Posted by: Timothy Ellis (The Tim)

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

63 responses to “Local Home Prices Outpaced by Inflation since 2000”

  1. numbermonkey

    I think there’s a confounding variable of average home value. Upkeep, aging and average construction quality have probably eroded some of the “value” of the average Seattle home.

    Given the very small gap shown in your analysis I would guess that a home of equal ‘value’ in 2000 has probably exceeded inflation. If you consider a solid brick Mansion on federal ave with great upkeep in the same class as a 2007 bubble McMansion that barely scrapes by code, the average price will seem to have declined more that the real ‘value’ of a home that a dollar buys.

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  2. Kary L. Krismer

    RE: The Tim @ 2 – I read him saying that different houses change value at different rates, and so C-S would be just as affected as the median. And again, I still believe that C-S is affected by short sale and REO, although that is not as clear as with the median.

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  3. softwarengineer

    RE: numbermonkey @ 1

    Why Do You Think We’re Seeing So Many “Cash Only” Home Sales Lately [Hand Made Signs BTW]?

    Sellers can’t afford the basic mainenance upkeep to get it normally listed, especially with deep discounts required to get it even looking OK [it still might be a money pit anyway BTW]. Gone are the heydays of selling fixer uppers for gouge prices…..welcome to the new reality.

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  4. F

    You should extend the graph. If you start in 1990, and graph the inflation-adjusted Case-Shiller you see a completely flat line from 1990-1997, then a bump up from 1997-2000, then a new plateau from 2000-2002, then the bubble madness. And we have regained the 2000-2002 plateau, but that’s still 30% above the 1990-1997 trend. So the question is, which plateau will we return to? The one from 2000-2002 or the one from 1990-1997?

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  5. Kary L. Krismer

    RE: The Tim @ 6 – So are you arguing that over longer periods of time real estate outpaces inflation? ;-)

    Seriously, I suspect that if you started with 1970, 1980 and 1990, you’d have four different results, relative to the starting point. I’m not sure what that would prove.

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  6. F

    Well, the proper comparison point would be 1996 or 1997 since housing prices didn’t change between 1990 and 1997. So which is the Seattle of 2012 more similar to, 1996 or 2000? And was there really such a big difference between 1996 and 2000? I suppose the obvious answer is “Amazon”, but I do think it’s an open question.

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  7. numbermonkey

    RE: The Tim @ 2 – That’s interesting about the methodology of C.S.

    Have you ever made an in depth post about how the index is calculated?

    Now I look at it and and read it “price changes in houses sellers have decided to sell”, which in itself opens a huge can of worms. Which houses are being resold now and why would have a big impact on the price differences, and using it as a indicator of the change in price of the average house off the market would be tricky. It would be fun to think about what the index number really represents.

    I think my point still holds that depreciation and maintenance can vary, and the inputs into the C.S. Index may be skewed towards houses which have depreciated in quality/value more than a true “average” house in the city.

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  8. Bard Luippold

    Mitsuru Mizuno and Isaac Tabner found, in a paper published in the May/June edition of the Financial Analysts Journal (“The Margin of Safety and Turning Points in House Prices”), that growth of GDP per capita (eg. level of household wealth) was a better ‘deflator’ for housing price growth than was CPI because it effectively detrended the housing price series.

    They deflated an index of housing price growth starting in 1963 by an index of per-capita-GDP growth. They further detrended this series by dividing by its OLS rolling trend and then calculated valuation bands for detrended home prices by taking and average to one-standard deviation around the average.

    They found that housing prices experienced cycles where the detrended index would sit for multi-year periods on its lower boundary, basically growing with the rate of GDP growth, and then spike quickly up above the upper boundary (eg. in “bubble” periods).

    Housing prices are currently sitting on the lower valuation band (eg. not crashing anymore…just expected to grow with the rate of GDP growth). The last time they were there was roughly in 2000, after which they spiked up to above the upper valuation band in the space of 2-3 years, before crashing back in 2008. Cycles seem to last, on average, 5-10 years. I wish I could paste the chart that they use, as it is very instructive.

