Forum Replies Created
-
AuthorPosts
-
June 18, 2013 at 4:58 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762976June 18, 2013 at 1:30 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762952
SK in CV
Participant[quote=bearishgurl]
We can’t have it both ways … that is … 40%+?? of CA’s landowners paying 1/10th of 1% of the current market value of their properties due to artificially low assessments which will NEVER catch up to even being close to the market value…[/quote]Do you know this 40% number is right or are you just guessing at it? I have no idea.
Edited to add: I think that 40% number is impossible. My mother’s house (which was sold a few years ago) had 1976 original valuation for prop 13 purposes. The assessed value more than doubled over the years to right around 100,000. It was sold right after the peak of the market at $670K, and is probably worth a little less than that now. I suspect most of the original prop 13 valuations are similar, at about maybe 15% of full market value (as opposed to the 10% you claimed). I won’t quibble about that difference, but I find it hard to believe that anywhere near 40% of all California property is still working from almost 40 year old valuations. In fact, I wouldn’t be surprised if close to 1/2 of all RE improvements aren’t even that old. California’s population has come close to doubling since 1978.
SK in CV
Participant[quote=spdrun]And why exactly should BoA be obliged to give deadbeat borrowers a free ride?
Don’t pay child support: go to jail
Don’t pay car loan: get car repo’edWhy should mortgages be a sacred cow?[/quote]
They’re not a sacred cow. Millions of homeowners have had their loans foreclosed. That’s not the issue here. The issue is good faith bargaining. Lenders took risks. Bad ones. And got bailed out, to the tune of hundreds of billions of dollars. Coincidental to that bailout, they were required to negotiate in good faith to modify loans. BofA in particular, and other lenders similarly, have demonstrably failed to do so.
June 18, 2013 at 11:18 AM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762946SK in CV
Participant[quote=FlyerInHi]Another point that was made here is that If we screw the retirees, we should screw the bonds holders too.
I see a difference because CAR uses the technicalities to make his arguments.
The pension funds owe the benefits, not the taxpayers as CAR put it. So let the funds exhaust their money first, then we will deal with it, or not. The various governments owe money to the bond holders directly. Let’s deal with different contracts separately. First things first.[/quote]
That’s ultimately a distinction without a difference. Neither are direct obligations of the taxpayer. (bond holders are not going to come knocking on YOUR door for the money.) Both are direct obligations of the state or municipality. The pension funds (in CA, primarily CalPers and STRS) are just a conduit. The state (or school districts in the case of STRS) owes the money. Exactly the same as they owe the money on bonds.
June 17, 2013 at 10:26 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762924SK in CV
Participant[quote=CA renter]I see your point about LLs not putting properties on the market, SK, but believe that many would still choose to put their properties on the market if they can’t manage to make the same returns. OTOH, with interest rates and other asset classes valued as they are, they wouldn’t have many other options until/unless interest rates go up (and asset prices down). I’m just surmising based on what many LLs would think based on a tax reassessment at full market value for their properties. There is no doubt that their margins would be crushed.[/quote]
The bolded part is the important part. Although I’m not sure interest rates are the key. The key will be alternatives. Can they invest their after tax proceeds on sale and get a better return? If values go down, then returns go up. (cash flow/net value) If investors are still buying today (or at least in some parts of the state, were until very recently), and paying full property taxes, they’re doing it based on a belief that it is better than alternatives. Some current owners may evaluate it differently, but these are people who are already comfortable being landlords. So it seems unlikely.
June 17, 2013 at 8:01 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762917SK in CV
Participant[quote=dumbrenter][quote=CA renter]
Note: rents did not go down, so the belief that rent would go up as a result of its repeal doesn’t really hold water. What would probably happen, is that properties would flood the market in anticipation of the repeal, which would drive down prices in many cases. Some of us would like to see this happen, as we believe that the rights of people to own their own (affordable) homes trumps the “rights” of landlords to collect rents/profit from people who need housing. Some properties could be excluded from the tax increase, but ONLY if the savings are passed on to renters (especially low-income renters) instead of padding the pockets of the profiteering parasites. At least with pensions we’re getting something in return (the best possible public employees who provide for our safety and security); with Prop 13 subsidies to landlords/landowners, we get NOTHING in return.[/quote]You say that the rents did not go lower when Prop 13 was introduced hence they will not go up if it were to be repealed. I do not think it is as simple as solving for a mathematical equation.
That said, I see that your expectation in this scenario is for the newer (relatively) landlords to lose the margin and hence put their properties on the market. I admit I did not consider this scenario, but still, the newer landlords will still have to raise rents and they will be even more compelled to do so since they do not have the “advantage” of the older ones. Given that this repeal is across the board, nobody can make a case of collusion in raising rents statewide.
BTW your expectation of future is better for my finances than mine, but I think it is unlikely that it will turn out that way.[/quote]
I disagree entirely that sellers will have a strong motivation to sell properties if prop 13 is repealed, because of lower margins. There may be some circumstances, but it will be pretty rare. Investors have been buying California property with current tax rates. They don’t look at an existing owner’s taxes, they KNOW that property taxes will be approximately 1.1% of purchase price. (outside of MR districts.) A long time owner will probably experience a big increase in taxes, but they will be the same as a new buyer would have. For investor purposes, a cash flow projection is already based on those higher taxes, so what would be the incentive for a landlord to sell?
Current rents are based on demand/supply. A change in the property tax structure is unlikely to change either the demand or the supply. Tenants will not suddenly be willing to pay more, so landlords will not be able to suddenly raise the rents they charge. Rents are NOT determined by a landlord’s cash flow. They’re determined by the market.
