[Need_affordable_home]

I cant find a house that rents for under $1500 a month and relistically I cant afford more than about $700 a month rent. You got very lucky Muggy(I know you wish to keep the details secret and I respect this) but it doesnt matter, I am growing tired of Florida anyway and I can enter home ownership elsewhere for much less than even the $700 cost of rent in Florida. I doubt ill ever return to Florida besides vacations.

[shannon94]

Originally Posted by Shores9

And yes I am a realtor and have ties to the industry from the banking mortgage origination/underwriting side to RE sales for over 18 years. I have seen this Bla Bla Bla before and still the RE market continues to climb over the long term.


And the article you quoted was written by Mike Shedlock for Whiskey and Gunpowder. Who is Whiskey & Gunpowder other than a free, twice-per-week, e-mail service Tell me these guys are agenda free. If they didn’t publish something sensational who would subscribe to them?

And realtors don't have an agenda?????? lol

[Zhang Fei]

Originally Posted by Muggy

For example, a $200k 3/2 in St. Petersburg would cost $5-10k/yr. apart from the mortgage to carry. That is simply not within my means. Even if the same house tumbled to $150k I still would not buy because of the associated carrying costs. There are a lot of people who would, however.

I think the biggest problem facing Florida, aside from inventory and speculation, is carrying costs. Some people's insurance alone costs the same as my rent and we live on the same street!!!

It's insane.

And despite what many believe, not every boomer from the Northeast is looking to buy at any price in Florida. The reason: carrying costs.

My father is on the brink of retirement and so are many of his co-workers. Five years ago they were all considering Florida. Exactly ZERO are considering Florida now.

I have to agree. I think Florida's attraction to retirees is not it used to be because of the skyrocketing property prices, homeowner's insurance (due to the recent hurricanes) and property taxes. Florida used to be a low cost place to retire. After looking at property prices and the associated taxes, I think it is still cheaper than the northeast, but nowhere near as competitive as it used to be with a variety of other locations, cost-wise.

[Zhang Fei]

Originally Posted by josephhawkinson

after all the rosy talk, is it really too hard to comprehend this is in fact a housing bubble (about to burst) thanks to Greenspan and his crazy money printing machine (FED) to bail out the government from the recession caused by the stock bubble burst. All he did was diverting the cheap money from one crazy bubble to another.

I don't think Greenspan had all that much to do with it. The "problem" is that the world has never been as prosperous as it is today. India and China are moving beyond subsistence economies, and generating enormous amounts of investment capital in the process. The East Asian economies that were known as the Tigers in the 80's and early 90's are now reaching the development levels of the European economies. The point is that there are now a large number of economies where people are not spending every penny they earn on living expenses. This means a gigantic savings pool sloshing around the world in the form of pension and unit trusts, mutual funds, government treasury money and so on. This is the money that is feeding asset bubbles of all kinds, not the Federal Reserve's interest rate policies.*

Japan's high savings rates were, ironically, responsible for the real estate bubble that led to the Imperial Palace grounds being worth more than all the land in California. Japan's residential real estate prices then fell - every single year - for 15 years, with this year (or last) being the first increase recorded since the collapse began.** Note that Japan's international businesses have remained as fiercely competitive as ever. Throughout this time frame, it was construction, real estate, banks (plagued with bad real estate loans) and retail (pinched by troubled consumers burdened with 100-year mortgages - the US equivalent is Option ARMS) that went south in a big way.

One of the reasons the savings rate in America has fallen in a big way is because home purchases are counted as consumption. Americans are buying homes*** at prices they can't afford - prices that they won't see at auction when the bank inevitably forecloses on their exotic interest-only, no-money-down, variable-rate mortgage loan. I doubt we'll see a 15-year correction in the property market, but we will probably see a 50% correction at the very least, if home prices are to return even to the low end of historical affordability ratios (a low affordability ratio means mortgage payments are not very affordable).

* Does anyone know that even Hong Kong celebrities like Jackie Chan (estimated to be worth over $100m - via movie productions, business interests and endorsement deals) are investing in American real estate? He is said to be corraling other moneyed Hong Kong celebrities and assorted glitterati into doing the same.

** Note that in the last year before it stopped falling, the decrease recorded was 5%, meaning that Japanese property prices fell over 90% over 15 years. Hong Kong real estate is down 60% since 1998, and it's not exactly become a Third World city. Note that these two places have much lower carrying costs than American properties - both insurance and property taxes are negligible relative to property values. The fact is that the lack of an economic depression does not guarantee that property prices will hold up.

