South Florida home prices keep plunging

South Florida home prices keep plunging

There are 178 comments on the South Florida Sun-Sentinel story from Feb 25, 2009, titled South Florida home prices keep plunging. In it, South Florida Sun-Sentinel reports that:

Prices of existing homes and condominiums continue to plummet in South Florida as the weak housing market searches for a bottom.

Join the discussion below, or Read more at South Florida Sun-Sentinel.

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BillB

Pompano Beach, FL

#197 Feb 26, 2009
I AM A1ACharles Dammit wrote:
Now we subsidize the marine industry's tax bill.
Great.
And just HOW is that being done ????

Marina's now get tax as a marina WHY would anyone have a problem with that. The real problem was when working waterfronts such as a marina were being tax for potential use for something they're NOT. Rather UN-American if you ask me and NO I don't own or am involved with any waterfront property.
I AM A1ACharles Dammit

West Palm Beach, FL

#198 Feb 26, 2009
BillB wrote:
<quoted text>
And just HOW is that being done ????
Marina's now get tax as a marina WHY would anyone have a problem with that. The real problem was when working waterfronts such as a marina were being tax for potential use for something they're NOT. Rather UN-American if you ask me and NO I don't own or am involved with any waterfront property.
They lobbied to have their taxes lowered and their former burden is now my current burden.
Broward Resident

Minerva, OH

#199 Feb 26, 2009
Their burden was caused by developers saying that that property was worth 10x as much if it was a high rise condo. A terrible idea if it's being used as a marina. It means the only way anyone can afford it is it's turned into a high rise. It's killing the mom and pop hotels on Hollwood Beach

“East side of Fort Lauderdale”

Since: Feb 09

Fort Lauderdale

#201 Feb 26, 2009
If the title of the article is even remotely correct - that prices continue to fall - then it clearly is NOT the time to buy, but instead is the time to wait.
I AM A1ACharles Dammit

West Palm Beach, FL

#203 Feb 27, 2009
Broward Resident wrote:
Their burden was caused by developers saying that that property was worth 10x as much if it was a high rise condo. A terrible idea if it's being used as a marina. It means the only way anyone can afford it is it's turned into a high rise. It's killing the mom and pop hotels on Hollwood Beach
Well gosh, I sure would like to have enough political clout to have my special interests addressed.
brushfire

Miami, FL

#204 Feb 27, 2009
I AM A1ACharles Dammit wrote:
<quoted text>
Well gosh, I sure would like to have enough political clout to have my special interests addressed.
If your were getting raped as badly as the marine industry was, maybe you'd get some attention. The way it was previously set up, the marine industry was subsidizing YOU.
brushfire

Miami, FL

#205 Feb 27, 2009
Sure wrote:
<quoted text>
Is this called the "Catch a Falling Knife" financial strategy?
Let's apply your logic to the stock market.
In September 2008, everyone was selling their stocks -- in fact, the S&P dropped nearly 10% during that month.
Similarly, in October 2008, everyone was selling their stocks -- during that month, the S&P 500 dropped nearly 18%.
By your logic, September and October 2008 would have been wonderful times to buy stocks.
What's happened since?
Since early September 2008 and October 2008, the S&P 500 is down 40% and 34% respectively.
True, but is your answer to buy when prices are rising and sell when they're falling? Reasoning like that is why the majority of mutual fund and individual investors lose money in the stock market even over the course of good times. Why? It's because they're trying to time the market. Dollar cost averaging with stock investments and having a long term strategy is the only way to go, unless you are a trained securities analyst or got a magic crystal ball. Nobody's gonna send you a telegram telling you when the market has hit bottom or peaked.

Since: Jan 07

Hialeah, FL

#206 Feb 27, 2009
Are we talking about RE or stocks?

In RE, you can buy when the ratios work out (price/rent, price/median income) and be pretty well assured that 10 years from the date of purchase, you will at least break even.

Stocks are a whole different story, compared to RE, valuing stocks correctly is like trying to divine the weather patterns 3 years out from today, it's MUCH more difficult.

RE is exceptionally easy to value, it appreciates at the rate of inflation, and should generally sell for 100-125X rent. The median income in an area should be about 1/3rd the median home price. And the rate of appreciation should mirror the rate of inflation. Homes cost about 100/sq/ft to build, anything over that amount and you should be getting a very good location, premium building, or both. That's all you need to know about RE to keep yourself from getting killed in the market. Unfortunately, the rules on stocks are much more complicated and varied, it's much more difficult to value a stock.
brushfire wrote:
<quoted text>
True, but is your answer to buy when prices are rising and sell when they're falling? Reasoning like that is why the majority of mutual fund and individual investors lose money in the stock market even over the course of good times. Why? It's because they're trying to time the market. Dollar cost averaging with stock investments and having a long term strategy is the only way to go, unless you are a trained securities analyst or got a magic crystal ball. Nobody's gonna send you a telegram telling you when the market has hit bottom or peaked.
I AM A1ACharles Dammit

West Palm Beach, FL

#207 Feb 27, 2009
brushfire wrote:
<quoted text>
If your were getting raped as badly as the marine industry was, maybe you'd get some attention. The way it was previously set up, the marine industry was subsidizing YOU.
How much did the marine industry pay to remove heavy metals pollution from New River?

