Mini housing bubble - is it still a decent time to buy? (Miami: sale, rental)

[hurricaneMan1992]

Rent for a year. If the market has gone up another 20%, you know we're in a bubble and it's going to burst. If it goes up 5%, you haven't lost much house value, and you're more familiar with neighborhoods and you likely have more cash saved up. In many neighborhoods around here, you really have to narrow it down to the block-by-block level as far as which parts are desirable.

I doubt the 20% increase over last year is sustainable long term. Incomes have not gone up that much, and cash investors are eventually going to stop buying when prices get too high. Cash investors usually want to buy low. Also, interest rates are eventually going to go back up. That said, there are plenty of distressed properties from the foreclosure crisis that are ripe for flipping or buying cheap and renting it out.

[hmmppm]

OP here. Sorry about the late reply. We have been busy looking at houses in Coral Gables and Pinecrest. The prices are high but that's not the scary part. The scary part is the bidding war which is draining and makes us question the sanity of the situation.

Cubanchic, thank you for the insights. Could you elaborate where is the 3 Gables?

Chelito23, yes, we are just looking for a nice place with good schools to live, hopefully for 5 to 10 years. Not interested in "flipping" or renting it out. Not in it to make money; just want a good place to live and in the meantime not lose anything big. If the market was a normal housing market, we wouldn't hesitate. But it just doesn't feel right at the moment.

tallrick and Calitomiami, the situation you described seems a little extreme to me but that is exactly what scares me. We are not looking at condos or trying to find tenants. But it doesn't mean those factors won't affect the areas we are interested in. Certainly don't want to be caught in the crossfire. Would you suggest that we wait till 2014 or 2015?

doggiebus and hurricanMan1992, due to our jobs, we have been living in Miami part time since 2010, but only just fully transfered ourselves to Miami full time earlier this year. We are fairly familiar with the neighborhoods, but never looked carefully at the housing market until recently. What a huge mistake on our part. We could've easily saved $100k to $200k had we bought something in 2010 or 2011, or even last year.

[hurricaneMan1992]

I can tell you it's also getting crazy up in North Miami Beach, which does NOT have good schools. And up here it is investors with cash--seems like there's a new For Rent sign every week, lots of moving trucks around. A large portion of the inventory are foreclosures and Homepaths as opposed to regular sales of well-kept properties. With all the headlines, you gotta wonder if a lot of people are going to be putting their homes on the market this summer, while the kids are out of school and more families are looking to buy. If not, it's gonna get even crazier!

[Calitomiami]

Here's hos i feel about it. If you are going to live in the house for 10 or more years it will make sense to buy for pure emotional reasons, such as having a place to truly call home. Of course that's assuming you can put down enough money to feel like ou actually own it as opposed to just renting from the bank. If you're worried about losing value in the real estate I would say you have every reason to be, but you can't put your life on hold either. Stay away from bidding wars if possible, buy only if you are in love with the house, buy within your means (think ahead, can you keep the house if your income is cut in half at some point and when interest rates go significantly up?). If you are forced to sell at the next economy/housing bust you'll lose far more than if you stay well within your current means and keep the house through the downfall. Forget the joneses, they will ruin you. I personally wouldn't buy real estate as an investment right now, especially not in miami. I will rent until the market corrects itself from the poisonous quantitative easing.

[Sugah Ray]

Originally Posted by hurricaneMan1992

I can tell you it's also getting crazy up in North Miami Beach, which does NOT have good schools. And up here it is investors with cash--seems like there's a new For Rent sign every week, lots of moving trucks around. A large portion of the inventory are foreclosures and Homepaths as opposed to regular sales of well-kept properties. With all the headlines, you gotta wonder if a lot of people are going to be putting their homes on the market this summer, while the kids are out of school and more families are looking to buy. If not, it's gonna get even crazier!

It's investors all over the place, not just where the tourist buy. Private equity firms are buying properties, renting them and inflating the market.

