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Maybe Time To Move To Florida!


Parsad
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Article discussing how nearly 20% of homes in Florida sit empty.  One analyst predicts that it will take till 2030 for prices to come back in some areas.  Maybe I should buy a winter home in the next couple of years!  ;D  Cheers!

 

http://finance.yahoo.com/news/Nearly-20-of-Florida-homes-cnnm-2507768369.html;_ylt=ApNniPB06JG.ivIQ6vnaFkq7YWsA;_ylu=X3oDMTE1cWFpZzBtBHBvcwM2BHNlYwN0b3BTdG9yaWVzBHNsawNuZWFybHkyMG9mZmw-?x=0&sec=topStories&pos=3&asset=&ccode=

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The contrast between Florida with a median home price of $122K and Vancouver is pretty incredible. And Florida is arguably a nicer place to live.

 

Sometimes I wonder what would happen to Vancouver if Harper's and Obama's border initiative suddenly results in elimination of Canada/US border and allow Canadians to live and work freely in the US.

http://www.canada.com/business/Harper+Obama+agree+integrate+border+creating+security+trade+perimeter/4225641/story.html

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Millions of Democrats would move to Canada...

 

The contrast between Florida with a median home price of $122K and Vancouver is pretty incredible. And Florida is arguably a nicer place to live.

 

Sometimes I wonder what would happen to Vancouver if Harper's and Obama's border initiative suddenly results in elimination of Canada/US border and allow Canadians to live and work freely in the US.

http://www.canada.com/business/Harper+Obama+agree+integrate+border+creating+security+trade+perimeter/4225641/story.html

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I just got back from Marco Island and while I was there I went to 2 open houses the homes were very nice and were selling for $800,000.00 similiar to the one we rent.I was the only one there except for the real estate agent and being from southern Ontario I not familiar with all the costs that are involved with owning a home in Florida.The agent went through all of the things that you need to do if you own a home there.Things like the cost of the exterminator.So we went through all the costs taxes,pool guy,grass cutting,ELECTRIC BILL(keep in mind ac all summer or the house gets mold)and on that house it would take $35,000.00 a year just to own it.

 

He told me that lots on the island in 95 cost $50,000.00 in 2006 they were $800 to 1.2 mil now they are $175,000.00.This agent said things in Fla are not cheap just were they should be.

 

We rent a house on the water for the month for $5000.00 and walk away at the end.I realized when it comes to real estate I should invest in my own back yard.Cheers

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We sold our house on Marco Island in 2004 and can confirm the $35k amount to own a house on the island.  Water is very expensive, sprinklers need to run in the winter or your lawn is toast, flood insurance, wind insurance, homeowners insurance, pool heater and the list goes on.  You are definitely better off renting.

 

We check the real estate prices on Marco occasionally and have found that two very similar houses will be on the market for very different prices.  Sometimes one house will be half the price of the other.  The lower priced house will usually sell after several months, but the higher price house seems to stay on the market forever.  Actually, some homes on the island seem to be perpetually for sale. 

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You may kick yourself for not taking advantage of the gifts of extremely low interest rates and (perhaps) rock bottom valuations:

 

http://blogs.forbes.com/robertlenzner/2010/09/27/john-paulson-sell-bonds-buy-stocks-double-digit-inflation-coming/

 

As this is the best time in 50 years to buy homes, Paulson advised his listeners, crowded into 3 separate dining rooms, to issue 30 year mortgages to buy a home as “your debt and interest payments get locked in at record lows, while the price of your home will rise.”

 

“If you don’t own a home buy one,” Paulson recommended; ” if you  own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.”

 

Prices WILL go lower in Florida but on a 10 - 20 year time horizon the upside is locked in when you consider inflation and population growth.

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“If you don’t own a home buy one,” Paulson recommended; ” if you  own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.”

 

Isn't that what got us into this mess?  Looks like China is going in this direction as well.

