Anybody Seeing Real Estate as a Buying Opportunity in Their Locale?

[ShokWaveRider]

Here in North East Florida, I have seen housing coming down in price since last November when it peaked. $50k reductions in Single Family Homes are not uncommon and Every Real Estate Agent I talk to says it is a Buyer's Market. Condos are still a little pricey but I am sure they will follow suite.

On the news last night, Jacksonville was said to be at the highest foreclosure level in 3 years with 3,500 new ones in the last few months.

Just curious.

SWR

 

[brewer12345]

Yeah, but will any of it flow cash as a rental. Still a mile away from that in my locale.

 

[wabmester]

Unless interest rates drop, supply drops, or demand goes up (all very unlikely), then prices have no where to go but down.

 

[lazygood4nothinbum]

south florida:

in broward county, even while sales of existing single family houses dropped 31% and inventory rose 3x's, the medium price rose overall (1st quarter 2006 from 2005) 14% to $366,600 (after we dipped some between wilma and earlier this quarter). condos here fell 26% in sales but rose 25% in price to a $209,800 medium.

palm beach county single family dropped 32% in sales and rose 2x's in inventory, but increased in price 8% to $392,900. miami-dade county sales dropped 9%, while the median price increased 21% to $376,900.

single family is expected to continue to rise. condos, likely at the high end, are expected to tank upwards of 20% as new-builds come on-line over the next 2 years.

investing here still looks good f you are in the my-home-is-part-of-my-net-worth camp and especially if you already own and are homesteaded.

but when it comes to investing for an income stream, i'm not so sure how the numbers play.

the tax on that $209,800 1/1 condo is $4,890 plus homeowner association fees plus insurance. it might rent for $850. a 2/2 might rent for $1,200 if it has a pool.

the tax on that $366,600, 1,200 square-foot, 2/1 house is $8,578, plus insurance (going up another 16% this year) and might rent for 1,200 or so.

demand here is expected to continue to rise given the population growth of 30,000 per county per year. that rate expected to continue over the next 30 years. broward county is already at build-out.

 

[Chris24]

Front page of the Boston Globe .. "Buyers' Market .. a record glut of house for sell in Mass. should send prices tumbling" ... Stuff is still selling, prices have "stabilized", but houses' are staying on the market longer adding to the inventory, and putting pressure on sellers to lower prices.

Had to happen at some point, with the record increase's in House prices in the NE. Those intrest only/ Arm mortgages are catching up with some folks. Mortgage rates are holding others back from buying at the price's sellers want to sell. It's all about the monthly payment.

 

[macdaddy]

Pray for rates to keep going up. Once mortgage rates are at 9%-10% then start buying. Buy everything you can get your hands on that comes close to cash flowing using 5-year fixed ARMs. Most buyers shop for homes now the way they shop for cars, by asking, what is the max monthly payment that I can afford? So at that point, no one will be buying. In a short while, rates will drop back down to 6% and that will send all your properties into cash flow positive territory and up in value as well. There may be too much liquidity still in the system for rates to ever hit that high, but if you wait until they do, you will be rewarded. Home prices for middle class properties are a function of interest rates, period.

 

[cute fuzzy bunny]

Stuffs come down to the point where I dont roll my eyes and bark "Come ON!" when I see what someone thinks their house is worth. Starting to see "Price reduced AGAIN!" in MLS listings.

About 15-25% more and I think we'll be down to what these properties are actually worth.

 

[2B]

Many of you have never seen the proverbial "**** hitting the fan." I experienced it a number of times and I have always been confronted by people in other parts of the country not experiencing a free fall in housing prices with comments about my "poor judgement."

When housing prices tank it is always "local." I lost about $35,000 when Jimmy Swaggert was caught in a motel with "another women" in Baton Rouge. That was almost 20% of my house's purchase price in 1985 (or so). Before that I lost almost 15% in the great oil boom collapse in 1983 in Houston. The early 80's basically killed me on housing equity.

