patrick.net

Are they still building down there, too?!?!?! A co-worker is planning to move back to his home state of Arizona from here, Portland, Oregon. He is tracking the RE and we all know how bad Maricopa County is, as is FL and NV. And he states they are still building! He was gonna wait a few years for things to settle but he's very tempted by $98-105K new construction homes, 3/2's, some w/ pools!

How low will it go?!?!

Florida is a big place, can you be more specific?

Leigh says

Are they still building down there, too?!?!?!

Building came to a screaching halt four years ago and hasn't resumed.

Tenouncetrout says

Florida is a big place, can you be more specific?

East coast, center of the state, edge of what's considered tropical. It's a nice town.

I'm going down with my carpet bag at the end of April. I'm hoping to pick up a vacation homestead for cheap.

yeah...

I am 4-10 miles from the best beaches in the US, 33756. Bought 2/05 @115k a 2/2 1000sf condo. It would maybe sell for 50k today. Not really bitching though; nice and cheap to maintain.

perma-lurker / aqua-owner

Why are you going to cry? Did you buy your house as an "investment"? Houses are terrible investments. They're constantly falling down and needing repairs, you have to keep paying taxes on them, etc. If you can afford the payment and like living there then keep doing it.

How do you feel when you buy a piece of electronics? You have to know it will be cheaper in the future but you want to enjoy it now and the premium is worth it to you then you can't be mad at the person who bought the same (or maybe better) gear for less money months or years later.

This paranoid fear of "getting screwed" because someone pays less for something is not healthy. Do your homework on a given purchase, decide that the thing is worth what you're paying for it, and don't look back.

@grywlfbg
What other investments have a good solid history of maintaining value? I'm looking at most of the old families from europe. They seem to be doing pretty well even today.

Are the shoe smith families of the 1800's doing as well as property owners?
Are the smiths doing as well as property owners?
How about more recent items. Horse carriage manufactures?
Car manufactures?
Banks? How about Banks, how long do banks last on average?

Land is still one of the best long term investments. Not a house will depreciate and require upkeep, but the over all value of the land will in general keep going up. We're exiting a huge bubble. Anything in a bubble will depreciate, but over all it's still one of the best investments *most* people could make.

@ordertaker
You've owned the property since 2003. Renting for those 7 years would have had some major costs associated with them as well, and depending on what you've done to the house, you might not have been able to enjoy it as much as a rental and the rental might have cost you an arm and leg during the housing boom. You might be in a wash situation right now, but you've enjoyed your home for those years as well. It will never go to $0. Maybe it could drop a bit further, but over all you're not in a bad position. You might have bought a bit into the bubble, but it seems you got in before things truly went crazy.

Come on man. Mid state, east coast, Fort Peirce and Stewart?

It was in '99 I personally knew several people that moved there because houses were 1/3 of what they were going for down in Broward.

pkennedy says

@grywlfbg

What other investments have a good solid history of maintaining value? I’m looking at most of the old families from europe. They seem to be doing pretty well even today.
Are the shoe smith families of the 1800’s doing as well as property owners?

Are the smiths doing as well as property owners?

How about more recent items. Horse carriage manufactures?

Car manufactures?

Banks? How about Banks, how long do banks last on average?
Land is still one of the best long term investments. Not a house will depreciate and require upkeep, but the over all value of the land will in general keep going up. We’re exiting a huge bubble. Anything in a bubble will depreciate, but over all it’s still one of the best investments *most* people could make.

Holding value and appreciation are different. Land does tend to generally track inflation and such is a good store of value (like gold) but unless you can catch a bubble it's not an asset that appreciates (in real not nominal terms) over time. And when you factor in carrying and finance costs, my guess is you'd do better laddering CD's. Of course there's a side-benefit that you can live in/on your land but that just reinforces my point.

The point of my post was that people are still buying homes/land in the expectation that the value will rise faster than the rate of inflation. I don't believe this to be true outside of short-term bubbles.

Well considering rent becomes radically "reduced", or can generate income, the value of land doesn't necessarily need to go faster than inflation. If you have a piece of land appreciating at 3%, and inflation is 3% and you are collecting $2000 net in rent, to maintain that income level, you would need to first make more than 3% on that money, and then figure out how to make 1-3 extra % to make up for that added income.

Now, many people might be able to pick winners for 5, 10, 15 or 20 years. But at some point, unless you're warren buffet or another elite, you're going to make a mistake. That mistake could wipe out masses of your wealth. While a house, might depreciate, but in general tracks inflation, so never will you stand a chance of losing 100% of your investment.

As an investment, it is a pretty good deal. Buying outside a bubble isn't that hard. When watching housing inflating WAY beyond inflation is a pretty easy thing to spot.

Every other investment requires masses of attention and usually a high degree of competence. For most, they don't have that. How much of the population could make a good solid investment? How many would choose a CD for 30 years? I'm betting if you asked 100 people, even a highly educated person, the average person would make large scale mistakes that would cost them far more than an investment in a house, making a house one of the best investments for people.

thunderlips11 says

ordertaker says

Tenouncetrout says

Florida is a big place, can you be more specific?

