Dropping Prices And Changing Up The Terms
A report from the Washington Post. “Average rents at the District’s higher-end apartment buildings have turned lower over the past year, research firm Delta Associates found, as a surge of new projects in the Southwest Waterfront area brings fresh competition to recently gentrified neighborhoods in the middle of the city. The declines were strongest in the Shaw and Columbia Heights neighborhoods, where rents fell by 4.1 percent. The area that includes Logan Circle and the 14th Street corridor experienced a 2.4 percent decline in Class A rents.”
“It was the second quarter in a row that the research group reported falling rents, suggesting the trend could have some staying power. Bob Murphy, chief executive of District-based MRP Realty, said real estate investors are less eager to sink money into ambitious new projects as a result. Funding new construction ‘is going to be much more selective and difficult,’ Murphy said. ‘If you talk to anybody who’s building [downtown], years ago you wanted north of a 6 percent return. Now you never see that anymore.’”
From the Daily Mail on New York. “A grand plan once spearheaded by Jared Kushner to rescue the biggest deal in his career by razing a Fifth Avenue skyscraper and building luxury apartments in its place is all but dead, the co-owner of the building said. The comments from Vornado Realty Trust CEO Steven Roth suggest that Kushner’s most ambitious purchase will continue to bleed money - tens of millions a year - as a deadline for repayment of the giant mortgage on the office building nears. Adding to the troubles, the luxury condo market has shifted recently, undermining a key assumption behind the raze-and-rebuild plan. There is a glut of luxury apartments in Manhattan now, prices are falling and they are taking longer to sell.”
From The Real Deal on Florida. “As Miami’s condo market lags, developers are working hard to sell their remaining inventories and looking long term when it comes to completing major projects like Miami Worldcenter. In 2010, ‘there was a lot of need and a lot of demand and we all thought it was going to last for a long time,’ said Edgardo Defortuna, president and CEO of Fortune International Group. The slowdown has sent developers to other foreign markets in search of buyers, like Turkey, Europe and China. Latin Americans still consider Miami a safe haven for investment, but ‘the perception today is the urgency is not that much anymore,’ Defortuna said.”
“Finding construction financing for Paramount, the luxury condo component of Worldcenter, was especially challenging. ‘There’s never a bad real estate cycle as long as you have time and no debt,’ joked Art Falcone, managing principal of Encore Capital Management.”
The Bend Bulletin in Oregon. ” In the past few months, Bend rental-property managers have gone from managing waiting lists to offering discounts in order to get signed leases. They attribute the slowdown to a surge of newly available apartments. ‘We’re starting to get really competitive,’ said Andee Jesse, owner of A Superior Property Management Company LLC, which manages 400 single-family houses and several multifamily properties. ‘We’re dropping prices, and we’re changing up the lease terms.’”
“That’s a big change from just six months ago, when vacancies were scarce, and rents were rising. From Jan. 1, 2016, through Oct. 4, Bend saw 695 new apartments completed, according to the city’s Community Development Department. A few properties on A Superior Property Management’s website advertise a ‘new lower price!!!’ Two of the price-reduced rentals are single-family houses, one in Redmond and the other in La Pine. Two others are in Bend: A one-bedroom, one-bathroom house off NW 14th Street is listed at $1,295 a month, while a four-bedroom, three-bathroom house in NorthWest Crossing is listed at $2,500 a month.”
“‘Right now it’s more of a renter’s market than it has been in a long time,’ Jesse said.”
From Bisnow on Texas. “Thousands of displaced homeowners in the aftermath of Hurricane Harvey resulted in a quick turnaround for the struggling multifamily sector. Houston posted more than 9,000 units of positive net absorption in Q3 alone, according to CoStar data. But multifamily investors and developers are worried the market’s rebound may disappear just as quickly. ‘We’ve seen an uptick in velocity. We were doing about two-three leases a week, now we’re looking at five-six, but we’re still giving away concessions,’ said Allied Orion Chief Investment Officer Ricardo Rivas.”
“Alliance Residential Managing Director Cyrus Bahrami, behind the redevelopment of the Heights Waterworks, is worried about supply reappearing. ‘There’s a lot of unknowns on both the income and the cost side. Harvey took 15,000 units off the market, what happens when they come back online in nine months?”
The Denver Channel in Colorado. “The cost of renting in Denver has dropped for the second month in a row according to the latest data from rental listing site ApartmentList. Lone Tree, which has the most expensive rents in the metro, also saw the biggest decreases last month with rents down 1.7 percent.”
From the Arizona Republic. “A larger share of renters are ousted from their apartments in the Phoenix area than in any other major U.S. metro area except for one. Only Memphis ranks higher in rental evictions, according to the national research firm Apartment List. ‘We estimate an eviction rate of 5.9 percent for the Phoenix metro,’ said Chris Salviati, housing economist for Apartment List. ‘We have found that evictions are most prevalent in metros that were hit hard by the foreclosure crisis and have high rates of poverty.’”
“Many studies, including this one from Apartment List, show evictions are the leading cause of homelessness. Rapidly rising rents in the Valley during the past few years has made it more difficult for many renters. Nationwide, one in five renters was unable to pay the rent in full for at least one of the past three months, according to the survey.”
From Bloomberg. “On the shores of California’s San Francisco Bay, sizzling job gains have slowed down since 2015 to something pretty … average. My Bloomberg View colleague Conor Sen noted this Silicon Valley slowdown last month. One reason for it is pretty clear: Metropolitan San Jose and San Francisco are the two most expensive housing markets in the country, with median home sales prices in the second quarter of, respectively, $1.2 million and $950,000, according to the National Association of Realtors.”
“So I was curious: What if we looked at all 10 of the large metropolitan areas that score worst on the NAR affordability index? These are, in reverse order of affordability, San Jose; San Francisco; Los Angeles; San Diego; Miami; Riverside, California; New York; Seattle; Portland, Oregon; and Denver 2 — let’s call them, collectively, Expensivia (-ia seems to be the most common ending for fictional-country names). Does employment growth there show the same pattern?”
“Yes, it does show the same pattern, just a little less dramatically. 3 And yes, I checked to make sure that this phenomenon isn’t being driven by San Jose and San Francisco — exclude them from Expensivia, and the chart barely changes.”
‘We estimate an eviction rate of 5.9 percent for the Phoenix metro’
Poof, there goes the profit.
‘Lone Tree, which has the most expensive rents in the metro, also saw the biggest decreases last month with rents down 1.7 percent’
This is exactly what we saw in NYC. The most expensive areas have had the biggest decreases.
Ben,
You have experience in this area.
At what vacancy or eviction rate does the average landlord not cash flow?
It depends on how much they paid, how much they borrowed.
the 2-4% rent decrease numbers probably DON’T include the 1st free month etc discounts
Or vacancies. If it doesn’t say effective rents, they are probably two-thirds off the drop in revenue, or more. Like that LA lux tower that’s half full with big incentives.
‘advertise a ‘new lower price!!!’ Two of the price-reduced rentals are single-family houses, one in Redmond and the other in La Pine. Two others are in Bend: A one-bedroom, one-bathroom house off NW 14th Street is listed at $1,295 a month, while a four-bedroom, three-bathroom house in NorthWest Crossing is listed at $2,500 a month’
Oh dear.
$40,000 + buying your own lot + utilities + taxes + etc.
And no running water!!!!
++++
This Three-Story Tiny House Fits In The Footprint Of A Parking Space
FastCompany.com | 10/23/2017 | Adele Peters
In Helsinki, like many cities, there isn’t enough housing to keep up with demand. Some people blame a lack of land to build new housing, but one design firm argues that there is enough land–if you know where to look. The firm’s new building is designed to fit in a single parking spot.
Casagrande had considered the idea of building in parking spaces for some time, but after working with a particular material on another project–cross-laminated timber, a type of very strong engineered wood–he realized that it would be possible to stack multiple stories on a small space. While constructing a regular apartment building, he used the material to stack modules of the material together, “kind of like big Legos,” he says.
The construction process is fast on site: The modules can be built in a factory, and the whole house can be installed in a parking lot overnight. “I would like to emphasize how easy it was,” Casagrande says. “It’s almost ridiculous. Usually, building a house is really a pain in the ass, and it takes so much effort . . . In this case, it just popped up.”
The first prototype doesn’t have space for a kitchen or running water, based on the reasoning that someone living in the middle of an urban neighborhood could get food elsewhere and shower at a gym (it does have a composting toilet). It runs on its own solar panels, and the wood material is self-insulating and warm in winter, so it doesn’t need to be hooked up to the grid. But the architects are now working on designs that can also be connected to water and work more like conventional housing.
The architects are already getting orders to produce the houses, which cost around $40,000 for three stories. “It’s like [the price of] your average car,” he says. Permits will be an obvious challenge for anyone who wants to use the homes legally, but Casagrande believes that cities will recognize the advantages of the design and eventually change codes.
I love this. This is so awesome to me. Obviously this wouldn’t be for everyone and personally, I wouldn’t care about running water. I actually do shower at the gym, which is what is suggested by the article. If this were available for purchase and it were within code where I lived, I would do this in a heartbeat.
There aren’t actually any building codes per se to consider, but there is the ABYC code as a guide. My boat has running water hot and cold, heat, air conditioning, full “kitchen”, a big refrigerator, microwave and oven (for pizza) and a real “bathroom”. A much higher standard of living at a small fraction of the cost.
I have some experience living without running water. It gets rather tedious. Always eating elsewhere is ridiculous.
I thought about this over a decade ago - getting a cheap sailboat and renting a slip at the harbor to evade greedy landlords as the housing bubble was in its early stages of bursting.
Your boat sounds pretty nice compared to what I was looking at - what type and size is yours?
It’s a 45 year old cabin cruiser. All aluminum. 32 ft without the swim platform.
That is a sweet setup. I love it! My sister graduated from the University of Hawaii. She lived in a boat docked for like 2 years off the dock because housing was ridiculous. Her setup reminds me a little bit of what you describe.
I lived this way for about a decade and saved enough money to buy a modest house cash and retire. I sold the dock last month. Best investment I ever made. I’ll spend the next 10 years cruising the Great Lakes and such and river ratting for 6 to 8 months a year. Then we’ll see.
Good things come to out-of-the-box thinkers. Props to you for figuring out a solution that works. I’m a bit envious of your setup.
I’m saving up to buy a Tesla model S and I’m going to figure out camper mode and sleep in the back and tour the country and run every single noteworthy race in this country. Not near as cool as cruising the Great Lakes in a boat, but it is what works for me!
One of my college buddies did the tour the country adventure by motorcycle years back before he got serious about working. He slept in a tent, usually on the highway divide.