I have been pretty lucky by some standards. My BIL/SIL lost about 80% of their home's value in Houston in 1983. Their neighborhood was eventually bulldozed. Right after that the banks started reporting "forgiven equity" as income to discourage people turning in their keys to their mortgage holders.

Be careful about having too much of your net worth in housing. Someday you might want to go for a long walk.

 

[REWahoo]

I lost about $35,000 when Jimmy Swaggert was caught in a motel with "another women" in Baton Rouge.

(I know there must be one heck of a story here, but I'm almost afraid to ask...)

2B, by any chance were you the "other woman"? : If so, I would have to agree that particular situation was definitely "poor judgement".

 

[2B]

(I know there must be one heck of a story here, but I'm almost afraid to ask...)

2B, by any chance were you the "other woman"? :  If so, I would have to agree that particular situation was definitely "poor judgement".

That was an extremely "interesting" period in my life.  I had recently lost my job with a mega oil company and managed to land another job in Baton Rouge without missing a paycheck.  Then the floor fell out of the Baton Rouge market when Jimmy Swaggert ministries (second largest employer in Baton Rouge) laid off their entire staff.  I lost another job -- not with JS Ministries -- and ate the green weenie.  From my earlier post we can's say s--t.

BTW -- There were a number of JS Ministries people in my neighborhood and I was surprised at the number of people that weren't surprised.  I worked for a lech at one point and he sexually harassed any woman that had a B cup.  He was particuarly disgusting by hitting on women with the company I was dating (before I got married).  He was eventually fired in the early 80's for unprofessional behavior.  That was (unfortunately) the early days of sexual harassment and I like to think the young ladies knew I couldn't help or hurt their careers no matter what they did with me.

 

[sendbaht]

Home prices have a LONG way to go...down... buy in 2 to 3 years or longer, it's going to be bruital...

 

[Ed_The_Gypsy]

I don't have the stones for real estate. My Vanguard REIT index fund as one asset class is all I want to mess with. It is liquid and diversified. Oh, yeah--and the house.

We left Houston in the 80's and I am here to tell you that you CAN lose money in real estate.

Ed

 

[Craig]

I agree, we are very early on as far as a decline ... interest rates are still relatively low. Hardly any pain thus far.

While I share the thought there will be opportunity, I do feel some concern for these folks that are stretched right now on ARM's. They are in a very precarious position, and there will be some very tough lessons, and sad stories ...

 

[macdaddy]

Housing bears can't stand to hear that "it's different this time". But I do think a few things have changed, three of which I can point out - 1. access to information over the internet, makes it easier to buy a home at a younger age - 2. dual income the norm now, it's routine now for a poster to say, i'm married, 28 years old, we make 110k (to borrow from an actual, recent post). 110k has a lot more buying power than 55k. - 3. global liquidity. i don't see the money from china and india drying up in the near future, this has driven returns on every asset class down (and thus, since rents rarely change much, the price on real estate up). Prices will go down and will settle, but probably higher on the graphs than in previous cycles.

 

[brewer12345]

Housing bears can't stand to hear that "it's different this time".  But I do think a few things have changed, three of which I can point out - 1. access to information over the internet, makes it easier to buy a home at a younger age - 2. dual income the norm now, it's routine now for a poster to say, i'm married, 28 years old, we make 110k (to borrow from an actual, recent post).  110k has a lot more buying power than 55k. - 3. global liquidity.  i don't see the money from china and india drying up in the near future, this has driven returns on every asset class down (and thus, since rents rarely change much, the price on real estate up).  Prices will go down and will settle, but probably higher on the graphs than in previous cycles.

Nationally, you are probably right. Locally will be a different story. Lots of places in the Midwest never saw a run-up in the first place. But in the bubble markets like Florida, Nevada, Boston, and (especially) the west coast, it ain't gonna be pretty. Anywhere Option ARMs have been real popular will gget torched within a couple of years. I'm hoping to pick up some cheap property in Denver in a couple of years.

