Attn Second Home Owners in Vermont

[AdironRider]

Yeah, because renting in a metro doesn't have the same problem of the landlord raising the rent unsustainably, converting it to an airbnb, or selling it. Most people have encountered this situation before they owned a house in their respective city and its not fun.

Nevermind a mortgage is relatively inelastic, you are bound to just insurance, tax and utility cost increases. For arguments sake let's say maintenance is 2-3% of current market value regardless. That is highly predictable and much more easier managed over time than renting, which inevitably always goes up. Meanwhile, a family who is in year 15 of a mortgage is virtually guaranteed to pay less than they would be renting for the same house in the same area.

I could not imagine getting a 30 day notice of my lease being up and suddenly having to not only find a new place and move, but also have the uncertainly of what my monthly budget would be depending on what rental I could find.

 

[Hastur]

.......................Also, for a guy that claims to understand finance..................................

The more you read his posts, the more you realize he doesn't.

 

[1dog]

Not sure anyone is taking foreign real residential estate investment into account here. Its pretty massive, and over half are cash buys above market rates- driving prices and prop. taxes higher. Mostly urban areas and vacation spots but it affects all RE prices. Many times they remain empty as well. Creates shortages and for most part are detrimental to US citizens.

When the top 10% of income earners are responsible for 50-55% of consumer spending, that can only spell trouble, never mind adding in wealth from other countries to compete with.

 

[Former Sunday Rivah Rat]

The American dream will just have to die. Even people earning six figures will have to make a choice. Buy a house and have it be your life (some love that), or live a life not preoccupied with your domicile and invest as heavy as you can for retirement. Pick your poison. This won’t apply to those from wealthy families.

Don't give up on the American dream yet. A 2%-4% drop in mortgage rates would make a huge difference in payments. The last 3 recessions the 10 year yield dropped on average 2.65%. The next recession should move the 10 yr yield down another 2% which would slash mortgage payments.

 

[BenedictGomez]

The next recession should move the 10 yr yield down another 2% which would slash mortgage payments.

To get back to pre-pandemic affordability you need a bit more than a 4% drop in mortgage rates. Very unlikely.

Not sure if a job loss recession's coming, but yes, that would drop rates a bit, but of course if you're the one who loses his/her job that's not helping you either.

But in terms of game theory, JPOW's only got 12 months left, and Trump will 100% replace him with someone who's going to lower interest rates. The market, of course, will also likely anticipate that belief of mine & rates should drop ahead of that. Maybe January'ish or so.

 

[Hawk]

I think part of the benefit from home ownership is the forced savings into equity (assuming you don't burn it with constant re-fi or HELOC). Most renters won't have the discipline to save/invest the dollars from payng lower rent vs owning.

I have more confidence in the work ethic and ingenuity of the general population. Housing may change, but the bigger American dream is to build equity and have some leisure time.

The American dream of the 1800's was to journey west and homestead some land and start a family. No one does that anymore. Dreams change. Your grandchildren will have different dreams.

I have two observations.
I have 22 neices and nephews ranging in age from early teens to thier 50's. My family is very close so I know them all very well and most of thier friends. All of them have the exact same dream of owning a house and maybe a second home for leisure. I guess my wife and I have been a great uncle and aunt roll model. Most of them come to ski here at Sugarbush with us at some point in the season. Some of them are halfway there. None of them have achieved the second home. All of them strugle with finances because they were put under the wieght of a large school lone or pay super high rent and can't save enough money.

Second, most of them lack the commitment to really hard work, sacrifice and the saving ethic. They just don't get it. It was not pounded into them like my father did for me. Instead they talk about vacations, expensive cars, going out to eat, living in town and paying rediculous rent. They want to work from home, get paid $250K and work 30 hours. LOL I grew up like 2 planker with the same amount of hours for that kind of pay. So it is hard to understand the "New" expectations. I guess I am just an old fuck.

 

[jimmywilson69]

Second, most of them lack the commitment to really hard work, sacrifice and the saving ethic. They just don't get it. It was not pounded into them like my father did for me. Instead they talk about vacations, expensive cars, going out to eat, living in town and paying rediculous rent. They want to work from home, get paid $250K and work 30 hours. LOL I grew up like 2 planker with the same amount of hours for that kind of pay. So it is hard to understand the "New" expectations. I guess I am just an old fuck.

well when we say this stuff, it does make you feel old, but the fact of the matter is that the younger generation is VERY much defined by the bolded above.

I see it every day as a senior member of my engineering firm. Hell we even are an outlier and pay everyone hourly, so working extra hours equals straight time extra pay. I often have to mandate OT as opposed to folks seeing that we need to hit deadlines and do it voluntarily... And then when its mandated, people hate it. Which is totally understandable.

