Ethics of Real Estate Investment, NIMYism and the Housing Crisis

Peabody said:

aircooled said:

And this is one reason why you see what might be called "degree inflation".  Many jobs seem to have unjustifiable degree requirements because collage degrees have become so much more common, it is now a measure of if you have a typical / reasonable education. Kind of like how having a high school diploma used to mean you had some basic qualities, weather what you learned was necessary in the job or not.

In my situation I see a lot of incompetence in the human resources role.

Companies ask for Inter provincial, and "Red seal" licenses for my trade when they can't even get people with a standard license. When I've asked during interviews why the requirement, nobody has been able to answer satisfactorily. Some didn't even know what the difference was.

HR is just like any other group. Most aren't particularly well informed about actual needs but they do know how to check off boxes.  
    A lot of their practices were developed when America was recovering from the 2008 recession and millions of people were sending out Email  resumes for any position.  HR needed some way to sort through the hundreds of applications so if some box wasn't checked off  they had reason to discard the application.  
As the economy started to recover,   instead of looking for people with the right attitude they kept on checking off boxes. Legitimately qualified people were discarded in favor of those who simply parroted back job requirements.  
    HR really isn't good at knowing what the right attitude is.  Or deciding who should get an interview without those boxes. They need some way to weed out poor candidates. So management thinks HR is doing a good job at prescreening.  

I had this debate on Facebook: I think those high-tax states, especially those without high paying job like California, are going to hit a tax rate wrekoning. As more and more people leave those states, it forces more of the taxes on the folks who can't leave (low incomes) who make up larger portions of the voting populace. 

I'd love to study why the tax burdens in Illinois, for example, are more expensive than in Arizona. In theory, all that infrastructure should be paid off - where as all the "new" infrastructure in Arizona should be expensive. Are the taxes high because there is too much infrastructure? 

I don't think you can say "government people get paid too much!" because the wages of government workers aren't really dramatically higher in high-tax states. They might have better pensions though. 

I wonder how much of it is the higher density of western cities. All those little towns sprawled out across the north-central and north-east can't be cheap to maintain.  Lot of individual little schools and government buildings. 

In reply to pheller :

As a long time California resident, I’m kind of counting on it. I love and hate California at the same time. I love the weather, love the geography. I hate the cost to live here and the way the state is run. Much of my family is talking about moving out. If it wasn’t for family, I wouldn’t live here. I could sell my house and live comfortably almost anywhere else in the country. My extended family, on both my side and my wife’s side, has talked about a coordinated move to Idaho. I’d rather not, but need to make a decision while the kids are still young. The bottom line is that for me, California is becoming an increasingly more expensive place to live while also becoming less of a nice place to live. They question is, do I give up and head to another state, hoping it doesn’t begin the same cycle? Or do I ride it out, thinking we are near the end of this cycle and things will get better? Here is some info I just dug up regarding California’s spending...

Examining the categories of spending growth separately, all of the categories show huge increases. In constant 2019 dollars, per capita general fund spending has risen from $2,124 in 1976-77 to $3,650 in 2019-21. Special Funds spending has soared, from $418 per capita in 1976-77 to $1,507 in 2019-20. And Federal contributions to the state have also risen sharply, from $1,637 forty years ago to $2,669 today. In constant dollars, adjusted for inflation, per capita state spending in California has roughly doubled over the past forty years.

Keep in mind that most large infrastructure projects were completed long ago. We are also getting hit with ever increasing costs of unfunded liabilities. California is on pace to become the second state to go bankrupt, after Illinois. 

Edited to address this...

I don't think you can say "government people get paid too much!" because the wages of government workers aren't really dramatically higher in high-tax states. They might have better pensions though. 

I wonder how much of it is the higher density of western cities. All those little towns sprawled out across the north-central and north-east can't be cheap to maintain.  Lot of individual little schools and government buildings. 

