Bob Shiller: 'Decline May Well Continue for Some Time'
Yale econ professor Robert Shiller had an op-ed in the Times this weekend that talked about why there’s not necessarily an end in sight for the decline in the country’s housing market. The piece examines why other declines have dragged out for years: “Despite the uptick last week in pending home sales and recent improvement…
Yale econ professor Robert Shiller had an op-ed in the Times this weekend that talked about why there’s not necessarily an end in sight for the decline in the country’s housing market. The piece examines why other declines have dragged out for years: “Despite the uptick last week in pending home sales and recent improvement in consumer confidence, we still appear to be in a continuing price decline…Several factors can explain the snail-like behavior of the real estate market. An important one is that sales of existing homes are mainly by people who are planning to buy other homes. So even if sellers think that home prices are in decline, most have no reason to hurry because they are not really leaving the market. Furthermore, few homeowners consider exiting the housing market for purely speculative reasons. First, many owners don’t have a speculator’s sense of urgency. And they don’t like shifting from being owners to renters, a process entailing lifestyle changes that can take years to effect.” He concludes: “Even if there is a quick end to the recession, the housing market’s poor performance may linger. After the last home price boom, which ended about the time of the 1990-91 recession, home prices did not start moving upward, even incrementally, until 1997.”
Why Home Prices May Keep Falling [NY Times]
President Obama is thinking of perhaps financing his new national health initiative by taxing the rich.
You hear that all you brownstone-owning millionaires?
An asset (such as a house in Park Slope) worth well over a million dollars makes you a very wealthy person in most of the United States.
j bummer, bears are ordering steak now
colonel, thanks — we crossed posts. ok, I got too excited for the bulls. So a 3MM stone would cause a 1MM estate tax, assuming no other assets. zoiks. better to sell it.
“after further review, offsides, team bull. no score”
OK, so say I’m a retirement-age owner living in my stone for 20 years. property taxes capped at laughably low rates. rental income from the garden apartment. probably net positive carry. I can sell now and write a 6-figure check to a broker and another 6-figure check to the IRS, or I can lord it over my lazy kids to get them to keep coming home for my birthday. total no-brainer.
Joe, just as the capital gains rate will go up, the estate tax exemptions are going to go back down.
Currently the estate threshold is $3.5 million for 2009, with a tax rate of 45%. In 2010, the tax cut will be repealed and in 2011 they go back down to $1 million, taxed at 50%.
So those brownstone owners sitting on a million plus hoping to pass it down tax free are in for a rude awakening.
this one’s good & supports the colonel:
http://taxes.about.com/od/taxplanning/qt/home_sale_tax.htm
On estate tax: http://wills.about.com/od/understandingestatetaxes/a/taxliability.htm
So, on a really quick read, it looks like the first 3.5MM is exempt? Then that’s a huge big deal for brownstoners. You’re supposed to keep that brownie in the family.
BHO what do you make of that?
Not anymore, BHO.
“BHO so what’s the final final…”
I understood you avoided gains tax if you bought again within a year but I’m not certain.
***Bid half off peak comps***
thanks folks — I didn’t realize that only the first 250/500K of gain was exempt. that’s got to be a huge big factor in the brownstone market, don’t you think? Long-timers are sitting on 7-figure gains, and would have to pay a six-figure tax bill if they sold now. If the home represents the bulk of their assets, and they have the alternative of leaving it to their kids (taking advantage of higher estate tax exemptions), there is a really good reason not to sell.
maybe one for team bull there.