Jacksonville a Top City to Buy instead of Rent
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If you're a qualified buyer and thinking of renting in Jacksonville, you may want to reevaluate. According to Truila.com, a San Francisco-based real estate website, Jacksonville is one of the top cities in the country to consider buying over renting.
Full Article
http://www.metrojacksonville.com/article/2011-jan-jacksonville-a-top-city-to-buy-instead-of-rent
Unless of course you bought your home in 2006/2007 (like we did). Then, the joke's on you. Wocka wocka wocka!
Yep. I bought in 2007 for $230 and it is now worth $88. I'll be stuck there until I get the loan paid off in 27 years... I only wish I was smart enough to wait until now to buy. My condo was originally $270, so I thought I was buying at the right time. What an idiot I turned out to be.
If you were to buy a 2/2 condo for $88, the monthly cost with HOA dues would only be about $800 per month ($400 per month per bedroom). Buying would make a lot of sense.
Quote from: peestandingup on January 27, 2011, 07:05:34 AM
Unless of course you bought your home in 2006/2007 (like we did). Then, the joke's on you. Wocka wocka wocka!
Not necessarily. If you sold a home at the height of the market in, say the Northeast, for top dollar and you bought in Jacksonville in the same period, you are still ahead of the game. It's all relative. Of course not so with first time buyers.
I'm a first time buyer... we bought in 2009. But the seller came down like $75k! And it was appraised for $40k more than we paid for it!
I hope I didn't do something stupid. At the time, we thought the market was low. Plus our mortgage is the same as we were paying in rent (well, it was, til some kind of tax increase resulted in my monthly escrow payment going way up).
If I had it to do again, I'd reconsider. But such is life!
Well, I sorta had my arm twisted (by the wifey). But I've personally never liked the idea of homeownership unless you're absolutely sure you'll be living in the thing for most of your life. And really, who even knows that they're going to do that these days.
Its too much of volatile market to ever really screw around with as far as I'm concerned.
Quote from: peestandingup on January 27, 2011, 10:05:03 AM
Well, I sorta had my arm twisted (by the wifey). But I've personally never liked the idea of homeownership unless you're absolutely sure you'll be living in the thing for most of your life. And really, who even knows that they're going to do that these days.
Its too much of volatile market to ever really screw around with as far as I'm concerned.
I kind of agree. I know we won't be living in this house most of our lives (heck, maybe another 5 years).
I think I just got tired of lining my landlord's pockets while being unable to change the house to suit my tastes. At least now I can paint, pull up flooring, build fences, install crown molding, etc etc...
I won't lose sleep over it or anything but sometimes I worry that I paid too much.
Quote from: Cricket on January 27, 2011, 08:47:54 AM
Quote from: peestandingup on January 27, 2011, 07:05:34 AM
Unless of course you bought your home in 2006/2007 (like we did). Then, the joke's on you. Wocka wocka wocka!
Not necessarily. If you sold a home at the height of the market in, say the Northeast, for top dollar and you bought in Jacksonville in the same period, you are still ahead of the game. It's all relative. Of course not so with first time buyers.
exactly...I made a 130% profit on my first home in Tampa (owned from 2001 to 2005)....and then made another 42% on my second home in Tampa that I owned for about a year...so, while I'm down about $70,000 on my home here (purchased in 2006), I'm still way ahead.
House prices will keep falling in the areas where prices are still dangerously high compared to incomes and rents. Banks say a safe mortgage is a maximum of 3 times the buyer's annual income with 20% downpayment. Landlords say a safe price is a maximum of 15 times the house's annual rent. Yet in affluent areas, both those safety rules are still being violated and there is still a huge housing bubble. Buyers are still borrowing 6 times their income and putting only 3% down, and sellers are still asking 30 times annual rent, even after recent price declines. Renting is a cash business that proves what people can really pay based on their salary, not how much they can borrow. Salaries and rents prove that those high prices will keep falling for a long time. Anyone who bought a "bargain" in those areas last year is already sitting on a very painful loss.