Depending on the sedan, one way to do “camper mode” is to remove the back seats & put in a plywood floor with hatches for underfloor access. I did this in a 2012 Elantra & found I can fit (just barely) and sleep fully flat on my back, with just inches to spare. Figure out a way to install screens in the car windows with no-see-um mesh. Problem is that your body heat tends to overheat the interior in summertime. An all-electric should be easy to modify to provide better ventilation. Stow a tent for more luxurious accommodation.
That is the appeal of an all-electric. The AC and ventilation means its climate controlled through the entire night, and it barely uses any battery. My dad does this all the time with his Tesla. He can obviously afford to stay at a hotel, but he just prefers the convenience of being able to park anywhere and sleep. The main advantage that I see of this setup is that it’s small and doesn’t draw the same attention as a massive 5th wheel or a huge RV.
“That is the appeal of an all-electric. The AC and ventilation means its climate controlled through the entire night, and it barely uses any battery. My dad does this all the time with his Tesla. He can obviously afford to stay at a hotel, but he just prefers the convenience of being able to park anywhere and sleep.”
LMFAO. BS. You’d have to be some sort of tiny to be comfortable sleeping in that thing. What a joke.
Normal-sized people can fit just fine. It works really well, even better in the model X with the foldable seats. You don’t have to believe me, but there is a substantial underground Tesla following that does this. There is apparently enough of a demand for a company that does this:
https://dreamcase.eu/
The Norwegian guy who made it kind of famous:
https://www.youtube.com/watch?v=C694INTgmiY
LMFAO. BS. You’d have to be some sort of tiny to be comfortable sleeping in that thing. What a joke.
My Elantra just works on camping trips. I’m 6′, 230 lb. Laugh all you want.
No laughing matter: remember what happened to Michael Jordan’s father. Is the Tesla bulletproof? Will it resist a Molotov cocktail?
So what are the advantages of this compared to simply building a tower of efficiency apartments of a block of tiny rowhouses?
I think the main thing here is questioning what is necessary for housing. The idea of building in a parking space is sort of novel for urban areas.
This quote from the article struck me as absolutely true:
“The city is not designed because of humans–it’s designed because of cars.”
If there is one thing I detest more than overpriced housing, it’s probably too many vehicles. I run about 100 miles per week and I vary my route so I see everywhere in about 4 cities. Everywhere I run I see so many ruined neighborhoods with just cars strewn about. I see tacky McMansions with like 6 cars. I think it is absolutely absurd. Cars are everywhere. They are a blight on the city. I’m not sure if this prototype is the answer, but it’s part of what I think is important. Americans spend way too much time of their lives paying for overpriced houses. They also spend way too much of their lives stuck in a car, commuting to and fro. When we moved to where we live now, I made certain that I could walk to where I work. That one decision has had a huge impact on quality of life.
Yeah, but you’re taking a myopic view of things. Most people don’t run, and most people lover their cars.
It still doesn’t answer the question about what this would accomplish that a microapartment can’t. You can still get rid of your car while living in a microapartment. You can choose not to use the shower in a microapartment. You fit many more microapartments in that same parking lot, in a smaller envelope relative to occupants. I guess the only advantage is more windows and no shared walls?
Questioning what is necessary for housing
That’s been questioned since man discovered that caves offer shelter from the wind and rain. The modern answer is that 1-2 people can live comfortably in ~500 sq ft. That’s what you need to provide a 5×8 bath, a kitchenette, a small living space, and a separate sleeping chamber.
Seems to be a trend…
++++++
It Gets Serious: Biggest US Cities Where Rents Are Plunging
Wolf Richter • Nov 1, 2017
In San Francisco, the most expensive major rental market in the US, the median asking rent for a one-bedroom apartment inched up 1.2% year-over-year to $3,420 but is down 6.8% from the peak in October 2015. For a two-bedroom, the median asking rent dropped 5.9% year-over-year to $4,500 and is down 10% from the peak.
And these asking rents do not consider incentives, such as “one month free” or “two months free,” which effectively slash the rent for the first year by another 8% or 17%. The data is based on “over one million active listings,” Zumper explains in its methodology. Importantly, the data also includes asking rents from new construction.
In New York City, the median asking rent for a one-bedroom dropped 4.3% year-over-year to $2,870. For two-bedrooms, it dropped 10.7% to $3,100. Measured from the peak in March 2016, asking rents – not including incentives – have plunged respectively 15% and 22%.
In Chicago, the median asking rent for a one-bedroom apartment dropped 15.9% year-over-year to $1,530, and 15.6% to $2,110 for a two-bedroom. Whatever the reasons – from Chicago’s declining population to its fiscal woes – median asking rents have plunged by 25% and 20% respectively from their peaks in late 2015.
Even in Seattle, asking rents are coming under serious pressure, possibly due to new construction units piling on the market as years of crane-counting are producing results. The median asking rent for one-bedroom apartments dropped 1.1% year-over-year and is down 7.7% from the peak in August. Part of the sharp decline since the summer may be due to seasonal patterns. Rents for two-bedrooms still rose 3.7% year-over-year but are down 5.7% from their peak in April!
In San Jose, rents are coming under pressure compared to their peak in April 2016, with the median two-bedroom asking rent down 10% from the peak.
In Oakland – once red-hot as it attracted San Francisco’s housing refugees – one-bedroom and two-bedroom rents have plunged 19% and 12% respectively from their peaks.
In Honolulu, rents plunged 19% and 24% from their peak, rivaling Chicago’s rental market.
Falling prices in Seattle, Manhattan, Honolulu, Chicago, San Jose. All very good news for the economy.
Remember…. Nothing accelerates the economy, creates jobs and raises the standard of living like falling prices to dramatically lower and more affordable levels. Nothing.
I’m shocked, shocked, that a real estate company would hide Sales data that might not support the narrative.
It’s quite surprising (but not really) that the Census bureau gets its housing data from the NAR, which exists solely to advance the interests of its members. One of the ways they do that is to create a narrative around housing, and if data will harm that narrative, it’s hardly a stretch to think they’ll fudge it, in order to support the narrative.
States and local governments keep a very close tab on real estate data for taxation and title purposes. I think it would be quite a minor step to improve the data vastly if the Census got its data from the source, instead from a real estate advocacy organization.
Seattle, WA 98117 Housing Prices Crater 9% YOY
https://www.zillow.com/seattle-wa-98177/home-values/
*Select price on dropdown menu under first chart
*Select price on dropdown menu under first chart
When you say “select price”, do you mean the “Median List Price” or the “Median Sale Price”? The latter is greyed out for me.
“When you say “select price”, do you mean the “Median List Price” or the “Median Sale Price”? The latter is greyed out for me.”
Exactly. Zillow hides the Median Sale Price now, which is the most important metric. Zillow = REIC shill. “Shillow.”
Hello my good friend.
Coos Bay, OR Housing Prices Crater 19% YOY
https://www.movoto.com/coos-bay-or/market-trends/
Nobody here is your good friend, HA.
And you’re my best friend here.
Saint Augustine, FL Housing Prices Crater 5% YOY
https://www.movoto.com/saint-augustine-fl/market-trends/
Redmond, with due respect: the prudent man speaks only for himself.
jane, some people project.
When you say “select price”, do you mean the “Median List Price” or the “Median Sale Price”? The latter is greyed out for me.
You must be kidding asking this after the millions of times I’ve posted about it:
https://snag.gy/pOUw3S.jpg
Right. So why even link to Zillow, when in your words it was “the only legitimate piece of date (sic)” on their site?
Because I like to.
‘If you talk to anybody who’s building [downtown], years ago you wanted north of a 6 percent return. Now you never see that anymore.’”
—————————-
Seems like a lot of time, money and effort to get a 6 percent return. Without looking I bet any Vanguard Admiral Fund has over a 6 percent ROI.
Maybe Jingle can comment on how to make a million on just 1% ROI.
Invest $250,000 in 2010, collect $40,000/ year cash flow (including $15,000/year principal reduction). 7 years later, the equity is $1,200,000 (or about $900,000 after tax).
I do think this was an extraordinary experience, atypical, as I was able to buy at the bottom because I saved ferociously for a decade and had some strength going into the downturn. The HBB helped me stay patient, and even then I bought my first house too early!
It has been the best experience of my life financially and that is why I share it here. Many people talk down investing in real estate here, and it is too bad.
Extraordinary indeed. So the purchase price of these properties was how many million, 2,3,4?
We all might learn something here so I hope you will Illuminate us. If it was $2 million you wagered, gaining $15,000 a year in net returns is very interesting. I get it that you had to manage these properties closely as a landlord and have to give that up to retire and move. Making a million at $15,000/yr is absolutely amazing.
I cannot illuminate someone who cannot add. The cash flow was $25,000/year plus I retired about $15,000 in loan principal. That is $40,000/year. The equity invested was $250.000.
So how much was the borrowed portion of the purchase? If you were paying down $15,000 it might have been only one million?
His numbers change with his mood. He’s a liar.
I cannot illuminate someone who cannot add. The cash flow was $25,000/year plus I retired about $15,000 in loan principal. That is $40,000/year. The equity invested was $250.000.
But you’re not telling us the most important number: how much debt you took on, the total actual purchase price, not just how much of your own money you put in.
The total price is what matters in figuring your returns, as has been pointed out repeatedly.
Jingle-
I’m semi local to you and I absolutely believe that your story is legit. I’ve watched the echo bubble form in the Sac area, and I have no doubt that your numbers are plausible, esp with properties in the better areas in town and around. If other people don’t want to believe it they’re entitled to their beliefs.
It’s not hard to believe. $250,000 actual cash, $1,000,000 borrowed money, $25,000 to interest and taxes and $15,000 squeaking toward paying off the loan.
The math doesn’t add up well and the properties should be worth less than when he bought them. He supposes he’s made a million. If so, it is ALL Bubble. Ironically, Jingle doesn’t think there is a bubble.
Maybe you can’t borrow cash to buy stocks the way you can to build housing. I imagine there are lots of program and tax breaks to take advantage of.
Actually, you lose $1 of potential depreciation write off for every $2 of earnings over $100,000. So it is important to keep you income below that level ( and under $95k if you have a 401(k) and still want to contribute to a Roth IRA)
So here is the catch: when you sell, all that depreciation (mandatory under IRS rules) is now recaptured at 25%!
I do “practice” tax returns with Turbo Tax software 3 times/year just to see what works and what doesn’t. I use multiple “what if” scenarios, because the tax code is so complex and convoluted, reading it makes no sense. Crunching the numbers is the best way to plan.
My real point is there really are no great tax shelters at my income level. You have to be at Trump’s or Clinton’s level and do scam charity and foundation work…..
