[SK in CV]

[quote=Nor-LA-SD-GUY2]
Something no one wants to hear but it’s the truth.
It’s So Simple,
Housing is 20% of the economy in most locals (not all but most)
Agents, escrow, insurance, finance , landscape, builders,… etc the list goes on.

YOU WILL NEVER HAVE AN ECONOMIC RECOVERY UNTIL THE MAJORITY OF UNDERWATER HOME OWNERS ARE NO LONGER UNDER WATER,
One way or the other..

[/quote]

I think you’re mostly right here, despite the hyperbole. We actually have had a small recovery, which is miraculous under the circumstances. But I think you’ve also jumped to the conclusion that if real estate hits bottom, then there will be a recovery. Not so fast. It’s not just real estate that drives so many local economies. It’s construction. The bottoming out of housing prices and reduction of inventory overhang by itself will not guarantee that construction picks up. (In the short term it will. Guaranteed. Because builders build. It’s what they do. Until they can’t sell what they build.)

For some local economies, it will. But others just don’t need any more housing. The country as a whole isn’t over-built for 18 months. It may be over-built for closer to 5 years. Some markets for a generation. And more construction in over-built locales will just put additional downward pressure on prices.

So I think you’re right, but maybe a bit too optomistic. Fixing the underwater homeowners, by itself, may not even help much.

The real recovery, including massive job creation, will have to come from somewhere else. Given the current political climate and the current corporate zeitgeist, I haven’t a clue where that would be.

[SK in CV]

[quote=Nor-LA-SD-GUY2]
Something no one wants to hear but it’s the truth.
It’s So Simple,
Housing is 20% of the economy in most locals (not all but most)
Agents, escrow, insurance, finance , landscape, builders,… etc the list goes on.

YOU WILL NEVER HAVE AN ECONOMIC RECOVERY UNTIL THE MAJORITY OF UNDERWATER HOME OWNERS ARE NO LONGER UNDER WATER,
One way or the other..

[/quote]

I think you’re mostly right here, despite the hyperbole. We actually have had a small recovery, which is miraculous under the circumstances. But I think you’ve also jumped to the conclusion that if real estate hits bottom, then there will be a recovery. Not so fast. It’s not just real estate that drives so many local economies. It’s construction. The bottoming out of housing prices and reduction of inventory overhang by itself will not guarantee that construction picks up. (In the short term it will. Guaranteed. Because builders build. It’s what they do. Until they can’t sell what they build.)

For some local economies, it will. But others just don’t need any more housing. The country as a whole isn’t over-built for 18 months. It may be over-built for closer to 5 years. Some markets for a generation. And more construction in over-built locales will just put additional downward pressure on prices.

So I think you’re right, but maybe a bit too optomistic. Fixing the underwater homeowners, by itself, may not even help much.

The real recovery, including massive job creation, will have to come from somewhere else. Given the current political climate and the current corporate zeitgeist, I haven’t a clue where that would be.

[SK in CV]

[quote=Nor-LA-SD-GUY2]
Something no one wants to hear but it’s the truth.
It’s So Simple,
Housing is 20% of the economy in most locals (not all but most)
Agents, escrow, insurance, finance , landscape, builders,… etc the list goes on.

YOU WILL NEVER HAVE AN ECONOMIC RECOVERY UNTIL THE MAJORITY OF UNDERWATER HOME OWNERS ARE NO LONGER UNDER WATER,
One way or the other..

[/quote]

I think you’re mostly right here, despite the hyperbole. We actually have had a small recovery, which is miraculous under the circumstances. But I think you’ve also jumped to the conclusion that if real estate hits bottom, then there will be a recovery. Not so fast. It’s not just real estate that drives so many local economies. It’s construction. The bottoming out of housing prices and reduction of inventory overhang by itself will not guarantee that construction picks up. (In the short term it will. Guaranteed. Because builders build. It’s what they do. Until they can’t sell what they build.)

For some local economies, it will. But others just don’t need any more housing. The country as a whole isn’t over-built for 18 months. It may be over-built for closer to 5 years. Some markets for a generation. And more construction in over-built locales will just put additional downward pressure on prices.

So I think you’re right, but maybe a bit too optomistic. Fixing the underwater homeowners, by itself, may not even help much.

The real recovery, including massive job creation, will have to come from somewhere else. Given the current political climate and the current corporate zeitgeist, I haven’t a clue where that would be.

[SK in CV]

[quote=Nor-LA-SD-GUY2]
Something no one wants to hear but it’s the truth.
It’s So Simple,
Housing is 20% of the economy in most locals (not all but most)
Agents, escrow, insurance, finance , landscape, builders,… etc the list goes on.

YOU WILL NEVER HAVE AN ECONOMIC RECOVERY UNTIL THE MAJORITY OF UNDERWATER HOME OWNERS ARE NO LONGER UNDER WATER,
One way or the other..

