Harry Krause wrote:
wrote:
JIMinFL wrote:
wrote in message
ups.com...
JIMinFL wrote:
http://www.orlandosentinel.com/busin...ness-headlines
After a couple of years of boom town price hikes and 3% rent increases,
buyers can no longer afford to service the debt or would be reluctant
to tie up that sort of cash for such a paltry return.
Isn't that what the guy said in the first sentence of his article.
Not exactly. The author supposes that rents will soon begin increasing
dramatically to support the skyrocketing price of houses and
apartments. IMO, as a guy with over 30-years of landlording experience,
that ain't gonna happen, and here's why:
Buyers are attracted to skyrocketing prices like moths to an overly
bright deck light.
Buyers, weirdly enough, want to buy the most overpriced house they
think they can almost afford,
with the expectation that when the house they just paid $1mm for goes
up 40% in a year they will be much better off than if they bought a
$400,000 house. In the current market, you can almost increase the
amount of interest in a property by raising the price.
Renters, on the other hand, consider housing an expense rather than an
"investment." Renters are not the least impressed with what the
building they are living in is worth this year vs. last, they are
simply hopting to get by with the lowest monthly payment for a
habitable rental house or apartment that meets their needs.
For example: I can speak with unquestionable accuracy about an
embarrasing and tottering little eyesore of a run down slum in a mixed
residential/commercial neighborhood just a couple of blocks from one of
Seattle's major tourist attractions. They just mowed down the old
teacher's union building on the lot immediately next door, and they're
putting up 17 (!) new townhomes. I'm going to speculate that the very
tiny little two-shoebox-bedroom townhomes will probably sell for
something north of $200,000 apiece- and based on what the developer
paid for the TU building and the demolition they are probably going to
have to bring at least that much for the project to pencil. Rents for
one of those little crackerboxes would need to be at least $1500-1800 a
month to make any sense at all. Some people will surely move in and pay
that, but it isn't going to raise the rents on any of the 2 bedroom
units in the little eyesore of a run down slum next door. (The 1964
vintage bulding gets $895-925 for a typical 2 bedroom).
Point is: The new buildings need some super rents to pencil, but the
market consists of new buildings that must get record breaking rents as
well as older buldings that can afford to
rent out a similar amount of space, in exactly the same neighborhood,
for about half the price.
Renters seek the lowest available rent for an apartment that meets
their standards, a totally different philosophy from most buyers who
believe it's a wise move to buy the most overpriced property they can
find and speculate on further appreciation.
Up in the Northeast they are seeing record setting housing prices. Housing
starts are way down. Housing sales are off. Taxes are going up. Little is
being done to improve the inferstructure. They have a democratic
legislature, and puritainistic town governments. The technology highway is
crumbling. Because of all of this, there is a negative population growth in
at least one New England state. Oh! I forgot to mention the weather.
Hopefully it hasn't yet gotten that bad up where you live. Cut your losses
and come on down while you can. The timing isn't going to get any better.
Oh, by the way bring lots of money with you. You can't make a living on
wages down here.
And precisely because you "can't make a living on wages", the FLA
bubble is going to burst.
Those wage earners who "can't make aliving" will be unable to pay the
rents required to support the mega-expensive new condos and apartments-
even if they wanted to do so.
JIMinFL
Fortunately, one can still buy a very nice brand new house on a decent
lot in NE Florida for $125,000 to $150,000. This would be a four bedroom
builder's house, with 2-1/2 baths, and a decent lot NOT in a flood
plain. I don't disagree about wages in Florida, though. They really
suck. That's why the state usually loses so many teachers, firemen,
policemen, et cetera, every year.
Whenever we have travelled to the south, (has been a couple of years
now), we are always amazed at some of the relative "deals" we see on
the RE down that way. IIRC, we saw ads for 3-4 bedroom houses on 20
acre parcels for about $100k in some of the more rural areas last time
we were down there. It's too bad that the costs for most things work on
a national, rather than regional basis because if the cost for housing
were indicative of the overall relative cost of living in the sunny
"souf" there would be a stampede of folks headed that way who couldn't
afford to retire anywhere else.
And that's another disconnect; Why do the SOFLA folks think that
exponentially increasing numbers of fixed-income retirees are going to
be attracted to the most expensive housing in the country?
I'd like to have 20 acres and a 4-bedroom house for $100k......but on
the shore of Puget Sound, if you please. :-)
I'd only consider renting a place for a week or two in SW Florida. The
weather stinks, and you are likely to lose everything in a hurricane.
--
Debate Issue:
Resolved, that the voters of the United States need a mechanism
to remove an incompetent President from office.
An alternative: write a letter to George W. Bush at the White House
and ask him to resign immediately for the good of the country and its
people.