So here is the catch: when you sell, all that depreciation (mandatory under IRS rules) is now recaptured at 25%! ”
Can’t you move back into the rental and claim it as primary residence ? Then no depreciation ?
You should look into making a 469c7 election to avoid that phase out. If you self manage the properties, you’d likely qualify as an re professional.
Luxe rents inside DC city limits may be dropping, but has anyone seen any drops in for 1960s-1980s era grade B+ complexes in the leafy suburbs?
By the way, something I *never* see mentioned is the $$$ for parking. Even older complexes with open surface lots are charging for parking now (they didn’t in the past). At best, LLs will offer one space free and ~$100 for each additional space. For LLs, it’s free money. AND it’s a good way to keep out the illegals and their 4-5 vehicles per household. (2 of which are always white vans.)
is your county spending like mad? It’s like housing went up 5%+ vs the 1-2% reality
Commercial down too boot
BOOTs
The leafy suburb counties are spending like mad on parks and rec, expensive environmental projects like stormwater management, and of course putting every immigrant who looks under the age of 40 through public schools.
The guest parking spots in my exurb townhouse neighborhood are always full, and there are more and more white vans.
And I bet there are plenty more white vans parked on the street, beyond the reach of the LLs to charge for. And that’s for Grade B with surface lots, where there’s land. Many of these luxe complexes downtown have to put parking garages underneath the units. Other complexes have adopted the trick of building units along the railroad tracks, especially within a mile of a Metro subway station. They build the units to face the road, and then behind, right along the tracks, they build multistory skinny parking garage next to the tracks to buffer sound. You can almost throw a rock into the garage from the Metro platform.
Parking garages are much more expensive than surface lots. One Grade B hi-rise I lived in charged $90/month for the garage, and that was in 2001. This new stuff has to be exhorbitant.
“$90/month for the garage…”
Wow. That’s what the village/county/state charge me to park a whole house!
I got a call from a recruiter last week about a job in Mountain View. Sounded great, high pay too. But for Mountain View it was barely middle class standard of living. Add in the
taxes and it’s ridiculous. I told him that and from his response back I got the feeling he hears this all day long.
It’s not what you make - it’s what you keep.
It’s funny. Companies want to hire the smartest people to do the job but just dumb enough that they can’t figure out basic financials…
Funny that these hi-tech companies simply don’t fan out into the sticks or into other states. We could go back to the days of the “company town,” only this time heavily educated and more diverse. Crunch time for the local populations: they can choose to get educated and share in the jobs, or foam the latté milk and complain about being gentrified.
They tend to locate near the money (the VCs.) Also, they can’t attract talent to the sticks.
“can’t attract talent to the sticks”
My work experience betrays this as not true. The trouble with one high technology company in a small town is that if you change jobs, you’re moving. The benefit is seriously lower cost of living and a stress free commute.
“Also, they can’t attract talent to the sticks.”
Nonsense.
Here in Salt Lake City we have tons of tech company start-ups, and quite a few that are relocating from higher priced areas or putting down their 2nd site. Unfortunately, this is also why real estate has appreciated so quickly here:
https://www.bloomberg.com/news/articles/2017-10-26/real-estate-investors-say-goodbye-to-houston-hello-to-salt-lake
I think, they can’t attract YOUNG talent to the sticks. Those iPhone-kissing Millenials are going to want to live in a vibrant downtown (or so they’ve been trained). But that may change as the nesting instinct kicks in. Then Boise, or Tuscon, or even Cleveland or Cedar Rapids or Harrisburg or Jacksonville or Richmond, will start to look good.
I think, they can’t attract YOUNG talent to the sticks.
Maybe so. I’m noticing that the current Silicon Valley business model is totally dependent on youngsters and H1Bs. Nobody else wants to spend everything they make on housing they don’t actually want to be in. What I used to think was age discrimination may actually partly be self selection out of the bay area.
They do fan out. Oracle, Apple, Ebay, PayPal, BookFace, Google, Amazon have offices and some significant dev shops in Austin.
On the merits of working the Bay Area, I interviewed with Google a few years back. Although I did live and work there in the first .com run-up, I could not see moving back due to taxes, cost of living, traffic, etc. The thinking is that you grind it out on salary for a year until the stock grants kick in before you really get the opportunity to pay for those CaLPERs pensions.
Austin is hardly “fanning out”.
And Austin isn’t anything close to inexpensive.
Relatively it is. I know this because I just left Austin and sold my 2450 sq ft house on an acre for 325k. That commute was 25 minutes to the PayPal office.
You can pay over 400 a sq ft in some areas but that same house is going to cost over 700k on the lowest end anywhere within 60 minutes of where you might want to work in the Bay Area.
Tech companies do fan out of the Bay Area. But they fan out to places like Seattle or New York. Out of the frying pan and into the fire. What they need to do is go to places like Santa Fe, Boise, Tucson. These are cities where people would gladly move to. And it would be a win-win for everyone. Instead of paying $150K in San Jose, a company could pay $110K in Tucson which is worth more than $150K in San Jose. Employees would be better off relatively speaking and the employers would save money. And yet, it’s practically unheard of to do such a thing. It’s a weird thing.
provide riches.
If you’re 25, sure what the hell, go live with a couple of roommates and roll the dice on options paying out. Worst that happens is you spend a couple of years in your 20s in California working for leading edge companies.
But once you reach into real adulthood, ie married, couple of kids, spending $4K a month on a crappy 2 bedroom isn’t so appealing. Options or no options.
Why not Susanville, California?
Keep the equity locusts on California.
What is not needed is for Boise o Tucson to become next Austin.
Californians are already ruining the economics of several cities nationwide. Must they continue?
I got a call from a recruiter last week about a job in Mountain View. Sounded great, high pay too. But for Mountain View it was barely middle class standard of living. Add in the
taxes and it’s ridiculous. I told him that and from his response back I got the feeling he hears this all day long.
This is my world right now. Now that I’ve established the San Jose income I’m looking at options to let me leave the Bay Area but keep the salary. So far boss isn’t interested in supporting that internally. Bosses at other companies are more willing to discuss.
Right now Folsom is looking like the best compromise. But there are other conversations scheduled…
Please be careful, Carl. A San Jose income is never “established.” Sure, maybe you can go to another employer who will let you work at home, but for how long? All you need is one change in upper management and w@h could go *poof* very quickly.
Even worse, the IT world has discovered the gig economy. And when VCs and stockholders eventually start demanding that companies show some damn profit already, shifting employees to gig economy is the low-hanging fruit for cost-cutting.
Please be careful, Carl. A San Jose income is never “established.”
Ok, I probably should have worded differently. I just meant that now I have the salary history that allows me to ask for more than I could back when my whole career was based in Colorado.
Nobody is letting me work from home. The Folsom area has standard on-site jobs in my field (storage testing). And I’m happy to go back to contract at any time if people are willing to pay my rate. But so far everybody wants me for old school full time work.
Folsom real estate ain’t really that cheap either. Maybe compared to the bay area it’s cheaper, but not really cheap.
“Folsom real estate ain’t really that cheap either.”
True, but it is good living compared to ghetto Sacramento.
Don’t fear the ghetto, it’s a win on affordability. Pick a good street, they’re out there. Can’t beat a 250k mort…
I’m not so sure paying $250k over 30 years for a $100k item is such a good idea.
Folsom real estate ain’t really that cheap either. Maybe compared to the bay area it’s cheaper, but not really cheap.
For the houses I’m looking at it’s 1/3 the cost. Of course everything else costs the same. Unless you “need” private schools in the bay area but find the Folsom public schools “good enough”. Then you have another big savings.
“Harvey took 15,000 units off the market, what happens when they come back online in nine months?”
I’m counting on plunging rents!
Arlington, VA 22205 Housing Prices Crater 5% YOY
https://www.zillow.com/arlington-va-22205/home-values/
*Select price on dropdown menu under first chart
Well, they did help build all the crap stucco McMansions…
And no - we don’t need criminal illegal invaders.
+++++
Mexicans dismayed by rise of Trump’s border wall
Reuters | November 1, 2017 | Lizbeth Diaz
TIJUANA, Mexico - U.S. President Donald Trump’s wall is far from built but towering concrete and steel prototypes in San Diego are making Mexicans living just south of the border feel his campaign pledge has turned them into “pariahs.”
“People are still going to cross out of necessity even though they view us as pariahs over there,” said student Paola Gomez, 21, standing outside her home as the noise of workers putting up the sections drifted across the border.
“That’s how it looks with things like (the wall): they view us as pariahs. The worst thing is, it’s being built by Latinos themselves.”
Tijuana locals said they heard Spanish-speaking workers helping to build the prototypes, driving home the irony that Latino labor was being used to deter immigration from Latin America.
“They need Mexicans and other undocumented people. They save lots of money with us,” said Manuela Altamirano, 42, who watched from her home as the strips of wall went up. “Trump constantly does things to humiliate the Mexican people … These walls are like monsters he created, like a border Frankenstein.”
Manuela, the legal border crossing stations will still be open.
“They need Mexicans and other undocumented people. They save lots of money with us,” said Manuela Altamirano, 42, who watched from her home as the strips of wall went up.
Most male illegals work in construction. If “we” saved lots of money with them, the price of housing would have been going down all these decades.
I don’t know who is saving money by virtue of their presence, but it sure isn’t consumers.
Food. You are saving money if you are a consumer that eats.
Immigrant labor has contributed to cheaper produce–yes, some of that labor is legal, much is not.
http://www.latimes.com/projects/la-fi-farms-immigration/
I’m not sure if their increase in wages is real or nominal…a 50% increase over 20 years just about keeps up with inflation…but if that is a REAL increase (as opposed to nominal), how high do wages get to need to attract American workers to the fields?
https://www.washingtonpost.com/news/wonk/wp/2017/02/17/restaurants-imagined-a-day-without-immigrants-in-one-city-last-year-it-actually-happened/?utm_term=.4e595301f84b
$16/hr isn’t a nominal or real increase in wages.
Do you really believe wages will triple or quadruple to meet grossly inflated asking prices of resale housing?
Of course they won’t.
Housing prices will continue falling to dramatically lower and more affordable levels meeting wages.
I’m not sure if their increase in wages is real or nominal…a 50% increase over 20 years just about keeps up with inflation…but if that is a REAL increase (as opposed to nominal), how high do wages get to need to attract American workers to the fields?
No need to raise wages - simply get rid of all social welfare programs.
Food. You are saving money if you are a consumer that eats.
We are not saving money with immigrant labor in the fields any more than we are saving money with immigrant labor in housing construction.
It’s a narrative that we have been fed.
The wall is being built for rich expat Muricans. Duh.
da bear
“driving home the irony that Latino labor was being used to deter immigration from Latin America.”
