I have a paranoid fear that my kids won’t be able to afford houses once they’re fully ready since prices are going up like crazy. Like in 10 years.
I’ve played with the idea of buying a rental or two, renting until the kids get married or are ready then selling it to them. I’m guessing that has some holes though because taxes or whatever. Selling to kids at low market value.
Just tell me the market will cool off eventually.
StockGodess, market segments will cool, get hot, cool, get hot over and over again.
Buy what makes sense at the time, then sell when you want to buy something else. If you think stocks will do better than real estate, buy real estate now, if you think stocks will do better, then buy stocks. When appropriate sell to help with a down payment or let them figure it out on their own. Paying taxes is the sign of success. Better to pay taxes than eat losses.
I’ve played with the idea of buying a rental or two, renting until the kids get married or are ready then selling it to them. I’m guessing that has some holes though because taxes or whatever. Selling to kids at low market value.
How can you be sure that your kids are going to be living in the area where you purchase the home, and that they will want to live in that specific home? Even if they are living in the area, things like commutes, school district, size, configuration, etc. may make the home all wrong for them. And by selling a home that you rented out to them, even at a ‘low’ market value, you will still have to pay taxes on the recaptured depreciation and the gains, and if it’s not really the current market value, you would be required to pay taxes on the imputed gain that you chose to forego.
Buy a house because it fits your investment criteria, not with the intent to sell it to your kids.
If you want to help your kids buy a home, gift them money to do so. Gift tax limits are currently $16k and are adjusted for inflation. If you’re married, you and your spouse can each give them $16k, for a total of $32k. If they are married, you and your spouse can also each give their spouse $16k. You can gift them a pretty large chunk for a down payment, if not enough for an entire house, depending on how many years to choose to give them gifts.
Just tell me the market will cool off eventually.
Right now, it’s a supply issue. According to FRED data https://fred.stlouisfed.org/series/ACTLISCOUUS active listings are 30% of what they were 3 - 5 years ago at the same time of year, while the number of households has continued to grow (except for 2020) and the size of households has continued to shrink https://www2.census.gov/programs-surveys/demo/tables/familie… So when supply gets back up to where it can meet the demand, the market will cool. Depending on where you live, that may take a while, or it could happen next month. The FRED data has local MSA data that you can look at for your area.
AJ