I think you are on the right track with pensions. Government jobs used to be lower paying than the private sector, but with more security and better pensions. Over time, they became higher paid with high pensions. Many pensions were also over inflated by loopholes in the system that allowing pensions to be based off of more that the employees actually made. Without going off on a banned tangent, let’s just say that promises were made that were not in the best interest of the taxpayer, and those commitments have added up over the years. 

As for city density- I believe the west is much more spread out than the east. The vast majority of California is rural, with just a few concentrated urban areas. It’s just that most of the population lives in the urban areas. Lots of debate as to whether the people would be better served if CA was split up into separate states. 

pheller said:

I had this debate on Facebook: I think those high-tax states, especially those without high paying job like California, are going to hit a tax rate wrekoning. As more and more people leave those states, it forces more of the taxes on the folks who can't leave (low incomes) who make up larger portions of the voting populace. 

Add to the fact that it is now way easier to work out of state, and not have to be in a virally disadvantageous high density area... oh boy.  I really do hope they see that coming and that makes for some changes (yeah... right), but I am not sure it's a hole you can easily dig out of.

...I don't think you can say "government people get paid too much!" because the wages of government workers aren't really dramatically higher in high-tax states. They might have better pensions though...

Oh, you have no idea!  There is HUGE time bomb that waiting to go off in the form of unfunded public pensions in CA at least. The absurdity of some of the things they agreed to are mind boggling (uh, yes, the economy will forever be booming so why not....). 

The general plan, from what I can see, is to tax the hell out of the wealthy, to allow for the money to support the poor, since it is now so expensive (a lot because of the over taxing spill over). The top 0.5 percent of taxpayers pay over 40 percent of individual income taxes in the state. There is only one small issue.  What if the wealthy leave? 

Regarding Idaho:  Yes, that is simply the "next in line" as far places to escape to that have not already been real estate price raped (sorry).  My sister has been eyeballing it.  She is more rural and is used to a bit of snow, so might actually last there. I suspect she won't actually jump though.

For me?  They can only hurt me so much (hopefully).  I don't have kids, so I don't have to worry about what they will have to deal with...

I just don't get the taxation in some states/areas. 

My friends are moving from a rural area, Newberry Twp, York County, PA, approximately 20 minutes outside of Harrisburg. Their property taxes on house they sold for $240k were like $5100 year. 

They are moving to Village of Oak Creek, an unincorporated area south of Sedona, AZ. Their property taxes on a $500k house will be less than half what their old tax bill was. 

The new house is smaller, but brand new. The old house was on about a half-acre (much of it wooded and not really usable). The old house was in a small subdivision in a rural area. The nearest school was 15 minutes away. The nearest "town" was just a group of commercial buildings and a Walmart. 

Demographics compared:

Newberry Twp Population: 15,800
Population Density: 509.44/sq mi

Village of Oak Creek Population: 6,375

Population Density: 1200/sq mi (est) 


You could argue that the problem in their old area was the amount of roads needing maintenance for such a small population. In VOC, there are a lot more people uses a lot less roadway. The lack of freeze/thaw helps too. Not just that, but if we look at the county-level population densities, everyone in Yavapai County, AZ is fairly grouped together in Prescott, Cottonwood, Cornville, Sedona, Village of Oak Creek. Where as everyone in York County (aside from the city) is fairly spread out. Yavapai County has thousands of square miles of National Forest Land that isn't occupied, and doesn't have anything but dirts road for cabin access. Every freakin inch of York County is privately owned (with a few exceptions) with some amount of road access. 

If you looking for the cheaper taxes, the intermountain west definitely has some advantages, but you're going to pay out the wazoo for it due to limited land availability (not helped by land speculators hoarding the private land that IS available.) 

Everywhere else in the country might be better served by create larger swaths of parks and public land, pushing people closer together, and less maintenance on country roads. 

High taxes aren't just a problem in California, alot of east coast states have high property taxes too, without California's climate or pay scale. 

In reply to Boost_Crazy :

Where in Idaho?

