Saturday, February 04, 2012

Real Estate Insanity Bubbling Again

It's truly astounding how many Morons haven't learned their lessons - despite all the fresh blood.

Real estate remains a complete suckers' bet. Taxes, utility costs, artificially low interest rates, and unrelenting over-supply have conspired to separate all these fools from their money.

I mean I know people, plenty of people, who got their butts kicked and STILL they figured out some way to re-invest, if not physically, then mentally, in a sun-will-come-out-tomorrow real estate fantasy.

My real estate buddy down here in Naples informed me the other day that one of his clients wanted *in* on a new construction he had to have someone stand in line for say 8:30am one morning to get a choice of lots.

And guess what...

At around 7:30pm the night before there were already 7 Morons waiting in line!!!

So we are staying in this very nice 3 BR 2.5 Bath unit in Bridgewater Bay...

It's going for around $220,000 these days which sounds rather cheap.


Doing the math on carrying the mortgage, HOA's, taxes, etc. I come up with about $19,000 per year - or nearly $1,600 per month, EVERY MONTH, for 30 years.

You could argue that it makes sense as a primary residence, which I won't argue.

But as a secondary one it most certainly does not.

It's better off to rent, still, by a long shot.

I mean why would ANYONE camp-out out for a run-of-the-mill new construction home here in Florida, in 2012, when there are 5-7 years of supply of homes owned by the banks and federal government?

Apparently 60+% of new buyers in Florida these days are buying with *all cash*.

That must imply strong healthy demand, that must imply that there's no bubble forming, right?


All it means is that deposit interest rates are ZERO. I'm sure that many people could have paid all cash in prior years (esp. for cheap FL housing) it's just that they were getting more than .25 % on their money in the bank.


Justin Time said...

I couldn't agree more about this insanity. But you have to remember that anyone who didn't experience the housing market prior to 1999 doesn't really have any idea what reaslistic housing prices are.

I'd compare it to the 30 year mortgage. There was a time when cunsuming the majority of your working life to pay off a house loan would have been considered insanity. But the 30 year has been around long enough now that most people consider it normal to become a slave to a mortgage.

And you make an excellent point about the real estate taxes. I'm guessing that will be the part that really starts crushing people in the not-to-distant future.

CaptiousNut said...

Somebody I *know* here on Long Island just bought a house.

Looking on I see that the real estate taxes on it went up 60% from 2007-2011 - from $7,300 to $11,700.

The reality is pols have proven time and again that they will simply raise taxes rather than cut spending and pensions. Where are the taxes on that house going to be in 10 years?

I just don't see how so many Morons can keep buying these time-bomb moneypits!

And go back further than 1999. I know people who started buying in the early 90s (at the bottom, on the upswing) who are die-hard real estate bulls.