patrick.net

clambo says

Florida is not going to have a "collapse" in real estate prices, because they've already gone up 100% in a few years.

They won't be the only area to have a collapse. It's going to happen across the board ... IMO.

The worst possible combination for real estate prices:

1) Artificially inflated prices.

2) Historically low interest rates that were artificially kept at those levels for over 10 years.

3) Poor economy, along with high inflation and rising interest rates.

4) Terrible housing market for 1st. time homebuyers. Not only is the inventory low, but the borrowing power for the 1st. timers is extremely poor, as the high paying jobs are simply not there, and, many are saddled with tuition loans, which count against them on the debt side, further diminishing the amount that they can borrow.

5) VERY few 'investors' such as pension funds, insurance companies, etc. that are willing to buy the all-important Mortgage Backed Securities, which provides literally 95+% of all financing for residential real estate.

6) With prices coming down, more and more homeowner's that have mortgages will find that they are 'upside down' on their mortgages. Look for foreclosures to come back in a big way in the next 12-18 months.

RayAmerica says

6) With prices coming down, more and more homeowner's that have mortgages will find that they are 'upside down' on their mortgages. Look for foreclosures to come back in a big way in the next 12-18 months.

So, what about Blackrock and the other corps buying them up? They have to value them mark-to-market on their books, right?

And they are having problems renting them out for what they want/need, especially in Florida

So when do you think there will be a follow up dump onto the market with these properties?

clambo,

What happens to the FLA homeowners if they 'bought' at or near the peak and prices come down to say, 20%, which isn't beyond the realm of possibility at all. For them, it's going to be a 'collapse,' and it will be a potential repeat of '06.

RayAmerica says

What happens to the FLA homeowners if they 'bought' at or near the peak and prices come down to say, 20%

If the homeowner doesn't plan to move, what difference does it make? He has the same payment as before, and his real estate passement may even go down and thus lower his tax. a 2.5% loan at peak price may be pretty much the same payment as a 7.5% loan at that 20% lower price.

I see my mutual funds drop 20% but I don't feel the need to sell them.
Likewise, if I have a house that serves its purpose, why do anything if it drops in value?
My car has dropped in value and I still like driving it, so I'll keep it.

I don't plan on moving from our current home, so yes, price fluctuations mean next to nothing for someone like me.

However, many people are forced to sell for a variety of reasons, such as; death of a spouse, divorce, job transfer, diminished income, job loss, increase of crime in surrounding area, downsizing because the kids are all gone, can no longer afford the utilities, taxes, insurance and cost of up keep, etc., etc.

clambo says

I'm beating a dead horse, but I have a bunch of friends in Santa Cruz who have houses and no money.

They sometimes brag about their houses being worth a lot of money.

That's what my dad did. He did sell some of the real estate assets and eventually became a $3-5M wealth guy in 2001 at about 50. So solid money for age and time. Lost it all except a few joint partnerships on industrial real estate with my uncle and another friend that ended up 8-9 figure wealth. My mom did get about $1M out of it. So not a total loss. He did file BK though.

It ain't money until it's in the account. I also think residential RE is trash. I know there's property management companies, but I can't deal with liars every month to have a profitable business. Residential tenants are the worst. I could cashflow $800/mo on my current house when we move. I'd rather get the cash now. $10k/yr really isn't worth it regardless of depreciation and tax benefits. Already running around repairing family members homes for free with no men in their lives and if there is they don't know shit.

I fucked up and didn't buy my neighboring towns post office building. USPS ain't gonna move, so the lease was solid forever. Literally zero new construction in 3 decades. So no need to expand to a different building. Another office space in the building. Only $400 cash flow, but only $110k at full list. Reinvest the cash flow over 2-3 decades and inflation and it would have been a low risk $500k to who knows what above that by the time I'm 60-70. I fucked up. $25k down for $500k and still invest my income and a tax write off on my high income earning years. No personal relationship. Government contract. Easy.

https://www.cnbc.com/2024/05/01/florida-real-estate-struggles-as-motivated-sellers-flood-market.html

Florida real estate struggles as ‘motivated’ sellers flood market

https://fortune.com/2024/05/01/is-south-florida-housing-market-bubble-real-estate/

Study finding South Florida homes are 35% overvalued sparks bubble worries: ‘This trend does concern me’

All of Florida is cool or very cool as far as housing market according to Realtor.com, and Panama City area is third from bottom :-(

Still rents are holding steady at least as a 3 bedroom , 2 car garage townhome within 2 miles of the beach rents still between $2100 to $2300

zzyzzx says

https://fortune.com/2024/05/01/is-south-florida-housing-market-bubble-real-estate/

Study finding South Florida homes are 35% overvalued sparks bubble worries: ‘This trend does concern me’

The general rule is that for every 1% increase in the 30 year rate mortgage rate, there should be a 10% drop in price.

When housing prices peaked in early 2022, the rate was around 3%. Hence if the rate is now 7%, then that means there should be a 40% drop.

However, income has gone up about 10% since early 2022.

So adjusting for that, it would be safe to assume that housing should only drop around 30% in South Florida to make it fairly valued.

If Panama City Beach townhome values drop 30% from peak price then that means they return to early to mid 2020 price levels :-(

That would wipe out the COVID pandemic price gains :-(

.

Rent in some of the biggest cities in Florida declined in April compared to a year ago, according to real estate platform Redfin, at a time when some residents are relocating away from the state.

Jacksonville saw median asking rent in the city drop by 5.6 percent. Meanwhile, Miami reported a decline of 5 percent, Tampa's fell 4.3 percent and Orlando also saw its rent asks go down 3.2 percent according to Redfin's data, in what were among the biggest drops of the month.

https://www.newsweek.com/florida-rent-drops-people-flee-state-1901951

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WookieMan says

Another office space in the building. Only $400 cash flow, but only $110k at full list. Reinvest the cash flow over 2-3 decades and inflation and it would have been a low risk $500k to who knows what above that by the time I'm 60-70.

So is office space building the best investment in commercial real estate? If not, then what is?

gabbar says

WookieMan says

Another office space in the building. Only $400 cash flow, but only $110k at full list. Reinvest the cash flow over 2-3 decades and inflation and it would have been a low risk $500k to who knows what above that by the time I'm 60-70.

So is office space building the best investment in commercial real estate? If not, then what is?

TL:DR - I wouldn't touch office spaces unless you have a long term, solid tenant.

I was more or less being super specific to my location. The main tenant was USPS and they never move. The town it's in doesn't build new construction. The other small office would have been a bonus. $20k down. $400/mo in cash flow. Was a safe and solid investment, I inquired, but didn't pull the trigger. Would have reinvested the cash flow. Appreciation over 20-30 years and it could have easily added 5-8 years of retirement money beyond what I already have going.

I wouldn't touch office space right now without a solid lease from a tenant you knew was going to stay I guess is my point. I think the snapback from covid and WFH is going to piss off employees. At least the ones that got their job done during covid.

Not going to name the company but the the town I was looking to buy the building in, another office has about a 70 space parking lot. This is rural, so that's big here. Lot was full every day. Maybe 5-10 cars parked there every day now. Company owns the building outright. They can just move the people that show up to a section of the building and shut down the rest.

But this is my anecdotal evidence that WFH is here to stay. Companies trying to bring it back are dealing with pissed off employees that now have to pay commuting costs again doing the same job they were for 2 years at home.