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“If you don’t own a home buy one,” Paulson recommended; ” if you  own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.”

 

Isn't that what got us into this mess?  Looks like China is going in this direction as well.

 

Exactly. From FFH 2010 letter :

 

Meanwhile we have concerns over potential bubbles in emerging markets. Consider, for instance, what we learned on a recent trip to China: many house (apartment) prices in Beijing and Shanghai had gone up almost four times – in the past four to five years!; many individuals own multiple apartments as investments with the certain belief that real estate prices can only go up; and maids are taking holidays so that they can buy apartments also. “Buy two and sell one after it doubles to get one for free” goes the refrain! In his essay in Vanity Fair, “When Irish Eyes Are Crying”, Michael Lewis says, “Real estate bubbles never end with soft landings. A bubble is inflated by nothing firmer than expectations. The moment people cease to believe that house prices will rise forever, they will notice what a terrible long term investment real estate has become and flee the market, and the market will crash.” We agree!!
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Hoodlum...2 points:

 

1) Bayes Theorem doesn't apply here.  Valuations in China are not a pre-condition for valuations in Florida. 

 

2) Absolute valuation matters and relative valuation doesn't.  Values of Florida real estate assets are best examined in the context of replacement value -- a measure of absolute value.

 

-O

 

“If you don’t own a home buy one,” Paulson recommended; ” if you  own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home.”

 

Isn't that what got us into this mess?  Looks like China is going in this direction as well.

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Guest broxburnboy

You may kick yourself for not taking advantage of the gifts of extremely low interest rates and (perhaps) rock bottom valuations:

 

Prices WILL go lower in Florida but on a 10 - 20 year time horizon the upside is locked in when you consider inflation and population growth.

 

Low interest rates a gift? Who is giving such great gifts.. the banks? the government?

Low interest rates are a trap, and one than can not be sustained.

 

Rock bottom valuations will come when interest rates and employment are relatively high, not now when they are unsustainably low. This market will continue to collapse as rental income income plummets and municipal/state taxes must be raised. Services will be cut and neighborhoods will continue to erode. It's not pretty but the bottom is not in yet.

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Low interest rates a gift? Who is giving such great gifts.. the banks? the government?

Low interest rates are a trap, and one than can not be sustained.

 

Rock bottom valuations will come when interest rates and employment are relatively high, not now when they are unsustainably low. This market will continue to collapse as rental income income plummets and municipal/state taxes must be raised. Services will be cut and neighborhoods will continue to erode. It's not pretty but the bottom is not in yet.

 

I think it is fairly reasonable to say a guaranteed borrowing rate less than 4.3% every year for nearly 1/3 of a century is a "gift".

 

I think Paulson was speaking tongue-in-cheek when he said you should borrow to buy two or three homes. I assume, given his history as an investor, that he was implying that folks should hedge (against what he feels is a coming inflation tsunami) with real estate.

 

I think it would be a bad idea to borrow to buy Florida real estate if you think that home prices will be lower in 2026 than they are in 2011. That is possible, but I can't figure out how that could happen (save for a few category 4 or 5 hurricanes). If this were 2004 or 2005 it would be another story.

 

If interest rates will be sliced in half from current levels then I would be shocked by that too.

 

 

 

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Although housing prices are local for the most part, the prices in the US are very low compared to Canada or developed countries like Japan, Hongkong, Europe or Australia. Florida population is increasing and it has gained congressional seats. With more boomers retiring ( check out Lou Simpson ) more folks will prefer Nevada, Arizona and Florida. All three have favorable weather and Florida has no state income tax.

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I think prices are low enough to warrant buying to live in. But its not time to start a partnership based on rolling up houses and renting them out (a few in my family have done this).  I like being mobile and am happy to pay rent for the optionaility of being able to move every few years. As someone looking to buy housing based solely from an investment perspective. Stocks look cheaper. I would rather own ROIC leaps. Massive cheap leverage, and no phone calls  ;D

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