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South Florida Sun-Sentinel

Florida's unemployment rate hit 8.6 percent in January, t...

"A bit of positive economic news came from the Federal Reserve, which reported that consumer borrowing increased at an annual rate of $1.76 billion in the first month of the year." Does anyone realize how stupid this statement is? People borrowing money is what got us into this nightmare, and yet, somehow it's a good thing when people borrow more heavily? FL is taking this worse then just about any other state because of the massive overvaluation in our housing market. We invested SO much money from 1999-2006 in residential RE (which was a total misallocation of resources) that we probably won't need to build another home for a decade to meet intrinsic demand. That's a very bad situation for an area that has low median incomes and has been based (for a decade now) on building/housing/b anking as the cornerstone of our economy. It is going to be very hard for people in some fields. Those in construction are either going to leave (to another area where they actually will need homes built again this decade), retrain, or stay unemployed. That's a huge swath of FL workers, and will keep our unemployment rate high for a long time. It will also keep people leaving the state (to find work elsewhere, or at least a lower cost of living), which will only exacerbate our housing problems; pushing priced down further.  (Mar 7, 2009 | post #13)

South Florida Sun-Sentinel

Citigroup mortgages lowered: Citicorp to lower some mortg...

Arbitrator, You and I don't always agree, but on this post, I'm there with you 100%. Many of these "homeowners " have been paying under the INTEREST on their loans for years now. They may have been paying less then rent, and now (because the loan balance goes up with an option ARM), they find themselves deeply underwater. How is that our problem? They never "owned" anything anyway, that just had a huge line of credit with the bank (that will never be paid back). I just don't see much point in bailing out those who were, in many cases, clearly irresponsible. They deserve to take the credit hit, and be renters for 3-5 years. I've been a renter that long patiently waiting out this bubble, why is it OK for me but not good enough for them  (Mar 4, 2009 | post #53)

South Florida Sun-Sentinel

South Florida home prices keep plunging

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  (Feb 27, 2009 | post #210)

South Florida Sun-Sentinel

South Florida home prices keep plunging

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  (Feb 27, 2009 | post #206)

South Florida Sun-Sentinel

A job fair being held in Davie, Florida on Thursday, Feb....

HELOC, that's how everyone drives BMWs in S. FL. That's also why everyone is losing homes in S. FL, and why the S. FL housing market is one of the worst in the nation. Build an area on nothing but construction and real estate (selling, flipping, scamming, etc) and this is what you get; an absolute disaster when the music stops  (Feb 27, 2009 | post #26)

South Florida Sun-Sentinel

South Florida home prices keep plunging

My father is actually a tax professor at a large NJ college; the first time we discussed SOH we got into a big argument because he was convinced that I was wrong about how the system worked. Several days later he called me back to apologize; saying that SOH was the most incredibly flawed taxing scheme he had ever seen in practice. His words were "Don't people realize that this will lead to run-away taxation", to which my only answer was "Apparently not". He then mentioned that you'd have to be nuts to buy a 2nd home in FL given the SOH tax system, you're almost assured a completely unstoppable tax increase at the cheering of the residents. I had to agree. The thing that most people just can't get their heads around is that if we had a revenue neutral tax system put in place (instead of SOH), we would all have a tax rate today of about 1% (instead of the 2% we currently pay). SOH has ripped off this state like no other law that has ever been passed, nothing has increased revenues faster then SOH, and yet, the people still (because they don't understand the interaction between mill rates, appraisals, and tax bills) support it. What most people don't realize, and nobody will ever tell them, is that even those with big SOH exemptions are still victims of the system. The only people who really make out with the SOH system is the rich, who own big homes, have owned them for 20 years, and have a tax bill of 5K on a 5M dollar home. The 2-3K that most people "save" because of SOH is nothing compared to the 100K+ that many of the mansions across S. FL have sheltered from taxation. Most people are losers on this system, unless you bought 20+ years ago, or have a VERY expensive home (also bought a long time ago) your a victim of the SOH system. Oh well, perhaps one day the people will wake up. Until then, we have crushed the RE market in this state, and made it the most tax unfriendly state in the union for 2nd home owners/investors. Great idea when we have the biggest glut of homes in history, right  (Feb 26, 2009 | post #180)

South Florida Sun-Sentinel

South Florida home prices keep plunging

That is true to an extent. The biggest question (IMHO) is why didn't the mill rates fall from 2000-2006? Home prices went up 100-300%, and the mill rates remained constant? That's the real crime, and, again, IMHO, I think that its because of SOH that the mill rates didn't fall. There was no political pressure to reduce them because all the voters have SOH protection, and therefore don't care about the assessed values. My father's home in NY was reappraised a few years ago at 10X his previous appraisial (housing bubble wasn't just FL, and it had been a long time since they did the appraisals). You know what happened to his taxes? They went DOWN! Only in FL do we have this idea that 10X increase in value means 10X taxes!! They lowered the mill rates to adjust for the new home values, and now, because the cost of services hadn't increased much, everyone pretty much still pays the same tax bill they had many years before (unless you made big improvements to changes to your home). It's all about RELATIVE value in the rest of the country. SOH has made it about ABSOLUTE value, which, during the bubble, was a disaster for everyone not covered by SOH. If everyone's home values go up 10X tomorrow, does that mean we all pay 10X in taxes? Only in FL does that mentality even exist, your home value is only one part of your tax bill. The MILL RATE X value is what determines your tax bill. The mill rate remained unchanged while prices went up 2-4X. That's the real crime of SOH  (Feb 26, 2009 | post #175)

