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Old 07-25-2015, 10:45 PM
 
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Quote:
Originally Posted by pghsebring View Post

Do you have any other ideas in PBC (or south, lol) that might fit our criteria?

EDIT: I thought about this more, and if "everyone" is paying cash, then why does the median income of the area matter for prices? Why would that be a limiting factor? I understand why it normally would be. It seems prices in many areas are already more than you'd expect based on the demographics.

Its very important. The reason being the people living and working in the area have to be able to afford the properties or the prices aren't sustainable long term. There are always exceptions. Sail Fish Point is a good one as is NYC. You have some of the richest people in the world living there so the property values there have no relationship with the common peasants and what they make for a living. However when the prices of the average home start to rise above what the median household finds affordable you start pushing an envelope that can only be pushed so far before it bubbles and retracts. Especially when you don't have a large influx of foreign investment or big money players.

Look, 15 years is a long time and we are on the verge of a demographic shift in this country and especially in Florida. Lets look at a few facts:

1. Florida has been buoyed a huge amount by retiring people and especially baby boomers moving here. Not so much on the young people and many that have come followed family.

2. In 15 years the baby boomers, I'm going to use the term at a 1945 to 1950 year born since those were really the true baby boom years post WWII, will be 81.

3. The world is warming (fact), sea levels are rising and we are a major storm away from some serious issues in this state (guarantee fund, borrowing capacity of the state and pricing of insurance). The last batch of storms forced many dozens of companies out of business and put the state severely in the red. Those storms really weren't that bad and didn't have a direct hit on an area that was super populated. Now those companies are bankrupt, the state is insuring those areas and they are on the hook for much much much more $$$. If we ever see a Cat 5 hit Miami or Lauderdale the state of Florida is SCREWED. No joke.

Lets look at just the first two things and what do you think is going to happen in Florida during these years? Do you think there will be more people moving here or do you think that the large segment of the movers will have moved here already and starting to die off?

So when you look at property values now and they seem a little high. Then you look at the outlook for who is actually buying these properties and realize that a large percentage of them have already moved here or will move here pretty shortly and by the time you're horizon is up are likely to not be moving here much and even starting to die off. I'd say the outlook long term isn't super awesome.

Now lets consider a few other things.

1. People haven't saved nearly enough money

2. People are going to be on fixed incomes

3. SE FL is becoming quite expensive. Very expensive when you consider HOA fees, insurance and taxes.

4. Salaries here suck unless you fit a very narrow range of professional / licensed professions

So do you think that retirees will continue to flock here and drop 400k for a new place? Some will, but as the baby boomers age the early retirees and the people that have that kind of money are going to be mostly here already. The people that didn't have the money will be needing to put some away from their house sale up north and might start to consider other places. I mean what is the difference if you're moving 1500 miles anyway between PBC and say a suburb of Orlando or Palm Coast or Destin. Little cooler but reality is its still 1000x better than shoveling another nor'easter.

Money issues are going to play a much larger role in the later baby boomer retirees than the early ones that are here already.

Personally I think SE FL is near its peak. If you're looking for a good deal and appreciation in 15 years you need to buy value now and that puts you North of Jupiter. Otherwise I think the market is already a little over priced and I don't think that during your outlook period it will improve all that much. Can you make some money? Sure. I wouldn't count on it though. Florida real estate has historically been very up and down and it will be no different over the next 10 to 20 years. Especially with easy to see warning signs.

Last edited by aridon; 07-25-2015 at 10:58 PM..
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Old 07-26-2015, 03:07 AM
 
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Between 2010 and 2014, the Miami MSA grew 6.5%, which is a pretty healthy clip for a MSA this large to begin with. It's on par with the growth in seattle, DC, phoenix, atlanta and san fran. Houston and Dallas are the only large MSA's growing significantly faster.

I mean, this could obviously end, but it seems to have had steady growth for quite a while now, and is still an attractive place to live for many. But even during the worst housing bust in our lifetime, the population of PBC only "paused" and now its back to growing again.

In any case, we are going to live in SE florida, so we're trying to find the "least worst" place for appreciation if we are going to buy a house to live in, with the least worst school districts, and our budget is around 300k (you can add 30k to that if the HOA is $0 instead of $200.) I just don't want to buy in an area in SE florida that appreciates below the average for SE florida, and prefer to get into an area that will appreciate more than average for SE florida.

I sure wish we were able to get a place for cheap a couple years ago, but we weren't in the position to do so. We have a window coming up where we will be able to do so - starting in january, through spring. It's either now or never.

I'm also tired of my rent going up 10-20% every year. Seems a lot of people still want to move down here.
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Old 07-26-2015, 06:06 AM
 
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You mentioned you can buy the condos cheaper than renting, when you see that dynamic hat would mean housing is over priced.

As an investor myself who invest only in areas that you seek in your criteria, good schools, good location and good place to live with chance for capital appreciation. Anyway I look for a certain ROI when I buy a property all cash and right now deals are harder and harder to come by that fit my ROI criteria. I raise my rents on tenants each year to meet my ROI criteria on current value of property not my costs but current value.

Right now we are in a neutral market as far as prices go. It is difficult to find new properties meeting the ROI requirement but the ROI is not low enough where it makes the values super over inflated. If it does get there I will be selling.

