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no_such_reality
Participant[quote=poorgradstudent]My issue with that execution is step counting is a rather silly metric. Especially since the accounting of steps is minimally controversial, and arguably somewhat irrelevant.
As a TEACHING tool I can see the use. As an EVALUATION tool I don’t care for it.[/quote]
You’re still thinking of tests in the old format,me very kid gets the same piece of paper. That’s notnhownthe core computer test work, they’re dynamic and based on whether or not you’re getting concepts correct, it moves you one to more complex things. Get them wrong and it moves you towards simpler things.
ParticipantWhat that test question does is verifies the kids ability to adaptitively use math to quickly reach answers. It determines if the student understands multiple approaches, based on the numbers, different approaches work better at different times.
People complain about common core and it is a giant shift, it’s a shift from can the kids regurgitate formulas to can the kids use math.
Although based on observation of LAUSD graduates, many struggle to even use a calculator to solve basic math.
ParticipantEither way, I’m looking forward to seeing how they butchered “The Martian.”
ParticipantSo what happen with the 70,000 people in December 2009? You guys build a Solent green plant?
ParticipantWhile I think long term ownership is more beneficial than long term renting for building financial stability and wealth, that’s not what we’re talking about in this thread.
This is about whether gutting prop thirteen for any non-primary residence and removing the ability to protect the tax basis in family transfers will be better or not for the majority.
The proposal will make it harder for people to buy, harder to move up, harder to save to buy because it will increase rents and push more to corporation run housing which will churn them.
The anti-13 crowd has a lot of wishful thinking on what they want, but no basic economic connection to what will happen in their proposal.
ParticipantFor the 1 or 2 out of ten that get to buy it, but buying it is more expensive than renting. And frankly, many renters are renting out of necessity. They don’t have the money to close the deal on $500,000.
The other 8 will be squeezed into an even tighter renting pool that is already experiencing signifcant rent increases.http://www.ocregister.com/articles/rent-680104-month-three.html
And then prop 13 elimination plans will universally raise costs to ALL landlords.
What happens when all producers experience cost increases? They raise prices.
BTW, the largest slumlord in California is about to sell off a bunch of properties. CalTrans is going to sell the homes they own in the path of the never built 710 extension in Pasadena.
ParticipantCAR because the renter/unit relationship is neither direct nor linear. We were a good example and know many friends that essentially did the same. When we rented, we settled for a 2/2 townhome. When we bought, like our friends, we went SFR 3 or more/2.5 or more.
The rental market for 3 bedrooms or more is pretty lean. Selling those properties that have low tax rates will disporptionately hit the higher bedroom count of the rental market.. Essentially, you will see slightly less competition for significantly less properties in that property space.
Where today you may essentially have 11 people vying for 10 SFR rentals, after stripping the tax basis, I suspect you will end up with 9/10 vying for 6 or 7 available SFR properties. More competition on those properties will put upward pressure on rents there. While eventually the number of renter at a given property type balances back out, you have more people substituting a lower end good for a higher end good because the higher end unit isn’t available. That in turn actually pulls those rents up on the better quality lower end units which in turn pushes more up.
The second factor is many of those same properties that will get returned to the buyer pool are managed by small time landlords. In general small time landlords value stability in tenants more than the dollars. While your major property management firms will raise rents like clockwork on lease expiration, smaller owners often won’t on good tenants. The tax basis will again shift the property mix more to large landlords, large landlords that will raise rents relentlessly because they are going to have the market vacancy anyway.
Those two factors will create a rental environment that experiences more churn, more instability for the renters, more rent increases and more upward pressure on rent.
ParticipantBG several of your points are valid however you fail economics 101. The tax assessment is an expense. If you increase expenses the number units people are willing to make available for a given price falls. As you see in the other thread, homes the would be rental with low assessment will be sold to owners at higher prices
Less units means more competition for the units and greater increases.
While a renter turn buyer does remove one renter from the pool, the effect on the pool of available rentals will be greater than the affect on the decrease of renters. As less SFRs are available to rent, there rental cost will increase, which will in turn pull the next leg down in size/quality up.
We’ve seen repeatedly how quickly rents rise with any constraint in supply in SoCal.
Participant@xbox I hear you, I too share the beef with all the people living here but pretending to reside elsewhere for their car title, income etc.
Participant[quote=bearishgurl][quote=no_such_reality]At that price point, the rental value exceeds the sale value. It’s about at the tipping point though. At that price point (outlined in the other thread), a new buyer can’t really purchase it with anything over 50% financing and make a return on capital after paying the stepped up taxes and costs. The net result, the homes change hands to new owners, not landlords.
As the price goes up, the rental value doesn’t keep up and the houses tend to resell and revamp instead of refurb and rent.
