Forum Replies Created
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ucodegen
ParticipantWould you consider ANYBODY buying in the market today a “savy” buyer? The facts just show that most buyers are indeed not savy.
I never said I considered them savy. That is why I am disagreeing with your statement earlier:
“This measure will simply help those who have money get more property”.
I was using the second quoted statement:
“While the savy buyer measures value of a home with regards to market conditions, pricing, etc… many a buyer, dare I say a majority simply look at the mortgage payment.”
to counter the first quoted statement. I don’t agree with the first quoted statement but agree with the second. I felt you were making slightly contradictory statements. I was also bringing in the fact that many of the non-savy buyers have already shot their wad… of cash to coin a phrase. They don’t have money to buy in now. The ones that have money to buy in are the savy buyers (who probably haven’t contacted a Realtor yet because they know this thing has legs in the downward direction) and wannabe savy who are fence sitters sitting on the edge of their seat. The change in conforming will probably pull the wannabe savies off the fence. Instead of “wannabe savy”, I was calling them green investors or green potential buyers. The green/inexperienced label is a bit nicer than wannabe. My two last sentences in the paragraph referring to green investor/buyers could have been clearer. I consider having money and the wisdom to use it properly going hand in hand because those with money currently but lacking wisdom are soon separated from their money.
Your argument is like a college professor giving a lecture. You use facts, you point out cause and expected affects. It all makes perfect sense.
However the world is not working like that. At least not yet.
I use facts because I know they are the only real counter argument to things that the NAR have been saying as well as other individuals/groups. I know the market is not working rationally and won’t until this thing has spent itself out. That is why I was doing a rational explanation of the liquidity, where the problems are, what is expected to happen and why the fed move and who is it really helping. Somehow people were getting the feeling that the fed dropping the rates was to help them with houses.. and I was trying to pull off the rose colored glasses.. if only for a second. I am not saying that you, SD Realtor, have rose colored glasses on. I do think there are viewers on this board who do.
Anyways again, no argument with your post, except that I am a heck of alot busier then I should be given the market conditions.
I know you are quite busy.. and that is what really scares the crap out of me. I bet the houses are not going for that much of a discount from ’05 prices. There have been several statements on the media that the turn around will occur in ’08 or ’09. I think the flattening that we will see in ’09 will be another suckers play. Neg Ams start resetting afterwards (and therefore the “All hell breaks loose.” statement).
I generally use my facts and analysis on this board because I feel the “quality of clientèle” is better. If I try the logic approach to a member of the general public, it is often too much for them to handle and their eyes glaze over. They then grasp a one of the statements the RE hypers have used to counter. Sorry if I sound like Tanta or Calculated Risk…
ParticipantWould you consider ANYBODY buying in the market today a “savy” buyer? The facts just show that most buyers are indeed not savy.
I never said I considered them savy. That is why I am disagreeing with your statement earlier:
“This measure will simply help those who have money get more property”.
I was using the second quoted statement:
“While the savy buyer measures value of a home with regards to market conditions, pricing, etc… many a buyer, dare I say a majority simply look at the mortgage payment.”
to counter the first quoted statement. I don’t agree with the first quoted statement but agree with the second. I felt you were making slightly contradictory statements. I was also bringing in the fact that many of the non-savy buyers have already shot their wad… of cash to coin a phrase. They don’t have money to buy in now. The ones that have money to buy in are the savy buyers (who probably haven’t contacted a Realtor yet because they know this thing has legs in the downward direction) and wannabe savy who are fence sitters sitting on the edge of their seat. The change in conforming will probably pull the wannabe savies off the fence. Instead of “wannabe savy”, I was calling them green investors or green potential buyers. The green/inexperienced label is a bit nicer than wannabe. My two last sentences in the paragraph referring to green investor/buyers could have been clearer. I consider having money and the wisdom to use it properly going hand in hand because those with money currently but lacking wisdom are soon separated from their money.
Your argument is like a college professor giving a lecture. You use facts, you point out cause and expected affects. It all makes perfect sense.
