Ethics of Real Estate Investment, NIMYism and the Housing Crisis

Yeah, I think it was just a post count thing, but far more on point than most you see.  I have not noted any "conversation steering ones" by what you might call malicious actors here, but they are somewhat obvious and rather rampant on something like Reddit (which sadly, because of the obvious influence, is a very popular site).  A high percentage of the topic there could have the subtitle: "another topic to sow dissent and partisanship in the US".

pheller said:

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. 

Your answers are right in the numbers you use.  To start annual property tax rates around 1.5-2.5% of the value of property are typical.  
 When tax rates are below that one of thre things are present.
First and most likely services are deficit            You pay for that in shorter average life spans ( poor medical facilities ) higher  insurance rates due to crimes and fire being poorly served. Fewer well paying jobs due to Lower commercial viability. 
  Second  conglomerations of wealthy residents.  Local tax rates are significantly under that due to multi-million dollar homes so congested together. A city block could have property values that exceed $100 million. 
Or three property tax is made up in some way such as fees, income taxes,  in the case of Alaska and North Dakota a low population and high natural resources. 
   
When annual property taxes are higher than that range.  Either corruption is present. Or a population density with a high percentage of poor people. 

In reply to floareatravis :

Any regrets on keeping those canoes?

STM317 said:

Some data about migration patterns in 2020

Similar study from different moving company

More data from different source

Yet another study with similar findings

I'm sure there are a few ways that this data can be interpreted. Without getting patio'd, what I can say jumps off the page to me, are that states seeing large outflows are mostly known to have pretty high taxes and cost of living, while states seeing large inflows are known for lower taxes and cost of living.

States like New York and California's migration out is due in a large part to people having made their bag of Gold and are leaving to retire with it.  
    You have to look at income opportunity not just taxes. 
  If I can increase my income by 50% I don't mind paying 15% of it to the state. I'm still ahead by 35%. Not to mention the natural wonders of California.  
     Incidentally those states are still growing in population size. Granted now it's by 2% from previous highs of 15% annually. 
  Plus those increases in Income are competing against states like Texas who have lower taxes lower cost homes and lower civic impact. 
     For that reason Texas has gained massively in population, while freeway congestion is rapidly approaching California density. 

In reply to frenchyd :

But what changed?

Why aren't as many new people coming into those states to acquire their bags of gold as there are people leaving after having acquired their bags of gold...something has obviously changed.

Unfortunately I can't recall the source but I remember seeing a study that found the median household income of those migrating to California was 55K and the median household income of those migrating away from California was 127K.

This is super bad news for our tax base as each rotation represents much more than a 57% reduction (127 X .43 = 55) due to our progressive tax system.     

In reply to RX Reven' :

Be careful how you say it.  California and New York etc are still growing. A slower though. 
  It's  the same thing that is happening all over. People move to where they have the greatest income opportunity.  
  Look at Texas, as they developed the high tech industry they started to attract  more people.  To the point where growth in is significant. Except now costs for homes are going up and other expense increasing as well. When you add traffic density that Texas is going through. Etc population growth is slowing down.  
  The cost of living goes up and they are competing against more people seeking those same high paying jobs. More qualified candidates tends to soften wages.  And the cycle continues. 
     I think what made wages in California do high was the rewards for excellence. 
     Actors for example aren't selected because they can do the job. They selected because of box office draw.  Same can be said for writers directors etc etc. 
  Computer nerds are paid premiums for their brilliance not their ability to punch a 9-5 clock.   Brilliance in aerospace and engineering etc. all drive up average incomes. 

In reply to RX Reven' :

I personally think it is, in general, people leaving for warmer weather. I know about 5 Baby Boomer couples who have left Illinois, and 1 from New Jersey, for Texas or Florida. I know of another who is heading to Tennessee for its driving roads as soon as they retire. 

Obviously not the only reason, and Boomers are not the only demographic that is moving. Had a friend, millennial, who moved from Illinois to North Carolina and their cost of living increased about 20%. So it's not all about the money.

In reply to frenchyd :

Yep, it costs $4,000 to rent a moving van from Los Angeles to Austin but only $800 for Austin to Los Angeles. 

In reply to mtn :

But those warm places come with brutally hot weather in the summer which is just as hard on Boomers as cold is to them.  
    My friend left Southern California for Missouri because it's middle ground from Minnesota to Texas. He Sold his home for a million and bought a new bigger one for less than $300,000.   The 700,000 went towards his retirement. 
    Idaho's grow has increased in part due to Californians retiring where summers aren't do brutally hot.  

In reply to mtn :

The two lots at the end of the point were sold for $2 & $5 million  with nice large houses built on top of the lot prices.  
 Homes like that are 2nd or 3rd homes.  So some people are lucky enough to enjoy our summers and Florida's winters. 