I met my first hard core white supremacist/ full tilt racist in Idaho. There's a suprising amount of them in that state. 

Antihero (Forum Supporter) said:

In reply to Boost_Crazy :

Where in Idaho?

Sun Valley, Idaho.... and anywhere else in the state where they have mountains and chair lifts and rustic cabins and things that attract high income Silicon Valley types. There are also places like this in Colorado, Utah and New Mexico. Taos and Santa Fe are a couple of New Mexico towns where housing is expensive and incomes are high. Lake Tahoe is also a boomtown now. Even the California side with their high state taxes. These guys just want to get away from the Bay Area and homeless people and crowds but they still want to live someplace that's "cool". 

Appleseed said:

I met my first hard core white supremacist/ full tilt racist in Idaho. There's a suprising amount of them in that state. 

It's never surprising in any state lol

In reply to Antihero (Forum Supporter) :

 

In reply to Boost_Crazy :

Where in Idaho?

We are still way early in the process, but most likely the southwestern part of the state- the Boise/Meridian/Nampa area. My brother took a trip recently to check out the Coeur’d Alene area. He loved the area, but was a bit shocked that it is near Bay Area pricing already. Plus too far north, the pan handle gets real winter. 

In reply to Boost_Crazy :

I live farther north than couer d alene lol.

Prices are ridiculous there

Appleseed said:

I met my first hard core white supremacist/ full tilt racist in Idaho. There's a suprising amount of them in that state. 

There was a lot more when I moved here but there is very little now.

Most the reason why it's still considered a thing is because people around here don't want a lot of people moving here lol

yupididit said:

Appleseed said:

I met my first hard core white supremacist/ full tilt racist in Idaho. There's a suprising amount of them in that state. 

 

It's never surprising in any state lol

I found Washington to be way way worse.

I literally had a conversation with someone that said they hated how ethnic the town had gotten ( exact words) and asked where I was from. When I said Idaho they said they hated Idaho because of all the racists.

Weird conversation there.

In reply to pheller :

Agreed.  I constantly heard about the pension liability shortfall issues in NJ when I worked there and iNJ has some of the highest taxes of any state in the country.

One reason I like my postage stamp sized house/property in a very blue-collar area of Bucks Co. PA is for the relatively low taxes I pay. 

So while there are definitely times when I would like to live elsewhere (I watch a lot of recreational shooting and mtn biking videos from AZ and think - that looks nice...), when I look at the financial implications of moving, I'm happy where I'm at. Hopefully when I retire I'll still be active enough to winter in AZ with an RV of some type.

pheller said:

I had this debate on Facebook: I think those high-tax states, especially those without high paying job like California, are going to hit a tax rate wrekoning. As more and more people leave those states, it forces more of the taxes on the folks who can't leave (low incomes) who make up larger portions of the voting populace. 

 

I'd love to study why the tax burdens in Illinois, for example, are more expensive than in Arizona. In theory, all that infrastructure should be paid off - where as all the "new" infrastructure in Arizona should be expensive. Are the taxes high because there is too much infrastructure? 

I don't think you can say "government people get paid too much!" because the wages of government workers aren't really dramatically higher in high-tax states. They might have better pensions though. 

I wonder how much of it is the higher density of western cities. All those little towns sprawled out across the north-central and north-east can't be cheap to maintain.  Lot of individual little schools and government buildings. 

Studies suggest that taxes in Illinois are primarily driven by massive, underfunded public pension programs. I'm sure some of our members from IL can chime in for clarification.

Also, the states with large outflows in population were most adversely affected by the cap put on SALT tax deduction in 2018. Suddenly, people (particularly the wealthy) felt more of the brunt of their local taxes and realized how onerous they were. And of course they're the most capable of moving. The trend was in place before 2018, and before the pandemic, but both have accelerated the migration out of those places.

