What investment will keep up with inflation that is not the stock market? Gold?

[javacontour]

No offense intended, but people in the Midwest simply do not get it. This is going on mostly West of the Rockies and in parts of the Southwest. It is a big problem in the West, and the corrupt politicians are not seizing the opportunity to help out the taxpayers by taxing (property taxes) these investment 2nd and 5th houses at an increasingly higher rate. They are contributing to the problem, because they get more taxpayer dollars to play with as the cost of homes goes up and up and up. Even people who stay in the same house for 60 years are feeling the pinch, because their property taxes are increasing every year. The price rise is IMHO mostly due to the artificial shortage created by these speculators. Sorta like a massive scale pyramid scheme of houses.

Well, yes and no, we get it.

Sure, until recently, it took 30-90 days to sell a house here. Right now, times are about 10% of what they were, at least in my community.

Okay, maybe not that fast, but the median days on the market in my community is about 1/2 of Phoenix, and homes are going for 101% of list when they go on the market, so sellers are not giving much in terms of concessions.

It's easy to blame the investors. But look at WHY the investors are attracted. Go back to the NPR link I provided. We've not been building homes at the same pace for the last 12-13 years. Baby boomers are remaining in homes they likely would have left a generation ago. And we've over emphasized 4 year degrees vs a trades education.


Add in the pandemic where folks can both work from anywhere and are leaving some cities for single family homes and you get a shortage of single family homes.

 

[zeky]

When 15% of the housing stock is sitting empty while the investor/owners bide time waiting for the price to go up, it is not that much of a stretch to see why the price is going up. Who can blame them? Who is blaming anybody? Blame goes to the regulators, which in this case is the County/City and State politicians that set property taxes. They know full well these 2nd and 5th investor houses (that sit empty) are being used purely for profit, yet they continue to tax them at the regular "family" rate. Like it or not, there is a huge amount of money out West, and as this practice spreads, people are taking vast amounts of money out of bonds and the stock market to invest in this mostly unregulated housing pyramid scheme.

 

[PimTac]

Housing is starting to cool off.

 

[zeky]

Housing is starting to cool of

People are starting to figure it out.

 

[Dave Hess]

Housing is starting to cool off.

Housing bubble on the horizon ?

 

[PimTac]

People are starting to figure it out.

Plus they are still building like crazy.

 

[PimTac]

Housing bubble on the horizon ?

Just a observation. I go to real estate websites and check local prices here. I use the map view as it’s easier for me to see the neighborhoods.

Realtor.com has this function. Type in any city and go to map view. What I am seeing are little down arrows that indicate the price has been lowered. Six months ago I rarely saw that.

 

[Silver]

You can't see the forest for the trees.

You want the highest return at the highest risk you're willing to accept. That last one is a concrete wall you build and identify.

Maybe you're asking for the safest investments. I tend to suggest Vanguard to inexperienced folks that just want to protect their money. Ridiculously safe are MMKT funds (Vanguard sometimes pays as much as 2%) or savings bonds that double your money after 20(?) years.

Go on their site and play with the filters.

 

[zeky]

Just a observation. I go to real estate websites and check local prices here. I use the map view as it’s easier for me to see the neighborhoods.

Realtor.com has this function. Type in any city and go to map view. What I am seeing are little down arrows that indicate the price has been lowered. Six months ago I rarely saw that.

For kicks I sometimes scrutinize an area on Zillow. They list the sales history of the house. There was a particular town I have been watching (retirement potential) and the prices have significantly risen during the pandemic. Sometimes you can find a house that sold 3 years ago (say $200,000) and now they are asking $400,000. That same house you can tell that has not been remodeled in the last 3 years.

I have noticed the recent price reductions, too.

