Housing boom or bust?

[73ss454]

On my second home in Florida my home owners went from 980 last year to 1470 this year. <ouch>

This will be our primary residence some time this year. Hopefully anyway.

[wabmester]

Quote:

Originally Posted by shiny Like a timeshare or a commune?

It's my new RanchShare(TM) concept.* *$12K buys you 2 acres and a mule cute fuzzy bunny.

[lazygood4nothinbum]

Quote:

Originally Posted by brewer12345 What is happening to homeowners' insurance rates?*

ya, that and taxes are also problems. we've even heard talk of insurance going up another 110% after having gone up some 60% i think last year. that's just part of insurance though, the wind part. i don't think it is 110% on flood or on homeowner's. and yes, unlike the norleans/mississippi folks, besides wind we also pay for flood which we understand can be part of hurricane forces. even without storm surge, after the wind tears yer roof off, the rain's gonna flood it.

another problem with insurance that i've mentioned on another post is that premiums are figured not just on structure but on the entire property. my brother went to increase his insurance to account for rising construction costs. but in order to increase the insurance on just the structure they wanted an appraisal on the entire property. in my case it would simply be a joke because my property is worth 5 x's what my house is worth. so i've just got enough insurance to rebuild a basic structure if i needed. more likely i'd just sell and move on.

the bigger problem is taxes. we are all trapped in our homesteaded houses. i pay $1,000 a year to live in a $500k property. if i sold today the new guy would pay $11k. between insurance & taxes for me to even downsize in this area would increase my housing costs by at least 10 x's. once i sell & move out of the area i'd never be able to afford to move back. fortunately i've enjoyed this area for 30 years before it got so crowded so it's time to cash out anyway.

our wise legislators are working on so-called tax solutions. one of these involves getting rid of the "save our homes" amendment which limits appraisals upon which taxes are based on homesteaded property from rising more than 3% a year. hopefully the electorate will not be stupid enough to let that one pass. other ideas involve making our homestead exemptions portable at least to some degree.

and one legislator came up with what i thought was a brilliant idea. he wanted us to be able to sell our homestead with the property to the new owners. so for the next guy who'd be buying my house, instead of paying 11k/year taxes he would get to pay my $1k/yr. but then some other wise legislator said, oh, but that would bring speculators in and drive up prices, as if that would be a bad thing.

[Brat]

Be careful about under insuring. If you insure for 50% of value they may only pay 50% of the claim. Do your due diligance.

[brewer12345]

I think ccertain parts of FL may find that it is almost impossible to get HO insurance. A lot ofthis is being driven by the catastrophe reinsurers, who are demanding some pretty unbelievable rate increases. Then again, considering the beating they took in the last couple of years, maybe that's not so unbelievable.

[lets-retire]

The state of FL has an insurance company, but it is very expensive.* A friend of the DW has to use them.* She pays, I think, over 3000 per year and has a very high hurricane deductible.

If you can use them USAA has the best rates I've seen. Our homeowners is less than 1000 and the hurricane deductible is about 2000.

[brewer12345]

Quote:

Originally Posted by lets-retire The state of FL has an insurance company, but it is very expensive.* A friend of the DW has to use them.* She pays, I think, over 3000 per year and has a very high hurricane deductible. If you can use them USAA has the best rates I've seen.* Our homeowners is less than 1000 and the hurricane deductible is about 2000.

Citizen's, the state-run insurer, is on the ropes financially with a multi-billion dolar deficot. That will result in higher rates and surcharges for years to come.

[Momtwo]

Quote:

Originally Posted by brewer12345 I think ccertain parts of FL may find that it is almost impossible to get HO insurance.* A lot ofthis is being driven by the catastrophe reinsurers, who are demanding some pretty unbelievable rate increases.* Then again, considering the beating they took in the last couple of years, maybe that's not so unbelievable.

My son was tranferred to the Tampa, FL area a year or so ago. He had a terrible time getting HO insurance. He wanted to stay with the insurer who he had been with in the state he moved from- State Farm. They were put on a waiting list. Evidently State Farm and I am sure many other insurers take only so many customers. So he was put on a waiting list. Fortunately, his name came up on the list before the closing on his house.

He also told me that his insurance increased significantly this year.

Florida may not have any state income tax but other expenses there make up for it.

[Brat]

The program I mentioned earlier was a broadcast on UCTV, Christopher Thornburg PhD presenter on Feb 16, 2006.* This program is available on the web if you have a RealPlayer from that website.* http://www.uctv.tv/schedule3.asp?key...sing&x=30&y=11
A transcript of Dr. Thornburg’s comments on NOW can be found at: www.pbs.org/now/politics/thornberg.html

This discussion was macro in character and California focused.* Much of what is discussed would be applicable to the rest of the west coast and Boston.