While higher density living may be great for the bottom lines of local governments and real estate developers, I'm not sure that it's what many people actually want. The trend in population migration from state to state is pretty obvious, but what's less obvious is the movement of people from high density places to lower density locations. In addition to the people leaving high population states for lower population states, you've also got people moving from dense population areas to places with lower density within the same state or even the same metro area.

A lot of those places that are gaining population are just lower density suburbs of larger metro areas (Dallas, Houston, Austin, NYC, Atlanta, Tampa Bay, etc), so they keep a lot of the convenience and culture of the larger city, but get more space for less money. It seems like a lot of people don't really want high density living, or find it to be poor value.

In reply to STM317 :

We left IL 5-years ago. The state funded pensions are an issue, but the underlying corruption is really the root cause. Having personally experienced it in our tiny town of 1400-people, I'm pretty confident it exists at a rampant level even higher up.

People(like us) are leaving the small towns for a couple of reasons:

• The compounding factors of job-loss/addictions/crime
• The fact that many small town older commercial areas are either being razed and/or falling into ruin due a lack of business, generally coupled with the lack of convenience & inability to compete on both price & selection those areas can provide vs. Casey's/Dollar General/Walmart/etc.

We actually moved to a larger city, though certainly not a "big" one. It's nice having a police force that's large enough & well-funded to keep crime under control, plentiful emergency services, multiple healthcare options, and a variety of choices for food & entertainment.

aircooled said:

pheller said:

I had this debate on Facebook: I think those high-tax states, especially those without high paying job like California, are going to hit a tax rate wrekoning. As more and more people leave those states, it forces more of the taxes on the folks who can't leave (low incomes) who make up larger portions of the voting populace. 

Add to the fact that it is now way easier to work out of state, and not have to be in a virally disadvantageous high density area... oh boy.  I really do hope they see that coming and that makes for some changes (yeah... right), but I am not sure it's a hole you can easily dig out of.

...I don't think you can say "government people get paid too much!" because the wages of government workers aren't really dramatically higher in high-tax states. They might have better pensions though...

Oh, you have no idea!  There is HUGE time bomb that waiting to go off in the form of unfunded public pensions in CA at least. The absurdity of some of the things they agreed to are mind boggling (uh, yes, the economy will forever be booming so why not....). 

The general plan, from what I can see, is to tax the hell out of the wealthy, to allow for the money to support the poor, since it is now so expensive (a lot because of the over taxing spill over). The top 0.5 percent of taxpayers pay over 40 percent of individual income taxes in the state. There is only one small issue.  What if the wealthy leave? 

Regarding Idaho:  Yes, that is simply the "next in line" as far places to escape to that have not already been real estate price raped (sorry).  My sister has been eyeballing it.  She is more rural and is used to a bit of snow, so might actually last there. I suspect she won't actually jump though.

For me?  They can only hurt me so much (hopefully).  I don't have kids, so I don't have to worry about what they will have to deal with...

I love the comment about the top percent paying 40% of the taxes. That sure sounds like a lot.  
What it doesn't say is how much of the states income the top percent have.  Once you look that up you realize that the top percent of income earners are getting the deal of a century. 
 

 To put it in simple terms. The top percent earn 90% of the income. Yet only have to pay for 40% of the taxes.  
 

Maybe this will explain it better?  If you work for minimum wages 24/7/365  it will take you 35,000 years to earn a billion dollars. OK so double your income and it will still take you over 17,000 years to earn that Billion. 
 

Here, let's  make it more relevant to you.  Take your income  and figure out how many years before you've earned a Billion dollars?  
 

Let's make it even more realistic. Assume you'll earn the same amount the rest of your working life, how much will that be?   OK let's move you from Mississippi, Arkansas, North Dakota, or any other low income tax low income state to a high income tax high tax state. Like Connecticut, New York, California  or Minnesota.  Your income doubles but you pay 20% of it for taxes.   ( or do it the other way if you live in one of those states) move to a low income no tax state.  Cut your income in half but don't pay any taxes. 
       

frenchyd said:

aircooled said:

... The top 0.5 percent of taxpayers pay over 40 percent of individual income taxes in the state. There is only one small issue.  What if the wealthy leave? ....

