buy a house?

Hi,

I posted this a few times in misc.invest.real-estate hbut no responses
and full of spam, so thought I would try my luck in here w/the many
knowledgeable people contributing.

I live in Queens, NY just started a job and thinking of investing in a
house over the next few months. The house prices around my area have
sky-rocketed. It's really actually obnoxious how much people are
demanding for houses. Now, I don't wish to spend all my money in
taxes and some tax breaks would be much welcome. But is it really
worth buying a 3 bedroom small house for 500K in today's market? As
far as the market is concerned, I am quite agnostic to it as I don't
plan on selling it in one year. So, even if the prices go high, its
not going to help me much, as if I sell it and buy another house, even
that house will be more expensive and vice-versa in terms of the prices

going down.


I guess in my mind I do know the answer, but shelling out so much money

for a house seems preposterous to me. So I guess what I am getting it
is just the "opinion" of some people who are knowledgeable. (I know
that some of you might say that it would be better to talk to an
"expert", but my point here is to really just hear what people think
about it). If (hypothetically) you were getting a
42% tax on your income and could afford a decent downpayment on a
house, would your advice be to buy a really expensive house? Or wait a

little while as the alleged "real-estate bubble" bursts?


Help is much appreciated. Thanks.

Re: buy a house?

wrote:
> Now, I don't wish to spend all my money in
> taxes and some tax breaks would be much welcome

I never understood the line of reasoning to buy a house for "tax
breaks". If you were going to spend the money anyways, then sure, "tax
breaks" make sense. But it doesn't make sense to spend more to save
less.

You get more of a tax break by donating to a non-profit than buying a
house (principal payments are not tax-deductible). But I don't hear of
anyone suggesting to donate to charity for the purpose of getting tax
breaks.

Bottom line: If you want to buy a house, that's fine. Just don't do it
for the tax breaks.

Re: buy a house?

<> wrote

> It's really actually obnoxious how much people are
> demanding for houses.

That should read:
It's really actually obnoxious how much people are
willing to pay for houses.

> If (hypothetically) you were getting a
> 42% tax on your income and could afford a decent downpayment on a
> house, would your advice be to buy a really expensive house? Or wait a
> little while as the alleged "real-estate bubble" bursts?

What if the market just goes flat and prices don't come down? What if they
continue to rise? What if they take 10 years to start coming down? I guess
what it comes down to is do you need a house now and does it have to be in
the NY area?

Re: buy a house?

wrote:

> I live in Queens, NY just started a job and thinking of investing in a
> house over the next few months. The house prices around my area have
> sky-rocketed. It's really actually obnoxious how much people are
> demanding for houses. Now, I don't wish to spend all my money in
> taxes and some tax breaks would be much welcome. But is it really
> worth buying a 3 bedroom small house for 500K in today's market?

I believe the U.S. is in a true real-estate bubble and some sort of
shakeout may not be far off.

That doesn't mean you can't buy a home (after all, you have to have some
place to live), but you shouldn't max out on leverage.

Here in Massachusetts, the last time real estate prices skyrocketed,
some folks made the mistake of buying real estate with only 10% down (or
even less). When housing prices peaked and then fell much more than
10%, they ended up owing more on their mortgage than their home was
worth. And then they were faced with declaring bankruptcy. Lots of
homeowners got caught that way.


--
Steven D. Litvintchouk
Email:

Remove the NOSPAM before replying to me.

Re: buy a house?

Bucky wrote:
> wrote:
>
>>Now, I don't wish to spend all my money in
>>taxes and some tax breaks would be much welcome
>
>
> I never understood the line of reasoning to buy a house for "tax
> breaks". If you were going to spend the money anyways, then sure, "tax
> breaks" make sense.

Of course you are "going to spend the money anyway," because you have to
live somewhere. So it influences your rent vs. buy decision.

The question is whether the after-tax monthly payment on a home mortgage
would be higher or lower than the rent on a comparable home.

If I buy a condo with an monthly after-tax mortgage payment of $1000,
that's better than renting a comparable apartment with a monthly rent
greater than $1,000. I end up with more disposable income with the
mortgage payment than I do with the rent.


--
Steven D. Litvintchouk
Email:

Remove the NOSPAM before replying to me.

Re: buy a house?

Post removed (X-No-Archive: yes)

Re: buy a house?

<> wrote in message
news:
> I posted this a few times in misc.invest.real-estate hbut no responses
> and full of spam, so thought I would try my luck in here w/the many
> knowledgeable people contributing.
>
> I live in Queens, NY just started a job and thinking of investing in a
> house over the next few months. The house prices around my area have
> sky-rocketed. It's really actually obnoxious how much people are
> demanding for houses. Now, I don't wish to spend all my money in
> taxes and some tax breaks would be much welcome. But is it really
> worth buying a 3 bedroom small house for 500K in today's market? As
> far as the market is concerned, I am quite agnostic to it as I don't
> plan on selling it in one year. So, even if the prices go high, its
> not going to help me much, as if I sell it and buy another house, even
> that house will be more expensive and vice-versa in terms of the prices

Something that should not be underestimated is that home ownership provides
a kind of forced savings: You have to make the monthly mortgage payment come
what may, and there is less temptation to fritter away the money on
non-essentials. Calculations whereby you invest the money that would
otherwise go to mortgage payments in something that has a higher return
sound good in theory, but in the long run, interest rates rise and fall in
unpredictable ways and these assumptions are risky. I would say buy a house
early in life and keep it. I did it and I am glad.

Re: buy a house?

wrote:
> Hi,
>
> I posted this a few times in misc.invest.real-estate hbut no responses
> and full of spam, so thought I would try my luck in here w/the many
> knowledgeable people contributing.
>
> I live in Queens, NY just started a job and thinking of investing in a
> house over the next few months. The house prices around my area have
> sky-rocketed. It's really actually obnoxious how much people are
> demanding for houses. Now, I don't wish to spend all my money in
> taxes and some tax breaks would be much welcome. But is it really
> worth buying a 3 bedroom small house for 500K in today's market? As
> far as the market is concerned, I am quite agnostic to it as I don't
> plan on selling it in one year. So, even if the prices go high, its
> not going to help me much, as if I sell it and buy another house, even
> that house will be more expensive and vice-versa in terms of the prices
>
> going down.
>
>
> I guess in my mind I do know the answer, but shelling out so much money
>
> for a house seems preposterous to me. So I guess what I am getting it
> is just the "opinion" of some people who are knowledgeable. (I know
> that some of you might say that it would be better to talk to an
> "expert", but my point here is to really just hear what people think
> about it). If (hypothetically) you were getting a
> 42% tax on your income and could afford a decent downpayment on a
> house, would your advice be to buy a really expensive house? Or wait a
>
> little while as the alleged "real-estate bubble" bursts?
>
>
> Help is much appreciated. Thanks.
>

How much is the rent for a similar house. Is (mortgage + insurance +
other expenses - tax break) a lot greater than rent. If yes then maybe
better to rent. If not then maybe better to buy.

