Ethics of Real Estate Investment, NIMYism and the Housing Crisis

Duke said:

In reply to pheller :

I'm sorry, I must have missed the part where anybody said excessive regulation was the reason for the housing problem.

Someone posted an article to a study that showed that one of the primary contributors to lack of housing being built was the result of regulation / government intervention (this could even be local governments / communities not wanting development BTW). 

In CA is is very clearly a huge part of the issue, building here is insanely convoluted and very commonly can take years to get approvals (which of course also makes it that much more expensive).  As noted, the amount it is the issue will certainly vary by location and even in CA will vary a bit based on where you are in the state.

In reply to RX Reven' :

And its not a net dollar for them, its a gross dollar. 

Opti said:

In reply to RX Reven' :

And its not a net dollar for them, its a gross dollar. 

Actually, I did bake that in...

$1.78 gross income times 0.75 for my income tax times 0.75 for their income tax = $1.00 net income in their hands.

The breaking point for me was when my pool guy wanted $125 to clean my filter which is $166 in gross income for a 45 minute job so I'd need to be making $221< an hour for it to make sense.

I'm a good engineer but not a great engineer 

Opti said:

In reply to 93EXCivic :

I think its already a massive problem. I dont think raising taxes is a viable PART of the solution. The only way it actually gets fixed and stays fixed for any amount of time is through reduced spending. Taxing to fix the problem doesnt fix the problem because it just says "we only have a small spending problem, so we just need to tax a little and cut a little" we will be back to deficit spending the next year.  We need massive cuts.

Problem is, it will require a massive cultural shift and will probably never happen. Most of America will always be happy to pay no income taxes and complain that someone else isnt paying enough and spending their money.

I don't agree that raising taxes isn't of the part of the solution. It is going to have to be part of the solution. We can't only cut our way out of this debt and continue to have a country that functions well. Will there need to be cuts? Absolutely. I just don't agree that tax raises won't also be needed.

RX Raven mentioned the National debt in 1980 but look at the tax rates in 1980 versus now.

Ian F (Forum Supporter) said:

So what is a solution? Beats the berk out of me. Less people? At some point in time the concept of constant growth becomes unsustainable. 

Do you mean like less people as in, slow the whole national/global population, or less people as in "we're (city/metro area/state) is full, go somewhere else"?

aircooled said:

Duke said:

In reply to pheller :

I'm sorry, I must have missed the part where anybody said excessive regulation was the reason for the housing problem.

Someone posted an article to a study that showed that one of the primary contributors to lack of housing being built was the result of regulation / government intervention (this could even be local governments / communities not wanting development BTW). 

 

Wait, y'all don't have new condos, apartments, housing subdivisions popping up literally everywhere? We have had such an explosion in housing of all types the last 15 years here. 

RX Reven' said:

 

The breaking point for me was when my pool guy wanted $125 to clean my filter which is $166 in gross income for a 45 minute job so I'd need to be making $221< an hour for it to make sense.

So interesting data based on zip codes. Here are costs within 27 miles of each other:  (locations are Southeast of your house)

Zipcode 1

Pool guy monthly cost 225$ (did it myself, before being a rental)

Gardener (basic blow and go) $180/month ( I did it myself for 5 years prior to turning property into another rental)

Zipcode 2

Pool guy $95/month

Gardener $40 a month. 

*when gardener in Zip#2 was provided with 5 houses (4 being rentals), he lowered it to $30/month per property. 

Similar land size, same work. 

aircooled said:

 

In CA is is very clearly a huge part of the issue, building here is insanely convoluted and very commonly can take years to get approvals (which of course also makes it that much more expensive).  As noted, the amount it is the issue will certainly vary by location and even in CA will vary a bit based on where you are in the state.

No doubt. Took 10+ years and CA supreme court before the 5point being built (25,0000 residence). I tried buying 3 there last year, but after looking at HOA+melloroos, ROI rental just didn't make sense. 

Funny thing is there are 5 developers there.  During Covid, when they opened, they wouldn't let you in the main gate area without credit check to see you qualified.  If you brought in preapproval from your lender you worked with for 20+ years, it ididn't matter. You had to be preapproved by their inhouse lenders

Now everyday the developers send you email saying they will self finance with 4% for 2 years, etc, if you please buy one of their property..h.aha

In reply to mr2s2000elise :

Wow, what a huge spread!

I assume these are some of your rentals.

Edit - I see you clarified what the properties are.

RX Reven' said:

In reply to mr2s2000elise :

Wow, what a huge spread!

I assume these are some of your rentals.

Yes. I just find it very interesting, how such a short distance changes the pricing.  The higher priced zip code, when I interviewed 5 gardeners were all being told "most customers pay $250 a month for a blow and go, fact that we are quoting 180-200, IS the discount." 

If the gardeners all live in SFV, the distance to either zipcode is exactly equal.  Time/gas is not a concern.  They are charging by what they assume is the income of the property owner. More power to them. Capitalism at its best. 

