Housing Rolling Along 2

[sirpangolin]

Quote from dac8555:

hasnt crashed yet, you are right. But i do believe the bay area DEFINATELY will be very hard hit along with the east coast floria, and the other inflated areas.

I would agree that the Bay Area will be hit. But I think it's only going to be certain spots. For example, I live in Contra Costa. I bought a house here last year because it was a good investment idea, not necessarily because it's chock full of well developed businesses... Actually, I wouldn't mind moving back to Livermore, but that's another story...

Anyway, according to DataQuick, Contra Costa was one of the highest in appreciation this year -- 22%, only second to San Joaquin at 24%. 2004 was 18% for Contra Costa.

So I believe that it was a good investment, because sure, the Bay Area will experience a slowdown, but where other counties drop a tad, the higher counties will stay neutral.

man, you have to understand, only 14% of the population makes enough money to afford a home now! with all the specuators...it is going to be blood.

I would agree on the latter half of your statement. On the former, I think the number is less than 14% to be honest... I thought I heard it the other day on the news or read it. Can you cite where you got that statistic?

yes, we all know 2005 will continute to be record year, but that is beauce people already have the financing and are paying for the home...next quarter that wont be the case.

I agree, but I disagree on the next quarter part -- The Fed, according to yesterday's announcement, is pretty much done with rate hikes. Which makes banks feel happy.

And on top of that, do you really think banks aren't going to come out with some new, cool loan program to get people into a home? Look at 40-year mortgages now!

you'll see. there have been MULTIPLE real estate crashed throught the world and throughout history...and the run-up has been much smaller than this one. Unfortunately, the economic effict will be pretty devistating.

Perhaps. We'll see, I guess.

 

[Copernicus]

Miami

From coke to cubists
Aug 18th 2005 | MIAMI
From The Economist print edition

And the condos keep on selling. For the moment

NOT for the first time, Miami is being rebranded. Hollywood is at work on an upmarket movie version of the 1980s TV series, “Miami Vice”. Crime is down, employment up and the city's boosters claim outsiders are being lured to South Florida for its new cultural attractions as much as its sun-and-sin pleasures.

As if to complete its transformation from drug-dealers' playground to mainstream metropolis, Miami also has an all-American property boom. Last year, the tax roll in Miami-Dade County grew by 16.5%—the biggest jump for 30 years (and also the third year of double-digit growth). The city of Miami's property-tax base rose a staggering 27% in 2004. House prices have doubled since 1999.

About 65,000 condominium units are either under construction, approved for building or in some stage of the permit process. Most of these condos are in Miami's long neglected downtown area. A small studio apartment can cost $200,000; the posher developments, with names like Icon, Onyx and Nirvana, throw champagne parties for prospective buyers to inspect the marble-packed kitchens, fancy spas and waterfront views.

Advertisement
Unsurprisingly, Miami finished top in a study of “mega metro bubbles” by Merrill Lynch, a stockbroker. The Centre for Housing Policy has also given warning that the ratio between income and house prices is growing at an alarming pace in South Florida. Miami has known busts before: in the 1980s the city's Brickell banking district overheated and prices collapsed. Brickell has since bounced back, with several elegant new glass towers and luxury hotels.

The main debate this time centres on how many of the buyers are speculators, either trying to make a quick return or buying to rent (and doing both on borrowed money). “Flipping”—buying and selling condominiums before they are built—rivals beach volleyball as a local leisure sport.

Optimists, a group that includes many city bureaucrats, say all this bubble talk is exaggerated. Johnny Winton, a city commissioner and property developer with a decent record of avoiding previous crashes, points to “a confluence of events that may just make this boom sustainable”. Florida is booming: sales-tax revenues for the state rose by 11% last year. The economy is also much more diversified: trade now accounts for half Miami-Dade County's GDP and tourism has jumped.

Miami's reputation for crime, corruption and hurricanes, which lay behind much of the white flight of the 1980s, has also been reappraised. The city has been cleaned up, the hurricanes have missed and the summers, though scorching, are much less humid than in cities further north. Meanwhile, Latin America's various woes continue to generate buyers for Miami property. One in three new homes in South Florida is sold to a foreigner.

This boom is also different from its predecessors. Miami Beach, the traditional home of beachfront condos, is already “built out”. Meanwhile, there is not much room left out west, where the city is hemmed in by the (now protected) Everglades. So the city is growing skywards. The 74-floor Met 3 in central Miami will be the tallest residential building south of Manhattan. In many ways that is what Miami needs, say developers. The city has long been a sprawl with little urban planning and a poor public-transport system.

And all those new museums and art galleries are making a difference. In one stretch of Biscayne Boulevard, dubbed the “Miami Arts District”, some 25,000 condos are being built at a cost of more than $1 billion. Many of the buyers are wealthy New Yorkers and other east-coast snowbirds, drawn by the prospect of a busy cultural calendar to accompany Miami's fine winter weather. The city is home to the biggest art fair in the United States and a new $400m Performing Arts Centre is due to open in 2006. “Right now, people are recognising that this is serious,” says Bonnie Clearwater, the chief curator at the Museum of Contemporary Art.

Public funding for the arts in the city has quadrupled in the past five years; private donors have also ploughed money into cultural projects. “Now is the time to take our rightful place as one of the world's greatest cities,” said Miami's mayor, Manny Diaz, in his annual state-of-the-city speech. That is a fair tribute to a place that has put a lot of effort into smartening itself up. But even the world's greatest cities can have property crashes.

 

[dac8555]

Quote from sirpangolin:

I would agree on the latter half of your statement. On the former, I think the number is less than 14% to be honest... I thought I heard it the other day on the news or read it. Can you cite where you got that statistic?

