patrick.net

Good job. You and your wife sound like a great team and THAT RIGHT THERE, is the gold. My one hope is that neither one of you are government parasites or tech people helping to build the panopticon.

The Collapse in Florida is going to start as it always does, with Condos before hitting SFH.

$60k assessments going to condo owners, even those in realtively new buildings from the 90s - coastal condos over 3 floors must be inspected in the 25th Year. Not only is a complete structural inspection ordered at inflated post-COVID prices, plus the demand from the new law, but also there is a reserve requirement, all hitting by December 2025 at the latest, and for many (depending on age of building) December 2024.

When those Condo owners cut and dump (discounting the assessments off the price), SFH is gonna have a hard time competing with rock bottom condos.

Finally, it's not just big buildings. The Florida law also applies to gated communities and any with common areas like a clubhouse or community pool.

Rents are already collapsing across Florida, from Naples to Orlando to Jax.



Don't even THINK about buying a FL Condo unless the structural assessment and report of what needs to be done is already in the bag, with the Condo Board already given final approval to any and all assessments to the condo seller.

I think the red box is about where things should be, and that's with a generous ~2%/YoY appreciation



Only 1M net new entrants in the workforce every year. In 2008, it was 2-2.5M each year.

Too many boomers, too few people in financial shape to buy their inflated price houses.

"But GenZ". Yeah, I don't think $15-20/hr workers are in shape to buy a $400k 20+ year old house. If they added half again their wages/salary it would be a stretch for them. Then toss in the low marriage rate and the smaller household sizes which has been a multidecade trend with no signs of reversing.

"Don't worry, 50M Chinese millionaires are coming to buy in Ocala and Piscataway and Sacramento!" LOL

Back to life,
Back to reality.

There ain't no 50M Foreign Millionaires
Wanting to pay half a mil for US Suburbality

However you might want it,
However you might need it.

https://www.youtube.com/watch?v=TB54dZkzZOY



"Look at the beautiful Billard Green painted walls with the lived in, Grandpa holding himself up with dirty oily hand marks. And the musky smelling rose color carpet where you can see where the couch wasn't moved for a decade. WOW! Let's make an offer."

Florida is still a low income state. W=median worker. H=median household.


"$3000 a month is no problem for a household making $63k/year! Not including power and water... it's only half the pre-tax, income!"

The french tickler of fun is turning into a dildo of doom, US 1988-2023 demographics of homeloaners

For Bay County (Panama City) Florida, the starting salary for a public school teacher is around $48,000 and they get about 2.5 months off for summer, 1 week off spring break and 2 weeks off Christmas break.

And a 3 bedroom townhome with a garage within 2 miles of the beach rents for around $2000 a month (with electric $125 / month, internet $50 /month, water/sewer $50 / month).

These townhomes are not even selling at $290,000 now, whereas they were selling for $235,000 in February 2020 and $330,000 in February 2022. The HOA fee range between $350 and $450 per month for the owners and property tax is around $160 a month.

My theory for Panama City Beach townhomes, especially on east end, is they'll settle at a price based on a 4% annual appreciation applied to the February 2020 market price, which is around $286,000.

Still need two incomes (each making $20 an hour) to qualify for a 3 bedroom townhome with a 30 year mortgage rate between 5 and 7%.

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AmericanKulak says

American Kulak, figure 100 was the index value in 2000. Conservatively apply a 4% appreciation since its Florida (and Professor Shiller said the national historic annual appreciation rate is 4%),

1.04^24 x 100 = 256

Tampa prices should be just above the peak price set during the Great Financial Crisis (around 2007).

I remember an agent telling me that it would take 20 years for a lot of real estate markets to clear the peak price set in the Great Financial Crisis.

The townhome community I live in the east side of Panama City Beach had townhomes built in 2005 and sold for $275,000 in 2006. They are at those same prices now as far as asking prices.

.

AmericanKulak says

I wonder as far as demographics especially for service workers and blue collar (from nursing home aids to dishwashers to construction helpers) that was one major reason for increasing immigration over the last 3 years, and eventually these workers will be home buyers.

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AD says

I wonder as far as demographics especially for service workers and blue collar (from nursing home aids to dishwashers to construction helpers) that was one major reason for increasing immigration over the last 3 years, and eventually these workers will be home buyers.

