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So in other words using numbers,lets say for instant that the median income is 50,000,that means that people could afford a 175,000,which is 3.5 times the median income. Where in Miami can you find a decent home for that price?
I don't know miami prices to be honest. I have not been following down there so much. I do know some of those condos downtown went for 150,000 to 175,000 in a fire sale last November. Also just to correct you, its 2.5 to 3.5 you also have to factor in how much debt you have, know what I mean? Anyway, the prices are still falling, you are going to have to be patient. Housing bubbles take a LONG time to correct. The one that happened in the NE took a good little while to correct. You are fighting against ignorant home salers. They have to be willing to lower their prices, to reflect local incomes. That is not going to happen until they get desperate and then they realize (oh wait, maybe my price is to high). Once that reality sets in, then they will start lowering quicker. As unemployment down here rises. As people start defaulting on their loans, then you will start this start to pick up even quicker. What you need to do right now is keep saving up and be ready to pounce when the time is right. Find a neighborhood you like, make sure the median income in that area matches your range and just watch. When its time, pounce.
Good thing is (well not really good) but even people with fixed mortgages over extended themselves with second and sometimes third mortgages. They were up to their eyeballs in all sorts of debt. Man of those people are a pay check away from disaster. So, they are adding to the subprime and alt a loan debacle. This is the worse housing mess since the great depression. So, just be wait, deals will be there. You also have to pay close attention to where you buy. You don't want to buy into a place that might become a ghost town or den for squatters.
I don't know miami prices to be honest. I have not been following down there so much. I do know some of those condos downtown went for 150,000 to 175,000 in a fire sale last November. Also just to correct you, its 2.5 to 3.5 you also have to factor in how much debt you have, know what I mean? Anyway, the prices are still falling, you are going to have to be patient. Housing bubbles take a LONG time to correct. The one that happened in the NE took a good little while to correct. You are fighting against ignorant home salers. They have to be willing to lower their prices, to reflect local incomes. That is not going to happen until they get desperate and then they realize (oh wait, maybe my price is to high). Once that reality sets in, then they will start lowering quicker. As unemployment down here rises. As people start defaulting on their loans, then you will start this start to pick up even quicker. What you need to do right now is keep saving up and be ready to pounce when the time is right. Find a neighborhood you like, make sure the median income in that area matches your range and just watch. When its time, pounce.
Wouldn't it be nice if it was like the stock market -- a quantifiable formula to plug in the value of a stock vs the price?
Well, at the end of the day, a stock is still 'worth' whatever someone is willing to pay for it! Same with property.
There other issues that go into home values besides income ratios, rental vs home ownership costs, percentage of previous ownership in area, etc.
Prices probably will down further yes. But WHERE? CGables? Hialeah? Miramar? Everywhere? A little or a lot?
Prices got ahead of themselves everywhere, but I would check out latest sale numbers in the specific area your thinking of as another part of the great "equation," see what is moving, how many properties for sale vs historicals, etc. Personally, I believe in "better" areas, prices are beginning to stabilize. People with better credit can still get mortgages and these people tend to be established, working longer and hence have the higher salaries needed to afford more expensive homes. AGAIN, you can verify this by checking the property sale numbers yourself. Making an informed decision is much better than taking the advice of some guy (or guys) on some message board.
Good luck!
Last edited by planetsurf; 07-20-2008 at 09:27 AM..
People should not be speculating on real estate. I would rather speculate on something that could develop into a source of income, like "alternative" energy or manufacturing instead of the money pit called real estate. Miami has no real production, it depends on the whims of wealthy outside investors. Too much risk and loss for my taste.
Just a note regarding the magical "formula" of where home prices are "supposed to be."
I think the "formula" is a bit better indicator of what YOU can afford, and not a reflection of what home prices will do or should be in an area. Case in point: Palm Beach Island, where the average median home price is in the millions, and the average median income is around 100k/year.
Just a note regarding the magical "formula" of where home prices are "supposed to be."