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  9. softwarengineer

    RE: The Tim @ 11

    The CPI is Way Low-balled IMO

    The real CPI, with food/energy mixed in [I assume your charts exclude both] eats up a lion’s share of the bottom 50% of Seattle’s per capita pay and yes; we stop driving as much and eating as much too when gas gets over $4/gal…..imagine what that’s doing to Seattle area service/entertainment industries dependent on us travelling [like tire shops, movie theaters, restaurants, etc, etc]? In the end it hits housing prices affordability as this service industry collapse reduces [total labor force shrinks, even while unemployment possibly shrinks too].

    Good graphs anyway, its all they give us to graph and then its shoot from the hip after that?

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  10. softwarengineer

    RE: softwarengineer @ 12

    Real CPI

    Note Education is up about 6% a year and health care about 10% a year.

    http://nowandfutures.com/cpi_lie.html

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  11. F

    @11

    That’s quite compelling. Nice work.

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  12. redmondjp

    RE: The Tim @ 11 – To some of us who are mildly dyslexic, “PCI” and CPI” in those graph headers sure do look a lot alike!

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  13. David Losh

    Sniglet brought up the idea of deflation. I’ve met him a couple of times since, and researched the concept.

    True inflation, the way I understand it, is it takes more dollars to buy the same amount of goods. That would be devalued currency, but it’s fiat cirrency, without the backing of gold.

    We don’t use currency for a lot of things, we use credit. Housing prices have been almost exclusively based on credit since about the mid 1990s, maybe late 1990s. Everything is based on credit, even education. All consumer goods pricing is based on credit, and easy payment plans.

    So how much of this inflation is the financing option, and what do we actually pay, including interest? We have high wages here in Seattle, and maybe San Fransico, but as a national, or global trend is housing really an asset? Has the game changed to make housing an incidental expense, like cars, cloths, TVs, and other consumables?

    I mean if the game has changed, then the price we pay would change. If housing is disposable, then it’s no longer an asset to hold.

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  14. Macro Investor

    Longer term charts always give the best perspective. The reader can decide which periods are relevant to his or her theories on what was going on at the time. While I do like the charts, it is arrogant to suggest this is the “best” view, as if we are children needing “Dad” to impose his opinions on us.

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  15. Kary L. Krismer

    By The Tim @ 20:

    Or you can just complain that I don’t do all the work to generate exactly the content you want on my site. You know, whatever.

    If i recall right, the post after the one where you posted these graphs in the other thread asked for 50 or 100 years of data. Get to work! You’re being lazy! ;-)

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  16. Hugh Dominic

    RE: numbermonkey @ 10 – This reminds me of a hypothesis that I wanted to raise.

    In a normal market, people tend to move every 7 years. But 7 years ago it was 2005, so we are now entering an era when, normally, houses purchased in the 2004-2006 range would make up a big chunk of the listings and sales. With so many of those houses underwater, they are not coming onto the market. That will skew a lot of statistics, including supply, but also the closed sales will be an unusual mix of houses held for 9+ years and distressed. It might even be possible to quantify the effect.

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  17. Absinthe

    Ah, thanks, The Tim. The Case-Shiller charts I looked at when first coming across the idea were inflation-adjusted/real to the day’s dollars. I mistakenly thought that was a feature of Case-Shiller Indexes generally rather than of that particular example, and so I was assuming inflation-adjustment that wasn’t present.

    With your inflation additions it appears clear that adjusted to today’s dollars, if 2000 = 100, the C-S would be <100, and therefore possibly undervalued; although, I think Shiller was pretty clear that regions change based on supply/demand, gentrification, and densification. So if overbuilding was the norm in the bubble years, there may be a long period at <100.

