Where should I move to?

[denny411]

Just be very carefull buying and/or selling real estate right now. I was watching a market analyst from forbes on Glenn Beck last night. He is predicting a major decline in the housing bubble.

The hardest hit areas will be coastal regions and suburbs of larger cities where the market has been artificially inflated in recent years.

 

If you currently live in an inflated region, and are considering a move to a more rural area. You may want to sell high now and rent temporarily to see what the market does in the regions that you are most interested in.

 

An interesting FAQ. In the state of california, there is one real estate agent for every 50 residents of the entire state.

Also, Apparently there is a record number of unsold NEW homes on the market. I think the number was between 1.5 and 2 million for this quarter.

 

If you have the patience to wait it out, you might be able to save some serious cash in the coming years. It is expected to be 5 years or so before prices start to come back to more appropriate levels.

[JMortensen]

I appreciate the post denny. The problem is I'm getting royally screwed on my taxes because I'm currently renting. I pay $1350/mo rent, so why not buy a house and get thousands back in taxes at the end of the year? The main focus is going to be finding a house that I want to live in for a while. I don't mind if it loses some value in the near term so long as I can stick it out long enough so that the value rises again and makes me some profit in the long term. In the near term I'll just enjoy the fat tax return at the end of the year. None of this is going to happen for about 6 months, so I'm kind of hoping that if the market is going to tank it will just hurry up and tank. Then maybe I can move closer to family and still afford the mortgage. We'll see.

[Mikelly]

There is some truth in the concern over the "bubble" bursting... However, What my investment broker, CPA, Attorney, and others in the business are telling me is that (and this only applies to the Washington DC area) the market will bottom out for us come next spring/ summer. We were very fortunate in getting out of our house quickly, as we'd already BOUGHT the other house... We got a lower price for our home, but we got the "asking" price.

 

One way to look at it is that if you buy in an inflated market, plan to sell in that market. We bought and sold right on the edge of the slide downward, and we took advantage of it. The previous owners had their house on the market for 5 months before we made an offer, and they had lowered the price from $569K to $539K. We payed $519K for it. In comparison, we could have gotten $379-389K for our house a year ago, and only for $344,900 for ours when we sold...

 

The other factor is the price range. Houses under $400K are less impacted in our area, and the lower that price, the less the impact. If you look at the homes we were looking at when we bought our house, all in the $800-900K range this past spring, those that didn't sell have seen major reductions... Up to $150K.

 

Right now is the time to buy, not to sell, So Jon, you're in a GREAT position.

 

Wish you would look out this way in Va...

 

Mike

[tannji]

Wow... I am actually surprised you had such a good impression of Albuquerque.... I was there last summer and was really disappointed in the direction it has gone since I lived there. (lived in and aound there until I was 20 or so) I still love NM in general, but would not look forward to living in the Alb city proper. Big contrast between Alb and Denver... Culture VS pop culture... architecture couldnt be more different, lol. Ironically, I liked living in Denver for the most part, traffic isnt too bad if you know the area and have some control over your work schedule, and the bubble is probably about to deflate in a big way there. All the tract housing (houses made of ticky-tacky, name that folk singer, lol) came in response to the many thousands of people who moved to Denver over the past 15 years... a lot of people made a lot of money developing horrible housing tracts, because they were cheaper and as nice or nicer than where all the implants had in various other states. (mostly Californians) I guess you could say I loved living in Colorado... and found Denver easy to tolerate, considering the overall quality-of-life, mountains, sports, ect. And Foosball. I havent played Foosball since I left, major bummer for me, lol.

You could always come look at Davenport, Iowa... that would re-center your perspective for certain. Arm-pit of the Mid-West... typical River Town, high crime, no culture, horrible food, bad job morket, high humidity, cold, wet winters, hot and sticky summers, what few Z's there are are either hidden away in forgotten garages or have trees growing growing where the engine used to be. Did I mention RUST. Ahhh, home sweet home... God I need a new life, lol.