I think the "formula" is a bit better indicator of what YOU can afford, and not a reflection of what home prices will do or should be in an area. Case in point: Palm Beach Island, where the average median home price is in the millions, and the average median income is around 100k/year.
Same with New York City.
Location location location folks.
again, nope. NYC has had a housing bubble and it is now collapsing Sales are down in Brooklyn by 68% and the same goes for much of the city. Those prices are correcting. People should do research before trying to disprove facts.
again, nope. NYC has had a housing bubble and it is now collapsing Sales are down in Brooklyn by 68% and the same goes for much of the city. Those prices are correcting. People should do research before trying to disprove facts.
When I say, "New York City," in a post that clearly refers to the importance of "location," I thought it ws fairly obvious I was talking about somewhere desirable to live in New York City. In other words, Manhattan. Not "borough."
Manhattan Condo Sales:
Jun 2007 - May 2008 - Jun 2008 - 1 year change - 1 month
Total Sales 748 599 666 -11% +11%
Volume $1,196 mil $1,084 mil $1,199 mil 0% +11%
Avg Price $1,599,171 $1,810,074 $1,800,807 +13% -1%
Avg sf 1,196 sf 1,203 sf 1,285 sf +7% +7%
Avg $/sf $1,247 $1,383 $1,313 +5% -5%
And, the prices for the ENTIRE "New York" market, as a whole, are stabilized and mostly unchanged:
Regardless, you've missed the point. The median price for a condo in Manhattan remains high above 3x the average Manhattan salary of roughly $125k. Why? I'll let you do some "research" to figure that one out.
You're delusional if you think home prices in Manhattan will EVER fall to $375k "average". Similarly, homes on Palm Beach are NOT going to come down to $400k to mirror the official "median income" stats for the town. And that is precisely the point. Use the 3x income guide to decide what YOU can afford, not to where the market will necessarily correct. THAT is a lazy man's answer. Research your particular market thoroughly if you're timing the "bottom."
After all, in most desirable areas, anyone with significant assets, income, and/or tax burden will realize a federal income tax write-off potential of property tax and mortgage interest to offset or exceed savings or value reductions within a few years of owning, even in a "falling" market.
When I say, "New York City," in a post that clearly refers to the importance of "location," I thought it ws fairly obvious I was talking about somewhere desirable to live in New York City. In other words, Manhattan. Not "borough."
Manhattan Condo Sales:
Jun 2007 - May 2008 - Jun 2008 - 1 year change - 1 month
Total Sales 748 599 666 -11% +11%
Volume $1,196 mil $1,084 mil $1,199 mil 0% +11%
Avg Price $1,599,171 $1,810,074 $1,800,807 +13% -1%
Avg sf 1,196 sf 1,203 sf 1,285 sf +7% +7%
Avg $/sf $1,247 $1,383 $1,313 +5% -5%
And, the prices for the ENTIRE "New York" market, as a whole, are stabilized and mostly unchanged:
Regardless, you've missed the point. The median price for a condo in Manhattan remains high above 3x the average Manhattan salary of roughly $125k. Why? I'll let you do some "research" to figure that one out.
You're delusional if you think home prices in Manhattan will EVER fall to $375k "average". Similarly, homes on Palm Beach are NOT going to come down to $400k to mirror the official "median income" stats for the town. And that is precisely the point. Use the 3x income guide to decide what YOU can afford, not to where the market will necessarily correct. THAT is a lazy man's answer. Research your particular market thoroughly if you're timing the "bottom."
After all, in most desirable areas, anyone with significant assets, income, and/or tax burden will realize a federal income tax write-off potential of property tax and mortgage interest to offset or exceed savings or value reductions within a few years of owning, even in a "falling" market.
Let me educate you. I am from NYC born and raised my friend. Now for those of us originally from NYC or who are older enough to know what we are talking about, remember what happened in the 80s/90s link
As for Brooklyn not being desirable and only Manhattan being desirable as you absurdly tried to state. I can only assume you must not originally be from NYC or know absolutly nothing about whats going on in Bk right now. Go research Park Slope, Crown Heights, Brooklyn Heights, Clinton Hill.... I am going to stop there. Again research before you start trying to disprove things. Quick 10 minute google searches aint gonna cut it brother.
