housing bubble about to bust?
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From: WASTED in Margaritaville
Miami condo market will be first. There is an insane amount of units coming online from now until 2008. Over 80% are investor units. I don't know if single-family residential will burst, but I think you might see a regression in prices. For example the last information I saw said Palm Beach County's housing market was overvalues by over 26%.
The only thing thats keeping the bubble from bursting IMHO is that mortgage interest rates have stayed low. A lot of people with ARMs/Interest only mortgages can only afford their payments at low rates. Should the rates rise, it could be bad.
Since I'm sort of in this business I usually get some good information. I have another South Florida market seminar coming up soon. I'll have new information in a month or so as they do these quarterly.
The only thing thats keeping the bubble from bursting IMHO is that mortgage interest rates have stayed low. A lot of people with ARMs/Interest only mortgages can only afford their payments at low rates. Should the rates rise, it could be bad.
Since I'm sort of in this business I usually get some good information. I have another South Florida market seminar coming up soon. I'll have new information in a month or so as they do these quarterly.
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The bubble will burst eventually. Just some parts will be quicker than others. Keith brought up the prime example of Miami. That is the first place that will go. Too much supply, and not enough demand...
On the other hand, you have to take into account that people are maikng a lot of money off their homes, but when it comes to purchasing a new home, all things being relative, some of them cannot afford it. The same house that would have cost you $200,000 a few years ago has more than doubled today.
Once interest rates rise, that will be the end of the housing boom! There will be foreclosures all over the place, due to all of those interest only and adjustable rate mortgages.
With an interest only mortgage, your payment is low because you are only putting money towards the interest. If you do a 5 year interest only on a $200,000 loan, you still owe $200,000 at the end of those five years. If your home has not appreciated, then you are screwed once the time comes to switch to a regualr mortgage, because people may or may not be able to afford the payment.
On an adjustable rate mortgage, once the rate increases, people may no longer be able to afford their new mortgage payment. This will lead to the following: More homes flooding the market as well as foreclosures. With more supply out there, prices will drop.
I did not explain the adjustable rate stuff with much detail, but hope I gave a clear picture of it.
On the other hand, you have to take into account that people are maikng a lot of money off their homes, but when it comes to purchasing a new home, all things being relative, some of them cannot afford it. The same house that would have cost you $200,000 a few years ago has more than doubled today.
Once interest rates rise, that will be the end of the housing boom! There will be foreclosures all over the place, due to all of those interest only and adjustable rate mortgages.
With an interest only mortgage, your payment is low because you are only putting money towards the interest. If you do a 5 year interest only on a $200,000 loan, you still owe $200,000 at the end of those five years. If your home has not appreciated, then you are screwed once the time comes to switch to a regualr mortgage, because people may or may not be able to afford the payment.
On an adjustable rate mortgage, once the rate increases, people may no longer be able to afford their new mortgage payment. This will lead to the following: More homes flooding the market as well as foreclosures. With more supply out there, prices will drop.
I did not explain the adjustable rate stuff with much detail, but hope I gave a clear picture of it.
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From: on the rev limiter
Originally Posted by S2K44,Jun 24 2005, 09:20 AM
...There will be foreclosures all over the place, due to all of those interest only and adjustable rate mortgages.
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It all depends on lenght of adjustable rate.... Of course there is a cap on how high the rate can go up, but that could mean a few more hundred per month on their mortgage, which some people cannot handle...
All things being equal, expect a good amount of foreclosures once the rate increases..... However, as we've seen, nothing is normal in the housing market these days!
All things being equal, expect a good amount of foreclosures once the rate increases..... However, as we've seen, nothing is normal in the housing market these days!
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From: WASTED in Margaritaville
Some are some aren't Penrod. ARMs with the lowest initial rates have no caps. A lot of ARMs are capped but at 8-9%. 
One thing to counter the assertion that people are making money on houses. They do make a lot of money but all of the other houses have escalted in price as well. Furthermore, your property taxes are assed on the amount of the last sale, so a lot of people aren't able to afford a more expensive house when the property taxes are factored in. $400,000 house is $8,000 a year or $666.67/month in property taxes (obviously before your $50,000 homestead exemption). Keep in mind if you had a house you bought for $100,000 your taxes would only have been $2,000/year or $166.67/month. Since they can only raise property taxes by small amounts each year, your tax rate on the old house is still significantly lower.
One thing to counter the assertion that people are making money on houses. They do make a lot of money but all of the other houses have escalted in price as well. Furthermore, your property taxes are assed on the amount of the last sale, so a lot of people aren't able to afford a more expensive house when the property taxes are factored in. $400,000 house is $8,000 a year or $666.67/month in property taxes (obviously before your $50,000 homestead exemption). Keep in mind if you had a house you bought for $100,000 your taxes would only have been $2,000/year or $166.67/month. Since they can only raise property taxes by small amounts each year, your tax rate on the old house is still significantly lower.
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From: Miami, Florida
Originally Posted by KeithD,Jun 24 2005, 11:18 AM
Some are some aren't Penrod. ARMs with the lowest initial rates have no caps. A lot of ARMs are capped but at 8-9%.
One thing to counter the assertion that people are making money on houses. They do make a lot of money but all of the other houses have escalted in price as well. Furthermore, your property taxes are assed on the amount of the last sale, so a lot of people aren't able to afford a more expensive house when the property taxes are factored in. $400,000 house is $8,000 a year or $666.67/month in property taxes (obviously before your $50,000 homestead exemption). Keep in mind if you had a house you bought for $100,000 your taxes would only have been $2,000/year or $166.67/month. Since they can only raise property taxes by small amounts each year, your tax rate on the old house is still significantly lower.
One thing to counter the assertion that people are making money on houses. They do make a lot of money but all of the other houses have escalted in price as well. Furthermore, your property taxes are assed on the amount of the last sale, so a lot of people aren't able to afford a more expensive house when the property taxes are factored in. $400,000 house is $8,000 a year or $666.67/month in property taxes (obviously before your $50,000 homestead exemption). Keep in mind if you had a house you bought for $100,000 your taxes would only have been $2,000/year or $166.67/month. Since they can only raise property taxes by small amounts each year, your tax rate on the old house is still significantly lower.
Anyone know of any good insurance companies for home owners?
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I'm trying to buy something right now, but think it is a bad time.. That is just my opinion though.. i feel that prices are high enough, and there is not too much room for them get any higher, so i think it would be a bad investment for me at this point in time...
However the way our economy is, you never know what the hell is going to happen....
However the way our economy is, you never know what the hell is going to happen....