[SKB]

Originally Posted by UKOK

Just another example of the insane disparity between the rental and sales market. You can buy this house in The Founders Club for $1.5 million:

House for sale

Or you can rent the same house for $3,900 a month:

House for rent (http://www.weichertrents.com/search/realestate/PropertyListing.aspx?P=12828700&search=bkr&cityid= 45676&minpr=3500&minbr=3&minba=2&pg=5 - broken link)

So, if one was to buy the house with a very generous $500,000 down payment your monthly payment would be:

Mortgage: $6,519 (30 years 6.8%)
Homeowners: $708 (8,500 a year)
Taxes: $1,259 ($15,000 a year)
Association: $300 (a guess, it's probably more)

Grand monthly total to buy: $8,786

Grand monthly total to rent: $3,900

I know one can also deduct interest payments which is not included in the figures above. But, also don't forget there is an opportunity cost for putting down the $500k which could generate $23,000 a year in a 4.5% cd.

This is a wonderful example of the disconnect from the basic fundamentals.

Great post!!!

[Mike1306]

Originally Posted by nychiefsfan

Using JK's formula, the owner paid between $468 to $585k for that home.

NYCF

Well $309,000 for the lot and that model from the builder is around $950,000 base price. So $1,259,000 plus any extras.

[Mike1306]

Originally Posted by tallrick

Who would even consider paying 1.5 million for that shack? I know of homes in Southwest Ranches for the same price that are much more beautiful and spacious. Even 300,000 is a stretch for that place- it looks like it doesn't even have a yard. YUCK!

You do amuse me sometimes.
I understand everyone has their personal likes and dislikes but to call that home a shack is interesting to say the least.
The lots in there are selling for over $300,000 so to say $300,000 is a stretch is ridiculous.

[JimKing]

Yes, that house in Sarasota is a great example of how delusional sellers are. And another great question is who the target audience is for that house. 4 bedrooms and 4.5 baths?

Obviously not baby boomers retiring....not a young family with 1-2 kids. The target would be that rare, rare, rare family with 2-3 kids and a household income of $400,000. You have a better chance of finding a needle in a haystack than a buyer for that house.

Honestly, even ignoring that the house is almost triple what it should be...there is a good chance you could not give that house away. Most young families could barely afford the insurance and taxes, let alone the mortgage.

[SKB]

Originally Posted by JimKing

Yes, that house in Sarasota is a great example of how delusional sellers are. And another great question is who the target audience is for that house. 4 bedrooms and 4.5 baths?

Obviously not baby boomers retiring....not a young family with 1-2 kids. The target would be that rare, rare, rare family with 2-3 kids and a household income of $400,000. You have a better chance of finding a needle in a haystack than a buyer for that house.

Honestly, even ignoring that the house is almost triple what it should be...there is a good chance you could not give that house away. Most young families could barely afford the insurance and taxes, let alone the mortgage.

That is an excellent point and now that the easy money has dried up, there is no way to borrow your way into a house like that.

[Mike1306]

Originally Posted by JimKing

Yes, that house in Sarasota is a great example of how delusional sellers are. And another great question is who the target audience is for that house. 4 bedrooms and 4.5 baths?

Obviously not baby boomers retiring....not a young family with 1-2 kids. The target would be that rare, rare, rare family with 2-3 kids and a household income of $400,000. You have a better chance of finding a needle in a haystack than a buyer for that house.

Honestly, even ignoring that the house is almost triple what it should be...there is a good chance you could not give that house away. Most young families could barely afford the insurance and taxes, let alone the mortgage.

What you are failing to see is that that subdivision is not targeted for a young middle class family.
It is targeting the higher end of the market that will spend $1,000,000 to $2,000,000 on a house.

[Mike1306]

Originally Posted by SKB

That is an excellent point and now that the easy money has dried up, there is no way to borrow your way into a house like that.

Someone that will be buying that house will have no problem getting financing if they were going the financing route.

[SKB]

That was NOT my point, my point was as early as only a few months ago, it would have been easy for ANYONE THAT COULD FOG A MIRROR, to get financing on that property or any other property they wanted.
Now that the money tree is stripped bare, it is going to be a lot more difficult to find buyers with their OWN money with the income to support it.

[Mike1306]

Originally Posted by SKB

That was NOT my point, my point was as early as only a few months ago, it would have been easy for ANYONE THAT COULD FOG A MIRROR, to get financing on that property or any other property they wanted.
Now that the money tree is stripped bare, it is going to be a lot more difficult to find buyers with their OWN money with the income to support it.

You are completely off the mark though.
Homes, such as the one that we are discussing, will not be affected by the subprime lending breakdown or tightened standards anywhere near as much, if at all, compared to homes in the median price range.

[Obrero]

Originally Posted by Mike Peterson

You are completely off the mark though.
Homes, such as the one that we are discussing, will not be affected by the subprime lending breakdown or tightened standards anywhere near as much, if at all, compared to homes in the median price range.

I think the real point was that many houses high end houses are much cheaper to rent than buy.