I'm thankful my son sees the value of saving. He's working 2 part time jobs while going to grad school. We're also helping him out as much as I can so He's not saddled with such an enormous amount of debt.

 

[Former Sunday Rivah Rat]

Second, most of them lack the commitment to really hard work, sacrifice and the saving ethic. They just don't get it. It was not pounded into them like my father did for me. Instead they talk about vacations, expensive cars, going out to eat, living in town and paying rediculous rent. They want to work from home, get paid $250K and work 30 hours.

I must be an old fuck too. I can't wrap my mind around the Gen Z + Millennials need to piss money down the drain on car payments, vacations and eating out. If your trying to save for a house it means sacrificing most of those luxuries.

 

[kbroderick]

I must be an old fuck too. I can't wrap my mind around the Gen Z + Millennials need to piss money down the drain on car payments, vacations and eating out. If your trying to save for a house it means sacrificing most of those luxuries.

So how many Gen Z and Millennial folks saw their parents sacrifice, work hard (including plenty of unpaid/salaried OT), and still end up suffering through layoffs, restructuring, etc?

Now throw in the economic conditions after the dot com crash and 2008 financial crisis, add current COL (particularly housing and health insurance, nevermind healthcare), and it's pretty easy to figure that if you're not going to come out ahead, you might as well enjoy the ride.

I was born in 1980, which makes me Gen X by at least some standards (anyone who wants to call me a millennial can kindly shove their avocado toast somewhere unpleasant), and anyone who has lived with me can verify that I inherited and/or was taught a Yankee attitude towards saving, reusing and repairing, and working hard--but I don't blame younger coworkers who aren't inclined to work 60 hours a week, especially on salary.

 

[BenedictGomez]

Regarding the aforementioned student loans, the Trump Administration announced this week students need to start paying up, the many years of "perma" forbearance is finally over. And they're going to start garnishing wages of those heavily behind, an estimated 5.3 million people.

What I'd really love to know from a sociological experiment standpoint, is how many of these people used the unprecedented financial gift of literally years of interest free loans to save themselves many thousands of dollars of debt, pay down, and get ahead, versus how many of these people were like @Hawk suggested, decided visiting Barcelona and Rome or buying a Tesla was more important, squandered this "gift" and saved nothing.

 

[JimG.]

it's pretty easy to figure that if you're not going to come out ahead, you might as well enjoy the ride.

That's great and if that's how they feel then do "enjoy the ride".

But they should please stop complaining about it. Because there are plenty in this age group that are getting ahead.

 

[kbroderick]

That's great and if that's how they feel then do "enjoy the ride".

But they should please stop complaining about it. Because there are plenty in this age group that are getting ahead.

I'm not motivated to do the research, but I'd question how many are actually getting ahead versus staying ahead after starting with a better cushion. Of the folks in that age bracket I know well enough to know how they paid for their houses, the majority had significant help from their parents (and that's before considering earlier help like larger college cost help or buying a first car that wasn't also an opportunity to learn automotive maintenance).

In broader terms, it appears that the middle class has been shrinking and that income growth (as a percentage, not just in total dollars) has been greater for high-income households since 1970, but even more so since 2000:

Trends in income and wealth inequality

Barely 10 years past the end of the Great Recession in 2009, the U.S. economy is doing well on several fronts. The labor market is on a job-creating

www.pewresearch.org

That was the first link that came up when I searched for income trends in the US, and I think the statistics that income growth was nearly flat from 2000 to 2015 versus growing steadily from 1970 to 2000 is a pretty good indication that it is indeed harder to get ahead in the 21st century than the latter half of the 20th.

 

[Edd]

it is indeed harder to get ahead in the 21st century than the latter half of the 20th.

This, obviously.

 

[mister moose]

So how many Gen Z and Millennial folks saw their parents sacrifice, work hard (including plenty of unpaid/salaried OT), and still end up suffering through layoffs, restructuring, etc?

I've seen it in every generation since and including my parents, who had 2 major setbacks. My grandparents, who worked through the Great Depression, had full pension large company jobs. However they were gray, wrinkled, hunched and put their teeth in a glass at night by 65.

What I'd really love to know from a sociological experiment standpoint, is how many of these people used the unprecedented financial gift of literally years of interest free loans to save themselves many thousands of dollars of debt, pay down, and get ahead, versus how many of these people were like @Hawk suggested, decided visiting Barcelona and Rome or buying a Tesla was more important, squandered this "gift" and saved nothing.

As long as cars are sold by leases or "How much payment can you afford" I'm guessing the vast majority spent and didn't save.