In reply to frenchyd :

I wouldn't say that 76 degrees is brutally hot.

Link

In reply to RX Reven' :

How close to the ocean is it?    I spent 7 years in San Diego (USNavy, North Island). . It was near perfect temps year around. But go inland 50 miles and it's pretty brutal.  

mtn said:

In reply to RX Reven' :

I personally think it is, in general, people leaving for warmer weather. I know about 5 Baby Boomer couples who have left Illinois, and 1 from New Jersey, for Texas or Florida. I know of another who is heading to Tennessee for its driving roads as soon as they retire. 

Obviously not the only reason, and Boomers are not the only demographic that is moving. Had a friend, millennial, who moved from Illinois to North Carolina and their cost of living increased about 20%. So it's not all about the money.

I don't think it's necessarily warmer weather. Especially considering the 3 states you named have you no state income taxes on wages. 

For the fiance and I, that would be nearly $10k more a year going back into our pocket instead of a state income tax like we have in Oklahoma. 

frenchyd said:

STM317 said:

Some data about migration patterns in 2020

 

Similar study from different moving company

More data from different source

Yet another study with similar findings

I'm sure there are a few ways that this data can be interpreted. Without getting patio'd, what I can say jumps off the page to me, are that states seeing large outflows are mostly known to have pretty high taxes and cost of living, while states seeing large inflows are known for lower taxes and cost of living.

States like New York and California's migration out is due in a large part to people having made their bag of Gold and are leaving to retire with it.  
    You have to look at income opportunity not just taxes. 
  If I can increase my income by 50% I don't mind paying 15% of it to the state. I'm still ahead by 35%. Not to mention the natural wonders of California.  
     Incidentally those states are still growing in population size. Granted now it's by 2% from previous highs of 15% annually. 
  Plus those increases in Income are competing against states like Texas who have lower taxes lower cost homes and lower civic impact. 
     For that reason Texas has gained massively in population, while freeway congestion is rapidly approaching California density. 

Not sure why it was worth digging up a post from so long ago to hash this out again, but notice I said higher taxes AND cost of living. There's a lot more to financial gain than just higher income and taxes. Housing, food, etc are also much higher in these areas, and it's often enough to offset a raise in salary. Anybody considering a move for a job needs to consider the entire picture instead of just salary and taxes.

For a very long time, cities were where you had to go to make a high salary, and the costs were reasonable enough to justify the move. Now,there are more options for jobs in various locations, and costs to live in major cities have outpaced most wages, so people are seemingly being a bit more judicious in their decision making.

Since this was reintroduced, here's another map that I saw the other day indicating the changes in home prices by location. It seems like many of the locations that saw huge increases in recent months/years have also begun to see the largest declines in price:

frenchyd said:

In reply to RX Reven' :

How close to the ocean is it?    I spent 7 years in San Diego (USNavy, North Island). . It was near perfect temps year around. But go inland 50 miles and it's pretty brutal.  

Ventura county is on the coast and yes, if you go way East & South in the state, it can get really hot. 

However, something like 50% of Californians live within 26 miles of the coast...my office is 22 miles by air from the nearest coast (Santa Monica) and there are only a hand full of days per year when it's uncomfortably hot.

STM317 said:

frenchyd said:

STM317 said:

Some data about migration patterns in 2020

 

Similar study from different moving company

More data from different source

Yet another study with similar findings

I'm sure there are a few ways that this data can be interpreted. Without getting patio'd, what I can say jumps off the page to me, are that states seeing large outflows are mostly known to have pretty high taxes and cost of living, while states seeing large inflows are known for lower taxes and cost of living.

States like New York and California's migration out is due in a large part to people having made their bag of Gold and are leaving to retire with it.  
    You have to look at income opportunity not just taxes. 
  If I can increase my income by 50% I don't mind paying 15% of it to the state. I'm still ahead by 35%. Not to mention the natural wonders of California.  
     Incidentally those states are still growing in population size. Granted now it's by 2% from previous highs of 15% annually. 
  Plus those increases in Income are competing against states like Texas who have lower taxes lower cost homes and lower civic impact. 
     For that reason Texas has gained massively in population, while freeway congestion is rapidly approaching California density. 

Not sure why it was worth digging up a post from so long ago to hash this out again, but notice I said higher taxes AND cost of living. There's a lot more to financial gain than just higher income and taxes. Housing, food, etc are also much higher in these areas, and it's often enough to offset a raise in salary. Anybody considering a move for a job needs to consider the entire picture instead of just salary and taxes.