*** I should really say taking on large amounts of debt, since until you pay it off, the bank can always take it away from you.

[MrTudo]

* Does anyone know that even Hong Kong celebrities like Jackie Chan (estimated to be worth over $100m - via movie productions, business interests and endorsement deals) are investing in American real estate? He is said to be corraling other moneyed Hong Kong celebrities and assorted glitterati into doing the same.


Yes and the reason why American real estate is popular around the world is you can OWN it. You cannot own land in China. You cannot own land in Asia. You can lease it. You can buy "land use" rights ( alleged rights) but you don't own the land.

There are no property rights in Asia.

China has started to make a change in their Constitution, however all one needs to do is read the communist manifesto to realize what can and cannot be done with regards to private owvership of land.

Furthermore, there's millions and millions of PREVIOUS landowners who have been ripped off by government in China, Vietnam who have never so much as had a day in court in order to argue the legal point that in fact their land was stolen from them "for the greater good of course heh", who will eventually get their day in court for those purposes and it will be an interesting scenario to hear the plumderer claim how the land belongs to them which they took at the point of a gun.

It will be many years before all that washes out.

In the meantime it's so much easier to invest in America and that's what smart people from around the world do. It's good for them and it's good for America. Now that property rights continue to Erode because of government regulations, seizures, property tax laws in America and that it becomes equalized with the lack of property rights elsewhere around the globe it will be interesting to see what happens over the medium to long term here.

Don't get me started on Asia heheh. My family owns a real estate business in Vietnam which primarily handles rentals and it's always an interesting conversation when a dreamer says "I'd like to buy a place on the beach" Ha!

[Shores9]

Originally Posted by Muggy

I'm done debating with people. Me and my cash are sitting this one out. Whether or not sales are up or down is irrelevant to me. I can afford a house and I am not going to buy one. Renting is a way better deal in Pinellas County right now.

Sounds like you’ve made a decision and I respect that. However for the sake of others who are reading that may not be in your situation I’d like to make a few points on the rent vs buy discussion.

Percentage of income going to housing payments are up in both the rental market (average 30%) and the homeowner’s market (average 34.5%). If you can save a significant amount on a monthly basis then it may make sense… but to stay on par with the housing market (in the event that you once again want to own) you will need to do a few things. 1 – the savings [by renting] should be enough to overcome the tax benefit of owning. 2 – The monthly savings plus whatever you have gained from you current sale (if any) needs to be put aside and actually saved. These monies need to be invested in a secure instrument with a return of about CPI +1-2%. If you CAN do this you may have a case for waiting it out.

Other considerations while you wait are 1- you relinquish one of the most important rights we have in our country “Homeownership”! The right to quiet enjoyment of ones own home to do with as they please (within the law) The old adage “A man’s home is his Castle” no longer applies to men and woman who choose renting over owning. You are subject to the terms and conditions of your lease (if you have one) and may not be assured of a renewal or may face a significant increase in rent. You basically have little rights! 2- The assumption is that the [housing market will further correct significantly downward, in which case if you held on to you money and invested wisely else ware you may actually come out ahead, however historical odds do not favor this argument.

Here’s a post from another board specifically about the housing bubble that started back on 10/3/2002. Yes the debate has been raging on since back then:

Oct 4, 2002 - I spoke to a friend the other day who kept telling me how my wife and I are missing out on the housing boom. This person was completely uneducated in the ways of the market. He just got lucky and bought a place five years ago in Southern California and has made a fortune. He tells me to buy now and I will be guaranteed to double my money in just a few years. I remember hearing that about the tech-market boom of '99 before the bottom fell out. When speculators begin the hype, that is when the end is near. My wife and I are gonna stash cash, and pad our credit ratings in the meantime.

Do you think this couple made out OK by renting. I hope he saved an awful lot in the process and I don’t think he’s buying [or even renting] today in So Cal!

Another comment I’d like to make for those who are reading and it’s not an attack on any one person or group just an observation. Much of the comments I hear are based on the perception that housing is too expensive. I agree to some extent but then I wonder how our parents and grandparents did it. It was not cheap or easy for them! Have we gotten lazy? Do we believe that for some reason we are entitled to something better for less? Here’s a quote from the same forum (as above).

Oct 12, 2006 I've got some advice and its simple. Work harder and smarter, and for 80 hours per week as you will double your income instantly. 40 hours a week is a fantasy dream that poor people subscribe to. Pool your money and share your first house with however many family members it takes to qualify. Buy a home a little further away from your job than you would like just to get it cheaper. Eventually development will catch up and then your next-generation family will live in the middle of everything. In 1972 my mom and dad bought an FHA house 50 miles from Chicago and that poor ******* commuted everyday for 20 years. Now their town is a major hub. Suck it up and quit crying, roll up your sleeves, and put your nose to the grindstone like every other immigrant family does.

