Investing Thread

[JWags85]

Are there a lot of boomers unwilling to sell simply because of the capital gains hit?

Or even enough to make any significant dent in the currently needed supply?

Do I think this is the reason for the vast majority? Probably not. But supply issues are being caused by a bunch of things and it can't hurt. I am of the belief there are a a significant number of boomers who have the majority of their net worth/wealth tied up in their house who would absolutely be materially affected in retirement by savings, even if it's $100-200K.

Empirical examples don't prove anything, but color my thinking. I have a friend in Chicago who grew up in Wilmette. His parents are teachers and have been in the same house since the early 90s. They bought it for mid 100s in the "cheaper" part of Wilmette at the time.  It would absolutely sell for $1MM++ these days.  They have a variety of concerns with moving to an apartment/finances and saving $250K+ in cap gains taxes would be a huge consideration point.

Then my younger sister's MIL is in a similar situation in the DC area.  Again purchase price in the low 200s, would sell close to $800K-1MM, and she's widowed so she'd single file and have an even lower exemption.  Plus she owns a vacation cabin near Charlottesville they bought for nothing decades ago that has jumped in value that she occasionally AirBNBs cause they rarely visit.  She wonders if its worth it to sell or just hold it and pass it down.  She's a frugal personal finance nutcase so I guarantee that's all part of the consideration.  Both not lower middle class or struggling by any means, but not wealthy necessarily as they are house rich cash not so much.

Wags certainly doesn't need me to speak for him, but I think he's saying that owners will hold onto these houses until they die, at which point there's a basis step up and no cap gain revenue to be had

Exactly.  I'm saying its not lost revenue NOW, or even in the next couple years, cause they wouldn't be selling anyways.  And sure its potential future lost revenue, but would not be in the magnitude that is going to change the face of the country's debt as I said.

We are not taxing out way out of debt from a mathematic perspective, or from a willingness perspective?  Because we went from a budget surplus in Clinton's last year to where we are now thanks to 25 years of unrelenting tax cuts.

Willingness.  Both parties have huge (differing) spending agendas they won't give up.  You can claim the Democrats are hampered by the tax cuts, but they've made no meaningful attempt to cut spending, curb entitlement programs, etc... in decades and you're not going to tax your way out of increasing spending to an ever ballooning deficit.  And the Republicans make a show of spending cuts and small government but still find ways to spend more and more themselves.  Its a uniparty spending sickness.

[Hards Alumni]

Trump floats the idea of eliminating cap gains tax on home sales.  I know there is a $500K exemption already, but given the state of the current housing market, I think this could be a potentially good idea. 

Sure, I am already wary since part of the genesis of the idea seems to be from a bill proposed by Madam Space Lasers, and yes it helps the wealthy with high value homes/second properties...but there are a ton of boomers, especially on the coasts, sitting on massive appreciation that could now be motivated to sell.  Not to mention what I imagine would be a lot of movement of rental/investment properties that wouldn't be part of the exemption anyways.  Could be a win win for a large swath of people.

Count me out on this.

[Hards Alumni]

Are there a lot of boomers unwilling to sell simply because of the capital gains hit?

Or even enough to make any significant dent in the currently needed supply?

The problem is the boomers stashed all their parents in homes and are looking down the barrel of it themselves and that scares them (it should).  It is expensive to stay alive the last 5-10 years of your life.  Eventually, the day to day stuff becomes too much for family to do so the options are Assisted Living or In-Home Health Care.  Staying at home is a much more attractive option than being at a facility.  It's the choice I'd make for my parents and myself if the need every arose.  As you can imagine, this keeps homes off the market for an additional couple of years and leads to a continuation of less supply.

[Hards Alumni]

Willingness.  Both parties have huge (differing) spending agendas they won't give up.  You can claim the Democrats are hampered by the tax cuts, but they've made no meaningful attempt to cut spending, curb entitlement programs, etc... in decades and you're not going to tax your way out of increasing spending to an ever ballooning deficit.  And the Republicans make a show of spending cuts and small government but still find ways to spend more and more themselves.  Its a uniparty spending sickness.

The problem is they're not the same.  "Entitlements" keep people from living on the streets.  Infrastructure keeps the country moving economically.  These things have tangible societal benefits.  Blowing the heads off of kids a thousand miles away has minimal tangible benefit to the American population.

