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Old 05-19-2014, 08:10 AM
 
Location: State of Being
35,885 posts, read 67,186,293 times
Reputation: 22375

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Quote:
Originally Posted by MadManofBethesda View Post
I don't care how many homes you've owned, that is nowhere close to being accurate at today's interest rates.

Even with absolutely no down payment, the principal and interest portion of a 4%, $150,000 mortgage would be $716.12/month. If we assume 1% annual property taxes, that would add another $125/month to the mortgage payment. Finally, if we add another 1% for insurance (which would be quite high), that adds another $125. All told, the total PITI comes to $966.12.

IOW, anifani was correct.
Yeppers. Thank you for breaking those figures down, BETHESDA.
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Old 05-19-2014, 08:52 AM
 
Location: State of Being
35,885 posts, read 67,186,293 times
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Quote:
Originally Posted by TuborgP View Post
As far as the cost of college goes I keep a loan note from my college days as a reminder of how cost have and haven't gone up. Which has gone up the most my salary from my first job to retirement or the cost of the degree to get it? Hmmmmmm.
LOL - love that, Tuborg.

We could have a very lively discussion about this.

As I was thinking about costs back in 1970, it hit me . . . the price of gas alone has had a big impact on anyone commuting (whether to a job or to classes!)

If a dollar in 1970 would equate to $4.75 today (just a figure I found - not sure if that is accurate at all!), then a gallon of gas should cost under $2 today.

And think about computers and calculators and "color TVs." Remember how expensive they were even back then? A nice color TV in 1972 was $800, which was like 2 months of salary for the average guy!

Few credit cards were even available, then, either. There was layaway . . . and sometimes, "store financing."

So in discussing this comparison, one would have to consider commodities and how those prices have changed, too . . . hard to come up with an accurage snapshot comparing 1970 to 2014, as it isn't as simple as inflation/value of dollar or overall COL.

I bet someone out there has spent time doing such a study, though!
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Old 05-19-2014, 08:52 AM
 
494 posts, read 881,093 times
Reputation: 1348
A common type of post on the Florida local forums is that someone wants to buy their retirement home now while they can in case prices go up even though they won't be retiring for several years.

Speaking as a Florida resident for over a dozen years, from my vantage point, while some benefitted financially from the volatility in prices over the last decade or so, for many people it has been disruptive and burdensome, not to mention having serious ripple effects on the larger economy (especially high unemployment and businesses closing). A lot of affordable housing was also lost. Titles became clouded, mold grew in non-air-conditioned homes sitting in the sun and humidity for years, some neighborhoods of modestly priced homes went into decline. I agree that many people don't want starter homes, but some of us do, and it's unfortunate that many starter homes here have been allowed to deteriorate and so aren't viable home choices any more.

This volatility is a loss to a way of life we were lucky to enjoy for a long time. I find it sad that the average person worries that they'd better time the purchase/sale of a home based on the ups-and-downs of a volatile market instead of being able to (without risking a big financial loss) choose to buy or sell when individual life circumstances (the need for a particular home at any given time) dictate. This volatility also means it is no longer automatic that the homeowner who uses their savings for a down payment and then pays for and maintains a home over years or even decades is the one to reap the rewards of any increase in its value.

I thought after all the upheaval and financial losses that affected so many people as a result of the last real estate boom-bust cycle (which hit my area of Florida particularly hard) that I could take my time in looking for a retirement home because this volatility would not soon be repeated. I agree that prices had gone so low that a correction was to be expected, but I (wrongly, it turned out) expected it to happen gradually. (I certainly wasn't seeing the kind of improvements in people's financial situations that would warrant big increases).

