[SKB]

Originally Posted by Mike Peterson

Median in my area is $42,000, I can find you a starter home for around $130,000. I am sure this is true for many other areas.
I can find you a decent 2 bed 2 bath for under $100,000.
For a young couple even with a child this should be enough home.
These are not in the ghetto either.

The issue here is that some people want to live above their means and want to be in the $300,000 neighborhood when their budget can not handle it.

Just because there are $300,000 neighborhoods does not mean there are no affordable homes in other neighborhoods.

Now one thing to consider when talking about the median income. How much do retirees figure into the equation? In Florida retirees account for a healthy amount of the population yet many don't work and others just have part time jobs to keep busy even if they do not need them. So a retiree making $10,000a year will bring down the median.

Our friends that recently bought their home in a neighborhood of 350+++ homes is happy, err sort of, He said to me "we're surviving". When he said that I had visions of emaciated people running around scrounging for food.

This is coming from someone that makes 100K+ a year and put down over 30% on his 365,000 home. His wife now has gone back to work he said she is not making much.

It is a sad state of affairs when someone in that income bracket in Florida can not even get their piece of the American "dream" without having to "just survive".
His home is nice, nothing to big, 2024 under air, three bedrooms a typical Florida style home. Back in 2002 that home was selling for 225,000. If he had paid 225,000 he would not be "surviving" he would be doing well.

If someone in this income only survives, what do the others that are making 40 something K a year do?

After my conversation, I realized how content I will be with renting a similar home for 1,000 a month. We are in the same income bracket and by renting we will be "doing well".

[hiknapster]

SKB: They recently bought. Did they not do the math? The wife has to go back to work and is not making much. Did they not research this?

Good for you. Glad to see you are thinking. It constantly amazes me how some people leap before they think, add or research.

[JimKing]

These housing prices will swing back down below 1999 prices eventually, when adjusted for inflation. Along with that, developers will move in to build affordable housing. The end result will be houses in the $200,000 range will sell for $100,000.

But the most vulnerable part of the market are the 3-5 bedroom homes currently 'valued' between $350,000-800,000". There are just way to many searching for fewer buyers.

The effects of other debt, high taxes, high insurance, high gas and energy costs will knock out more and more buyers every year. The end of phony appraisals and funny lending will do the same.

Today's $350,000 house may get cut by 50%. As you work up the ladder, the cuts will be a higher percentage. All these houses currently listed at $500,000 to $800,000....they will be lucky to eventually sell for 40% of that.

[maslozhir]

Originally Posted by LingLing

I really don't know what kind of housing and people you are dealing with. Everyone around me rent their place with three month rent upfront, first and last month rent and one month rent as damage deposit. They are all rented to the people with good credit. Oh, no, the rent is not as low as you claimed and the size of the houses is not as big as you said. I really don't know exactly which area or sub area of Florida you are talking about. I don't think it is proper for me to place someone's actual lease on the website.

I rent a townhouse in Boca 3/2/1 , 2200sf on lake for 1,500 .
The same unit on sale for 350K . If I buy now , I would pay
3,000 /mo (PITI) . I'm saving 18k/year and prices not going up .
So , I'll wait and save . I'll buy when it be 250K . Than it'll make sence .
Another scenario : I'll buy for 350K if rent will be 3,000 /mo .
What ever come first .

[kort677]

Originally Posted by maslozhir

I rent a townhouse in Boca 3/2/1 , 2200sf on lake for 1,500 .
The same unit on sale for 350K . If I buy now , I would pay
3,000 /mo (PITI) . I'm saving 18k/year and prices not going up .
So , I'll wait and save . I'll buy when it be 250K . Than it'll make sence .
Another scenario : I'll buy for 350K if rent will be 3,000 /mo .
What ever come first .

and a few years down the road your rent will be up but your mortgage payment would be the same and you'd have built up some equity to boot. so while that 18k a year savings looks good in the short term in the long term it might not work out so well.

[hiknapster]

Kort: I believe you are in banking and recently purchased a home in Florida. What will you do if that home depreciates? You will start stinking.

