As has been described several times in this thread, this is not the case in many (most) locations who have a competent local government. The budget is set, the home values are what they are assessed to be, and mill rate is adjusted to tax revenue meets budget expenses. If that isn’t happening where you live, you should consider getting active in your local government.
Renowned housing analyst who predicted the 2008 home price crash weighs in on the current market
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If that’s true, then so is the post I’m replying to.
No. I grew up on a farm and rode a bus. But I worked hard and made it fine. But this wasn’t some average kid from the Philippines. Clearly a smart kid Who is hand picked from a special international school? I’m pretty sure there’s still lots of smart Philippine Kids stuck on the farm somewhere.
One off esoteric examples prove nothing. If I only cared about myself, I wouldn’t care if things changed either. I’m doing quite well also.
Did you walk through streams to school to buy your first house?
yeah ok
Blows my mind you're missing the point. People who work hard and want an education and successful life are literally dying to get to the USA but many of our own citizens think life is unfair here. I assume you are reading through this thread.
If you cant afford a house here you are in the minority, clearly doing something wrong and if so, pick yourself up, figure it out like the rest of the population. Home ownership levels in the USA are within historical norms for the last 5 decades. Today is no different than 50 years ago but 50 years ago homes were much smaller, many less options and luxuries.
Life is more easy than is has been in the history of the USA today.
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I never said the pricing would come down. I said the cycle will continue as it always has. The 70's saw this type of housing price increase. Then wages caught up. Before the wages increased there was hand wringing and housing concerns. Then, the wages caught up and people started buying again - even with high interest rates in the 80's.
As I've said in other threads as well, my parents bought a nice suburban home in 1970 for 38K. 10 years later it was worth 114K. And way more now.
It's just a normal event in the cycle of economics. Things go up in price, then wages go up to "catch-up". And don't forget that location matters too.
People from the NE are moving south because of the "value" of their dollar (so to speak). So we have economic migration underway. No different than people from less fortunate US states retiring to lower cost countries elsewhere (where their dollars will go further).
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BIL & SIL are leaving Cali and moving out here. They bought a house here this week and they sold their house in Vacaville Ca this week. The CA house was on the market for 2 days, they were asking 665(present tax assessment) and it sold for 705k...what do you think the new assessment amount will be? It sold for 270/sqft, house prices are vastly inflated and taxes along with their inflated values. You can build a new house for less per sqft...I'm doing it right now.
Search for a chart on housing prices versus median income in the 1970s, It was well under 3 the entire decade. It’s close to 6 now.
15% interest is easier when your paying half as much.
If housing prices were to stay the same, and incomes were to double to get back to a historical norm, inflation, and everything else under the sun would be so through the roof we would all be broke.
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Home ownership rate is at an historical norm ( at LEAST for the last FOUR decades) of 65.7% in 2023 up from 63.7% in 2016 up from 64.1% in 1990 down from 69% IN 2005 (2005 AND YEARS AROUND THAT WAS A FLUKE) as people were buying homes that should not have been allowed and why the sub prime disaster that followed.SO here we are in social media and proof that nothing has changed in the housing market but people think it has because of social media and related organizations today. Let's keep in mind one blip, an epidemic that shut down the world. Now recovering better than ever. Life is great and anyone who works hard is buying homes at a rate higher than even 8 years ago. So what is the gripe? It's just an inconvenient truth?
I mean most all of us are intelligent people in here. So we not like facts, more convenient to listen to non factual non sense.
Let's take it a step further, home ownership rate is the same as it was in 1980. This is amazing, considering the marriage rate is lower and people putting off marriage and the current rate is the lowest in all these years.
source https://ipropertymanagement.com/research/homeownership-rate-by-year
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If you would post that I would like to see it. I don't understand how that pertains to housing cycles and the future costs because nothing is static.
If what you are saying is the wages are too low right now, I absolutely agree with you. So, the "ratio" is out of whack, then one of two things will happen in this cycle - wages will go up, or house prices will go down (or obviously so combination of the two).
And the only way prices go down in a capitalist society is through more production and/or less demand.
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one thing I will never do is pull cash out from my home.
The reason I got my house so cheap in 2011 is because the previous owner used it as an ATM in the 2000's and eventually it caught up when the market collapsed.
guy down the street lost his home he lived in for the same reason.
He is a fireman.. his wife is employed in the medical field..
they lived in that house since 2000.
they had a nice RV, a bass boat, two new vehicles etc...
I used to wonder how they did it, they had fairly good jobs, but not that good..
they ended up moving out as the house got foreclosed when they couldn't pay the bills anymore.
learned later on he just kept using the house as piggybank...
Please pay attention to what I'm saying. The budget here is voted on by the citizens and it goes up incrementally over time. If the budget was passed and it required $1,000,000 in revenue, and there were 100 of the exact same homes in our town, each home would owe $10,000. If the homes last year were valued at $500,000 then the mill rate would need to be 10% for tax revenue to cover the budget. If this year the value of these 100 homes magically doubled, the mill rate doesn't stay 5%, because tax revenue would be double what the citizens voted for in the budget. The mill rate necessarily must be cut in half because the home values doubled. If this is not happening in your town, go to the town meetings and ask why.