Quote:
A rash of price reductions now skitters across the columns of the New York Times real-estate classifieds, testament to diminished expectations. "We have dramatically reduced the price of this 1BR in prime West Village," blares an e-mail from a broker for a small, light-filled apartment at 295 West 11th St., not far from the chic Meatpacking District.
NYC is not immune, sales are down, prices are falling in some boroughs and beginning to show weakness in others. That is how this works, EVERY TIME IT HAPPENS. sales slow, people get desperate and then prices drop. NYC is about a year to 2 yrs behind the Miami market and it is showing the exact same signs Miami did in its beginning. Again do research. No place can sustain prices that are above the local economies ability to pay, period. They said all these magical Europeans were going to come in and buy up everything. Odd how that is not happening. If it were, sales would not be down so dramatically across the city. We haven't even seen the Alt As reset yet which is coming.
As I said to the other person, just do some research. Best place to start is searching through my post. Posted a great article from NPR that chronicles the housing mess in NYC. Or not, your choice.
Quote:
South Florida's housing picture remains as muddled as ever.
A lingering decline in existing home sales across Palm Beach County eased in April after another round of price cuts, but that trend didn't continue into May.
The county had 702 sales last month, off 5 percent from a year ago, the Florida Association of Realtors said Thursday. The median price of $330,900 was down 15 percent from last May's $387,800.
If I wanted a teacher that "missed the point" I would study constitutional law under Barack Obama.
Now, let's get back to fundamentals, since you have now responded TWICE to my posts, and have managed to completely ignore or miss the point.
If it is true that housing prices will "correct" back until they are inline with 3X median income, then that means you are stating that Manhattan, with its 1 million dollar median home price, will "correct" to approximately 375K?
Are you prepared to say that? To tell prospective buyers to ride out the "bottom" until the market reaches that point? Are you prepared to say that Palm Beach Island will see a drop to $400k median home price at the end of the bubble?
Address the issue: Not every area follows "the fundamentals." Some areas will, and a variety of OTHER FACTORS besides the LAZY "3x median incomes" standard must be used, unless you're only interested in "work force housing."
If you live in a community where the average income is 50k/year, and you make $100k/year, what good will waiting until average home prices hit $150k/year mean when you are probably looking at homes in an entirely different price point/situation?
Indeed, what good does "3X the median income" mean when most people FINANCE their homes, and a $100k home at 10% costs as much "per month" as a $200k home at 5%? If interest rates shot up tomorrow to 10%, home prices would fall, but would those homes be "affordable" at prevailing interest rates? No.
It's one thing to say that home prices have to come more in line with what people in a community can afford. That's a given. It's quite another to rely on the "magic formula" as a hard and fast rule without nuance, because every community is different.
THAT was the point, "brother."
(Btw, I'm not going to partake in your pissing match/inferority complex regarding the "desirability" of Brooklyn vs. Manhattan. It appears it's a sore spot for you "New York natives" and I just don't care).
anyone who thinks FL real estate is going to stop falling and rebound in the next few years is smoking crack, in my opinion
when I first moved here, people said prices wouldn't drop in key west, cuz there isn't anymore land, but here it is prices falling like stone with no end in sight
Manhattan condos/co-ops should go lower pretty soon because of recent financial services industry woes. Those condo/co-op prices are largely driven by bonuses paid out by Goldman, Lehman, Merrill, etc.
However the condo/co-op prices in Manhattan will probably never be in line with 3x median income in the neighborhood. They will always be higher because the price only has to be accomodated by the median income of NEW buyers. Not everyone in the neighborhood has to make that amount. Some people in my old neighborhood (East 50s, Sutton Place) have been there for decades and would never be able to move there today with their income. Market prices are determined at the margin.
I think this same effect exists in Miami, but probably not as pronounced as NYC.
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