patrick.net

You can't live in a stock (but you can sell some and live in a motor home). That is all.. Oh, and this -- yikes!

EBGuy says

You can't live in a stock (but you can sell some and live in a motor home).

or rent, or not overpay every year in property taxes to live in the SF Bay Area. Yikes!

Interesting take on inflation from Bill Gross and the Wolf:
https://wolfstreet.com/2021/06/01/cash-has-been-trash-for-years-but-soon-it-may-be-the-only-haven-for-investors-bill-gross-is-at-it-again/

The Fed’s asset purchases have already created so much liquidity, causing bank reserves to more than double in a year to $3.8 trillion, that liquidity is now going haywire, and the Fed is feverishly engaged trying to control it by selling Treasury securities and for cash via overnight reverse repos, thus draining liquidity from the market.

Just this morning, the Fed sold $448 billion in Treasury securities via overnight reverse repos, as Friday’s overnight reverse repos of $478 billion matured and unwound. This is down a tad from the record of $485 billion in reverse repos last Thursday that matured and unwound on Friday.

So the Fed cannot continue its current zero-interest rate policy and its asset purchases that create more bank reserves, Gross says. When the Fed starts dialing back its policies, assets that have been supported by low yields, such as the 10-year Treasury and stocks – “no matter the growth potential for 2021 and 2022,” Gross says – are in for a reckoning when they lose that support:

“Cash has been trash for years but soon it may be the only haven for investors sated beyond reasonable expectations of perpetually low yields and supportive bond kings and queens,” Gross concludes.

EBGuy says

You can't live in a stock (but you can sell some and live in a motor home). That is all..

That's silly: you can rent a real home with your stock riches.

krc says

Well, not yet at least. Give it time... People are looking hard at general asset taxes. When you need to even further distribute wealth...

Sad.

I just heard Biden making a top priority to "narrow the racial wealth gap".

FuckCCP89 says

EBGuy says

You can't live in a stock (but you can sell some and live in a motor home). That is all..

That's silly: you can rent a real home with your stock riches.

FuckCCP89:

Do you live here in the SF Bay Area? Just asking. It's the only place I've lived. Many (but not all) people here have this petty bourgeois zeitgeist that one must own their home to live here. Of those, some (many?) are smug, and have only snark for others who don't share their view. Misery loves company. Defending their position by going on the attack. Like some of the shrill lefties on social matters.

B.A.C.A.H. says

FuckCCP89:

Do you live here in the SF Bay Area? Just asking. It's the only place I've lived. Many (but not all) people here have this petty bourgeois zeitgeist that one must own their home to live here.

I do.

BTW, isn't rent/own ratio in SFBA higher than country average? I think it is. Not anywhere near NYC level but still.

Patrick says

HeadSet says

Do not forget that real estate loans involve origination fees and closing costs. Also real estate has yearly taxes and maintenance. And then costs when you selI. It ain't like buying stock and waiting for capital appreciation.

True. One thing I really love about stock is that it doesn't have any property tax.

Not if your own NNN commercial property.
The renter pay property taxes, maintenance and insurance premiums.

FuckCCP89 says

That's silly: you can rent a real home with your stock riches.

By my calculations you need almost $2 million to "rent" a modest 1,000 sq.ft. apartment @ $3/sq.ft./month in perpetuity.

EBGuy says

By my calculations you need almost $2 million to "rent" a modest 1,000 sq.ft. apartment @ $3/sq.ft./month in perpetuity.

So what?

There's a whole world outside of the SF Bay Area.

EBGuy says

FuckCCP89 says

That's silly: you can rent a real home with your stock riches.

By my calculations you need almost $2 million to "rent" a modest 1,000 sq.ft. apartment @ $3/sq.ft./month in perpetuity.

Huh? If we are to follow "safe withdrawal ratio" of 4%, $2M gives us $80K per year. Which rents you a nice McMansion even in fucking SFBA. Definitely not a fucking 1,000 sq.f. apartment.