However the calculation may not be as simple. How much does rent go up
every year? Mortgage payments will remain constant (that assumes on a
fixed rate mortgage or short length of stay - 3/5/7 yrs before you sell
or mortgage goes up).

Re: buy a house?

Steven L. wrote:
> Of course you are "going to spend the money anyway," because you have to
> live somewhere. So it influences your rent vs. buy decision.
> The question is whether the after-tax monthly payment on a home mortgage
> would be higher or lower than the rent on a comparable home.

Right. But if your rent is $1000, and you're considering an after-tax
mortage payment of $1500 just to get a tax break, that's dumb.

Re: buy a house?

<> wrote in message
news:
> Hi,
>
> I posted this a few times in misc.invest.real-estate hbut no
> responses and full of spam, so thought I would try my luck in here
> w/the many knowledgeable people contributing.
>
> I live in Queens, NY just started a job and thinking of investing in a
> house over the next few months. The house prices around my area
> have sky-rocketed. It's really actually obnoxious how much people
> are demanding for houses. Now, I don't wish to spend all my
> money in taxes and some tax breaks would be much welcome.
> But is it really worth buying a 3 bedroom small house for 500K in
> today's market?

Depending on the part of Queens, the house size may not be significant. We
sold a house this year in a Queens neighborhood of small houses where many
of the purchases being made were with the intent of razing and building mini
mansions. Queens is the most diverse county in the US, and you are still
seeing a lot of foreign money coming in, sustaining prices.

$500K was the ballpark for comps in the neighborhood. Take a look around.
If this is what's happening, then you are really paying for the land, and
the house is just a "bonus".

I don't know whether that makes the purchase more or less attractive, but it
is another factor to throw into the mix. It also suggests that the prices
might be more sustainable there than in other inflated regions. Or not :-)

--
Mark Freeland

Re: buy a house?

"SD" <> wrote

> However the calculation may not be as simple. How much does rent go up
> every year? Mortgage payments will remain constant...

....but property taxes won't. My taxes have gone from $200/month to
$440/month.
My homeowners policy has gone up by 50%. My mortgage payment has remained
constant. It started out at $0 and it's still $0.

Re: buy a house?

Taxes have risen 400 to 600 yrly; and at a comparable rate to exchange
at fair market value. A policy, (500ft from nearest firestation on a
10mile peninsula 50ft+ sealevel, 5th tier evacuation code), isn't
typically skewed to an initial 200 now at 1600; weather castles built
in sand neither needn't be besieged at x3 by amortization machinations,
nor divine intervention atypically underwritten, such furries as lay...

Ed wrote:
> ...but property taxes won't. My taxes have gone from $200/month to
> $440/month.
> My homeowners policy has gone up by 50%. My mortgage payment has remained
> constant. It started out at $0 and it's still $0.

Re: buy a house?

Ed wrote:
> "SD" <> wrote
>
>
>> However the calculation may not be as simple. How much does rent go
>> up every year? Mortgage payments will remain constant...
>
>
> ...but property taxes won't. My taxes have gone from $200/month to
> $440/month.

Over what period of time? What annual% does that amount to. What % of
the mortage would that involve. Where I stay rent goes up 6-10% a year.
I doubt my total monthly payment (mortgage + tax + insurance) would go
up that much.

> My homeowners policy has gone up by 50%. My mortgage payment has
> remained constant. It started out at $0 and it's still $0.

Same questions about the policy - over what period of time. Also for OP
- homeowners insurance is generally a small amount/month.

Re: buy a house?

SD wrote:
> Ed wrote:
>
>> "SD" <> wrote
>>
>>
>>> However the calculation may not be as simple. How much does rent go
>>> up every year? Mortgage payments will remain constant...
>>
>>
>>
>> ...but property taxes won't. My taxes have gone from $200/month to
>> $440/month.
>
>
> Over what period of time? What annual% does that amount to. What % of
> the mortage would that involve. Where I stay rent goes up 6-10% a year.
> I doubt my total monthly payment (mortgage + tax + insurance) would go
> up that much.
>
The great things about a mortgage are that:

a) some part of the payments goes to paying off the capital and this is
a form of forced saving, unlike rent all of which is straight down the
drain

b) the payments do not go up like rent although they can vary with the
interest rate

c) eventually you pay it all off and the payments drop to zero. Have you
thought of living rent-free? I paid off my fairly small mortgage about
12 years ago. It's great!

d) with a relatively small deposit you buy into a highly leveraged asset
that is almost certain to appreciate over the years. For property
inflation is on your side.

e) I think that in the US you even get tax breaks on the payments,
although these have been discontinued in the UK.

Re: buy a house?

"SD" <> wrote

> Over what period of time?

It doesn't matter. My point was that nothing stays the same. Nothing is
fixed.

"However the calculation may not be as simple. How much does rent go up
every year? Mortgage payments will remain constant...."

No, they won't.

Re: buy a house?

Jim wrote:
> "SD" <> wrote
>
>
>>Over what period of time?
>
>
> It doesn't matter. My point was that nothing stays the same. Nothing is
> fixed.
>
> "However the calculation may not be as simple. How much does rent go up
> every year? Mortgage payments will remain constant...."
>
> No, they won't.
>
>

Point noted. So now we have mortgage payments hopefully increasing
*less* than rent payments. Atleast as David pointed out in 30 or 15 or
20 or some n muber of years they will end.

Re: buy a house?

"David Wilkinson" <> wrote in message
news:dh1kc1$cjb$
> e) I think that in the US you even get tax breaks on the payments,
> although these have been discontinued in the UK.

The interest portion of the payments are deductible from income, under some
fairly broad conditions (first or second home, only up to $1M in debt, not
to exceed fair market value).


When did the UK discontinue deductions? More importantly, what sort of
impact did it have on housing prices?