Raped? There will always be marinas.
Sure

United States

#209 Feb 27, 2009
brushfire wrote:
<quoted text>
True, but is your answer to buy when prices are rising and sell when they're falling? Reasoning like that is why the majority of mutual fund and individual investors lose money in the stock market even over the course of good times. Why? It's because they're trying to time the market. Dollar cost averaging with stock investments and having a long term strategy is the only way to go, unless you are a trained securities analyst or got a magic crystal ball. Nobody's gonna send you a telegram telling you when the market has hit bottom or peaked.
True to all of that. I used to be a market timer -- got burned. Now, I'm a dollar-cost averager.

Incidentally, I am a trained securities analyst and I still haven't figured it out -- the stock market crystal ball is working for me, despite my education.

However, as Mike Fink eloquently pointed out, the real estate market is MUCH, MUCH easier to figure out. When I saw the rent-to-buy ratios and the median household income to median home price get so out of wack, it didn’t take a PhD in economics to figure out that home prices were not even remotely sustainable. So, I made the decision to cash out and sell my real estate properties and become a lowly renter.

Now, I am waiting to get back in – to buy a home again and a few rental properties. While perfectly predicting the absolute bottom is the real estate market is still impossible, it very easy to figure out that we’re nowhere near the bottom yet. As Mike pointed out, the rent/buy and income/price ratios are still completely out of wack. In addition, we have nearly 5 years of inventory (a healthy market has around 4 months of inventory), record vacancy rates, population erosion, high unemployment, a ballooning foreclosure rate (with thousand of units that haven’t been processed by the lenders yet) and restrictive credit market. The data pointing to continued devaluation is overwhelming and certainly doesn’t require a crystal ball.

Besides, one really needs to look at personal risk in timing the real estate market. There is very little risk in missing the bottom and buying “too late.” If you buy after the absolutely bottom and buy into a rising market, you may not get the absolutely best price on your home. However, if you buy into an increase market, there is no risk in becoming underwater, where you’re unable to sell your home without bringing cash to the closing table. A job loss, illness, or an unexpected move will not cripple you because you’ll still be able to sell your house for a profit.

On the other hand, there is huge risk in buying “too early.” In this scenario, the risk of becoming underwater is huge. The same life changes that were manageable in a rising market become a crisis in a falling market (just like it is for millions of Americans right now).

Since: Jan 07

Hialeah, FL

#210 Feb 27, 2009
Excellent post, right on the mark. Frankly, RE is so predictable that, given expected inflation, and current price, it's possible to figure out RE prices pretty much indefinitely into the future (over a large base of homes). If you tell me the median price is 150K today (absent the bubble) and inflation is expected to be 3% per year, you can figure RE prices out for the next 10-20 years with reasonably good accuracy.

RE doesn't really appreciate, it paces inflation and, should the area change significantly (become much better or worse) the value of the land can change. But the house itself is a depreciating asset, it provides a utility over a period of time, and then it is "used up" and either needs to be rebuilt, or significant repairs. Why should a house built in 1980 cost more today then it did in 1980 (except for the inflation adjustment)?

And, of course, housing CANNOT outpace inflation for any significant period of time (or by a significant amount); if it did, eventually EVERYONE would be priced out.
Sure wrote:
<quoted text>
True to all of that. I used to be a market timer -- got burned. Now, I'm a dollar-cost averager.
Incidentally, I am a trained securities analyst and I still haven't figured it out -- the stock market crystal ball is working for me, despite my education.
However, as Mike Fink eloquently pointed out, the real estate market is MUCH, MUCH easier to figure out. When I saw the rent-to-buy ratios and the median household income to median home price get so out of wack, it didn’t take a PhD in economics to figure out that home prices were not even remotely sustainable. So, I made the decision to cash out and sell my real estate properties and become a lowly renter.
Now, I am waiting to get back in – to buy a home again and a few rental properties. While perfectly predicting the absolute bottom is the real estate market is still impossible, it very easy to figure out that we’re nowhere near the bottom yet. As Mike pointed out, the rent/buy and income/price ratios are still completely out of wack. In addition, we have nearly 5 years of inventory (a healthy market has around 4 months of inventory), record vacancy rates, population erosion, high unemployment, a ballooning foreclosure rate (with thousand of units that haven’t been processed by the lenders yet) and restrictive credit market. The data pointing to continued devaluation is overwhelming and certainly doesn’t require a crystal ball.
Besides, one really needs to look at personal risk in timing the real estate market. There is very little risk in missing the bottom and buying “too late.” If you buy after the absolutely bottom and buy into a rising market, you may not get the absolutely best price on your home. However, if you buy into an increase market, there is no risk in becoming underwater, where you’re unable to sell your home without bringing cash to the closing table. A job loss, illness, or an unexpected move will not cripple you because you’ll still be able to sell your house for a profit.
On the other hand, there is huge risk in buying “too early.” In this scenario, the risk of becoming underwater is huge. The same life changes that were manageable in a rising market become a crisis in a falling market (just like it is for millions of Americans right now).
Wise Guy