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  18. Ross Jordan

    Over the long run, housing tracks wage inflation, not price inflation. But based on credit expansions, tax changes, regulations even price inflation — housing prices can be out of whack for a long time. I’d suggest any timeframe less than 50 years will be too short to really make any points. Even 50 years may be too short. The problem is that for periods >50 yrs, there can be substantial local changes (i.e. a city can go from boom to bust — i.e. detroit, or bust to boom — i.e. bay area)

    The best long term data I saw is the “Herengracht index” which tracks housing in a major section of central amsterdam over 350yrs.

    http://web.mit.edu/cre/research/papers/wp86eichholtz.pdf

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  19. deejayoh

    By Ross Jordan @ 24:

    Over the long run, housing tracks wage inflation, not price inflation. But based on credit expansions, tax changes, regulations even price inflation — housing prices can be out of whack for a long time. I’d suggest any timeframe less than 50 years will be too short to really make any points. Even 50 years may be too short. The problem is that for periods >50 yrs, there can be substantial local changes (i.e. a city can go from boom to bust — i.e. detroit, or bust to boom — i.e. bay area)

    The best long term data I saw is the “Herengracht index” which tracks housing in a major section of central amsterdam over 350yrs.

    http://web.mit.edu/cre/research/papers/wp86eichholtz.pdf

    Very useful if one cares about home price trends beyond their lifetime. Me, not so much.

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  20. Nick

    Pretty interesting data.

    Looking at LA for comparison, CS is around 165, so probably ~15% above nominal inflation over the same period. That’s [somewhat coincidentally] around my guess for the remaining air in the LA bubble (around 10-15%), not counting any over-correction. After that, I agree with your other assessment: prices will stay flat for “a while”, until the fundamentals are allowed to correct themselves (ie: REO inventory is cleared out, there are no more potential bailouts in the wings, people have jobs, etc.).

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  21. David Losh

    RE: deejayoh @ 25

    That would make your sum total of wealth only pertinent to you, and your life time.

    As an example, two individuals have amassed about the same amount of wealth in a life time. One individual has a wife, and kids, the other is single.

    The person with a wife, and kids spent a life time preserving the estate for the children, the other maintained an estate to live out retirement. The preserved estate can grow, or not, as that person passes. The other estate is either depleted, goes to the government, or is passed on to some unsuspecting third party.

    If property is held as an asset it outlives the holder of the estate. It’s a part of the portfolio, and the long term trend of value needs to be considered.

    That’s what’s meant by an estate, a Real Estate.

    The Amsterdam paper is talking about long term trends. In Amsterdam it’s more significant than it is here in the New World, but it is worth consideration when people buy. Are they buying a long term hold, or disposable property?

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  22. wreckingbull

    RE: David Losh @ 27 – Real estate is a horrible way to pass money down to the next generation, if that is what you are advocating. Actually, I’m not really sure what you are advocating.

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  23. ARDELL

    RE: David Losh @ 27

    Have to agree with Wreckingbull on this one, David. Having been in the Trust and Estate business for many years, the realty portions of the estate were usually a complete mess. The real estate was rarely bought for investment reasons. It was usually bought to be enjoyed by the family. The main estate consisted of cash and securities.

    The fights over the realty portions ruined some families. Some members never wanted to sell it while others wanted it sold and the money divided. This was such a problem that often the Wills named one person to receive the real estate. Usually the one trusted not to actually sell it. That didn’t go over too big either.

    The one I remember well involved Connie Mack of Connie Mack Stadium. The details continue to be confidential, even after all these years. In fact if memory serves me…his name wasn’t really Connie Mack :) But the history of the place is fascinating. http://en.wikipedia.org/wiki/Shibe_Park That was an estate of great historical significance…though not of financial gain. The real estate of many estates has similar “value” quite aside from monetary gain. Families are usually very attached to the realty portions for reasons other than what they can be sold for.

    Never a good idea for an estate to be more than 10% in realty holdings, and more often they have no realty holdings.

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  24. David Losh

    Holy crap, most estates have had the family home.

    I’m making the observation that all of you confirmed. Here in the United States we don’t hold property, and property is more disposable, probably because it’s so new.

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  25. David Losh

    RE: wreckingbull @ 28

    How so? What’s better? stocks? bonds? cash? and then what? The next generation starts again?

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  26. ARDELL

    RE: David Losh @ 30

    Not really. More often the family home is sold when the parents get old and long before they die. Especially homes of great value owned by people who can afford high end elder care living accommodations.