--
Mark Freeland

Re: buy a house?

Mark Freeland wrote:
> "David Wilkinson" <> wrote in message
> news:dh1kc1$cjb$
>
>>e) I think that in the US you even get tax breaks on the payments,
>>although these have been discontinued in the UK.
>
>
> The interest portion of the payments are deductible from income, under some
> fairly broad conditions (first or second home, only up to $1M in debt, not
> to exceed fair market value).
>
>
> When did the UK discontinue deductions? More importantly, what sort of
> impact did it have on housing prices?
>
I am not sure of the dates, but tax relief on mortgage interest was
reduced over a period and was completely gone about 10 years ago, I
think, but don't hold me to it! It used to be that you got tax relief on
the interest at your marginal tax rate, which is 40% if you have a
middle class or above income. Then it dropped to the standard rate of
20%. Then it was reduced to 10% and then it was deleted altogether.

It is only hypothetical to guess what its effect was as we did not have
any parallel cases with and without tax relief, but as it made mortgage
payments less and reduced the cost of buying houses it almost certainly
contributed to house price inflation at the time, which was certainly
high. The government had to phase it out slowly over a long period to
avoid massive increases in mortgage payments and bankrupting those
paying off huge mortgages under full tax relief. Of course it was a
great one for the chancellor as he could increase taxes while claiming
it was for our own good in keeping house prices in check.

The phasing out may have been when there was a period of falling house
prices and some owners having the dreaded negative equity, where they
owed more than the house was worth. However house prices soon rose again
and are higher now than they have ever been.

Re: buy a house?

Caveat Emptor - 40% of new homebuyers last year, and 25% of mortgages
paid no down payment; they are being waived in leu of "creative
financing". One-third and more of these mortgages are being assessed at
interest only, of which, 23% serve investment purposes and 13% qualify
as secondary residencies. Two-fifths of new jobs over the past five
years are housing related in a land $8T in debt. How and why do they do
this, you say? Because I'm heavily invested in real estate and support
$4.6T of investment bank loans that surpass an oustanding value of U.S.
issued Treasuries? Hell no, David. I'm out'a it at first sign the
slumbering giants are awakening.

David Wilkinson wrote:
> The great things about a mortgage are that:
>
> a) some part of the payments goes to paying off the capital and this is
> a form of forced saving, unlike rent all of which is straight down the
> drain
> b) the payments do not go up like rent although they can vary with the
> interest rate
> d) with a relatively small deposit you buy into a highly leveraged asset
> that is almost certain to appreciate over the years. For property
> inflation is on your side.

Re: buy a house?

Hi,

Sorry for the late reply. I posted a couple of times but the post
didn't show up.

Buying a house for tax breaks is a great idea! In charity you dont get
your money back (not to discount the lessening of guilt, but I prefer $
=) If I am making 55K and have interest payments and property taxes of
about 35K a year, my tax bracket goes down from 50K, where it is about
40% rite now to having no tax at all! (I have other income to take
care of all my other year expenses including grocery, car insurance and
such..) So instead of paying 25K in taxes I am saving that 25K and
investing it in real estate. So in that case, buying a house makes
great sense.
> I never understood the line of reasoning to buy a house for "tax
> breaks". If you were going to spend the money anyways, then sure, "tax
> breaks" make sense. But it doesn't make sense to spend more to save
> less.

No its not! As explained above ur $1000 are down the drain, wheresa
with the $1500 you are building equity. This is all obviously assuming
that the extra $500 wont affect your ability to provide food n clothing
to your family. =)
> Right. But if your rent is $1000, and you're considering an after-tax
>mortage payment of $1500 just to get a tax break, that's dumb.


I am not in the market to make money but dont want to be in a position
where my house is worth half my mortgage. I am going aroudn in
circles, but just debating with myself what would be the best route,
and hoping someone says something that could push me over on either
side.
> What if the market just goes flat and prices don't come down? What if > they
> continue to rise? What if they take 10 years to start coming down? I
> guess
The house does have to be in the NY area. I work in Manhattan.
> what it comes down to is do you need a house now and does it have to
> be in the NY area?

that is precisely something like that, that I am scared off. But I
also understand that housing prices are going to fluctuate. Lets say I
buy my house for 500K right now, prices fall to 400K in a year, it does
usually go back up to 600K maybe in 5 years from now? What happend in
your case in MA? Prices fell down by more than 10% and when did they
go back up? Obviously I want to try to be at the bottom on the curve
when I buy my house, but its going to be hard (if not almost
impossible) to predict!
> Here in Massachusetts, the last time real estate prices skyrocketed,
> some folks made the mistake of buying real estate with only 10% down
> (or
> even less). When housing prices peaked and then fell much more than
> 10%, they ended up owing more on their mortgage than their home was
> worth. And then they were faced with declaring bankruptcy. Lots of
> homeowners got caught that way.

Its a little of both, obviously induced by the given tax breaks.
> You have got to separate the issues involved in buying a house. One,
> do you want to buy a house because you want more space better
> neighborhood house ownership etc.? Or do you want to buy a house for
> appreciation tax breaks etc.?

Would you mind stating the reasons of why you feel this way? I
understand its speculative but just trying to encompass as many views
as possible before trying to get to a decision.
> If it's the latter my personal thinking is now is not the time to buy > a house.


Rent for a similar house doens't matter. We are paying $900 for rent
rite now, but our house is going to be a LOT fancier than our 2 bedroom
co-op rite now. mortgage+tax woudl be around $4000 a month. As far as
the tax breaks are concerned I am going to need a little help on that,
and will probably start a new thread for it. But as for some quick
calculations can you please verify my thinking for me? Making 55K rite
now and getting taxes 40%. So get about 36K in my house. This is ALL
savings for me as my expenses are taken care of through other income
(parents). Now if I am paying about 38K for mortgage+property tax, my
taxable income would come down to 17K and at that point I would
essentially be paying NO TAXES at all. Is my reasoning correct, or am
I missing something?
> How much is the rent for a similar house. Is (mortgage + insurance +
> other expenses - tax break) a lot greater than rent. If yes then maybe
> better to rent. If not then maybe better to buy.


What is a homeowners policy? Is that homeowners insurance? And if so,
would anyone know a ballpark figure for a 500K house in Nassau county,
Long Island (around Westbury)? I know its a long shot, but just
wonderign if anyone had some idea.
> ...but property taxes won't. My taxes have gone from $200/month to
> $440/month.
> My homeowners policy has gone up by 50%. My mortgage payment has
> remained
> constant. It started out at $0 and it's still $0.

