Home Owners Trapped By Prices, Taxes
For many home owners in Florida the high cost of buying and the prospect of much higher taxes is preventing them from cashing in. The Palm Beach Post reports, "Don Todorich is one of many Palm Beach County residents who find themselves suddenly wealthy on paper yet trapped in their homes."I'd have to spend $500,000 to $700,000 (for a new home)," he said, "and my taxes would go to at least $12,000."
"It's not an obstacle for people moving out of the area," said agent Lauren Hollander. "They just can't afford to move down the street."
"This bubble has got to burst sometime," Mark Trudel said. "I just hope it's after I leave."
4 Comments:
If Don was smart he'd sell and rent for a year. Don's home is probaby worth $300-$400K, and that is probably a lot of money for him. If one were using their head alone, they'd take profits at this point and rent until the market collapses.
Isn't it funny that in real estate and stocks, nobody ever wants to take a profit and sit on cash ? I'm trying to figure out of if people are stupid or greedy. In the '99 dot com boom, some people had made 5, 8 and 10x their investment and were sitting on enough paper money to retire. WHY DIDNT THEY SELL ? What do people have to see to recognize that there is no harm in taking profits and sitting on the side.
I'll bet that Don could sell his house and rent it back from the buyer.
Your plan would work, so many "investors" are buying houses to rent with a negative cash flow. My rent doesn't even cover the property tax.
As to why don't they sell? Greed.
Yes, it's all about greed and fear - as long as an individual does what everyone else is doing, he will be safe. He'll either win with everyone else or he'll lose with everyone else. If the individual goes out on a limb and he is wrong, then (in the case of selling your house and renting), he will not only be wrong (temporarily), but he will be alone.
It is better to sell early and endure some anguish while watching prices continue to rise, than to chase the market down after the peak - but this is so hard to do.
I've heard so many stories from five or six years ago about people who could have exited stock positions with a ton of money, but they never sold - they rode it up, and rode it back down.
If anyone is interested, I've started a new blog at (it's sooo easy to do):
http://www.themessthatgreenspanmade.blogspot.com/
Not sure where it will go, but in addition to the housing bubble, I see the next year being quite interesting from a Fed - interest rate policy - inflation perspective.
Tim,
Thats a good idea for a blog. I'm gonna go check it out. It will be interesting, maybe this coming week..Ben
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