Yes, once the bubble bursts. Pedro and Anna and Tia Angelina and Abuelito Josito and the 5 ninos will get the Zero Lot 5/3 that sold for $500k in 2020 for $290k in 2027. Divorced Single Dad of 2 grown kids will buy the townhouse in Orlando that sold for $270k in 2020 for $180k in 2028

Even will mass migration, we now have half the net people entering the workforce as leaving it as we did a decade ago.

AmericanKulak says

Will wages skyrocket while the housing market plateaus, or will asset values plummet? I'm betting on the latter, which would be the best outcome, too.

Housing Affordability needs to be dragged out of it's luxury waterbed in the McMansion it lives in and given a beating worse than the printer in Office Space.

It's going to be the most stunning reminder of unsustainable asset inflation, and it can't be avoided because the huge demographics pressure will make any attempt to keep it afloat fail.

Really, the same reason for the Great Recession: Run out of buyers. At some point they ran out of people who could fog a mirror and get a NINJA loan, and Ftffffftttzzz the whole thing impoded.

As for the Panhandle region, the top employer will keep things from collapsing.AD says

For Bay County (Panama City) Florida, the starting salary for a public school teacher is around $48,000 and they get about 2.5 months off for summer, 1 week off spring break and 2 weeks off Christmas break.

Also requires a teaching certificate and almost always a college degree (=$80k worth of debt at 21, like being saddled with a high end car loan). There are rare exceptions, I've heard of them giving non-tenure 1-year contracts to those with most of the credits but currently enrolled in night school, and contract renewal is dependent on them finishing (and racking up big loans).

$38k/year is the median Florida worker salary.

AmericanKulak says

Even will mass migration, we now have half the net people entering the workforce as leaving it as we did a decade ago.

Civilian labor participation is still not that bad : https://fred.stlouisfed.org/series/CIVPART

I'd be concerned if it was below 57%.

We need to innovate more to realize productivity gains by technology if there are concerns with workforce size (due to demographic trends).

I was thinking about senior citizen care and nursing homes, where technology can help the nursing aide. This means more senior citizens can be watching and monitored by the nursing aide.

So if home prices are at 2007 levels in 2025, think about household income inflation since then and that household income and wages catching up with housing prices.

That is why I can agree with your forecast about asset values plummeting as far as housing affordability like we had around 2012 to 2015.

A family member built a 3 bedroom/2.5 bath (not including finished basement which has 2 bedrooms and a full bathroom) house (on 5 acres with a garage apartment that rents for $1300 a month ) out in mountain west for $250,000 in 2000.

Two appraisals came in recently for a reverse mortgage, $1 million and $1.3 million.

It should be $800,000 assuming a 5% annual appreciation rate, but I think a lot of people want to live there to escape the city and grow your own food (chickens, greenhouses, etc) as well as enjoy the outdoors. Hence it appreciated at least 6% each year, and not 5% since the year 2000.

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AD says

Civilian labor participation is still not that bad : https://fred.stlouisfed.org/series/CIVPART

AD says

I was thinking about senior citizen care and nursing homes, where technology can help the nursing aide. This means more senior citizens can be watching and monitored by the nursing aide.

Every nursing aide will tell you there is already Wayyyyy too much work. Massive shortage, because Florida is so far beinhd

Also the fake "Right to Work State" that requires NON-emergency health care workers like CNA to do 3 weekend shifts a month, as a grift grant to the private companies that run them. There's a free market solution to the "nobody wants to work Friday nights" problem, but the lobbyists bribed the state to be "Required by Law in every contract to work 3 undesirable shifts without shift differential pay".

The pay rate for nurses and CNAs is another unsustainable Florida problem, Florida has a massive nursing shortage but refuses to allow the market to set rates, intervening for corporate socialism on behalf of Big Hospital. Only state worse than Florida is California for nursing shortages. Many nurses turn around and go right back when they see the wages vs. cost of living. Again, Florida is no longer a "Low wage, but cheap cost of living state".

I just spoke to a 30-year old from Arkansas that told me her and her husband are going back, because the wages are almost the same there, but housing is far, far cheaper than Florida.