No, legal workers are being *paid* to deter illegal immigrants from the easiest and weakest crossing point. Pointing out the heritage of the workers sounds rather r*ci*t to me.
(that said, I hope those workers are legal)
Good! I look forward to hearing similar stories. Hopefully frequently.
We have enough criminals in the USA as it is. We do not need more.
“The worst thing is, it’s being built by Latinos themselves.”
Not hardly. In fact, it’d a wonderful thing. It means that there are Latinos out there who expect others - even those of the same or similar skin color (OMG!) to respect the law.
“That’s how it looks with things like (the wall): they view us as pariahs. The worst thing is, it’s being built by Latinos themselves.”
Notice how she made it a race issue. This is a strawman argument. It has nothing to do with race. When I talk about illegal immigration, I talk about Mexicans, not “Latinos,” just as I would talk about “Haitians” if they were invading, or “Syrians” if they were pouring in the border, or “Canadians” if there happened to be on our northern border.
She fell for the race-baiting schtick that has been promulgated by the media, Demorats, and RINOs. They’ve resorted to lies and character assassination to try to achieve their selfish goals. Illegal immigration is about cheap labor for the wealthy, and votes for entrenched politicians.
Democrats will have no idea why DJT will win again in 2020.
Democrats still scratching their heads…
And based on post-election revelations and performance, it’s Hillary’s voters who should be feeling buyers’ remorse!
++++
Donald J. Trump And The Slow Arrival Of Buyers’ Remorse
The Huffington Post | November 1, 2017 | David Coates and Lauren Tarde
You might be forgiven for thinking ― given all that has happened since Donald J. Trump defeated Hillary Clinton for the U.S. presidency in November 2016 ― that buyers’ remorse would be rampant in contemporary America. But it is not. It is true that Donald J. Trump started his presidency capturing only a minority of the popular vote; and that he is significantly less popular in polls taken today than he was on election day. But very substantial pockets of support remain. They remain among members of his electoral base. They remain among life-long Republicans, not all of whom greeted his emergence as their presidential candidate in 2016 with any great enthusiasm; and they remain – as far as one can tell – in the deepest recesses of the Alt-Right. In those circles at least, there is much talk of seven years of Donald J. Trump in the White House; and for those of us who do not care for that prospect, the immediate political imperative is clear. We need to understand who voted for the Trump-Pence ticket in 2016, why they did so, and whether any or all of them can be dissuaded from doing so again in 2020.
What a Tarde.
DJT wont just win, he’ll curb stomp any opponent. Dems strategy of letting in whacked out immigrants for their votes when all too often they kill off other dem voters has to be red pilling many many people. Trump says he’s going to throw the latest nut in gitmo, thereby saving the taxpayers millions in (((attorney))) fees and ending the visa lottery and chain migration adds up to a butt load of winning in normal peoples minds - the return to common sense which we havent had in ~25 years.
Still not tired of winning yet. Oh, and my prediction for the astros winning the series still stands. Written like a script - because it was.
They did!
So the Texans are going to win the Souper Bowl too?
Dont know. I dont follow sports at all honestly, dont even consider the teams ability but years ago realized in the big games they are typically scripted with the winner pre-ordained. In this case, due to Houston getting whacked by all the storms it was an easy prediction to make - and I first made it when they were down to the yankees - would have made it earlier but didnt know who was even in the playoffs - heard it on the radio and told a friend, plus posted here).
There are other factors to consider - spreads, if the team’s owner is looking to have the city pay for a stadium, etc. But ultimately its nothing more than a contrived story.
I’m skeptical that DJT will win again. Policy aside, and no matter what the electoral college says, DJT won in a squeaker, on less than 100K Rust Belt votes. And only then because disaffected Sanders voters stayed home or voted for Stein. If Clinton could woo those Sanders supporters, she could win without flipping a single Trump voter.
‘DJT won in a squeaker’
http://kenrite.co/us-map-counties-trump-won-and-hillary-won.html#
Now that chart is hilarious!
Counties don’t matter. Popular vote doesn’t matter. States matter. And at the level of states, it was a squeaker.
No it wasn’t. I called it here around 10:30 Arizona time. None of this staying up til 3AM or counting hanging chads for days. She got schlonged.
“She got schlonged.”
And that’s the only thing that matters.
• 30 states for Trump, 20 for Hillary, plus DC.
• 306 to 232 electoral votes for Trump.
http://www.cnn.com/election/results/president
She took the popular vote, but running up the score outside NY and LA isn’t the way to win a presidential contest. The Founders intended it that way.
Granted, this isn’t a Reagan-esque electoral landslide, but it’s IMO a solid win. Is it maintainable? Only if DJT delivers some improvements for the voters. Spinning a glittering web of BS doesn’t mean much if you’ve got no job and no pride, or if you’re sinking deeper in debt while seeing Lifestyles Of The Rich and Famous just out of reach.
November 8, 2016
Da Meddel Fanger!
Posted By: Ben Jones @ 10:17 pm
http://thehousingbubbleblog.com/?p=9871
Comment by Ben Jones
2016-11-08 22:47:58
‘Meanwhile, At Hillary Clinton’s Headquarters: Tragedy’
“I feel nauseous,” one top campaign official for Clinton told People before slipping behind a black curtain beyond which reporters were barred.’
Does that sound like a squeaker?
Comment by Ben Jones
2016-11-09 13:35:35
‘A stunned Chris Matthews struggled to comprehend Hillary Clinton’s loss and the victory of Donald Trump on election night. On MSNBC, Matthews sputtered, “[Clinton] won every debate by all standards. Every debate…. She had the best ad campaign, the best ground game.”
‘He whined, “This is a shot against meritocracy, I think. Because she merited everything and the normal way you standardize these things, she did what you’re supposed to do to win and Trump came in around the corner.”
‘Reporter Kasie Hunt mourned, “I don’t think we should overlook the human element here either…. I mean it’s a devastating end.”
‘A sullen James Carville compared Clinton’s loss to the Civil War, saying, “There will be a Ken Burns film on this.”
“[Clinton] won every debate by all standards. Every debate…. She had the best ad campaign, the best ground game.”
But she was also as corrupt as the day is long…and everyone knew it.
The best comment I heard on election night was about how when Trump traveled and spoke at rallies, he was precisely the same everywhere. He might have changed a red MAGA hat for a camo MAGA hat, but he still wore a suit, and he spoke the exact same way.
Clinton on the other hand would change how she spoke and presented herself (accent, mannerisms, etc.).
Trump came off as authentic…Clinton not. People aren’t stupid. They can spot someone who is disingenuous.
I’ll modify to say that if it was a squeaker outside of Pennsylvania. In the Rust Belt, Trump was able to take a lot of electoral votes just from a narrow victory in the popular vote.
But the main point is that Hillary lost because many of her base stayed home, figuring that their vote wasn’t “needed.” She herself projected that image when she didn’t bother to campaign in the Rust Belt states. If Hillary runs again in 2020, it will be different. To those stay-at-homes, their horror of Trump will override their horror of Clinton. It won’t take that many of those votes to flip the Rust Belt back to the Dems.
[also note that by 2020, many of the anchor babies will be over 18 and able to vote. They are not going to vote for Trump.]
‘many of her base stayed home’
She never had a base. It was all a construct, completely based in fiction. Someone called me the day after the election asking did this really happen? I responded that Shriek was the least electable person to ever get a major party nomination. The Hill quote is right: this bantering about “what could have been” is simply denial about what a flawed candidate she was. Not to mention lazy.
Trump could have ran against Mother Teresa and would have one anyways. There’s a silent majority at work while the moonbats screech and donkeys bray.
Ol’ Hillary. The modern embodiment of “The Picture of Dorian Gray”. (I know it should be underlined. Proudly, I is a Deplorable and don’t talk HTML.)
I’m skeptical that DJT will win again.
It’s all about who he’s running against…just like last time. My advice to the Ds is that it’s not enough to simply run someone who is technically better at the job. They really need to run someone that hasn’t been hated by millions (and who can’t resist stoking that hate) for decades. They need a Jim Webb type that can connect with the average person better than DJT. Or someone that walks Warren’s talk and actually wants to (and will) take on Wall Street and the Fed.
“We need to understand who voted for the Trump-Pence ticket in 2016, why they did so …”
Bahahahaha … this is something they will NEVER understand.
The stupidity … it burns.
“Right around the time of the convention, the leaked emails revealed Hillary’s campaign was grabbing money from the state parties for its own purposes, leaving the states with very little to support down-ballot races. A Politico story published on May 2, 2016, described the big fund-raising vehicle she had launched through the states the summer before, quoting a vow she had made to rebuild “the party from the ground up … when our state parties are strong, we win. That’s what will happen.”
“Yet the states kept less than half of 1 percent of the $82 million they had amassed from the extravagant fund-raisers Hillary’s campaign was holding, just as Gary had described to me when he and I talked in August. When the Politico story described this arrangement as “essentially … money laundering” for the Clinton campaign, Hillary’s people were outraged at being accused of doing something shady. Bernie’s people were angry for their own reasons, saying this was part of a calculated strategy to throw the nomination to Hillary.”
“I wanted to believe Hillary, who made campaign finance reform part of her platform, but I had made this pledge to Bernie and did not want to disappoint him. I kept asking the party lawyers and the DNC staff to show me the agreements that the party had made for sharing the money they raised, but there was a lot of shuffling of feet and looking the other way.”
https://www.politico.com/magazine/story/2017/11/02/clinton-brazile-hacks-2016-215774
‘the leaked emails revealed Hillary’s campaign was grabbing money from the state parties for its own purposes’
Wasn’t it just criminal that we found out stuff like this and tons of other things? Those leaks were the best thing that could have happened, yet the MSM still acts like it “stole” the election from this crook.
And if I remember correctly, a lot of the money that was ultimately grabbed for HRC came from the Hollywood Elites.
I love the fact that they won’t be able to present themselves as somehow morally superior to everyone else anymore.
A vile den of scumbags, protected from within.
IIRC using three letters to designate a politician is reserved for presidents.
There is a massive effort on the part of the media and the Demorats to cover up anything and everything. When something accidentally pops up it’s “Look, Trump and Russia!” while they furiously work to hide whatever it is.
It’s not just the Democrats. What we are witnessing is the establishment (there can only be one) doing everything it can to nullify the election. All the stuff we learned in school and life about what our government is and how it works was wrong. This deep state or whatever you want to call it is real and powerful in ways never exposed before. All these people fighting the President should wake up and see that the swamp is not on their side. Look at what they did to Sanders. Do they think that if Trump is run off they’ll revert to some semblance of democracy?
It’s worth remembering that at one point or another in the last election both parties announced that they would chose the candidate. This is basically a rouge cabal desperate to hold onto the trillions that flow through DC every year. For the future of the nation and every citizen in it, we should do everything we can to see that they fail.