The impact fees in California are ruinous. I had someone say they were facing $55,000 in impact fees for building a modest single family house. As in, not permits, not utility hook-up costs, no - just a fee to offset the impact your house has on the area by existing. Maybe that's not a big deal on a million dollar house, but it's gotta make a whole lotta projects die on the vine.

And that's separate from the difficulty of actually getting the approval to build!

dculberson said:

The impact fees in California are ruinous. I had someone say they were facing $55,000 in impact fees for building a modest single family house. As in, not permits, not utility hook-up costs, no - just a fee to offset the impact your house has on the area by existing. Maybe that's not a big deal on a million dollar house, but it's gotta make a whole lotta projects die on the vine.

And that's separate from the difficulty of actually getting the approval to build!

Impact fees are ridiculous. If you thinknthose are bad, the ADU permit fees are terrible. I am in the midst of 4 ADU construction. Simple permit fees are between $9-15,000 per ADU.   Only saving grace for most of us, is that the ROI is fantastic, but the govt is fleecing us at every step of the way, no doubt. 

93EXCivic said:

 

RX Raven mentioned the National debt in 1980 but look at the tax rates in 1980 versus now.

Posting a chart of tax RATES tells us very little practically.  What you want to see is tax REVENUES.  People love to quote the top tax rates which were up to 90% at one point, but that does not mean anyone actually paid that (likely almost none did).

This is the only (rather simple) chart I can find for revenues.  It looks to be completely unrelated to tax rates: Unfortunately, this is showing percentages, which is not ideal, if someone can find a better chart, please post it.  The chart does seem to to show rather flat percentages, with Payroll taxes slowly replacing Corporate Taxes (not sure what the implications / side effects of that are).

This one shows revenue, but only goes back to 1980 (clearly we want to see before 1980):

This one shows deeper historical data, but it's not a graph (I clipped the 70's-80's section, first column is income tax, second is corporate):

There is a rather noticeable pot hole in 1983, but I suspect that might have a lot to do with the general economy at the time.

https://taxfoundation.org/federal-tax-revenue-source-1934-2018

In reply to pheller :

Bit of both? Of course, neither is realistic nor even a remotely quick solution.  

I still say whatever solutions need to be tailored towards the location. In some places, maybe more or different taxes. In others, regulation changes. Others, a bit of both.  In others, maybe something totally different we haven't thought of. But nothing will be a solution for every area.

In reply to aircooled :

Great charts lot of information there, but  no chart I've ever seen  displays tax avoidance.  
  It should be straight forward if those charts are correct.  Compare GDP to revenue. 
Ah heck even that won't be right.  What about the all cash society?  Do they make either the GDP or the Revenue charts.    Or bigger dollars  still is money hidden in Tax Havens like the Bahamas?   I hear about billions of dollars leaving the US and buying drugs  or illegal stuff like name brand clones/purses /shoes/watches etc.  

Or in our 24 trillion dollar economy do those things simply not show up?  

In reply to 93EXCivic :

It's called the Laffer curve

In reply to frenchyd :

I've seen info showing that the actual tax rate, as in how much I'd collected compared to GDP, doesn't really change that much. Been a while, and unfortunately I can't try to find it right now.

Well, I am not sure it matters, at least from a overall federal impact. 

Changing of the top marginal rate seems to have little effect (as noted, better charts would be needed).  If the overall income did not change it either means those taxes have no noticeable effect, or they were avoided.

In reply to aircooled :

Both of those are true. If you raise taxes you raise the incentive and budget to avoid them. 

Opti said:

In reply to 93EXCivic :

It's called the Laffer curve

Oh, you just dropped the "L" word.

I got a metric $hit ton of hate when I did it...hang on buddy.  

Opti said:

Why do people believe the government is entitled to the fruits of your labor, especially as inefficient and wasteful it is. I have an extra problem with double and triple taxation.

It seems disingenuous when someone says "I think people are entitled to the fruits of their labor BUT also the government is definitely entitled to large chunks of it."

Here in America we are the government.  Now 1/2  believe one way while the other 1/2 believes another way.  To further split things very few of the 1/2 believe everything that half  does is correct.   Both sides.  

 Based on that, little the government does makes people happy.  But like everything you've got to give in order to take. it's called compromise.  You trade a cabbage subsidy  for support on a defense project.  Or whatever.  
   As far as double and triple taxation?   You pay your property taxes right?  Is it right that the same state charges you to drive  on a tollway?   Worse,  you pay federal taxes? And 80% of that tollway was built by the federal government.  
   Then there are local fees ( taxes in another form)  and sales taxes, zoning restrictions, etc etc etc. 

    Bottom line? Public things cost more than then politicians can  admit. In Some states the politicians need to get their cut.   People don't seem to care. When was the last time you saw a politician tarred and feathered?  

In reply to RX Reven' :

I hope so. I love a good spirited debate

In reply to frenchyd :

People don't seem to care because most of them aren't paying attention or paying income taxes.

Things cost more when the government gets involved.

I think Frenchy is onto something let's go back to tar and feathering politicians.

pheller said:

Ok, so what's the problem

Is there a problem?

I'm done talking. 

Ask the guy that started the thread, he must think there is a problem based on the title. I'd say most of the others here don't see a problem.