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Interest rates are at historic lows. Florida has no state income tax so it’s high odds that the homestead property tax cap currently at 1.9% isn’t sustainable. If interest rates go up and property taxes go up, property prices tumble in any market where real estate isn’t scarce. A condo in Miami isn’t scarce. Insurance also keeps going up. Another impact on prices.
Scarcity is a relative thing. Today you have 1000 buyers and 10000 condos for sale and you think there are plenty condos around to satisfy buyers for the next 10 years. But what if tomorrow 20,000 buyers arrive?
Or 200,000 buyers?
I believe that current work from home thing is going to take hold. Which means millions of people will be free to move to another state. So in the past only retirees could move to Florida and now you add working people can do the same. And many of them would want to live in a warm state with access to an ocean 12 months a year. There are not many places like this in the USA where you can swim in the ocean all year round.
Only South FL comes to mind.
So that current condo glut of 10,000 properties (or whatever the number is) is nothing comparing to the number of people who might be coming in the next several years.
Maybe that influx of people will bring more tax revenues to the state so they won't have to raise taxes.
I am looking to buy a condo apartment in Miami area.
The prices are down somewhat in the past several years but I am reading articles that predict another crash.
Of course, anything can happen but it seems to me the prices currently are way down since the top if we consider the mortgage rates went down.
So I compared mortgage payments today vs the 2006 (high of the bubble) and 2010-11 (the bottom) in Miami area. I am taking historical sales prices for condos similar to the one I am looking to buy so I pretty much know what that particular apartment was valued in the past years.
So the same apartment that is currently requires $1600 monthly mortgage payment required $3000 in monthly payments in 2006. And at the bottom in 2011 the buyer would only pay $1100.
Including inflation, the $1100 in 2011 dollars would be approximately $1300 right now. (Bottom)
Including inflation, the $3000 in 2006 dollars would be approximately $3600 right now (Top)
Can we say the current prices if judging in mortgage payments ($1600) are pretty much close to the prices at the bottom of the previous cycle (adjusted $1300) and down 60% from the top (adjusted $3500)?
And if we assume that the crash in 2010-12 was very bad, can we say that buying right now is pretty much a safe bet?
Thanks.
You looking for a home or an investment?
Quote:
Originally Posted by GeoffD
Interest rates are at historic lows. Florida has no state income tax so it’s high odds that the homestead property tax cap currently at 1.9% isn’t sustainable. If interest rates go up and property taxes go up, property prices tumble in any market where real estate isn’t scarce. A condo in Miami isn’t scarce. Insurance also keeps going up. Another impact on prices.
Good god, not this BS again; you from the northeast or something? because only those from up there always talking like this, the decade after decade of "doom and gloom" regarding Florida and its taxes, yet they (those from the NE) are living in fiscal basket cases.
Quote:
Originally Posted by Banbuk77
I thought that FL property taxes are based on the current estimate not on the purchase price. So if the value of the property goes up - the taxes go up as well regardless of how much you paid for it.
Am I wrong?
Correct, based on current assessment.
Quote:
Originally Posted by Banbuk77
Scarcity is a relative thing. Today you have 1000 buyers and 10000 condos for sale and you think there are plenty condos around to satisfy buyers for the next 10 years. But what if tomorrow 20,000 buyers arrive?
Or 200,000 buyers?
I believe that current work from home thing is going to take hold. Which means millions of people will be free to move to another state. So in the past only retirees could move to Florida and now you add working people can do the same. And many of them would want to live in a warm state with access to an ocean 12 months a year. There are not many places like this in the USA where you can swim in the ocean all year round.
Only South FL comes to mind.
So that current condo glut of 10,000 properties (or whatever the number is) is nothing comparing to the number of people who might be coming in the next several years.
Maybe that influx of people will bring more tax revenues to the state so they won't have to raise taxes.
There should be an excess of condos in Miami, they been building them like crazy over the last 10 years. I would be very surprise if there was still a supply constraint after all the building they been doing. They been purposely building to up the inventory because demand has been high.
Real estate has two values: the flipper value and the real value. The flipper value will change depending on market conditions. The real value never changes - it's always a place to sleep and keep your stuff. The people who got burned in 2008 either lost their jobs and were foreclosed, or freaked out and sold at the bottom. There was even "jingle mail," where people mailed keys to the bank and walked, because on paper they were upside down on their mortgage.
If you're a flipper, it's a gamble. Your guess is as good as mine. If you are contracting for a place to live, your mortgage payment locks in your housing cost no matter what inflation does. Condo fees and property taxes can rise, of course. If it meets your housing needs at an affordable price, go for it.
