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Comment by jonknee | Hacker News Reader

It's a poor headline as it's not just the wealthiest:

> But agents said the slowdown extends beyond new condos, hitting every segment of the market. While the cooling is more significant at the high-end, smaller units also are affected. In the third quarter, the median price for a one-bedroom Manhattan home was $815,000, down 4% from the same period in 2017. The volume of sales fell 12.7%.

> “What’s most significant about 2018 is that even the sub-$1 million market is slowing because of rising mortgage rates,” said appraiser Jonathan Miller. Rates for a 30-year mortgage averaged 4.81% in late November, up nearly a full percentage point from the beginning of the year, according to Fannie Mae and Freddie Mac.

Higher interest rates and lack of SALT deduction are a big double whammy for the non uber-wealthy (who can afford to move to optimize taxes).

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Being able to pay (or be qualified to get a mortgage to pay) $815k for a home kind of makes you 'wealthy', no?

If you're defining wealthy as anything like "the 1%", then no, you can be well below the 1% and still afford a mortgage on a $815k home, especially if you have dual income earners.

So sustained top 5% in household income.

It's all relative. In the country at large, maybe. Relative to NYC or other big cities, definitely not.

It probably would in Buffalo, but not in Manhattan. The median home price in Manhattan is nearly $1.3m:

https://www.zillow.com/manhattan-new-york-ny/home-values/

Fortunately there is an endless supply of dreamers from bumbaf*ck that will be impressed by your modicum of six-figure stability in Manhattan. At least a few weeks after they've realized the hopelessness of Carrie Bradshaw fantasy and understand the value of a 400 sq. ft. walkup.

A lot of those loans are IO only ARMs with a balloon. You pay IO and treat it as rent. Balloon in 5-10 years means you have 5-10 years in place where a landlord cannot jack up rent on you. If everything goes well and your unit appreciates, then you now have more equity which means you refinance it again. If your mortgage requires you do pay off the balloon and you can't refinance, you sell. Even if you sell at a loss, the loss is likely to be less than the rent you would have paid for the same space. You take the money and do it again, in a new space.

This is one of the reason why you see all kinds of house trading among celebrities - they don't actually "buy" houses with conventional 30 year mortgages. When the balloons come due, they instead sell a house either for more money or for less money and make the balloon whole with the "saved rent"

Higher interest rates are fine if you're looking to buy, more expensive money means cheaper housing. That's what's happening here. People forget that interest rates aren't _normally_ 0% as they've been for most of the past decade.

Losing the SALT deduction really burns, though. That's new.

For all the talk of wanting to stick it to the rich SALT is what the Democrats are going after. When the Democrats are in a position to write their own tax bill, there will be 3 times as many brackets, the top bracket will be 90% and - as a "compromise" they'll bring back SALT.

I always get a chuckle when hearing Democrats talk nonstop about how the rich need to be taxed to pay their fair share, and then they turn around and talk about how horrible the SALT cap is.

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