 

[tryan]

This current pause is no buying opportunity... if this cycle is anything like past cycles it'll take 1/2 as long to hit bottom as it took to top. So this ~12 year run up needs ~6 years to cycle down.

Save your pennys and get ready ~2011-2012. Cash will be king ... forget about ARMs, they won't exist for investors (just like 1993-1994).

 

[bpp]

Do I get points for keeping my mouth shut until now, instead of jumping up and down and shouting, "Ooh, ooh!" like Horshack?

Bpp

 

[Andre1969]

I'm starting to see mixed signals. Some prices are dropping, and some things are staying on the market for longer, but some asking prices seem to keep going up.

Here's one example that I've been watching:

Last summer, a house up the road from me sold for $490,000. It had two acres of nice, cleared ground (no swamps/etc) and a separate cinderblock workshop that was big enough to house four cars. The house itself wasn't huge, about 1100 square feet, built in 1956. Rambler with two bedrooms, two baths, a den, and a full basement. Not sure if the den and extra bath are in the basement or not, though. It's all brick, looks very well-built, has a front porch and a back porch, and a 2-car carport.

Well, it's back on the market again, for $529,000. However, it's been subdivided. Included in the sale is only the house on 1/2 acre. And as set back from the road as the house is, I doubt that the workshop will be included in the deal; it will probably be razed once the other lots start selling. And once those empty lots get populated with McMansions, both to the left and behind it, any semblance of privacy this house once had will be lost. I'll be interested to know what it ultimately sells for.

Another house went on the market last November, a 3br/2ba cape cod built in 1942. It's on 1/2 acre, with a 1-car garage and lean-to 1car carport off the garage. It's just a frame house with what I think they used to call clapboard siding. It has a few McMansions towering over it in back. In fact, when they took pics of it to put online, they had to take it at just the right angle so you couldn't see them. Well, originally they were asking $350K. It went off the market around Christmas, but came back early this year. The last I saw they were asking $329K. It's sold now, but I don't know what it went for.

 

[youbet]

But in the bubble markets like Florida, Nevada, Boston, and (especially) the west coast, it ain't gonna be pretty. 

I hope not!  The last Calif real estate crash was so entertaining back here in the flatlands we could hardly stand it.  Someone would bring a newspaper to lunch everyday and read stories out loud about folks upside down in their mortgages, etc. and we'd all crack up. It was like something from a comic strip. 

Before we're accused of just being jealous, we admit it!  Seeing folks profit beyond imagination from real estate or equity bubbles does make one do the happy dance at payback time.  And especially since, for most, it's just paper loses, a reversion to the mean.

 

[bosco]

I worked for a lech at one point and he sexually harassed any woman that had a B cup.

that explains it....

I was wondering what '2B' stood for

 

[lazygood4nothinbum]

But in the bubble markets like Florida, Nevada, Boston, and (especially) the west coast, it ain't gonna be pretty.

recognizing i'd have a lot to lose if florida went bust--so i do question my own judgment here--i still think florida shouldn't be written-off quite so quickly.

our in-migration & immigration rates are about the highest in the country. we don't just get cheap labor floating in on rafts but also northeast and midwest equity as well as european and south american cash flying in on business class. we'll soon top new york as the third most populous state.

our unemployment rate is about the lowest in the country (3% as of april) with dade & broward counties (bubbleland) leading the state in that. granted these are not all high paying jobs. but we also have a new bio-tech industry cranking up here. assuming none of those little organisms escape and kill us off during a hurricane, we could become another silicon valley over the next 5-10 years.

our geography is limited--in south florida in particular--by the atlantic ocean to the east, keys to the south and the everglades to the west. so redevelopment is fast underway. our long beloved strip "where the boys are" has been converted from spring break mom & pop 2-story motels to 4 & 5 star condo-hotels. i don't like it, but there you have it. progress.