That's because of demographics of the workforce as the baby boomers started to retire in mass around 2013.

You just have to figure out how to do the more with less. Look at how agriculture has become very productive going back to Great Depression Era.

It does not take a large family to run a farm like it did 140 years ago.

We need another economic revolution like the industrial revolution as far as this, and I gave an example as far as nursing homes and senior care using technology so that a nursing aide can be assigned to more senior citizens.

I even like now that robots are used to serve food in restaurants as one example.

AD says

We need another economic revolution like the industrial revolution as far as this, and I gave an example as far as nursing homes and senior care using technology so that a nursing aide can be assigned to more senior citizens.

They already did this BY creating and expanding the duties of Nurses Aides. Only a bare minimum number of workers are kept around, and that's because insurance companies will jack their malpractice insurance up the roof if they try to replace yet more nurses with CNAs. There is actual numbers behind that, and insurers do NOT want to pay so that Hospital Admins can grift more from them and the Government (44% of health costs are now paid from the USG)

The worker has no more to give.

Our #1 problem is Corporate Socialism. We need more free market, and less giveaways and regulations favoring large businesses.

No country ever entered prosperity by lowering wages and increasing living costs based on inflated assets.

AmericanKulak says

I just spoke to a 30-year old from Arkansas that told me her and her husband are going back, because the wages are almost the same there, but housing is far, far cheaper than Florida.

Florida always has been an outlier for housing price volatility. So I agree with you Florida housing prices now are too high relative to worker wages.

In Panama City Beach though, townhomes are not that overly priced and if they drop from median price of around $290,000 (peaked around $330,000 in early 2022) to a bottom of $250,000 by 2025, then they will be a forerunner to housing affordability.

.

AD says

AmericanKulak says

I just spoke to a 30-year old from Arkansas that told me her and her husband are going back, because the wages are almost the same there, but housing is far, far cheaper than Florida.

Florida always has been an outlier for housing price volatility. So I agree with you Florida housing prices now are too high relative to worker wages.

In Panama City Beach though, townhomes are not that overly priced and if they drop from median price of around $290,000 (peaked around $330,000 in early 2022) to a bottom of $250,000 by 2025, then they will be a forerunner to housing affordability.

.

Could be, unfortunately I've seen no data from the Panhandle, only a few anecdotal articles about long time military retirees getting pushed out by rising prices.

However, everything else in penninsular Florida seems to be running a course, that it always does. And probably the country will follow a similar course.

10-15 years like clockwork. My parents brought in the early 90s in a trough like the early-mid 2010s. I predict in about 3-4 years we'll be well into a trough.

Even Miami is slowing down.

AmericanKulak says

Could be, unfortunately I've seen no data from the Panhandle, only a few anecdotal articles about long time military retirees getting pushed out by rising prices.

However, everything else in penninsular Florida seems to be running a course, that it always does. And probably the country will follow a similar course.

10-15 years like clockwork.

Residential property insurance is problematic in the Florida panhandle. My home property insurance is going up from around $1850 a year to $2250, and the insurance company is being generous since it was approved for about a 55% increase by the insurance commission. I remember it was $600 a year in 2016.

Check out Zillow for Panama City Beach and also Florida panhandle. Average household income is around $80,000 for Panama City, FL, and median is around $63,000.

https://www.floridatrend.com/print/article/40499

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AD says

AmericanKulak says

American Kulak, figure 100 was the index value in 2000. Conservatively apply a 4% appreciation since its Florida (and Professor Shiller said the national historic annual appreciation rate is 4%),

1.04^24 x 100 = 256

How does this compare to local wages over the same time period?

The oldest baby boomers (largest generation in US history) are between 77 and 78 years old today.

The peak birth year is 1957, or 67 years ago.

The median age of death in the US is 77. That means half die before 77.

If anything, life expectancy for middle and senior aged males in the USA is actually... declining! Though even without that point, it's still a decade away.

Boomers own 32 million houses in the United States, 38% of all houses, while making up 21% of the US population.

So in the next decade, about something like 20M houses will be up for sale and there will be pressure to sell fast. You don't need to die in order for the house to go up for sale (assisted living, caregiving by relatives in their house, relatives and children are in other states and don't want to maintain or rent a distant house, etc.)

