double post

[golfgal]

Makes me sad what our children are going to live in???

A two bedroom home for $400K???

It's crazy.

That might be, but chances are it will be something they can afford. My parents bought the house I grew up in for $20,000. At that time, that was an expensive house for where we lived--huge 6 bedroom Victorian house in a popular community, etc. My dad was maybe making $10,000/year, which again, at that time, was a great salary. Well, that same house today is worth probably $500,000 and someone in his same position could easily afford that house, so as housing costs increase, so do salaries for the most part.

For the poster that was commenting about these huge houses having no furniture, I agree, they are house poor and can't afford to furnish their house. That is pretty sad. I wouldn't want to live in an empty 5000 sq ft house just so I could have a 5000 sq ft house. I will take my 3000 sq ft house that is completly furnished and decorated any day.

 

[chrissyk]

Well true the engineering jobs are going to pay close to other parts of the country because of recruiting factors. Have you read the articles lately about not being able to sustain a young professional population since this place is boring. Money is important because of this.

Hmm I haven't gone in that development for some time even though we are only two developments south. I'll have to go check it out this weekend.

Yeah, definitely go check it out...it's hilarious Oh, and the decor is VERY "right now"...you can tell that it's going to look MASSIVELY outdated in less than 10 years. It did look cool for the present moment, though, LOL!

I haven't read those articles about not being able to sustain a young, professional population because it's boring here. I don't think it's boring here Geez, it's a lot more interesting than living in a place where we had horrible commutes, lived in a tiny house (in a truly boring place), paid $400 a month for heat, and never did anything but hang out in the garage with our neighbors because everyone was too poor to do anything else! At least we have beaches here. What do people need for excitement? I'll take being "bored" here anyday over the excitement of wondering how I'm going to afford the gas bill

 

[Galahad]

I think the bubble is going to burst in a very painful way in some parts of the country in a way that will hurt the entire economy. Any bubble does that. The dot.com bubble, the Y2K bubble, the stock bubble of the late 90's all contributed to the economic trouble that followed. This will hurt as well. In the meantime, a lot of individuals will be able to make out well before it disappears. Not sure I'm all that comfortable with the "get yours while you can" approach to things like this. Greenspan is no dummy.

 

[tubachick]

Reading this thread made me think about our recent offer on a house. Our first house. 35 miles from where we live in order to be able to afford the house. I will now have to commute to work But inorder to get a house (not a condo or studio) in our price range, that is what we had to do.

 

[Texan Mouseketeer]

Some of the house prices y'all are talking about seem so high! Is it because you're up North? I am ignorant, of course. But around here, you can get a home in the 100's (mainly mid to high 100's) pretty easily. The 200's on up are very nice and with the square footages some of you have mentioned. So how do people like teachers and police officers afford $500 and $800k homes?

 

[chrissyk]

Some of the house prices y'all are talking about seem so high! Is it because you're up North? I am ignorant, of course. But around here, you can get a home in the 100's (mainly mid to high 100's) pretty easily. The 200's on up are very nice and with the square footages some of you have mentioned. So how do people like teachers and police officers afford $500 and $800k homes?

Um, they don't...well, maybe police officers do because they can make a lot of OT, but teacher's don't make that kind of money around here.

I'm talking about FL when I talk about the $500K+ homes...not south FL either. TX is one of the few places where I think you can get a wicked nice new house for in the $100's.

 

[AllyandJack]

Um, they don't...well, maybe police officers do because they can make a lot of OT, but teacher's don't make that kind of money around here.

I'm talking about FL when I talk about the $500K+ homes...not south FL either. TX is one of the few places where I think you can get a wicked nice new house for in the $100's.

Some teachers in MA are paid REALLY well. My friend's boyfriend is a teacher and he makes over $70,000 a year and he just got his license this year. One of my good friend's DH's is a teacher. She's a SAHM and they bought a house in Winthrop for over $500,000.

So, it can be done.

 

[chrissyk]

Some teachers in MA are paid REALLY well. My friend's boyfriend is a teacher and he makes over $70,000 a year and he just got his license this year. One of my good friend's DH's is a teacher. She's a SAHM and they bought a house in Winthrop for over $500,000.

So, it can be done.

MA teachers get both track and step pay, so they can get paid really well! FL teachers get steps but no track, so the payscale tops out at like $50K after 20 years, LOL!

Even at top pay in a good district, a MA teacher makes under $100K/year. I have to wonder what kind of creative financing went into that $500K home purchase Maybe they were lucky and sold a smaller house that had appreciated

 

[AllyandJack]

MA teachers get both track and step pay, so they can get paid really well! FL teachers get steps but no track, so the payscale tops out at like $50K after 20 years, LOL!

