Bubble, bubble, how long will this one last? (Miami, Tampa: 2014, foreclosure)

[tallrick]

Originally Posted by CHASLS2

Got us in a mess we won't ever get out of in our lifetimes. Think home prices are bad elsewhere then try West Pasco county FL. Homes are sitting at under 25k and no one will touch them.

That must be a high crime area with homes and no land around them. If a home really was worth less than 25K it would be free living as there would be no property tax. You have not seen that in the Miami fantasy land....YET!

[LKJ1988]

Originally Posted by tallrick

That must be a high crime area with homes and no land around them. If a home really was worth less than 25K it would be free living as there would be no property tax. You have not seen that in the Miami fantasy land....YET!

Most of west Pasco is small 2bedroom homes with a very few big homes on the gulf. Even what very few big homes on the gulf that were going for $600k+ are now sitting at less than 250k. This is a very high crime area as most the homes are rented out. This area is about the worst drugs crime area you will find. Plus Ins cost on the bigger homes can top over 16k a year for HOI, thanks to sinkhole and wind.

[seain dublin]

Originally Posted by doggiebus

^^^I agree, not every American is meant to be a homeowner. Bush wanted every American to be a home owner and look where that got us...

Exactly. I have former neighbors(they went into foreclosure) who told me they knew when they got house they couldn't afford it(they also got a new SUV included in the mortgage).

The house sat vacant and now has renters who seem to entertain a lot.

The problem is the street is not designed for parked cars, but they don't seem to care.

[seain dublin]

Originally Posted by boxus

20% really never made sense to me, still does not. Financially speaking, it is a pointless number that no one knows where exactly it came from. Why not 18%? Or 23% Even just due to this it make no sense.

So, if someone puts up 20% on a $200k house, that is some how better than the same person taking out a $150k loan without a 20% down? From a financial stand point, the 20% in this scenario makes no sense. A person is no more willing to attempt to make payments with 20% invested as they are without. That 20% is sunk costs, so in any event, everything that occurs after in not pending what happened before; as in the 20% down is not going make someone feel more obligated to make a house payment.

Because having at least 20% shows they're somewhat serious and have some financial responsibility.

There used to a show on one those cable channels that was about new home ownership. This was about 2 yrs ago.

Most of it was done in Las Vegas. They had people not only buying houses with zero down, but they were also charging all their furniture.

They showed one who was in her 20s a dental hygenist making 35K a year buying a house with nothing down. I guarantee you she went into foreclosure.

By someone putting a decent percentage of their own money vs. financing the whole thing they're less inclined to walk away so easily.

It's just like buying a car. Someone who financed the whole thing is less concerned about a car being repossed vs. someone who put down $3,000 for the new car.

The one who put down $3,000 is going to make more of an effort to get that car payment paid.

[Dakster]

I agree seain dublin... Putting some of your own hard earned money in on the deal makes you think twice before you just "walk away".

The real crisis brewing is insurance. That is starting to become another mortgage payment.

[boxus]

Sunk costs do not stop anyone from walking away. It does not stop people, and it does not stop businesses. It is a cost that is unrecoverable. If being out in the street or crammed into a one room apartment with your credit destroyed is not motivation enough, then sunk costs surely is not. While there are strategic defaults, these are rare relative to the amount of foreclosures. Many rather keep their house, but without a job or employment that paid as much as when they got these house, no amount of motivation is going to replace the money they need each month to make the payment.

The 20% is just a number that came from who knows where. Again, why not 18%? or 23%? Because financially, no one can explain it because it does not make sense, it goes off of emotions only.

The 20% should only play into the interest rates, with the most favorable rates going to a person who makes the 20% down. This makes much more sense financially as banks would have less risk on the loan knowing they have 20% worth of the property already. A proposal similiar to this but more complicated with ragrds to invest by the banks is on the books (last I heard at least).

Now, I am all for the 20% rule personally, I wish it was mandatory. With people needing to put 20% down, house prices would drop like a rock. 20% to me is no problem to save, but to many people it is (look at the savings rate average). With this, house prices would have to drop in order to sell if people need 20% down. That means the type and location of the housing I really want would be even cheaper for me.

People with great credit can already get a personal loan to cover much of the down payment costs, so it is not an issue for people who have low savings, but good income and credit.

This is not even getting into wage rates, ect, since the 20% item came out many moons ago.

[boxus]

Originally Posted by Dakster

I agree seain dublin... Putting some of your own hard earned money in on the deal makes you think twice before you just "walk away".

The real crisis brewing is insurance. That is starting to become another mortgage payment.

Yea, insurance and property taxes are the two items keeping me from purchasing a home in Miami. I still have not decided if it is even worth it. Though the place is great, it is hard to justify the costs of those items, at least with my present income.

I can relocate to the Raleigh NC area and get twice the housing for half the price, with only a 15% drop in income. So those factors are in my mind before I fork out money for a place in Miami. Not that I ma a huge fan of NC over Miami, but it makes more financial sense to me in the long run with factoring in the positives versus the negatives.

If insurance and property taxes were not so high, I would have bought a house a year ago.

[doggiebus]

Location, Location, Location is my rule of thumb. You pay more to live where more people want to live. Yes you will be able to get more for your money in North Carolina, but after knowing friends and family that have lived in Manhattan. I have learned that living in a huge place isn't worth it. More people are now moving back to the cities because they have realized having this big house in the suburbs isn't all that important compared to the location. If you ever wanted to buy in Miami, now is the time to do it.

[boxus]

I am not meaning a huge place, I do not even want a place past around 1300-1500 sq ft. But here is my personal example; my friend in NC bought a decent house (small but three bed) on ten acres outside of Raleigh for $150k, he drives 45 minutes into Raleigh for work. There is not a house anywhere in this area that comes close that is in a decent neighborhood, let alone ten acres with it.

Now, I am faced with a decision; love Miami but property prices here are a big detractor from me wanting to stay long term. Transferring to Raleigh would net me a 15% drop in income, but the housing prices would be even cheaper, let alone taxes (except state income) and insurance.

It is still a debate about it, I am looking for every reason to stay in Miami, but economically speaking, it just does not make sense to me to invest long term in the place with my current income.

If money was no object, then no problem. But I feel stupid forking out so much money for a place, then visiting someone who has a heck of a lot better place at half the income and price as I do. Some days Miami is worth it, some days it is not.

[Wild Style]

Originally Posted by doggiebus

^^^I agree, not every American is meant to be a homeowner. Bush wanted every American to be a home owner and look where that got us...

you can't blame bush. That was actually Alan Greenspan's pet project. May his days be filled with pot holes and speeding tickets.