[JMortensen]

Well maybe you have a point tannji. To me Alb was new and different. The houses are a lot different looking than I'm used to. The food was great. The mountains were pretty. I didn't look at the crappy parts of town, only the nicer areas. The places that I went to and the houses that I looked at and even the people that I talke to were really nice, so that left me with a good impression. Like I said my wife's take was that it was an economically depressed city, but we were mostly focused on Tijeras once we found that house. That would be really perfect for us, too bad we can't just drop everything and move right now or I'd do it.

 

I think you're right about CO, and maybe 12 years ago I would have been more excited about a "new house in the suburbs" but damn, I was so turned off by the never-ending seas of tract homes that I just don't think I could do it. I think I'll let you keep Iowa all to yourself...

 

Mike, that's kind of what I'm thinking. Buy in an inflated market, sell in an inflated market. I mean even if the housing values go WAY down, it's still a better deal for me to have a mortgage and get the tax bennies from owning the home. I can't imagine rent would drop precipitously if the housing bubble were to burst, so what I'm really gauging is how my mortgage would comparte to my rent. If the two are close (and they are), and I get the big tax break, then it's still a good thing. And bottom line is that everyone needs a place to live, so as long as the population of our country keeps growing the value of a home should continue to trend upwards as more people eventually need a house to live in. That may be a really long term perspective, but that's my own "worst case scenario" Plan Z type of thing.

 

I hear quite a few people talking East Coast and I appreciate the invite, I just can't get the woman to want to get out there. I was pretty excited about North Carolina, but she just doesn't want to budge, so that's that. I think that's the reason she isn't very interested in Texas. Too far away from the Left Coast.

[Twoeightnine]

Hey Jon.

I lived in Seattle for four years. Get out now while you still have your mind!!!

Dont get me wrong, the city and the people are awesome. The constant weird ass weather used to drive me nuts! I even had mold grow on the top of my car!

I moved there from Arizona so it was quite the shock.

I was a military brat and when my father got out, I went in. I have since then been in the aviation industry and have had to go with the dough.

Not too many places that I have NOT been. I liked the carolinas very much. Loved Michigan in the summer. Same for Montana. Seattle...see above. Loved Arizona. I was living in Colorado when I was offered a posistion in north Texas. Now... I spent 6 years in the Dallas area back in the eighties so I figured OK fine. Where I live now is far from Dallas.

The weirdest thing, when I crossed the Colorado Texas border, it felt good for some reason. I realized that I like Texas. It's like another country. Has a lot to offer.

Sea shores, forest, desert, big city, endless country.

If some one would have asked me 5 years ago if I would live in Amarillo TX however, I would have thought them crazy. But after being here a while, I find that even the north panhandle of texas, beats just about anywhere I have been. God bless Texas!

[Guest Mike]

Yeah... and we could secede without missing a beat if federal bureaucracy becomes unbearable:lol:

 

Hey Jon.

I lived in Seattle for four years. Get out now while you still have your mind!!!

Dont get me wrong, the city and the people are awesome. The constant weird ass weather used to drive me nuts! I even had mold grow on the top of my car!

I moved there from Arizona so it was quite the shock.

I was a military brat and when my father got out, I went in. I have since then been in the aviation industry and have had to go with the dough.

Not too many places that I have NOT been. I liked the carolinas very much. Loved Michigan in the summer. Same for Montana. Seattle...see above. Loved Arizona. I was living in Colorado when I was offered a posistion in north Texas. Now... I spent 6 years in the Dallas area back in the eighties so I figured OK fine. Where I live now is far from Dallas.

The weirdest thing, when I crossed the Colorado Texas border, it felt good for some reason. I realized that I like Texas. It's like another country. Has a lot to offer.

Sea shores, forest, desert, big city, endless country.

If some one would have asked me 5 years ago if I would live in Amarillo TX however, I would have thought them crazy. But after being here a while, I find that even the north panhandle of texas, beats just about anywhere I have been. God bless Texas!

