The insanity almost feels like 2007! (Miami: middle-class, rent, condos)

[JacobMAX]

Originally Posted by tallrick

The cash is largely from banks and hedge funds who benefited from the free money from the Fed. The foreign money is also from fed money printed and sent overseas. With local incomes stagnant and more supply of rental units on the market rents will have to fall. Another bubble burst is in the future.

^^^ That, definitely agreed.

[Vai Frente]

Originally Posted by Sugah Ray

Add Brazilians, south american drug money, european investment and maybe that's it. For sure it's not blacks or anglos moving back to Dade.

It makes no sense for property values to go up when the salaries have not improved and unemployment is still high. Miami will crash again because investors will eventually stop flipping, the roaches and dust who live in those empty condos don't boost the economy, and the locals can't make a 3k mortgage payment on a 50k household income. Next time we might not be as lucky and we might become the next Detroit if residents start moving to other states where their salary can actually cover their mortgage payment.

Spot on post !!

[Vai Frente]

Originally Posted by tallrick

The cash is largely from banks and hedge funds who benefited from the free money from the Fed. The foreign money is also from fed money printed and sent overseas. With local incomes stagnant and more supply of rental units on the market rents will have to fall. Another bubble burst is in the future.

Unfortunately you may be right.

[relocatingresearcher]

I am straight out of Kentucky....well, the city version. Relocating to Venezuela...i mean...Miami. So that's one for the states. PS Alex takes great food pics...see 5 favorite restaurants topic.

[gaash2]

Get used to it .. real estate is going higher, A LOT higher. This move has been driven by cash buyers who are parking money for the longer term, not buying to flip. Just wait until buyers with mortgages come in and a larger percentage of the investors are flippers not buy to rent. Then we can start talking about a bubble. Until then, prices are going higher, and I think by a lot. I believe most better quality assets will be above their 06/07 peaks within the next 3-5yrs, some considerably higher. Interest rates are very low and the duration on real estate assets is extremely high = much higher valuations for similar if not better excess return to treasuries than in 2006/7.

[tallrick]

Originally Posted by gaash2

Get used to it .. real estate is going higher, A LOT higher. This move has been driven by cash buyers who are parking money for the longer term, not buying to flip. Just wait until buyers with mortgages come in and a larger percentage of the investors are flippers not buy to rent. Then we can start talking about a bubble. Until then, prices are going higher, and I think by a lot. I believe most better quality assets will be above their 06/07 peaks within the next 3-5yrs, some considerably higher. Interest rates are very low and the duration on real estate assets is extremely high = much higher valuations for similar if not better excess return to treasuries than in 2006/7.

As long as the Fed pumps 2 billion a day in funny money the bobble keeps inflating. Yet this will not go on forever. Unlike gold real estate loses 2% or more per year in property taxes, Only a total fool will buy overinflated properties, cash or not to lose money. Quantitative easing will end when the rest of the world gives the finger to the out of control US deficit. In 5 years you will see that prices will be LOWER than they are today. Bet your portfolio on it.

[gaash2]

Originally Posted by tallrick

As long as the Fed pumps 2 billion a day in funny money the bobble keeps inflating. Yet this will not go on forever. Unlike gold real estate loses 2% or more per year in property taxes, Only a total fool will buy overinflated properties, cash or not to lose money. Quantitative easing will end when the rest of the world gives the finger to the out of control US deficit. In 5 years you will see that prices will be LOWER than they are today. Bet your portfolio on it.

Real Estate loses money? Ever heard of renting it out? Gold? LOL. Why would I buy real asset that is up 5 fold since 2001 with no use when I can buy a useful one (real estate) at close to 2001 prices in cities whose populations are up 5,10,20+%??? I would wager in 5yrs, not only will real estate prices be higher, they will be MUCH higher. Japan printed money for going on 20 years now and they still have no inflation; money printing can last longer than you think and lead to much less inflation than you think and much much further down the road than you think. Do you know how much wealth was destroyed from real estate alone since 2006/2007? Something like 8 trillion dollars. The fed has hardly printed a third of that much.

[Vai Frente]

So what's the bottom line ?

[tallrick]

Steve Forbes: Bernanke Distorting Whole Market - YouTube

[tallrick]

Originally Posted by gaash2

Real Estate loses money? Ever heard of renting it out? Gold? LOL. Why would I buy real asset that is up 5 fold since 2001 with no use when I can buy a useful one (real estate) at close to 2001 prices in cities whose populations are up 5,10,20+%??? I would wager in 5yrs, not only will real estate prices be higher, they will be MUCH higher. Japan printed money for going on 20 years now and they still have no inflation; money printing can last longer than you think and lead to much less inflation than you think and much much further down the road than you think. Do you know how much wealth was destroyed from real estate alone since 2006/2007? Something like 8 trillion dollars. The fed has hardly printed a third of that much.

With a weaker dollar comes high oil, food and other commodity prices. A globalizing world suppresses wages. Where, pray tell will these cash strapped workers get the money for the inflated rents? There will come a time when people tire of piling 10 to an apartment. The money printing in the US could last longer, but it has done tremendous damage to the economy and vastly increased the divide between the wealthy and the worker. On top of Fed funny money is 10-20 times fractional reserve bank credit being poured into developments, shopping centers and other nonproductive assets. This is all just more debt. Bonds are so grossly overpriced that only the Fed will buy them. Their balance sheet is huge and what happens when people lose faith in helicopter ben? The bond market crashes, debt loads increase and the leveraged real estate market implodes. Japan had a high savings rate, we have none. In 2008 the economy was trying hard to rebalance and Ben set out to sabotage it. I predicted a new bubble in Miami in 2010. I just sold my last rental property and so have my friends. Real estate is a horrible investment now and my advice is to avoid it unless you can find properties priced 3 times median incomes or less.