However the world is not working like that. At least not yet.
I use facts because I know they are the only real counter argument to things that the NAR have been saying as well as other individuals/groups. I know the market is not working rationally and won’t until this thing has spent itself out. That is why I was doing a rational explanation of the liquidity, where the problems are, what is expected to happen and why the fed move and who is it really helping. Somehow people were getting the feeling that the fed dropping the rates was to help them with houses.. and I was trying to pull off the rose colored glasses.. if only for a second. I am not saying that you, SD Realtor, have rose colored glasses on. I do think there are viewers on this board who do.
Anyways again, no argument with your post, except that I am a heck of alot busier then I should be given the market conditions.
I know you are quite busy.. and that is what really scares the crap out of me. I bet the houses are not going for that much of a discount from ’05 prices. There have been several statements on the media that the turn around will occur in ’08 or ’09. I think the flattening that we will see in ’09 will be another suckers play. Neg Ams start resetting afterwards (and therefore the “All hell breaks loose.” statement).
I generally use my facts and analysis on this board because I feel the “quality of clientèle” is better. If I try the logic approach to a member of the general public, it is often too much for them to handle and their eyes glaze over. They then grasp a one of the statements the RE hypers have used to counter. Sorry if I sound like Tanta or Calculated Risk…
ParticipantThis measure will simply help those who have money get more property.
I would have to disagree with you here. It will cause an jump in prices on houses in the 500k to 800k region because of the reason you stated earlier:
While the savy buyer measures value of a home with regards to market conditions, pricing, etc… many a buyer, dare I say a majority simply look at the mortgage payment.
Most of the savy buyers know the value of money and will notice the price getting a bit more unreasonable in the 500K to 800K region. What the measure will do is ‘sink the hook’ in the mouths of any green investors or green potential buyers that only look at the house payment and believe that a full turnaround is imminent. The people with money will wait until these people get hit too. The have the money in the first place because they were patent enough to not get sucked into the previous hype-up of prices.
My opinion on the increase on loan limits is that it is a suckers play. It pulls people out of original purchase jumbo loans into a refi, which makes the loans recourse. It gets the fence sitters that are on the edge of their seats and don’t have the experience to see the sucker play into the market to try to prop up house prices.
The second part of it is that it is a suckers play on all taxpayers because Fannie Mae, Freddie Mac are backed by US taxpayers should the loans default sufficiently to cause either of the institutions to have liquidity problems. It allows banks to that have loans that would qualify, sell them off to either of the institutions, potentially at a profit because of the present interest rate drops. Banks walk away with the money, Fannie Mae, Freddie Mac (aka US taxpayers) take the risk.
As for liquidity problem, there is more than enough liquidity. The problem is that the banks know their own investment portfolio (SIVs) look like crap and suspect another bank’s are just as bad or worse.. so they will not lend to each other without significant risk premium.. but the banks want cheap money for high risk just like they have been getting in the past. The second part of the problem is that the banks etc with the CDOs/MBSs or mortgage paper do not want to mark to market because it will really hurt their bottom line (they will have resolve the drop in assets to net income.. -100Bil anyone?). We are seeing a few billion here and there. The total amount is involved is estimated to be close to $500Billion or more. What the rapid drop in interest rates does is inflate the ‘asset value’ of the CDOs/MBSs until the holders can find another sucker to hold the bag. Rough example following:
Lets say we are a bank and have $1Mil in MBSs yielding 6% ($60,000/yr). Now we discover 50% of the loans are bad ($500K) and the recovery rate is 50% of assets on bad loans. This means you have $750K of real assets(MBS) returning $30K/yr (50% went bad so they don’t yield a return). Effectively we now have a $750K asset yielding 4%. Be we are greedy.. we want our $1Mil back.. how do we do this? Well if the risk free rate of return (Treasury) is reduced to 3% or below, $1Mil returns $30K @ 3%.. which looks just like our crap! If we can achieve good ratings after allowing for bad loans.. we (the bank) can hot potato the MBS to someone else at our original cost. We the bank don’t lose. The dodgy debt is someone else’s problem.