Even at top pay in a good district, a MA teacher makes under $100K/year. I have to wonder what kind of creative financing went into that $500K home purchase Maybe they were lucky and sold a smaller house that had appreciated

They took out a HELOC to get the 20% down to avoid the PMI. He also refuses to let her get Dunkin' Donuts coffee - apparently this is some great money-saver. They seem to make it work, but it's a struggle. It was her obsession to live near her mother in Winthrop. I would have told her fine, but you need to go to work.

 

[soccerchick]

They're not doing this to put pressure on you to buy now. They are doing it because of the demand. If the market wouldn't/couldn't bear the prices, they would drop.



Erin

I think they know the market will tolerate it. at first I wondered if they did it to slow things down since they can only release so many lots at a time. I think it did the reverse; people panic that prices will go higher and are pressured to sign contracts.

We were interested in a house/model that would have been a stretch for us anyway, so we thought about it. This was a Thursday. We had a few more questions and called the salesperson back on Friday and base prices had been raised that morning by $60,000!!!!

We bought the same model house but in a different neighborhood on the other side of the county. We did our contract on a Wednesday. It went up 20K that Friday after. That was in March of 2004. We moved in in Sept. of 2004 and our house is now worth, on paper, $300,000 more than we paid for it. You cannot buy a new single family home in our county for under $800K.

The other problem is that builders around here are requiring 10% for the down payment. We paid $5K in 1999 when we contracted on our last house. Now you're talking anywhere from 50K to 90K in cash before you can sign on the dotted line.

I am a teacher and DH is a police officer. We could afford to move then (not now though) because the house we bought in 2000 far more than doubled what we paid for it. We put 20% down on this house, put a very nice sum away for the kids' college funds and still have a good amount leftover from the transaction.

I'd love to move away to where home prices are more reasonable, but all our family is around here except one sister. DH is too far up the seniority ladder to seriously consider leaving now too.


Also, to be honest, the foreclosure problems exist in any neighborhood. When we lived in our old neighborhood two neighbors had to sell and move and the homes were all priced right around $200,000 at that time.

 

[aprincessmom]

Even if the builder pays a high per-lot cost and a high per-home impact fee, how do they justify raising the prices on these to-be-built homes on a monthly basis? Do their costs go up monthly as well?

Sometimes they do...right now the shipping costs are going sky high as most building materials end up being delivered by truck at some point. Some of it is the way their financing for the land development works. If it takes them 2 years to develop the land (which is about what it takes from the time you buy it, go through all the board approvals, get sign off, and actually start building roads), you have to finance it somehow. Some deals have balloon payments that begin at a certain time in the deal. Sometimes the financing is finite and so they have to then pay off and get other financing which is at a higher rate or has balloons in it as well. Land development is riskier than individual mortgages and there are very few outlets for financing so the developer is at the mercy of the financing.

What you are describing appears to be more of a supply and demand kind of thing. Demand outstrips supply so they can name their price and raise their prices as long as people are willing to pay that price. Keep in mind there is a huge market right now in second homes and people from other areas buying "retirement" homes for when they retire 5-10 years. There are a bunch of people at my job who are doing this. They see the prices rising in FL, AZ, TX, and CA and even though they are 5-12 years from retiring, they are buying their retirement homes now while they are "affordable". That may be why you see the prices you see in your area despite locals not being able to support it on local economy salaries. Think Cape Cod...that's been happening there for at least 25 years.

 

[aprincessmom]

So how do people like teachers and police officers afford $500 and $800k homes?

They don't. That's the problem.

 

[chrissyk]

That's totally true about the 2nd home/retirement market, but this area of FL would not be an area that I would think would attract major #'s of retirees. Maybe I'm wrong, though. There is a 55+ portion of the development (although not a major portion). I could see retirees flocking to the beach, Orlando, South FL, anywhere near a nice golf course, but this is more of a "family" area. Besides, I don't know a whole lot of retirees who want to maintain a 3000+ sq. ft. house...again, I could be wrong, though!!

 

[chrissyk]

I think they know the market will tolerate it. at first I wondered if they did it to slow things down since they can only release so many lots at a time. I think it did the reverse; people panic that prices will go higher and are pressured to sign contracts.

That's my take on it anyways. I just wonder how long it will take before panic buying turns into panic selling (as in, "uh oh, my interest-only mortgage payment just adjusted up and now I can't afford it!")

 

[aprincessmom]

Besides, I don't know a whole lot of retirees who want to maintain a 3000+ sq. ft. house...again, I could be wrong, though!!

That's what I thought, too, until I saw pictures of these "retirement" homes. They are bigger than their current houses!

 

[ducklite]

Some of the buyers may have had a lot of equity in their last home, making their payments not as much as you'd think.

I know for a fact that is how most buyers in my neighborhood ended up in their million dollar homes. In other cases people were lucky in the stock market.

DH and I had a little of both. We had bought a "starter home" in NJ nine years ago that was well below our means. It had gone through TWO foreclosures, and needed a little work, but nothing that couldn't be done while we lived there. We were able to pay it almost off by making extra principal payments every month on top of a 15 year mortgage. Using that equity plus some stock sales, we were able to build our dream house in FL, and keep our payments to about what they were on the starter home in NJ.