$500,000 x 5% = $10,000
$1,000,000 x 2.5% = $10,000
My home has doubled in value in the past 10 years and when I moved in 10 years ago I paid $8,000 per year in property tax. This year, I will pay $10,500 in property taxes, not $16,000, and that $10,500 represents incremental increases over the past 10 years. Of course, the budget depends on a whole bunch of other issues as well, but if this isn't how it works where you live, you should be asking why?
This is the perfect way to explain it. Thank you for posting this!
Maximum variability is less than 7% over the years. Again, amazing chart.
It's amazing and why finance should be required in High Schools. It never will, do you know why? The financial industry lobby would never allow it.
Reading your post, think about that, all the people who take out loans against their homes pay back almost double the cost of the product. All they know to do is look at the payment, not accepting the fact that the first number of years they will be paying mostly all interest on the 15 to 30 year loan they are taking out for something they could not afford to save themselves.
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even my BIL made me think what was he thinking. He has a Master's degree in engineering, real good job and he paid his mortgage for 30 years.. OTOH the only secondary education I have is at the school of hard knocks, and I paid off my house in 3... because every time I received a windfall I threw it at the mortgage.
You should be asking why you pay 10K+ in property taxes. I have yet to see a locality or school board say "We have enough money, we're GTG"
What you describe is NOT how tax rates work at all. Some neighborhoods in the city go up 20% in a given year while others remain flat or maybe 2-3% increase, so the rate drops maybe 2% that year. Next year, a different couple of neighborhoods have the same 20% increase while most others are flat. That is how it works here, they have figured it out on a broad scale. I literally had a 55% increase in assessment during a single year back during the 2006ish run up to the crash, the rate dropped 5% citywide that year, but neither the assessments nor the rate came down during the 08 crash.
Awesome. I learned about amortization at a youngish age too. Purchased a small commercial building retail on the main level, apartments above with a partner. We knock'd out the mortgage in 10 years. (possibly a year or two less) actually owned that before our first home. Today that building is paying my retirement. Social Security is untouched every month and deposited into a savings account. (so far) *LOL*
First home, not half as good as you did, at times I did buy stupid things, the most stupid was a 28 foot SeaRay before the house but after the commercial property purchase. Sold the boat and used it for the down payment on the house. Knocked that out in 15 of the 30 years. Being self employed at the time. My accountant advised me, take the 30 and pay it off early, rather than a 15 IN CASE something had happened at the business I could revert to lower payments. SO I did that. You do need to be disciplined and I was from the time of buying that boat forward. So good for you, me still I feel fortunate in the sense of now borrowing money like many and when I did, the repayment would be cut in half. Ex 30 years to 15
I taught amortization to my daughter on her college loans. Printed them out, showed her how much interest she will save by paying down additional principle every month. As an incentive we gave her a 50% match on additional principle. She knocked that out in less than 5 years, debt free. Unlike other kids her age, she was driving a beat up Grand Am until it died, than a 2012 or 14 Ford Fiesta and hand me down cell phones. Has been doing great in her career. Felt really cool she listened to me about debt, she hates it.
First realize I am making no predictions. Simply stating current state.
I am on my phone or I would make you a graph on FRED. But here is an article.
“ In 2022, the median sale price for a single-family home in the US was 5.6 times higher than the median household income, higher than at any point on record dating back to the early 1970s. This represents a rapid increase in just a few years, as home prices have risen considerably since the start of the COVID-19 pandemic. As recently as 2019, the national price-to-income ratio was just 4.1. High price-to-income ratios are an especially worrying indicator of deteriorating homebuyer affordability.”
https://www.jchs.harvard.edu/blog/home-price-income-ratio-reaches-record-high-0
You live in a corrupt town then but don't tell me it's not how it works. I've owned multiple homes in multiple towns in multiple states and this is always how it has worked and it is theoretically how it is supposed to work.
I pay $14.10ish per $1,000 assessed and $10K on a $750k home is a steal for what the town provides and the school system.
California has Prop 13 which distorts what others consider a normal tax structure. It benefits those who stay put but nails those who just bought property. That makes winners and losers and seems to have convoluted amendments to keep the right people happy.
Maine has two effective sets of real estate tax assessments-- water views and the poors. When they re-valuate every 15 years it usually turns out the water views grew faster in price than average and their owners get to suddenly pay more.
Maine has two effective sets of real estate tax assessments-- water views and the poors. When they re-valuate every 15 years it usually turns out the water views grew faster in price than average and their owners get to suddenly pay more.
In South Carolina, the millage rate is applied to the tax value, which can only go up 3% a year by state law. The guy next to me bought his house two years ago. His actual tax bill will be twice what mine is. So the Millage rate is only half the story.
If your state has no property tax increase cap, then it will work differently.
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