To add my thoughts to the above quote: It seems that a lot of people in this country want but are not willing to work [harder for it]. If we don’t value homeownership and don’t fight for it then we will find ourselves at a loss to those that do and will.

[Shores9]

Originally Posted by MrTudo

* the reason why American real estate is popular around the world is you can OWN it.

Must be on the same frequency couldn’t agree more!

[josephhawkinson]

Some realtors feel differently about this housing bubble than the common one who denies its being to start with.

Here is one of those different realtors commenting about current housing crisis. It is HIS opinion and I know it is only one person but it just reinforces my and many people's view about the dire situation of the Housing Market.

This realtor is QUOTED by another writer and there is a link on that website if you want to check he is in fact a realtor. By the way he really is

http://safehaven.com/article-6109.htm

Kool Aid and Krispy Kremes
by Mike Shedlock


I asked Mike Morgan at Morgan Florida if he had an update for us.

Here it is. It is something quite different too.

Mike Morgan:

With so many "experts" out there singing the praises of the housing market, I think it is time for me to once again poke my head out. I had an email exchange this week with Jim Cramer, and it was hard to believe he is as bullish as he is. I hear from too many analysts and Wall Street gurus that don't take the time to get out of their offices and get on the front line here in Florida, as well as Arizona, Texas, California, Virginia, etc. I also hear from the analysts and hedge fund managers that are visiting the corporate offices of the big builders. Unfortunately, they're drinking the Cool Aid. It's potent stuff that clouds rational thinking and it is probably just what is needed to wash down a few hundred stale donuts.

Do you remember my analogy of housing to donuts? A year ago I said this was like the room of 1,000 donuts. Even if they are warm Krispy Kremes, how many can you eat? Three? Maybe four? And even if you come back the next day, and the donuts are now half price, how many can you eat? Same thing with housing. We only have so many people in the US. But builders built houses like donuts. They sold houses to non-users. They sold houses to the greedy masses that bought multiple houses to flip. Now we have the inventory, but there are not enough people to occupy these homes. Moreover, with interest rates rising and mortgages becoming tougher to obtain, we have less and less people that can buy these homes, even if they want to.

Since my recent article in Barron's, I have received dozens of calls from builders, bankers, buyers and investment groups perched like vultures. Let me give you a sampling of a few calls.

Public Builder - Called me to find them bulk buyers with the ability to buy out all remaining units in developments they cannot sell. They are willing to sell at cost. I told them they were about 10% over the current distress market, and they didn't even hesitate. They said, fine. Drop the price 10% and we'll pay a 5% commission to you. Just help us get rid of this inventory...

READ THE REST OF THE ARTICLE AT http://safehaven.com/article-6109.htm

[Shores9]

No doubt there’s excess inventory… that's what happens when people become paralyzed (blinded by the hype) and stop buying. Fortunately for most a house is not a stock and has utility. They can continue to live in it rather than sell. That leaves builders and investors.

The builders are all about inventory management, just like other major corporations! If cola is building up on the warehouse shelves then you’ll see a 2 liter sale for 99 cents or a prize promotion under the cap like tickets to a sporting event, builders are no different. They will “fire sale” their inventory with incentives and sales and then throttle back production. For most investors the game is over and they will leave the market (some licking their wounds)!!!

PS Do builders have an agenda? Sure thing! After 5 record years they are cash rich and as they offer guidance about future earnings making statements like “they may not have seen the bottom”….. they are quietly conspiring to purchase back their own stock at depressed prices. And BTW so what if they’re down 39% or so from last year…. let’s remember that last year the larger builders had revenues in the neighborhood of about 4 BILLION, 2.4 Billion for this year is still a GREAT number

Sorry, as fearful as I am about the downside possibilities and I know they could become a reality they are far from a sure thing. Until then I'd prefer to be on the optimistic side of the fence.

[shannon94]

[quote=Shores9;127667]No doubt there’s excess inventory… that's what happens when people become paralyzed (blinded by the hype) and stop buying. Fortunately for most a house is not a stock and has utility. They can continue to live in it rather than sell. That leaves builders and investors.


"Blinded by the hype and stop buying"...now thats funny. I think there's excess inventory because it has become U-N-A-F-F-O-R-D-A-B-L-E to a large percentage. And with all the foreclosures currently out there people obviously "bought blindly".