PS. For instance: https://www.zillow.com/homedetails/7667-Pineville-Cir-Castro-Valley-CA-94552/69226818_zpid/

FuckCCP89 says

EBGuy says

FuckCCP89 says

That's silly: you can rent a real home with your stock riches.

By my calculations you need almost $2 million to "rent" a modest 1,000 sq.ft. apartment @ $3/sq.ft./month in perpetuity.

Huh? If we are to follow "safe withdrawal ratio" of 4%, $2M gives us $80K per year. Which rents you a nice McMansion even in fucking SFBA. Definitely not a fucking 1,000 sq.f. apartment.

PS. For instance: https://www.zillow.com/homedetails/7667-Pineville-Cir-Castro-Valley-CA-94552/69226818_zpid/

Yes. Rental yields have no relation to price.
Typical reason people don;t cell bay area real estate:
1) capital gains tax. Large number of families have $500k+ gains.
2) Fear of never been able to return to bay area if sell their house and priced out in future. So willing to get shitty yields.
3) House prices always go up and govt insures that they do.
If a $2M home have $72k rental and house appreciate 5% .. Rental yield becomes meaningless and it is happening for long time.
4) Prop 13 locks your property tax.
Bay area have the mix of all ingredients to keep house prices high.

https://propertyindustryeye.com/around-400000-renters-told-to-expect-eviction-notices/

Around 400,000 renters told to expect eviction notices

Farmer,

How many local homeowners told you this?

farmer2021 says

Typical reason people don;t cell bay area real estate:
1) capital gains tax. Large number of families have $500k+ gains.
2) Fear of never been able to return to bay area if sell their house and priced out in future. So willing to get shitty yields.
3) House prices always go up and govt insures that they do.
If a $2M home have $72k rental and house appreciate 5% .. Rental yield becomes meaningless and it is happening for long time.
4) Prop 13 locks your property tax.
Bay area have the mix of all ingredients to keep house prices high.

Booger says

Around 400,000 renters told to expect eviction notices

From the article:
The cost of boosting support to tackle rent arrears is a fraction of the cost of the stamp duty holiday.
We're not in Kansas any more. Help me Auntie Em.

farmer2021 says

NNN commercial property

Thanks @farmer2021 I didn't know this term.

https://www.investopedia.com/terms/t/triple-net-lease-nnn.asp

Depends on what changes Biden can push through to make the RE market "fairer" to minorites as per today's announcement. If they lower lending standards prices will continue to climb. Clinton had the same MO and that ultimately led to the real estate bubble. Been almost 20 years since the hosuing market went haywire. How quickly people forget.

B.A.C.A.H. says

Farmer,

How many local homeowners told you this?

farmer2021 says

Typical reason people don;t cell bay area real estate:
1) capital gains tax. Large number of families have $500k+ gains.
2) Fear of never been able to return to bay area if sell their house and priced out in future. So willing to get shitty yields.
3) House prices always go up and govt insures that they do.
If a $2M home have $72k rental and house appreciate 5% .. Rental yield becomes meaningless and it is happening for long time.
4) Prop 13 locks your property tax.
Bay area have the mix of all ingredients to keep house prices high.

Many. Upper class(Not ultra wealthy) asians typically have this thinking.

EBGuy says

From the article:
The cost of boosting support to tackle rent arrears is a fraction of the cost of the stamp duty holiday.
We're not in Kansas any more. Help me Auntie Em.

Article is for the UK, but the same conditions exist elsewhere.

farmer2021 says

B.A.C.A.H. says

Farmer,

How many local homeowners told you this?

farmer2021 says

Typical reason people don;t cell bay area real estate:
1) capital gains tax. Large number of families have $500k+ gains.
2) Fear of never been able to return to bay area if sell their house and priced out in future. So willing to get shitty yields.
3) House prices always go up and govt insures that they do.
If a $2M home have $72k rental and house appreciate 5% .. Rental yield becomes meaningless and it is happening for long time.
4) Prop 13 locks your property tax.
Bay area have the mix of all ingredients to keep house prices high.