[Michael]

Please consider that the purported tax benefits of home ownership are often illusory! First, only the mortgage interest is tax deductible; the principal is not. So unless you make a small down payment or have a very long-term loan, pretty soon after buying you’ll find your tax benefits evaporating. Second, the standard deduction for married filing jointly is $10,000. You’ll need a house in Northern Virginia to get an annual mortgage interest to exceed that! Third, house ownership means property taxes, and these taxes can easily be comparable to the cost of renting an apartment. To put it in perspective – I have no mortgage, yet the taxes and maintenance expenses of my house more than exceed the rent for a 1-bedroom apartment.

 

The home ownership fever is a ruse concocted to keep people bound to “property”, triggering various behaviors deemed favorable, not to mention additional expenses such as furniture, remodeling and lawn care. I’d go on and on, but the thread would become too political.

 

Bottom line: buy because you need a place to work on cars, and not because you’re concerned about missing out on putative tax breaks.

[JMortensen]

Please consider that the purported tax benefits of home ownership are often illusory! First, only the mortgage interest is tax deductible; the principal is not. So unless you make a small down payment or have a very long-term loan, pretty soon after buying you’ll find your tax benefits evaporating. Second, the standard deduction for married filing jointly is $10,000. You’ll need a house in Northern Virginia to get an annual mortgage interest to exceed that! Third, house ownership means property taxes, and these taxes can easily be comparable to the cost of renting an apartment. To put it in perspective – I have no mortgage, yet the taxes and maintenance expenses of my house more than exceed the rent for a 1-bedroom apartment.

 

The home ownership fever is a ruse concocted to keep people bound to “propertyâ€, triggering various behaviors deemed favorable, not to mention additional expenses such as furniture, remodeling and lawn care. I’d go on and on, but the thread would become too political.

 

Bottom line: buy because you need a place to work on cars, and not because you’re concerned about missing out on putative tax breaks.

I paid a hell of a lot in taxes last year. My CPA told me that since I'm self employed I wouldn't get my self-employment taxes back by owning a home, but I would have gotten the other half back (at least last year). So why rent and accrue equity for a landlord when I could be doing the same for myself, and have my mortgage effectively subsidized by the government? If I find that in 10 or 15 years that the tax benefit isn't as good, I'll just buy another house!

 

If you think that makes me a "slave to my belongings", well then so be it. I like my belongings and I really loved my old house. I can't wait to get those shackles on again. I remember that feeling of "oppression" washing over me, how warm and happy it made me... In the mean time I'm going to keep working hard so that I can put more of that "evil" money into a "stupid" Z car, because it makes me happy too.

 

As to property taxes, I haven't yet seen the $250,000 house where you have $17K in property taxes. That's basically what I pay for rent in the current place. When I owned in CA my $255K home ran about $3K in taxes. It is definitely something to keep in mind, and we are checking that before we buy. I've seen stories of homeowners and particularly seniors who were on Social Security and had fixed incomes that got pushed right out of their houses by the property tax increases. That was one thing that I liked about ID, they had laws against increasing property taxes more than .xx percent per year.

[Mikelly]

I paid a hell of a lot in taxes last year. My CPA told me that since I'm self employed I wouldn't get my self-employment taxes back by owning a home, but I would have gotten the other half back (at least last year). So why rent and accrue equity for a landlord when I could be doing the same for myself, and have my mortgage effectively subsidized by the government? If I find that in 10 or 15 years that the tax benefit isn't as good, I'll just buy another house!

 

If you think that makes me a "slave to my belongings", well then so be it. I like my belongings and I really loved my old house. I can't wait to get those shackles on again. I remember that feeling of "oppression" washing over me, how warm and happy it made me... In the mean time I'm going to keep working hard so that I can put more of that "evil" money into a "stupid" Z car, because it makes me happy too.

 

As to property taxes, I haven't yet seen the $250,000 house where you have $17K in property taxes. That's basically what I pay for rent in the current place. When I owned in CA my $255K home ran about $3K in taxes. It is definitely something to keep in mind, and we are checking that before we buy. I've seen stories of homeowners and particularly seniors who were on Social Security and had fixed incomes that got pushed right out of their houses by the property tax increases. That was one thing that I liked about ID, they had laws against increasing property taxes more than .xx percent per year.