 

[Harvey]

Wanting to tax non-residents (that use far less services) more than residents is such a bizarre concept. No surprise that the poll cited in the article showed large support for that though. If you can get others that have no voice/vote to pay for your own stuff...why not.

Great thread, lots of insight. I read much of it, but not all, so sorry if some of this has been said this already.

A few things come to mind.

Taxing luxuries at a higher rate than necessities is not a new concept. A second home is a luxury.

And while it's true that 2nd homeowners use less services, here in the Adk, we want more kids in the school. When school districts are merging, the education system is struggling. Theoretically a two-tiered system could encourage families to move in, if it keeps their costs down.

Which brings up the idea of incentive. To some extent you tax behavior you want to discourage. I think this is what the governor is saying. If we raise taxes on second homes we are discouraging second homeowners. I think he's asking, is that what we want?

Last question: Do primary homeowners really want to stick it to secondary homeowners because, you know, "more for me?" I don't know. We are moving here (Adk) full time in the next few months, and I'm sure I'll find out. But I do know there is a feeling that business is hampered because of the volume of protected land, those rules are made by "others" (Albany), and you can't do much about it. Where we are from in NJ, new ratables are much easier to come by.

IMO the taxation without representation is an unsolvable issue. Yes it's wrong, but how do you let some people vote in two jurisdictions? That essentially gives more vote/power to the "rich." Would you give up your vote "at home" to vote in VT? (It's a facetious question.)

That's one NY POV, not sure how much of that holds in VT.

 

[Edd]

A second home is a luxury.

Can I just say, this seems to be an underapprecited notion. Your second home on the lake or ski country or wherever impacts other people. If they charge you for that privilege somehow , cry me a river. Want to dodge it, make it your primary residence and be a legit part of the community.

 

[deadheadskier]

Put me in the camp of residency determines voting eligibility. Should someone who owns Airbnbs in multiple locations have the right to vote everywhere they own property?
Wealth determines influence too much as is in society.

 

[cdskier]

I think there's a distinct difference between someone that buys/owns additional properties purely to profit from (i.e. via Airbnbs) vs someone that has a second home purely for their own use. Even the term "second" home is somewhat misleading at times. Technically my "second home" is the only home I own. I can't afford to own something in the area where I'm officially a resident. I think that's a big misconception that every second homeowner is wealthy. Many are not.

I'm not sure what the answer is. Do I think I should have the same voting rights as someone that lives locally? No. Do I think I should have some degree of say over what is done with my tax dollars in VT? Yes (to a point). If all residential properties used purely for use by the owner were taxed at the same rate, I'd be perfectly fine with that. I don't think second homeowners should be taxed less. I just don't agree that they should be taxed at a higher rate (they may inherently pay more taxes already simply by virtue of some of those properties being worth more...and I'm fine with that).

People buying properties simply to profit from them...that's an entirely different story.

 

[deadheadskier]

Maybe I shouldn't have called it Airbnbs. Just the general idea of people owning multiple homes and getting to vote every place they own property. Though many Airbnb investors do use those homes occasionally too. I bet most folks who own at Clay Brook or Spruce at Stowe, likely have more than one vacation property in addition to their primary home. Maybe they have a place on the Cape or the Hamptons in addition to their ski condo. It doesn't sit right with me that they get to vote in multiple places.

If I'm a Warren resident , I don't want an out of state resident dictating school budgets, police, fire and rescue etc. The likelihood is that most temporary folks like that are going to vote for the lowest taxes possible figuring they don't really need those services.

 

[cdskier]

Maybe I shouldn't have called it Airbnbs. Just the general idea of people owning multiple homes and getting to vote every place they own property. Though many Airbnb investors do use those homes occasionally too. I bet most folks who own at Clay Brook or Spruce at Stowe, likely have more than one vacation property in addition to their primary home. Maybe they have a place on the Cape or the Hamptons in addition to their ski condo. It doesn't sit right with me that they get to vote in multiple places.

If I'm a Warren resident , I don't want an out of state resident dictating school budgets, police, fire and rescue etc. The likelihood is that most temporary folks like that are going to vote for the lowest taxes possible figuring they don't really need those services.

And this is where I'd be fine if there were no voting rights for second home-owners if the rate was locked in to be identical to residents. When residents can start to decide that second home-owners should pay a higher rate simply because the second home-owners have no voice and can't fight back, that's where I draw the line and have a problem. Non-homestead properties already contribute a higher amount in education taxes than residents do in VT. (60% of education tax funding comes from non-homestead properties).

FWIW.,..I think Clay Brook and Spruce are very fringe examples and not representative of the majority of second home-owners. At least at Sugarbush there are a lot of much lower end condos that likely are the only vacation property someone has. I'm not as familiar with Stowe, so I'm not going to comment on that.