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Silver Regular Contributor
tux
Posts: 641
Registered: ‎01-29-2010
0

Re: Fannie's horrible year

 


GiantsFan wrote:

I love how people quote blogs like articles--that's just irresponsible.


 

That kind of statement is like shooting the messenger and ignoring the message, don't you think? An intelligent debate should center on the merits of the information. But I would grant that too many here (not you, per se) aren't capable of an intelligent debate.

 

Silver Super Contributor
El_Katz
Posts: 1,340
Registered: ‎04-26-2009
0

Re: Fannie's horrible year

 


OneTreeHill wrote:

 


El_Katz wrote:

OTH wrote:

 

"Oh, and if you pay taxes, a penny saved is actually more like two pennies earned. :smileyhappy:"

 

 

----------------

 

Not true. You still pay taxes on the penny saved unless you stash it under a mattress and get no return whatsoever (or are a tax dodger). You might want to prepare yourself for the tax changes that are coming under the current administration before you start touting how much money you're going to preserve in the market or other investments.

 

I guess if you lost your job, your landlord would let you live there for free, correct?

 

 


 

 

Huh? If you have after-tax money saved in the bank, you pay ZERO taxes on that money. You only pay taxes on the interest earnings, which falls under the "a penny saved is two pennies earned". Your interest earnings are part of your earnings, not part of what you've already got saved. Many people live off of their interest earnings but never spend a dime of their savings.

 

Since my rent is so much less than what I would have to pay every month if I bought a house, I could keep a roof over my head for 3 or 4 times longer without a job by renting than by buying. I could also easily move into an even cheaper apartment. That gives me much more time to find a new job. Plus, since I'm not tied to an immobile physical geographic asset, I could easily pick up and move to wherever the jobs are. In addition, I don't have to worry about and sweat over the possibility of losing hundreds of thousands of dollars in home equity due to foreclosure if I can't make my payments.  My hundreds of thousands of dollars is safely in a bank for me to use to pay my bills while I'm out of work.  Thus, I would lose a heck of a lot less sleep if I lost my job as a renter than as a homeowner.


 

 

I guess I wasn't clear..... if you've saved a penny, it's not two.  It's still only one penny.  You may have to earn two to get the one due to the tax load, but one ain't two unless you're a fractional banker.  If you save a penny and it pays you income, you pay tax on that income.... which still converts into additional tax load. If you invest that penny in something other than a bank account, you'll pay fees as well as capital gains taxes if it goes up... and still suffer losses if the market drops.  Saving the penny, getting 1/4% interest in a period of 2 or 3% inflation is still a net loss of purchasing power. Is that simple enough for you? 

 

You can live longer in a rental?  Then, please don't buy.  It's not the right decision for you. 

 

Freedom to move?  I have the same options.  In my industry, employers pay your relocation costs - even for new hires.  Life isn't only one way.  Your situation may differ - but it doesn't make anyone elses "wrong". It's simply a different point of view.  Try getting a rental apartment without a job..... you'll still be marooned in your more expensive digs or relocate to a box under a bridge.  Few will rent to the unemployed - not even with a hefty deposit.   That's just naive.

 

 

Silver Super Contributor
OneTreeHill
Posts: 1,129
Registered: ‎01-19-2010
0

Re: Fannie's horrible year

[ Edited ]

 


El_Katz wrote:

 


I guess I wasn't clear..... if you've saved a penny, it's not two. It's still only one penny. You may have to earn two to get the one due to the tax load, but one ain't two unless you're a fractional banker. If you save a penny and it pays you income, you pay tax on that income.... which still converts into additional tax load. If you invest that penny in something other than a bank account, you'll pay fees as well as capital gains taxes if it goes up... and still suffer losses if the market drops. Saving the penny, getting 1/4% interest in a period of 2 or 3% inflation is still a net loss of purchasing power. Is that simple enough for you?

 

You can live longer in a rental? Then, please don't buy. It's not the right decision for you.

 

Freedom to move? I have the same options. In my industry, employers pay your relocation costs - even for new hires. Life isn't only one way. Your situation may differ - but it doesn't make anyone elses "wrong". It's simply a different point of view. Try getting a rental apartment without a job..... you'll still be marooned in your more expensive digs or relocate to a box under a bridge. Few will rent to the unemployed - not even with a hefty deposit. That's just naive.

 

 


 

 

I don't think you're getting the point. If you have to earn $2 million to put $1 million into the bank after taxes, then that $1 million saved represents $2 million earned. In other words, if you spent that $1 million of after tax money instead of saving it, you'd have to earn $2 million more to replace it. Thus, "a penny saved is two pennies earned", if you factor in taxes.