 

Jon, I'd do exactly what you're planning to do... Michael's breakdown on homeownership is in the minority and I'd bet dollars to donuts you'll not find many in the financial or tax world who will tell you that buying a home is a bad thing from a tax standpoint. I won't get into this here, but Michael has had a very bad experience with a property that is located in a market that's not very prosperous. He also bought a home that needed a lot more repairs than he probably was aware of when he bought it (based solely on what he's told me in the past when visiting) and his situation is not the norm for savey buyers who are patient and have the luxury to buy in areas that are more lucrative. I stayed in my last home 8 years, paid $126K for it, spent an additional $45K in total mods to it, and sold it for $345K, on the back side of the "boom", when prices had started falling... Had I chose to sell in 2005, I'd have been able to sell in the $400+K range. It all boils down to location, condition of property and timing.

 

My tax bill annually on my old house was $1650. Where Michael get's his figures from is beyond me... Maybe Ohio has some special "ScrewmebecauseIownahome" tax or something... But if that were the case, I'd move out of O-HI-O!

 

Mike

[Mikelly]

Just for snicks, I went digging for my statement on the new home... We're paying approximately $2800 in taxes annually for this place and it's valued at over $530K...

 

OOOOO-hiiiiiiiiiiiiiiiieeeeeeeeeeeyyyyyyyyy-OOOOOHHHHHHHHHH! :lmao:

 

Mike

[Michael]

For the record, I'm paying about $3200 of property tax a year on a house assessed at $200K. And this is in a township, where we don't even have a firehouse! A colleague at work is paying $9300/year on a house assessed at about $400K. You can verify these numbers by researching the Greene County (Ohio) municipal web site; do a search on 3360 Old Winchester Trail (unfortunately these statistics are all a matter of public record - makes me wonder about identity theft, but that's for a different thread).

 

Meanwhile, when I moved here in 2000, my one-bedroom apartment cost me $480/month.

[denny411]

I think micheal is right on track with the property tax situation here in O-HI-uhh.

I have several friends with houses valued in the 250-350K range that are paying well over $3000 a year in property taxes.

 

I guess you have to pay one way or another. These houses would be 1mil+ in some markets, and the intrest/payments on those mortgages would be much higher.

 

As far as income tax goes. If you have a tax right off it means you had a loss. I personally would buy a house in a more reasonable market, and pay less for same amenities as in the inflated markets.

You will have lower payments and pay less intrest. Since you work online i can`t see that it would matter much whathousing market you are in.

 

I would look for an area with a low to moderate cost of living and keep more money in the bank each month rather than jump through hoops for the IRS.

[Mikelly]

...Or you could just make enough money that the taxes won't matter... Although I suspect I'll be crying a different tune come April when I have to pay the IRS 40% of our black profits for the year...

 

Again Jon, as I said earlier... If you buy in a depressed market, sell in an inflated market and make some coin... I'd also not buy anything that you wouldn't be 100% happy in for a 10 year stretch. And keep in mind where it's located, and do some research to find out what your county has planned for zoning/planning for that area in their out-year planning... You don't want to buy a place where they may be planning to put an airport or landfill!

 

Happy house hunting, and for gawds sake, get one with a nice big garage!!

Mike

[Mikelly]

For the record, I'm paying about $3200 of property tax a year on a house assessed at $200K. And this is in a township, where we don't even have a firehouse! A colleague at work is paying $9300/year on a house assessed at about $400K. You can verify these numbers by researching the Greene County (Ohio) municipal web site; do a search on 3360 Old Winchester Trail (unfortunately these statistics are all a matter of public record - makes me wonder about identity theft, but that's for a different thread).

 

Meanwhile, when I moved here in 2000, my one-bedroom apartment cost me $480/month.

 

If that's the case Michael, You might want to start attending county meetings to find out what the hell your tax dollars are going towards. That seems outragious. By comparison, our home assessed at over $450K and we're paying 1/3rd your colleagues taxes, and I've got a fire/rescue house and waste collection site within 2 miles of my home, and I'm not in a subdivision...

 

Yea, you're right, I'd be pissed too if I was in your shoes...

