The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: Lizzie Tudor who wrote (8912)	2/17/2003 11:00:13 AM
From: GraceZ	Read Replies (3) of 306849

Interesting assessment, anything that effectively reduces supply below marginal demand would raise prices as long as there is an expectation of rising prices. Also, someone who has owned a house for some time has a much lower mortgage payment or no mortgage payment, that in of itself is enough to get you to stay put in an environment where house prices are rising. You don't think you can afford something better even if you take out your existing equity. I know several who couldn't afford to buy the houses they owned because the sale price would be so far above where they bought them. You think if you take out your equity you can, but it also puts you back at the beginning of the amortization schedule. I don't know about you, but I'm getting to the age where I want to see the end of mortgage payments. The first five years of a thirty year is almost entirely interest. My 20 year was a bit better, but I'm almost at the halfway point timewise and I'm still not paying half principle yet on the payment. When I start complaining about losing the big interest deduction I'll know I've finally gotten there. In some of the pricier neighborhoods here there is a supply demand situation where you practically have to read the obits to find a house for sale. It is this lack of turnover that drives up the prices and the expectation of higher prices, making people hold onto their houses. What is funny here is that a neighborhood with rising prices can be spitting distance away from one with stable or stagnating prices. School district lines can make the difference or being in a neighborhood with a desirable name or covenants. The difference here is that a couple million will buy you a lot of house and a lot of property. I've seen some 2 million dollar properties in CA that I could only say were entirely ordinary, if not downright ugly. Don't get me started on the differences between the 600k ones. I know in other parts of the country where local government wishes to reduce development they have tried the "tax the newcomer" technique. My brother-in-law bought a new 800k house in PA where the estimated taxes were 12k and as soon as he went to settlement the taxes jumped to 20k. The real estate agent based the estimate on similar existing homes and didn't factor in the much higher assessment given to new homes in that county. Several lawyers later.....he still pays those taxes but he did get some give back on the sale price from the seller. Which leads me to believe what Elroy said about higher taxes and development fees reducing prices not raising them. What would the yearly property tax be on a half million dollar new house? On the same price that was grandfathered by prop 13?

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