South Florida Sun-Sentinel

South Florida home prices keep plunging

LOL. How can you defend SOH in the face of the evidence from 2000-2006? SOH caused taxes to go up during that time at a rate never before seen in FL history. It did nothing to control the tax burden, it actually helped it increase at an absolutely breakneck pace. If you believe (as I do) that SOH was a wonderful way to raise taxes on FL homeowners, then, yes, I suppose you can argue it worked as intended. However, most people believe that SOH is a tax control, or a cap, to prevent taxes from going up as much as they would without it. In that respect, it's an absolute failure, taxes have never gone up as fast as they did since the passage of SOH  (Feb 26, 2009 | post #172)

South Florida Sun-Sentinel

South Florida home prices keep plunging

LOL. Amend 1 was for the mental deficients, plain and simple. There were VERY few people who would have been helped by that plan; and the number falls more and more every day as SOH values and actual values converge again. Had we passed something like the 1.3% max mill rate that had been proposed, many of us would see our taxes at 1/2 their peak levels. But, once again, we had to try to " **** **k thy neighbor" and stick others with our tax obligations through SOH. This time we are getting what we deserve, higher tax rates and no help from portability. Perhaps, after this collapse ends, we can have a real discussion again about CAPPING THE REVENUE of the taxing bodies, to prevent the 100-300% tax increases that we say from 2000-2006. I'm not hopeful that this system will ever be fixed. The people of FL just don't understand how it works, SOH has pushed up taxes MORE and FASTER then ANY other law passed in FL property tax history. And yet we (the people of FL) continue to defend and protect it, because most of us don't understand what it really does  (Feb 26, 2009 | post #159)

South Florida Sun-Sentinel

South Florida home prices keep plunging

He (like me) is waiting for fair value to be reached. The way he got his high credit score and high income is through making wise choices in life. Buying into a crashing market isn't typically considered a "wise" choice! :) Rent X 100, 100/sq/ft; those are the numbers we will hit when we're fairly valued. Once we hit those numbers, the smart money will start to move again. But, there is a VERY good chance that we will fall far below those guidelines, we have a massive oversupply of homes down here, there will be communities where homes will fall to nearly 0, they simply have no value to anyone (other then scrap value of the house). I was out in Wellington last week looking at some homes prices ~50/sq/ft. It's still too much, there's simply too many homes in Wellington, and the homes there are FAR too large. They need to fall further, and likely bulldoze some communities to reduce the supply  (Feb 26, 2009 | post #150)

South Florida Sun-Sentinel

South Florida home prices keep plunging

Absolutely, 3X income is the MAX for a home in S. FL, and, on 60K (median income) a 180K house is really pushing it! Remember, taxes and insurance are incredibly high in FL (compared to the rest of the country), as well as HOA fees and other fixed costs. IMHO, anything over 2.5X income is asking for trouble in this area, our cost of living is just too high to support 3X home prices (at least at the median income levels). 100/sq/ft is the other gauge that I use, don't even consider buying a home for over 100/sq/ft unless you are look at something very unique (which is, IMHO, ONLY waterfront, deep water, or ocean front.. And no, man made ponds are not waterfront  (Feb 26, 2009 | post #148)

South Florida Sun-Sentinel

South Florida home prices keep plunging

LOL. You people who think it takes a "crystal ball" to predict home prices really crack me up. Read "Irrational Exuberance" by Robert Shiller, that will explain the housing market, and housing market pricing to you, giving you a "crystal ball" as well. Home prices are about as predictable as sunrise/sunset, with the exception of the RE bubble, when adjusted for inflation, home prices are pretty much flat throughout all of recorded history (with the exception of after one of the world wars). Home prices mirror inflation; once you realize that, you "suddenly " can predict home prices out into the future! Now, what I can't tell you is the exact time/day to buy. But what I can tell you is when we have again reached the historic price levels on homes in this area. And we're still not there, we have another 10-20% in most areas to go. And then we may overcorrect (because we built WAY too many houses!), but at least you won't get killed if you wait for historic price/income and price/rent (as well as Case-Shiller) numbers to fall back in line  (Feb 26, 2009 | post #147)

South Florida Sun-Sentinel

South Florida home prices keep plunging

The home price stats are almost always reported as MEDIAN, not average. The median is the number in the middle, and is used in home prices specifically to keep very expensive or inexpensive homes from skewing the number up or down. So, the median says that 1/2 of all homes sold for HIGHER, and 1/2 for lower. It does not take into account how MUCH higher or lower, therefore this number does not skew with the inclusion of high end homes  (Feb 26, 2009 | post #146)

South Florida Sun-Sentinel

Broward County: Police crack down on aggressive drivers

Blatant money grab. That's all these are, just sit out there and write tickets en'masse. Frankly, 80%+ of the cars on I95, TPKE, or 595 EVER day can be pulled and written for something. And if you **** the cop off, that number goes to 100%. :) If they only went after people who were actually causing dangerous situations, I would support it. But those tickets are much more difficult and a PITA to write. So, instead, I'm sure they just sat there with a radar gun getting everyone going over some arbitrary speed they selected, pulled them over, and wrote for speeding. Yup, I feel a LOT safer now.  (Feb 25, 2009 | post #25)