For a very long time, cities were where you had to go to make a high salary, and the costs were reasonable enough to justify the move. Now,there are more options for jobs in various locations, and costs to live in major cities have outpaced most wages, so people are seemingly being a bit more judicious in their decision making.

We are saying similar things.  However My assumption that businesses would abandon large downtown office buildings  I failed to understand that owners of those places have massive  ego's, that will have a hard time accepting the new realities.  
  The Bank my wife works at  has actual numbers behind the work from home concept.   ( off the cuff, 42% more productive and 24% lower costs).  
   In spite of that  recently the CEO ordered everyone back into  the office.  
     At first it's a hybrid thing but soon it's business as usual. 
     I honestly believe they are not prepared to have those big buildings turned into apartment's. 
  I'll grant that some tasks can be performed in a central location more efficiently  then on line or Zoom etc.  but most administration tasks are more efficient done from home and then who cares where that home is?      
      Saying that it will be a bumpy road for some.  Moving to remote areas or rural areas without transportation links to major cities will have some people locked into one level of work.  Making a nice income where most remain at minimum wages  could become a glass ceiling thing or even a dead end job unless more CEO's embrace work from home. 

z31maniac said:

mtn said:

In reply to RX Reven' :

I personally think it is, in general, people leaving for warmer weather. I know about 5 Baby Boomer couples who have left Illinois, and 1 from New Jersey, for Texas or Florida. I know of another who is heading to Tennessee for its driving roads as soon as they retire. 

Obviously not the only reason, and Boomers are not the only demographic that is moving. Had a friend, millennial, who moved from Illinois to North Carolina and their cost of living increased about 20%. So it's not all about the money.

I don't think it's necessarily warmer weather. Especially considering the 3 states you named have you no state income taxes on wages. 

For the fiance and I, that would be nearly $10k more a year going back into our pocket instead of a state income tax like we have in Oklahoma. 

We're number one in the nation...go California!!!

If you've paid off your home loan, the cost of living in California isn't too ridiculous (except for the opportunity cost associated with having a lot of money tied up in your home).  The killer is the capital gains tax on your investment income...we're getting slaughtered out here.  

In reply to frenchyd :

So, the ONLY reason office buildings exist is because of executive egos??  What a load of horse poo. 
 

According to businesscollective.com, the top reasons for keeping an urban office:

- Worker Energy

- Talented Millennials

- More Connections

- Easy Access

- Economic Incentives

- Built-in Culture

- An Easy Commute

- Brand Recognition

- Networking Opportunities

- Innovation

- Community

- More Appeal to Potential Hires

- Central Location

Ego ain't on the list. 
 

Your wife works in perhaps the most digitized industry on the planet. They literally have no use for buildings (or even staff). It can all be automated. They trade in 0's and 1's.  The only reason they needed buildings at all was because their customers didn't trust online. The pandemic changed that. 
 

Your assertion is completely wrong for many industries. 
 

And converting most large high rise office space to residential space is a financial impossibility. It's way too costly to consider in most cases. 

In reply to SV reX :

Why waste your time arguing with someone that pulled up a 18 month dead thread, just to say the same BS?

In reply to Steve_Jones :

I'm not arguing with him. I'm adding info for anyone EXCEPT him that might be interested in considering that all CEOs are not evil despots  devoted to nothing other than greed and malice. There are many other things they take into consideration. 
 

In reply to SV reX :

I agree, the statement alone is so out there that no argument is really needed. I have a lot of first hand experience with this subject. Not just with my company or the scores of companies that I work with on a daily basis- but a huge part of my job involves the construction and renovation of office buildings. At the beginning of the pandemic, remote working worked fine for most. But it quickly became apparent that there was a huge disparity in production between those who had responsibilities  they were solely responsible for and those with shared responsibilities. Those with their own responsibilities, they had to get their work done no matter where they were. No one else was going to do it for them. If anything, most were more productive- especially salaried employees who put in more work instead of commute time. Many people who had shared responsibilities- like call centers or those who watched a shared email box- became much less responsive and productive remotely. Instead of phones ringing in cubicles with a manager making sure they were answered- you had home phones ringing with people staring at them, waiting for someone else to answer. That was at it's best, when it was experienced employees working from home. As turnover necessitated hiring and training new employees, the flaws in everyone working remotely became even more apparent, at least to anyone with more than one datapoint. 
 

Also, most companies don't own their buildings. They lease them, at great expense. If working remotely worked, it would save them a lot of money. Which trumps ego in most companies. 

In reply to z31maniac :

Illinois does not tax retirement income (SS, IRA, 401k, Pension). Seeing as all the Boomers I know who moved did so after retirement, that isn't it.

Also, the millennials that moved from Illinois to NC now have higher state income taxes. And somehow property taxes too, but that one is an apples and oranges comparison.