Used car prices have plummeted in the past year, reaching their lowest point since 2021.

The price declines come after a prolonged supply crunch in the new vehicle market caused used values to skyrocket.

Not long ago, the rise in used car prices was one of the key reasons the overall inflation rate was so high. Now, used vehicles are now the No. 1 category driving down inflation in the economy, according to an analysis of consumer price index (CPI) data by car shopping app CoPilot.

The June CPI report showed used vehicle prices are down 10.1% in the past year, after falling 1.5% in the last month.

Why are used car prices falling? CoPilot CEO Pat Ryan explains that the supply of new vehicles is up about 50% since July 2023, which has had a spillover effect on the used market.

https://money.com/used-car-prices-driving-down-inflation/?xid=applenews

Dealers are fucked because they have to fill in their plans with new vehicles, but can't moved the used cars because of the high interest rates, and the newer cars are often priced very competitively to the used/trade-ins and come with teaser rates the used cars don't.

It's different this time

AmericanKulak says

It's different this time

Everytime I'm on a roller coaster at that particular point, my balls scrunch up as much as they can.

....but the Experts on PatNet said....

zzyzzx says

AD says

AmericanKulak says

American Kulak, figure 100 was the index value in 2000. Conservatively apply a 4% appreciation since its Florida (and Professor Shiller said the national historic annual appreciation rate is 4%),

1.04^24 x 100 = 256

How does this compare to local wages over the same time period?

Tampa / St Petersburg metro area per capita income

https://fred.stlouisfed.org/series/TAMP312PCPI

year 2000: $29,223
year 2022: $60,091
year 2024: $64,000 (estimate)

****** per capita (or per person) income in Tampa metro area increased about 3 times or 400% from 2000 to 2024 *******

compared to Case - Shiller housing index for Tampa:

2000: 100
2024: 350

***** housing for Tampa metro area increased about 3.5 times or 450% from 2000 to 2024 **********

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zzyzzx says

How does this compare to local wages over the same time period?

Can't sustain this if 30 Year mortgage rate is above 5% AND housing prices continue to increase again.

Need lower mortgage payments due to interest rate decrease and housing income increases (greater than housing price increases).

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AD says

Can't sustain this if 30 Year mortgage rate is above 5% AND housing prices continue to increase again.

Except in patently fucked up circumstances (California and allowing foreigners to buy houses), those days are over for a while.

Cheap mortgage rates are toast until the Millennials start saving en masse during their pre-retirement years, like Boomers did for the last 15 years until recently.

DemocratsAreTotallyFucked says

California and allowing foreigners to buy houses

Need then foreigners with deep pockets from India, China, Malaysia, etc to buy +$1.5 million bungalows in California, then in turn the California home seller moves to a state with less expensive housing like Colorado, Nevada, Arizona, Idaho, etc.

I guess that gravy train of foreigners is no longer running for now to at least the start of the next bubble cycle

Look at how prices are dropping in states where Californians were buying like Colorado (such as Colorado Springs, Vail, Breckinridge, etc) as well as Idaho, or prices have went down a little while sales volume is virtually zero
.

AD says

I guess that gravy train of foreigners is no longer running for now to at least the start of the next bubble cycle

The absentee ones only want the R/E to park their money outside of home. Even if they lose 30% or so in value, that is 70% that they 'saved'. This mostly pertains to Chinese. Indians tend buy to live here.

Corporate owned housing tend to sell when shit goes south w/o batting an eye. So if you bought a house in a new subdivision of 80 homes built and a REIT bought 35 of them at a discount by that subdivision's home builder, then decides to sell, you may be fucked because they are going to sell those 35 all at once. Esp if they are distressed and can't sell them in an LLC package which won't nornally effect CMAs generated.

DemocratsAreTotallyFucked says

Cheap mortgage rates are toast until the Millennials start saving en masse during their pre-retirement years, like Boomers did for the last 15 years until recently.

I look at if the 30 year mortgage rate steadies to 6% , then I will buy 4 discount points to get it to 5%. Compare that to the 3% rate when housing prices peaked (in early 2022).

5% is a "cheap enough mortgage rate" if housing prices remain at the peak price levels, as our household income went up about 20% since 2022.