^
Oh, I agree. I should have included RINOs and all established political hacks. This isn’t just in our country, either. It’s global as you have highlighted. This is Bilderberg Club shit.
I find it humorous, too, that the entrenched politicians are desperately trying to spin things as if the interests of the people are what they have in mind when nothing could be further from the truth. The people aren’t buying it anymore, and realize “hey, my life has gotten really bad over the past few decades.” Nothing a politician can say at this point is going to change that fact. We need MORE Donald Trumps!
Re: Ben’s reference to rouge cabal - I had to wiki it up.
“Rouge admins are a cabal of administrators, governed by five pillars of evil and the Five Pillars of Untruth, who stand in the way of Wikipedia’s true purpose, which is to disseminate new and controversial theories, publicize hitherto suppressed views about establishment figures, document the stories which the news media refuse to touch, suppress small businesspeople from establishing ginger monopolies as the first step to attaining secular galaxial government, and bring to public attention the “Holy Grail” which the said groups refuse to endorse.”
Apropos. Right on the (cough, cough) money.
“We need to understand who voted for the Trump-Pence ticket in 2016, why they did so
Trump voters TRIED to tell Hillary voters why they voted for Trump. The conversation went like this:
Trump voter: I don’t like illegal immi–
WHO’S GOING TO MOW YOUR LAWN???
R*C**t!!!
XENOPHOBE!!!
NAAAAAAA***III!!
DEPLORABLE!!!
SEXIST!!! DON’T YOU WANT TO VOTE FOR THE FIRST WOMAN PRESIDENT!!?!
Hillary voter:
Trump voter: Actually I mow my own –
Hillary voter:
Trump voter: I don’t want my IT job being taken by someone from Indi–
Hillary voter:
Trump voter: I also want e-veri–
Hillary voter:
Trump voter: And what about the jobs in Chi–
Hillary voter:
Trump voter: And Hillary has been in the news 20 years now and she always seems to —
Hillary voter:
If they don’t understand by now, it’s on them.
I’m starting a list
Up have to be illegal or divorced w a tax lien.
2. Accept cash at a huge discount
Sweet
Are you drunk posting? This makes no sense whatsoever.
Nah, he’s kinda sensible, but you have to fill in the grammar yourself, accounting for autocorrect. Not sure why he thinks I’m divorced
http://thehill.com/homenews/campaign/358538-brazile-revelation-tears-at-democratic-scab
“The problem is, some Hillary people still can’t accept the reality that she was a flawed candidate, so they’re trying to blame it on anybody else just like she did in her book,” Bill Press, a Sanders surrogate and radio talk show host, said in an email to The Hill.’
Shriek was never going to be elected. It was no squeaker.
What’s up with Florida democrats recently?
++++++
Democrat Baez to quit Florida House, plead guilty to perjury
Politico | 10/31/17 | Marc Caputo
MIAMI — Democratic State Rep. Daisy Baez is expected to resign her Florida House seat Wednesday and agree to plead guilty to a perjury charges in a criminal case over whether she lawfully lived in her Coral Gables-area district, according to her colleagues and a draft plea agreement obtained by POLITICO Florida.
++++
Florida Senate Democratic leader quits after admitting affair with lobbyist
SunSentinel | 10/27/17
The incoming leader of the Senate Democrats resigned Friday after revealing he had an affair with a lobbyist during the 2017 session.
West was hired by Broward County in July as a lobbyist and legislative coordinator.
.
State legislators and party officials, of both parties, alternate their follies. A few years ago the former chairman of the state GOP was in jail. If you look at what state has more elected officials in prison, it’s not even close. We win by a wide margin.
My local paper had an interesting piece recently; legislators appear to be actively spying on one another.
“legislators appear to be actively spying on one another.”
I saw that headline and didn’t read the story, thanks for clarifying, I thought they were objecting to being spied on by the CIA or FBI.
That’s great these tards are getting a little of their own back. They don’t seem to mind when it happens to us.
Eventually - Economics and fundamentals will win.
Coming soon to other parts of the economy.
++++
Papa John: NFL to Blame for Sinking Pizza Profits
New York Post | November 1, 2017 | Michael Blaustein
Better Ingredients. Better Pizza. More NFL Anthem Protests. Less Sales. That was the message Papa John’s CEO John Schnatter sent on Wednesday.
“The NFL has hurt us,” Schnatter said during a conference call, according to ESPN. “We are disappointed the NFL and its leadership did not resolve this.”
The CEO, who famously stars in the company’s commercials alongside NFL legends like Peyton Manning, also said he thought the national anthem issues had been “nipped in the bud” last season
Lol, I’m sure it has nothing to do with the fact that their pizzas are hurl-worthy. IMO, anyway.
Excellent (and long) article
+++++
The Biggest Ponzi In Human History
By Raúl Ilargi Meijer - The Automatic Earth - November 1, 2017
Here’s the story in a nutshell: Ultra low interest rates mark a shift away from people’s wealth residing in their savings and pension plans, and into to so-called wealth residing in their homes, which are bought with ever growing levels of debt. When interest rates rise, they will lose that so-called wealth.
It is grand theft auto on an unparalleled scale, and it’s a piece of genius, because while people are getting robbed in plain daylight, they actually think they’re winning. But as I wrote back in March of this year, home sales, and bubbles, are the only thing that keeps our economies humming.
What we have invented to keep big banks afloat for a while longer is ultra low interest rates, NIRP, ZIRP etc. They create the illusion of not only growth, but also of wealth. They make people think a home they couldn’t have dreamt of buying not long ago now fits in their ‘budget’. That is how we get them to sign up for ever bigger mortgages. And those in turn keep our banks from falling over.
That’s right: the survival of our economies today depends one on one on the existence of housing bubbles. No bubble means no money creation means no functioning economy.
However, as low interest rates make the price of debt look very low, the real price (there always is one, it’s just like thermodynamics) is paid beyond interest rates, beyond the financial markets even, it’s paid on Main Street, in the real economy. Where the quality of jobs, if not the quantity, has fallen dramatically, and people can only survive by descending ever deeper into ever more debt.
Where the fine bubble plan runs astray is in affordability. Ultra low rates can encourage sales, but that also raises prices, and if and when wages do not keep up there must be a point where you hit a wall.
There’s nothing anyone can do to raise wages, and while Yellen may claim not to understand why wages and inflation refuse to shine, it’s not that hard. Whatever is called a job these days is America didn’t use to be labeled that. We’ve all been conned into redefining what a job is, but the benefits and security and all that have still vanished. So what can people afford? They can’t even afford to rent anymore:
Now remember what I said before: millions upon millions see their savings and pensions melt away before their eyes, while at the same time they are forced to spend ever more on housing costs. And when that scheme hits the wall, the economy will remember it’s alive only because of the housing bubble, and then croak. Leaving both renters and owners without jobs and eventually places to live.
Bank it or bust. In October 2017, the Dutch Central Bank (DNB) issued a warning on mortgages in the Netherlands. They claimed that almost 55% of the aggregate Dutch mortgage debt consisted of interest-only and investment-based mortgage loans, which did not involve any contractual repayments during the loan term. As prices in the the European housing, or residential real estate, market increase and mortgage rates decrease due the Asset Purchase Programme (APP) of the ECB, interest-only mortgages became more and more popular.
http://www.talkmarkets.com/content/global-markets/the-biggest-ponzi-in-human-history?post=154770
“… while people are getting robbed in plain daylight, they actually think they’re winning.”
😁
Banks will always win they write the rules
Rules that multitudes of ignorant pukes willingly sign up for.
News flash: Ponzi finance encouragement to continue under new Fed chair.
Financial Times
Federal Reserve succession
Trump names Powell as Fed chair nominee
The president moves to make his mark on the world’s most powerful central bank
2 hours ago
…
For those plotting an “Oil City” plan, this is must reading.
Abstract
Rust Belt cities have long been trying to respond to social and economic decline. Some officials continue to pursue a revival of manufacturing. Academics and, to a lesser extent, policymakers have tried to develop “shrinking city” agendas that start by recognizing that postindustrial cities are not likely to return soon to postwar economic health. But political necessity forces most city officials to focus more on revitalization than on how to manage decline.
Any policy designed to revive the Rust Belt must come to terms with the deep fiscal challenges faced by these city governments. Despite steadily weakening tax bases, Rust Belt local officials have continued to increase debt and retirement-benefit burdens. The result is tremendous strain on city budgets.
Municipal fiscal distress in the Rust Belt is pervasive and structural. Rust Belt cities’ fiscal challenges are exacerbated by recessions; but they persist during economic expansions, too. Whatever else “urban revitalization” may mean, it must mean solvency. A city that cannot balance its budget and fund its debt and liabilities cannot provide police and fire protection or maintain its infrastructure. The ability of cities to deliver such services is increasingly in question during the current era of diminished municipal self-sufficiency due to increased legacy burdens and weakened tax bases.
As bad as other times, such as the 1970s, have been for Rust Belt cities, the threat to insolvency is greater now. Many Rust Belt state governments are active, and have been for decades, in dealing with fiscal distress in various ways. But further adjustments to the traditional relationship between state and local governments may be necessary. State governments are the only entities in a position to ensure that cities remain solvent and that basic services are delivered.
Link to the full report (PDF): https://www.manhattan-institute.org/sites/default/files/R-SE-1017.pdf
How to fix Rust Belt Cities in nine easy steps:
1. Declare bankruptcy
2. Null and void all public union contracts and pensions
3. Outlaw all public unions
4. Throw the corrupt democrats who have rode your city into the ground for the last 50 years into jail
5. Low taxes
6. Low housing costs
7. Low regulations - especially for starting a new business
8. All welfare requires work. Period.
9. Sit back and watch your city GROW
Gov goons get paid
How about water cooler cams?
hey 2 even more radical….get pregnant on welfare and child automatically gets put up for adoption unless baby daddy pays support.
I found this to be an interesting and eye-opening read. The report focused on 11 rust belt states (Connecticut, Illinois, Indiana, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, and Wisconsin.)
It’s really hard to maintain a decent quality of life when you’re poor and in debt, whether you’re an individual or a municipality. With that as context, it’s not surprising that some of these cities have lost over 20% of their populations in the last 26 years.
They never lose their gov workers
New Jersey and Mass are rust belt states?
It’s really hard to maintain a decent quality of life when you’re poor and in debt, whether you’re an individual or a municipality. With that as context, it’s not surprising that some of these cities have lost over 20% of their populations in the last 26 years.
I’d rather take my chances under those conditions, than the conditions offered by California, Oregon and Hawaii.
