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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Tradelite who wrote (1322)	1/10/2002 3:34:29 PM
From: GraceZ	Read Replies (1) \| Respond to of 306849

When I do these analysis for friends it is using real life data. What can you buy that is equivalent to what you rent?You have to figure out the difference between itemizing and using the standard deduction and sometimes its not that much because with someone who is in a low tax bracket to begin with the additional deduction will not reduce significantly the amount the person pays for a mortgage and the expenses of maintaining the house. Do you understand why you can't just figure the whole deduction, you have to take the difference to make the analysis significant? Monthly expenses to own are almost always higher in an area with expensive houses and expensive rents where the person is a single filer with a low marginal rate. You might think that people in this situation don't live in expensive areas, but you would be wrong. NYC is a perfect example. There are numerous rent stabilized apartments (if you are lucky enough to have one) and if the person buys a condo they are not protected from the inflation factor like an individual home buyer with just a mortgage. The low end doesn't appreciate at as high a rate as the high end, condos don't appreciate as fast as houses. Ocasionally people ask me to assess just how much of the sale price of their home is profit when you account for tax savings, maintanence and improvements. I hate doing these because the news is almost always bad. It is a myth to think you can live for free off the inflation, or should I say appreciation, of your house. What the house does do is enforce savings. Most renters wouldn't invest the amount of money people put into their houses.

To: Tradelite who wrote (1322)	1/11/2002 2:08:21 AM
From: LLCF	Read Replies (1) \| Respond to of 306849

<What areas exist where homes are expensive but rents are not also proportionately expensive? Not familiar with any and don't see how that can occur.> Here's a scenario... your looking for housing in the Bay area.... do you pay a million for a home, or pay 5k a month in rent??? Well, after you back of the napkin figure out the return on a million dollar house being worth 1/2 million in 2 years.... you pay the 5k a month, which turns into 3k in the second year and you've hit a relative home run. DAK