And finally as I originally said, if (hypothetically) you were getting
a
42% tax on your income and could afford a decent downpayment on a
house, would your advice be to buy a house right now? Or wait a
little while as the alleged "real-estate bubble" bursts?

Thank you everyone for their input no this topic. It is MUCH
appreciated. Thanks again

Re: buy a house?

Just wanted to post it at the end instead of in the middle of the
thread, so posting it here. Thanks.

Hi,


Sorry for the late reply. I posted a couple of times but the post
didn't show up.


Buying a house for tax breaks is a great idea! In charity you dont get

your money back (not to discount the lessening of guilt, but I prefer $

=) If I am making 55K and have interest payments and property taxes of

about 35K a year, my tax bracket goes down from 50K, where it is about
40% rite now to having no tax at all! (I have other income to take
care of all my other year expenses including grocery, car insurance and

such..) So instead of paying 25K in taxes I am saving that 25K and
investing it in real estate. So in that case, buying a house makes
great sense.



> I never understood the line of reasoning to buy a house for "tax
> breaks". If you were going to spend the money anyways, then sure, "tax
> breaks" make sense. But it doesn't make sense to spend more to save
> less.


No its not! As explained above ur $1000 are down the drain, wheresa
with the $1500 you are building equity. This is all obviously assuming

that the extra $500 wont affect your ability to provide food n clothing

to your family. =)


> Right. But if your rent is $1000, and you're considering an after-tax
>mortage payment of $1500 just to get a tax break, that's dumb.


I am not in the market to make money but dont want to be in a position
where my house is worth half my mortgage. I am going aroudn in
circles, but just debating with myself what would be the best route,
and hoping someone says something that could push me over on either
side.

> What if the market just goes flat and prices don't come down? What if > they
> continue to rise? What if they take 10 years to start coming down? I
> guess


The house does have to be in the NY area. I work in Manhattan.


> what it comes down to is do you need a house now and does it have to
> be in the NY area?


that is precisely something like that, that I am scared off. But I
also understand that housing prices are going to fluctuate. Lets say I

buy my house for 500K right now, prices fall to 400K in a year, it does

usually go back up to 600K maybe in 5 years from now? What happend in
your case in MA? Prices fell down by more than 10% and when did they
go back up? Obviously I want to try to be at the bottom on the curve
when I buy my house, but its going to be hard (if not almost
impossible) to predict!


> Here in Massachusetts, the last time real estate prices skyrocketed,
> some folks made the mistake of buying real estate with only 10% down
> (or
> even less). When housing prices peaked and then fell much more than
> 10%, they ended up owing more on their mortgage than their home was
> worth. And then they were faced with declaring bankruptcy. Lots of
> homeowners got caught that way.


Its a little of both, obviously induced by the given tax breaks.


> You have got to separate the issues involved in buying a house. One,
> do you want to buy a house because you want more space better
> neighborhood house ownership etc.? Or do you want to buy a house for
> appreciation tax breaks etc.?


Would you mind stating the reasons of why you feel this way? I
understand its speculative but just trying to encompass as many views
as possible before trying to get to a decision.


> If it's the latter my personal thinking is now is not the time to buy > a house.


Rent for a similar house doens't matter. We are paying $900 for rent
rite now, but our house is going to be a LOT fancier than our 2 bedroom

co-op rite now. mortgage+tax woudl be around $4000 a month. As far as

the tax breaks are concerned I am going to need a little help on that,
and will probably start a new thread for it. But as for some quick
calculations can you please verify my thinking for me? Making 55K rite

now and getting taxes 40%. So get about 36K in my house. This is ALL
savings for me as my expenses are taken care of through other income
(parents). Now if I am paying about 38K for mortgage+property tax, my
taxable income would come down to 17K and at that point I would
essentially be paying NO TAXES at all. Is my reasoning correct, or am
I missing something?


> How much is the rent for a similar house. Is (mortgage + insurance +
> other expenses - tax break) a lot greater than rent. If yes then maybe
> better to rent. If not then maybe better to buy.


What is a homeowners policy? Is that homeowners insurance? And if so,

would anyone know a ballpark figure for a 500K house in Nassau county,
Long Island (around Westbury)? I know its a long shot, but just
wonderign if anyone had some idea.


> ...but property taxes won't. My taxes have gone from $200/month to
> $440/month.
> My homeowners policy has gone up by 50%. My mortgage payment has
> remained
> constant. It started out at $0 and it's still $0.


And finally as I originally said, if (hypothetically) you were getting
a
42% tax on your income and could afford a decent downpayment on a
house, would your advice be to buy a house right now? Or wait a
little while as the alleged "real-estate bubble" bursts?

Thank you everyone for their input no this topic. It is MUCH
appreciated. Thanks again

Re: buy a house?

wrote:
> Hi,
> If (hypothetically) you were getting a
> 42% tax on your income and could afford a decent downpayment on a
> house, would your advice be to buy a really expensive house? Or wait a
>
> little while as the alleged "real-estate bubble" bursts?

It's worth reading what the Economist has had to say over the last
couple of years about the housing bubble. Also the new introduction
for Robert Shiller's Second Edition of 'Irrational Exuberance' (the
book which predicted the dot com bubble) which is all about real
estate. Did you know (I didn't) that the average price rise of housing
in the US (*after inflation*) from 1890-2000 was 0.8%? That little, in
an era which saw the US go from horses to motor cars to jet planes,
when its population must have tripled and its standard of living (more
than) quadrupled?

I have a friend who lives in Queens and is looking to buy a house. A
number of his clients (he is a psycotherapist) are mortage brokers,
real estate finance professionals, real estate agents etc. They are
almost unanimous that prices will fall 30-40% in the next few years.
Needless to say he is not rushing to buy.

I would consider the rent v. own question very carefully. It is not
the case that housing prices only go up: consider Boston in the early
90s (or California).

Re: buy a house?

wrote:
> In charity you dont get your money back

OK, fair enough. =)

> If I am making 55K and have interest payments and property taxes of
> about 35K a year, my tax bracket goes down from 50K, where it is about
> 40% rite now to having no tax at all!

Huh? How do you get 40% tax rate? If you're making $55K, the federal
tax bracket is 25% and the NY state tax should be 7%, which equals 32%.