And aridon, you have to keep in mind in south Florida rents are high thus attracting cash investors from all over the world and a lot of private equity and hedge funds. Many of these wall street funds literally own thousands of single family homes and rent them. As an individual investor/cash buyer I see all the mistakes they make buying what I deem low ROI and undesirable location properties. eventually this will not end well if prices continue upwards as when these funds run for the exit it will spell trouble

Now OP, I gave you 2 good suggestions, wellington and western lake worth. I even gave you names of communities

now here is some specific properties to look at, not sure what more you want?

8577 Bonita Isle DriveLake Worth, FL 33467 - $259,000

5473 White Sands CoveLake Worth, FL 33467 - $259,000

1772 Barnstable Road Wellington, FL 33414 - $264,000

7088 Davit CircleLake Worth, FL 33467 - $274,900

10817 Oak Bend Way Wellington, FL 33414 - $275,000

there are many more. these are only some examples and all decent schools and very good areas

Last edited by BVG_Steve; 07-26-2015 at 06:18 AM..
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Old 07-26-2015, 06:46 AM
 
57 posts, read 156,752 times
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Quote:
Originally Posted by BVG_Steve View Post
You mentioned you can buy the condos cheaper than renting, when you see that dynamic hat would mean housing is over priced.

As an investor myself who invest only in areas that you seek in your criteria, good schools, good location and good place to live with chance for capital appreciation. Anyway I look for a certain ROI when I buy a property all cash and right now deals are harder and harder to come by that fit my ROI criteria. I raise my rents on tenants each year to meet my ROI criteria on current value of property not my costs but current value.
I think condos are overpriced, and a lot of homes are too, but at least there are some of the latter that you could buy/rent for approx. the same price. I hope to find a house that if I were forced to rent it, I could cover the payment, or get as close as possible.

Thanks for the list of homes to look at.
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Old 07-26-2015, 06:56 AM
 
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actually i can still buy homes and rent out for more than cost of purchase

The homes on the list I showed you any cash investor will make a minimum of 5% ROI or profit per year without capital appreciation

example

expenses after purchase

property taxes = $400 per month
HOA = $200 per month
Insurance = $170 per month
Misc = $30 per month

Total expenses = $800 per month

Purchase price $250,000 + $15,000 improvements = $260,000

Rent = $2100 per month

leaves $1300 per month profit or $15,600 annual profit on the $265,000 investment = 5.9% ROI annually.

so you can buy the property a lot cheaper than renting. when you do the math you have to look ta purchasing cash, and not 3.5% down as this is what investors will look at
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Old 07-26-2015, 07:05 AM
 
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I get that, but I don't have 100% down...so in my world, if I *could* rent it and cover my mortgage/expenses, I think I'm doing well.

In your example, $1300 should about cover a 240k mortgage/pmi.
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Old 07-26-2015, 07:37 AM
 
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yes but you need to understand what you are bidding against. Me as a cash investor or any cash investor look at it totally different

you can get a 250,000 mortgage for a little over $1300 a month with PMI. but also keep in mind you cannot buy a home for $250,000 that a cash investor can buy for $250,000. you with 3.5% down will need to pay $260 to 265 in order to have any chance. So know what you are up against. Cash is king.

I have assisted some friends buy homes in the recent past and the first thing I have to get them to understand a home with an asking price of $265K that is a good deal they will have to bid 265K minimum and often above list because any property priced right here will have multiple offers and going in fha with 3.5% , quite bluntly you are a weak buyer
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Old 07-26-2015, 08:21 AM
 
Location: SoFlo
791 posts, read 598,842 times
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BVG, a bit off topic but wondering what your thoughts are about the Jacksonville, specifically Fernandina Beach area wrt ROI? We live in Delray, having purchased a historic house that we renovated in Del Ida Park. With the appreciation here and my opinion that we could be near the peak, combined with high taxes and insurance we thought it might be a good time to cash out and head much further north. Fernandina Beach looked like a good option as it seems to be less impacted by hurricanes, real estate prices at least 25 percent less and close to the airport, which is what we need for work, and schools not an issue. Would be great to hear any insights, thx!
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Old 07-26-2015, 03:53 PM
 
292 posts, read 393,518 times
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K

I do not know anything about the Jacksonville area so I cannot be much of a help. Just remember with real estate everything is location, location location. So if areas are lagging there is usually a good reason for that.

I also disagree we are near the peak here. I believe we are in a neutral market, meaning prices are high but can go higher but not as the rapid rate of appreciation we have seen. I do not think they are heading lower either, because interest rates are low and going lower. the 10 year bond fell nearly 1/4 point the past 2 weeks and the economy is not doing great, so despite the federal reserve lip service on raising rates, their hands are tied plus the fed does not control long term rates.

Put it this way I personally would be selling some of my properties if I thought we were near a peak. When cash flow ROI gets 4% or below then we will surely be overvalued. Right now we are still in the 5 to 6 % cash flow ROI range when buying desirable property in desirable areas.
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Old 07-26-2015, 06:18 PM
 
Location: SoFlo
791 posts, read 598,842 times
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BVG, great info thx so much for the response. Would be very interested to hear when you think we are close to the peak, you definitely have a good handle on this market
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