Looking at the above, you might be able to estimate where the fed rates will drop to before stabilizing. What is needed is the % of loans going bad, recovery rate as a percentage of original loan value and what the MBSs/CDOs were originally yielding. The real formula to use is an amortization formula.. but thats harder to follow. The above paragraph is easier to follow and reflecting on all of this is making me cranky again (And the Friday beer is wearing off.. needed one for this week).. so I am going to hit the hay.
NOTE: The above applies to the sub-prime, Alt-A paper. Many of these were refi’d into NegAms.. which are projected to start resetting late 2009 and hit full swing 2010. I can’t project what will happen here because these loans start out underwater. Some were refi’s which makes them recourse. I call this period the ‘all Hell breaks loose’ period.
ParticipantThis measure will simply help those who have money get more property.
I would have to disagree with you here. It will cause an jump in prices on houses in the 500k to 800k region because of the reason you stated earlier:
While the savy buyer measures value of a home with regards to market conditions, pricing, etc… many a buyer, dare I say a majority simply look at the mortgage payment.
Most of the savy buyers know the value of money and will notice the price getting a bit more unreasonable in the 500K to 800K region. What the measure will do is ‘sink the hook’ in the mouths of any green investors or green potential buyers that only look at the house payment and believe that a full turnaround is imminent. The people with money will wait until these people get hit too. The have the money in the first place because they were patent enough to not get sucked into the previous hype-up of prices.
My opinion on the increase on loan limits is that it is a suckers play. It pulls people out of original purchase jumbo loans into a refi, which makes the loans recourse. It gets the fence sitters that are on the edge of their seats and don’t have the experience to see the sucker play into the market to try to prop up house prices.
The second part of it is that it is a suckers play on all taxpayers because Fannie Mae, Freddie Mac are backed by US taxpayers should the loans default sufficiently to cause either of the institutions to have liquidity problems. It allows banks to that have loans that would qualify, sell them off to either of the institutions, potentially at a profit because of the present interest rate drops. Banks walk away with the money, Fannie Mae, Freddie Mac (aka US taxpayers) take the risk.
As for liquidity problem, there is more than enough liquidity. The problem is that the banks know their own investment portfolio (SIVs) look like crap and suspect another bank’s are just as bad or worse.. so they will not lend to each other without significant risk premium.. but the banks want cheap money for high risk just like they have been getting in the past. The second part of the problem is that the banks etc with the CDOs/MBSs or mortgage paper do not want to mark to market because it will really hurt their bottom line (they will have resolve the drop in assets to net income.. -100Bil anyone?). We are seeing a few billion here and there. The total amount is involved is estimated to be close to $500Billion or more. What the rapid drop in interest rates does is inflate the ‘asset value’ of the CDOs/MBSs until the holders can find another sucker to hold the bag. Rough example following:
Lets say we are a bank and have $1Mil in MBSs yielding 6% ($60,000/yr). Now we discover 50% of the loans are bad ($500K) and the recovery rate is 50% of assets on bad loans. This means you have $750K of real assets(MBS) returning $30K/yr (50% went bad so they don’t yield a return). Effectively we now have a $750K asset yielding 4%. Be we are greedy.. we want our $1Mil back.. how do we do this? Well if the risk free rate of return (Treasury) is reduced to 3% or below, $1Mil returns $30K @ 3%.. which looks just like our crap! If we can achieve good ratings after allowing for bad loans.. we (the bank) can hot potato the MBS to someone else at our original cost. We the bank don’t lose. The dodgy debt is someone else’s problem.
Looking at the above, you might be able to estimate where the fed rates will drop to before stabilizing. What is needed is the % of loans going bad, recovery rate as a percentage of original loan value and what the MBSs/CDOs were originally yielding. The real formula to use is an amortization formula.. but thats harder to follow. The above paragraph is easier to follow and reflecting on all of this is making me cranky again (And the Friday beer is wearing off.. needed one for this week).. so I am going to hit the hay.
