Arkansas Blog

For most people who constantly move up in house size and price, owning isn't a lot different from renting other than at tax time I guess. You either pay a landlord monthly or you pay the mortgage company monthly.

I watched my youngest son buy more house than he could afford, but he fortunately sold it just weeks before the housing bubble really broke. We were hearing abut it all the time and I thought he was stuck with that house for sure - he even had one of the dreaded sub-prime loans where you can NEVER get anyone on the phone who knows anything about your loan or even that you owe them money. Just getting the deed and paper work from the people who in the end held his loan took a Houdini. But they skinnied out of that house just minutes before the sub-prime housing world came up against a stone wall.

I suppose they will buy again, but it's no longer a cash cow so I think many will opt to just rent and enjoy the house without all the hassle.

I'd love to own a home. Doesn't have to be a 'McMansion', either. I'd love a nice little cottage or bungalow. But even little bungalows are beyond my reach- and will probably remain so for a long time. Sadly, single people are pretty much priced out of the housing market. And even with prices dropping, it probably won't change much for me. I keep doing the math, and it keeps telling me that I am better off renting.

I get angry at people who tell me that I am throwing money away on rent, then turn around and cry about maintenance costs. And I also get angry at people who believe that renters are a lower class of people who bring down the value of a neighborhood. Some of us who rent would love to have our own places. Right now, though, it's more cost effective to rent.

Just amazed that an economist would make this comment:

"On top of that, government-sponsored enterprises - Fannie Mae, Freddie Mac and the Federal Home Loan Banks - provide cheap financing for home buyers; investors who want to provide rental housing are on their own."

There never seems to be a lack of funding for more and more apartment/duplex villages. Seems investors who do rental properties get many more advantages than home owners: tax deductions for all repairs and maintainence, property taxes, insurance premiums, mortgage interest, plus the big fiction of depreciation. The tax deduction for depreciation often creates the cash flow to landlords in the beginning years. In addition to the above tax advantages to rental investors the investors from time to time prevail upon their servants in Congress to create fed loan subsidies for building rental properties.

True eLwood:

It started with Regan in 1984 I think with some kind of scheme of fast depr. and then investors would trade for equal value properties for no taxes and get to start all over with the new market value. No wonder we are in such dire times.

Phaedrus,
I've been watching real estate transactions on online and have noticed that the rich "trade" houses quite often. I have always assumed that they were cheating, i mean, finding a loophole in our tax system. I've always been curious of the angle there, do you know what the advantage is to trading houses?
Thanks.

I've always been curious of the angle there, do you know what the advantage is to trading houses?
Thanks.<<

If you're a smart trader you can live tax-free on the gains. If you occupy a home for 4 years then sell it there is no tax on the gain. Thank Darth Cheney for that one. If you happen to have building skills and buy a fixer-upper you can see where you could earn pretty good income doing the four year flip. At least you used to. If you own the property for six months you can still flip and get capital gains treatment for your gain (15%). Say you make $100K on a flip. You pay 15% income tax. If you earn the same amount in taxable income you pay 30-33% plus contributions to FICA (7.5%). Thus you stand to save as much as 25% in taxes.

Sorry EasyB:
I was talking about the big boys who get all the repubs breaks like hedge fund managers and the specific details are usually not what an individual would want to do. My house is an investment but first it is my home.

ELwood has some good ideas but the housing crisis was caused by the large number of people who crazily thought prices were going to always go up so be careful. It is hard to compete with the breaks the big apt owners are getting.