I am looking to buy a condo apartment in Miami area.
The prices are down somewhat in the past several years but I am reading articles that predict another crash.
Of course, anything can happen but it seems to me the prices currently are way down since the top if we consider the mortgage rates went down.
So I compared mortgage payments today vs the 2006 (high of the bubble) and 2010-11 (the bottom) in Miami area. I am taking historical sales prices for condos similar to the one I am looking to buy so I pretty much know what that particular apartment was valued in the past years.
So the same apartment that is currently requires $1600 monthly mortgage payment required $3000 in monthly payments in 2006. And at the bottom in 2011 the buyer would only pay $1100.
Including inflation, the $1100 in 2011 dollars would be approximately $1300 right now. (Bottom)
Including inflation, the $3000 in 2006 dollars would be approximately $3600 right now (Top)
Can we say the current prices if judging in mortgage payments ($1600) are pretty much close to the prices at the bottom of the previous cycle (adjusted $1300) and down 60% from the top (adjusted $3500)?
And if we assume that the crash in 2010-12 was very bad, can we say that buying right now is pretty much a safe bet?
Thanks.
The mortgage is only a small part.
A Miami condo for $400K as a 2/2 will have close to a $1000 a month for the HOA. Your taxes as a second home will be $600 a month. So you can add an additional $1600 a month on to the price.
Real estate has two values: the flipper value and the real value. The flipper value will change depending on market conditions. The real value never changes - it's always a place to sleep and keep your stuff. The people who got burned in 2008 either lost their jobs and were foreclosed, or freaked out and sold at the bottom. There was even "jingle mail," where people mailed keys to the bank and walked, because on paper they were upside down on their mortgage.
If you're a flipper, it's a gamble. Your guess is as good as mine. If you are contracting for a place to live, your mortgage payment locks in your housing cost no matter what inflation does. Condo fees and property taxes can rise, of course. If it meets your housing needs at an affordable price, go for it.
It would a place to live, but since I am still working - anything can happen and who knows maybe I will be forced to move to another state in search for a job. In which case, I don't want to be upside down on a mortgage if the prices went down (assuming the rates are the same) or if I have to rent it - the rent won't cover the mortgage payments.
I don't get this idea that if you are buying something for yourself - you shouldn't care for the price as long as you can afford it. I can afford $100K car but that doesn't mean I should buy a car that is currently worth $50K.
Rates are low, prices are high. Long shot odds of nailing both a low rate and a low price.
That is true when everything else is being equal.
What I am afraid might happen is inflation becomes visible and rates start inching up and people might start chasing hard assets. So rates will be going up and prices will be going up.
And Miami situation is unique since a lot of foreigners are buying there and with inflation dollar would go down and making Miami RE more affordable for the foreigners.
I thought that FL property taxes are based on the current estimate not on the purchase price. So if the value of the property goes up - the taxes go up as well regardless of how much you paid for it.
Am I wrong?
No, that's not quite correct. When you purchase your condo, your property taxes will be set at that time. However after that, your taxes can only increase a maximum of 3% annually (currently it is less than 2%) due to something called "Save Our Homes." The Save Our Homes property tax cap is an amendment to the Florida constitution that limits the annual increase in the tax assessment of homestead property to a maximum of 3% of the prior year’s assessment. If the CPI is lower than 3% in any given year, then the max is set at the change in CPI for that year.
Please note that this only pertains to purchases that serve as someone's primary residence. It is not applicable to second or vacation homes.
I thought that FL property taxes are based on the current estimate not on the purchase price. So if the value of the property goes up - the taxes go up as well regardless of how much you paid for it.
Am I wrong?
For Florida specifically, you are correct.
For the other 49 States (and territories) it may not be so. Other readers may want to research this.
My point was to emphasize the importance of taxes, as we age, and our capability of earning vast amounts of cash, becoming diminished.
Most of my posts are created for the purpose to incite thought. Not just necessarily the OP, but all who read it.
It would a place to live, but since I am still working - anything can happen and who knows maybe I will be forced to move to another state in search for a job. In which case, I don't want to be upside down on a mortgage if the prices went down (assuming the rates are the same) or if I have to rent it - the rent won't cover the mortgage payments.
I don't get this idea that if you are buying something for yourself - you shouldn't care for the price as long as you can afford it. I can afford $100K car but that doesn't mean I should buy a car that is currently worth $50K.
Have you ever been a landlord? You can amortize the cost of property, and deduct any operating expense, like condo fees. Talk to a tax accountant if you are thinking of converting a home to a rental. You may be surprised at the bottom line.
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