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  27. David Losh

    RE: ARDELL @ 32

    That’s the point. Here in the United States we don’t build estates. We don’t care for the parents. Each generation builds there own lives and carries on.

    The wealthy do build multi generational estates. They set up trusts, portfolios, family LLCs, corporations, and build wealth from one generation to the next.

    Americans don’t do that, which goes back to Deejayohs comment “Very useful if one cares about home price trends beyond their lifetime. Me, not so much.”

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  28. Hugh Dominic

    By ARDELL @ 29:

    RE: David Losh @ 27 – The fights over the realty portions ruined some families. Some members never wanted to sell it while others wanted it sold and the money divided. This was such a problem that often the Wills named one person to receive the real estate. Usually the one trusted not to actually sell it. That didn’t go over too big either.

    Ardell is right, and in keeping with tradition, Losh is utterly wrong. Holding real estate is a terrible way to pass wealth to your children, for reasons that Ardell describes. There is still bitterness in my wife’s family over the grandparents’ house on Martha’s vineyard. One faction wanted to keep it for sentimental reasons and because the market was soft, but they could not raise enough money to buy out the faction that wanted cash.

    Please look into a life trust and transfer cash to your heirs using life insurance.

    Although, I’m a big supporter of a death tax so I’d like to see most of it lost. When you think about it, it’s a reasonable way for the Boomers to repay the debts left over after they plundered the treasury.

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  29. Hugh Dominic

    By David Losh @ 31:

    RE: wreckingbull @ 28

    How so? What’s better? stocks? bonds? cash? and then what? The next generation starts again?

    Are you aware that cash can be exchanged for land? Or a college education. It’s pretty versatile. You should learn more about it.

    I’ll take the cash. You can have the “dirt” that you are so fond of.

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  30. MichaelB

    Hey Tim,

    What does this mean? “But in my opinion, it does mean that the vast majority of the excesses of the housing bubble have now been cleared out.” According to this NAR economist – shadow inventory is still an issue. http://economistsoutlook.blogs.realtor.org/2012/02/03/the-looming-shadow-state-estimates-of-shadow-inventory/

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  31. MichaelB

    By deejayoh @ 25:

    By Ross Jordan @ 24:
    Over the long run, housing tracks wage inflation, not price inflation. But based on credit expansions, tax changes, regulations even price inflation — housing prices can be out of whack for a long time. I’d suggest any timeframe less than 50 years will be too short to really make any points. Even 50 years may be too short. The problem is that for periods >50 yrs, there can be substantial local changes (i.e. a city can go from boom to bust — i.e. detroit, or bust to boom — i.e. bay area)

    The best long term data I saw is the “Herengracht index” which tracks housing in a major section of central amsterdam over 350yrs.

    http://web.mit.edu/cre/research/papers/wp86eichholtz.pdf

    Very useful if one cares about home price trends beyond their lifetime. Me, not so much.

    Great point by Ross. Stupid, narrow minded comment by Deejayoh…nuff said. If you don’t care – don’t comment! Fact is that prices could drop for the next 50 years straight…it has happened before.

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  32. Scotsman

    RE: MichaelB @ 37

    “Fact is that prices could drop for the next 50 years straight…it has happened before.”

    Source?

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  33. Ross Jordan

    By deejayoh @ 25:

    By Ross Jordan @ 24:
    Over the long run, housing tracks wage inflation, not price inflation. But based on credit expansions, tax changes, regulations even price inflation — housing prices can be out of whack for a long time. I’d suggest any timeframe less than 50 years will be too short to really make any points. Even 50 years may be too short. The problem is that for periods >50 yrs, there can be substantial local changes (i.e. a city can go from boom to bust — i.e. detroit, or bust to boom — i.e. bay area)

    The best long term data I saw is the “Herengracht index” which tracks housing in a major section of central amsterdam over 350yrs.

    http://web.mit.edu/cre/research/papers/wp86eichholtz.pdf

    Very useful if one cares about home price trends beyond their lifetime. Me, not so much.

