Florida Real Estate: Still Cheap?
home prices show no gain for the previous 25 years, when you adjust for inflation.
Meanwhile, Investment U Vice President Brian Hunt was out in Carlsbad, CA last week. He went out for a jog, and while jogging he passed a sign that said "Starter homes, starting in the $900s..." Of course, these home have no ocean views... or views of anything. It was a cookie-cutter neighborhood... nothing special at all.
What's going on? According to the current issue of Fortune magazine, what's going on is a nationwide housing bubble. But by my research, we do not have a nationwide housing bubble. We have a bubble in California, and a few coastal towns, and that's it. Home prices in much of America are still affordable. Let me explain...
Sell California Real Estate, Buy Florida Real Estate
I live on an island off the east coast of Florida, near Jacksonville. The median home price in Jacksonville is about $150,000, and the median family income is about $50,000. At current interest rates, the median family would spend about 17% of its monthly gross income on its mortgage payment (principal and interest). Jacksonville prices have risen fast. But mortgage rates have fallen faster than the home prices, making home payments very reasonable.
It's not just Jacksonville. The numbers for a long stretch of Florida's east coast - the Melbourne-Titusville-Palm Bay area, for example - are about the same. It's a great deal for coastal real estate. People are starting to catch on - real estate prices in that area are up nearly 20% in the last year. But it's still cheap.
Not everywhere in Florida is a great bargain. For example, the West Palm Beach-Boca Raton-Delray Beach stretch isn't nearly as attractively priced anymore, as prices are much higher and incomes are lower than the other regions I talked about. But compared to California, Florida is super cheap...
In Florida, from Jacksonville to Palm Bay, the median family can buy the median house with 17% of their monthly gross income. But in certain California areas (including San Francisco and San Diego), it would take the median family over 50% of their monthly gross income just to afford the median home.
The east coast of Florida down to Palm Bay is so cheap, relatively (even after the big price rises), that it compares with towns like Omaha, NE, and Indianapolis, IN, where it takes the median family only 14% of gross monthly income to afford the median home.
But it snows in Omaha...
Want to buy a few minutes from the beach, at close-to-Omaha prices? Consider buying near the coast in central and north Florida. Prices are rising fast. Judging by how high prices are in coastal markets like California and the northeastern U.S., there's plenty of room to run.
Today's IU Cribsheet
# As for other markets, at first glance, the median home in the Washington D.C. area appears very expensive, in the $400,000 range. But surprisingly, the median family income in a few surrounding counties (like Fairfax County, Virginia, and Montgomery County, Maryland) is nearly $100,000. The mortgage math works out where these median families can afford the median home. New York / New Jersey is somewhere in between D.C. and California... not cheap by any standard, but not at California's bubble proportions, as incomes are higher in New York and home prices are lower than California's.
Meanwhile, Investment U Vice President Brian Hunt was out in Carlsbad, CA last week. He went out for a jog, and while jogging he passed a sign that said "Starter homes, starting in the $900s..." Of course, these home have no ocean views... or views of anything. It was a cookie-cutter neighborhood... nothing special at all.
What's going on? According to the current issue of Fortune magazine, what's going on is a nationwide housing bubble. But by my research, we do not have a nationwide housing bubble. We have a bubble in California, and a few coastal towns, and that's it. Home prices in much of America are still affordable. Let me explain...
Sell California Real Estate, Buy Florida Real Estate
I live on an island off the east coast of Florida, near Jacksonville. The median home price in Jacksonville is about $150,000, and the median family income is about $50,000. At current interest rates, the median family would spend about 17% of its monthly gross income on its mortgage payment (principal and interest). Jacksonville prices have risen fast. But mortgage rates have fallen faster than the home prices, making home payments very reasonable.
It's not just Jacksonville. The numbers for a long stretch of Florida's east coast - the Melbourne-Titusville-Palm Bay area, for example - are about the same. It's a great deal for coastal real estate. People are starting to catch on - real estate prices in that area are up nearly 20% in the last year. But it's still cheap.
Not everywhere in Florida is a great bargain. For example, the West Palm Beach-Boca Raton-Delray Beach stretch isn't nearly as attractively priced anymore, as prices are much higher and incomes are lower than the other regions I talked about. But compared to California, Florida is super cheap...
In Florida, from Jacksonville to Palm Bay, the median family can buy the median house with 17% of their monthly gross income. But in certain California areas (including San Francisco and San Diego), it would take the median family over 50% of their monthly gross income just to afford the median home.
The east coast of Florida down to Palm Bay is so cheap, relatively (even after the big price rises), that it compares with towns like Omaha, NE, and Indianapolis, IN, where it takes the median family only 14% of gross monthly income to afford the median home.
But it snows in Omaha...
Want to buy a few minutes from the beach, at close-to-Omaha prices? Consider buying near the coast in central and north Florida. Prices are rising fast. Judging by how high prices are in coastal markets like California and the northeastern U.S., there's plenty of room to run.
Today's IU Cribsheet
# As for other markets, at first glance, the median home in the Washington D.C. area appears very expensive, in the $400,000 range. But surprisingly, the median family income in a few surrounding counties (like Fairfax County, Virginia, and Montgomery County, Maryland) is nearly $100,000. The mortgage math works out where these median families can afford the median home. New York / New Jersey is somewhere in between D.C. and California... not cheap by any standard, but not at California's bubble proportions, as incomes are higher in New York and home prices are lower than California's.
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Hurricanes unlikely to dampen real estate
Palm Beach Post - Palm Beach,FL,United States
... Properties in West Palm Beach. But by and large they won't, Bianchi and real estate analysts agree. Palm Beach County's hot housing ... http://www.palmbeachpost.com/business/content/business/epaper/2004/10/10/a1f_canerealestate_1010.html
It's always cheap if I buy it. lol.
Talk about Jacksonville...wait until after the BIG GAME.
I expect some changes around here.
JB
REAL Estate News
http://www.Sun-Sentinel.com - Fort Lauderdale,FL,USA
Good news: Housing demand has been robust, thanks to the strong job market
and the continued migration of northerners to South Florida. ...
http://www.sun-sentinel.com/business/local/sfl-sbreal26dec26,0,7589708.story?coll=sfla-business-headlines
Front page of my paper on Sunday 12-26.
THE RED HOT BOOM
I did hear something interesting from nother investor, I don't know how accurate it was, but it definately seems to be coming true.
"Pretty soon the east coast from Savannah, GA to Daytona, FL is going to be the next California in respect to real estate prices"
JB
Found this recent article online regarding Brit's favorable pound=dollar exchange causing flashing cash!
property/main.jhtml%3Fxml%3D/property/2004/12/15/pflorida15.xml%26sSheet%3D/property/2004/12/18/ixpmain17.html+buy+land+in+rotonda&hl=en&client=firefox-a">FLASHING CASH
property/main.jhtml?xml=/property/2004/12/15/pflorida15.xml&sSheet=/property/2004/12/18/ixpmain17.html">FLASHING CASH
Nice article! My wife is british and her family has been investing in Lee County for awhile now with great results.
Ray Higdon
SWFLA Investments
Another article about housing bubble in Florida?
Florida Trend Magazine