You want to balance the budget?  Repeals tax cuts on the most wealthy, curtail military spending, and create an NHS to drive health care costs down and allow the government to better negotiate prices.

The issue is that money runs politics and we have no meaningful way of changing unless you can find 538 members of congress, 9 Supreme Court Justices, and the President to change that.  And good luck with that.

[The Sultan]

Empirical examples don't prove anything, but color my thinking. I have a friend in Chicago who grew up in Wilmette. His parents are teachers and have been in the same house since the early 90s. They bought it for mid 100s in the "cheaper" part of Wilmette at the time.  It would absolutely sell for $1MM++ these days.  They have a variety of concerns with moving to an apartment/finances and saving $250K+ in cap gains taxes would be a huge consideration point.

Yeah, if there is one group that needs a tax break it is this poor family who owns a $1M home outright in Willmette.     

Anyway, I think there are much better ways to address the housing shortage than giving people at the top a tax break and having that work its way through the system.

[Frenns Liquor Depot]

Wags certainly doesn't need me to speak for him, but I think he's saying that owners will hold onto these houses until they die, at which point there's a basis step up and no cap gain revenue to be had

If it's such an inhibitor to progress you could also not allow basis step up upon death thereby forcing people to pay for the gains they've made in during their life.  Gets people out of their zombie homes and helps fund society.

I somehow think that this isnt the actual goal of the policy proposal though.

[The Sultan]

My wife is in multi family real estate.  The number of apartment complexes going up to target more affluent post-home owners, in addition to young professionals, is probably the fastest growing market.

So your solution here is to allow them to forgo the capital gains on their house so they can more into apartments catering to "affluent" seniors?  How on earth is this good policy?

I would much rather look at providing incentives builders to build more on the entry level. Or enhancing first time buyer programs.

[Hards Alumni]

So your solution here is to allow them to forgo the capital gains on their house so they can more into apartments catering to "affluent" seniors?  How on earth is this good policy?

I would much rather look at providing incentives builders to build more on the entry level. Or enhancing first time buyer programs.

Any building increases supply, which inherently, should lower prices.

PERSONALLY, I think the solution to housing is to add density to cities... by relaxing zoning ordinances alongside incentivizing building of affordable apartment/condo buildings.  Of course, this would require investment in city infrastructure, and public transportation.  To offset some of these costs, prices to live in SFHs should increase.  SFH's are the American Dream of course, but they're not realistic anymore.  As the population increasingly moves towards more urban areas there needs to be a reckoning that SFH's take up too much space and create the sprawl and all the associated problems.  Build up, not out.

I have a lot of wacky ideas.  I don't expect any of my ideas to be popular.

[MuggsyB]

The problem is the boomers stashed all their parents in homes and are looking down the barrel of it themselves and that scares them (it should).  It is expensive to stay alive the last 5-10 years of your life.  Eventually, the day to day stuff becomes too much for family to do so the options are Assisted Living or In-Home Health Care.  Staying at home is a much more attractive option than being at a facility.  It's the choice I'd make for my parents and myself if the need every arose.  As you can imagine, this keeps homes off the market for an additional couple of years and leads to a continuation of less supply.

I think your staying at home/going to an assisted living facility is a much more nuanced and case by case issue. 

[Jockey]

Any building increases supply, which inherently, should lower prices.

PERSONALLY, I think the solution to housing is to add density to cities... by relaxing zoning ordinances alongside incentivizing building of affordable apartment/condo buildings.  Of course, this would require investment in city infrastructure, and public transportation.  To offset some of these costs, prices to live in SFHs should increase.  SFH's are the American Dream of course, but they're not realistic anymore.  As the population increasingly moves towards more urban areas there needs to be a reckoning that SFH's take up too much space and create the sprawl and all the associated problems.  Build up, not out.

I have a lot of wacky ideas.  I don't expect any of my ideas to be popular.

I get it. Government can solve any problem with mandates.

[Uncle Rico]

I think your staying at home/going to am assisted living facility is a much more nuanced and case by case issue. 

That's why my 5-point plan includes rounding up anyone over 70 and taking their wealth.  Move along, geriatrics and enjoy pudding in my Boomer Alcatraz

[Hards Alumni]

I get it. Government can solve any problem with mandates.