One of the reasons why I didn't see the big price increases (of early last year or so) coming is that I didn't recognize that, with market conditions that cause investors worldwide to be on the lookout for places to park their money and the ability for investors to easily (especially given the Internet) look at the whole global landscape of real estate prices and pick/execute their real estate investments from afar, real estate was no longer a mainly local business. I think we (in Florida and I suspect numerous other places) really have lost that connection between what real estate costs and what local residents (including not only owner occupants but also local people who intend to buy a home or several to rent out very long-term) are able to pay.

And I don't agree with the reasoning I often hear in Florida that if people are paying these prices in cash, the homes must be worth it. Prices went up in part because some of those "paying cash" were buying multiple properties with investors' money, where the decision maker was not the individual who'd personally take a loss if the purchase turned out to be a mistake, and so it really isn't the same as a market where prices go up because those paying cash are almost all local individuals buying their own home (or an investment property near where they live that they intend to hold for the very long term).

I don't have an opinion either way on whether the higher prices are sustainable. I just don't have a good enough understanding to feel I can predict anything. But I hope for the sake of average people's individual finances and the stability of neighborhoods that we don't have another boom-bust cycle; we still haven't recovered from the last one. But, to the extent that Florida is attractive to some retirees, who are a larger segment of the population now, and many are relocating from higher priced areas, possibly this won't be a repeat--although unfortunately things are tougher than they used to be before the bubble for people who need to finance a home on a typical Florida salary.

Something worth noting is, while I think the prices of many homes fell too low and did need correcting upwards, there are a lot of homes out there that anyone doing their homework would avoid, yet the asking price doesn't always reflect their condition. (It seems like they've been carried along in the general upward trend, perhaps because of lower inventory at certain price points.)

I'd encourage anyone planning to spend their money on a retirement home in Florida to really do their due diligence. Above all, there have been many foreclosures (and many homes on the market are flips of foreclosures), so make sure you aren't getting a problem home with just a superficial makeover. And definitely look into what's been going on with insurance costs/availability.

There are many things to look out for, but, that said, I think paying cash for a Florida retirement home can be a good strategy for some people if you pick the right house. I think there are still bargains to be had--both for people looking in the lower price ranges who are comfortable taking a chance on a condo for their retirement home (I've posted at length on other threads about why I think condos are financially risky, but they do work out well for some people although, again, you're taking a chance; I'm trying to decide myself whether to take a chance on a condo again or not) or for people who are fairly well off financially but not wealthy (particularly people who have homes with significant equity in high-cost-of-living places with high taxes that they want to sell in order to finance their purchase of a lower cost retirement home). But I recommend really trying to understand as much as possible, so that you get one of the true bargains. (When I say they are bargains, though, I don't mean I have any idea whether they'll appreciate or depreciate, but just that the numbers here may make a lot of sense for some people compared to staying in a higher home price and higher property tax area.)

The local Florida forums here on City-Data contain lots of helpful discussions for anyone thinking of buying a retirement home here.

And Ani: I agree with you about the psychological benefits of home ownership. (I wouldn't even be considering getting involved in a condo type of ownership situation again were it not for that.)
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Old 05-19-2014, 08:54 AM
 
Location: Living on the Coast in Oxnard CA
15,748 posts, read 26,786,222 times
Reputation: 20381
My parents cashed out back in 2003. They sold there home that they had been in for 38 years and paid cash for a home in Arizona and had a couple hundred thousand for retirement. Not bad when you consider my dad had a Navy retirement and a retirement from Southern California Edison plus Social Security. My mom who was a home maker also gets social security although she never "worked" outside the home.
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Old 05-19-2014, 08:59 AM
 
Location: State of Being
35,885 posts, read 67,186,293 times
Reputation: 22375
I found this rather fascinating . . . prices on various electrical appliances from the 1970s.

Note: the price of a microwave and a color TV. Those were real "luxury" items back in the 70s.