> So instead of paying 25K in taxes I am saving that 25K and
> investing it in real estate. So in that case, buying a house makes
> great sense.

You can't shift all your taxes 1 for 1 completely into real estate
investment. It's deduction based, so you have to spend way more than
25K to get 25K in tax breaks.

> As explained above ur $1000 are down the drain, wheresa
> with the $1500 you are building equity.

In order to make a fair comparison, you have to assume that if you're
renting for $1000, then you're saving an extra $500 per month, which is
equity. With a mortgage, you'll be throwing a lot more money than $1000
down the drain in terms of interest payments, property tax, and
insurance.

There's plenty of rent vs buy calculators available. Plug some figures
into the calculators and let us know the results. I think you'll find
that if you set house appreciation to 0%, rent is almost always better
off than buy. (This is what you should use to evalute tax breaks). If
you set house appreciation greater than 0, then buy will usually be
better than renting in the long-term.

I stand by my statement: there's plenty of good reasons to buy a house,
even in NYC. But if it's purely just for tax breaks (meaning that you
ignore appreciation), it's a bad decision.

Re: buy a house?

wrote:
> Making 55K rite
> now and getting taxes 40%. So get about 36K in my house. This is ALL
> savings for me as my expenses are taken care of through other income
> (parents). Now if I am paying about 38K for mortgage+property tax, my
> taxable income would come down to 17K and at that point I would
> essentially be paying NO TAXES at all. Is my reasoning correct, or am
> I missing something?

You probably want to take this to the misc.taxes newsgroup. This is
definitely beyond the scope of this newsgroup.

$55K should be getting taxed at 25+7=32%, which is $17,600. If you plan
on deducting $38K for mortgage interest and property tax, that would
take your taxable income down to $12K, which would be taxed at
15+5=20%, which comes out to $2400. So you want to spend $38K to save
$15,200?

I don't think you'll be able to get a loan when they see that you're
spending 70% of your gross income on house payments. You should talk
with a real estate agent or loan agent for a reality check.

Re: buy a house?

The UK finally discontinued the deductions in 1994.

The 'tax induced boom' came at the end of the 80s: it had been possible
for 2 (unmarried) individuals to get deductions on the first =A3120k of
mortgage. The Chancellor in 1988 abolished this, but left a 6 month
window *at the end of a long housing boom*. Prices rose over 20% in
the remaining 6 months of that year.

The period 1989-1994 was then marked by a long housing slump.
Inflation had risen to 9%, and in a bid to 'shadow' the Exchange Rate
Mechanism (now the 'euro') the Chancellor adopted a policy of
ratcheting up interest rates. They reached 15% in 1992, just as the UK
plunged out of ERM ('Black Wednesday', September 1992). Unemployment
rose sharply, and at the peak the average monthly mortgage payment was
more than 55% of the average household take home pay.

Housing prices plummeted: in London by about 40% (more adjusting for
inflation). 'negative equity' was the watchword of the day: I watched
it ruin many young professional's lives. In less popular and
gentrifying parts of London, property was literally unsaleable--
properties would sit on the market for a year or more.

The turn came in 1994, beginning as always in London. No longer
compelled by the exchange rate policy, the Chancellor allowed interest
rates to fall quite rapidly. It became (much) cheaper to own than to
rent. The City was doing well. Unemployment began to drop.

Since the bottom in 1993 housing prices have more or less tripled
depending on which region of the country. London moved up furthest and
fastest, until the 2001 recession where London has been in something of
a stagnation (and may now be recovering) but the rest of the country
has staged a 'catch up'. 'Buy to let' has become a preferred middle
class savings mechanism: many say they will not rely on stock markets
for their pensions, but nothing is 'safe as houses'.

I would conclude the overt tax effects of the withdrawal of mortgage
deduction have been small-- stealing some fuel from the fire perhaps.
Houses are now more expensive relative to incomes than they have ever
been in UK history (about 5 times avg annual incomes) however because
of low interest rates, monthly mortgages are still about 30% of pay so
much lower than their peak.

The major tax exemption for housing (principal residence capital gains
tax exemption) remains. However, inheritance taxes are now starting to
bite, as the average house is now worth more than the ihneritance tax
threshold, affecting intergenerational wealth transfer.

A further new tax dodge is looming: from April 2006 it will be possible
for high net worth individuals to put a property (eg a second home) as
an asset in their personal pension. This is an effective 40% saving on
the price of the house (the top marginal rate of tax).

Re: buy a house?

PS important to understand. 90% of UK mortgages are at variable rate,
reset either monthly or (less common now) annually.

Re: buy a house?

"darkness39" <> wrote

> I would consider the rent v. own question very carefully. It is not
> the case that housing prices only go up: consider Boston in the early
> 90s (or California).

Re: buy a house?

Ed wrote:
> "darkness39" <> wrote
>
> > I would consider the rent v. own question very carefully. It is not
> > the case that housing prices only go up: consider Boston in the early
> > 90s (or California).
>
>

Glad that this document supports what I just said ;-).

Re: buy a house?

"darkness39" <> wrote in message
news:
>
> Ed wrote:
>> "darkness39" <> wrote
>>
>> > I would consider the rent v. own question very carefully. It is not
>> > the case that housing prices only go up: consider Boston in the early
>> > 90s (or California).
>>
>>
>
> Glad that this document supports what I just said ;-).

Just thought you would enjoy it.

Re: buy a house?

Thank you. I did.

Re: buy a house?

darkness39 wrote:
>
> The UK finally discontinued the deductions in 1994.
>
> The 'tax induced boom' came at the end of the 80s: it had been possible
> for 2 (unmarried) individuals to get deductions on the first £120k of
> mortgage. The Chancellor in 1988 abolished this, but left a 6 month
> window *at the end of a long housing boom*. Prices rose over 20% in
> the remaining 6 months of that year.

[subsequent events - interest rate increases, housing slump, etc.
deleted]

Thanks for the details (and also thanks to David). It sounds like what
happened in the UK then could get played out in the US (a few more
months of rising prices, then sticker shock as ARMs increase and balloon
payments come due). A problem you note is reducing/eliminating the
deduction too late. I've wondered whether the real estate market could
be tempered by reducing deductions now, and then gradually restoring
them as interest rates rise. Of course, that would take more
intelligence and planning than we've seen in the US for a long time.