    Well, you’re always free to choose a “lifetime fitting” dataset from the above index; the index is published in the appendix with data for each year.

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  34. Kary L. Krismer

    By wreckingbull @ 28:

    RE: David Losh @ 27 – Real estate is a horrible way to pass money down to the next generation, if that is what you are advocating. Actually, I’m not really sure what you are advocating.

    Out of curiosity, why? If it’s income producing the original owner might depreciate most or even all of the buildings’ values during their lifetime, and then the new owner would get a stepped up basis and be able to do the same, or sell immediately tax free.

    Throw in a spouse and in theory you could fully depreciate it, have one spouse die and they fully depreciate it, and then have it passed on to the kid(s).

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  35. Kary L. Krismer

    By ARDELL @ 29:

    The fights over the realty portions ruined some families. Some members never wanted to sell it while others wanted it sold and the money divided. This was such a problem that often the Wills named one person to receive the real estate. Usually the one trusted not to actually sell it. That didn’t go over too big either.

    Those concerns can be addressed by the will. A bigger problem would probably be with the house the decedent was living in–moving all of their crap out. That’s a problem even if they were renting. I look forward to passing that problem down the line, so that I can avoid having to move. ;-)

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  36. Kary L. Krismer

    By Hugh Dominic @ 34:

    There is still bitterness in my wife’s family over the grandparents’ house on Martha’s vineyard. One faction wanted to keep it for sentimental reasons and because the market was soft, but they could not raise enough money to buy out the faction that wanted cash.

    Please look into a life trust and transfer cash to your heirs using life insurance.

    Again the will can deal with it, but your story reminds me of one of my listings. The grandmother left it to one grandchild, which caused its own problems. But those who didn’t get the property wanted the grandchild to keep the property, rather than sell to fund her education, even though between all of them they didn’t have enough money to keep the lights on. It would have been better if the will had directed the executor to sell.

    A lot of these disputes are simply situations where one group isn’t capable of doing what they want to do, and the will should be written to avoid those problems.

    One other point. If you don’t have a “homeowner’s” title insurance policy, which would be the case for all properties bought a long time ago since those policies are fairly new, the title insurance would lapse when you transfer into a family trust. Probably not much of an issue for houses bought before the existence of homeowner’s policies, because the chance of an issue arising after so much time is slight, but for those who bought more recently and only obtained an owner’s policy, that would be a concern.

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  37. softwarengineer

    RE: The Tim @ 15

    Not After paying for Food, Medical, Gas and College: the Real CPI

    We’re broke after that. We’d of been broke with our basically flat wages the last decade, anyway, tring to buy a Seattle area home, unless you’re the top few percentage of the wage incomes.

    Sorry for my pragmatic rant, now pass me the Russian vodka, so I can go back into denial again.

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  38. David Losh

    RE: Hugh Dominic @ 34

    You do have a lot of bitterness, but you have proved my point.

    Here in the United States we do think of life insurance, death insurance, as estate planning. The majority of people never build estate portfolios administered after death. The wealthy do.

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  39. softwarengineer

    RE: Scotsman @ 38

    How About Japan?

    They’ve been seeing price decreasing for decades now, zombie interest rates too.

    That’s the problem with Japan and America both, when Greenspan and Bernanke kept lowering short term treasuries to zero with mortgage rates tied in, the limit is zero….the zombie switch is simply pegged out in both countries, what longterm economic good it ever did, if any.

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  40. David Losh

    RE: ARDELL @ 29

    Ardell, it’s the same with any form of estate. The kids can fight over paintings as well. I had a client where the house held the art work, jewelry, and furs. There was also a lot of silver. The sale of the house was a no brainer, the division of the art work was another matter.

    The person they hired to appraise the estate was knew how to price the silver, but didn’t know anything about the art which turned out to be the bulk of the estate. A second person was brought in and the fighting began.

    So these stories can be about anything including the cookie jar collection.

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  41. David Losh

    RE: Scotsman @ 38

    Europe, but the paper was about Amsterdam. We are a new country where the price of property started at about zero, based on land grants.

