By ChicagoTruth

July 2, 2008 6:27 PM | Link to this

Why arent they selling…hmmm..could it be….THE PRICES, STUPID!!?? I don’t care how much prices have declined over the past year, they still havent come close to being within range of average incomes.

While investors, specilators, and flippers are freaking out over a median home price that has dropped from a peak of $410,000 down to around $320,000, that STILL is far too high for the majority of working class folks.

Rule of thumb for home affordability. 3x annual income. Therefore, even at $320,000, that still requires a 6-figure income! COnsidering that FLorida is the land of low paid service and tourism jobs, few are earning that kind of income. And no, owning a home should NOT require two or three full time worker’s incomes pooling together to buy it. Only a generation ago, the average home could be purchased by ONE LONE average income. Thus, it allowed for one parent to actually be home with, and raise children, instead of dumping them at chaotic kiddie care. clinics.

I, for one, would sure like to know just what kinds of jobs pay over $100,000/yr in Florida, and just how many of those jobs are available, and what is the ratio of jobs that pay that much compared to the masses that earn a third of that and less.

Was there no one with any foresight to see that when virtually 100% of new housing is built for, and affordable to only the top 10% of the population, economic disaster is inevitiable?

The similarities between the housing industry and the Detroit automakers is astounding. The Detroit 3 focused all of their efforts on building the biggest, most profitable self indulgent gas guzzlers possible. COnsequently, as gas prices have risen to be more equitable with the rest of the world, the Detroit auto industry is dropping like a lead balloon, while Toyota and Honda cant keep up with the demand for their economical, reliable smaller cars.

The storage lots at Detroit auto plants resemble many of the newer housing developments down there, such as Port St Loser, or Olympia in Wellington. Thousands of empty, unwanted, unsellable homes/vehicles.

Like the Detroit 3, housing developers claim they cant make money on smaller, simpler homes. Well, Toyota and Honda sure seem to be able to make money on smaller vehicles. Why then cant they take the materials used to build one oversized McMansion, and instead build two simple 1200 sq ft 3br ranches to be sold at the $100-200,000 range? If it is using the same amount of material, and same cost per sq ft, how can it not work to use said materials and labor to construct two or three small basic homes instead of one unnecessarily huge McMansion?

One thing is for sure. Those greedy developers are not making a cent off of the thousands of unsold McMansions around PB County!

People are having less kids, so why do they need bigger homes?? How on earth does a couple with one child need a 3000 sq ft home?? People simply need homes, not palaces. When I grew up, a generation ago, most of my town, (industrial suburb of Detroit) consisted of 3br ranches and trilevels averaging from 1200 to 1600 sq ft. In those modest homes, parents raised families of 2 to 8 kids. And you know what? Those kids turned out fine. Many went off to college, and successful careers. They did not suffer at all for sharing a bedroom. Why then does it seem that today, many feel that they need 1000 sq ft per person??

The housing market will rebound when more homes are affordable to the average working class person, and when they start building smaller, simple homes aimed at those working class people.

By Chitago

July 2, 2008 8:37 PM | Link to this

Hey Chicago pigboy your low class ignorance is showing. Go back to your tenement slum. You couldn’t even afford to live in Florida as trailer trash. Low income equals low intelligence. What a fool. Freeze your A$$ off in the Winter and sweat your BA$LS off in the summer. You must be Polish, huh?

By Get in the Game

July 2, 2008 9:59 PM | Link to this

Whatever you are trading…

If it’s priced right - it sells.

Or

Irrational on the way up = irrational on the way down

By iq135

July 2, 2008 10:04 PM | Link to this

Chitago, there are plenty of people down here with college degrees who can barely afford to live here. Intelligence gives one the resourcefulness to be able to figure out how to stretch a budget. It does not guarantee a 6 figure income. I believe it is you who has revealed not only ignorance, but a substantial deficiency of character. Lack of affordable housing is a real problem. I do not like the fact that many teachers at my son’s school are not able to afford homes in Palm Beach County. Some may be leaving because high gas prices make commuting unaffordable. I would hardly call these people unintelligent, and neither should you.

By Rational thinker

July 3, 2008 6:56 AM | Link to this

If price is only determined by income, then please explain how New York has so many people making minimum income. Income is only one of the factors in home pricing. Another factor is desirability of location. People are willing to work longer and save up to afford a more desirable address than a less desirable address.

Also, age and ability to attain other assets are a big factor. Many people inherit money from deceased family members and in the second part of their lives are able to move to a more expensive home. I for one saved my money while single by living with my parents until the age of 26. My husband did the same until he was 31 and we were able to purchase our first house prior to getting married (no big wedding ceremony).

Another factor is whether you have a house to trade in. If you own a home, the equity gained can be transfered to the new house. Of course things are quite different if you do not own a home today. This is why you should buy anything (even an apartment) as soon as you can because you are just throwing away money when renting. Just make sure you get a fixer-upper so you get as good a neighborhood as you can afford and don’t go over your head. You might just want to move to another community that has lower priced homes.

The last factor is the global economy and our dollar is very weak. This makes the U.S. very affordable in comparison to non-Americans and many are moving to the U.S.

