WOW! Real estate in Miami taking a big hit (Orlando: for sale, foreclosure)

[observer]

I was looking at several real estate sites and could not believe what I saw. I was looking at a particular area in West Kendall that have townhouses, condos, and single family homes for sale at almost half the price of what it was in 2005. Not exactly half, but close.

Some condos that were not only listed, but sold for over $200,000 3 years ago, are going for about $120,000 today. I know the market is taking a hit but WOW! Small condos that were going for about $175,000 a few years ago have similiar ones on the market for about $95,000. It seems as if some owners are going as low as they can to get rid of them. If what experts say that the market will not hit bottom for another year to year and half means a lot of people will continue losing their homes or be paying mortgage on homes that are worth much less than what they owe, especially if they bought after 2003.

[tallrick]

We can only hope the prices continue falling. Otherwise Miami is finished.

[observer]

Yeah Rick, I can see where you are coming from. Unfortunately, I want to sell within the next 2 years and get the heck out of the state.

I do see where you are coming from. Salaries here in Miami and the cost of housing defy logic. I can see if the average salaries in Miami were comparable to that of NY, LA, Seattle, but is not. I do not like and have not liked the direction where Miami is heading and will continue to head in all aspects.

[Valwpcc9w6]

The FUNDAMENTAL question is this: When are my property taxes and insurance going to drop, such that I am not paying a second mortgage just to buy something? It makes no sense to borrow $150,000 to purchase a condo when you will be paying much more than that just for insurance and taxes!

My scenario:

Condo Price in Miami: $300,000
Down Payment: $150,000 (50% down just to be sure to get the loan!)
Mortgage Loan: $150,000 (Approximately $1,000 per month over 30 years at 6.7%)
Taxes and Insurance: $11,000 ($916 per month, ball park)
Condo Fees: $600 per month (very possible in Miami)
Closing costs: I have no idea, but add those in, too

Total: Around $2,500 per month for a two-bedroom condo!

Very few people these days have $150,000 to blow on a down payment for a real estate. With the kind of supply that is on the market these days, who would be willing to blow this much money while earning Miami's pitiful salaries? I will continue to rent, thank you very much.

[heydade]

11,000 for taxes and insurance seems a little too high ! Usually the homeowners insurance is INCLUDED in the condo fee's. Taxes would be around 5K. So I would subtract 500 per month from your figures.

But yes...it seems to me like prices have fallen so much in Miami and Ft.Lauderdale AND Palm beach ( I have been looking at homes in all 3 counties) and people are starting to get desperate. I have seen so many abandoned homes that are in pre-foreclosure. It's sad.

[rogerbacon]

Originally Posted by observer

I was looking at several real estate sites and could not believe what I saw. I was looking at a particular area in West Kendall that have townhouses, condos, and single family homes for sale at almost half the price of what it was in 2005. Not exactly half, but close.

If what experts say that the market will not hit bottom for another year to year and half means a lot of people will continue losing their homes or be paying mortgage on homes that are worth much less than what they owe, especially if they bought after 2003.

You are just now realizing this? Yeah, it's been going on for quite a while now. More and more people will walk away from their houses rather than continue paying double what they are worth. If our government can bail out the banks then they should be able to force those same banks to write off 1/2 of the money owed on every home loan made from 2002-2007. People have mortgages for $400,000 houses that are only worth $200,000 today. Why should they keep paying double market rate for the next 30 years? Our government will bail out Fannie May and Freddie Mack but screw the individual homeowner. So, those homeowners feel they have no choice but to walk away, which will only depress the market further.

[Lulu101]

What about other markets (Orlando, Jax)? Are they seeing the same declines?

[miamiblue]

Originally Posted by rogerbacon

You are just now realizing this? Yeah, it's been going on for quite a while now. More and more people will walk away from their houses rather than continue paying double what they are worth. If our government can bail out the banks then they should be able to force those same banks to write off 1/2 of the money owed on every home loan made from 2002-2007. People have mortgages for $400,000 houses that are only worth $200,000 today. Why should they keep paying double market rate for the next 30 years? Our government will bail out Fannie May and Freddie Mack but screw the individual homeowner. So, those homeowners feel they have no choice but to walk away, which will only depress the market further.

I'm sorry, while I feel for people who had TRUE financial hardships, I don't feel for those who bought into the hype of the housing market in the Miami area over the past 6-7 years. No one was FORCED to purchase a $400,000 overpriced piece of real estate. In fact, no one was forced to purchase real estate at all during a time that was an obvious anomaly in the market. I don't think anyone needs to be bailed out, and the banks need to eat what they created on their own. A house is something that you buy and hold, so even if someone is paying on a loan that is more than what the house is currently worth, that is not to say the house will not eventually appreciate over time. They just won't be able to use the house as a checking account like so many people were banking (no pun intended) on when they made these foolish purchases.

If anyone didn't see this coming, then I just don't know what to say.

[observer]

rogerbacon,

I know the market has been in a decline for a while now. However, since I am not presently in the market to buy or sell I haven't been paying close attention to the big drop.

[big mean bear]

We haven't come anywhere close to hitting bottom. There is still a huge volume of units that haven't even come on the market yet. After this happens, we will have more than a five year supply of residential units on the market.