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6 Tax Breaks Landlords Get and You Don’t

 [Originally published on my substack in June, 2021.] If the U.S. government stops distorting the housing market, we’ll increase home ownership, economic growth, economic equality, and stable family wealth creation. We should at least get rid of these tax breaks for landlords of single-family houses and condos. How many of these landlord tax breaks did you know about? I learned about them from websites and YouTube. There’s a minor industry online explaining all the tax breaks for landlords. Leave a comment with the landlord tax breaks I’ve missed. Depreciation Tax Deduction – (Tax Deferral) Get rid of the depreciation tax deduction for landlords because houses do NOT depreciate, they appreciate.…

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Nationally, the Real Mortgage Payment Price Index is 19% HIGHER than in 2005

 Note. August 2023 data is the latest available from Case-Shiller as I write this on October 31, 2023. The data is a 3-month moving average so what they call August is really the June-August average. See all my Case-Shiller graphs. Based on Case-Shiller and other data, the national Real Mortgage Payment Price is now; You can check the numbers for 17 individual metros, here. Since the spring, Seattle house prices have rebounded the most and Chicago the least, year-over-year. But Chicago house prices didn’t fall like in Seattle. Seasonality shows monthly price increases are very likely to continue slowing down for a few months. In January 2021, you could borrow $248,000…

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The Internet Made The Housing Market Less Rational

 [An earlier version of this piece appeared in Forbes.com.] Rational expectations is a basic economic theory that originated with a paper written in 1972 by future Nobel Prize-winning economist Robert Lucas. The theory of rational expectations has been discussed by economists non-stop ever since.  “Theory of rational expectations holds that people are aware of and act upon available information, making forecasts that are more or less accurate,”  Horwich, Minneapolis Fed, 2022. Economists have gone down many related rabbit holes with names such as; rational bubbles, biased expectations, adaptive expectations, diagnostic expectations, price expectations, price extrapolation, learning from prices, momentum trading, and others.  On the opposite end of Lucas’ rational expectations hypothesis is “irrational exuberance”…

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“It’s A Wonderful Life” – The Weird History Of “Building & Loans” In Real Life

 [An earlier version of this piece appeared on Forbes.com in December 2021.] “It’s a Wonderful Life” is a great movie but what the heck is a “Building and Loan”? At the beginning of the movie, during the 1920s, Building & Loans were huge. But by the end of the movie, right after World War 2 – in real life – most Building & Loan Associations had already gone out of business or had been converted into Savings & Loans. One way or another, if the movie had continued, the Bailey Brothers Building and Loan would have soon been gone. Here’s what happened in real life. Building & Loans Were Huge About half of all…

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Real, Inflation-Adjusted House Prices in San Francisco DOWN 6% from a Year Ago

 Note. September 2022 data is the latest available from Case-Shiller as I write this on November 30, 2022. The data is a 3-month moving average so what they call September is really the July-September average. See all my Case-Shiller graphs. Real, inflation-adjusted house prices are DOWN from a year earlier in; Real, inflation-adjusted house prices are the SAME as a year earlier in; ZERO upward momentum in house prices in any of the 20 cities covered by Case-Shiller. The upward price momentum brakes were slammed on in Phoenix harder than in any other city. Prices falling more steeply than in 2006 after increasing more steeply than in the years before 2006.…

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Ivy Zelman Quotes from New Interview

 I hadn’t seen anything from Ivy Zelman online in a while so was very happy to see this. Ted Oakley of Oxbox Advisors interviewed Ivy Zelman, CEO of Zelman & Associates, on November 17, 2022. Ivy became famous for accurately calling the top of the real estate boom in 2005 and last year she was the first mainstream analyst to raise a red flag about the U.S. housing market. Below I’ll put the video of the Ivy Zelman interview and then I’ll pull a few quotes and all of her graphics from the interview. Great stuff! Ivy Zelman Video Interview Ivy Zelman Quotes & Graphics “… but if we just looked…

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A Housing Bust Will Hurt Baby Boomers Too, Not Just Millennials

 [An earlier version of this piece appeared in Forbes.com.] Our crazy, volatile house prices hurt first-home buyers who buy near the top of the market and last-home sellers who have to sell near the bottom of the market. Millennial first-home buyers who bought at the top of the recent boom will be hurt the most by falling house prices but those aging Boomers who will have to sell their homes in the future near the bottom of the market in order to pay for unexpected expenses like medical, assisted living, nursing home or other living expenses, will also be hurt.  House prices are naturally prone to booms and busts because the…

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House Prices Lower than a Year Ago in 4 Metros

 Case-Shiller Home Price Index Update Note. August 2022 data is the latest available from Case-Shiller as I write this on October 25, 2022. The data is a 3-month moving average so what they call August is really the June-August average. See all my Case-Shiller graphs. Real, Inflation-Adjusted House Prices Lower than a Year Ago in 4 Metros. Price Momentum is Negative in 16 Cities. Prices increased more slowly in the last 12 months than during the previous 12 months in 16 of the 20 cities covered by Case-Shiller. I think I see a trend. Recent price falls are steeper than after the S&L bust and the 2000s bust. With a…

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3 Possible Solutions To Housing Booms And Busts

 [An earlier version of this piece appeared in Forbes.com.] Changes in demand caused by the pandemic were, of course, a big part of the house price boom but two years of falling mortgage rates was the main reason house prices skyrocketed in 2020 and 2021. Rates fell from 4.9% in November 2018 to 2.7% in January 2021, the lowest rate ever on 30-year fixed-rate mortgages. Is there a sector of the economy that is more sensitive to changes in interest rates than buying houses? When you borrow 95% of the price of the largest purchase of your life for 30 years, interest rates have a huge impact on how much you…

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Falling House Prices And The Elections In 2022 And 2024

 [An earlier version of this piece appeared in Forbes.com.] Falling house prices tend to be bad for incumbent politicians during reelections. Take, for example, George H. W. Bush. Vice President George H. W. Bush was elected president in a landslide in 1988. The U.S. housing market had been booming for years before that election. The Northeast boomed from 1986 to 1988, and California was also booming in 1988. Nationally, nominal house prices increased 14% in the 20 months from January 1987 until the election in November 1988, according to the S&P CoreLogic Case-Shiller Home Price Index.  Eight states voted for George Bush that haven’t voted for another Republican presidential candidate since then. Six of…

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