No comparison, in fact. Debt carried by individuals in the Rust Belt is much less than the debt carried by individuals in California, Oregon, Hawaii.
Further, the locals aren’t such dicks.
Having lived and gone to college in the rust belt for a few years during the 1980s, this is an excellent read.
The top employers in many (former factory) towns now are: 1) government; 2) education, and 3) healthcare. None of which can infinitely sustain themselves without a host organism to leech off of.
And to make matters worse, the true state of the poor living in these places has been hidden by the yuan-manipulated prices of $7 tennis shoes at the local Walmart. You know it’s really getting bad when people are too poor to even shop there.
One possible solution which nobody wants to hear: 1)dis-incorporation of cities, passing the control to county government, and 2) combining several counties into one. Businesses have been doing this for decades, and it’s time for governments to do the same.
You know it’s really getting bad when people are too poor to even shop there.”
So, people working for ‘high flying” Valley companies yet living in their cars because they cannot afford rent is a step up?
LOL.
“Meds and eds” has been the re-invention philosophy for a couple of decades now. That both of these things might run out of gas in their current manifestations, and quickly too, isn’t on the radar of anybody considered serious.
Eds is running out as the Millenials have run out of college degrees that they can borrow for. Yes there is Gen Z, but as a group they don’t have a lot of money. Many are anchor babies working up from zero. The Baby Boomers are keeping the Meds afloat, but I’m not sure if Meds can be sustained on Medicare payments alone.
“Meds and eds” has been the re-invention philosophy for a couple of decades now. That both of these things might run out of gas in their current manifestations, and quickly too, isn’t on the radar of anybody considered serious.
Med and eds is all federal government money. Welfare for the middle class.
Med and eds is all federal government money. Welfare for the middle class.
If you’re “middle class” meds == HD plan and eds == lots of student loans.
The article was referring to the *jobs* involved.
“Welfare recipients” are never only, and maybe not even principally, the folks receiving the handouts.
That sounds more like the crushing poverty and rampant crime of California than it does the mid-west or northeast.
My thoughts exactly. It sounds VERY much like California.
Ol’B - what a great study. Yet another reference I would never have thought to seek out on my own, which has expanded my world-view. Thank you.
“But political necessity forces most city officials to focus more on revitalization than on how to manage decline.”
Grand slam out of the park.
Schillow says Orlando to go up
Bigly
17.1% 1-year change
7.1% 1-year forecast
Due to cultural history n lack of land😂
Carrollton, TX Housing Prices Crater 9% YOY
https://www.movoto.com/carrollton-tx/market-trends/
‘We’re starting to get really competitive,’ said Andee Jesse, owner of A Superior Property Management Company LLC, which manages 400 single-family houses and several multifamily properties. ‘We’re dropping prices, and we’re changing up the lease terms.’”
400 homes in Bend f*cking OR is a lot of the rental market. Rents are high because the FED has incentivized blood sucking rentiers who have all piled into the housing market, driving up purchase prices and rents. When these blood sucking “businesses” start going belly up the unwind will get going in earnest. Unfortunately, with mark-to-fantasy rules still in play, it’s likely that most of the foreclosed properties that will come about during the unwind will be held off the market and rot away while keeping prices artificially higher than they might normally be.
Bendover, Oregon is bubble central. Wages are paltry. It’s a place where California bubble money runs. It was absolutely wiped out in the last bust.
buy stocks and homes and your problems will go away.
moar stawks!
Yellen is leaving, but low rates are here to stay.
Get ready for the MSM to show you pictures of catastrophic sea level rise in the next couple of days.
I have watched King tides come and go in SE Florida since the early 80s. Back then older people told me it had been going on forever.
Wikipedia says it like this…
King tides are simply the very highest tides. They are naturally occurring, predictable events.
Now if you are a believer in the Reverend Al Gore”s religion of Man Made Global Warming or uh Climate Change and know that a Carbon Tax and jail is what is needed for those “Deniers” like the Loon who got tossed off the flight after the election you would probably go with…
Massive October King Tide Gives Miami Another Taste of Climate Change
By Henry Grabar
OCT. 05, 2017, 5:45 PM
https://slate.com/business/2017/10/massive-october-king-tide-gives-miami-another-taste-of-climate-change.html
King tide
From Wikipedia
Definition
King tides are simply the very highest tides. They are naturally occurring, predictable events.
Tides are the movement of water across Earth’s surface caused by the combined effects of the gravitational forces exerted by the Moon, Sun, and the rotation of Earth which manifest in the local rise and fall of sea levels. Tides are driven by the relative positions of the Earth, Sun, Moon, land formations, and relative location on Earth. In the lunar month, the highest tides occur roughly every 14 days, at the new and full moons, when the gravitational pull of the Moon and the Sun are in alignment. These highest tides in the lunar cycle are called spring tides.
The king tides occur when the Earth, Moon and Sun are aligned at perigee and perihelion, resulting in the largest tidal range seen over the course of a year. So, tides are enhanced when the Earth is closest to the Sun around January 2 of each year. They are reduced when it is furthest from the Sun, around July 2. [2]
The predicted heights of a king tide can be further augmented by local weather patterns and ocean conditions.
Loon who got tossed off the flight after the election.
https://www.youtube.com/watch?v=n8HGTmANHyU
Thanks for the memories!
I especially enjoyed watching the hen pecked wuss she was with.
What a flake.
https://youtu.be/WaR5W9v9HpA
Here’s the best part where everyone claps and cheers when that badgering Sea Hag gets escorted off the plane by the cops.
God Bless President Trump. God Bless The United States Of America.
and God Bless Sea Hag’s husband Hegot Nospine.
God Bless Robert Mueller and the DOJ for upholding America’s cherished Rule of Law.
I am surprised and pleased that the GOP is taking a swipe at the MID. Let’s see if it sticks.
That is sort of how I feel too. I also feel great about the increase of standard deduction and moving towards a territorial tax system. I would have preferred that the whole MID was on the table, but capping it at $500k is a good first step towards scrapping it altogether. If the cap isn’t indexed for inflation, eventually it will become irrelevant.
The thing that irks me is that GOP is still trying to get rid of the estate tax. 55% of wealth over $100 million in the US is in the form of unrealized capital gains. This wealth has never been taxed. Eliminating the estate tax basically means that a huge portion of extremely wealthy individuals will never pay any tax at all. We can complain about being taxed too much, or gripe about government waste, but I have no sympathy for the uber-wealthy who think they are entitled to pay no taxes.
“…a huge portion of extremely wealthy individuals will never pay any tax at all.”
TODAY, with the estate tax, the wealthy DON’T pay estate taxes.
The estate tax doesn’t effect the wealthy. PERIOD.
It does GREATLY effect family businesses and family farms.
Surely there’s an easy work-around that they can figure out for that. One thought, off the top of my head, tax the heirs but then allow the business to deduct the taxes from their revenue and thus recoup those taxes over some years. That would discourage setting up fake businesses.
But somehow, it needs to be separated out. I’m tired of pols using wholesome Old MacDonald images, while the greedy Walton kids swim in money they didn’t earn.
They’ll do the workout,that’s why the phase in
Oxy, we’ve had this (…errr…) discussion before. You and Polly lost last time. Your argument was “I know sooo much better what to do with your money, since I’m in gubbermint - whooppeee!!! More monee for meeee!!”.
My argument was “Keep your effin’ hands out of my pocket, and quit destroying the fruits of multi-generational labor”.
My argument has not changed: I’ll be glad to review the thesis.
Keeping the fruits of multi-generational labor is how royal families are made.
This is absolutely true. While we hold up as paragons of entrepreneurial spirit the college drop-out who founded a business empire, these very much are the exceptions, and they cloud the thinking of the populace. The data shows that most wealth in the US is dynastic. The best predictor of how well you are going to do financially is how well your parents were. Someone will always point to some wonderful story about someone making it against all odds, but these are about as likely as your child becoming a pro-athlete.
If the cap isn’t indexed for inflation, eventually it will become irrelevant.
It may already be irrelevant for many with the increase in the standard deduction.
I know people who would pay massive estate taxes if they died suddenly, and let me just say this: With proper planning, a LOT of wealth is transferred under the current code legally to the next generation without paying estate taxes. However, a lot of fees to attorneys and accountants are paid in the meantime, with a ton of time also being spent by the wealthy individual.
In other words, it’s not fun, it’s expensive, but it’s possible AND common to avoid estate taxes altogether.
The people who I know who transfer this kind of wealth start as early as when they are in their 40’s, and get it done over a period of decades. Will they succeed in paying 0%? Maybe not, but their total bill is FAR, FAR less than 40% of everything over $11MM.
Only people who die suddenly, or don’t want to pass it on, or don’t plan, pay meaningful estate taxes.
And on top of all of this, they also get the benefit of the step-up in basis at the time of death.
If we want to have a serious conversation about eliminating the estate tax, we also need to eliminate the automatic step-up in basis upon death (so that when heirs sell appreciated assets, they pay the tax that was never paid by the prior generation).
HOWEVER, there needs to be something left in place for spouses…I would support a basis transfer (public stock to public stock). So, if the husband/wife had a concentrated position in one stock, the surviving spouse could diversify without paying a big tax bill–but the tax bill would come due when the heirs sold that stock.
The automatic step-up in basis along with the 1031 exchange are among the biggest give-aways in the tax code, and no one wants to touch those.
I agree with everything you’ve said. I could support a compromise whereby the estate tax were reduced to something like 20% IF the automatic step-up basis were eliminated too.
Why 20%?
Removing the automatic step-up in basis makes it absolutely true that the gains would have already been taxed once. There is no reason to tax them again.
The only rationale for it being anything other than 0% is “wealth redistribution”, to which I am fundamentally opposed.
If, on the other hand, you said that the 20% tax was to pay down/off the debt, I would applaud it, and in conjunction with dropping the exemption from $10MM (+/-) to $0, and a balanced budget amendment, I would be in full support until the debt was $0, at which time, the estate tax should go away.
The only rationale that I see for an estate tax is that prior generations over-spent based on their era’s tax policy, and benefited from the ballooning of the US Debt.
If the estate tax were used specifically to pay off that debt, I would be in support, but only if the base was broadened, rate was lowered, and balanced budget amendment was adopted.
I see your logic. I made a mistake in my thought process; eliminating the step-up basis would render that double taxation. My thinking was that 20% would be higher than the 17% effective that the estate tax is generating now, and since it would be just a few percentage points above the effective rate that it might make all the accountants and other chicanery not useful, so people might just pay instead of trying to go to great lengths to shelter income.
Yes, my thought is that the budget has to be balanced and the endless of spending more than one takes in has to have a reckoning. Those who have benefited the most from this system should pay. Income inequality has skyrocketed and threatens to destroy the Republic. Of note, I am one who stands to benefit from a large inheritance.
