Gad! House buying today

[KennyG]

You guys are right that the taxes and insurance are a big part of the problem. High mortgage rates are a problem but at least the payments end eventually. I'm not in a high tax area but my taxes and insurance are between 3 and 4% of the property value and that never ends. My guess is some areas are a lot higher.

 

[paulsharvey]

@JeepHead part of that surprise might be the 'in Florida!' part. Not Palm tree and beach Florida, or even the subdivision and orange grove Fla, we are talking inland, poverty Florida. The part where 10% of the county lives in a shed or van in the woods FLa.

 

[JeepHead]

@JeepHead part of that surprise might be the 'in Florida!' part. Not Palm tree and beach Florida, or even the subdivision and orange grove Fla, we are talking inland, poverty Florida. The part where 10% of the county lives in a shed or van in the woods FLa.

I have lived in Florida a couple of different times. I know all too well what you're talking about....

 

[paulsharvey]

Correction on that 28 acres; sale price was $131k; and she gor $99k after everything.

 

[jyoutz]

Yes, it's the combination of skyrocketing prices (which was livable with low intrest rates) mixed with the high intrest rates.

The average new home is $411,000; a 4% intrest, 3.5% down, at 3%=is only $1730/month before property taxes and insurance;

now; $411,000 @ 7%=$2910

Now; the hidden part; the taxes and insurance; that's gonna be close to directly tied to purchase price; Excpet; all our homestead tax breaks; which come off the top; so you get $50,000 off the appraised value, and then pay about 1.8% of the remaining appraised value per year;

What that kills you on; a $150,000 home, your taxes were like $1,800/year; but a $500,000 home. that's gonna be $8100/year.

We are in the realm of a new purchase of an average home being $2910+541.50+300=$3755 per month

10 years ago; we probably were $150,000k home; $790/month+$100 in insurance; and $150 in taxes=$1040;

So; a average home is 3.6 x the cost per month as 10 years ago.... How's your pay check compare to that? If we assume you got 3% per year, each year for last 10 years; we are at like a 35% increase in pay vs 360% increase in cost of new housing.


Edit: that probably extreme, 10 years ago was 2014; so that $150,000 should have actually been $178,000.

Property taxes seem awfully high in your example, but of course that fluctuates widely by state and county.

 

[2manyrocks]

The fed has been "easing" the money supply at a hefty pace since 2008 up until 2020 when they increased the money supply at a such rate and in an amount that is unprecedented. Housing prices essentially doubled in most areas of the US from what they were in 2019 to 2022 while earnings did not. This rapid increase in prices relative to earnings has created the worst housing affordability in 30 something years.

There are a substantial number of homeowners who got 30 year mortgages below 3%. They aren't going to sell these homes to have to refi at double the interest rate and double the price just to buy another home, and the odds are that the inventory of homes they have to pick from are worse than what they already own.

Not only did this create a housing affordability problem, the real estate market is pretty locked up right now.

So congrats to the Fed.

 

[ericm979]

Covid had a big impact on the housing market. Suddenly a lot of people wanted to live somewhere else. Usually out of the city, which would affect rural and suburban markets. A lot of people I know in tech bought rural places and worked from home.

Another factor is large private equity firms have been buying up houses to rent. Many thousands of them. Mostly suburban. They have also been buying farm land, which is one of the reasons it's so high these days.

 

[NorTracNY]

Yes, it's the combination of skyrocketing prices (which was livable with low intrest rates) mixed with the high intrest rates.

The average new home is $411,000; a 4% intrest, 3.5% down, at 3%=is only $1730/month before property taxes and insurance;

now; $411,000 @ 7%=$2910

Now; the hidden part; the taxes and insurance; that's gonna be close to directly tied to purchase price; Excpet; all our homestead tax breaks; which come off the top; so you get $50,000 off the appraised value, and then pay about 1.8% of the remaining appraised value per year;

What that kills you on; a $150,000 home, your taxes were like $1,800/year; but a $500,000 home. that's gonna be $8100/year.

We are in the realm of a new purchase of an average home being $2910+541.50+300=$3755 per month

10 years ago; we probably were $150,000k home; $790/month+$100 in insurance; and $150 in taxes=$1040;

So; a average home is 3.6 x the cost per month as 10 years ago.... How's your pay check compare to that? If we assume you got 3% per year, each year for last 10 years; we are at like a 35% increase in pay vs 360% increase in cost of new housing.


Edit: that probably extreme, 10 years ago was 2014; so that $150,000 should have actually been $178,000.

I know you're not doing it on purpose, but I don't like your post! I dream of paying anywhere close to $10K in property taxes. -$50K then just 1.8% of value........ Try, minus zero and 3+%.

 

[paulsharvey]

I know you're not doing it on purpose, but I don't like your post! I dream of paying anywhere close to $10K in property taxes. -$50K then just 1.8% of value........ Try, minus zero and 3+%.

So, in Fla, each county can charge upto 10 mils (1%), plus the school board same, and if inside city limits, the city can charge 1% as well; plus much smaller fees for water management and trash removal, that is like $50-250/year. Most areas they are going to be as close as they can get to that 1%, while not loosing an election.

That's assest value; which can only go up by like 3.5% per year on your Homestead, which can only be 1 property. Property is assisted at Highest and Best Use, unless bona-fide agricultural use is applied for.

 

[paulsharvey]

We haven't even brought up CDD fees or HOA fees that in some cases can be another $300-500/month for subdivision folks.