 

Mike

[Phantom]

I was about 60 miles south of Charlotte a few months ago. It was nearly 100°F and the humidity had to be at least 80%. Got even worse later int he afternoon because it started to sprinkle a bit which then brought the humidity to 100% and the temperature only dropped a couple degrees.

 

Jon,

Made my decision and I'm moving your direction. I'll be just over the hill in Yakima. Low humidity and cools down at night even when it gets hot in the summer. Housing runs about $160/sqft for really nice homes. I've seen some pretty decent looking places with 2-10 acres of land and about 2,500 sq ft in the main house in the low 300's.

[JMortensen]

I'd also not buy anything that you wouldn't be 100% happy in for a 10 year stretch.

This is the MAIN consideration for us. We realize that the market is on a downturn, so we're trying to find a place where we would be happy to live for the next 10 years, just in case it takes that long for the market to cycle back up.

As far as income tax goes. If you have a tax right off it means you had a loss.

I don't think that this is the case in terms of home buying. The interest on a loan is a write off. Doesn't necessitate a loss.

I personally would buy a house in a more reasonable market' date=' and pay less for same amenities as in the inflated markets.

You will have lower payments and pay less intrest. Since you work online i can`t see that it would matter much whathousing market you are in.[/quote']

The location matters a lot to my wife, who works as a pediatric dietitian. She works with very sick children who need liver and bowel transplants. She likes dealing with the severely ill kids and finds that rewarding, so she doesn't want to live in an area where there are no hospitals that have Neo-natal Intensive Care Units (NICU's). She'll go for less ill than she has right now, but she doesn't just want to deal with fat people getting Type II diabetes all day long.

 

As to the other bit, I was explaining this to my friend in CA. I'd rather not be house poor. I'd rather pay less for a house and have more in the bank to put into the car or buy a nicer mountain bike or whatever. His argument back was that his $345K house that he purchased about 7 years ago is now worth over $1M (and they're still selling for that in his area too!), and you won't get that kind of appreciation in NM or CO or ID or some other relatively sparsely populated state. He's right about that, no doubt about it. Location, location, location. But, the question is can we afford to get in there, and do we want to actually live there? In the case of the housing tract that he is in, the answer would be no to both of those questions. I'd much rather live in the house in Tijeras for less than $300K than his house for $1M, even if I could afford it.

I would look for an area with a low to moderate cost of living and keep more money in the bank each month rather than jump through hoops for the IRS.

This is what we're trying to do. It's a matter of degrees. We're not going to check out MO, where my sister-in-law bought a house for $35K, because we don't want to live out where she was. We want to find something reasonable where we can afford to live comfortably and where we would be happy long term, should we need to stay for a long time.

[grumpyvette]

jmortensen

 

I repeat I went thru this

 

THINK NORTH CENTRAL TO UPPER MID CENTRAL FLORIDA

 

NO STATE income taxes

year round decent weather

crime in rural floridas LOW

concelled carry licence is easy to get, most people don,t bother

cops don,t look at a shotgun in the rear window as anything out of the ordinary, people are generally polite, its only south florida that SUCKS

fast growing area ,lots of job potential for SKILLED or even SEMI SKILLED workers

you can shop around but you can get a nice house on 5 acres for between $500K and 700K EASILY, shop harder and noticably better deals are available, especially on larger or smaller tracks of land,recently saw several nice deals

 

far enougth north like in the tallahassee or jacksonville to pensecola in areas that are at least 50 miles from the coast

[Dave240Z]

Michael isn’t completely wrong. The ability to itemize your deductions is somewhat illusionary unless you are able to itemize huge amounts. Home ownership usually allows people to start itemizing their deductions due to the interest/property tax deductions since they would not exceed the standard deduction otherwise. According to the IRS, nearly 2/3 of the U.S. use the standard deduction.

 

Note that the standard deduction for the 2005 tax year was $5K/individual or $10K/married. This number jumps to $10,300 for 2006 and to $10,700 in 2007. Also worth noting is that both the standard and itemized deductions simply reduce your AGI (Adjusted Gross Income), which is really reducing your effective income which in turn can reduce your effective tax rate depending on where you fall within the various brackets. Depending on which bracket you fall into, this may or may not provide any significant change. A tax credit is far more effective, but that’s for another topic.

