1607

In fact, there are not many places in the world with median home prices at $1m, and those places can largely be defined as full of rich people.

1608

I think he said San Fran, Bay area which is also notorious for a lot of homeless people and at some point there was some POD living going on.

1609

Bay Area can’t be considered a typical market by any stretch.

1610

Sure, but I’m responding to this:

My point is that plenty of places in the world have $1 million homes

In the US, only 3% of homes sell above $1m, and I’m all but certain the global threshold is far smaller. How do I deal with the financial consequences of my $1m home is a rich person’s problem.

1611

Oh sure. We have some here too but San Fran is… as @Grunden said unusual. Not everyone there is as rich as you would expect them to be due to the outrageous COLA.

Also, a million dollar home and million dollar assets… 300k-500k type homes are as unusual, add retirement, investments, it wouldn’t be unthinkable for middle class and lower upper class to have that for retirement, you know, saving, investing, building equity… doing everything we advised them to do.

1612

The thing is, 7-figure home values, relative to wages, are a symptom of income inequality. To borrow a phrase, the rent is too damned high. Without transfers of larger income shares up to the most wealthy, there wouldn’t be buyers for those properties, and housing prices would come down.

1613

People want to work and live there. That does not make it a symptom of income inequality, whatever that ts supposed to mean.

1614

Roughly 12% of American household have a networth over $1 million, including their homes. Among those near retirement age the percentage rises to 21%.

It seems pointless to argue if they are rich, or upper middle class. The fact is there are boatload of them.
As Nesrie say $300-500K house plus saving for retirement aka doing what you’ve been advised is going to lead to a $1 million in net worth.

If the solution to income inequality is to apply 100% inheritance tax over $1,000,000 as @legowarrior advocates. I fear 4+ years of Trump presidency.

1615

As @Strollen says, 1M net worth is not nearly what is used to be. That’s owning a single house in California plus a moderate 401k. Not exactly living like a Kardashian.

1616

If (some) people don’t have very high incomes, they can’t bid housing prices up to the extent they have, no matter how much they want to live there. That’s what I mean. And they don’t really want to live there, not for any reasonable meaning of want. It’s just that their high-paying jobs are there, and those jobs making living there well possible.

1617

Here’s the thing, the medium networth, is what, around $80k? So most people wouldn’t be effected. And the rest that are, I put nicely in the box I label “Rich People Problems” That’s like, two or three steps above “First World Problems” in terms of how much I just don’t give a shit.

What is the net worth of a person right before they die though? I mean, you are drawing down on your retirement the whole time and paying for fancy medical procedures to keep you alive. Since inheritance tax only kicks in after you pass on from these mortal coils, it really doesn’t make much of a difference what you had at your peak, but at your twilight days (although some people might die young, the fact remains that younger people have less net worth, and are even less impacted then people that die old).

If we are going to talk about people impacted by my idea, there is something I think we are all leaving out. The person is, mostly likely, DEAD. As in, not among the living. So, the people impacted might be his or her family, but these are likely people that have lives of their own, with their own jobs, houses and net worth. I think 1 million should be enough to cover a lot of immediate expanses, or at least plane tickets to and from the Funeral, if nothing else.

It might not be enough to set someone up for life, but since when did we think it was okay for people to be set up for life just because their parents for family members died. That’s not pulling yourself up by the boot straps. That’s just the consolidation of wealth in the hands of a few. Which, looking back at history, usually seems to work out pretty badly for humanity.

So, I guess the question I have to ask. If you were suddenly gifted 1 million dollars (Completely in the clear, because the estate took care of the taxes), would it be enough? According to @Strollen, it might not be enough, but I think I do pretty well with 1 million dollars in my pocket. Maybe I’m just better with money then he is. It wouldn’t replace my parents though, and that thought makes me really sad. Thankful, both are alive and well, and hopefully spending the net worth that accumulated on themselves, and not trying to give it to me.