 

Not too many companies these days will buy your house from you, especially in this economy where people feel lucky just to have any job anywhere. And even if they do, it will be at the current market price, not what you paid for it, and since many people are underwater, that means a realized loss of possibly hundreds of thousands of dollars for many people. What percentage of all homeowners in this country do you think have the level of jobs in which a new employer will buy your old house from you and then buy you a new house at your new location? Especially these days when there's so much unemployed talent everywhere.

 

I've rented 3 different luxury apartments on separate occassions over the past 12 years without a job. You don't need to have a job to rent an apartment. You only need to show the ability to pay the rent (and a good credit score). No income, no problem. Just show them your assets in the bank. And since I don't have all my assets locked into a house, I have lots of cash liquidity to pay the rent for a very long time even with no income whatsoever. Cash in the bank is much better than a job from the landlords' perspective since you already have the money to pay the rent for the entire lease term and are not dependent on potential future income which may not materialize if you lose your job.

Super Contributor
Dublin
Posts: 349
Registered: ‎08-17-2009

Re: Fannie's horrible year

^^^ Then why are you even here ?

 

Just endlessly rent your so called luxury apartment with annoying neighbors on all walls, no yard, expiring lease, large security deposit, zero upgradbility.....and love it. All the while jobless, and contributing absolutely nothing to society.

 

No need to constantly post your rants on a RE buyers board.

 

Those who are interested in buying won't be convinced by the chicken bleep whining by all you bears anyway.   Go ahead, tell me if that isn't true.

Silver Contributor
PABuyer
Posts: 403
Registered: ‎08-14-2009
0

Re: Fannie's horrible year

 


Tom_P wrote:

 

The high cost of prices during the boom has shifted many jobs out during the past 10 years because of the high cost of employment, mainly from housing. Regardless if your a renter or homeowner, the impact of this bubble isnt going to be pretty.  The economic formula of SV industries/business cannot balance high home prices and high supply of local jobs.  It doesnt work that way, and it never has.  I rather see prices fall 50% than watch jobs vanish for BOTH renters and homeowners.  That is why i am here!

 


 

Tom - I respect your posts and point of view, but I beg to differ about the causes for job migration to other areas.  For one, the advances in telecommunications in the past 10 years have made it much easier, cheaper and efficient to employ low-cost talent overseas.  Even if home prices did decline by 50%, I think it is difficult to argue for basic programming jobs coming back from Bangalore. 

 

As for whether an entrepreneur chooses to set-up shop in SV or elsewhere in the states - the nexus of capital, talent and companies that are potential customers/partners/acquirors remains incredibly strong in the Bay Area, despite many aspects of California taxes and laws that are unfavorable to business.  If you have evidence (be it a survey, study, etc) that identifies the cost of housing as the top reason for employers leaving or starting elsewhere, I would be interested in seeing it.

 

In any event, I think the economic impact to a further 50% drop in SV real estate would be much more catastrophic for the Bay Area job and economic outlook than if they remained at their current levels and/or resumed inflation-level appreciation.

Silver Super Contributor
OneTreeHill
Posts: 1,129
Registered: ‎01-19-2010
0

Re: Fannie's horrible year

[ Edited ]

 


Dublin wrote:

^^^ Then why are you even here ?

 

Just endlessly rent your so called luxury apartment with annoying neighbors on all walls, no yard, expiring lease, large security deposit, zero upgradbility.....and love it. All the while jobless, and contributing absolutely nothing to society.

 


"...annoying neighbors on all walls..."?

 

Ever heard of renting a single family home? How about renting the penthouse or top floor corner unit where you only have a neighbor on one side? Or how about a townhouse with no shared walls?

 

And if you ever have a heart attack or injure yourself while you're home alone, you're going to wish you had neighbors close by. Not all neighbors are "annoying". Many are very friendly and helpful.

 

..."no yard..."?

 

Thank God! No yard means no yardwork! Ever! Yea!!! I can spend my free time lying by the huge pool 25 feet from me instead or out on the golf course or on the tennis court or in the hills hiking or whatever I enjoy doing or.........

 

"....expiring lease..."?

 

Which means I can leave when the lease expires if I want to. I can even leave before the lease expires by paying an extra month's rent. Much better than being stuck in the same old house for 30 years or trying to sell your house for years or having to pay $30,000 in selling costs to be able to move. And if I want to stay, just simply renew the lease. And these days most people are renewing their leases at a lower rent.

