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

To: CalculatedRisk who wrote (69397)	12/26/2006 11:18:15 AM
From: Jim McMannis	Respond to of 306849

RE:"Just to make sure everyone knows - there are differing opinions on the '97 tax change - I believe the '97 tax change was irrelevant and has nothing to do with the housing boom." Well, we could reverse the law and see what happens just for kicks. <G> OTOH, it seems to me that if someone up north sells their house for a $500k tax free gain vs paying say $100k in taxes that they will have that much more to drive up prices with. More that that, the tax freebie is a heck of an incentive to move, just psychologically. Also, let me ask you this. If you were looking for a profession and the Government offered you zero taxes on your first $500k worth of income if you went into the XYZ profession...maybe just maybe a whole lot of people would rush into it? Then maybe the ecomomy would skew to that profession and related professions. And at the expense of other sectors. Then on top of that, you can get a nice toxic loan to go into that profession...whew.

To: CalculatedRisk who wrote (69397)	12/26/2006 11:32:34 AM
From: bentway	Read Replies (2) \| Respond to of 306849

"Just to make sure everyone knows - there are differing opinions on the '97 tax change - I believe the '97 tax change was irrelevant and has nothing to do with the housing boom." Me too! I think the lowest interest rates in 50 years coupled with the lowest lending standards in my lifetime did the trick. Any effect the homestead tax exemption had was miniscule. The tax break Jim constantly harps on was ONLY available to people who lived in the house they sold for the previous two years or more. You DON'T get it for second, third, fourth or seventh homes. It is 250k for singles and 500k for married couples, although he only uses the 500k figure. Although I'm sure some of these people DID sell their houses and buy houses in Florida, someone who lives in a house for two years ISN'T anyone but Jim's idea of a "flipper"! I still like this tax break. It's one of the ONLY big tax breaks available to ordinary homeowners. At the time, it was touted as a way for JSP to raise large sums of cash for medical emergencies or other contingencies, uses that are still valid today. To get it, you have to SELL YOUR HOMESTEAD.

To: CalculatedRisk who wrote (69397)	12/26/2006 3:06:08 PM
From: Lizzie Tudor	Read Replies (1) \| Respond to of 306849

me too, well not totally irrelevant but just one of many factors creating the boom (the largest of which I think were collapsing dollar and stock market, with low rates and easy credit). Of course, you and I live in California and one thing I am learning here on this thread is that FLA and Detroit and other areas have no relationship to CA whatsoever. Its fascinating to me to read about FLA. Its as if their driver for booming real estate to mirror the real estate boom we had in N CA after the industry took off, is the amt of money flowing into WALL STREET BANKS. They have no self generated wealth in FLA at all! Amazing! However, wall street is going to start perking up. That might mitigate the crash in FLA real estate a little.