No Bubble in Tampa Bay (Miami, Orlando: for sale, real estate market, 2015)

[housingcrashsurvivor]

http://www.sandiego.edu/business/doc...=HousingBubble

...There has been growing speculation among some economists and real estate market observers that there is another bubble forming in the U.S. housing market or in various metropolitan areas. Our analysis based on a number of approaches we have used over the years to identify home price bubbles is that we are far from bubble territory on a national or metropolitan level and that anyone claiming otherwise is looking to sensationalize an issue which does not exist....

...a bubble is an unsustainable price trend fueled by speculation that prices will continue to increase. In theory, the price of an asset in market equilibrium should be a reflection of its intrinsic value. In the case of stocks, one typically looks at earnings and dividends as the basis for intrinsic value. With home prices, there are several ways to look at intrinsic value. One is the current and future "imputed rents" the owner is paying himself to live in his residence. A second is the so-called "affordable price", i.e. the price that the typical household can afford based on local income, wealth and current mortgage rates....

...Another reason why we do not use the term "price bubble" freely is that real ones are very infrequent. Examples of real bubbles include, stock prices in 1929, 1987, and NASDAQ stocks in 2000, gold and silver in 1980, Japanese land and real estate prices in 1989-90, and, of course, home prices in the U.S. in 2005-2007. Based on these rare examples, it is reasonable to say that true bubbles only occur on average once in a generation....

...The Collateral Analytics Home Price Forecast Models use a number of fundamental and technical drivers (independent variables) which can provide a more economically based way to analyze home price intrinsic value and, thus, overvaluation (or undervaluation)....

...median price and the residual expressed as a percentage difference between the Median Sale Price (MSP) and the model prediction of MSP. This residual provides an excellent way to identify home price bubbles...

...We have created home price models for nearly 400 CBSAs around the U.S., which include many of the areas that were widely acknowledged to having had price bubbles in the 2005-2006 period and which exhibited similar patterns with regard to the residuals. Insights about the market at the end of 2015:q1 versus the historical record since the early 1980s is captured in Figure 3 below. This plots the average residual among 48 or the largest CBSAs over time. Note the sharp peak during the 2005-2006 period and the height of the bubble. On average, the average residual is about equal to zero over this entire time period....

...There are, however, some potential exceptions that may be showing potential signs of a bubble. These are highlighted in Table 1. Column 3 shows the average annualized value of residuals for 35 large CBSAs estimated with the model using data through 2015:q1. These are ranked from the lowest to the largest residuals. The second column shows the size of the residuals for 2006:q1 using the same model. The last column shows the difference in the sizes of the residuals in 2005 and 2014 using the current model (column 3 less column 2)...

....

[Snoogler]

I'd say it's more like a mini-bubble; one of those side bubbles that forms off of a giant one.

[EngGirl]

Originally Posted by Snoogler

I'd say it's more like a mini-bubble; one of those side bubbles that forms off of a giant one.

I would add this time is really area related because we definitely see increased "last bubble level" house prices at some areas...

[housingcrashsurvivor]

Tampa, Florida Housing Graph - JP's Real Estate Charts

The above chart estimates the market value of today's median-priced Tampa, Florida metropolitan area house from 1987 until present. The red line represents inflation-adjusted house prices. The blue line represents nominal house prices.

.........

[jaybird45]

To those that say we are in a bubble consider the monthly payment today at 4 percent interest on median priced house of $155K (per the chart above) would be about $750 per month. The same median priced house in 2006 ($225K) with a 6 percent interest rate would be about $1350 per month. In inflation adjusted dollars that would be about $1650 per month in today's dollars. Either way you look at it, the median priced house in Tampa today is as low today as it has every been in inflation adjusted dollars based on cost and interest rates.

I am not predicting that prices will go higher, I am just saying that relative to times in the past housing is relatively inexpensive in Tampa right now.

[EngGirl]

Originally Posted by jaybird45

To those that say we are in a bubble consider the monthly payment today at 4 percent interest on median priced house of $155K (per the chart above) would be about $750 per month. The same median priced house in 2006 ($225K) with a 6 percent interest rate would be about $1350 per month. In inflation adjusted dollars that would be about $1650 per month in today's dollars. Either way you look at it, the median priced house in Tampa today is as low today as it has every been in inflation adjusted dollars based on cost and interest rates.

I am not predicting that prices will go higher, I am just saying that relative to times in the past housing is relatively inexpensive in Tampa right now.

It doesn't matter what interest rate is for cash buyers which are the majority transactions according to this forum realtors especially for properties under $200K

[jaybird45]

Originally Posted by EngGirl

It doesn't matter what interest rate is for cash buyers which are the majority transactions according to this forum realtors especially for properties under $200K

This may be true but does not change the fact that it is a very good time for most people to buy a home in the Tampa and that we are not in a bubble. In inflation adjusted dollars, homes prices are at in 2001-2002 time frame levels which was before the last bubble.

[EngGirl]

I see your point, but it's really depends on how you look at it I guess

[housingcrashsurvivor]

All that matters is whether a person looks rationally at facts as held evident in stats or if you hyperbolize in hysteria anecdotal evidence to mischaracterize a market, which is trolling nonsense.

As to cash buying over utilizing available low interest rate mortgages, that's further evidence of no bubble because it not only means people can afford to buy with cash which is sort of one of those fundamental thingies of being able to afford a thing outright, but also it speaks to confidence in the market that people are willing to invest full equity--to risk their own money--instead of relying on leverage (someone else's money) to buy it.

As to most of what is being bought with cash currently...

Cash deals account for more than half of Tampa Bay home sales | Tampa Bay Times

At the lowest end of the market, the vast majority of sales in March were cash — 91 percent in Hernando, 92 percent in Pinellas and 95 percent in Hillsborough and Pasco. Many of those properties selling for less than $50,000 were condos or small single-family homes bought by investors to flip or rent.

At the high end, $2 million and above, three of the five sales were cash.

[housingcrashsurvivor]

Tampa Homes in Reach for Young Buyers | Tampa Bay Times

Zillow analyzed the prices of homes listed for sale in five Florida metropolitan areas and compared them against the median incomes of millennials – those 23 to 34 years old – to determine what percentage of homes were within the youngest buyers’ grasp.

Nationwide, 70 percent of homes listed for sale are affordable for this set of potential homeowners. In Tampa, the percentage is 71 percent and in nearby Lakeland, the percentage is 78 percent – with the most optimistic outlook in the state.

Elsewhere in Florida, the picture is cloudier for young buyers with much lower percentages of homes in the affordable range:

• Miami, 44 percent
• Orlando, 57 percent
• Sarasota, 46 percent

Yet, Florida is relatively affordable for those who came of age in the new millennium, unlike the nation’s highest priced markets. Here are the least affordable metropolitan areas and Zillow’s analysis of the percentage of millennials that can buy homes:

• New York City, 46 percent
• San Francisco, 36 percent
• Los Angeles, 26 percent
• Honolulu, 25 percent