 

".....large security deposit...."?

 

You're joking, right? I'd much rather pay a $500 security deposit than a $300,000 down payment any day of the week. And as long as I don't wreck the place, I'll get that security deposit back. With a house, if the market goes down or if you get foreclosed on, you could lose your entire $300,000 down payment. Look at how many homeowners are underwater right now.

 

And how about all the closing costs which you'll never get back?  They were a bit more than $500, weren't they?

 

".....zero upgradbility..."?

 

Oh really? My landlord upgraded our apartment with full granite slab countertops in both the kitchen and all the bathrooms, brand new modern kitchen and bathroom cabinets, brand new top-of-the-line stainless steel appliances including 3 door refrigerator with bottom drawer freezer, ceramic top radiant stove, express activation microwave, and high-efficiency large capacity front loading washer and dryer, large 2' x 2' Italian ceramic tiles in the dining, kitchen, and bathrooms, berber carpeting in the bedrooms, top-of-the-line wooden blinds in all the rooms, new sinks throughout, etc.

 

And if your landlord won't upgrade your unit, just simply move to one that is upgraded. You're not tied down to have to live in the same place as it gets older. Just move to a brand new apartment, like I've done.

 

"All the while jobless, and contributing absolutely nothing to society."

 

Hmmm...OK, you've convinced me. I'll go get a multi-million dollar job on Wall Street.because making money means you're contributing to society, right? So the more you make, the more you must be contributing to society, right?

Silver Regular Contributor
tux
Posts: 641
Registered: ‎01-29-2010
0

Re: Fannie's horrible year

OTH: That's what is called a Dublin Drive By. Zero to low information content designed to stir things up. I just ignore them.

Silver Super Contributor
El_Katz
Posts: 1,340
Registered: ‎04-26-2009
0

Re: Fannie's horrible year

Yeah..... OTH.  You have a mil in the bank.  Cool.  Luxury apartment.  Cool.  You so rock.  Sounds like " anecdotal information" that is irrelevant to the majority of those that visit this board.  Let's see some facts. 

 

If I recall correctly, you live in Fremont.  "Fremont" and "luxury apartment" are mutually exclusive.  I looked in Fremont for a home for my daughter.  I refused to invest a nickel there.  For good reason.  It's only redeeming factor was it's proximity to SV. 

 

If you have $1M in a bank, you're earning in the neighborhood of a whopping $20K a year on it - if you can muster up a 2% return.  Which you can't unless you go long in CD's - which would be really naive.  On that $20K, you'll pay probably 40% in taxes (between state and feds) because you're so wealthy.   So your net return on $1M is $12 grand.  Woo hoo.  Pop the Cristal.   You're quite the mogul!   Factor in inflation?  You're upside down.  If you have it stashed in IRA's?  It's inaccessible unless you choose to pay a penalty.  It's no different than a house. 

 

Now let's introduce reality to your world.  99.999% of the people can't rent an apartment without a job.  Write it down.  High FICO but no income?  Buh-Bye!  Money in bank?  It takes 60-90 days of statements to show stable average balances to satisfy a landlord. 

 

Here's another flash for you: $1M in the bank doesn't represent $2M in anyone's world but yours.  It's $1M.  Why?  Because you can't spend $2M with $1M, unless you leverage it.  What you're saying is so totally irrelevant that it's laughable.  $1M is $1M.  You think you're smarter than Benjamin Franklin (whose name is attributed to the quote "a penny saved is a penny earned). You're not.  You're simply showing how math challenged you really are. I guess you and the other pseudo intellectuals cannot admit that you're just W R O N G.  Argue it to the death.  I'm sure you'll find at least one or two "trolls" on this board who agree with you.  End game?  You're still wrong.  1+0 is always 1.  It's called math. 

 

What does Ben Franklin's quote really mean?  If you don't spend a penny, it's the same as a penny you just earned.  Not that it represents two pennies earned - pre-tax. And if you invest it in an off-shore tax sheltered fund, managed by.......

 

 

 

 

 

 

 

 

 

 

Silver Super Contributor
OneTreeHill
Posts: 1,129
Registered: ‎01-19-2010
0

Re: Fannie's horrible year

 


El_Katz wrote:

Yeah..... OTH.  You have a mil in the bank.  Cool.  Luxury apartment.  Cool.  You so rock.  Sounds like " anecdotal information" that is irrelevant to the majority of those that visit this board.  Let's see some facts. 