[/quote]

I think you’re mostly right here, despite the hyperbole. We actually have had a small recovery, which is miraculous under the circumstances. But I think you’ve also jumped to the conclusion that if real estate hits bottom, then there will be a recovery. Not so fast. It’s not just real estate that drives so many local economies. It’s construction. The bottoming out of housing prices and reduction of inventory overhang by itself will not guarantee that construction picks up. (In the short term it will. Guaranteed. Because builders build. It’s what they do. Until they can’t sell what they build.)

For some local economies, it will. But others just don’t need any more housing. The country as a whole isn’t over-built for 18 months. It may be over-built for closer to 5 years. Some markets for a generation. And more construction in over-built locales will just put additional downward pressure on prices.

So I think you’re right, but maybe a bit too optomistic. Fixing the underwater homeowners, by itself, may not even help much.

The real recovery, including massive job creation, will have to come from somewhere else. Given the current political climate and the current corporate zeitgeist, I haven’t a clue where that would be.

[SK in CV]

[quote=CA renter]

I’ve often questioned the wisdom of paying a dollar in interest in order to save 30-40 cents in taxes.

Am I missing something?

[/quote]

No, you’re not. You’ve identified something that should be obvious, yet I don’t know how many times I’ve had new clients come to see me, with huge mortgages, and they tell me that their prior CPA told them to buy the most expensive house they could and borrow as much as possible to save taxes. Friggen morons.

It’s simple. If the question is to put another $100K down, or borrow another $100K, if the taxable return on investing the $ is the same as the interest rate on the loan, taxes will be almost exactly the same. (there are some exceptions to this, but those exceptions would certainly not apply in a case where the purchase is a $1M home.) Nobody EVER needs a tax deduction in the form of home mortgage interest. Mortgage interest costs REAL money. It NEVER pays to buy a dollar for dollar deduction. If it did, no one would ever complain about my fees, since they’d be essentially free after taxes.

If someone is fortunate enough to have the flexibility like the OP does, it’s a pure investment decision. Taxes are a variable like they are for all investments. They are usually not the driver. Net return is.

[SK in CV]

[quote=CA renter]

I’ve often questioned the wisdom of paying a dollar in interest in order to save 30-40 cents in taxes.

Am I missing something?

[/quote]

No, you’re not. You’ve identified something that should be obvious, yet I don’t know how many times I’ve had new clients come to see me, with huge mortgages, and they tell me that their prior CPA told them to buy the most expensive house they could and borrow as much as possible to save taxes. Friggen morons.

It’s simple. If the question is to put another $100K down, or borrow another $100K, if the taxable return on investing the $ is the same as the interest rate on the loan, taxes will be almost exactly the same. (there are some exceptions to this, but those exceptions would certainly not apply in a case where the purchase is a $1M home.) Nobody EVER needs a tax deduction in the form of home mortgage interest. Mortgage interest costs REAL money. It NEVER pays to buy a dollar for dollar deduction. If it did, no one would ever complain about my fees, since they’d be essentially free after taxes.

If someone is fortunate enough to have the flexibility like the OP does, it’s a pure investment decision. Taxes are a variable like they are for all investments. They are usually not the driver. Net return is.

[SK in CV]

[quote=CA renter]

I’ve often questioned the wisdom of paying a dollar in interest in order to save 30-40 cents in taxes.

Am I missing something?

[/quote]

No, you’re not. You’ve identified something that should be obvious, yet I don’t know how many times I’ve had new clients come to see me, with huge mortgages, and they tell me that their prior CPA told them to buy the most expensive house they could and borrow as much as possible to save taxes. Friggen morons.

It’s simple. If the question is to put another $100K down, or borrow another $100K, if the taxable return on investing the $ is the same as the interest rate on the loan, taxes will be almost exactly the same. (there are some exceptions to this, but those exceptions would certainly not apply in a case where the purchase is a $1M home.) Nobody EVER needs a tax deduction in the form of home mortgage interest. Mortgage interest costs REAL money. It NEVER pays to buy a dollar for dollar deduction. If it did, no one would ever complain about my fees, since they’d be essentially free after taxes.

If someone is fortunate enough to have the flexibility like the OP does, it’s a pure investment decision. Taxes are a variable like they are for all investments. They are usually not the driver. Net return is.

[SK in CV]

[quote=CA renter]

I’ve often questioned the wisdom of paying a dollar in interest in order to save 30-40 cents in taxes.

Am I missing something?

[/quote]

No, you’re not. You’ve identified something that should be obvious, yet I don’t know how many times I’ve had new clients come to see me, with huge mortgages, and they tell me that their prior CPA told them to buy the most expensive house they could and borrow as much as possible to save taxes. Friggen morons.

It’s simple. If the question is to put another $100K down, or borrow another $100K, if the taxable return on investing the $ is the same as the interest rate on the loan, taxes will be almost exactly the same. (there are some exceptions to this, but those exceptions would certainly not apply in a case where the purchase is a $1M home.) Nobody EVER needs a tax deduction in the form of home mortgage interest. Mortgage interest costs REAL money. It NEVER pays to buy a dollar for dollar deduction. If it did, no one would ever complain about my fees, since they’d be essentially free after taxes.