....To put it in simple terms. The top percent earn 90% of the income. Yet only have to pay for 40% of the taxes....

You are entirely missing the point.  It's not that the wealthy pay too much of the taxes, it's that the states finances are heavily reliant on a rather small percentage of the population to pay them.  Those same people can also rather easily leave the state and not have to pay those taxes.  Is that a critical percentage? I don't know, but a similar concept applies to businesses (which certainly pay a lot taxes, and are also leaving)

As an example, Elon Musk's move out of CA has potentially cost the state $18 billion:

If he executed the options and sold all ensuing shares at their current trading price of $599.04, he could owe California as much as $18 billion in capital gains taxes based on a rough calculation—assuming most of Musk’s equity stake was granted to him rather than purchased. If he lived in Texas, he’d dodge that entire potential tax bill. For perspective, the entire market cap of Domino’s Pizza is $15.1 billion.

https://fortune.com/2020/12/04/elon-musk-moving-texas-from-california-capital-gains-taxes/

I entirely understand your point, but it is really only relevant on a national level.  On a state level, they can just leave to escape (in some case they could then leave the country, but that's seems like less of a concern)

aircooled said:

frenchyd said:

aircooled said:

... The top 0.5 percent of taxpayers pay over 40 percent of individual income taxes in the state. There is only one small issue.  What if the wealthy leave? ....

....To put it in simple terms. The top percent earn 90% of the income. Yet only have to pay for 40% of the taxes....

You are entirely missing the point.  It's not that the wealthy pay too much of the taxes, it's that the states finances are heavily reliant on a rather small percentage of the population to pay them.  Those same people can also rather easily leave the state and not have to pay those taxes.  Is that a critical percentage? I don't know, but a similar concept applies to businesses (which certainly pay a lot taxes, and are also leaving)

As an example, Elon Musk's move out of CA has potentially cost the state $18 billion:

If he executed the options and sold all ensuing shares at their current trading price of $599.04, he could owe California as much as $18 billion in capital gains taxes based on a rough calculation—assuming most of Musk’s equity stake was granted to him rather than purchased. If he lived in Texas, he’d dodge that entire potential tax bill. For perspective, the entire market cap of Domino’s Pizza is $15.1 billion.

https://fortune.com/2020/12/04/elon-musk-moving-texas-from-california-capital-gains-taxes/

I entirely understand your point, but it is really only relevant on a national level.  On a state level, they can just leave to escape (in some case they could then leave the country, but that's seems like less of a concern)

What would your proposed solution be? 

Not base a large amount of the tax income on a small group of people who can easily leave? 

Not make the business climate so bad that many are leaving?  (also a major source of taxes).  Not exactly shocking businesses are moving from #49 to #11.

(sorry, I don't know if this is wandering into politics, but it seems like an economic discussion to me)

https://taxfoundation.org/2021-state-business-tax-climate-index/

In reply to aircooled :

It's going to be really difficult to extract more taxes from a larger group of people if those people aren't making more money. 

I absolutely love that a random canoe popped this thread up after a 6 week hiatus and the conversation picked up as if there had never been a break.

Duke said:

I absolutely love that a random canoe popped this thread up after a 6 week hiatus and the conversation picked up as if there had never been a break.

 

This is the way

BrinaDodon said:

It always seemed to me that it is better to buy a room with a mortgage than to rent it. Well, really, you can create a system. Take the house on a mortgage and put the tenants there. They will pay the rent to you, and you will pay the mortgage. In a couple of years, you will be able to fully buy a house and it will bring you profit.

So the "canoe" who posted this: what is their intent?  Is this post supposed to influence people towards buying investment properties?  It's a rather off-putting manipulation, to think that any random comments you read on the internet might be from some company just trying to steer the public conversation.

In reply to Benswen :

Usually they will make a few innocuous posts that are sort of related to a topic before they start throwing links in.