 

If I recall correctly, you live in Fremont.  "Fremont" and "luxury apartment" are mutually exclusive.  I looked in Fremont for a home for my daughter.  I refused to invest a nickel there.  For good reason.  It's only redeeming factor was it's proximity to SV. 

 

If you have $1M in a bank, you're earning in the neighborhood of a whopping $20K a year on it - if you can muster up a 2% return.  Which you can't unless you go long in CD's - which would be really naive.  On that $20K, you'll pay probably 40% in taxes (between state and feds) because you're so wealthy.   So your net return on $1M is $12 grand.  Woo hoo.  Pop the Cristal.   You're quite the mogul!   Factor in inflation?  You're upside down.  If you have it stashed in IRA's?  It's inaccessible unless you choose to pay a penalty.  It's no different than a house. 

 

Now let's introduce reality to your world.  99.999% of the people can't rent an apartment without a job.  Write it down.  High FICO but no income?  Buh-Bye!  Money in bank?  It takes 60-90 days of statements to show stable average balances to satisfy a landlord. 

 

Here's another flash for you: $1M in the bank doesn't represent $2M in anyone's world but yours.  It's $1M.  Why?  Because you can't spend $2M with $1M, unless you leverage it.  What you're saying is so totally irrelevant that it's laughable.  $1M is $1M.  You think you're smarter than Benjamin Franklin (whose name is attributed to the quote "a penny saved is a penny earned). You're not.  You're simply showing how math challenged you really are. I guess you and the other pseudo intellectuals cannot admit that you're just W R O N G.  Argue it to the death.  I'm sure you'll find at least one or two "trolls" on this board who agree with you.  End game?  You're still wrong.  1+0 is always 1.  It's called math. 

 

What does Ben Franklin's quote really mean?  If you don't spend a penny, it's the same as a penny you just earned.  Not that it represents two pennies earned - pre-tax. And if you invest it in an off-shore tax sheltered fund, managed by....

 


 

 

OMG...are you for real??  How hard is it to understand that if you have to pay 50% of your income to taxes (all of them inclusive), that you have to earn 2 pennies pre-tax in order to save 1 penny after-tax into the bank?  Why?  Because you lose the other penny that you earned to taxes!  Thus, Benjamin Franklin was advocating that people should save their penny instead of spending it because that penny you saved represents two pennies that you earned due to taxes on your earnings.  If you spend that penny, you have to earn two more to have that one penny back.  Benjamin Franklin simply did not factor in taxes.  Maybe he didn't have to pay any?

 

99.999% of people who can afford a 20% down payment on a decent house in a good area of the Bay Area can rent an apartment without a job.  Why?  Because that means they have enough cash in the bank to pay rent for at least 5 years.  We're talking about choosing to rent instead of buy and not about if you have the money to buy, remember? 

 

The current interest rates are low but that will not last forever.  They will be going up very shortly.  Besides, I was earning 5% on a 1-year CD only 18 months ago.  Also, the stock market has averaged an 8% return over the past 100 years.  History has shown that the stock market earns a higher average return than real estate (which barely keeps up with inflation).

 

And, no, I do not and have never lived in Fremont.  In fact, I don't think I've ever even been to Fremont.  Maybe once to check out a company I was thinking of investing in many years ago, but I don't recall exactly.

Silver Super Contributor
El_Katz
Posts: 1,340
Registered: ‎04-26-2009
0

Re: Fannie's horrible year

[ Edited ]

Gee!  Using your logic, if you reduced  your tax load to 30% would the saying become "a penny saved is @1.43 cents earned"?   Your statement is not hard to understand, it's simply irrelevant.  I also don't think that was Ben Franklin's intent... as I am fairly confident that there wasn't any income tax in the 1700's.  Check it out.   http://www.ustreas.gov/education/fact-sheets/taxes/ustax.shtml

 

I find it difficult to believe that a MLS website forum intended for those interested in buying a home is graced by several multi-millionaires, with huge stock options, hundreds of thousands - if not millions - in demand deposits in banks, living in penthouse apartments or renting million dollar homes - who choose to spend their valuable time on here providing their opinion and biased facts about homes that they have no intention of buying, while belittittling those that come here for advice or to do research on the very topics that the site is intended for. 

 

I wonder where all the common people go?

 

Okay.  We get it.  Houses can work out to be crumby investments. However, they do make pretty good places to live... which is their real intent and main utilitarian purpose.  The investment side is a byproduct, and should not be the principal reason to buy.  If you go back to my very first post on this site - from April 2009 - you'll find nothing has changed in how I view residential real estate. 

 

Can we move on?