Yeah we are still debating, we plan to stay in the area but after reviewing what acreage is going for and per the 2 builders I’ve chatted with, appears it would be nearly a year before moving into a newly built home.
Thoughts on Real Estate- bubble burst or not?
- Thread starter Cobra1776
- Start date
All of the cash sales going on, and there a a lot of them, check out who is making the cash purchases. Follow the money. Once you find out who is buying up all of the property with cash, be wary.
Do your homework. Make informed, NOT emotional decisions.
Do your homework. Make informed, NOT emotional decisions.
Did you do a 1031 exchange or eat the capital gains tax?
No large city grew faster than Phoenix.
Arizona’s capital grew at the fastest rate among America’s biggest cities, vaulting it ahead of Philadelphia to officially become the fifth-biggest city in the U.S. since the last census.
"The increase has been fueled not just by immigration and sun-seeking retirees but also by the arrival of tech companies and middle-class families from California and other more expensive parts of the country seeking more affordable housing."
This may account for a good percentage of cash buyers. I have some of them on my street.
A buddy of mine across the street sold their house for $1.6M after building for $350k 10 years ago. They're in an apartment trying to play the swing and they're miserable. He's aged more in a year than the 20 I've known him. No way no how would I go back into an apartment.
I had a handful of cash buyers makes offers on my home...low ballin bastards...but i understand lol
I did neither. Was not necessary having lived there for 5 years as a primary residence. $830k of pure profit in 5 years, yummy!
Edit - well, minus the 4% total for realtor fees.
Your going to owe some federal income tax on it, but not much compared to the amount of the gain and there really isn't anything you could have done, a personal residence doesnt qualify for a 1031 exchange.
We checked with our tax guy and when we closed they did not have to file anything with the IRS. Both our closing & title company, and our tax guy said no.
Both said since we built it and lived there 5+ years there was no tax on the gains.
If they were both wrong, I'll be shocked (and unhappy). But since nothing was filed with the IRS at the closing, I don't see how they'd know we even sold.
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Your tax guy or gal is an idiot or didn't understand what you told them in relation to the total gain on the property.
You will report the sale of the house on your return this year, if you signed the 1099-S form stating that you owned the house and used it as your personal residence AND did not have a gain over 500k then you need to go back and have them fix it.
If you and your wife both owned and lived in the house for 2 of the last 5 years you qualify for the personal residence exclusion, however that is only 250,000 per person. So if you both qualify, you get 500,000 of the 830,000 excluded. Meaning you owe long term capital gains tax on 330,000, that could be at 15%, 20% or 23.8% depending on your other income. You will be on the hook for 50-80k.
Topic no. 701, Sale of your home | Internal Revenue Service
Topic No. 701 Sale of Your Home
I guess we will know in a few months
I already know the answer, its just will your return be done right or wrong.
I am a CPA that specializes in tax for the last 10 years. I also added the link to the IRS website that explains your tax "pro" is wrong.
But to cover your ass, send your guy an email and print a copy and save it with their response that there is no tax due, that way they have to cover the penalty if your audited in the future.
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Everyone that says a burst isn't happening continually references the variables from 08 and states they aren't there to make it happen again.
Except there's nothing stating it may be a whole different set of variables that brings it down.
Tons of people are buying extremely high and over-extending their finances bc they're being told to buy now or you won't be able to again. All that needs happen is a decent recession that removes those people from their income, and bam, a shitton of homes are up for sale. If that happens supply rises and demand falls and values tank.
You also have stated with high property taxes that owners have seen their taxes double or triple in a few years thanks to nearly exponential rise in property values. Again, they end up over-extended now and if they lose jobs those homes go up for sale like above. If enough hit the market at once value drops wiping out the equity created the last few years so owners can't fall back on equity as their saving graces anymore.
You also have firms like Blackrock and Vanguard buying SFH at fever pitch bc they want to push everyone into renting from them. Problem is, if there's a recession and market dump, these firms may need to offload real estate to cover losses, and then like above supply increases while demand drops in a recession and values tank.
The big thing is all it takes is a major issue to put a bunch of homes on the market to change the paradigm.
Except there's nothing stating it may be a whole different set of variables that brings it down.
Tons of people are buying extremely high and over-extending their finances bc they're being told to buy now or you won't be able to again. All that needs happen is a decent recession that removes those people from their income, and bam, a shitton of homes are up for sale. If that happens supply rises and demand falls and values tank.
You also have stated with high property taxes that owners have seen their taxes double or triple in a few years thanks to nearly exponential rise in property values. Again, they end up over-extended now and if they lose jobs those homes go up for sale like above. If enough hit the market at once value drops wiping out the equity created the last few years so owners can't fall back on equity as their saving graces anymore.
You also have firms like Blackrock and Vanguard buying SFH at fever pitch bc they want to push everyone into renting from them. Problem is, if there's a recession and market dump, these firms may need to offload real estate to cover losses, and then like above supply increases while demand drops in a recession and values tank.
The big thing is all it takes is a major issue to put a bunch of homes on the market to change the paradigm.
There are a lot of all cash home buyers out there, it's not like 2007 where loans go to anyone. Cash wins over financing every time. The buyers are much better off than the 2007-9 because there is a limited number of homes and they are going to the most financial stable buyers (mostly). You're not going to find a bunch of people defaulting and massive foreclosures on a few rate hikes. Anyone whom is taking out a variable rate mortgage is an idiot because everyone knows interest rates are going up.
How many of those cash buyers are financing after the sale? The institutionals sure as hell are.
Tv just told me that fed expects to hike interest rates next year.
A week ago they were saying 2023/2024.
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A week ago they were saying 2023/2024.
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You tell me. The point being that buyers are much better of than is being portrayed by thomas.
Or the point being that just because they are purchased with cash does not mean there is any long term equity or leverage on the properties. Certainly seems to me it shouldn’t make people think the market is immune to a crash.
So you don't know. Got it. A lot of former/current Homeowners (not investors) with all cash certainly are not financing. They are downgrading and pocketing the remaining cash.
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