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  42. ARDELL

    RE: David Losh @ 44

    It gets more complicated because of “The Rule Against Perpetuities”, which limits your “hand from the grave” and prevents long term disposition of family wealth and assets to some degree. Each State handles that slightly differently, and I don’t know how WA treats it.

    The best example I remember in one of my accounts was the Life Estate granted to the French Mistress and illegitimate son born of the French Mistress, then the asset reverted back to his legal heirs.

    A famous case, also one of my accounts back when, was the family that tried to get around The Rule Against Perpetuities and keep the wealth and realty and tangible assets in the family indefinitely by having it designated as a “Charitable Trust”, which was my specialty and exempt from the Rule Against Perpetuities. It was The Barnes Foundation and is likely the best example of why a family can’t preserve wealth in the U.S. That family likely succeeded in doing what you espouse for longer than most…but they got nailed more than once for trying to do so.

    If we have learned nothing from this housing crisis, we should have learned that forcing a sale at the wrong time, for inheritance reasons or divorce or any untimed need to sell, is not the best way to treat realty assets. Better to convert the realty assets to more liquid and easily divisible ones, which by the way Kary also enjoy the benefits of a stepped-up basis, and are much easier to balance as a division of wealth to the inheriting parties. In some and probably many cases it is better to convert the gain while the gain is not taxable, and use the stepped up basis for the stocks and bonds purchased with the proceeds of the family home.

    Makes me wonder how many families who inherited real estate are now wishing their parents died in 2007 vs 2009. :)

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  43. Kary L. Krismer

    RE: ARDELL @ 48 – Other asset get stepped up basis, but most liquid assets cannot be depreciated. Thus they don’t provide the tax shelter during the life of the wealthy individual. That’s a huge advantage to real estate (excluding the family home).

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  44. ARDELL

    RE: Kary L. Krismer @ 49

    Theoretically correct, but in practice when the people get too old to manage the realty assets they often convert them to REIT holdings…which historically has not worked out well at all. Much like bond funds, the churning of the commingled assets amplifies the short term volatility and locks in losses.

    As to the Will being able to wipe out “bitterness” by design, it has been tried and has rarely succeeded. Some go so far as to say anyone contesting the Will has their share reverted to zero just for trying. That created more bitterness…though the rationale for the clause was to eradicate legal disputes.

    There are too many myths about the value of real estate generally, when in fact there are very few examples of true long term success stories. More wealth has been gained by the first holders of certain stocks over the years, than holders of real estate. In recent years way too many people spend the appreciation early in their life, borrow against their equity, and end up with nothing at the end.

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  45. Kary L. Krismer

    RE: ARDELL @ 50 – Property management is an option instead of REIT, and a much less extreme one.

    And I wasn’t talking about cutting out someone. I was talking about having the will specify that the executor will sell certain property. That would be virtually impossible to contest.

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  46. MichaelB
  47. wreckingbull

    RE: Kary L. Krismer @ 40 – You give an example income-producing property, in which there is a single beneficiary. That is almost never the case.

    I’ll give my reasons.

    1. Difficultly in coming to a liquidation strategy. In my experience this almost always results in family brawls.

    2. If #1 is in fact achieved, you have a 10% transaction cost to liquidate, or more depending on what is needed to get the property in marketable condition.

    3. If the family does indeed choose to keep the property, the senior tax exemption is gone and the family cannot afford property taxes. This forces a sale at a time which may not be desirable.

    4. I saw a situation in my county where a farm was re-assessed using the best use doctrine, right after the death. The ‘best use’ was a residential development. There was no way the family could afford the new tax rate and had to liquidate at an undesirable time.

    5. Real estate requires active management. Often family members do not live in the same area and/or do not have the time or money for such management.

    I don’t have kids, but if I did, I would give it away tax free before I died – $13,000 at a time. If it is not all gone when I died, it would go to charity. This gives you the added benefit of seeing the money appreciated. If it was not appreciated, it would again go to charity.

    Now, for the irony: My estate is going to a local, public-serving, land trust.