Many. Upper class(Not ultra wealthy) asians typically have this thinking.

I've also heard some of these sentiments from a few asian coworkers (both chinese and indian). Most of them bought bay area homes in the past few years.

There's no "top" probably.
There may be a dip soon when people start getting foreclosed on and evicted.
I'm probably going to buy something in the town which I like.
I'm thinking of it for intangible reasons, avoiding rules is a main reason.
Houses are not a great investment in states like California; they are a tax trap.
It's like marriage; guys will still do it although it makes no sense on several levels.

Hircus says

the past few years.

Yeah. Been here the past few years and know it all, already. Know-It-Alls.

B.A.C.A.H. says

Farmer,

How many local homeowners told you this?

farmer2021 says

Typical reason people don;t cell bay area real estate:
1) capital gains tax. Large number of families have $500k+ gains.
2) Fear of never been able to return to bay area if sell their house and priced out in future. So willing to get shitty yields.
3) House prices always go up and govt insures that they do.
If a $2M home have $72k rental and house appreciate 5% .. Rental yield becomes meaningless and it is happening for long time.
4) Prop 13 locks your property tax.
Bay area have the mix of all ingredients to keep house prices high.

I'm in the exact same boat. I've also been wondering why homeowners turn their shacks into rental properties. When I flee I'll definitely be selling because I'd rather take the massive tax hit and be done with it. Maybe there will be lots of selling before the end of the tax year, since people are likely to believe federal long term capital gains tax rates will be going up.

B.A.C.A.H. says

It's hilarious, they're signing up for a massive annual property tax bill. ... And because of the recent Republican authored changes to the income tax law, the entire amount of those property taxes can no longer be deducted from the (required) super high incomes to service the property tax bill.

My experience was that AMT effectively lowered my deductions to exactly 0 in years prior to 2019. Still, prospective shack buyers won't find this out until April 15 after the year they bought. Oops!

Turns out that for me the republican-led tax changes slightly improved my tax situation since I was able to take the $12k standard deduction and the AMT limits were less stringent. I typed all the year 2019 numbers into 2018 tax software and confirmed that, indeed, I saved some money using the 2019 rules.

zzyzzx says

Article is for the UK, but the same conditions exist elsewhere.

Looks like Rentmageddon begins at the end of the month. Per the State of California:
Beginning July 1, 2021, landlords can take tenants to small claims court to recover unpaid rent debt regardless of how much the tenant owes... Also please understand that, no matter what, beginning July 1, 2021, you will have to pay the full amount of your rent to be protected from eviction.
Excess inventory has already put some downward pressure on rents (but they seem to leveling off). Will be interesting to see if new listings, once eviction season begins, put more downward pressure on the market. I know my municipality has a number of vacancies, but a lot will depend of whether that inventory gets sucked up once colleges go back to in person learning in the fall.

What is going to be interesting is the shear amount of coin upfront that it is going to take for new renters.

Landlords just got fucked and they are not going to allow it again. I expect to see 6 months+ of rent up front. They will call it something else, but yes expect it. They will try to pin it as as racist, but economics will prevail.

Slime renters who gamed the system will get what is coming.

Misc says

I expect to see 6 months+ of rent up front.

that should bring inventory up.

If illegals are paying coyotes $8k to get into the country, there is not going to be much of an increase in inventory.

Misc says

Landlords just got fucked and they are not going to allow it again. I expect to see 6 months+ of rent up front. They will call it something else, but yes expect it. They will try to pin it as as racist, but economics will prevail.

I don't know CA rental laws and I'm sure they vary from city to city. You cannot ask for months of rent up front in Chicago. Security deposit (which is a fucking pain in the ass as a landlord) and your first months rent is it. You could market a lower rate for those that pay 6 months in advance, but cannot be a requirement to rent. You'll get yo ass in trouble here.