 

In order for you to realize any sort of tax shelter benefits from your new home, you would need to be able to rack up at least $10,300/yr in itemized deductions. With record high home prices this isn’t terribly difficult. The first year simple interest on a $250K/home (this would be a 5’x5’ shack around here) assuming 10% down payment would equal roughly $13K with an additional $2K/yr in property taxes for a total of $15K without itemizing anything else. So while you are getting a larger tax deduction, it’s only an additional $4,700 when compared to the standard deduction. In 2007, this will drop to $4,300. If you can add anything else to your itemized deductions then so much the better, but don’t be completely fooled into thinking that just because you can deduct the interest/prop taxes that there’s going to be some kind of windfall tax advantage. If you put down 20%, you can reduce your tax “benefit” by another $1K to $3700 and $3300 respectively.

 

This isn’t to say home ownership isn’t great. These tax breaks do make it more attractive to buy a home, which after all is what the government wants. However, as I tried to explain here the real tax benefits may not be as big as they may seem especially with the standard deduction rising rather briskly. Besides, there are other ways to save on taxes. Ideally, you would want to adjust everything so that you owe Uncle Sam a big fat $0 every year. Getting money back is akin to giving the gov’t a nice interest free loan each year when that money could have been put to better use. I always error on the side of slightly owing since I’d rather owe than get anything back which simply means I overpaid. The past few years, I have been rather successful at this and have owed less than $500 each year.

 

 

As far as where to move, my entire Dad's side of my family lives in ABQ. I visit once or twice a year and have found the city to be rather relaxed and enjoyable. The weather is not too extreme and for the southwest is actually quite agreeable. My family lives in the more upscale NE corner near the Sandia mountains so I must admit that I have not ventured into any of the more seedy portions. My biggest gripe about the place would be the grid type layout. All the streets run N-S or E-W. They need a couple of diagonal freeways to make getting from point A-B a little faster. Other than that and the general lack of work I don't think it's a bad place at all. In fact, it's underrated IMO.

[Michael]

OK, it really comes down to whether one thinks of a house principally as an investment or as a “place to live”. Barring pathological anomalies such as my own case, generally owning a house gives higher quality of life than renting; this I readily admit. The investment part, however, is highly tenuous. Jon’s friend in CA with the $1M house did very nicely; I envy him! In such circumstances it would have been foolish to rent an apartment. But in the Midwest, the Plains, and the South (except for the coastal regions and big cities such as Atlanta), real estate as an investment is quite unattractive. Nevertheless, our culture encourages home ownership as being the decent, self-respecting thing to do. This I resent, not only because of the fallacy of the assertion itself, but because applied too broadly it drives reasonable people to making unreasonable decisions - to the benefit of some one else!

 

As for our local situation in Ohio... it takes about as much money to support a student in public school in Ohio, as it does in Virginia or California or wherever. If less money is available per capita, then the relative tax rate per capita has to be higher. If there are more school-age children per capita, then again taxes end up higher. In this area (probably true for suburban/rural Midwest in general) we have lots of young families with children and single-parents with children. But there are few "young professionals", empty-nesters, childless singles, or double-income-no-kids couples. Single-income households (wife stays at home) seem to be the norm. Manufacturing jobs are disappearing (if I recall correctly, Ohio is #1 nationwide in percentage of lost manufacturing jobs), and with them the backbone of the economy. Bottom line: lots of children in school, few adults with good jobs to pay for the schools. The result has been horrendous property taxes.

 

One argument in favor of moving to a relatively expensive area is that said area would have a good tax base. Being surrounded by affluence might make one feel psychologically "poor", but the tax rates don't need to be as high, while municipal services (schools, roads, parks) would be good. Another argument is that to a point, expensive areas become even more expensive, while lower-priced areas continue to languish. Rural Alabama had cheap real estate 50 years ago, has cheap real estate now, and will have cheap real estate 50 years in the future. NYC, Washington DC, San Francisco etc. will most likely keep appreciating faster than the rest of the country.