 

[Wolf359]

When 15% of the housing stock is sitting empty while the investor/owners bide time waiting for the price to go up, it is not that much of a stretch to see why the price is going up. Who can blame them? Who is blaming anybody? Blame goes to the regulators, which in this case is the County/City and State politicians that set property taxes. They know full well these 2nd and 5th investor houses (that sit empty) are being used purely for profit, yet they continue to tax them at the regular "family" rate. Like it or not, there is a huge amount of money out West, and as this practice spreads, people are taking vast amounts of money out of bonds and the stock market to invest in this mostly unregulated housing pyramid scheme.

It's funny that you blame the regulators not the people. The real solution is to build more housing. But people in the local area always want to block new construction. So with supply and demand, no new supply and same demand or even less, prices go up. It's not the regulators job to fix it by raising property taxes. And how much would you have them raise it? Property taxes in general here aren't that big a percentage of the holding costs of the property, probably the interest on the mortgage is the biggest cost. You could probably double property taxes and it still wouldn't really affect their number. Yet if you try to double property taxes, everyone else will scream.

And what's wrong with profit?

 

[zeky]

It's funny that you blame the regulators not the people. The real solution is to build more housing. But people in the local area always want to block new construction. So with supply and demand, no new supply and same demand or even less, prices go up. It's not the regulators job to fix it by raising property taxes. And how much would you have them raise it? Property taxes in general here aren't that big a percentage of the holding costs of the property, probably the interest on the mortgage is the biggest cost. You could probably double property taxes and it still wouldn't really affect their number. Yet if you try to double property taxes, everyone else will scream.

And what's wrong with profit?

I never said anything was wrong with profit. You are confused. First you say to blame the investors for wanting to make profit, and then you ask what is wrong with profit???

These people are generally not getting mortgages. They are investing for a high % return in one or three years. For those 1-3 years they are taking the property out of the housing stock, maybe a property tax of 5X the normal rate would be appropriate. How that sound? For instance, in California with an effective property tax of 1%, on a million dollar house the property tax would go from $10,000/yr to $50,000/year.

 

[ArrestMeRedZ]

So, on an empty house that uses almost almost no government services you want to tax them at a much higher rate. Plus, in California, to use your example, taxes will go up and be based on the inflated sales price when it is eventually sold and that is bad?
I have a better idea. Tax the empty houses at a rate commensurate with the amount of government services provided.
I do not agree with your recommendation.

 

[zeky]

So, on an empty house that uses almost almost no government services you want to tax them at a much higher rate. Plus, in California, to use your example, taxes will go up and be based on the inflated sales price when it is eventually sold and that is bad?
I have a better idea. Tax the empty houses at a rate commensurate with the amount of government services provided.
I do not agree with your recommendation.

Empty houses being used merely for investment purposes. Did you read the thread?

 

[Wolf359]

Empty houses being used merely for investment purposes. Did you read the thread?

So what's wrong with using it as investment purposes? Note I have rental property myself so I'm interested in hearing your arguments as I'm on the other side. Mine aren't empty though. Although I have no problem waiting an extra month or two for the right tenant. A bad tenant can easily destroy a property and it would cost thousands to fix. Ask me how I know.

Also your theory on the taxing authority being able to jack up the taxes depending on the use assumes way too many things. I've bought foreclosed property before and took a few months to fix it up. How would they know that was what I was doing? I didn't have to tell anyone. Actually the insurance company did a drive by and found out and gave me a 30 day notice that they were going to cancel my insurance, but by that point it was ready and I had a tenant in there in less than 30 days. But I could have just as easily switched insurance products, would have just cost a little more money, maybe around 1k on an annual basis, but I could have switched back and would have been pro-rated by the month. Some tenants like to pay cash and there's no mechanism to determine if the house is empty for a few months or a few years.

I know other landlords who are a little crazy about getting the right amount of rent for the property and won't lower their rent when the market is down. In that case, the property is vacant for months. They've already owned it for decades so there's no mortgage and it's just another game they're playing but makes no financial sense.

 

[Wolf359]

I never said anything was wrong with profit. You are confused. First you say to blame the investors for wanting to make profit, and then you ask what is wrong with profit???