I am hoping this is the case as household income catches up with housing prices and the 30 Year mortgage rate drops to 6%.

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DemocratsAreTotallyFucked says

Corporate owned housing tend to sell when shit goes south w/o batting an eye.

I read there are about 16.2 million single family homes that are for rent, and Invitation Homes is the largest single owner of single-family rental homes in the United States, managing more than 80,000 homes as of 2021.

I agree as if you buy, then you plan on owning the home for at least 8 years to help you recover if you bought near the peak.

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AD says

****** per capita (or per person) income in Tampa metro area increased about 3 times or 400% from 2000 to 2024 *******

Per Capita

2000 - $40k/year (likely skewed upwards from all the MN retired teachers and IL gov employees on 2/3 last salary, esp back then)
2024 - Definitely not $120k/year and really half that (again, skewed by retirees from MUCH higher wage northern states).
https://fred.stlouisfed.org/series/MHIFL12057A052NCEN

2000- Typical Florida home was $106k. Let's be generous and say Hillborough was $125k
2024- Typical Hillsborough Home goes for $410k, a nearly 4x increase in price

https://www.tampabay.com/archive/2009/09/11/prices-history-don-t-mesh/#:~:text=But%20in%202000%2C%20Florida%20homes,40%20percent%2C%20to%20about%20%24144%2C000.
https://www.redfin.com/county/464/FL/Hillsborough-County/housing-market

The two choices are: Double the incomes, or pound the outrageous inflated house values down 50%.

Let's pound the asset prices down, since doubling incomes is going to create massive inflation for everybody on everything from groceries to electric.

Doubling incomes while lowering rates will only exacerbate the affordability problem in the long term.

Keeping rates high or better yet VOLKER SOLUTION will provide retired boomers with nice CD returns, keep speculators out of SFH and much of the housing market, etc.

Low interest/Cheap money is just more of the same crack that got us here.

AmericanKulak says

The two choices are: Double the incomes, or pound the outrageous inflated house values down 50%.

Prices in Panama City Beach especially east end are about 15% below early 2022 peak levels. And 3 bedroom, 1 car garage townhomes rent for ~$2000, same price in 2022 and compared to $1500 in 2016.

So townhome rent has only increased about 3.5% since 2016 in east Panama City Beach.

I would hope that prices remain where they are now for next 3 to 4 years while income slowly catches up with prices.

That is why you don't need a 50% asset crash with housing like we did with stocks (i.e. a lot more liquidity) in October 2022 (~20% crash), April 2020 (~34% crash), 2008 (~58% crash) and 2002 (~50% crash).

Just let the air out slowly of the housing asset bubble over the next 4 years.

.

Blackstone liquidating homes in Florida:

https://youtu.be/Wa5r73qp%20-U?si=Y9COD3K_JLjk6koN

DemocratsAreTotallyFucked says

Blackstone liquidating homes in Florida:

https://youtu.be/Wa5r73qp%20-U?si=Y9COD3K_JLjk6koN

Noooooooooo!

Redfin
@Redfin
About 56,000 home purchases were canceled last month, equal to 15% of homes that went under contract 👉 http://bit.ly/4clZNzz #realestate

Metros with the highest share of home-purchase cancellations were:
1. Orlando, 20.8%
2. Jacksonville, 20.5%
3. Tampa, 20.5%

https://x.com/Redfin/status/1818686844214612008

About 56,000 home purchases were canceled, equal to 15% of homes that went under contract—the highest percentage of any June on record. Buyers are skittish due to elevated mortgage rates and record-high home prices.
20% of homes for sale last month had a price cut—the highest June share on record. Many sellers are dropping prices because their homes are sitting on the market, causing listings to pile up; active listings posted the biggest annual gain on record.
Home sales fell roughly 1% from a month earlier in June—the biggest drop since October.
https://www.redfin.com/news/home-purchase-cancellations-june-2024/

The best thing about the price collapse is watching Real Estate Agents having to go back to their Fitness Instructor and Applebee waitress jobs.

Gym owner: "I know if the real estate market is hot or not by how many instructors return to bring clients to the gym"

My standard meme response to 'housing experts' who try to lecture me on X: