Author Archive: Irvine Renter
Falling mortgage interest rates increased the borrowing power of all buyers and inflated house prices beyond what ordinary income growth would have accomplished.
Repost from OC Housing News 2011-2016It’s widely believed mortgage interest rates will rise in the future, perhaps for a very long time. The mainstream media is littered with articles about how this won’t hurt the housing recovery to provide homeowners and prospective buyers assurance that prices will keep rising. To better understand why rising interest rates are such a big issue to housing, it’s worth reviewing the impact falling interest rates have had on house prices for the last 30 years.
House prices and rental parityThe basis of all house prices valuations is rental parity, the price point where the cost of ownership equals the cost of a comparable rental. Rental parity is a tether on house prices because[READ MORE]
Real estate ownership has implications for both income taxes during the ownership period and capital gains on the sale.
Repost from OC Housing News 2011-2016Some people buy houses because they are "tired of paying so much in taxes." Homeownership provides the taxpayer the ability to write off the cost of interest on a home mortgage, and they can deduct property taxes as well. Unfortunately, while these tax deductions may lower the bill to Uncle Sam, they come with a cost, and often in Coastal California, the cost outweighs the benefit. Many people end up paying more in interest than they save in taxes. So while it may relieve a high wage earner to avoid paying Uncle Sam, giving far more money to a banker makes little sense.
TaxesOwning real estate has two significant tax benefits: (1) favorable capital gains tax exemptions and (2)[READ MORE]