The Schiff Report 2nd episode(Says to stop the home building )

youtube/Peter Schiff Channel ^ | February 24, 2009 | sickoflibs/peter Schiff

[Ditto]

House cost more to build these days. There are more government requirements than ever.

The house I grew up in was built in the 1870s. Originally, it didn't have a bathroom. Somehow in the 1920s, those old folks figured out how to put an addition on with a bathroom almost as good as the 'new' houses being built then.

Standards change, but the big problem is property taxes and communities via crazy development fees and 'zoning requirements' killing the new starter house market. That is why the MacMansion market developed. By the time a developer jumps through all the government hoops, he has to put big expensive houses on small lots just to break even.

That's all cool for grandma and grandpap who watch their values on their old house rise, but it sure sucks for the grandkids just trying to get started.

[Ditto]

"...the builder will close the business rather than continue to build houses that do not create enough revenue to cover the fixed costs."

I wouldn't expect that builders have much in the way if fixed costs.

They can have tremendous sunk costs if they buy a parcle of land and jump through all the hoops to get permits which makes time a critical issue, but I don't think many have large fixed costs like a manufacturing business where they can sell down the margin just to stay alive.

[FBD]

yes, he advocated more debt, and lots of it.

[Brad from Tennessee]

Sales of Existing Homes in US Probably Increased in January

Feb. 25 (Bloomberg) — Sales of U.S. previously owned homes probably rose in January as record foreclosures brought bargain hunters into the market, economists said before a private group’s report today. . .Purchases increased 1.1 percent to a 4.79 million annual rate, according to the median of 70 forecasts in a Bloomberg News survey. The rate reached a record-low 4.45 million in November.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a5avKyMc.HU8&refer=home

Bay Area home prices fall, sales rise

Bay Area year-over-year home sales rose for the fifth month in a row during the month of January while the median price fell to $300,000, almost half of where prices stood a year ago. . .sales were once again spurred by foreclosures, which accounted for 54 percent of resale transactions. Most foreclosure sales, which involve homes that had been foreclosed upon during the last year, are taking place in parts of Contra Costa County and other inland areas.
http://www.mercurynews.com/breakingnews/ci_11740446

[Sgt_Schultze]

Sorry, but housing prices are exactly where they need to be. Think for a minute, who profits most from high property costs?

Local and state governments do. They derive a significant portion of their revenue from the property tax. Their bonding authority is tied to a reliable revenue stream from property taxes year in, and year out. If housing prices have to come back to reality, then property tax revenues evaporate. Local school funding dries up, and government has to raise taxes elsewhere.

[sickoflibs]

RE :”Sorry, but housing prices are exactly where they need to be(ie not fall any more). Think for a minute, who profits most from high property costs? Local and state governments do. “

Are you kidding? If you want higher state and local taxes just tell your local elected to raise them. Government Propping up house prices artificially nationally (using printed money yet) hurts home buyers and is a bad way for you to keep your local tax rates high.

[mad_as_he$$]

Well, you are in Kalifornia.

[wildandcrazyrussian]

That is not how the property tax system works. I used to work for a tax assessor office, and tax revenue is based on (total assessed value) times (millage rate). If the total assessed value goes up, either with new construction, improvements, or inflationary pressures, then the millage rate could simultaneously go down, as mandated by law in some states, to keep the same total revenue.

If the total assessed value goes down, due to depreciation formulas, knockdowns, or loss of comparative sales value in a declining economy, then the millage rate could go up to keep the same revenue.

Also, foreclosures should have absolutely no effect on property tax revenues, since the bank that owns the property would be responsible for making sure the taxes are paid, so that the property does not get sold in a tax sale to someone else (who would then pay back taxes plus interest, and then be responsible for property taxes thereafter.)

[Sgt_Schultze]

I’m not lobbying for high house prices or higher local taxes. I’m just telling you why housing prices won’t drop to where they were 13 years ago as stocks have. If the bond rating agencies found that states could not rely on a continuing stream of high property taxes, the muni bond ratings would sink and borrowing costs for states would skyrocket. We would get higher other taxes then, and the politicians would be in jeopardy.

[Sgt_Schultze]

I realize property is taxed that way. My mom lives in Maryland. They are required to publish the constant-yield rate, which is the millage level necessary to yield the same amount of dollars. Yet each year they continue to tax at the same rate - an effective tax increase - but tell their constituents they have kept taxes the same. The assessed value can be challenged every year and that value will be based on comps of recent sales.

[sickoflibs]

RE “ I’m not lobbying for high house prices or higher local taxes. I’m just telling you why housing prices won’t drop to where they were 13 years ago as stocks have. If the bond rating agencies found that states could not rely on a continuing stream of high property taxes, the muni bond ratings would sink and borrowing costs for states would skyrocket. We would get higher other taxes then, and the politicians would be in jeopardy.”

You are saying federal officials are propping up house prices with massive debt to keep local property taxes high? .

Capital gains taxes on stocks plummeted, they didnt push stock prices higher with borrowed money to keep tax revenues coming in. Except GM.

[DB]

Well I have news for you - Kalifornia is coming to you.

[mad_as_he$$]

Much of it already did - unfortunately.