Electrical goods and appliances in the 1970s with photos, prices and descriptions
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Old 05-19-2014, 09:05 AM
 
Location: State of Being
35,885 posts, read 67,186,293 times
Reputation: 22375
Quote:
Originally Posted by SOON2BNSURPRISE View Post
My parents cashed out back in 2003. They sold there home that they had been in for 38 years and paid cash for a home in Arizona and had a couple hundred thousand for retirement. Not bad when you consider my dad had a Navy retirement and a retirement from Southern California Edison plus Social Security. My mom who was a home maker also gets social security although she never "worked" outside the home.
So glad they got out before the crash!!!

Timing really is "everything" and if not "everything" -- it sure as hell has an impact, lolol!!!
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Old 05-19-2014, 09:07 AM
 
29,782 posts, read 34,880,403 times
Reputation: 11705
Quote:
Originally Posted by anifani821 View Post
I found this rather fascinating . . . prices on various electrical appliances from the 1970s.

Note: the price of a microwave and a color TV. Those were real "luxury" items back in the 70s.

Electrical goods and appliances in the 1970s with photos, prices and descriptions
Great link can't rep u again yet.
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Old 05-19-2014, 09:08 AM
 
Location: State of Being
35,885 posts, read 67,186,293 times
Reputation: 22375
Quote:
Originally Posted by City__Datarer View Post
A common type of post on the Florida local forums is that someone wants to buy their retirement home now while they can in case prices go up even though they won't be retiring for several years.

Speaking as a Florida resident for over a dozen years, from my vantage point, while some benefitted financially from the volatility in prices over the last decade or so, for many people it has been disruptive and burdensome, not to mention having serious ripple effects on the larger economy (especially high unemployment and businesses closing). A lot of affordable housing was also lost. Titles became clouded, mold grew in non-air-conditioned homes sitting in the sun and humidity for years, some neighborhoods of modestly priced homes went into decline. I agree that many people don't want starter homes, but some of us do, and it's unfortunate that many starter homes here have been allowed to deteriorate and so aren't viable home choices any more.

This volatility is a loss to a way of life we were lucky to enjoy for a long time. I find it sad that the average person worries that they'd better time the purchase/sale of a home based on the ups-and-downs of a volatile market instead of being able to (without risking a big financial loss) choose to buy or sell when individual life circumstances (the need for a particular home at any given time) dictate. This volatility also means it is no longer automatic that the homeowner who uses their savings for a down payment and then pays for and maintains a home over years or even decades is the one to reap the rewards of any increase in its value.

I thought after all the upheaval and financial losses that affected so many people as a result of the last real estate boom-bust cycle (which hit my area of Florida particularly hard) that I could take my time in looking for a retirement home because this volatility would not soon be repeated. I agree that prices had gone so low that a correction was to be expected, but I (wrongly, it turned out) expected it to happen gradually. (I certainly wasn't seeing the kind of improvements in people's financial situations that would warrant big increases).

One of the reasons why I didn't see the big price increases (of early last year or so) coming is that I didn't recognize that, with market conditions that cause investors worldwide to be on the lookout for places to park their money and the ability for investors to easily (especially given the Internet) look at the whole global landscape of real estate prices and pick/execute their real estate investments from afar, real estate was no longer a mainly local business. I think we (in Florida and I suspect numerous other places) really have lost that connection between what real estate costs and what local residents (including not only owner occupants but also local people who intend to buy a home or several to rent out very long-term) are able to pay.

And I don't agree with the reasoning I often hear in Florida that if people are paying these prices in cash, the homes must be worth it. Prices went up in part because some of those "paying cash" were buying multiple properties with investors' money, where the decision maker was not the individual who'd personally take a loss if the purchase turned out to be a mistake, and so it really isn't the same as a market where prices go up because those paying cash are almost all local individuals buying their own home (or an investment property near where they live that they intend to hold for the very long term).