And I’m thinking this through as a landlord. I own an apartment building I bought 20 years ago. There is an almost identical property right next door (built at the same, around 1975, but 20% more units). The building next door sold about 4 years ago. That owner can’t charge any higher rents than I can, even though his property taxes are probably 50-60% higher than mine, just like if my taxes went up, I won’t be able to charge higher rents. Competition in the market determines the rents. Not my cash flow.
June 17, 2013 at 3:08 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762899SK in CV
Participant[quote=SD Realtor]
Hiding behind poorly written pension contracts or antiquated requirements seems to be your path chosen here rather then going, okay that was a major f-ck up, let’s try to make things right.[/quote]I agree with trying to make things right. But what you’ve proposed is changing a contract. And it’s no more easily done on a very straight forward pension agreement than it is on a very straight forward bond contract agreement. That one was a bad idea in the first place doesn’t make it any easier to change.
June 17, 2013 at 2:43 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762897SK in CV
Participant[quote=SD Realtor]Ummm aren’t bonds callable? I have seen plenty of muni’s that have early call provisions.[/quote]
Some are, some are not. If the state can ignore existing pension agreements, they could ignore bond contracts. Maybe the issuers should just call those high interest rate bonds, irrespective of the bond contracts?
June 17, 2013 at 2:40 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762896SK in CV
Participant[quote=dumbrenter][quote=SK in CV][quote=dumbrenter][quote=SK in CV][quote=dumbrenter]Your fix will have a nasty side-effect of rents going up drastically.
[/quote]Why? How?[/quote]
The increase in property taxes will be passed on to the renters.[/quote]
Really? You think there are a lot of landlords now that are leaving money on the table, keeping rents lower because their property taxes are lower?
Not. A. Chance.[/quote]
huh?
It is ok for you to have a different opinion about future and it is also ok to say I am wrong. I wish you the best with whatever version of future you are thinking of.
But what is not ok with me is for you to make up things I never said. I never said a word about current rents and margins being made by landlords. Again, I said that the increase in property taxes will be passed off to renters.
While I like to have a conversation with people who hold different views, I do not like your twisting of things (intentional or otherwise), responding with questions and being lazy with words. Do not expect me to respond if you persist with such behavior.[/quote]
I’m not really twisting anything. What you said is that if prop 13 is repealed, rents will go up, because an increase in taxes will be passed on to tenants. There is a presumption in that claim that rents are determined based on a landlords expenses. Hence, the only reasonable conclusion would be that a landlord who bought many years ago, and has lower taxes, would charge lower rents than a landlord who just recently purchased and has higher taxes. If your claim was based on some other conclusion on the effects of a repeal of prop 13, please explain.
June 17, 2013 at 1:08 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762883SK in CV
Participant[quote=SD Realtor]I don’t see the solution to the pension problem in raising more revenue to pay the pensions. If the pensions are not making the projected returns, then tough break. Then the returns are not made and the those getting pension checks simply get less. If they do make the returns, then good for them.
Pensions are fine, just don’t use public funds to backstop poor performance.
If you want to change tax laws on prop 13 why not let everyone benefit from increased revenue?[/quote]
If it was that easy, why don’t we tell all the muni bond holders of old bonds with yields of >8% that the state just isn’t collecting enough money, so they don’t get the interest payments they were promised. Problem solved.
June 17, 2013 at 12:53 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762877SK in CV
Participant[quote=dumbrenter][quote=SK in CV][quote=dumbrenter]Your fix will have a nasty side-effect of rents going up drastically.
[/quote]Why? How?[/quote]
The increase in property taxes will be passed on to the renters.[/quote]
Really? You think there are a lot of landlords now that are leaving money on the table, keeping rents lower because their property taxes are lower?
Not. A. Chance.
June 17, 2013 at 12:23 PM in reply to: Another excellent Economist Mag article on the terrible state pension issues #762875SK in CV
Participant[quote=dumbrenter]Your fix will have a nasty side-effect of rents going up drastically.
[/quote]Why? How?
SK in CV
Participant[quote=Allan from Fallbrook]
It should also disabuse anyone of the notion that this administration is any less in bed with the Saudis than previous administrations were.[/quote]The Saudis? I thought it was Israel pulling the strings? I think it’s neither, though SA is closer to the truth. Or maybe it’s all 3 countries with parallel motivations, a common enemy in Iran. Stick with Assad and Iran wins. Go with the rebels and it’s only 50/50 that Iran wins. Maybe a little less than that. I have no doubt that at least some of the anti-Assad groups would align with Iran in a heartbeat.
SK in CV
Participant[quote=Allan from Fallbrook]And, in other news, America arms al-Qaeda, uh, I mean “rebels”, in Syrian civil war.
This should work out really well…[/quote]
Yeah, I don’t know if it’s exactly the same. But certainly close enough for discomfort. Doing nothing would be preferable.
SK in CV
Participant[quote=livinincali][quote=spdrun]Simple solution: limit working hours to 35 per week + 4 weeks mandatory vacation + holidays for most W-2 employees. Combine that with national health insurance for all, so that employers would have to provide very minimal benefits — cost of hiring goes down.
You’d have (a) more people hired, since the possible work done by a single worker will decline and (b) people having more time to spend with families and kids.
[/quote]Sounds like France. How is the their economy doing right now? Unfortunately the socialist managed economy idea looks good on paper but performs poorly when implemented in the real world. When the competitive nature of people is allowed to function it seems to bring about the most innovation and growth. Unfortunately it also leaves a bunch of people behind. I don’t have a fair equitable solution. The economists that seem to think they have a solution don’t seem to understand the complexity that leads to unexpected and unintended results. maybe we’d be better off just letting the economy ebb and flow naturally rather than trying to meddle in something we clearly don’t really understand.[/quote]
Actually, it’s closer to being like Germany, where the average worker doesn’t work as much as they do in France. Workers in both work less than Greece.
-
AuthorPosts