I'm a carrot and stick kind of guy.  But at this point in time, we've incentivized the wrong things and our cities kind of suck because of it.

[Jockey]

I'm a carrot and stick kind of guy.  But at this point in time, we've incentivized the wrong things and our cities kind of suck because of it.

I don't completely disagree with this, but Sultan had it right. More housing is the answer.

But that won't be solved because of the unbridled corporate greed. The ultra rich are the problem. They don't want to be part of the solution and the government rewards them for the damage they do.

[MU82]

The problem is they're not the same.  "Entitlements" keep people from living on the streets.  Infrastructure keeps the country moving economically.  These things have tangible societal benefits.  Blowing the heads off of kids a thousand miles away has minimal tangible benefit to the American population.

You want to balance the budget?  Repeals tax cuts on the most wealthy, curtail military spending, and create an NHS to drive health care costs down and allow the government to better negotiate prices.

The issue is that money runs politics and we have no meaningful way of changing unless you can find 538 members of congress, 9 Supreme Court Justices, and the President to change that.  And good luck with that.

Outstanding post.

[tower912]

The problem is they're not the same.  "Entitlements" keep people from living on the streets.  Infrastructure keeps the country moving economically.  These things have tangible societal benefits.  Blowing the heads off of kids a thousand miles away has minimal tangible benefit to the American population.

You want to balance the budget?  Repeals tax cuts on the most wealthy, curtail military spending, and create an NHS to drive health care costs down and allow the government to better negotiate prices.

The issue is that money runs politics and we have no meaningful way of changing unless you can find 538 members of congress, 9 Supreme Court Justices, and the President to change that.  And good luck with that.

In honored of Hulk Hogan...

OH, YEAH, BROTHER

[TSmith34, Inc.]

Eliminating capital gains on home sales would be a boon for older homeowners in high-cost states
https://www.yahoo.com/finance/news/eliminating-capital-gains-on-home-sales-would-be-a-boon-for-older-homeowners-in-high-cost-states-090052929.html

"Those owners are getting more attention in today's market because for-sale inventory is constrained in many parts of the country, pushing home prices to record highs. It's unclear exactly how much helping wealthier homeowners would enliven a sedate market. While it could unlock more inventory, some experts say it could worsen the affordability problem.

"This will primarily affect people in affluent towns and those who have owned their homes for a long time," Caswell said. "We have experienced a significant price increase since the lows of 2008, so anyone who bought after that period stands to benefit significantly."

He thinks buying and selling activity could tick up in those states if the bill were to pass, but he worries the dynamics could also mean more older homeowners with lots of purchasing power would be competing with first-time homebuyers for smaller, cheaper homes."

[jesmu84]

Why continue the trend of transferring wealth from young to old?

[TSmith34, Inc.]

Why continue the trend of transferring wealth from young to old?

Which is what I said originally. Along with exacerbating the deficit. What's not to like?

[MU82]

Meanwhile, more ATHs for the stock market - more validation for staying invested whether I like or dislike those in power.

[Shaka Shart]

Why continue the trend of transferring wealth from young to old?

Because the boomers earned it with hard work while the younger me generations had it all handed to them

[Pakuni]

Why continue the trend of transferring wealth from young to old?

Because kids these days spend all their money on Starbucks and avocados.

[MU82]

For one major thing that's effing up the housing market, especially for first-time buyers and other non-rich folks, here's the WSJ ...



Investors who buy homes to flip or rent out are gobbling up houses.
So far in 2025, they make up about 30% of purchases of both existing and newly built single-family homes, the highest share on record, according to property analytics firm Cotality's data going back 14 years.

[MU82]

As expected, the Fed held rates steady again.

It was the only logical move. There is far too much uncertainty in the economy right now to lower (or raise) rates, much of it due to ever-shifting tariff policy and recently passed major legislation.

[Skatastrophy]

Cloudflare (NET) is up over 1000% since my initial purchase. I only have a bit left. I sold off the rest of my position for a down payment on our home a few years ago.

Earnings is tomorrow, so I've probably jinxed it. 

[MU Fan in Connecticut]

I'm in the copper metals business and no one really knows if 50% tariffs are kicking in or not on Friday August 1?