There's also a fundamental question: Is a government policy of
encouraging home ownership a good thing? Home ownership is claimed to
result in more stable, well-maintained neighborhoods. Is that really
true, once one controls for urban vs. rural differences, and other
factors? Does one care more about the neighborhood if one owns a share
of a building (co-op) than if one rents a unit in that building? It's
not something I've looked at carefully.

To the original poster - since you are now talking about Nassau county,
recognize that the property taxes there are much higher than in NYC;
you'll have to take that into account when doing your calculations.

As to the calculations themselves, this may help:

"Is It Better to Buy or to Rent" - with analysis in the text on NY and
Northern Calif., along with a spreadsheet for other SMSAs.

--
Mark Freeland

Re: buy a house?

Mark Freeland wrote:
> darkness39 wrote:
> >
> > The UK finally discontinued the deductions in 1994.
> >
> > The 'tax induced boom' came at the end of the 80s: it had been possible
> > for 2 (unmarried) individuals to get deductions on the first =A3120k of
> > mortgage. The Chancellor in 1988 abolished this, but left a 6 month
> > window *at the end of a long housing boom*. Prices rose over 20% in
> > the remaining 6 months of that year.
>
> [subsequent events - interest rate increases, housing slump, etc.
> deleted]
>
> Thanks for the details (and also thanks to David). It sounds like what
> happened in the UK then could get played out in the US (a few more
> months of rising prices, then sticker shock as ARMs increase and balloon
> payments come due).

Australia is the poster child. 20% drop in housing prices in the last
18 months. No apparent cause (the Australian economy is growing faster
than the American, on the back of the Chinese commodity boom). Housing
prices simply got too high, there was a lot of speculation, etc.

I really cannot recommend Robert Shiller's book enough (the SECOND
edition). Shiller has gathered data that no one else has about the
long term experience of housing prices.


A problem you note is reducing/eliminating the
> deduction too late. I've wondered whether the real estate market could
> be tempered by reducing deductions now, and then gradually restoring
> them as interest rates rise. Of course, that would take more
> intelligence and planning than we've seen in the US for a long time.

Subsidies are bad news. If you can eliminate them, you should--
because they usually get capitalised into the value of the subsidised
item. The US government could use the money simply to lower tax rates
or to pay poor people money in order to be able to rent. In a sense,
since the AMT is catching more and more taxpayers, the gradual
abolition of the deduction is what is happening. In any case, the US
by Constitutional design is not well suited to that sort of fiscal
'tinkering'-- once a subsidy is granted it is almost impossible to
remove.

There have been a lot of studies of the impact of this tax subsidy on
the housing market. The best guess is anywhere from 80 to over 100% is
simply capitalised into the housing prices: so what you gain in being
able to carry the payment, you lose in paying more. You, or your
estate, gain when you finally exit the housing market (average age of
doing so probably over 70).

*however* Paul Krugman has defined the US as 'zoneland' and 'flatland',
roughly corresponding to Blue coastal and Red central America.
(Chicago the honourable exception). In Zoneland, land for housing is
in short supply-- zoning prevents increased densities (Boston is
perhaps the best example, or Southern California). So housing prices
go up (straight up). In Flatland, cities sprawl with natural
population growth (think Pheonix or Las Vegas). So housing prices grow
with the real economy but in the long run not much more. I think Boise
Idaho and Buffalo NY are supposed to have the most balanced housing
markets in the US.

What is unusual about this boom is that it is national (although it is
coastal areas that are showing all the classic signs of excess: think
S Calif, San Francisco and the Bay, Seattle, Florida, Washington DC,
Boston, NYC and also (non coastal) Las Vegas). So the pain of a
deflation could be much more national.

The above is one of the many bits of evidence that make me think that
this really is a bubble, and its unwinding could be particularly
unpleasant: something similar is happening in the Netherlands now.


>
> There's also a fundamental question: Is a government policy of
> encouraging home ownership a good thing? Home ownership is claimed to
> result in more stable, well-maintained neighborhoods. Is that really
> true, once one controls for urban vs. rural differences, and other
> factors? Does one care more about the neighborhood if one owns a share
> of a building (co-op) than if one rents a unit in that building? It's
> not something I've looked at carefully.

There is some evidence for that *however* in the UK, housing ownership
blocks labour mobility (a big problem in the UK economy is the jobs are
in the south, but the unemployed are in the north). This is less of a
problem in the US given how mobile people are.

Also I suspect the data is very 'noisy'. If you ever visit a
neighbourhood (South Central LA?) where home owners are poor, you see
houses falling down and all kinds of evidence of social degradation.
Home ownership is no panacea.

In the UK we had a huge experiment with allowing council (Project)
tenants to buy their own homes at deep discounts. The results were
typically that those who lived in pre 1945 homes made out like bandits:
bought them, and are now migrating out to the suburbs and rural areas,
selling their homes to yuppies and immigrants.

Those who lived in concrete tower blocks wound up with depreciating,
unsaleable assets (in an English climate, a concrete home decays-- most
are unmortgageable now) and caught by the worst of the interest rate
rises.

Also there is now an absolute shortage of homes for the very poor-- a
significant fraction of our poor people are housed in 'Bed and
Breakfast' (read: welfare hotels) at a huge cost (=A300s per week) to
the local council which has a legal obligation to house homeless
families, and to huge profits to the slum landlords. you get whole
families living 4 to a room, kids moving schools every 6 months etc,
perpetuating the cycle of poverty.



>
> To the original poster - since you are now talking about Nassau county,
> recognize that the property taxes there are much higher than in NYC;
> you'll have to take that into account when doing your calculations.
>
> As to the calculations themselves, this may help:
>
> "Is It Better to Buy or to Rent" - with analysis in the text on NY and
> Northern Calif., along with a spreadsheet for other SMSAs.
>=20
> --=20
> Mark Freeland
>

Re: buy a house?

In Holland, once the most densely populated country in the world, they give
no deductions on house mortgage interest or taxes. They do not want people
chewing up valuable land space with individual homes on lots.

Here, we use the home building industry as an economic windfall. First we
get jobs from building homes, then everyone needs rakes, lawnmowers,
sprinkler systems and so on. People who live in apts probably have a lot
more money than a home owner around here.

Happy Guy
-
>>
>> The UK finally discontinued the deductions in 1994.
>>
>> The 'tax induced boom' came at the end of the 80s: it had been possible
>> for 2 (unmarried) individuals to get deductions on the first £120k of
>> mortgage. The Chancellor in 1988 abolished this, but left a 6 month
>> window *at the end of a long housing boom*. Prices rose over 20% in
>> the remaining 6 months of that year.