I was typing quickly, i think the statistic was 14% of people in "bubble states" like california. It was either CNN or Motley fool...it was a shocking number to me!

And on top of that, do you really think banks aren't going to come out with some new, cool loan program to get people into a home? Look at 40-year mortgages now!

In japan they have 99 year morgages, but the price of Real estate in Japan dropped over 50% even with the 99 year mortgage. I think the prices there are still less than they were in the 80's. for me "cool loan program" is relative. The math to me is pretty basic, for example, IF a $500,000 home is a $5000 payment to a bank, and it costs $2500-$3000 to rent....you are way better off renting and investing the difference somehwhere. also, over 40 years, on a $500,000 home, you will wind up paying over $2,000,000 total with interest, capital, insurance, taxes etc.

also, the average appreciation of a house over time os only like .4% per year...the house you live in is gernerally not a good investment (but it has been the past few years), it is a liability.


Perhaps. We'll see, I guess. [/B]

 

[sirpangolin]

Quote from dac8555:

The math to me is pretty basic, for example, IF a $500,000 home is a $5000 payment to a bank, and it costs $2500-$3000 to rent....you are way better off renting and investing the difference somehwhere. also, over 40 years, on a $500,000 home, you will wind up paying over $2,000,000 total with interest, capital, insurance, taxes etc.

No offense, but you sound as if you don't live in the Bay Area, which means you probably are unaware of some key things about real estate here:

a) I own a home worth over 500K, and I don't even pay close to that figure. If I did, I wouldn't be in a home. That's why banks have all kinds of fancy loans -- for example, the 12-month MTA PayOption Jumbo ARM...but if you live in an area that has 2% appreciation, then you probably don't understand what a Jumbo is anyway, so...

b) Generally speaking, Bay Area home owners don't stay in homes more than 3-5 years. They sell their home after making 300K in 3 years, and upgrade. Then they stay in that home for 10-15 years then retire. So I pay interest-only for three years and never touch the principal. Who cares! I made 300K when I go to sell. I can now move to Bumsville, Idaho, take care of my family, and pay cash for a place.

also, the average appreciation of a house over time os only like .4% per year...the house you live in is gernerally not a good investment (but it has been the past few years), it is a liability.

For the most part, it's always been expensive because of appreciation out here. People want to live in the Bay Area. Sure, 1992 was bad, but it recovered in a few years. The Bay Area always bounces back because people want to be here.

Areas that have .4% (which is not correct and isn't even inflation BTW -- most Midwest states, for example, are at or slightly above inflation (2.6-3%)), aren't areas I would want to live in anyway. I know -- I grew up in the Midwest... I left and didn't look back.

Closing statement: It would take a BIG natural disaster to wipe out the housing market in California. It's always been this way. The greatest predictor of the future is history. Sure, it's cylical, but it's not doomsday out here.

 

[vitajex]

Quote from sirpangolin:

b) Generally speaking, Bay Area home owners don't stay in homes more than 3-5 years. They sell their home after making 300K in 3 years, and upgrade. Then they stay in that home for 10-15 years then retire.

LOL. Kids say the darndest things.

-v

 

[killATwill]

ha, yeah vita, who needs hard work, when i can just buy a SF home with an interest only loan and bank 100K yearly for the rest of my life? professional house sitting is so cool!

 

[killATwill]

this commentary is riddled with so much errant conjecture and frail logic that it gave me like the hugest boner just thinking about the opportunity that monied people will have when the bay err-ea becomes a massive tract of negative equity.

Quote from sirpangolin:

No offense, but you sound as if you don't live in the Bay Area, which means you probably are unaware of some key things about real estate here:

a) I own a home worth over 500K, and I don't even pay close to that figure. If I did, I wouldn't be in a home. That's why banks have all kinds of fancy loans -- for example, the 12-month MTA PayOption Jumbo ARM...but if you live in an area that has 2% appreciation, then you probably don't understand what a Jumbo is anyway, so...

b) Generally speaking, Bay Area home owners don't stay in homes more than 3-5 years. They sell their home after making 300K in 3 years, and upgrade. Then they stay in that home for 10-15 years then retire. So I pay interest-only for three years and never touch the principal. Who cares! I made 300K when I go to sell. I can now move to Bumsville, Idaho, take care of my family, and pay cash for a place.



For the most part, it's always been expensive because of appreciation out here. People want to live in the Bay Area. Sure, 1992 was bad, but it recovered in a few years. The Bay Area always bounces back because people want to be here.

Areas that have .4% (which is not correct and isn't even inflation BTW -- most Midwest states, for example, are at or slightly above inflation (2.6-3%)), aren't areas I would want to live in anyway. I know -- I grew up in the Midwest... I left and didn't look back.

Closing statement: It would take a BIG natural disaster to wipe out the housing market in California. It's always been this way. The greatest predictor of the future is history. Sure, it's cylical, but it's not doomsday out here.

 

[duard]

In 91 and 92 new towers in SF couldn't give away the places. They were giving 10k in furnishing incentives plus in - house below market loans plus moving allowances for places that were corner view upper level flats.

Oh yeah and east bay was take over payments everywhere.

Yes in the bay area prices only go up.

 

[Covertibility]

"also, the average appreciation of a house over time os only like .4% per year...the house you live in is gernerally not a good investment (but it has been the past few years), it is a liability."

Just when you thought you seen it all..... I'm gonna guess sometime next year someone will say houing over the long run has a negative return. lol.

 

[killATwill]

over the long run, housing has a real return of 0.