Miami Housing Boom or Prelude to a Bust?

[BK]

I'm fascinated when I hear of the Boom happening in Miami and the elusive cash buyers. My curious nature drove me to troll the Miami Dade County Mortgage database and what I find defies the popular storyline of wealthy International buyers (I'm sure there are some of these).

I found 46 NE 171st Street, North Miami Beach, Florida which sold on Aug 1, 2013. Selling price was $128,000 – the new mortgage on this property is $125,681 (the buyer didn’t even put down 20 percent). This Mortgage was granted by Prospect Mortgage LLC and the best part is the Chairman of Prospect Mortgage is the Former CEO of Fannie Mae, Michael J. Williams (as they say you can’t make this stuff up). Here is the Press Release: http://myprospectmortgage.com/blog/2...EO-as-Chairman

My uneducated guess is you bring the former CEO of Fannie Mae on to sell more of the Mortgages you sell to Fannie Mae.

Prospect Mortgage was the 4th highest in volume of all Mortgage Brokers last year.

Perhaps I am leaping to a conclusion based on anecdotal evidence, but it took me a few minutes to find this one exception to the miami cash buyer.

[lektrode]

Re: Miami Housing Boom or Prelude to a Bust?

guess the 1st question becomes: WHO bought it? (the house)

was it one of mega's faves, the B2L bunch (investor/flipper) - or a resident occupant???

[vt]

Re: Miami Housing Boom or Prelude to a Bust?

Places like Miami, San Francisco, and Washington, D.C. are different from other cities: there is no place else to build, and there are restrictions on heights of buildings and other factors. All three are desirable and attract people with lots of money willing to pay up to be there.

Also a lot of Latin American cash has come into Miami when the AFC drove Florida prices down. The lack of income tax helps to. What is not discussed is the rocketing costs of flood and property insurance in Miami.

[lektrode]

Re: Miami Housing Boom or Prelude to a Bust?

the history on this one is kindof interesting...

08/01/2013	Sold	$128,000	85.5%	$136	Public Record
04/25/2013	Sold	$69,000	9.5%	$73	Public Record
03/29/2013	Sold	$63,000	317%	$67	Public Record
01/19/2012	Sold: Foreclosed to lender	$15,100	-86.3%	$16	Public Record
01/21/2003	Sold	$110,000	52.8%	$117	Public Record
10/11/2002	Sold	$72,000	--	$76	Public Record

----

2012	$1,477	22.6%	$61,409	-32.7%
2011	$1,205	-17.4%	$91,212	-7.7%
2010	$1,459	-22.7%	$98,781	-17.8%
2009	$1,888	-25.1%	$120,123	-19.0%
2008	$2,522	-10.3%	$148,356	3.0%
2007	$2,812	-7.2%	$144,035	2.5%
2006	$3,029	-8.2%	$140,522	14.9%
2005	$3,301	28.0%	$122,295	30.5%
2004	$2,579	--	$93,686

can you say.....

[BK]

Re: Miami Housing Boom or Prelude to a Bust - How about Waltham-MA

Ok, so Miami is sought after because of Money from South America and its a retirement mecca.

Is it possible that Mr Bernanke has been widely successful getting people to borrow at insane levels.

Lets look at a few recent Waltham- Massachusetts Real Estate transactions

62 Beaver St, Waltham , sold Sept 19 2013 for $450,000

Mortgage for the new owners of 62 Beaver $412,087 - NO 20% down for these Buyers

150 Trapelo, Watlham, sold for $354,000 on Sept 18th - the Mortgage for the New Buyers $361,000 - Gee they Borrowed More than their House is worth.

24 Hovey Waltham sold for $501,000 on Sept 13th 2013 - the new owners of Hovey took out two Mortages - one for $400,800 and another for $50,1000 - apparently they didn't have the 20% down in cash

12 Lake sold for $343,000 on sept 13th - the new owners have a Mortgage of $332,700 - NO TWENTY percent down.

128 Chaffee in Waltham sold for $320,000 on Sept 12 and the new owners have two Mortgages - one mortgage is $256,000 and $30,350 - No Twenty Percent Down

40 Copeland - Waltham sold for $450,000 on Sept 4 2013 - the buyers now have a Mortgage of $380,000 - apparently they were a little shy of the 20% down requirement.

[ddn3f]

Re: Miami Housing Boom or Prelude to a Bust - How about Waltham-MA

150 Trapelo, Watlham, sold for $354,000 on Sept 18th - the Mortgage for the New Buyers $361,000 - Gee they Borrowed More than their House is worth.

12 Lake sold for $343,000 on sept 13th - the new owners have a Mortgage of $332,700 - NO TWENTY percent down.

128 Chaffee in Waltham sold for $320,000 on Sept 12 and the new owners have two Mortgages - one mortgage is $256,000 and $30,350 - No Twenty Percent Down

I have been looking at homes recently in the $350,000, I would not put down 20%. I would put down $10% ($35,000), pay $5000 for upfront mortgage insurance and save the other $30,000. The monthly difference between 10% down and 20% down is ~$175.

It's better to have some money in your hand. Maybe that's what all of these folks are doing.

[BK]

Re: Miami Housing Boom or Prelude to a Bust - How about Waltham-MA

My point is that the perception is Lending is tight and loans are hard to get is false. In fact you can even borrow more than the home is worth.

This is just a very small sample of what is going on and I didn't have to hunt to find these samples.

[lektrode]

Re: Miami Housing Boom or Prelude to a Bust - How about Waltham-MA

My point is that the perception is Lending is tight and loans are hard to get is false. In fact you can even borrow more than the home is worth.