Re: buy a house?

darkness39 wrote:

>
> Australia is the poster child. 20% drop in housing prices in the last
> 18 months. No apparent cause (the Australian economy is growing faster
> than the American, on the back of the Chinese commodity boom). Housing
> prices simply got too high, there was a lot of speculation, etc.


I also think this will happen in the US. What investments would take
advantage of this drop? Shorting REITS or????


Willi

Re: buy a house?

Willi wrote:
> darkness39 wrote:
>
> >
> > Australia is the poster child. 20% drop in housing prices in the last
> > 18 months. No apparent cause (the Australian economy is growing faster
> > than the American, on the back of the Chinese commodity boom). Housing
> > prices simply got too high, there was a lot of speculation, etc.
>
>
> I also think this will happen in the US. What investments would take
> advantage of this drop? Shorting REITS or????

Apartment REITS might do quite well: in such a scenario people move
back into rental units.

It is more likely to be shorting homebuilders, mortgage finance
companies, building product companies. But the macroeconomic effects
will be general and large-- a big hit on consumer spending generally (I
refer you to various articles over the last couple of years in The
Economist)-- WalMart probably does relatively well (necessities) but
other retailers do not.

The question is of course when? Because you can go broke with an
uncovered short whilst the bull market ignores your logic. And if I
could predict that, I would be a very rich man ;-).

A more aggressive strategy is to sit and cash and GICs and wait. I had
a friend who bought condos in the early 90s in Boston for $20k at
auction. Whole condos for $3-4k down. In very speculative markets it
could happen again.

Re: buy a house?

But Holland had soaring housing prices, and now appears to be in a
'bubble bust'. The people who invented the bubble (Tulip Bulb mania)
get to go through it again ;-).

The big US rise in home ownership was the GI Bill plus the government
sponsored entities (Fannie Mae, Freddie Mac, Ginnie Mae). Also
Eisenhower and the highway building. All government subsidy poured
into residential suburban housing. The good side was a huge expansion
in standard of living, the bad side is it made the US more
oil-dependent.

Another long run factor in the US is that the population is rising much
faster than Europe: more immigration and a much higher native birth
rate. Some European countries are almost at the point of declining
population.

Re: buy a house?

"Willi" <> wrote

>> Australia is the poster child. 20% drop in housing prices in the last
>> 18 months. No apparent cause (the Australian economy is growing faster
>> than the American, on the back of the Chinese commodity boom). Housing
>> prices simply got too high, there was a lot of speculation, etc.
>
>
> I also think this will happen in the US. What investments would take
> advantage of this drop? Shorting REITS or????

SRPIX, good luck, go for it.

Re: buy a house?

"darkness39" <> wrote

> Willi wrote:

>> I also think this will happen in the US. What investments would take
>> advantage of this drop? Shorting REITS or????
>
> Apartment REITS might do quite well: in such a scenario people move
> back into rental units.

Finally, someone sees the light, sort of.

All this talk about REIT's and people don't even know what they are.
Only 21% of REIT's have anything to do with residential property. 97% of
REIT's are equity REIT's. Equity REIT's own and invest in property. They
make money by renting or leasing the property.

All the talk here is about a housing bubble about to bust. If it does bust
it may have little or no impact on REIT's, but it could also have a big
impact.

The largest focus is on industrial and office buildings @ 33%, this is
followed by residential @ 21%, then retail space @ 20%, then lodging and
resorts @ 6%, then health care at 4%, the rest are too small to be concerned
with but they are not residential.

Homebuilders are not REIT's.

Re: buy a house?

Ed wrote:
> "darkness39" <> wrote
>
> > Willi wrote:
>
> >> I also think this will happen in the US. What investments would take
> >> advantage of this drop? Shorting REITS or????
> >
> > Apartment REITS might do quite well: in such a scenario people move
> > back into rental units.
>
> Finally, someone sees the light, sort of.
>
> All this talk about REIT's and people don't even know what they are.
> Only 21% of REIT's have anything to do with residential property. 97% of
> REIT's are equity REIT's. Equity REIT's own and invest in property. They
> make money by renting or leasing the property.

What I can't get my head around is whether a REIT, which owns
residential apartments and rents them out, is hit by a housing price
fall. Because in such a scenario (people being repossessed or deciding
to defer buying a home) they have to live *somewhere* and that is
rental housing.

Indeed the current home ownership boom has hurt. I read that rental
vacancies in Houston or Dallas were c. 10% ie about 5 times a 'full'
level of 2%. This may reflect speculative building of rental housing
units, condos etc.

But I think on balance it is a risky game-- if the US housing market
goes down, the effects will be widespread-- retail will get hit,
durable goods manufacturers, REITs that focus on retail space, etc.
The work that has been done suggest that a housing price fall of more
than 20% alone could push the US into recesion.

>
> All the talk here is about a housing bubble about to bust. If it does bust
> it may have little or no impact on REIT's, but it could also have a big
> impact.

One of the central facts arguing for a bubble is how prices have shot
ahead of rental yields.

>
> The largest focus is on industrial and office buildings @ 33%, this is
> followed by residential @ 21%, then retail space @ 20%, then lodging and
> resorts @ 6%, then health care at 4%, the rest are too small to be concerned
> with but they are not residential.
>
> Homebuilders are not REIT's.

Re: buy a house?

"darkness39" <> wrote

> What I can't get my head around is whether a REIT, which owns
> residential apartments and rents them out, is hit by a housing price
> fall. Because in such a scenario (people being repossessed or deciding
> to defer buying a home) they have to live *somewhere* and that is
> rental housing.

I agree with you on this one. I just think the number of people having their
home taken from them and going off to look for an apartment to rent may be
very limited. More likely, many of these people, the younger ones anyway,
will opt to move back home with Mom and Dad.

> Indeed the current home ownership boom has hurt. I read that rental
> vacancies in Houston or Dallas were c. 10% ie about 5 times a 'full'
> level of 2%. This may reflect speculative building of rental housing
> units, condos etc.

Not good for rents.

> But I think on balance it is a risky game-- if the US housing market
> goes down, the effects will be widespread-- retail will get hit,
> durable goods manufacturers, REITs that focus on retail space, etc.
> The work that has been done suggest that a housing price fall of more
> than 20% alone could push the US into recesion.