[valicky]

Originally Posted by Sugah Ray

It's investors all over the place, not just where the tourist buy. Private equity firms are buying properties, renting them and inflating the market.

This is what I'm seeing in my W. Kendall neighborhood and it sucks for the homeowners.

[nikki33161]

Hi, do not buy in Miami. Flood insurance rates are going to keep increasing each year as the National Flood Insurance Program is hopelessly in debt, and wind storm insurance will also continue to go up each year. My neighbor was just hit with a $6,000 increase over last year. Private insurance companies haven't written flood policies in south Florida for decades, which should tell you something. That's why the federal government has been subsidizing flood policies. However, as the number of FEMA emergencies keeps increasing these federal subsidies are coming to an end. Look up the Biggert-Waters Act of 2012 for yourself ( Flood Insurance Reform Act of 2012 | FEMA.gov). Also, read the news, Miami is ground zero for sea level rise!! No one in Miami talks about it because it's bad for business. However, the last thing you want to do is lock into a 30 year mortgage. If you're not into reading scholarly abstracts of research papers, then read this article from Rolling Stone magazine, July Issue of this year. It explains Miami's situation fairly well (Why the City of Miami Is Doomed to Drown | Politics News | Rolling Stone).
Just rent, enjoy the winters here, because summers are intolerable, and invest elsewhere!!

[jmspiderman]

So there is no solution in sight for the american regular working class? Is The "american dream" over drown by greedy interests or would it be a government scheme to kill it? Citizens,FHA,FEMA,etc etc? Because there is no way we were recovering from a housing bubble and suddenly we are trapped in another one it doesn't make sense to me .
And for the record I'm not a conspiracy believer or anything like that but all the things that are happening in the country in the last 3-4 years are very strange.

[NCtoMiami]

Originally Posted by nikki33161

Hi, do not buy in Miami. Flood insurance rates are going to keep increasing each year as the National Flood Insurance Program is hopelessly in debt, and wind storm insurance will also continue to go up each year. My neighbor was just hit with a $6,000 increase over last year. Private insurance companies haven't written flood policies in south Florida for decades, which should tell you something. That's why the federal government has been subsidizing flood policies. However, as the number of FEMA emergencies keeps increasing these federal subsidies are coming to an end. Look up the Biggert-Waters Act of 2012 for yourself ( Flood Insurance Reform Act of 2012 | FEMA.gov). Also, read the news, Miami is ground zero for sea level rise!! No one in Miami talks about it because it's bad for business. However, the last thing you want to do is lock into a 30 year mortgage. If you're not into reading scholarly abstracts of research papers, then read this article from Rolling Stone magazine, July Issue of this year. It explains Miami's situation fairly well (Why the City of Miami Is Doomed to Drown | Politics News | Rolling Stone).
Just rent, enjoy the winters here, because summers are intolerable, and invest elsewhere!!

I agree with you. I wish we never bought this house but we have to hang in till things get better sell. I would rather rent that way you dont have to deal with insurance companies unless you we take rental insurance.

[bale002]

Originally Posted by jmspiderman

So there is no solution in sight for the american regular working class? Is The "american dream" over

The American dream was never that the government subsidize oversized housing. Home ownership is a common aspiration the world over, there is nothing particular American about it.

The American dream is that you can be successful based on your own merits, not on social position at birth, express those talents in your own business or profession, and keep the bulk of what you earn for yourself and your family, and not have it taken away from you by those of "higher" social position (they call it taxation, or sometimes slavery).

The most successful people in US history sought their McMansion after, after, they successfully pursued the American dream, often in the twilight of their lives, we have several examples of them right here in Miami and elsewhere in Florida.

Life is movement and risk.

So stop whining and complaining, develop and hone your talents, take on risk, in other words live, open a business or go into a profession, then, maybe 20, 30, 40 years later think about a McMansion.

Please.