NOTE: The above applies to the sub-prime, Alt-A paper. Many of these were refi’d into NegAms.. which are projected to start resetting late 2009 and hit full swing 2010. I can’t project what will happen here because these loans start out underwater. Some were refi’s which makes them recourse. I call this period the ‘all Hell breaks loose’ period.
ParticipantThis measure will simply help those who have money get more property.
I would have to disagree with you here. It will cause an jump in prices on houses in the 500k to 800k region because of the reason you stated earlier:
While the savy buyer measures value of a home with regards to market conditions, pricing, etc… many a buyer, dare I say a majority simply look at the mortgage payment.
Most of the savy buyers know the value of money and will notice the price getting a bit more unreasonable in the 500K to 800K region. What the measure will do is ‘sink the hook’ in the mouths of any green investors or green potential buyers that only look at the house payment and believe that a full turnaround is imminent. The people with money will wait until these people get hit too. The have the money in the first place because they were patent enough to not get sucked into the previous hype-up of prices.
My opinion on the increase on loan limits is that it is a suckers play. It pulls people out of original purchase jumbo loans into a refi, which makes the loans recourse. It gets the fence sitters that are on the edge of their seats and don’t have the experience to see the sucker play into the market to try to prop up house prices.
The second part of it is that it is a suckers play on all taxpayers because Fannie Mae, Freddie Mac are backed by US taxpayers should the loans default sufficiently to cause either of the institutions to have liquidity problems. It allows banks to that have loans that would qualify, sell them off to either of the institutions, potentially at a profit because of the present interest rate drops. Banks walk away with the money, Fannie Mae, Freddie Mac (aka US taxpayers) take the risk.
As for liquidity problem, there is more than enough liquidity. The problem is that the banks know their own investment portfolio (SIVs) look like crap and suspect another bank’s are just as bad or worse.. so they will not lend to each other without significant risk premium.. but the banks want cheap money for high risk just like they have been getting in the past. The second part of the problem is that the banks etc with the CDOs/MBSs or mortgage paper do not want to mark to market because it will really hurt their bottom line (they will have resolve the drop in assets to net income.. -100Bil anyone?). We are seeing a few billion here and there. The total amount is involved is estimated to be close to $500Billion or more. What the rapid drop in interest rates does is inflate the ‘asset value’ of the CDOs/MBSs until the holders can find another sucker to hold the bag. Rough example following:
Lets say we are a bank and have $1Mil in MBSs yielding 6% ($60,000/yr). Now we discover 50% of the loans are bad ($500K) and the recovery rate is 50% of assets on bad loans. This means you have $750K of real assets(MBS) returning $30K/yr (50% went bad so they don’t yield a return). Effectively we now have a $750K asset yielding 4%. Be we are greedy.. we want our $1Mil back.. how do we do this? Well if the risk free rate of return (Treasury) is reduced to 3% or below, $1Mil returns $30K @ 3%.. which looks just like our crap! If we can achieve good ratings after allowing for bad loans.. we (the bank) can hot potato the MBS to someone else at our original cost. We the bank don’t lose. The dodgy debt is someone else’s problem.
Looking at the above, you might be able to estimate where the fed rates will drop to before stabilizing. What is needed is the % of loans going bad, recovery rate as a percentage of original loan value and what the MBSs/CDOs were originally yielding. The real formula to use is an amortization formula.. but thats harder to follow. The above paragraph is easier to follow and reflecting on all of this is making me cranky again (And the Friday beer is wearing off.. needed one for this week).. so I am going to hit the hay.
NOTE: The above applies to the sub-prime, Alt-A paper. Many of these were refi’d into NegAms.. which are projected to start resetting late 2009 and hit full swing 2010. I can’t project what will happen here because these loans start out underwater. Some were refi’s which makes them recourse. I call this period the ‘all Hell breaks loose’ period.
ParticipantThis measure will simply help those who have money get more property.
