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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Elroy Jetson who wrote (3720)7/31/2002 3:39:39 AM
From: Jim McMannisRead Replies (1) of 306849
 
RE:"The exception to this match with GDP is a demand preference shift from other wealth holding instruments driven by tax policy, or other change in preference. Make homes more desirable from a tax stand-point and you gain a one-time increase spread out over a period of time. All tax policy intended to make homes more affordable accomplish nothing in the end - as the rise in home price is equal to the subsidy. Home prices in Los Angeles County exactly matched GDP growth from 1890 until 1945. There were three distinct tax driven price adjustments above GDP after 1945. The most recent was the silly non-taxation of home appreciation.
Imagine, an investment whose cost, like mortgage interest and property taxes, are subsidized by the public purse, yet the gain is entirely untaxed."

I agree. Also the main reason housing prices have inflated so much over the last few years.

RE:"A Public Welfare system for those who buy a building.
I think its high time homeowners get off the dole and become self-supporting."

When you weigh the tax advantages it's pretty easy to see why RE has appreciated. As for homeowners getting off the dole. Not likely until something really drastic happens.
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