I think a lot of people have unrealistic expectations on a first home purchase, and want "the perfect house" rather than a house that needs some cosmetic work.

Anne

 

[chrissyk]

I think a lot of people have unrealistic expectations on a first home purchase, and want "the perfect house" rather than a house that needs some cosmetic work.

Anne

I so agree with this! Our first house was a little house in MA that we bought before the housing boom. It needed cosmetic work, but doing that was affordable over time. We didn't buy much nicer of a house here in FL, so we're debating whether or not we should buy that "dream house" now. We could, but I'm just not convinced that there is anything inherently worthwhile about the area where they're building that justifies the prices.

In MA, my gut told me that the area where we bought was about to boom, and I was right. It was a very obvious confluence of factors there to me...great location for commuters, decent schools (when we moved in...they sucked when we moved out), etc. The tech economy was just starting to recover, there were lots of newly minted high-income people in the area...

Here, the town is springing up out of nowhere, there is nothing to vouch for the schools as they're brand-new, the jobs to support the housing prices don't seem to be there, and I'm not sure where the "market" would come from if I suddenly needed to resell my 700K McMansion. For the next 20 years, the resales in this development will be in competition with constant new construction in the same development. I can't see the prices going up and up much beyond these prices for a while anyways, so that makes me think that the resales will languish while the new construction continues to boom. Add to that an eventual rise in interest rates, and it looks like a lose-lose scenario for the buyer of the $$$ house who wants to resell in 5 years. Who wouldn't rather build a new house and get exactly what they wanted for similar money

 

[mrsltg]

I know for a fact that is how most buyers in my neighborhood ended up in their million dollar homes. In other cases people were lucky in the stock market.

DH and I had a little of both. We had bought a "starter home" in NJ nine years ago that was well below our means. It had gone through TWO foreclosures, and needed a little work, but nothing that couldn't be done while we lived there. We were able to pay it almost off by making extra principal payments every month on top of a 15 year mortgage. Using that equity plus some stock sales, we were able to build our dream house in FL, and keep our payments to about what they were on the starter home in NJ.

I think a lot of people have unrealistic expectations on a first home purchase, and want "the perfect house" rather than a house that needs some cosmetic work.

Anne

I agree with this 1000%! We wouldn't have our current home if DH hadn't purchased a townhome back in 1996. We made $100k when we sold it allowing us to move up. My house is now worth $600k. My husband is a cop. If it weren't for his roommate getting married and DH deciding it was time to make a purchase, we'd be living in our old townhouse though we'd have purchased it for nearly the same price we purchased our current home for! There was an article in the Washington Post a few months ago saying that the average home in my county would go for about $900k in 3 years. When that happens we're selling!!! Then we'll be the people who take massive equity and buy a home somewhere for almost nothing...

Erin

 

[belle3]

I completely agree that things are spiraling out of control...we are one of the folks mentioned in one of the posts who are about 7 years away from retirement. We were fortunate enough to have bought 11/2 acres in Florida about three years ago and paid a very modest price. Now the cost has gone up about 5x what we paid and we are constantly being solicited to sell! We were looking at some of the builders and see prices going up weekly and monthly, and we were thinking it would be wise to build while we could afford it, that is until I went to the local tax office and found out ho much the taxes would cost! It was outrageous, and with no protection until we moved into the house, I expect it would only get worse. for a 350k house, the tax bill would be 7K, and it would go up yearly as the county is at 100% assessment. Nedless to say, we backed out of the plan...... I doubt very much if we will ever be able to afford to build. The prices of homes in our area have not spiraled like they have in Fl and other parts of the country, unfortunately! It may make more sense to give up the idea of building in Fl and try and find land around where we are and just stay here, but that is really NOT what I want to do. I have dreamed about living in Florida for many years, and hate to have to give that up. I agree that the price hike cannot be sustainable and there is a lot of panic buying going on now. As an example, one of the local builders in Florida sent us an e-mail with pricing on inventory homes. The lot was 0.2 acres, priced at 41k, with a lot PREMIUM...(are you ready...?) of 359k!!!!! And yet I am sure they will sell this house...For now, I am content enough to wait and see where the pricing will level out!

 

[ChrisnSteph]

So is there a huge difference of paying a higher price for a home at a lower interest rate, or a lower priced home at a high interest rate? Not really. I think people who have lots of equity in their homes - either by appreciation, or the down payment they made when they bought the home - don't have too much to worry about. My house would have to drop over 100K for me to start being concerned. But even then, the market goes up, it goes down, it goes up again. It's a cycle. I think the people who are doing no money down, ARM loans, and other exotic mortgages might have something to worry about, but who really knows for sure? People have been predicting the bubble is going to burst any second for the past 2 or 3 years, and it hasn't happened yet. It's cooled a bit in some areas, but not burst.