Philosophically though, I am more in favor of a wealth tax than an estate tax triggered at death. I kind of like the 1.4% annual tax on endowments that was in the GOP plan today. I could get behind something like a .5%-1% annual tax on wealth above a certain threshold. This would collect the revenue necessary to balance budget. The way to avoid the tax? Invest that money or pay it out in wages.
The way to avoid the tax? Invest that money or pay it out in wages.
Or, like in France, hide the assets–lie about the value of hard-to-value assets, buy collectibles/gold with cash and hide it, or, if all-else fails, leave the country.
You have the make the tax easy to calculate, hard to avoid, and reasonable. A tax on wealth is too easy to avoid–and easiest to avoid for the people who it was supposed to hit the hardest.
Depardieu is a perfect example of what happens when an ultra-wealthy person feels like the government is trying to take their wealth–he is now a Russian citizen….having turned over his French Passport.
By the way, I’m not in line to earn an inheritance (and I’ve told my parents that they’ve worked hard for what they have, and that I’d be pleased if they spent their last penny on their last meal).
However, I can understand the frustration of a person who paid a high marginal rate of 40-50%+ (depending on the state in which they lived) for a large part of their working career, and then being asked to pay another 40% on what’s left when they die.
Seems confiscatory to me.
Drop the rate to 0% and take away the step-up in basis.
You have the make the tax easy to calculate, hard to avoid, and reasonable.
Agree, agree, and agree. But to those I would add the following:
1) You have to make people proud to pay taxes, evoking a sense of patriotic duty and a sense of contributing to the greater civic good. Making government out to be the enemy and hyperbolic speech aimed at delegitimizing it makes people feel even more resentment at paying their taxes, like that is for suckers. It ultimately leads towards the path of Greece where there is a huge underground economy and nobody pays taxes. That isn’t so much a function of tax rates as it is of culture and ethics. Culture and a sense of values matter. Of course it doesn’t help when the commander-in-chief boasts of being “smart” when he pays no taxes.
2) There has to be a serious stick for tax evaders.
Most people who’ve made serious money are not earning it by wage income paying a high marginal tax rate. They are making their money on returns from capital and loopholes like carried interest.
1) You have to make people proud to pay taxes,
It’s hard to be proud to pay more taxes when you believe the government is wasteful, and all the rhetoric from politicians is about making certain people pay “their fair share”–which amounts to making wage earners pay more and more, but little commentary about closing massive loopholes (1031 exchanges, etc.).
CA’s “millionaire tax” is a perfect example. There is nothing progressive about deciding to raise an additional $100 in taxes, but requiring all $100 to come from a tiny subset of the population. It’s hard to be proud of theft.
They are making their money on returns from capital and loopholes like carried interest.
I heard Ken Griffin speak one time about the carried interest loophole. I’m paraphrasing, but he basically said that he didn’t give a sh*t since he’s paying ordinary income anyway (underlying activity needs to be a capital gain–no one seems to understand this–he trades on milliseconds). He’s a billionaire.
Attorneys once they become partners can easily make a million a year…ordinary.
Doctors….ordinary.
Most stock option grants….ordinary.
Stock grants….ordinary.
Massive CEO salaries…..ordinary.
Yes. Capital Gains come into play for lots of people. Especially founders of companies (who use others’ money and their effort to get rich–Bezos, Gates, Page, Brin, Zuckerberg).
The CBO estimates that the carried interest loophole costs $2 Billion per year…out of $130 Billion that they would gain if they taxed all capital gains as ordinary.
1. Eliminate the step up in basis;
2. Eliminate the estate tax;
3. Tax capital and ordinary the same (allowing inflation of basis before determining gain)
OK, all you Einsteins. In the family farm and its analogues, forcing an estate tax forces the sale of the family farm. Really. NOBODY can come up with the cash to pay off millions on a family farm plus acreage that has been pieced together since the 1800s (let’s say), without selling that farm and throwing three generations out on the street to work for wal-mart, each renting separate apartments, and leading isolated lives. Y’all must be real estate developers.
Methinks y’all BSD (big swinging d*cks) don’t have a clue about what you propose, since it does not happen to fall inside your parochial view. By that I mean “Everybody’s case is like mine, so I know best”.
A different slant on gubbermint-Oxy-gubbermint-Polly’s fatuous view of how the world is, and should be.
1. Eliminate the step up in basis;
2. Eliminate the estate tax;
3. Tax capital and ordinary the same (allowing inflation of basis before determining gain)
I can get behind those points, especially #3. That is the biggest issue that I seem to have with the tax code. The fact that capital gains are taxed at a preferential rate probably has some bearing on the real estate mania.
CA’s “millionaire tax” is a perfect example. There is nothing progressive about deciding to raise an additional $100 in taxes, but requiring all $100 to come from a tiny subset of the population. It’s hard to be proud of theft.
Well that is the very definition of a progressive tax. But if you believe that we should tax capital at a higher rate than labor, I’m with you. Our tax code now is the opposite. If a societal goal is to re-enthrone work, then tax wage income at a lower rate than someone who holds on to a house and flips it.
I don’t believe that taxation is theft. If that is the starting point, then we’ll just have to disagree there. Any discussion about taxation has to look at income inequality. We have to look at who gets what to determine who pays what, that’s how I view fairness. I can already sense we will disagree on this, but I think you have to look at where the income gains have ended. Per Saez, the top .1% in the US have 22% of the wealth. The top 1% have 42% of the wealth. Willie Sutton was asked why he robbed banks and he responded, “because that is where the money is.” Increasingly, the only way to generate tax revenue is to tax the millionaires and billionaires because they are the only ones with any money to tax. You can’t squeeze blood from a turnip. The poor and middle class increasingly are the turnips.
The estate tax isn’t over $100M. It’s $5.5M for 2017.
But it doesn’t matter what the number is. When I die, I want to leave my estate to my family, not to the IRS. 100% of it. Every last dime. The concept of taking 55% of someone’s assets after death is ridiculous.
The estate tax isn’t over $100M. It’s $5.5M for 2017.
You’ve misunderstood entirely. The data show that for estates valued at over $100M, 55% of that amount is unrealized capital gains. In other words, that means that in this hypothetical example, $55M has never been taxed at all, not one penny. Surely you aren’t advocating the very wealth pay no taxes?
I’m not sure how it is fair for a wage earner to pay a marginal tax rate of 15% or 25% or even the top rate of 39%, but a very wealthy individual pay no tax. This is why a differential tax rate between capital income and labor income doesn’t work very well.
This is why a differential tax rate between capital income and labor income doesn’t work very well.
But it’s not as simple as that.
$100 doubled over 3 years is much different than $100 that doubles over 20 years.
With 2% inflation, the $100 doubled over 3 years made a real return of $94. The $100 that doubled over 20 years made a real return of about $51.
The $100 of nominal gain should not be taxed at a high rate. If it was, long-term investment (which is good for the economy) would shrink.
The important question…of the 55% of the “gain” for large estates, how much of that 55% nominal gain is “real”?
Answer…less than 55%. Perhaps a lot less.
IIRC, Clinton proposed different capital gains rates based on the length of the investment…the longer the hold period, the lower the rate. That makes sense to me….inflating basis would be a nightmare.
Clinton proposed different capital gains rates based on the length of the investment…the longer the hold period, the lower the rate. That makes sense to me….inflating basis would be a nightmare.
While I see your point, I think that both of those routes further complicates the tax code. One point of agreement that I have with GOP talking points is the need to simplify the code, if only incrementally. Inflating basis or having multiple capital gain rates based on investment periods just adds complexity in my view, even if it comes from a good place (incidentally, this is also why I would nix the charitable deduction from the code - too much gaming and unintended consequences).
Besides, I have investments from fixed-income securities and I never get to deduct any sort of CPI deflator. The time horizon for these securities matches long term investment. I think one must chalk inflation up to the cost of doing business and make reasonable assumptions about what after-inflation returns will be and pencil out investment decision accordingly.
If an investment pencils out, long-term or short-term, then do it. The benefits of long-term investment are such that they are their own reward. If you are for eliminating the preferential rate for capital gains, I think you can get behind eliminating different rates for different time horizons.
Duly impressed. But I agree that the proof is in the pudding.
“The estate tax doesn’t effect the wealthy.”
Those are talking points by those who want to get rid of the estate tax, but they are not accurate. The estate tax very much does affect the wealthy. The estate tax brought int $18 billion in tax revenue last year. It’s true that the very wealthy shield a significant amount of their wealth using creative tax planning from the 40% rate above estates larger than $5.4 million ($10.98 million for couples), the effective tax rate is 17%.
https://www.bloomberg.com/news/articles/2017-10-31/is-the-death-tax-debate-finally-over
The official rate is 40 percent, though IRS data show that the effective tax rate is more like 17 percent.
Though its repeal has been central to Republican tax philosophy for years, some GOP senators, including Susan Collins of Maine, have expressed skepticism about ending the tax, which brought in $18 billion last year. Keeping it could help offset the deep business and individual income-tax rate cuts Republicans want.
Here is a link to the IRS data for the estate tax revenue:
https://www.irs.gov/statistics/soi-tax-stats-estate-tax-statistics-filing-year-table-1
By all accounts, the IRS revenue from the estate tax is likely to be the biggest in the next 10-20 years. Eliminating it now would be a huge form of reverse welfare to the wealthy via no taxes. Remember, much of this income has never been taxed.
Sorry, the 17% is a BS number. It’s based on the “Gross Estate for Tax Purposes”, and is reduced through other credits.
This doesn’t account at all for the games that are played before the individual dies (and has transferred enormous wealth to the next generation using various techniques), nor does it account for structuring the ownership in assets in ways that allows discounting. I suspect the effective tax rate is actually in the single digits when you take into account everything else.
Example:
Let’s say you directly own a building worth $100. It would go toward your estate tax valued at $100. You would be an idiot and have terrible advisers.
Let’s say that instead, you own 25% of a partnership (where the other partners are your kids’ trusts, who have an independent trustee). And let’s say that the value of the assets are $400.
This doesn’t count as $100 ($400 x 25%). You get to discount for “lack of control” and “illiquidity”. Perhaps, say, 35%. So instead of $100, it’s worth $65 toward your estate.
Well, let’s say instead of the partnership owning a building directly, you have invested in a Fund that you don’t control….tack on another 35% discount (maybe higher). Your $100 for estate tax purposes, is only worth $42.
But that’s not the fun part. Perhaps over time, you sell your $42 in interest to your kids trusts…but you lend your kids the money to do so.
