Is Tampa Bay in housing bubble? (Orlando, Melbourne: renters, co-op, refinancing)

[EngGirl]

Originally Posted by Pragmaticus

I know you won't be able to back up your claim.

This is what you said.....



And I break it down to you and the other poster that those who rent for $1400/month won't be able to afford $300K and $350K houses as you two imply to indicate. Now you agree that probably those who are paying $2500/month are the ones who would afford that. Great U -Turn

These are in Land O lakes, off SR 54 pretty close to Wesley Chapel:
2326 Via Bella Blvd, Land O Lakes - $2900 a month
24154 San Giovanni Dr, Land O Lakes - 2600 a months


You can buy similar homes for $300K-350K


20425 Walnut Grove Ln, Tampa - $2875 a month, right off County Line Rd which is pretty much Wesley Chapel


27954 Wild Sienna Look, Wesley Chapel - $2650 a month


I am good with math and can estimate needed down payment so the total monthly expenses will be equal to average rental prices. I just don't want to go over "people have no money for downpayment" again...


If $300K-$350K is so unaffordable, why we see so many houses being built and sold?

[EngGirl]

Just looked into MLS and spotted:
5 listing of houses/townhouses for rent in Wesley Chapel for $1400 and under.
10 house for rent for $1400-1700
9 houses for rent for $1700-$2500
1 house for rent for $2500+


To make it fair, I was searching for 3bed/2bath/1 car garage as a bare minimum


The average price to rent a house/townhouse in Wesley Chapel is $1750... just saying...

[Pragmaticus]

Originally Posted by bobandsherry

Just to interject, you fail to recognize two key components of home ownership.

First, there are tax benefits applicable to home mortgage interest and taxes. Hard to calculate specifically as tax payer status, income bracket/tax rate, other allowed deductions, etc. are going to vary. But there is a real and tangible benefit. May only be $40/month, could be $150/month.

More importantly, you fail to recognize that a portion of the payment is also going towards paying down the principal. On a $300K mortgage at 3.75% rate that's more than $450/month. If there is NO appreciation (and hopefully no depreciation in the value of the home) the homeowner will have money in their pocket when it comes time to sell. In just 5 years the principal would be paid down by $30,000, that's $500/month savings. I am aware there is real estate and other fees, but for the sake of discussion I'll assume that the home appreciated value will offset those costs (being pretty conservative in my estimate at less than 2% annually).

If I were to extend this out to meet your example of 20 years and needing a roof, well I am certain I would be able to easily show owning a home would be much less than paying rent over the same period of time. The balance on the home loan would be $138K, or $162K paid toward reducing principal ($675/month). With 2% annual appreciation the home would be worth $520K. That would be $355K to be recognized after sale (including estimated sales fees) which is $1,480/month.

And there is a whole review of what a house of $350K would rent for. I'm going to guess it's more than $1,400.

Exactly, my point! Put it in another way, on average people who rent $1400 can't afford a $350K house as the other two posters suggested. Those people would be renting $2500/month houses. That's the point I was making.

I am not going to discuss rent vs. buy as that's where you are going for SIMILAR homes except to say that you are missing the opportunity cost (market performance over 30 yrs vs. what one would pay on home over the same period). It is very well documented. Also, I am not talking about one guy who timed the buy and sell and the appreciation train of home ownership. Rather in some generalized statistical sense looking at aggregate decision.

[EngGirl]

But if average rent is $1700 a month for a house and something tells me people are paying that much otherwise we wouldn't see listings like that - can they afford $300K-350K houses assuming smart people buy with down payment? We are getting closer, aren't we?

[WickedBad]

Having "equity" in a house is meaningless...that's called an unrealized gain. Additionally, if the market cycle goes FLAT or lses value even the paper gain disappears.

The only way to "realize" a cash gain in any freekin house is to sell it, or borrow against it. Bragging about an unrealized intangible gain on a physical structure that is illiquid is quite dumb indeed. That's why I laugh at people that "pay off" a physical structure when it's best to keep your cash in YOUR pocket, not in the bank's coffers ! They are happy as hell for you to pay off a depreciating asset, than to mark to market that same asset on their books.

As much as possible, keep you equity in YOUR pocket, FIRST. If a house owner becomes ill, loses insurance etc, but has 300k of equity in his house, no bank is going to lend money to you....ha ha. You will have to SELL the house to put money in your own pocket, then probably go RENT....LOL.

Nope, use the bank's money for leverage, and keep your equity a REALIZED GAIN of CASH, NEVER tied up in any illiquid asset. By the way, in 2016 and beyond, a physical house is NOT an asset at all. In fact, it can be a pure cost, and a net liability.

[WickedBad]

Why would anyone want to die, having paid off a house, or for that matter having paid off unsecured debt ??? lol...now that's really dumb ha ha...

If I know I'm going to die, before I do, I'm going to max out every unsecured credit card to the benefit of my children, or to my charity.

Then, they can elect to do what they want to do with a physical house, in re life insurance payouts ! what the hell do I care then, I would still be DEAD. LOL

[bobandsherry]

So anyway, I guess the feeling is there may or may not be a housing bubble. I guess time will tell as that's the only thing that will confirm if it was or wasn't. Let's bury this and re-open it in 5 years and revisit to see which view was right.

[WickedBad]

Yeah, the morons in the last bubble didn't acknowledge it was a bubble at that time EITHER, despite seeing similar attributes of bogus price inflation and crazy pricing models.


Glad I know better.

[SJNE17]

the last housing bubble had 80-90%, and often 100%+ ltv loans. buyers had no risk, no skin in game, other than transaction costs.

that's a huge, huge difference in risk profile compared to today, where nonagency lending is in the high 60%-ish ltv and anything agency is around 80% (other than fha).

[bootyQueen2]

^^^well housing bubbles are NOT monolithic in origin or impetus...LTV's and lending practices can contribute to "demand", thus affecting price movement upward, however these factors are far from the only reason for artificial price inflation and "bubbles"....that's sophomoric and misleading.


For instance, the massive increase in cash buyers can have the identical inflationary effect, on new construction, and existing inventory.


If the product is overpriced, it's overpriced and will continue to be so, until buyers simply balk and walk away...


Having "no skin in the game" provided or facilitated the buyers to default and walk, thus DECREASE prices, NOT inflate them.


Housing bubbles are caused by inflationary pricing and phony prices matrices, hype, overly exuberant buyers, not necessarily by loan to value ratios.

The market in Tampa Bay is very much over-priced, and clearly on a price trajectory that can not be sustained, and it ain't got nuttin to do with LTV's.