East coast, center of the state, edge of what’s considered tropical. It’s a nice town.

Not Pt. St. Lousy, I hope. My parents’ retirement house, now 15+ years old, is valued at the same they brought it for back in 94/95. Unemployment rate is probably over 20% now.
I lived there as a HS Senior, schools are nightmarish, a good 3-4 years behind NY schools, and some are worse than inner-city schools (Ft. Pierce Central). They covered stuff we covered in the 8th grade in the 12th grade, and I wasn’t all-honors either.
Also, there are no jobs.

Pretty much summed up the problem with Florida. No jobs really outside of service industry and government. Terrible, and I mean terrible schools. Even in nice areas. People are nicer in the northern parts of the state, (Jacksonville) but schools are still awful and most of the jobs are government, service industry or military here. Few large employers. Salaries consistently lower than other areas. I'd take it in a heartbeart over PBC/Broward though. That area is the biggest tragedy in the country. Beautful beaches and water. Great weather if you like hot in the summer, and I do. Chock full of a-holes, though. That alone ruins everything else the area has going for it. Orlando is better than SFLA but not as good as Jacksonville. I haven't lived on the west coast.

The problem with Jacksonville is it really isn't that warm.. We had 13 days in a row of the temp never getting above freezing this january. Its 42 degrees today and its MARCH. In total I've lived in the Florida for nine years.

Jacksonville has only just gotten a tip of their housing crash iceberg, though. South Florida is ground zero for the housing bust. (well maybe ground 3, with Stockton, Vegas, and Phoenix being ground 0,1,2) Jacksonville has a long way to go. When I say that in social circles, they look at me like I am crazy just like they did when I said the same things in Ft. Laudy in 2006. I rent a 2,400 sqft home in the nicest older neighborhood close to downtown in Jacksonville for $1250. The house right next door to mine has been for sale for the entire two years I have lived here for $430K. The three most recent neighborhood comps, in order, are 305K, 275K, & 222K.

thunderlips11 says

ordertaker says

Tenouncetrout says

Florida is a big place, can you be more specific?

East coast, center of the state, edge of what’s considered tropical. It’s a nice town.

Not Pt. St. Lousy, I hope. My parents’ retirement house, now 15+ years old, is valued at the same they brought it for back in 94/95. Unemployment rate is probably over 20% now.
I lived there as a HS Senior, schools are nightmarish, a good 3-4 years behind NY schools, and some are worse than inner-city schools (Ft. Pierce Central). They covered stuff we covered in the 8th grade in the 12th grade, and I wasn’t all-honors either.
Also, there are no jobs.

I'm in Vero Beach. I agree that PSL is a terrible place.

thunderlips11 says

Also, like you say, there are no real employers.

http://www.citytowninfo.com/places/florida/jacksonville/work

Occupations count and salaries for Jacksonville. Interesting Stuff.

Blue Swan says

Here’s something that people can do. Buy up the foreclosed properties next to them, tear down the houses and get a double or triple plot for their home. De-densify the city and at the same time have a better lifestyle with more land. Instead of a McMansion (all house, no land) build a McEstate (triple plot, small house).

that's something I'd love to do if prices fell to half and my neighbor walked away

House Prices Reflect Salary Inflation. Houses Are Money Pit.

Let us use the Case-Shilling Index, going back to 1987. The black line is the total price index. The blue line is S.F. price index. The red line is S.D. price index. Note that S.F. and S.D. lines started below the total index.

Since long term house price reflects salaries rate. We dig up America's long term wage increase rate starting from 1939 (from .gov web site), it is 4.1%. By plotting house price index with a rate increase of 4.1% we get the green triangles, "what it should be."

Note that from about the end of 2001 house price deviates greatly from the "what it should be" (bubble).
Note also that from 1992 to 1997 house price is below "what it should be."
As of December 2009, house prices drop down to earth, not castle in the sky.

Real estate salesmen will bait you by saying "house price has drop 40%, it is cheap, you should buy now." Should you? Let's take a look. By using 1992 to 1997 as a guide, after an up swing, we should expect house prices to dip 15% to 25% below "what it should be".

Houses Are Money Pit.
Houses are products for shelter services, just like cars are products for transportation services. They are not investments. House salesman, Wall Street thieves, and government, want you to believe otherwise. Houses are money pit. They must be adequately insured, repainted, renovated, recarpeted, and otherwise maintained, with roof repairs, hot water tank busting or plumbing problems adding sizeable sums to the on-going costs.

A house like mine that happened to be in foreclosure just went under contract for $98,ooo. I bought in 2003 for $119,000.

now factor in inflation...

To Bankstere Originale: weren't you the one that strongly advised homeowners to refinance from fixed rate mortgages into ARMs?