Chicago is probably one of the least landlord friendly cities in the country. I think groups send out people as well to catch landlords breaking rules. There are also informed jackass tenants that try to catch even the most minor slip up. Security deposits pay interest to the tenants and the landlord HAS to send it or else. You cannot do first and last month. Evictions take at least 60 days and personal property laws are onerous for the landlord.

Unless you get a deal on a building, it makes no sense to own a rental in Chicago with a declining population, high taxes and corrupt government. Part of the reason I left my previous job. Half of it was dealing with dumb ass regulations and accounting. I get there are slum landlords out there, but never understood some of the regulations in Chicago.

WookieMan says

but never understood some of the regulations in Chicago.

Politicians pandering to their mostly deadbeat clientele. In Baltimore City there is even a regulation requiring that when you throw someone out, you have to put their stuff in a storage unit within one mile of their rental location.

Russia to exit from all Dollar assets in its Wealth Fund & to invest in Euros, Pound, Gold, Yuan instead - Russian Finance Minister Siluanov

"We can make this change rather quickly, within a month," Siluanov told reporters Thursday. The transfer will affect $119 of a total $186 billion in liquid assets.

Absolutely no top of RE market in sight. This can go on for many years until it cools off.
Super low interest rates. No inventory. Multiple offers on houses. Relatively tight lending standards.
Unless interest rates increase significantly, prices will continue to go up. All my neighbors that bought recently are loaded. Good jobs and spend like there is no tomorrow. I dont believe its all on credit cards. Two professionals with high paying jobs and a down payment have no problem buying a 1M-1.5M dollar house in Socal.

Builders let the highest bidder secure a lot now. It used to be first come first serve to get on the list for depositing money in order to secure a lot. But with 14,000 people on the interest list for 200 homes I understand why they let the highest bidder to secure the first lots.

https://www.cbs8.com/article/news/local/new-home-construction-in-mira-mesa-sparks-massive-interest/509-9e7ffca2-f319-4a46-89e5-2720addbaafc

Same thing is happening where I live. They are building 75 new homes with no fixed prices. Bidding is the new way.

porkchopexpress says

Russia to exit from all Dollar assets in its Wealth Fund & to invest in Euros, Pound, Gold, Yuan instead - Russian Finance Minister Siluanov

"We can make this change rather quickly, within a month," Siluanov told reporters Thursday. The transfer will affect $119 of a total $186 billion in liquid assets.

site.
Isn't that chump change?

WineHorror1 says

porkchopexpress says

Russia to exit from all Dollar assets in its Wealth Fund & to invest in Euros, Pound, Gold, Yuan instead - Russian Finance Minister Siluanov

"We can make this change rather quickly, within a month," Siluanov told reporters Thursday. The transfer will affect $119 of a total $186 billion in liquid assets.

site.
Isn't that chump change?

Peanuts. California spends more per year on booze and drugs for bums.

https://www.cnbc.com/2021/06/03/russia-to-remove-dollar-assets-from-national-wealth-fund.html

Bitcoin says

Bidding is the new way.

Sell houses on eBay?

NDrLoR says

Bitcoin says

Bidding is the new way.

Sell houses on eBay?

kind of. Highest offer gets to secure the lot. For all others, too bad so sad.

zzyzzx says

WookieMan says

but never understood some of the regulations in Chicago.

Politicians pandering to their mostly deadbeat clientele. In Baltimore City there is even a regulation requiring that when you throw someone out, you have to put their stuff in a storage unit within one mile of their rental location.

Ditto in Chicago. You're better off in the burbs here in IL around Chicago. Not in it.

Top? Not so fast!

ThreeBays says

Houses going up 45% then?

Why wouldn't they? Vacant land values will skyrocket and builders still won't build. They're trying to inflate their way out of the covid mess and by they I mean the left. You'd have figured an NYC real estate mogul would have done that, but no, it's Biden. That's how much they hated Trump. Doing the things they thought he would.