These people are generally not getting mortgages. They are investing for a high % return in one or three years. For those 1-3 years they are taking the property out of the housing stock, maybe a property tax of 5X the normal rate would be appropriate. How that sound? For instance, in California with an effective property tax of 1%, on a million dollar house the property tax would go from $10,000/yr to $50,000/year.

Read what I wrote carefully. I said blame the neighbors who try to block new housing, not the investors. The investors are just trying to make a profit. They run the numbers, if the numbers work they do it. You have a solution in search of a problem. Your solution isn't the right one nor will it work because it assumes many things that aren't true. Like how do taxing authorities know the property is vacant? Liar investment property loans have been around for decades. Investors just buy properties and say that they're going to be owner occupied. Then they just rent them out. The law just says that you intend to live there, they can't force you to live there.

It's a funny position because people always say taxes are too high and money is being wasted and now you're saying they're not high enough.

 

[PandaBear]

I don't have much to contribute new this time other than the following 3 points:

1) Many institutional investors buy single family homes (easy to blend into the market, hard to regulate without other "users" being the same casualty as a punishment) rather than big residential complexes (easy target to hit with rent control or regulation, hard to sell when the time is right). They would hire management to manage it like typical mom and pop landlords as well, they just blend in like a mom and pop landlord doing mom and pop landlord thing.

2) Many regular families also buy second home, many also buy home either for their children's future need or buy them as ski homes, weekend homes, etc. They too, are "investors" and they can write off property taxes on them just like their first home, they would typically leave them vacant and if a law pass to tax vacant home extra they too will get hit, and they may just claim to live there once in a while, and there would be no way to prove how much they live there vs not.

3) Leaving a home vacant can also mean buying a bigger house than you need and leave the extra space empty. Are you having a bigger home than an urban apartment? If so you too may be the problem, and you may be accused of reducing the housing supply.

 

[zeky]

Read what I wrote carefully. I said blame the neighbors who try to block new housing, not the investors. The investors are just trying to make a profit. They run the numbers, if the numbers work they do it. You have a solution in search of a problem. Your solution isn't the right one nor will it work because it assumes many things that aren't true. Like how do taxing authorities know the property is vacant? Liar investment property loans have been around for decades. Investors just buy properties and say that they're going to be owner occupied. Then they just rent them out. The law just says that you intend to live there, they can't force you to live there.

It's a funny position because people always say taxes are too high and money is being wasted and now you're saying they're not high enough.

Funny that my tax attorney (who is very plugged into county and state gov't) tells me the politico's are getting nervous over the level of Chinese and Russian investment in this speculation. You may have read what you wrote carefully, but have you been following this thread?

 

[zeky]

I don't have much to contribute new this time other than the following 3 points:

1) Many institutional investors buy single family homes (easy to blend into the market, hard to regulate without other "users" being the same casualty as a punishment) rather than big residential complexes (easy target to hit with rent control or regulation, hard to sell when the time is right). They would hire management to manage it like typical mom and pop landlords as well, they just blend in like a mom and pop landlord doing mom and pop landlord thing.

2) Many regular families also buy second home, many also buy home either for their children's future need or buy them as ski homes, weekend homes, etc. They too, are "investors" and they can write off property taxes on them just like their first home, they would typically leave them vacant and if a law pass to tax vacant home extra they too will get hit, and they may just claim to live there once in a while, and there would be no way to prove how much they live there vs not.

3) Leaving a home vacant can also mean buying a bigger house than you need and leave the extra space empty. Are you having a bigger home than an urban apartment? If so you too may be the problem, and you may be accused of reducing the housing supply.

Chinese propaganda machine would like us all to think like that, PandaBear. Let's hear from the Russian investors.

 

[PandaBear]

Chinese propaganda machine would like us all to think like that, PandaBear. Let's hear from the Russian investors.

Are you a Russian investor?

 

[Boomer]

Buy and stockpile expensive hunting rifles and handguns (Kimber, etc).