[firemed]

In the last year we have seen the prices drop fast but where will it stop? Two associations used different methodology in collecting data. The national group uses a sampling of data, and the Florida group uses sales by local Realtors. Still, the 9 percent drop in the state report would have enough to rank Brevard as the fourth-weakest major market in the national report.

The state report showed only two Florida markets had larger decreases in housing prices in the third quarter -- with an 18 percent drop in Punta Gorda and a 13 percent drop in Fort Pierce-Port St. Lucie. However, those are smaller markets that were not included in the national report.



Area real estate takes big hit | floridatoday.com | Serving Brevard County and Florida’s Space Coast

[bale002]

In certain neighborhoods in Palm Beach County, I have seen reduction in asking prices from 2005/2006 levels in excess of $100,000 now: the progressive increase in "price reduced" is tangible, like climbing downstairs.

The problem with statistics such as the ones you mention is that it is really difficult to understand, verify, and have confidence in the starting point and ending point - geographically and in time -, the methodology used, and the spin put on the results by whoever has an agenda at the moment. On top of that, they are aggregate numbers: in my view, even county-wide data can be too broad.

I prefer a "concentric circular" analysis, starting with broad (national and international) financial and economic conditions, state-wide conditions, regional (group of counties or one county) conditions, then local (neighborhood, individual ) property supply & demand conditions, to a significant extent based on personal interpretations and observations.

In any case, my understanding is that general financial conditions will not improve in 2008 (e.g., quantity of ARM resets to come is still enormous, I believe more than in 2007) and economic conditions may deteriorate (US growth definitely will slowdown, even the Fed says so, Florida probably already in recession, one needs to gauge local conditions by personal observation).

In short, only very tiny chance that the average Florida property will increase in 2008, only slighter larger than tiny in 2009, and overwhelmingly large probability that prices will fall further in 2008 and stagnate in 2009. Beyond that, I, at least, am not willing to venture a prediction.

But to put a percentage on the extent of any further fall, again in my view, is of limited meaning or meaningless. One needs to focus on a particular personal objective through the filter of a "concentric circular" analysis.

[MrTudo]

Personally I think the entire country is due for a long protracted downturn.

Fla will bounce back sooner than most places for obvious reasons.

[CJFlorida]

They will come down until they reflect 2.5-3 times income and about a 120 rent multiple. Those are the prices that can be supported long term.

The market we are tracking is Palm Beach Gardens. Houses currently listing for $300,000-450,000 are around 30% overpriced. Those over $500,000 are at least 50% overpriced.

[macguy]

Originally Posted by CJFlorida

They will come down until they reflect 2.5-3 times income and about a 120 rent multiple. Those are the prices that can be supported long term.

The market we are tracking is Palm Beach Gardens. Houses currently listing for $300,000-450,000 are around 30% overpriced. Those over $500,000 are at least 50% overpriced.

Why is a $500,000 home 50% overpriced?

[tallrick]

Luxury homes should remain expensive as foreign investors will buy them thanks to the falling dollar. However, I cannot see homes under 2,000 square feet remaining as expensive as they are. Working-class people buy with credit. No credit, no purchase. If prices do not come down Florida is toast.

[macguy]

Originally Posted by tallrick

Luxury homes should remain expensive as foreign investors will buy them thanks to the falling dollar. However, I cannot see homes under 2,000 square feet remaining as expensive as they are. Working-class people buy with credit. No credit, no purchase. If prices do not come down Florida is toast.

Your right, people who own luxury homes or the yachts you see parked behind them or the Bentleys you see cruising around Fort Lauderdale are not dependent on local economy. Someone working as a school teacher isn't looking at a million dollar pent house at "Points of America", that money comes from somewhere else.

[CJFlorida]

Originally Posted by macguy

Why is a $500,000 home 50% overpriced?

Because we have found 5 homes we like that are listing for $525,000-600,000, 3 of which are also for rent.

One is also listing to rent for $2500, one is listing to rent for $2400, and another is listing to rent for $1800. Rent includes all HOA fees, maintenance, lawn and pool.

All these costs plus, insurance and property taxes, make it much better to rent until prices come down about 50%. You would have be sure you would live in a home for over 20 years before the prices make even a little sense. We doubt we will be in a house 20 plus years, and the average family moves every 5 years. When you run a rent vs own calculator, if prices even stay stagnant for a few years, let alone drop, then you have to stay 30 years to make today's prices work. That is not a smart gamble to take.

We won't buy in a housing market with so much inventory and foreclosures on the way for a rent multiple of over 120. The numbers don't add up when rent multiples are at their current levels of 240-300.

Also, the median income of the area where these houses are located is $63,000. We would be purchasing at 8-9 times median income at today's prices. I don't think that makes any sense at all.

Lastly, the inventory of for sale and for rent in Palm Beach Gardens is huge. We would be foolish to pay these prices, 8 times income and 250 rent multiple. There is no incentive for us to do anything but rent until prices drop a lot.

[TampaKaren]

Originally Posted by CJFlorida

Because we have found 5 homes we like that are listing for $525,000-600,000, 3 of which are also for rent.

One is also listing to rent for $2500, one is listing to rent for $2400, and another is listing to rent for $1800. Rent includes all HOA fees, maintenance, lawn and pool.

All these costs plus, insurance and property taxes, make it much better to rent until prices come down about 50%. You would have be sure you would live in a home for over 20 years before the prices make even a little sense. We doubt we will be in a house 20 plus years, and the average family moves every 5 years.

We won't buy in a housing market with so much inventory and foreclosures on the way for a rent multiple of over 120. The numbers don't add up when rent multiples are at their current levels of 240-300.

Also, the median income of the area where these houses are located is $63,000. We would be purchasing at 8-9 times median income at today's prices. I don't think that makes any sense at all.

Lastly, the inventory of for sale and for rent in Palm Beach Gardens is huge. We would be foolish to pay these prices, 8 times income and 250 rent multiple. There is no incentive for us to do anything but rent until prices drop a lot.

I'm seeing desperate investors take anything they can get, rent-wise. Verify the property's mortgage amount if possible. And verify that the landlord is making the payments. You could find yourself homeless to a foreclosure. Sorry, it's better that you know the possibility exists, 'cause it's happening right now.

[CJFlorida]

Originally Posted by TampaKaren

I'm seeing desperate investors take anything they can get, rent-wise. Verify the property's mortgage amount if possible. And verify that the landlord is making the payments. You could find yourself homeless to a foreclosure. Sorry, it's better that you know the possibility exists, 'cause it's happening right now.

I agree, a tenant must take care. We ran a credit check on the landlord and got our security deposit put into escrow.

The tenants run the show these days if they know how to negotiate.