This is just a very small sample of what is going on and I didn't have to hunt to find these samples.

maybe its just one of the older/classic 'techniques' in selling science?: the take away.

as in: convince the herd its hard to get a loan = make em want it all the more

since ya cant get any yield on much of anything these daze, with rents krankin up, along with food, meds/services, insurance of all types = launching - with the bullhorn now telling us heating costs will rise this year??

i'd say their strategy is working purrrrfectly, wouldnt you BK?

but that house in miami seems to me to be a real tell on just what has happened with housing:
its gone into the casino, just like the rest of the investment spectrum has
only this casino dont offer free drinks...

[BK]

Re: Miami Housing Boom or Prelude to a Bust - How about Waltham-MA

Lektode,
Exactly. My wife and I like to watch House Hunters show and all the Homes people look at are empty. So, if the market is tight how can every House Hunter being looking at 3-4 properties that all empty?

[lektrode]

Re: Miami Housing Boom or Prelude to a Bust - How about Waltham-MA

perception = everything?

when the scam IS the message.

[BK]

Re: Miami Housing Boom or Prelude to a Bust - How about Waltham-MA

Lektrode,
I'm frightened for these folks who are buying in are they unable to do math (in Boston area many of these folks have masters in Phd's - and I'll admit to being a rotten math student in school).

For example, right next to Waltham is Watertown-MA (often an affordable alternative to Cambridge)
20 Palfrey Street Unit 20 (a Condo), sold in September for $530,000 - the buyer took out a loan of $397,500
In 2005 (at the height of the bubble when Interest Rates were 5.6%) this Unit sold for $610,000 - and the buyer had a Mortgage of $380,000.
Mortgage rates are 20% lower - the buyer is taking on more debt and Price is still below bubble peak (its a condo).

Taxes and Mortgage and Condo fee they are at $2,700 per month (and don't have the $130,000+ downpayment).

What do they say "we are doomed to repeat our mistakes".

[Milton Kuo]

Re: Miami Housing Boom or Prelude to a Bust - How about Waltham-MA

Lektrode,
I'm frightened for these folks who are buying in are they unable to do math (in Boston area many of these folks have masters in Phd's - and I'll admit to being a rotten math student in school).

For example, right next to Waltham is Watertown-MA (often an affordable alternative to Cambridge)
20 Palfrey Street Unit 20 (a Condo), sold in September for $530,000 - the buyer took out a loan of $397,500
In 2005 (at the height of the bubble when Interest Rates were 5.6%) this Unit sold for $610,000 - and the buyer had a Mortgage of $380,000.
Mortgage rates are 20% lower - the buyer is taking on more debt and Price is still below bubble peak (its a condo).

Taxes and Mortgage and Condo fee they are at $2,700 per month (and don't have the $130,000+ downpayment).

What do they say "we are doomed to repeat our mistakes".

This isn't even a mistake. This is a planned, concerted effort by the Federal Reserve and the U.S. government to reflate the housing bubble. Rational buyers who are careful with their money have to compete with idiots and deadbeats who are able to spend well beyond their means using easy credit from Uncles Ben and Sam. Now that housing is such a great "investment" once again, Congress is having second thoughts about winding down the GSEs:

http://www.bloomberg.com/news/2013-1...ashington.html

Much to my chagrin, I have been waiting since 2003/2004 for the housing bubble to end. When the crash finally occurred in 2008, I never imagined that the U.S. would be willing to sell its soul to reflate the housing bubble. I'm going to wait a little longer and see how much longer this fraud can hold up. However, I'm pretty pissed-off that I may have to just suck it up, grossly overpay for real estate, and take on the intentionally-created risk of losing a lot of money if another real estate crash occurs again.

[BK]

Re: Miami Housing Boom or Prelude to a Bust - How about Waltham-MA

A data point is my friend the Real Estate appraiser has seen business vanish since Mortgage rates increased recently. Refinance work is gone and there have been almost no appraisals for Sales since September. Its sad for my friend - but, what I was expecting.

[ddn3f]

Re: Miami Housing Boom or Prelude to a Bust - How about Waltham-MA

So when does this bottom? 2016?

A data point is my friend the Real Estate appraiser has seen business vanish since Mortgage rates increased recently. Refinance work is gone and there have been almost no appraisals for Sales since September. Its sad for my friend - but, what I was expecting.

[BK]

Re: Miami Housing Boom or Prelude to a Bust - How about Waltham-MA

When is the bottom - way beyond my pay grade.

But, even the insightful EJ has commented on this Forum that it is a great time to SELL a home and not to buy. I'm wrong way more often than EJ and buying a home is a personal choice.

If you are lucky enough to have stable employment - doctor - long term municipal employee who won't be laid off - then you may find a deal in the next year or two or three as sellers panic. Remember, no one selling a home has ever experienced a housing market coming off a generational low in interest rates and a future of higher interest rates.

If you buy you have to be there for the Long term as when Interest rates go higher there is less borrowing and prices go lower.

Some of the best real estate bargains were purchased when Paul Volker raised interest rates to the 15%-18% level. People buying then paid high interest rates, but were able to refinance as Interest rates dropped (Real Estate prices increased with every drop in Mortgage rates).

Look at the number of zip codes where prices increased by the double digits as mortgage rates fell by double digits. Yes, the Bloomberg commentators always talk about the increase in real estate and never want to talk about how highly correlated mortgage rates decreases are with home price increases.