I would have to disagree with you here. It will cause an jump in prices on houses in the 500k to 800k region because of the reason you stated earlier:
While the savy buyer measures value of a home with regards to market conditions, pricing, etc… many a buyer, dare I say a majority simply look at the mortgage payment.
Most of the savy buyers know the value of money and will notice the price getting a bit more unreasonable in the 500K to 800K region. What the measure will do is ‘sink the hook’ in the mouths of any green investors or green potential buyers that only look at the house payment and believe that a full turnaround is imminent. The people with money will wait until these people get hit too. The have the money in the first place because they were patent enough to not get sucked into the previous hype-up of prices.
My opinion on the increase on loan limits is that it is a suckers play. It pulls people out of original purchase jumbo loans into a refi, which makes the loans recourse. It gets the fence sitters that are on the edge of their seats and don’t have the experience to see the sucker play into the market to try to prop up house prices.
The second part of it is that it is a suckers play on all taxpayers because Fannie Mae, Freddie Mac are backed by US taxpayers should the loans default sufficiently to cause either of the institutions to have liquidity problems. It allows banks to that have loans that would qualify, sell them off to either of the institutions, potentially at a profit because of the present interest rate drops. Banks walk away with the money, Fannie Mae, Freddie Mac (aka US taxpayers) take the risk.
As for liquidity problem, there is more than enough liquidity. The problem is that the banks know their own investment portfolio (SIVs) look like crap and suspect another bank’s are just as bad or worse.. so they will not lend to each other without significant risk premium.. but the banks want cheap money for high risk just like they have been getting in the past. The second part of the problem is that the banks etc with the CDOs/MBSs or mortgage paper do not want to mark to market because it will really hurt their bottom line (they will have resolve the drop in assets to net income.. -100Bil anyone?). We are seeing a few billion here and there. The total amount is involved is estimated to be close to $500Billion or more. What the rapid drop in interest rates does is inflate the ‘asset value’ of the CDOs/MBSs until the holders can find another sucker to hold the bag. Rough example following:
Lets say we are a bank and have $1Mil in MBSs yielding 6% ($60,000/yr). Now we discover 50% of the loans are bad ($500K) and the recovery rate is 50% of assets on bad loans. This means you have $750K of real assets(MBS) returning $30K/yr (50% went bad so they don’t yield a return). Effectively we now have a $750K asset yielding 4%. Be we are greedy.. we want our $1Mil back.. how do we do this? Well if the risk free rate of return (Treasury) is reduced to 3% or below, $1Mil returns $30K @ 3%.. which looks just like our crap! If we can achieve good ratings after allowing for bad loans.. we (the bank) can hot potato the MBS to someone else at our original cost. We the bank don’t lose. The dodgy debt is someone else’s problem.
Looking at the above, you might be able to estimate where the fed rates will drop to before stabilizing. What is needed is the % of loans going bad, recovery rate as a percentage of original loan value and what the MBSs/CDOs were originally yielding. The real formula to use is an amortization formula.. but thats harder to follow. The above paragraph is easier to follow and reflecting on all of this is making me cranky again (And the Friday beer is wearing off.. needed one for this week).. so I am going to hit the hay.
NOTE: The above applies to the sub-prime, Alt-A paper. Many of these were refi’d into NegAms.. which are projected to start resetting late 2009 and hit full swing 2010. I can’t project what will happen here because these loans start out underwater. Some were refi’s which makes them recourse. I call this period the ‘all Hell breaks loose’ period.
ParticipantThis measure will simply help those who have money get more property.
I would have to disagree with you here. It will cause an jump in prices on houses in the 500k to 800k region because of the reason you stated earlier:
While the savy buyer measures value of a home with regards to market conditions, pricing, etc… many a buyer, dare I say a majority simply look at the mortgage payment.
Most of the savy buyers know the value of money and will notice the price getting a bit more unreasonable in the 500K to 800K region. What the measure will do is ‘sink the hook’ in the mouths of any green investors or green potential buyers that only look at the house payment and believe that a full turnaround is imminent. The people with money will wait until these people get hit too. The have the money in the first place because they were patent enough to not get sucked into the previous hype-up of prices.
