L8erDude at yattermatters.com February 2nd, 2011 at 1:18 pm, 4:53pm & 3 Feb 2011 at 8:56am -
“Since I bought my home my “income” has been 40% from my job and 60% from housing appreciation. When I sell this is tax free money. Go ahead and rent forever – but you’re rich or poor only in relation to your peers. At 60 years of age come and talk to me about how wise it was for you to rent. … I don’t see a halt to property prices so long as immigration continues at the frenzied pace of the last 20 years. At 60 years old my home will be worth 3x today and your rent will be about the same multiplier. … I won’t take a dime less than my home is worth to sell to an über-bear.”
1. The amount of “income” from appreciation of current market value of their house should be ringing alarm bells for this owner, and telling him/her something about the market, …but it isn’t.
2. The gains are thus far only present on paper. Only a very small percentage of owners in this situation will realize their gains.
-vreaa
Hot money!
http://www.theglobeandmail.com/news/national/toronto/police-searching-for-missing-toronto-area-realtor-and-client/article1879670/comments/
income |ˈinˌkəm; ˈi ng-|
noun
money received, esp. on a regular basis, for work or through investments : he has a nice home and an adequate income
to reiterate point 2 from vreaa…not income until it’s sold. too many vancouverites think like this and that drives the froth.
on the flip side, what happens when interest rates inevitably rise? will that 40% cover the debt?
silly.
“When I sell this is tax free money”
3. IMO this person is misunderstanding tax treatment of property sales
can you elaborate please. As i understand it the capital gains on a primary residence are not taxed, I think that is what the poster means.
If he really, truly believes 60% of his “income” has come from price appreciation it is time for some profit taking. STAT.
That’s the thing, isn’t it?
He believes it, but he’s not acting it. He’s so sure of future gains he’s already done the math re retirement.
He’s probably spent some of the ‘profits’ (RE ATM or wealth effect or both).
And, when the market reverses, it’ll prove to have been imaginary (and he’ll still have the debt, perhaps more than if he hadn’t gone along for the up-down ride).
Again, only a very small minority of homeowners with paper profits will realize those gains.
And because he is so disdainful of renting, this poster is guaranteed to not sell before the bubble pops.
If he’s a real mover and a shaker, he might even be “invested” in more properties by then, using leverage of course. Just think of all that extra “income” you could make by going into debt by another million dollars or so!
Hence the almighty HELOC.
The most telling thing about people like this poster is the simple fact that he feels compelled to rub his “success” in the faces of those who don’t appear to have it. People with nice shoes don’t walk up to homeless people and gloat about how much better their shoes are. The hubris smacks of non-confidence to me. Like he doesn’t really believe what he’s saying, but he’s in too deep and needs to continually reinforce his decisions to himself. I suppose those of us that frequent blogs that justify our decisions to rent are of a similar vein. I don’t think we are quite as scared though, if I’m wrong, then I just continue to rent, oh well. If he’s wrong, he’ll be financially devastated.
Hey at least he knows to put income in quotes.
Granted, yes.