Power is out, but not me!

NAFTA might have made it easier to ship jobs out of the country, but it would have happened regardless.

Yes, but they don't pay it separately, and to compare the cost of renting to the cost of buying, one has to add the separately paid property tax to the lost income if one had invested the purchase price. Some people would forget to do this. (There is also the cost of repairs that a landlord would make, but those may or may not occur. And the cost of replacing worn-out appliances which iiuc landlords bear, but I've never had an appliance wear out, so I didn't count that.)

Being a landlord is a great deal if you get tenants who pay their rent and don't bother you much, but if not, it can be an enormous headache. That's a big reason a lot of people just invest in savings accounts, stocks, and bonds, instead of residential property to be rented.

This too is a unique situation but I find it interesting and it's on topic for AHR: After my mother's first husband died, she kept the house she and her son lived in, and after various tenants, eventually she rented it to someone who got a reduction in the rent in return for doing repairs that the house needed. The major one was the wet basement, and instead of fixing it, he reported it to the building department!! So after he moved out, the building department was after my mother to fix the wet basement. But the city guy was nice and told her how to do it, that she might only need waterproofing paint, so she bought the paint** and I painted it when I was about 13. And we were both amazed that it worked. This was around 1960 when paint like this was pretty new and not well known, at least not to us. Of course the tenant could have done this. Plus he didn't pay his rent, although I guess he wanted to since he almost caught up shortly before he moved out.

And NAFTA stands for North America... Just Canada and Mexico, no China, Viet Nam, the Philipines, etc.

It did have the unintended effect of lowering the price for goods imported from Mexico, AND it lowered the price for Mexicans for goods imported from the US. This turned out to include corn, and the large efficient farms in the US were able to grow and sell corn cheaper than the small Mexican farmers could, and it drove many small Mexican farmers out of business, many of whom, thousands or more iiuc, came to or sneaked into the US to find work.

On 6/3/2024 3:44 PM, Ralph Mowery wrote:

My father was a high powered CPA. He convinced me of a few of his conclusions with respect to renting vs. owning and the generally overstated expectation of making a lot of money by selling your primary residence for a lot more than you paid for it. Renting vs. owning: When carefully enumerating all costs associated with each choice, in most cases, in most markets, for the same amount of money, you get much more square footage with an owned home compared to a rental. You can't compare someone's monthly rent with someone's monthly monthly mortgage payment. You are ignoring the interest cost of carrying a mortgage, the duration of the mortgage affecting the monthly payment, and the opportunity cost of having paid a down payment rather than invested those down payment dollars. On the rental side, you probably didn't consider the income offset of the rent from any investment profit with money you didn't have to park in a down payment.

As far as selling a home for much more than you paid for it, did you factor in all the expenses you had to pay that you wouldn't have had to pay with a rental? Did you factor in the capital gains taxes you had to pay on your large profit? How about all the real estate transfer taxes, the commission you paid to the real estate agent and the title insurance you might have bought and depending on where you live, on the real estate lawyer. When you sold, did you downgrade and spend less on your replacement primary residence than your net profit? And, much if not most of that profit would be negated by inflation. Unless you moved from a classy neighborhood to a dingy one, your replacement home probably went up in price by the same inflation that provided the higher sales price you received when you sold your previous home. Did you correct your apparent windfall gain for overall inflation? Closing costs associated with moving from one leased residence to another leased residence are negligible to none. Yes, you probably kept up with inflation and enjoyed more square footage per dollar in a mortgaged home than in an apartment but what if you were living in a rental and had invested all the $$ you chose to spend on your yard and other home owning expenses as well as your down payment dollars you didn't have available to invest? You might have ended up with very similar resources to purchase your replacement residence.

Personally, I haven't lived in a rental since 1982 and don't expect to do so ever again. I suspect the two major reasons why most people who rent do not buy is that (1) they don't have a stable job and may have to move frequently to find new employment, and (2) they don't have the savings to afford a down payment.

You bought in 1982 ? I bought in 1981 16 1/2 % mortgage for 1 year term - and the real estate market was still strong for sellers ! Renewal time 1982 18 1/2 % rate ... Try telling this to anyone under 40 today .. they live in fear of a 1 % rise from 6.5 to 7.5 %. John T.

Not to brag, but I bought in 1981 and paid only 15%. That was considered very good at the time. Refinanced twice, saved a bunch.

The tech specs for the turbines are for passive sonar only.