My opinion on the increase on loan limits is that it is a suckers play. It pulls people out of original purchase jumbo loans into a refi, which makes the loans recourse. It gets the fence sitters that are on the edge of their seats and don’t have the experience to see the sucker play into the market to try to prop up house prices.
The second part of it is that it is a suckers play on all taxpayers because Fannie Mae, Freddie Mac are backed by US taxpayers should the loans default sufficiently to cause either of the institutions to have liquidity problems. It allows banks to that have loans that would qualify, sell them off to either of the institutions, potentially at a profit because of the present interest rate drops. Banks walk away with the money, Fannie Mae, Freddie Mac (aka US taxpayers) take the risk.
As for liquidity problem, there is more than enough liquidity. The problem is that the banks know their own investment portfolio (SIVs) look like crap and suspect another bank’s are just as bad or worse.. so they will not lend to each other without significant risk premium.. but the banks want cheap money for high risk just like they have been getting in the past. The second part of the problem is that the banks etc with the CDOs/MBSs or mortgage paper do not want to mark to market because it will really hurt their bottom line (they will have resolve the drop in assets to net income.. -100Bil anyone?). We are seeing a few billion here and there. The total amount is involved is estimated to be close to $500Billion or more. What the rapid drop in interest rates does is inflate the ‘asset value’ of the CDOs/MBSs until the holders can find another sucker to hold the bag. Rough example following:
Lets say we are a bank and have $1Mil in MBSs yielding 6% ($60,000/yr). Now we discover 50% of the loans are bad ($500K) and the recovery rate is 50% of assets on bad loans. This means you have $750K of real assets(MBS) returning $30K/yr (50% went bad so they don’t yield a return). Effectively we now have a $750K asset yielding 4%. Be we are greedy.. we want our $1Mil back.. how do we do this? Well if the risk free rate of return (Treasury) is reduced to 3% or below, $1Mil returns $30K @ 3%.. which looks just like our crap! If we can achieve good ratings after allowing for bad loans.. we (the bank) can hot potato the MBS to someone else at our original cost. We the bank don’t lose. The dodgy debt is someone else’s problem.
Looking at the above, you might be able to estimate where the fed rates will drop to before stabilizing. What is needed is the % of loans going bad, recovery rate as a percentage of original loan value and what the MBSs/CDOs were originally yielding. The real formula to use is an amortization formula.. but thats harder to follow. The above paragraph is easier to follow and reflecting on all of this is making me cranky again (And the Friday beer is wearing off.. needed one for this week).. so I am going to hit the hay.
NOTE: The above applies to the sub-prime, Alt-A paper. Many of these were refi’d into NegAms.. which are projected to start resetting late 2009 and hit full swing 2010. I can’t project what will happen here because these loans start out underwater. Some were refi’s which makes them recourse. I call this period the ‘all Hell breaks loose’ period.
ParticipantThe complaint I have on taxes is that SS tax cuts off at 97500 meaning that guy making 97500 is paying out 6.2% of his income yet if I make 195000 I am only paying out 3.1% as a percentage of my income. Seems that the guy making 97500 is getting screwed when you look at this as a % of income.
Social security is not a standard tax. What you put in is related to what you can take out later. SS taxes are put into the Social Security Trust Fund. The person making 97,500 and the person making 195,000 will only be able to draw down social security at the same rate. This ignores any income based phase out of social security. The Social Security Administration should be sending you a sheet every year containing the taxed social security income. The amount you can withdraw depends upon the sum of the social security taxes adjusted for the time within the social security trust fund and amortized over your projected retirement lifetime.
What this also means, is that a person making 195,000 will need to make other arrangements (ie. investing in retirement funds, 401ks etc) if they want to live near the income they have lived at when they were working.
ParticipantThe complaint I have on taxes is that SS tax cuts off at 97500 meaning that guy making 97500 is paying out 6.2% of his income yet if I make 195000 I am only paying out 3.1% as a percentage of my income. Seems that the guy making 97500 is getting screwed when you look at this as a % of income.