If someone is fortunate enough to have the flexibility like the OP does, it’s a pure investment decision. Taxes are a variable like they are for all investments. They are usually not the driver. Net return is.

[SK in CV]

[quote=CA renter]

I’ve often questioned the wisdom of paying a dollar in interest in order to save 30-40 cents in taxes.

Am I missing something?

[/quote]

No, you’re not. You’ve identified something that should be obvious, yet I don’t know how many times I’ve had new clients come to see me, with huge mortgages, and they tell me that their prior CPA told them to buy the most expensive house they could and borrow as much as possible to save taxes. Friggen morons.

It’s simple. If the question is to put another $100K down, or borrow another $100K, if the taxable return on investing the $ is the same as the interest rate on the loan, taxes will be almost exactly the same. (there are some exceptions to this, but those exceptions would certainly not apply in a case where the purchase is a $1M home.) Nobody EVER needs a tax deduction in the form of home mortgage interest. Mortgage interest costs REAL money. It NEVER pays to buy a dollar for dollar deduction. If it did, no one would ever complain about my fees, since they’d be essentially free after taxes.

If someone is fortunate enough to have the flexibility like the OP does, it’s a pure investment decision. Taxes are a variable like they are for all investments. They are usually not the driver. Net return is.

[SK in CV]

I don’t know what the interest rates are right now on a %600K+ loan, but fixed rate, i’m guessing it’s in the neighborhood of 4.5%. So for every dollar you do NOT borrow, you’re getting an absolutely, positively, better than US govt debt, guaranteed return of 4.5%. If you have a high degree of confidence you can continue to generate 7% return, borrow as much as you can at that rate, you’re picking up 2.5%.

Then there’s also the risk that the market takes another swan dive. Lower down payment, lower exposure in case the value drops below the debt.

Tough call. Great to be in a position to have the flexibility to need to choose.

[SK in CV]

I don’t know what the interest rates are right now on a %600K+ loan, but fixed rate, i’m guessing it’s in the neighborhood of 4.5%. So for every dollar you do NOT borrow, you’re getting an absolutely, positively, better than US govt debt, guaranteed return of 4.5%. If you have a high degree of confidence you can continue to generate 7% return, borrow as much as you can at that rate, you’re picking up 2.5%.

Then there’s also the risk that the market takes another swan dive. Lower down payment, lower exposure in case the value drops below the debt.

Tough call. Great to be in a position to have the flexibility to need to choose.

[SK in CV]

I don’t know what the interest rates are right now on a %600K+ loan, but fixed rate, i’m guessing it’s in the neighborhood of 4.5%. So for every dollar you do NOT borrow, you’re getting an absolutely, positively, better than US govt debt, guaranteed return of 4.5%. If you have a high degree of confidence you can continue to generate 7% return, borrow as much as you can at that rate, you’re picking up 2.5%.

Then there’s also the risk that the market takes another swan dive. Lower down payment, lower exposure in case the value drops below the debt.

Tough call. Great to be in a position to have the flexibility to need to choose.

[SK in CV]

I don’t know what the interest rates are right now on a %600K+ loan, but fixed rate, i’m guessing it’s in the neighborhood of 4.5%. So for every dollar you do NOT borrow, you’re getting an absolutely, positively, better than US govt debt, guaranteed return of 4.5%. If you have a high degree of confidence you can continue to generate 7% return, borrow as much as you can at that rate, you’re picking up 2.5%.

Then there’s also the risk that the market takes another swan dive. Lower down payment, lower exposure in case the value drops below the debt.

Tough call. Great to be in a position to have the flexibility to need to choose.

[SK in CV]

I don’t know what the interest rates are right now on a %600K+ loan, but fixed rate, i’m guessing it’s in the neighborhood of 4.5%. So for every dollar you do NOT borrow, you’re getting an absolutely, positively, better than US govt debt, guaranteed return of 4.5%. If you have a high degree of confidence you can continue to generate 7% return, borrow as much as you can at that rate, you’re picking up 2.5%.

Then there’s also the risk that the market takes another swan dive. Lower down payment, lower exposure in case the value drops below the debt.

Tough call. Great to be in a position to have the flexibility to need to choose.

[SK in CV]

[quote=patb]

what it means is you have an enforceable contract, but that one page or
the clause may be not enforceable.

but, usually most people want to finish a deal[/quote]

Naw, it’s still fully enforceable. The theory behind the initials is twofold (maybe more). One, it acknowldges that the party is agreeing to the wording on that page, and prevents insertion of an alternate page or wording into the agreement. Second, it protects the counter-party from claims that the the initialer didn’t see or agree to clauses on that particular page. Nonetheless, signed contracts are fully enforceable with or without the initials. Particularly with so many copies of standard real estate contracts, the likelihood of either side prevailing in a dispute over the content of any particular page is remote. And if the contract is signed, the entire contract has met the “meeting of the minds” requirement. Missing initials notwithstanding.

[Author]

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