lastly, i would argue that florida was long undervalued. when the winds drop below 110 mph, it truly is quite beautiful here. we don't have the fear of the earth dropping out from under us, but we also are still valued at about half the price of san francisco and where do they go to the beach in the winter? i just hop on my bicycle and head east.

for the my-home-is-part-of-my-net-worth camp, it seems to my untrained eye that florida should remain a reasonably stable environment. for flippers who bought into the last year of the craze here, yeah, they might get hurt.

already we are hearing stories of people walking away from their $50k deposits. mostly these are in new complexes, overpriced from the start, where contract holders are now competing with the developer who hasn't finished building and has much deeper pockets than the flippers. as to those who thought they'd double or quadruple their money in 12 months--not to luxuriate in someone else's misfortune--it sure does make me smile to know i was not so careless with my future.

 

[brewer12345]

I could make the same argument about NJ (high emloyment, lots of people migrating in, little or no room to build, etc.). But I still think that the coasts are in for a rough ride. West coast markets will take the biggest beating because that is where the mortgage industry reached new heights of stupidity creativity.

 

[astromeria]

I hope not! The last Calif real estate crash was so entertaining back here in the flatlands we could hardly stand it. Someone would bring a newspaper to lunch everyday and read stories out loud about folks upside down in their mortgages, etc. and we'd all crack up. It was like something from a comic strip.

Before we're accused of just being jealous, we admit it! Seeing folks profit beyond imagination from real estate or equity bubbles does make one do the happy dance at payback time. And especially since, for most, it's just paper loses, a reversion to the mean.

Good grief--the people who lost money aren't the same (for the most part) as the ones who made money (the late sellers made a fortune, the late buyers lost it). Besides, I can't imagine feeling "entertained" by someone else's misfortune (3 stooges excepted-).

I know people on both coasts who lost or came close to losing their homes--not due to ARMs but to unemployment. It was not entertaining--these were mostly hard-working couples with kids--many Bush voters(!), and it was painful to experience their shock and sadness even secondhand. Why would this cause you & your coven friends to enjoy a happy dance

Be careful what you wish on others--karmic payback, dude.

 

[macdaddy]

I think California may be shielded a bit by proposition 13. Case in point we own a 1.5m house outside La Jolla that rents for 3300/month. Last year paid around 2800 in property taxes. This house can be passed down in the family indefinitely with no tax reassessment. Furthermore if I head back to San Diego I am told I can sell and buy a new house and take the tax exclusion on 1.5m with me. That's a sweet deal. If it weren't for this, we probably would have sold by now. Both houses next to ours are occupied by the children of the original owners (kids I grew up with), who otherwise would have been priced out. There is no efficiency in this market because people hold on to things forever, knowing if they sell they may be priced out forever. Personally I think it's an unfair law, but there you go.

 

[cute fuzzy bunny]

Last time we had a bubble in this area was 1988/1989. Prices shot up 30-40%, people running around with checkbooks in hand, making offers on properties from the curb, etc. Pretty much the same thing that just happened here the last two years.

From 1990 to 1996 values dropped about 5-6% a year. Nice long slow slide that put prices right back to where they were in 1987. Then they shot back up again. Now we've stopped rising and we're seeing a slow slide.

It was good to be a buyer back in 1996 when I bought my mcmansion. A lot of people had tried to wait out the slide and got killed. A lot of properties for sale, lots of foreclosures, and a whole lot of desperation.

I had a lot of sellers look me in the eye and say "PLEASE make me an offer. Anything.". Some people had been camping in the house for 4-5 years trying to sell it.

In short...its not necessarily the big drop all of a sudden that might kill ya. Its that long slow slide.

Couple of ads in the local paper show some flippers got their pants pulled down pretty good. One guy is begging for a quick offer, please look at his property. Another says he'll take cars, boats, rvs, anything at all in trade and will carry the financing cheap. Another just bought a condo and is offering to pay a large special assessment and a couple of years of the condo fees, along with a big discount.

Sniff...sniff...maybe a year or two and I might buy some property.