The whole east coast (atlantic) and most of the west coast (pacific) are covered with them. Virginia Beach/Norfolk area is actually one of the last to get them and our turbine farm is small compared to other areas. LOTS of data known about whale safety *before* they gave the go-ahead.

Ours is small because of all the shippage, cruise ships, and several navy bases making it the largest naval base in the world now. Those bases include huge ship building facilities. We have 7 bases just south of the chesapeake, and several more bases north of the chesapeake (plus USAF/Marines/army).

Keep in mind, we've had passive sonar out there since WWII.

Probably a Canada vs USA thing. The whole mortgage business changed in that time span - the shortest term for me in 1981 was 1 year - by 1982 there were variable rate and short term mortgages. The standard "escape clause" was 3 months interest - after ~ 1982 the escape clause was equivilant to the whole remaining interest of the term < ! >

John T.

It is, sickness, and ship strikes. USA and Canada ships are careful about that, others, not so much so. The 'noise' you list is also from ships (often international cargo either dropping off or picking up).

The ships aren't going to stop arriving and departing but that's why the turbines are way down south to the bottom of VB and a piece of north carolina, it seems.

Mine was 9% around 1975. I had moved out of a house where it was 6%. In

My first home has appreciated 625% since 1992 (The CPI has gone up 120% in the same interval). My current home has appreciated 50% in four years.

In both cases the profit far exceeds any costs during that interval.

Granted, these rather extraordinary results may not be representative of most states in the USA.

As for being a landlord for single-family (or duplex) homes, it's far more work, and very little reward with frequent headaches.

Yep. I also factor in the intangibles available to a homeowner that aren't available to a renter.

Transfer taxes are an insignificant fraction of the purchase price, and for most, capital gains on property sales only apply when the profit exceeds some threshold (400k?) and there are exceptions when putting the money back into a new house.

Generally paid by the seller.

What does sonar mean to you? passive sonar is an antenna receiving energy. Active is an antenna transmitting energy.

The latter may be a concern for sea life, the former is irrelevent.

Again, passive sonar is completely irrelevent. If there are windmill issues vis-a-vis whales, it certainly wouldn't involve sonar - active or passive.

I've owned a series of homes beginning in 1982, which was the last year I ever lived in an apartment. However, prior to that apartment, I had owned and lived in two homes and one apartment in 3 different cities. I have a rather long and complicated work and housing history which is common for someone with "broken service" (active duty followed by civilian employment and then military service again) adding up to a 30 year active duty career. When on active duty in the military, if you live off base, you're entitled to a housing allowance that is both federally and state income tax free. That allowance always covered 100% of my monthly mortgage costs when I owned and 100% of my rent when I rented. In effect, my housing expenses were relatively trivial for 30 years. I never considered mortgage interest rates during those years because my housing allowance always covered them. Because I knew what my housing allowance would be in advance, I always purchased a home at a price point where my mortgage would be fully covered by the allowance. Over my lifetime, I've owned and lived in 4 single family homes financed with mortgages and presently own and live in a condo I bought with cash.

But didn't that inflation also raise the price by a similar percentage for the replacement homes you probably bought? Of course, if you're always moving from more expensive areas to less expensive areas, that wouldn't pertain and you get to keep the profit for other purposes than housing. However, I suspect most people only downsize due to either to economic hardship or at the time of retirement (which can also be a time of economic hardship for many).

Agreed. I put the watershed year at in the early '70s. Much of the physical plant dated back to the war effort in the '40s and was nearing EOL. The choice was between capital investment in new machinery and technologies or moving production to areas with lower labor costs. It started with a move from the unionized northern states to the southern states. NAFTA only made it easier to move production to Mexico.

Sadly the quality of the workforce was arguably better in Mexico. The company I worked for participated in one of the moves to the south, rebuilding the machinery and setting it up in Georgia. The work ethic in Georgia wasn't the same as that in Connecticut. Attendance was noticeably light on Thursday and Friday's looked like a ghost town.

Capitalism is about return to the shareholders. End of story.

Dammit micky you're not supposed to make sense. NAFTA did no favors for Mexico either.

Mexico didn't build cars before NAFTA.

Now I heard China is opening EV factories in Mexico. Trump thought China is building the EVs in Mexico for the US market. I think China is building the EVs in Mexico for the Central and South American market. China is already building highways and bridges through the Darien Gap as part of China's BRI project. That will finish the Pan American Highway connecting Mexico all the way to Argentina.

Ah. The Gospel According to Milton Friedman.

He's not infallible, you know.

Indeed. And in the modern version, return to the shareholders means propping up the stock price using buybacks rather than actually distributing profits as dividends.