Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Tradelite who wrote (12510)	8/17/2003 2:31:43 PM
From: Tradelite	Respond to of 306849

Just found the California real estate story I referred to in previous post. It was in IBD of Monday, Aug. 11 in editorial section. Editorial contains some interesting facts, if they are indeed facts. Sources such as Census Bureau, Tax Foundation, and the Public Policy Institute of California are quoted. Worth a read if you're interested.

To: Tradelite who wrote (12510)	8/17/2003 2:36:09 PM
From: Lizzie Tudor	Read Replies (1) \| Respond to of 306849

Admit I know nothing about California real estate, but if the "current residents own multiple homes for investment", it must mean they are getting a good return on that investment or they wouldn't bother, and it must mean they are getting this return by renting to people who need to rent. Now.... please explain to me....how does this reduce supply of housing for your new employees? Because people generally want to buy homes (not rent) and there are not enough homes on the market, because there is no incentive to EVER sell, if you are locked into your property tax rate for effectively, forever. There is an economic term for effectively freezing someone's costs to acquire an asset while the true costs go up.... can't remember but I think it is "siphoning"... the end result is almost always an exponential pricing curve for the remaining assets on the market. That is what we have in California for home ownership. As to rentals, a bit of a different situation. We used to have a severe shortage of rentals in the tech bubble in the late 90s... foreign visas were extended from 60K - 200K for just one of the programs and most of the these visa holders wound up here. We needed more apts and a lot were built, also more office space was built. But homes for people to purchase were NOT built on available land, mostly because cities don't want to zone for housing due to the taxation issues- they can't make any revenue. This is called the "monetization of property"- also a direct result of prop 13, you can look that up on the web, it has been addressed by a lot of RE professionals. So lots of new office bldgs + new apts just adds more demand for homes. Today with all the offshoring and the tech collapse the rental climate has also collapsed. So no new apts for awhiile. Now, all of this might be an academic argument if we were a state in excellent fiscal shape. But with a 38 billion dollar deficit and looming tax increases like a tripling of car registration, some re-evaluation of these property tax laws is in order, imho.

To: Tradelite who wrote (12510)	8/18/2003 5:21:47 AM
From: Amy J	Read Replies (3) \| Respond to of 306849

Hi Tradelite, RE: "but if the "current residents own multiple homes for investment", it must mean they are getting a good return on that investment" Real Estate Investors' artificially good return is due to prop 13. Not due to market capital conditions, but due to false propping thru tax manipulations, all on the backs of NCGs (new college graduates.) RE: "it must mean they are getting this return by renting to people who need to rent. Now.... please explain to me....how does this reduce supply of housing for your new employees?" Here's how: The government gives an incentive to Investors for owning more homes than one. This reduces available supply of home ownership. RE: "Is it because these employees are not paid enough to afford local housing opportunities or what? Really trying to understand what you mean by appearing to blame it all on Prop 13 and real estate investors....help me out here." A business would have to pay a NCG approximately $150,000, if they wanted to purchase a house here. You know of any business in the world that can pay NCG's $150,000...help me out here. RE: "which claimed California needs 200,000 additional housing units per year but is only gaining about 100,000." They can probably get 100,000 new units simply by getting rid of prop 13 for investors who consume more than one home here and do not reside in it. RE: "Sounds to me more like a housing shortgage vs. population increases than a problem with Prop 13 or real estate investors "holding on to more than their fair share" of property." Your assumption is incorrect: more people have actually left the Bay Area than entered it, over the past couple of years, ironically too, when housing doubled. Your conclusion is also incorrect, because you are incorrectly assuming the number of units held by investors in the Bay Area is not high. The figure is exceedingly high, when projecting the example out. We need to get rid of prop 13 for investors (trusts, entities, same people listed under multiple trust entities) that do not live in their real estate. Prop 13 was suppose to help elderly people, it was never intended to help Investors artificially reduce the housing supply, on the backs of NCGs. Since when should Investors be treated better than NCGs? NCGs create value. Investors don't. The NCGs have gotten a really, really bad rap during this down turn. I'm not an NCG, so I'm not biased here when I say, this downturn has significantly hurt them on an aggregate basis more than any other segment of our population (which doesn't invalidate the very huge individual pain others are going thru.) I graduated during the previous recession, and that one was mainly (as an aggregate) on the backs of older people, but this one is hugely on the backs of NCGs. I've never seen anything negatively impact one class of people (NCGs) as much as this. Since when should Investors be treated better than NCGs? Locally, this will eventually cut off our air supply here. The media acts like people don't want to get rid of Prop 13 - maybe they need to take a poll that includes NCGs. Regards, Amy J