Housing Market

G8rMom7 · Post by **G8rMom7** » Thu Feb 28, 2008 10:39 pm

As you may have read, my parents are settled. They are living in a house in Ocala that is paid for and they are finally selling their house in Fort Myers tomorrow.

However, my in-laws have been looking for a house for over a year now. Their biggest problem is agreeing on one between themselves. Then they had to get over the fact that they likely wouldn't be able to get a house in G'ville because of the taxes. So they finally found a house that both of them like in Ocala. But my brother-in-laws (Bill's bros) are telling them to wait...if they buy the house now for $350 or whatever, next year it will be worth $250K and they will have just thrown away $100K. The owners paid $188 for it and have added on and obviously spent a fair amount to upgrade it (although my in-laws don't know how much exactly).

Do you all agree? How much longer should they wait? They are currently living in a small rental condo in G'ville. Its okay but its in one of those over 55 developments and really, from what they say, its more like over 75. They just aren't ready to succumb to being that old yet.

Thoughts?

IHateUGAlyDawgs · Post by **IHateUGAlyDawgs** » Thu Feb 28, 2008 10:51 pm

with the new amendment that just passed they should be able to take their tax rate with them to Gainesville, no?

G8rMom7 · Post by **G8rMom7** » Thu Feb 28, 2008 11:02 pm

with the new amendment that just passed they should be able to take their tax rate with them to Gainesville, no?

I asked my MIL about that and she didn't know. They have been renting for over a year and a half and the last house they owned was in Lake Wales and they had only owned that for a year or so.

She said no matter what though, the taxes will always be higher in G'ville because of the school. But I don't know.

TTBHG · Post by **TTBHG** » Fri Feb 29, 2008 1:11 am

with the new amendment that just passed they should be able to take their tax rate with them to Gainesville, no?

I doubt it Hater, they will be able to transfer the new 25,000 Homestead but not their millage rate. I would have to read up on the new law completely but each county has a different millage rate and thus a different tax burden.

Allie, I have never heard of someone not buying a house due to the tax rate. The difference can not be that much. Plus, UF is a state university and thus funded by the state. I don't the county puts out much if any money to support the school. A school the size of UF would cripple the county.

Now on to the price question. I do believe that the housing market has not seen the worst of it yet. I can pull you miles of data to support that claim. I think it is going to take another 6-10 months, maybe slighty longer to get back to in the normal range. Unless they could find a foreclosure or a short sell house that is just too good to pass up, I would sit on the sideline for a while. Six months will fly by for them.

radbag · Post by **radbag** » Fri Feb 29, 2008 8:58 am

i'd caution to forecast and make the assumption that the price of a home is going down much less down almost 30%...that's pretty big.

timing the market is tricky...i'd suggest they monitor the situation closely with no expectations of a 30% drop...at some point, the value (if you are forecasting a decrease) will become very attractive...when that happens, it might even drop further...you are now subject to competition and other buyers...once there's competition and other buyers, price goes up....so be very careful in forecasting the bottom...it doesn't stay there very long.

i think the answer lies in their timeframe as to how long they are willing to monitor the housing situation...if their timeframe is only 3 months, i'd say go get it now...if they're willing to wait several years, they should sit tight and monitor bearing in mind that they might have to make decisions sooner rather than later.

i too hate to buy at the highs...but i look at it this way, if i can afford it at the highs, and i want/need it right now, price means little...i'm getting usage for a full year...doubt it drops 30% but even if it does, it's mine now and the price means nothing because eventually, the value will rise...the price will only mean something to me if i am in the market SELLING it...i'm not so i don't care.

G8rMom7 · Post by **G8rMom7** » Fri Feb 29, 2008 9:10 am

TT...Gainesville taxes are quite a bit more than everywhere else. When they found a house they liked a while back, they found out that the taxes would be around 8-9 grand. That's a lot for two retired teachers.

Rad, that is a good point. That is partly why my parents are happy with what they bought. Even though they couldn't get what they paid for it right now, who cares? Its paid for and they don't plan on moving or selling it so its no big deal.

So how much further will it drop? Rad, you threw out the number of 30%, is that what it is expected to drop?

radbag · Post by **radbag** » Fri Feb 29, 2008 9:30 am

i threw up 30% based on your assumption that a 350K home will be worth 250k next year...unlikely imo...350k to 300k likely...250k from 350k less likely...not impossible...just a tremendously big move....

i'll say though that i don't know the area, i don't know the house, i don't know the county, and i don't know the comparables in the area....i could be totally off base...best to ask a friend with a real estate background that is familiar with the area you're speaking of... i'm cautious to throw up a number if i'm not totally familiar with any of the variables i've just mentioned.