I don't have an opinion either way on whether the higher prices are sustainable. I just don't have a good enough understanding to feel I can predict anything. But I hope for the sake of average people's individual finances and the stability of neighborhoods that we don't have another boom-bust cycle; we still haven't recovered from the last one. But, to the extent that Florida is attractive to some retirees, who are a larger segment of the population now, and many are relocating from higher priced areas, possibly this won't be a repeat--although unfortunately things are tougher than they used to be before the bubble for people who need to finance a home on a typical Florida salary.

Something worth noting is, while I think the prices of many homes fell too low and did need correcting upwards, there are a lot of homes out there that anyone doing their homework would avoid, yet the asking price doesn't always reflect their condition. (It seems like they've been carried along in the general upward trend, perhaps because of lower inventory at certain price points.)

I'd encourage anyone planning to spend their money on a retirement home in Florida to really do their due diligence. Above all, there have been many foreclosures (and many homes on the market are flips of foreclosures), so make sure you aren't getting a problem home with just a superficial makeover. And definitely look into what's been going on with insurance costs/availability.

There are many things to look out for, but, that said, I think paying cash for a Florida retirement home can be a good strategy for some people if you pick the right house. I think there are still bargains to be had--both for people looking in the lower price ranges who are comfortable taking a chance on a condo for their retirement home (I've posted at length on other threads about why I think condos are financially risky, but they do work out well for some people although, again, you're taking a chance; I'm trying to decide myself whether to take a chance on a condo again or not) or for people who are fairly well off financially but not wealthy (particularly people who have homes with significant equity in high-cost-of-living places with high taxes that they want to sell in order to finance their purchase of a lower cost retirement home). But I recommend really trying to understand as much as possible, so that you get one of the true bargains. (When I say they are bargains, though, I don't mean I have any idea whether they'll appreciate or depreciate, but just that the numbers here may make a lot of sense for some people compared to staying in a higher home price and higher property tax area.)

The local Florida forums here on City-Data contain lots of helpful discussions for anyone thinking of buying a retirement home here.

And Ani: I agree with you about the psychological benefits of home ownership. (I wouldn't even be considering getting involved in a condo type of ownership situation again were it not for that.)
Wonderful post - thought-provoking and interesting.

Excellent advice and caveats, as well, CITY DATERER. I hope folks considering buying property in FL will read and think about all you have thought through.

I worry about those homes that were closed up and perhaps have hidden mold . . . that's a real health concern . . .

I swore I would never get into a condo or townhome again (have rented them before) . . . but I just bought a townhome, lol. It was the best property for the dollars and it is owner occupied only. I just found out I have a set of twins (6 mos. old) on one side and 2 children under age 3 on the other side. So yeah, I am praying this works out . . . I had hoped for some retired folks as neighbors cause older folks SLEEP a lot, lololol. <keeping fingers crossed about crying babies>
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Old 05-19-2014, 09:18 AM
 
494 posts, read 881,093 times
Reputation: 1348
Quote:
Originally Posted by anifani821 View Post
Wonderful post - thought-provoking and interesting.

Excellent advice and caveats, as well, CITY DATERER. I hope folks considering buying property in FL will read and think about all you have thought through.

I worry about those homes that were closed up and perhaps have hidden mold . . . that's a real health concern . . .

I swore I would never get into a condo or townhome again (have rented them before) . . . but I just bought a townhome, lol. It was the best property for the dollars and it is owner occupied only. I just found out I have a set of twins (6 mos. old) on one side and 2 children under age 3 on the other side. So yeah, I am praying this works out . . . I had hoped for some retired folks as neighbors cause older folks SLEEP a lot, lololol. <keeping fingers crossed about crying babies>
Some are more soundproof than others--hope you got one of the good ones! And congrats on your new home!
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Old 05-19-2014, 09:59 AM
 
Location: State of Being
35,885 posts, read 67,186,293 times
Reputation: 22375
Quote:
Originally Posted by City__Datarer View Post
Some are more soundproof than others--hope you got one of the good ones! And congrats on your new home!
Keeping my fingers crossed, as well, C_D!!!! Thank you!
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