Social security is not a standard tax. What you put in is related to what you can take out later. SS taxes are put into the Social Security Trust Fund. The person making 97,500 and the person making 195,000 will only be able to draw down social security at the same rate. This ignores any income based phase out of social security. The Social Security Administration should be sending you a sheet every year containing the taxed social security income. The amount you can withdraw depends upon the sum of the social security taxes adjusted for the time within the social security trust fund and amortized over your projected retirement lifetime.
What this also means, is that a person making 195,000 will need to make other arrangements (ie. investing in retirement funds, 401ks etc) if they want to live near the income they have lived at when they were working.
ParticipantThe complaint I have on taxes is that SS tax cuts off at 97500 meaning that guy making 97500 is paying out 6.2% of his income yet if I make 195000 I am only paying out 3.1% as a percentage of my income. Seems that the guy making 97500 is getting screwed when you look at this as a % of income.
Social security is not a standard tax. What you put in is related to what you can take out later. SS taxes are put into the Social Security Trust Fund. The person making 97,500 and the person making 195,000 will only be able to draw down social security at the same rate. This ignores any income based phase out of social security. The Social Security Administration should be sending you a sheet every year containing the taxed social security income. The amount you can withdraw depends upon the sum of the social security taxes adjusted for the time within the social security trust fund and amortized over your projected retirement lifetime.
What this also means, is that a person making 195,000 will need to make other arrangements (ie. investing in retirement funds, 401ks etc) if they want to live near the income they have lived at when they were working.
ParticipantThe complaint I have on taxes is that SS tax cuts off at 97500 meaning that guy making 97500 is paying out 6.2% of his income yet if I make 195000 I am only paying out 3.1% as a percentage of my income. Seems that the guy making 97500 is getting screwed when you look at this as a % of income.
Social security is not a standard tax. What you put in is related to what you can take out later. SS taxes are put into the Social Security Trust Fund. The person making 97,500 and the person making 195,000 will only be able to draw down social security at the same rate. This ignores any income based phase out of social security. The Social Security Administration should be sending you a sheet every year containing the taxed social security income. The amount you can withdraw depends upon the sum of the social security taxes adjusted for the time within the social security trust fund and amortized over your projected retirement lifetime.
What this also means, is that a person making 195,000 will need to make other arrangements (ie. investing in retirement funds, 401ks etc) if they want to live near the income they have lived at when they were working.
ParticipantThe complaint I have on taxes is that SS tax cuts off at 97500 meaning that guy making 97500 is paying out 6.2% of his income yet if I make 195000 I am only paying out 3.1% as a percentage of my income. Seems that the guy making 97500 is getting screwed when you look at this as a % of income.
Social security is not a standard tax. What you put in is related to what you can take out later. SS taxes are put into the Social Security Trust Fund. The person making 97,500 and the person making 195,000 will only be able to draw down social security at the same rate. This ignores any income based phase out of social security. The Social Security Administration should be sending you a sheet every year containing the taxed social security income. The amount you can withdraw depends upon the sum of the social security taxes adjusted for the time within the social security trust fund and amortized over your projected retirement lifetime.
What this also means, is that a person making 195,000 will need to make other arrangements (ie. investing in retirement funds, 401ks etc) if they want to live near the income they have lived at when they were working.
Participant@andymajumder
They really are playing it as though prices might start going up again and this may cause a lot of potential buyers to jump back in.Maybe many knife catchers will jump in.. It may mean that I stay out for longer. With the real estate market the way it is, any down payment is dead money. Besides, with running into AMT, I can’t deduct mortgage interest when I have even a moderate LTCG (long term capital gain).
Participant@andymajumder
They really are playing it as though prices might start going up again and this may cause a lot of potential buyers to jump back in.Maybe many knife catchers will jump in.. It may mean that I stay out for longer. With the real estate market the way it is, any down payment is dead money. Besides, with running into AMT, I can’t deduct mortgage interest when I have even a moderate LTCG (long term capital gain).
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