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

To: Elroy Jetson who wrote (3759)	7/31/2002 3:43:57 PM
From: GraceZ	Read Replies (1) \| Respond to of 306849

Well I'm glad there's a chance we might agree on something. Actually I brought up eliminating cap gains on investment gains as a solution about three posts back, maybe you missed it. I would never suggest extending a tax to another asset class to eliminate the difference in treatment. Eliminating taxes on investment gains would have a far more beneficial effect and make everyone richer. The problem is it would most likely never pass because while it would benefit even those who don't own financial assets, it would make the rich even richer and Congress would rather everyone be poorer than open up the disparity between the rich and the poor wider. Its the logic of someone who doesn't want to be rich if there's a chance someone else might be made even richer. I remembered one thing you forgot to factor in when calculating real estate returns in comparison to other asset classes and its something we've covered here extensively. Leverage. You can't compare the returns on real estate to other assets without applying equal leverage. If you had 20k back in 1982 and you had a choice of putting it in real estate or stocks you could have bought a 100K house with 12% interest (yikes) or 100k worth of stocks with 12% interest (refinancing as interest rates came down over the twenty years). After twenty years, unless you were exceedingly lucky (or bought a coastal property in California) a straight S&P index would have soundly beaten the return on the house even after the "owners' equivalent rent" and interest deductions are factored in.... even with the ass whooping that the S&P has taken in the last two years. BTW having grown up a ward of the state of NJ and having experienced living on the real welfare first hand I know the difference between the real thing and what you so flippantly refer to as welfare. I think if you examine this line you will find that there is almost no one living here in these United States who isn't living off some form of government largess. Did you go to public school? State college? Did you take out student loans? Do you drive a car? Do you take public trans? Do you own a home? -g- Does Mom get social security? How about Medicare? Do you go to National Parks? Do you use wood products? Do you eat domestically grown food? Do you use the Internet? Etc, etc. The list is endless and its almost impossible to avoid being a recipient without building your own shack in the woods somewhere in Montana and dropping out of society altogether. Even there you might be the benefit of public land use restrictions and government fire fighting efforts. Its been my theory that home ownership is promoted by the government primarily because its a form of indentured servitude designed to keep you yoked up as a tax payer so you don't go off and live off the land in the wilds of Montana. It works rather well in this regard. Notice tax freedom day is later and later every year.