TTBHG · Post by **TTBHG** » Fri Feb 29, 2008 9:37 am

M7- I will do some research for you on millage rates. I can't believe they are taxing a 350k house at 8-9 grand. The taxable value for my house is $377,000. I live inside the city limits which means I pay city AND county property taxes. On 377, I only pay $4700 a year combined. I can't imagine that they are taxing at twice the rate. That would blow my mind, nobody could afford it.

AdGator02 · Post by **AdGator02** » Fri Feb 29, 2008 9:42 am

a $350k house in ocala?! how many acres is that bad boy sitting on?

TTBHG · Post by **TTBHG** » Fri Feb 29, 2008 9:44 am

I know you asked Rad about what he expected prices to drop but I will jump in as well if you don't mind. I think realistically you could expect 10-20%. I could be wrong, but I doubt you are going to see a 35% drop like the example you have given. If the house dropped to the 300-320 range. I would go ahead and buy.

If I was them I would seriously look into the foreclosure market. I am this close to buying 4 foreclosure houses in Ft. Myers. You can find some steals if you get on them quickly. It would not be a stretch for them to find that same 350k house and buy it out of foreclosure for 200-225k.

radbag · Post by **radbag** » Fri Feb 29, 2008 9:49 am

^ foreclosures as a primary residence or as an investment property tt? i ask cause i believe M7s parents are looking for a primary residence...i don't recommend foreclosures for an elderly couple.

TTBHG · Post by **TTBHG** » Fri Feb 29, 2008 9:54 am

Why not? All you are doing is buying a house. No different then buying one through a real estate agent. The only difference is one wants to sell, the other didn't have a choice. I would buy a foreclosure as a primary residence in a heartbeat.

a1bion · Post by **a1bion** » Fri Feb 29, 2008 9:55 am

So the current owners paid $188 and they're asking $350? When did the current owners buy this place?

I agree with rad about the difficulty of timing the market, but I'd also say that I don't think we're at a bottom in housing. The speculative bubble built up over several years and just started to pop a few months ago. We've got a lot of inventory to work through in certain markets (there's another reason it's hard to say--the Tampa market is much different than the Ocala market, I'm sure).

BTW, I heard an ad on the radio on the way home from work last night--you too can order dvd's and learn how to flip houses, just like Armando from Flip This House! That cat is under indictment for fraud, last I heard.

radbag · Post by **radbag** » Fri Feb 29, 2008 9:59 am

have you ever bought a foreclosure tt?

TTBHG · Post by **TTBHG** » Fri Feb 29, 2008 10:00 am

My attorney is drawing up paperwork for 4 as I type this.

annarborgator · Post by **annarborgator** » Fri Feb 29, 2008 10:03 am

The millage rate looks like 23.3 or so for Gville, TT.

G8rMom7 · Post by **G8rMom7** » Fri Feb 29, 2008 10:03 am

Yeah, I'm not so sure about a forclosure house. I mean...my in-laws are looking for a quality home...I just don't see forclosed homes as being all that good for them. And fwiw, I know they have gone to auctions on those types of homes in the past and have never liked any of the homes offered.

TT, as far as the taxes in G'ville...the house they were looking at at THAT time in G'ville was more like $425 (not $350), so I don't know if that makes a difference. But from everything I've heard G'ville taxes are quite high...I wish Welsh would chime in. I know he knows about this sitch quite well.

I had the same question about when they bought the house at $188.

I think what confused me is Bill's bros were telling her that it would take years for this to hit bottom. Actually, maybe they just said years until we recover. Eh, I'm an idiot.

I still don't know WHAT the F to do about our living situation! But we really can't make any kind of decision until our legal issues are behind us.

Rad, i really like what you said about not worrying so much about how much they lose on the house later. This is supposedly going to be their LAST house...so they need to consider that.

radbag · Post by **radbag** » Fri Feb 29, 2008 10:03 am

So the current owners paid $188 and they're asking $350? When did the current owners buy this place?

I agree with rad about the difficulty of timing the market, but I'd also say that I don't think we're at a bottom in housing. The speculative bubble built up over several years and just started to pop a few months ago. We've got a lot of inventory to work through in certain markets (there's another reason it's hard to say--the Tampa market is much different than the Ocala market, I'm sure).