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  48. Kary L. Krismer

    RE: wreckingbull @ 53 – I wasn’t necessarily assuming a single beneficiary. If there were multiple beneficiaries I would probably set up a trust of some other entity for the ownership, and that could deal with the control issues, brawls, etc. It could even allow voting to liquidate, and it wouldn’t even need to require a majority vote, or could require a super-majority.

    I’m focusing more though on what is best for the person who owns the asset. If the property is income producing and tax sheltering, that can be a benefit to them and I would not change that just for heirs. I would deal with your concerns though drafting of the will.

    As to your liquidation cost argument, we’re not talking about getting into real estate to pass on. We’re talking about whether to liquidate real estate near the end of life, so the liquidation cost is there not matter what.

    I do agree that things that might force a sale can be just as bad as not having any provisions allowing a sale. But typically outside of the residence, there is no elderly tax advantage, and that probably doesn’t exist in any case we’re talking about, because there are qualification limitations on that.

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  49. deejayoh

    By MichaelB @ 37:

    By deejayoh @ 25:
    By Ross Jordan @ 24:
    Over the long run, housing tracks wage inflation, not price inflation. But based on credit expansions, tax changes, regulations even price inflation — housing prices can be out of whack for a long time. I’d suggest any timeframe less than 50 years will be too short to really make any points. Even 50 years may be too short. The problem is that for periods >50 yrs, there can be substantial local changes (i.e. a city can go from boom to bust — i.e. detroit, or bust to boom — i.e. bay area)

    The best long term data I saw is the “Herengracht index” which tracks housing in a major section of central amsterdam over 350yrs.

    http://web.mit.edu/cre/research/papers/wp86eichholtz.pdf

    Very useful if one cares about home price trends beyond their lifetime. Me, not so much.

    Great point by Ross. Stupid, narrow minded comment by Deejayoh…nuff said. If you don’t care – don’t comment! Fact is that prices could drop for the next 50 years straight…it has happened before.

    Overreact much?

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  50. ARDELL

    RE: wreckingbull @ 53

    Regarding your last line, can you tell us what that public-serving land trust is?

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  51. wreckingbull

    RE: ARDELL @ 56 – We have many to choose from in our area. Here is a sampling.

    http://www.skagitlandtrust.org/
    http://www.cascadeland.org/
    http://www.whatcomlandtrust.org/
    http://www.bi-landtrust.org/
    http://www.sjpt.org/

    Do your research. Some are very well run in my opinion, others could use some work.

    No offense to you and your profession, but one question I asked them was if I could make a stipulation that none of my estate would be used to purchase land in a transaction which a real estate agent took a cut. I thought I would be the first to ask this but was told it is a common request.

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  52. David Losh

    RE: wreckingbull @ 57

    It is a common request because land trusts are usually contiguous, where they buy surrounding property.

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  53. David Losh

    RE: Kary L. Krismer @ 54

    This is very pertinent information that most people ignore. Like Real Estate agents, most people avoid attorneys except when they are in trouble. Most people ignore the estate planning aspect of what they own, and leave a mess when they die.

    Anyway that’s been my experience in most cases. Some others, mostly the wealthy, not rich, but wealthy, pay attention.

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  54. wreckingbull

    RE: David Losh @ 58 – Once again, I either don’t understand your comment or you are saying just the opposite than what is true. Almost all of the land trusts listed above hold land in a very dispersed manner. 10 acres here, 50 acres there, etc.

    The reason people make this request is that they don’t want their gift being skimmed. Talk to any one of the trusts and they will tell you that most of their purchases are done direct. No real estate agents involved.

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  55. David Losh

    RE: wreckingbull @ 60

    You are talking about public land trusts. The goal is to expand, to preserve, to make accessable. They actively, some times agressively, want to expand. They make it known they want to expand. It’s for accumulation.

    Also the Real Estate commission on a land transaction is 10%. That’s a big nut to save.

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  56. Kary L. Krismer

    RE: David Losh @ 59 – It is the wealthy. The estate tax keeps a lot of attorneys and accountants busy, and creates completely wasteful forms of ownership.

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  57. MichaelB

    RE: deejayoh @ 55

    DB

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