I do agree that people go overboard on home size because they just want to show off. I prefer location to house size because you can always revamp the house but you cannot uproot the house and move it to a new location. Also, houses in a good location increase faster. Our house went up ten-fold in 15 years because of the neighborhood.

I do feel bad for couples starting out today. I know that we would not be able to purchase what we did if we were facing today’s prices but that would not change the fact that the prices are here to stay.

By Get in the Game

July 3, 2008 8:42 AM | Link to this

Chicago is correct about price of the traded object to the amount of income needed to sustain the note.

In other words, take your income and multiply x THREE.

This number is the amount of house one (couple) can afford.

Banks USED TO lend money by this rule.

Since houses outstripped income, banks sold the notes overseas, thereby transferring responsibility to large investment vehicles (institutional funds).

Now the CREDITORS are demanding their ROI and the servicers can no longer BS.

So, until US banks - NOT ASIA - take house debt back on their books at a conservative metric (again, use income x 3) - this housing nonsense shall continue long into the future.

And if the servicers (US banks), RE agents truly want to trade these houses then just lower the prices.

All the gimmicks, cars, and other perks do not address the price.

US citizens do not have any MONEY. They barely have any savings. So, since they are going to need to SAVE MONEY to receive their house debt - until then prices are going to adjust.

In the end - just wait for the re-pricing of risk.

By WAKE UP

July 3, 2008 9:24 AM | Link to this

You’re just never going to learn are you Chicago? I hope you don’t work in the business sector, because you have zero concept of economy of scale. You apparently didn’t learn anything working for FEMA or the insurance companies or whatever the hell it was that you claimed to do a few years back.

To start off there aren’t necessarily enough materials in one mcmansion to build two smaller homes. Most of the mcmansions you speak of are 2 story homes, which means that they have relatively small footprints - something that would be pretty close to the 1,200-1,600 sf of your working class home. You can’t just pull the second floor off and have a complete home….you need a roof, a floor slab, foundation, etc. And now you need 2 lots to build on instead of 1. So the reality is that it is cheaper per sf to build a mcmansion than it is for your typical working class home, plus you have more usable sf in the same lot size. There are factors involved in project management and supervision that come into this as well, but that’s boring and probably over your head.

Many of us grew up in the same small ranch style houses that you mentioned. 1,200-1,600 sf 3B/2 bath, no garage, just a single car car-port, hell we didn’t have a formal dining room or a family room. Heck, here in FL we didn’t even have a basement. But that’s what was available to the masses here in S FL. Unless you were very wealthy and living near the beach, larger homes were just not the norm. If you were still here I would tell you to take a drive down through Lighthouse Point. Many of those older homes were built in the 50s and 60s and were owned by the “rich folks” who could afford to live on the water and park a boat in the backyard. Guess what - they were the same 3BR/2B houses the rest of us lived in, just in a different location. What has happened over the last few years is that people have come in and bought 2 of those old ranch houses, torn them down and built 1 large 5-6k sf mansion - life on the water is good.

Today there are more options to choose from and a different kind of cutomer. Many parts up north happen to have 2 and 3 story houses that aren’t 1,200-1,600 sf, and the people who live in them don’t want little ranch houses, they want mcmansions, and they can afford them. Then there are those of us who want a little more space than we had growing up - we buy mcmansions. Whether or not you deem it necessary is of little consequence to me.

But alas, I am rambling. I’ll leave you with this last note - one day you might a lovely woman (or man - whatever you’re into) and decide that you want to start a family. That’s when you will realize it’s not just about what YOU want or YOU can afford…

By 3rdworldlover

July 3, 2008 10:43 AM | Link to this

I’m not sure what it is that attracts many parts up north to southern Florida.

Is it the crime, road rage, over crowdedness, over developed beaches, water and air pollution,… strip joints and plastic people?

Do you really want to move down here to complain about how hot it is and pay FPL to air condition a house that’s required by some old greasy guido from NJ to look exactly like your neighbor’s from NY?

By ChicagoFactor

July 3, 2008 12:01 PM | Link to this

I am beginning to think that the PBPOST should pay me, because whenever I post a comment, it incites much action and response. The other posts may not agree with me, or downright hate me and what I say, but at least, I generate some action here. You know what they say, “there is no such thing as BAD publicity.”

After all, the RE blog has been mostly dead ever since Linda left in a huff and took here numerous blog puppets and alter-egos with her. Seems like the only time Jeff’s blog generates more than a response or two, from someone besides that media conspiracy nut, is when I post the Chicago position.

Speaking of Chicago, it has been a lovely summer. Extremely pleasant weather. Only a handful of hot days. MOstly in the low 80s by day, 60s at night. Refreshing, comfortable, windows wide open, fresh air. No AC needed. Lets see, my electric bill for June was $24.51. How about yours?

Hows that drought turning out? Keep your eyes on Bertha. Dont be caught with your pants down like with Wilma. But then, if you have another big hurricane, I just may have to come down and join FEMA to the rescue again! When that happens, I should be able to rent a sweet luxury condo with all the amenities, for maybe $800/mo!

By 3rd HUH?

July 3, 2008 1:11 PM | Link to this

what could it be? the sunshine, no snow? it’s still less crowded than the sh@tholes in NY and NJ that they’re moving from. Truly mind-boggling. If it was so great up north, we’d all be moving there instead.