Better yet, you create another LLC that serves as the lender to your kids. And then you turn around and sell a share of THAT LLC back to your kids at a discount, such that perhaps they never need to pay back the note at 100 cents on the dollar either…
Do you understand where I’m going?
With proper planning, the $100 in value shows up on the estate tax as $42…if a lot of it wasn’t transferred using attorneys and CPAs over a period of decades to move it to the next generation.
It’s the $42 (or whatever is left) that is taxed at an effective rate of 17%…NOT $100.
To give you a sense of the games that are played…here you go:
http://time.com/money/4344981/hillary-clinton-estate-plan-taxes/
Yes, I do understand this creative tax planning.
This is also why gifting money every year is $14k helps to reduce the amount subject to estate taxes.
Some types of wealth are more amenable to this dizzying concoction that you’ve illustrated, some are not. The same general principal applies with corporate taxes: some corporations have the heft to do all sorts of IP transfers and book revenue in low tax rate jurisdictions, while others cannot do this. Some businesses can’t bend the tax code far enough to make it work, even though they might like to.
My larger point is that I think that scraping the estate tax because there are so many people who use creative accounting is not the right solution. Better to eliminate the loopholes and strictly enforce than just give up.
Better to eliminate the loopholes and strictly enforce than just give up.
If one has $20MM or more in assets, the “dizzying” concoction isn’t very hard with the right accountant. In fact, the $14k per year (per parent…per kid) is a perfect amount to gift as interest per year to your kids to pay interest on the loans you give them (at the AFR rate, which today, long-term, is 2.5%). $28k per year allows a wealthy husband/wife to pay interest on loans to their kids of over $1MM….until the assets the kids bought can service their own debt, or the assets are sold to pay off the debt.
The biggest loophole of all is the step-up in basis. If you want to get cash from assets, an heir would have to pay tax on the actual gain that was passed on (ie. what could be turned into cash), not some made up number from an accountant.
Yet, when the complex structures used to avoid estate taxes are used by the very politicians that espouse the virtues of an estate tax (and their followers “ooohhh and ahhhhh” the righteous fight against the wealthy), there is little hope that we will do something as simple as drop the estate tax to zero and take away the step-up in basis.
There are simply too many votes to get from the social justice warriors.
Too many contributions to be received from CPAs and attorneys.
Too much of their own wealth to shelter from the estate tax through complex means…while getting to keep their precious automatic step-up in basis.
Sedalia, CO Housing Prices Crater 11% YOY
https://www.zillow.com/sedalia-co/home-values/
*Select price from dropdown menu under first chart
17.1% 1-year change
7.1% 1-year forecast
Orlando
A sweaty,flat nirvana?
You nailed it, that’s exactly what Orlando is. How anyone can live there, I have no idea. Two months was more than I could stand.
“The comments from Vornado Realty Trust CEO Steven Roth suggest that Kushner’s most ambitious purchase will continue to bleed money - tens of millions a year - as a deadline for repayment of the giant mortgage on the office building nears. Adding to the troubles, the luxury condo market has shifted recently, undermining a key assumption behind the raze-and-rebuild plan. There is a glut of luxury apartments in Manhattan now, prices are falling and they are taking longer to sell.”
It sure sux to be leveraged up the wazoo when prices are dropping!
It’s hard not to feel a little schadenfreude.
Somehow, I believe the losses will be socialized.
Back when Japan was having its bust, and it went down the QE route, propping up zombie companies, etc, I remember the discussion being how robust American capitalism was, and that would never happen here. During the teeth of the 2008 bust, a friend said that powerful people are not going to sit idly by and just take losses. They’re going to do everything in their power to avert them. And the system we have in place, economic and intellectual, is designed to show that allowing Wall Street any kind of significant harm is actually bad for the country, so losses must be socialized.
I remember the humble talk of the “Real Economy” versus “the Wall Street” economy, how Wall Street does a small but significant task of supporting the real economy. But when the tide went out, we found out who the real shot-callers are, and just how far down the road to oligarchy we are.
Going forward, we know that system exists. There was a shot across the bow with the election of DJT, who is, IMO, a protest candidate (remember how well candidate Deez Nuts originally polled). With productivity ever rising, and a broadening welfare state, it is possible that oligarchy can tighten its extractive grip while still improving the welfare of the populace - meeting its basic needs and perhaps then some - to point where it won’t actively push back in any organized political way.
The end game would be a small group of oligarchs, with the police and military being highly paid, prized occupations to protect them, and a population doing reasonably enough relative to any historical standard, or relative to other countries, via the welfare state, but living like peasants relative to the oligarchy. An outsize portion of any productivity gains will go to the oligarchy, but enough will accrue to the populace to prevent them from becoming restive. In any future economic crash, the same playbook would be pulled out again.
And in the next economic crash, welfare would be more liberally presented with even greater benefits allowing it to become a lifestyle choice for more people.
Immigration is an important part of this scheme. Immigrants from poor countries will see the crumbs available and eagerly and happily take them because they have much less available in their countries. These immigrants will “stabilize” the populace, preventing native born seeing their standard of living stagnate or decline from becoming restive. I have to wonder how much opioids really is the “soma” of the Brave New World affirmatively meant to blunt the dissatisfaction of some swathes of the US.
I’d felt for some time that the Great Recession had a similar impact as the Great Depression in terms of job and standard of living losses (including the run up - more and more people in deeper and deeper debt, but having more stuff). The difference this time was that there was a much beefier social safety net, and much higher productivity than 1930, so fewer people could meet the needs of the rest, significantly muting the impact on the populace - they still had food, clothing and shelter.
The tipping point would be if enough people “drop out” such that economic output begins declining.
And we always hear of “Japan as the model”: “Japan’s relative rate of poverty has risen over the past three decades to 16.3%, while the rate in the US, though higher at 17.3%, has fallen.”
It’s sort of a Brave New World: a return to the historical structure of human societies - oligarchy, feudal, but with modern technology and productivity.
Also realize, redistributing up is not a new thing. A feudal lord would take a cut of his serfs’ production, in return for protection and a little something-something extra, leading to his superior standard of living. Doing God’s work.
This is not uncommon with the nation state either:
[note: I think the author identifies the symptoms, but also subtly slides in some personal bias about his economic preferences]
“More fundamentally, many governments have no interest in redistribution. Inequality between the rulers and the rest is not a bug but a feature in a deliberate strategy of exploitation and extraction. This is how colonial powers behaved, and many post-colonial leaders learned the lesson well. I am not sure what the no-government counterfactual would look like for such countries, but these governments are creating inequality, not reducing it. Surely this is not so in the liberal democracies of the OECD?
Local rules and licences often keep power and money with those who already have it. At the national level, it is hard for any member of Congress to stand for election without deep-pocketed support, so voters get to choose among candidates whose views coincide with those of wealthy interests. Empirical work shows that legislators vote for the interests of their well-off constituents, not the public at large.
There is little difference here between Democrats and Republicans. The influence of the unions, which used to provide a countervailing force, has waned with their membership and with anti-union legislation.
It is possible that American democracy today has been damaged to the point where it is redistributing up, not down. The libertarian case for small(er) government should not necessarily be thought of as an argument that favours the rich.”
With productivity ever rising, and a broadening welfare state, it is possible that oligarchy can tighten its extractive grip while still improving the welfare of the populace - meeting its basic needs and perhaps then some - to point where it won’t actively push back in any organized political way.
Gee, sounds a lot like the country I’m sitting in at the moment while typing this.
Mount Vernon, WA 98274 Housing Prices Crater 12% YOY
https://www.zillow.com/mount-vernon-wa-98274/home-values/
real.whores pissed
maybe they can raise their commission rate to compensate
I’m guessing the $500k cap goes to 750
rampant.mortgage.fraud.
Millennials: Communism sounds pretty chill
By Shawn Langlois, MarketWatch
Nov. 2, 2017, 1:37 p.m. EDT
According to the latest survey from the Victims of Communism Memorial Foundation, a D.C.-based nonprofit, one in two U.S. millennials say they would rather live in a socialist or communist country than a capitalist democracy.
What’s more, 22% of them have a favorable view of Karl Marx and a surprising number see Joseph Stalin and Kim Jong Un as “heroes.”
Really, that’s what the numbers show.
https://www.marketwatch.com/(S(rnrsydaynixa5×55oiibxm45))/story/millennials-communism-sounds-pretty-chill-2017-11-01?link=MW_story_popular
Everything looks acceptable to DebtDonkeys. There is no hope when you’ve got empty pockets.
Maybe
https://www.freerepublic.com/focus/f-news/3601150/posts
‘What’s more, 22% of them have a favorable view of Karl Marx and a surprising number see Joseph Stalin and Kim Jong Un as “heroes.”’
We haven’t run out of delusional fools.
Millennial hero?
Inside Kim Jong-Un’s feared inner-circle: North Korean despot has teenage sex slaves plucked from school, enjoys £1,000 a-time lunches and forces upper class elite to watch horrific executions
An ex-regime insider is risking her life to expose the despot regime, which brainwashes people with claims of invincibility and threats to the US
Chris Hughes
Andy Stenning (pictures)
19 SEP 2017
Updated 21 SEP 2017
Life inside the world’s most secretive state, North Korea
A North Korean defector whose father was a senior officer under despot Kim Jong-Un has revealed a terrifying insight from within his feared inner-circle.
Ex-regime insider Hee Yeon Lim, 26, is risking her own life by telling the world how paranoid Kim lives like an emperor whilst casually ordering executions of confidantes and even relatives.
The petite Pyongyang graduate offers a rare glimpse inside a nuclear-weapons obsessed leader who has imprisoned 25 million starving people in grinding poverty.
As Kim’s lunatic weapons programme hurtles towards all-out war she wants to expose the tyrant who is dangerously clashing with America’s President Trump .
Just days after Kim tested a nuclear blast ten times the size of the Hiroshima bomb, Hee Yeon spoke to the Mirror at a secret location in Seoul, South Korea.
As world leaders await Kim’s next move against potentially explosive President Trump in their risky game of bluff and threat she revealed how he:
- Forces even Pyongyang’s upper class elite to watch horrific executions
- Brainwashes people with claims of invincibility and threats to the US.
- Hides in hundreds of secret luxury boltholes deep within his rogue state- making it virtually impossible for western spy agencies to know where he is at any one time.
- Has sex slaves, plucked as teenagers from school, despite his marriage to Ri Sol-ju, mum of his three children.
- Enjoys £1,000 a-time lunches whilst his subjects survive eating grass.
Asked what happens if they get pregnant she says: “Maybe the same.”
When Kim, who has three children with his wife Ri Sol-ju, has finished with the girls they are discarded but they can marry a high-ranking official.
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“On the shores of California’s San Francisco Bay, sizzling job gains have slowed down since 2015 to something pretty … average.”
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