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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.
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.
would you drive a car looking in the rear view mirror ?
no one one know the future .
the only thing that happens more often then not is history never repeats exactly the same way twice .
we will always have crashes and downturns but what triggers them and what would be a good plan changes each time and what you planned around based on last time ends up fighting the last war and not the current one
That is correct, but there are some fundamental things that don't change.
And one of them is that price of real estate depends on its affordability and currently in that particular area the affordability approximately twice is better than at the top of the previous bubble.
Of course, no one should expect to know where the bottom is or will be and how the current economy is going to affect the markets, but at least if I know that I am buying a condo at 50% discount from the top, my downside is much less than it could've been.
"Timing the market" is a fool's game. If you want a condo, then buy one.
One thing we can agree on, is that all markets are "cyclical." If you think it's a good time to buy, then buy. Is this condo your primary residence, or just a toy? If you need a place to live, then I'd say get something sooner, rather than later. Pundits are speculating that interest rates are going to begin moving upwards over the course of the next 4 years. We'll know for sure, on year 5...
Do not forget Annual Dues (Regime Fee) and look closely at any Special Assessments they may have had. Fees can vary quite a bit and being dependent on one gets for them, they might not be as costly as they sound. Look closely at Reserve Funds and Delinquencies.
"Timing the market" is a fool's game. If you want a condo, then buy one.
One thing we can agree on, is that all markets are "cyclical." If you think it's a good time to buy, then buy. Is this condo your primary residence, or just a toy? If you need a place to live, then I'd say get something sooner, rather than later. Pundits are speculating that interest rates are going to begin moving upwards over the course of the next 4 years. We'll know for sure, on year 5...
That is the problem that I don't know if time is right or not. Sometimes timing is not that hard: for example I was pretty much sure in 2006-07 that the prices will collapse. Just anecdotal evidence when a cleaning lady at my job bought a house and my neighbor was investing in property in Florida without even seeing it.
But this time around , the timing is hard with so many moving parts (money printing, pending deliquiates, people working remotely and moving to cheaper states like Florida, etc). That is why I wanted some other opinion.
Our ideal condo would cost around $600K right now and that is a little to high for our budget considering uncertain economy and pending delinquencies. And buying something cheaper and smaller - only to move again in the future doesn't make much sense. We could rent for a year or two , but on another hand I am afraid the money printing will cause everyone to get out of cash and invest in anything that would appreciate when inflation hits.
One factor that I didn't see was taxes. The sooner/cheaper you get a place, the lower your tax base should be. Right now, that might not be a big deal, but think about when you're on a "fixed income" down the line. That tax bill may be a monster by then, no matter where you live. This is one reason I tell people to "Keep one place you've bought if the taxes are low." You can always buy/sell subsequent properties. The last thing you want to be saddled with, is a $18,000 a year property tax bill...
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.
One factor that I didn't see was taxes. The sooner/cheaper you get a place, the lower your tax base should be. Right now, that might not be a big deal, but think about when you're on a "fixed income" down the line. That tax bill may be a monster by then, no matter where you live. This is one reason I tell people to "Keep one place you've bought if the taxes are low." You can always buy/sell subsequent properties. The last thing you want to be saddled with, is a $18,000 a year property tax bill...
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?
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