There is a link between home builders and REIT's in that sense, but it's the
same kind of link that you'd see between REIT's and retailers or automakers.

>> All the talk here is about a housing bubble about to bust. If it does
>> bust
>> it may have little or no impact on REIT's, but it could also have a big
>> impact.

> One of the central facts arguing for a bubble is how prices have shot
> ahead of rental yields.

People rent for many reasons, I think you'll agree, and there are rental
units that will satisfy any taste or pocketbook. The thing is that many
renters rent because they never believed they could afford a home. These are
lower income workers that make up a big chunk of the rental markets in just
about any urban setting. If rent were to keep up with housing prices these
people would become homeless and the apartments would become empty. It's
lose/lose.

Re: buy a house?

On 9/29/05 12:44 AM, darkness39 wrote:
>
> Subsidies are bad news. If you can eliminate them, you should--
> because they usually get capitalised into the value of the subsidised
> item. The US government could use the money simply to lower tax rates
> or to pay poor people money in order to be able to rent. In a sense,
> since the AMT is catching more and more taxpayers, the gradual
> abolition of the deduction is what is happening. In any case, the US
> by Constitutional design is not well suited to that sort of fiscal
> 'tinkering'-- once a subsidy is granted it is almost impossible to
> remove.
>
> There have been a lot of studies of the impact of this tax subsidy on
> the housing market. The best guess is anywhere from 80 to over 100% is
> simply capitalised into the housing prices: so what you gain in being
> able to carry the payment, you lose in paying more. You, or your
> estate, gain when you finally exit the housing market (average age of
> doing so probably over 70).
>
> *however* Paul Krugman has defined the US as 'zoneland' and 'flatland',
> roughly corresponding to Blue coastal and Red central America.
> (Chicago the honourable exception). In Zoneland, land for housing is
> in short supply-- zoning prevents increased densities (Boston is
> perhaps the best example, or Southern California). So housing prices
> go up (straight up). In Flatland, cities sprawl with natural
> population growth (think Pheonix or Las Vegas). So housing prices grow
> with the real economy but in the long run not much more. I think Boise
> Idaho and Buffalo NY are supposed to have the most balanced housing
> markets in the US.

Yor point is good, but one example is wrong. Las Vegas is seeing rising
house prices because (as it turns out) much of the last around Vegas is
owned or controlled by the BLM. That produces house price increases,
more typical of the coastal areas.

-JIm

Re: buy a house?

Jim Davidson wrote:
> In Flatland, cities sprawl with natural
> > population growth (think Pheonix or Las Vegas). So housing prices grow
> > with the real economy but in the long run not much more. I think Boise
> > Idaho and Buffalo NY are supposed to have the most balanced housing
> > markets in the US.
>
> Yor point is good, but one example is wrong. Las Vegas is seeing rising
> house prices because (as it turns out) much of the last around Vegas is
> owned or controlled by the BLM. That produces house price increases,
> more typical of the coastal areas.

Thank you. There was this spread in The Atlantic a couple of months
back which showed estimates for the top and bottom 50 cities, I think.
The most overvalued areas of housing prices relative to income growth
were the predictable, coastal ones, but the most overvalued city was,
AFAICR, Las Vegas. (and the least: Boise Idaho) Buffalo I know a
little more personally- a city which has been on a downward trend for
decades.

Your explanation of why is much appreciated.

Re: buy a house?

One of the overlooked 'most positive' aspects of the US economy is the
manufactured housing sector. I am quite serious about this: home
ownership is extended to people who in other societies would have to
rely on rental housing or the state. The sector has sustainably
produced lower cost housing for those who could not afford a more
conventional house.

Despite all the class-related snobberies about 'trailer trash' and
'crystal meths land', (or put into plain English people who are not
well offf tend to have more social ills that is reflected in how they
live), the US manufactured housing sector is a great success story.
And the homes are, by the standards of most of the world, commodious
(?is that a word?) and comfortable.

What I think happens in a housing bubble pop is that *anything* housing
related gets hit: shopping mall REITs, possibly rental REITs (simply on
sentiment if nothing else), housebuilders (most directly), building
materials companies, forest products cos, white goods retailers, etc.

Re: buy a house?

I don't really know what the housing market is like outside of New England.
Sure, I know California is expensive and parts of Nevada are going through
the roof. That said, manufactured housing is becoming out of reach for lower
income people in my neck of the woods. Most of these units are purchased and
placed on your land. This is the problem. Lots are very expensive, I would
guess an acre in my area is probably going for $150,000 - $200,000. Now add
the cost of clearing and preparing the lot and the cost of a munufactured
home and you're right up there.



"darkness39" <> wrote in message
news:
> One of the overlooked 'most positive' aspects of the US economy is the
> manufactured housing sector. I am quite serious about this: home
> ownership is extended to people who in other societies would have to
> rely on rental housing or the state. The sector has sustainably
> produced lower cost housing for those who could not afford a more
> conventional house.
>
> Despite all the class-related snobberies about 'trailer trash' and
> 'crystal meths land', (or put into plain English people who are not
> well offf tend to have more social ills that is reflected in how they
> live), the US manufactured housing sector is a great success story.
> And the homes are, by the standards of most of the world, commodious
> (?is that a word?) and comfortable.
>
> What I think happens in a housing bubble pop is that *anything* housing
> related gets hit: shopping mall REITs, possibly rental REITs (simply on
> sentiment if nothing else), housebuilders (most directly), building
> materials companies, forest products cos, white goods retailers, etc.
>

Re: buy a house?

I am from Buffalo and travel there often. The Buffalo economy is very
blue collar and depends on provate business and manufacturing sector
for most of it's employment... meaning very little demand for skilled
trades, technology and related types of white collar employment.

In addition Buffalo tends to have few people move into the area, and
the people I know have lived their whole life i the area (I get asked
to move back often), and their parents lived their whole life there...
One house has been in my familty for 40 years, for example and this is
typical of the area.

These two issues to me correlate to less need to build new houses
(people would rather go out and buy beer than move into a bigger
house), people aren't going to move into the area (so less demand for
new construction equals less price increases on the houses which are
built) and the people living there make a livable wage, but not so much
that upgrading one's place of residence is of high priority.

If possible compare Buffalo prices to Grand Island prices, sometimes
(for schools, libraries etc... Grand Island gets accounted different
than Buffalo). Also compare Buffalo to Rochester, as Rochester has
more white collar/ technology and from my experience would have higher
housing prices.