Holding off and saving is good business, right now. She may not be renting a few years down the road. She'll be buying someone's foreclosure, with cash in hand. Suh-weet.

[SKB]

Originally Posted by hiknapster

SKB: They recently bought. Did they not do the math? The wife has to go back to work and is not making much. Did they not research this?

Good for you. Glad to see you are thinking. It constantly amazes me how some people leap before they think, add or research.

They bought in Feb which in today's declining market equates to be a long time ago.

I tried to talk to them at their going away party about renting vs owning but the husband had "his mind set" he would NOT be a renter. Although that thinking and reasoning would have worked pre bubble, it certainly doesn't make any sense now. They said "we know all about the bubble so, I left it at that, no sense raining on their party.

[Mike Peterson]

Originally Posted by SKB

Our friends that recently bought their home in a neighborhood of 350+++ homes is happy, err sort of, He said to me "we're surviving". When he said that I had visions of emaciated people running around scrounging for food.

This is coming from someone that makes 100K+ a year and put down over 30% on his 365,000 home. His wife now has gone back to work he said she is not making much.

It is a sad state of affairs when someone in that income bracket in Florida can not even get their piece of the American "dream" without having to "just survive".
His home is nice, nothing to big, 2024 under air, three bedrooms a typical Florida style home. Back in 2002 that home was selling for 225,000. If he had paid 225,000 he would not be "surviving" he would be doing well.

If someone in this income only survives, what do the others that are making 40 something K a year do?

After my conversation, I realized how content I will be with renting a similar home for 1,000 a month. We are in the same income bracket and by renting we will be "doing well".

So your friend that makes $100,000 a year can not afford a $255,000 mortgage?
Seems to me they may have a bunch of other high end expenses.

Do the math. Even if taxes and insurance were $12,000 a year their payment would still be under $2700 a month. That would be 32% of the $100,000.

And his wife went back to work because of this?

I would say your friends are either overly dramatic or this whole story is highly embellished.

[Mike Peterson]

Originally Posted by JimKing

These housing prices will swing back down below 1999 prices eventually, when adjusted for inflation. Along with that, developers will move in to build affordable housing. The end result will be houses in the $200,000 range will sell for $100,000.

But the most vulnerable part of the market are the 3-5 bedroom homes currently 'valued' between $350,000-800,000". There are just way to many searching for fewer buyers.

The effects of other debt, high taxes, high insurance, high gas and energy costs will knock out more and more buyers every year. The end of phony appraisals and funny lending will do the same.

Today's $350,000 house may get cut by 50%. As you work up the ladder, the cuts will be a higher percentage. All these houses currently listed at $500,000 to $800,000....they will be lucky to eventually sell for 40% of that.

It's a magicians act. More numbers just pulled out of a hat.

[kort677]

Originally Posted by hiknapster

Kort: I believe you are in banking and recently purchased a home in Florida. What will you do if that home depreciates? You will start stinking.

I'll slit my wrists

what will I do?? I'll sit back and wait it out, I am comfortable with what the house is costing me and those costs will not vary much regardless of what the value of the home does in the short term.

some perspective for you, in 1989 I bough a home for 375k then the market turned sour like the market is now and values went down for a few years, did I panic? no! did I moan over it? no! I sat back and enjoyed my home and it's fixed costs of ownership, as an aside I got my assessment for taxes reduced to 310k so I saved a bunch on taxes and further tax increases because I lowered my basis as far as taxes were concerned.
now it is 2007 and the home has increased in value about 400%.
one other thing if I wouldn't have bought that house in 1989 there was someone right behind me who would've bought it. I don't buy cookie cutter houses in massive sub divisions, I buy premium houses with unique locations, there aren't many comps to what I usually buy

moral to the story:
think long term, only the losers think sort term

back to your original question, if I go negative on this house for a few years, so what! historically real estate increases in value, as long as you buy good value, a premium type home and location location location,
it's always worked in the past and there's no reason it won't continue to work