If were are worried about inflation, I say we peg that 1 million dollar amount to the Minimum Wage. As it goes up, so does the amount you can inherit. Win/Win for everyone!

1618

It’s a good thing you are not leading our party. You would just bring the Democrats into the ground by waging war on everyone who isn’t lower income. This kind of attitude is keeps everything from moving forward.

1619

Lower income? Nah, I just don’t have time people that aren’t middle class, but pretend to be.

It’s the type of trash you hear from Republicans all the time before Trump came to office.

Average net worth of the middle class is below 1 million dollars.

Even the ‘Upper Middle class’ don’t even make it often.

1620

21% is not average, nor did he claim it to be. You’re waging war on the wrong people and can’t even see it. Then again, you’re talking about markets you don’t understand too.

1621

I work in the financial industry. I know a bit more about it then you think.

And I am not waging a war on anyone, but I fully believe that 1 million is not an out of this world low amount to give to your family tax free. Is it a perfect number, not by any means, but I think it’s a perfectly good place to start the conversation.

So, let me ask, if you could pick a number that people could leave to their family, tax free, what would that number be? Would it be 2 million, 5 million, 10 million? Or are you more in like with the GOP in the belief that all tax is theft?

1622

Financial Industry is a big industry. It doesn’t make you or anyone else an expert in everything, and you tried to completely divorce mortgage and maintenance and the cost of just buying a house from rent. My opinion is based on that. Well that and trying to base all knowledge about housing on a period of time where the financial industry tried to bring itself down.

I would have to consider it more carefully, but I believe a million is too low doe to the groups saving in their homes and their retirements and those who managed to invest. I certainly don’t want to validate fears that the government is out to get the life-savings of those who were fortunate enough to amass a life’s worth of savings.

Also, I answered your question, mostly, and you never answered most of mine.

1623

I thought I had.

As for rent being cheaper then buying a house, I made the point that when you buy a house, in addition to mortgage, taxes, and lawn work, you also have to bare the price of home maintenance, which most experts ball park to be between 1 to 4 percent.

So, if the house is worth 200,000, you might have costs of up to 8,000 in maintenance.

For most properties that I have seen that are up for rent, the rent itself has not been that much more then what I would pay for a mortgage and taxes, but certainly less after you factor in maintenance costs. Plus, most rental properties come with some basic furnishings that you usually have to buy, like washer and dryers, and fridge.

For the house I am buying right now, the estimated monthly cost for rent would be 1,177 a month in rent. My future mortgage for my current house will be 969.00 a month. That includes taxes, insurance, the whole 9 yards, and it’s pretty good, because our interest rate is set to 3.5% and we are getting a bit of a steal on the house because the owner is selling it directly.
It’s $208 cheaper to buy, per month, then to rent, right now.

But, we are looking at 6,000 in costs for a new chimney, and another 4,000 in costs for the basement and roof and garage (although none of it is needed to be done immediately).

So, let’s say the maintenance cost is about 2% of the value of the house. That comes up to about 3,200, or about 266.00 a month. That more then makes up the difference between the cost of renting and the cost of owning the home. And, personal, I think the maintenance cost will be closer to 4%, so double that.

And, again, that is considering that interest rates are incredibly low right now. As I said, we feel fortunate to get a 3.5% interest on a house that is selling below market value. So, even with all those advantages, it is still cheaper, when factoring maintenance, to rent in this area, rather the own.

If the market ever starts to heat up, or interest rates aren’t at the amazing low 3.25 percent, that would add a lot more to the cost of a mortgage then it would be to a house that was probably refinanced during a period of time when the interest rates where low.

Hopefully, that helps answer the questions you had for me.

1624

Too late for that; I saw the earlier remark. And now we’re done.

1625

By the way, those articles only address retirees. What about the people that need to work until they are in the 70s or 80s? Are that part of the count of 1 in 6?

1626

Lol, of course you are. When the fact don’t support you, you usually try find a way out of a discussion without admitting anything.

It makes discussion with you frustrating at times.