AOL

#211 Feb 27, 2009
Realist wrote:
I lived in NC as well. A big difference in North Carolina is that they have a 7% state income tax which means they do not tend to rely as heavily on real property taxes (so the millages are not as high). They also had personal property taxes, a tax on dogs, and a variety of other taxes to supplement revenue.
I was having a discussion with a CPA friend who lives in Asheville and when we ran the numbers between tax burdens in NC and Florida it came out pretty similar.
I think the income tax way of raising revenue makes more sense than the system we have in place in Florida (since you pay tax on what you actually earn versus taxing the value of an illiquid asset). The income tax scenario may be even more favorable to someone who has lost a job since their tax burden would inevitably be decreased as income declined. I don't think we are going to see any constitutional approval in Florida for an income tax so its probably a moot point anyway.
<quoted text>
As you say the tax burdens are about equal per capita, but in FL the burden is unfairly divided because of Save THEIR Homes. Some people pay through the nose and others pay very little.

I also have friends in Asheville and when I explained the property tax system in FL, they simply couldn't believe it.
Local resident

Miami, FL

#212 Feb 27, 2009
Thank G-d there's someone who understands what "median" house price means and doesn't get all bent out of shape about the papers continually reporting on it's downward slide. It doesn't mean any one particular house is worth more or less than you think, simply means more low priced homes are selling vs. expensive homes. So friggin what!!!
Median is NOT the average wrote:
To those of you saying a "few million dollar home sales will bring up the average"....yes, they will. But, this article is not talking about the MEAN ( or average) home prices, it is talking about the MEDIAN home prices. A really high priced home or a really , really low priced home ( called an outliar in statistics) affects the mean, but it doesn't really affect the median unless there are MANY of those very high or very low priced home sales. When they say the MEDIAN home price is $190,000 , that means half of the homes sold for less than $190,000 and half sold for more. Just a clarification....
Do the Math

Kissimmee, FL

#213 Feb 27, 2009
Wise Guy wrote:
As you say the tax burdens are about equal per capita, but in FL the burden is unfairly divided because of Save THEIR Homes. Some people pay through the nose and others pay very little.
I have no problem with attacking A1, I was against it too. But SOH has saved me and most every homeowner money, that is the bottom line.

Oh, those of us with SOH do not pay "very little", we just don't have bubble prices impact our taxes. 3% increases per year to match historical home price increases, they are just more stable (predictable, plannable, justifiable) than what was there before, where the property appraiser could jump folks for a 10 to 20% increase for the SAME property just because their neighbor overpaid for their home.

We don't pay "very little", we still pay too much, but it is too much based on the real value of our home, and not the speculator-frenzied price that you would rather have us pay taxes on.
JCenafan54

Summerland Key, FL

#214 Feb 28, 2009
Well the so-called market correction had to happen sooner or later. Some of the inflated prices as late as 05-06, I blame on people "flipping" houses that they bought and selling quick for profit. I still feel that we're not quite at the bottom yet, even though $191k isn't that bad. I'm looking for the median range to be from $125k-$160k, to be "at the bottom". Hey would you rather pay $380k or so, like people did 3 years ago or so?
J-E-T-S

Pompano Beach, FL

#215 Mar 3, 2009
JManning wrote:
December 2006...I called the top of the housing market and told all the tards that the party was over. Back then, these boards were half-populated by people calling me a loser and saying I had missed the boat.
I would just like to say to those people...HAHAHA!
loser
David

United States

#216 Mar 3, 2009
The banks are sitting on mortgages that still in many cases are 30 to 50 percent too much. They are still getting bail-out money and until this dries up they are not in any real hurry to dispose of it and low prices. We looked at several homes in a nice area and the banks wanted 700k to 900k for them.

These homes sold in 1999-2003 from 198K to 308K. People kept buying higher and higher in the boom and these banks kept lending the money.

One home was 208K in 2001, 435K in 2005 and 653K in 2007. Talk about being over inflated.

With the new lending standards who is going to buy all this 500K to one million plus and up property? It is just sitting there for the most part.

I read in Money Magazine where the number of homes costing 800K and up have about 12 homes for each qualified buyer.

My wife and I own a home now and make about 147K combined income and the market in many cases in decent areas is just out of reach with the booms inflated prices.

Unless they go back to the old lending standards the homes are going to sit there.
investments

Hialeah, FL

#218 Mar 30, 2009
what hapens if I have a condo paid in full and purchased a property for more than its worth. Can I let go of the second propety without them taking my first one being that it is paid in full.both are invenstments?

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