BTW, I heard an ad on the radio on the way home from work last night--you too can order dvd's and learn how to flip houses, just like Armando from Flip This House! That cat is under indictment for fraud, last I heard.

flippers are what got us in this mess to begin with.

flippers are not in for the long haul...they're speculators and are in and out in less than a year...so a 30 year mtg is of no benefit to them...they would prefer 2 year mtgs...which is essentially what a 2yr ARM (adjustable rate mtg) is...pay nothing or very little in 2yrs and pay the piper thereafter...sounds good to a flipper cause he's not staying past a year anyways...he's fixing it and selling asap...who cares what the consequences are after 2yrs right?

we all know what happens next...

radbag · Post by **radbag** » Fri Feb 29, 2008 10:05 am

My attorney is drawing up paperwork for 4 as I type this.

ok - so i'm assuming you've bought em before since you're doing 4 now. nevermind. i'm sure you're aware of all that comes with foreclosures then...no worries...carry on.

radbag · Post by **radbag** » Fri Feb 29, 2008 10:12 am

Rad, i really like what you said about not worrying so much about how much they lose on the house later. This is supposedly going to be their LAST house...so they need to consider that.

everybody wants to save money but unless i'm going to sell it, who gives a fuck right? i mean, on a lesser scale, the iphone's sold for $500 when they originally came out and then got knocked down to $400 a few months later...for those that didn't buy it initially, they just saved $100...for those who did, who gives a fuck...they had 3 months or so of usage and they've moved on...who cares right? you can wait a year and buy it less $100 then...AND, you can wait another year after THAT and buy it on ebay for $100....OR, you can buy it 5 years from now in a supermarket for $9.99 - who gives a fuck right?

you need it now, get it...if it goes down in price, who gives a fuck...you aint selling it or anything...i mean, i'm all about saving money on the purchase and i know we're talking negotiated prices (homes) vs non-negotiated prices (iPhones) but really - if you need it, get it...or wait and save...save 10K, save 50K...up to you ya know...what's your threshold? is saving 10K worth it if you had to wait a year? is 50k if you had to wait 2years?

a1bion · Post by **a1bion** » Fri Feb 29, 2008 10:15 am

flippers are what got us in this mess to begin with.

flippers are not in for the long haul...they're speculators and are in and out in less than a year...so a 30 year mtg is of no benefit to them...they would prefer 2 year mtgs...which is essentially what a 2yr ARM (adjustable rate mtg) is...pay nothing or very little in 2yrs and pay the piper thereafter...sounds good to a flipper cause he's not staying past a year anyways...he's fixing it and selling asap...who cares what the consequences are after 2yrs right?

we all know what happens next...

The Christmas before I moved to the Tampa Bay area, I was down in Sarasota with my then gf, visiting her folks. We went out to dinner one night and ended up sitting next to two couples, one of whom apparently had moved down to the area from New York and the other of whom were down visiting for the holidays. The first couple was telling their visitors about how the HAD to move down, because it was so easy to make money just buying a couple of houses, sitting on them for a few months, then reselling. My gf's stepfather had made money for years in real estate and as we were leaving the restaurant, he turns to me and says, "Did you hear those people? They're going to get burned in the end."

Sure enough, when the Sarasota market locked up, it turned out that all the sales being made were the speculators selling to one another. Auctioneers down there are booked solid through the year, unloading properties.

TTBHG · Post by **TTBHG** » Fri Feb 29, 2008 10:19 am

My attorney is drawing up paperwork for 4 as I type this.

ok - so i'm assuming you've bought em before since you're doing 4 now. nevermind. i'm sure you're aware of all that comes with foreclosures then...no worries...carry on.

I have actually never bought one before. Keep in mind, people(I don't know about you) but people in general associate a foreclosure with a dump. Some dirtbags with no money was running a meth lab out of it and such. This is not the case. The four that I am buying are brand new. They have never had a single person live in them.

A developer built a 1000 home development in Ft. Myers. He only sold around 600-650 of the homes as he mistimed the market. These are 4 indentical houses that are 2400sq. ft. All were on the market for 230,000. I am buying them out of foreclosure for 115k a piece. I will have to keep them for a minimum of two years to avoid capital gains tax but that will not be a problem. I will rent them out for two or three years. I can rent them for more than the mortgage payment. Even if I can only sell them for 160-175 later. I will still make a good profit. And if the market times out right and I can get tham back to that 220-240 range then even better.

Of course I could fall flat on my face, file bankruptcy and sleep on M7's couch. Who knows.

radbag · Post by **radbag** » Fri Feb 29, 2008 10:21 am

inventory is up and we need guys like tt taking 4 at a time to free up inventory.

lower rates, real estate prices lowering, new home/existing home sales down - all favorable for guys like tt looking to invest.

maybe we're at the bottom after all.

G8rMom7 · Post by **G8rMom7** » Fri Feb 29, 2008 10:27 am

Of course I could fall flat on my face, file bankruptcy and sleep on M7's couch. Who knows.

As long as you bring your brother to service me and my house, you are MORE than welcome! [img]{SMILIES_PATH}/wave.gif[/img]

a1bion · Post by **a1bion** » Fri Feb 29, 2008 10:28 am

What kind of mortgage did you take on those places, TT? I saw something yesterday where fixed rates had moved higher again, while the adjustable had gone lower, despite the Fed lowering rates.