Because I hate long postings:* the first half was a historical look at economic growth and housing with references to the work of others.* There were interesting comments about recessions – business and consumer spending.* There was a funny noting that Greenspan and an athlete have both artificially boosted performance in recent years.* I really do recommend you try the internet feed if you can’t view the program on TV.* He did say that housing should be analyzed like a dividend paying blue chip stock, not a growth stock.

In a nutshell: housing prices will be flat going forward in those areas with strong employment.
Housing price increases will stop when buyers can’t enter the market.*
Watch for stall and decreases in unit sales, real prices trend downward one year after.
Home prices don’t drop quickly.
Liquidity will be a problem (seems to me that time on the market for different price segments worthy of tracking).
Prices are sustained by jobs.
Housing will be a low return investment going forward.

He commented that there is significant inventory coming on the market in the next two years from the completion of single family dwelling and condo construction.

[lazygood4nothinbum]

so what yer saying is it's time to sell and move onto the boat. not a problem.

[Brat]

Assume you can cash out your equity in a house, have enough to buy a boat and invest the rest at 2x inflation*. After reading posts by Floridians that is exactly what I would do. A great setup with solar, sails, current charts and sat connections - you are set! I assume you know safe harbors, how to operate and repair the ship.

We both know that a boat depreciates and that maintance isn't cheap, there is no free lunch. But, for some it works.

Mom of Deck Officers
* eventually shore housing will be needed so the boat owner will sell a depreciated asset and catch up to the then current housing market.

[brewer12345]

Interesting, brat. Pretty much dovetails with what I think about the situation. I think things are not gonna be pretty in the next few years and there will be a lt of borrowers and a few banks that will be REALLY sorry. As always, there is money to be made from the situation, both during the crash and after.

[wabmester]

So, what happens when two economists go house hunting in SoCal?* *They come up with a new valuation metric to justify their purchase.

Bubble, Bubble, Where's the Housing Bubble?

They basically looked at rents and calculated NPV assuming a desired 6% rate of return.* * Their conclusion was that even the hottest markets are fairly valued, and that some markets are still bargains.* *(Only San Mateo, CA was overvalued by their calculations.)* * They further conclude that the recent run-up was due to both dropping interest rates and the fact that houses were downright cheap compared to their fair values before the run-up.

[cute fuzzy bunny]

For what its worth, we've hit the wall here in my area. The stiff arm came from too many new homes built on postage stamp size lots. Right now you're looking at an 1800 square foot house, 5-10 years old, on a quarter acre for $380 or the same size, brand new, lot so small you cant walk between the homes holding a hockey stick sideways...$290-325. People are going for the newer homes, ignoring the lack of privacy and yard space and spending their money on more square footage. Its killed the resale market.

[lazygood4nothinbum]

florida dips. here we don't call it a bubble; we call it a dip.

just had two realtors over this morning. not good time to sell. they say i could have gotten about 450 last season. a smaller house around the corner on almost 1/2 the size lot got 460 last year. this season i'd be lucky to get 420 and it would sell today for 400 minus 5 or 6% commission. they think over 420 it would just sit.

they both say our market will bounce back by next year, going up maybe 5%. one added "if we don't get another hurricane." i asked about the nar apparent nonsense citing current ~15% increases. one realtor suggested that number pulled up by rising construction costs on new houses but that existing house sales have flattened and prices have dropped.

one realtor said supply went from 2% to 4% of housing stock which is about a year's supply. i don't understand how but the 2% was only a 3 month's supply and (realtor who just this second called said) in some areas we didn't even have a 30 day supply.

condo market is still expected to come down (some predict about 20%) when the new-builds come online within about 2 years and money become due. the condo market is a separate animal though and not expected to affect single family house prices.

one realtor was very optimistic about south florida over a 5-10 year period and demographic studies seem to back that emotion. one realtor suggested and it has been my feeling for a long time that this area will eventually rival the prices of new york and san francisco. monroe county (the keys) is close to that if it hasn't already exceeded.

and even with insurance going up, as long as the electorate doesn't vote out homestead tax protection, it will still be cheaper for me to live here than to rent elsewhere so instead of selling now i might just put up a 6 foot fence around paradise and wait for better times.

edit: realtor just called says is very sure i could get the entire asking price of 429 and would sell in 30-60 days. says if i wait a year i'd be at about 500, right where i thought i was before i learned of the bubble dip. so if i hold for 5 years, ok, maybe not the krogen 48, but the k42 is sure still in the cards.

ps zillow shows me at 380