bostonbubble.com

balor123 · Joined: 08 Mar 2008 Posts: 1204

If housing is dependent on government support, then war should be one of your biggest concerns. In fact, I'd even go as far as to say that a significant war in the near could plunge the US into a deeper depression than has ever been seen before. Wars are expensive and that would drive up the borrowing cost for America. That would drive up the deficit because we rely on rolling debt. We'd likely start printing money to make up for it which would likely further decentralize the world from the dollar and kill businesses who can't keep up with the change. The price of oil would surge, which alone could cause a repeat of the 70s except probably worse at this point now that everyone depends on cheap products coming from China via Amazon to their homes rather than the store down the street. And that's assuming that there's no real physical damage to American assets or interests! I don't know what you should do if you think a real war is coming but I know it won't be good for housing.

I'll grant you that housing is a vital part of the American economy but it still has to compete with other, at least equally vital and/or politically necessary things: oil/energy, healthcare, education, infrastructure, social security, municipal defaults, natural disasters, etc. We simply can't know at this point how Americans and politicians will make hard decisions. I suppose in some ways it depends on how bad those other things get but they can make bank and housing problems look easy. I also don't think that supporting housing is the only way to save the economy - more direct infusions of cash to banks and the Fed would also work (in fact, isn't there a bill floating around that does just that - offers an unlimited amount of money to GSEs? what do you think politicians are planning here?).

admin · Posted: Mon Jan 11, 2010 8:12 pm GMT Post subject:

Boston ITer · Guest

CL · Guest

admin - agreed with your point, and I think government help likely is in the form of preventing flood of foreclosure from hitting market thus the higher priced area (Newton, W towns, Brookline, Needham, etc) will not be helped as much.

CL · Guest

Texas has no income tax and lower cost of living, but has around 2-3% property tax. So if you have a 400K house and 75K salary in TX and 500K house and 100K salary in MA (account for higher cost of living but higher salary as well), your tax bill is more or less the same.

Of course, if you find a kick ass high inomce job in TX and keep renting and happy in that lifestyle, you get the best of both world.

Boston ITer · Guest

balor123 · Joined: 08 Mar 2008 Posts: 1204

CL - I did the comparison with Austin earlier if you remember. The taxes on a $400k home were roughly comparable to that of an $800k home here and I was looking in the most expensive area. Real estate taxes vary by area there as well. Sales tax is a little higher there but there's no state income tax, short term cap gains tax, excise tax, etc. And Boston ITer is correct that the prices of comparable homes down there are roughly 1/2 - 1/4 what they are here (1/2 -1/3 for Austin, 1/3 - 1/4 for San Antonio/Houston). The income difference isn't quite as large as you suggest. It's more like $100k vs $85k - $90k (10% - 15% drop).

balor123 · Joined: 08 Mar 2008 Posts: 1204

BostonITer - what's your email address? You don't seem to have a username w/email listed.

Boston ITer · Joined: 11 Jan 2010 Posts: 269

Ok, I guess I've been a guest for too long. I'm registered now. Smile

Boston ITer · Joined: 11 Jan 2010 Posts: 269

As long as the US doesn't end up like the scenario below, I think we'll trudge through somehow.

http://www.youtube.com/watch?v=_TL4XZdyo3g