How many times do I hear the same questions? How long is it going to take? What is my forecast for real estate in Florida?
I deal with different types of buyers every day: the investor, the vacation home buyer, the first time home buyer, the luxury home buyer, the curious, you name it.
They will all have different approaches. For example:
Ideally, the investor would like to rent and cover all or a significant part of the monthly costs of their mortgage, their insurance, maintenance or condominium fees, and their taxes.
The vacation home buyer wants to keep their monthly payments under control, because by definition they want to have fun with their purchase, and not create a new source of headaches. Add in mortgage payments, condo fees (because they’re usually interested in condos), and property taxes. And you’ll compare that to renting a nice hotel room or suite for a couple of weeks or even a month.
“Empty nesters,” who are of retirement age and trying to move to a smaller place once their children have left, are a special case. They have been helped by the “portability” feature now added to their “save our homes” protection. They will generally pay less property taxes if they move. However, many of them have lived in houses where they can somehow control their maintenance expenses. Moving into a condominium building means monthly charges as a lump sum, plus any “appraisal” charges for repairs or improvements to your condominium building. These “condo fees” have sustained relentless inflation for the past decade.
The first-time homebuyer does the math, and unless he and/or his wife have really good jobs, they could quickly discover that after paying mortgage, insurance, or condo fees, property taxes , a purchase is simply out of the question. the question. Renting is a much better deal.
Let’s play with some figures.
You graduated five years ago from a good university; you have a decent job. You are married with a child and your spouse has a job and brings some money to the table. Between the two of them, he’s making about $5,500 per month and that means, after taxes, he makes about $4,600.
You grew up in a middle class family and are used to a certain level of comfort. But you’ve made up your mind, and your first home will be a crowded two-bedroom condo. What’s available in a decent neighborhood (and I’m not talking high-end luxury or new buildings on the beach) will set you back about $280,000. You were lucky enough to get a home loan with just a 3% down payment, and your savings allowed you to pay all of your closing costs, and that’s okay.
When you calculate your total monthly home-related payments, you come up with a figure of $2,500 per month. That doesn’t include your electricity, phone, cell phones and other utilities. Let’s calculate all of this at around $220. You will not have cable TV or internet at home. You can’t afford it, and after all, TV is not good for the child, and he has enough Internet exposure at work.
On the other hand, even if you have an employer-sponsored health insurance plan, you may have to shell out your share of around $250-$300 per month. From time to time, you have to pay a $10 fee to see a doctor, or something called a “deductible,” and even these expensive pain medications for your child: strep throat; but we won’t count that.
You also need two cars, because they both work, and these cars need insurance, tires, and other things. It’s been reasonable, nothing fancy, but you still have to pay the monthly fees for both. So let’s say this would mean an extra $600 or $700 for both cars, all included. – except, of course, gas. I was about to forget that! And at more than three dollars, even for two small cars, will that mean another $150? $200? Okay. Let’s say it’s only $150. And you’ll change the oil yourself and do minor mechanical work, and run on flat tires, so as not to overwhelm the budget. By the way, we forgot about the college loans that, after all these years, you’ve been paying down to about $200 a month.
We are already passing the $4,000 mark and we are just starting the month. You have not eaten anything, you have not bought clothes or shoes; You haven’t thought about vacations, restaurants, movies, continuing education, children’s birthday parties, or anything that can bring a bit of fun to your life, you haven’t bought any furniture, appliances, anything… And you haven’t even set aside a cent.
Your husband is ironing the shirt and dress you will wear to work tomorrow while he watches the shaky picture on your antenna TV, trying to ignore the screams of the dear boy who has spent all day at your mom’s house: you can do it! ! Not paying for private preschool- and while you are making something for dinner, you are thinking that it is already the 20th of the month and in 10 days you will receive a new batch of bills and invoices in the mail.
Should I have thought twice before buying this condo, instead of renting it for around $1000 or 1200? your bet
Now, how many young couples you know make more money than our friend? How many do you know who have a lower income?
The fact is that real estate is not just an investment. It is not a stock bought on the stock market. It is not an IRA, an annuity, or a bond. It is part of the normal life of our population. There has been a greedy and unreasonable increase in house prices that has not been matched at all by wage increases or income increases.
Remember before the last stock market crash in 2000, how tech companies that had never made a penny saw their shares sell for incredibly high prices? Eventually everything went back to normal and people returned to common sense. (or did they?). Can we compare that to what’s happening with real estate? Why not?
Isn’t that what we’re seeing now? With the difference that so many homeowners who bought at high prices have high mortgages and can’t even sell their little piece of heaven?
What about the other half who refinanced and cashed out for a few years to support their lifestyle, only to find themselves with negative equity?
Our local governments, our cities and counties have compounded the problem by spending without restraint, and while they claim they are looking for ways to ease the property tax burden without hurting anyone (which of course is impossible), insurance premiums Housing prices have skyrocketed, and no big relief is on the horizon, unchanged. Except housing prices. Because hardly anyone can buy them anymore. Now you ask me when these prices are going to go up again; when will people start buying houses again, when will we get back to normal. Do you think I can do magic?
Now let’s take the case of the vacation home. There was a time when Florida was a place where you bought a nice condo for sixty or a hundred thousand dollars. He paid some maintenance fees and taxes totaling around two or three hundred dollars a month and he was done. Today, you buy a small two-fifty or three-hundred-thousand condo, you’re stuck with assessments and condo fees of five hundred a month, then the tax collector comes along and you have to pay another five thousand dollar bill, and it just doesn’t make as much sense. You’ll just look elsewhere or just forget about the idea.
Last but not least, our investor studied the case of the $200,000 condominium he was considering and weighed whether the $1,000 a month he would get in the best-case scenario, if all went well and he had a great tenant, would be a return. adequate when you must pay $1800 per month between mortgage, maintenance, taxes and appraisals.
Pessimistic? I wouldn’t be doing this real estate job if I didn’t have some hope. Now if our legislators could demand some hope in the people who shop, it would definitely help.