As another pointed out, rental market above certain amounts thin out quickly.[/quote]
I see your point but I thought most buy and hold investors today purchased their investment properties with all cash. Do you see small investors taking out purchase-money mortgages for a 1-4 unit investment property?[/quote]1 Unit is an SFR or single hab condo. Anything else that is 2-4 uits is intended to be landlord owned, whether or not the landlord lives on premise. The math on those are about the same. All cash you can squeak, and I mean squeak a return out on them, but you aren’t rolling dole. Based on the info from my tax preparer, there are 20:1 people buying properties and losing money to those buying properties and making money. Most are buying the propery, owning the property and having a renter subsibize their purchase of it, but many are kicking in money every month to hold it and aren’t going to be getting to break even soon.
You can do the math. That $400,000 home, if it’s sold to a new person at $400,000. At $1750 rent, if it’s straight up rented twelve months, max is $21,000 a year before any expenses, which would be a 5.25% return on cap before taxes. Property taxes are $4000+, insurance another $100. Call it $5200 for taxes and insurance before anything else. You’re down to $15,800. or a return of 3.95%.
Now start adding expenses, do you need a landscaper? Roof reserve? New carpet? AC service? Furnance service? They all chew into it.
Carrying debt? a $200K loan at 3.75% carries $620/month in interest, that’s $7440 a year out the door. The good news is it’ll push your return up to 4.1%, but on half the size of capital.
The $550K property example renting for $2200-$2400, same boat.
They’re using heavy cash or all cash because if you don’t, you have to kick money in every month to cover the principal portion of the loan. Crunch the numbers: 30% down, loan at 3.75%, the interest is $870/month. insurance another $100, property tax another $330. You’re at $1300 and you haven’t had a single variable expense, with $450 left on “the rent” and a principal payment on the loan of $430 due. Sure you can experiment with an ARM or 15 year or 10/1 I/O but that’s gambling the timing moves in your favor.
ParticipantAt that price point, the rental value exceeds the sale value. It’s about at the tipping point though. At that price point (outlined in the other thread), a new buyer can’t really purchase it with anything over 50% financing and make a return on capital after paying the stepped up taxes and costs. The net result, the homes change hands to new owners, not landlords.
As the price goes up, the rental value doesn’t keep up and the houses tend to resell and revamp instead of refurb and rent.
As another pointed out, rental market above certain amounts thin out quickly.
Participant[quote=bearishgurl]I forgot to add that a large portion of the driveways in Saratoga are asphalt and many of them in the listings I saw (even the concrete ones) are full of cracks. A (concrete) driveway of that size costs about $25K to pour today.[/quote]
I’ve being seeing that for three years in my neighborhood. Homes that have been owned for 40 years go up for sale at near market. they eventually come to reality and sell about 10-15% lower to one of the many investor flippers (last one I talked to had five investor offers first day. It then comes off market for 1-3 months and back on the market about 20-25% above their original listing.
I’ve watched home after home after home change hands.
Participant[quote=bearishgurl]WOW, County isn’t fooling around. They’re going to make bank here!
Oh, and I’m sure DR Horton is going to pass those ($3M++?) in fees County will have already collected from them onto the purchase price of each unit. Why not?
Hope all the worker-bee types who end up buying into this project (because they won’t read the fine print) get nice raises every year cuz they’re certainly going to need them! They’re going to get ripped a new a$$hole in compounded increases in their MR fees over their years of ownership.[/quote]I love the California Public Pay database. It sheds like on the issue. Previously, BG you complained that not enough taxes was the problem. Now you see the county sticking it to the developer.
I’ll pose another piece.
Google is recognised as one of the most lucrative companies to work for. In California, Google’s average salary is $113,929. It comes with an average bonus of $14,494. Lets round that up to $127,500. Health benefits adds some to that.
Now let’s look at something like Los Angeles Fire Department. 3590 employees. Average wages paid, $142,370. Average retirement & benefit cost another $13,060. Total $155,430.
Public Pay DBDo you think Google is paying $28,000 in health and other benefits per employee? I don’t.
Lakeside special district in San Diego county is close. Their pay is lower but benefit cost way higher.
Looking at Median wages is a bit better because of the number of part year payments in the public DB.
So is the problem taxes are too low and the developers are building and we’re not taxing enough or is the problem that we have some agencies getting compensation rivaling the most lucrative company in the country to work at.
ParticipantOn a recent trip to Phoenix, I gassed up the morning I left, cost $3.89 a gallon. I next gas up was same day in suburban Phoenix, cost $2.49/gallon.
California uses 14.5 Billion a year. That’s $20 billion in additional costs, some is refinery costs, some is air quality and some is just flat out taxes
Are we getting our value?
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