On the other hand, prices in some poor neighborhoods have now fallen well below the cost of renting. In those housing markets, gross rents exceed 10% of the price of a house. Housing prices could still fall more if unemployment rises or interest rates go up, but on a month-to-month basis, the buyer of a very cheap house wins. So the housing market is split.
It's usually still much cheaper to rent than to own the same size and quality house, in the same school district. On rich neighborhoods, annual rents are 2.5% of purchase price while mortgage rates are 5%, so it costs twice as much to borrow the money as it does to borrow the house. Renters win and owners lose! Worse, total owner costs including taxes, maintenance, and insurance come to about 9% of purchase price, which is more than three times the cost of renting and wipes out any income tax benefit.
The only true sign of a bottom is a price low enough so that you could rent out the house and make a profit. Then you'll know it's safe to buy for yourself because then rent could cover the mortgage and all expenses if necessary, eliminating most of your risk.
Quote from: finehoe on January 27, 2011, 11:33:42 AM
House prices will keep falling in the areas where prices are still dangerously high compared to incomes and rents. Banks say a safe mortgage is a maximum of 3 times the buyer's annual income with 20% downpayment. Landlords say a safe price is a maximum of 15 times the house's annual rent. Yet in affluent areas, both those safety rules are still being violated and there is still a huge housing bubble. Buyers are still borrowing 6 times their income and putting only 3% down, and sellers are still asking 30 times annual rent, even after recent price declines. Renting is a cash business that proves what people can really pay based on their salary, not how much they can borrow. Salaries and rents prove that those high prices will keep falling for a long time. Anyone who bought a "bargain" in those areas last year is already sitting on a very painful loss.
On the other hand, prices in some poor neighborhoods have now fallen well below the cost of renting. In those housing markets, gross rents exceed 10% of the price of a house. Housing prices could still fall more if unemployment rises or interest rates go up, but on a month-to-month basis, the buyer of a very cheap house wins. So the housing market is split.
It's usually still much cheaper to rent than to own the same size and quality house, in the same school district. On rich neighborhoods, annual rents are 2.5% of purchase price while mortgage rates are 5%, so it costs twice as much to borrow the money as it does to borrow the house. Renters win and owners lose! Worse, total owner costs including taxes, maintenance, and insurance come to about 9% of purchase price, which is more than three times the cost of renting and wipes out any income tax benefit.
The only true sign of a bottom is a price low enough so that you could rent out the house and make a profit. Then you'll know it's safe to buy for yourself because then rent could cover the mortgage and all expenses if necessary, eliminating most of your risk.
I think all of this is true if you're looking at a house as nothing more than an investment. Sometimes there's more to it than that.
My wife and I wanted someplace that we could renovate if we desired and live in for 7 to 10 years. We bought it pretty cheap - less than 3 years of my salary alone, to say nothing of mine and my wife's. So we aren't too concerned about what we paid. Our goal in the end is to break even on the house. Basically, to be where we would be had we been renting the entire time. If we make more than that, then it's a bonus. But as long as we don't lose money, and I don't think we will, then we're fine with what we paid for what we got. We aren't really worried about it. We didn't think of it as an investment per se.
I know a handful of people who bought properties as "investments" and are now off licking their wounds...!
Maybe for basic necessities like housing, food & oil/gas, they should just cost whatever the materials & labor costs to produce them, instead of letting pure speculation determine their worth?? Seems like that's where we run into trouble.
Quote from: finehoe on January 27, 2011, 11:33:42 AM
House prices will keep falling in the areas where prices are still dangerously high compared to incomes and rents. Banks say a safe mortgage is a maximum of 3 times the buyer's annual income with 20% downpayment. Landlords say a safe price is a maximum of 15 times the house's annual rent. Yet in affluent areas, both those safety rules are still being violated and there is still a huge housing bubble. Buyers are still borrowing 6 times their income and putting only 3% down, and sellers are still asking 30 times annual rent, even after recent price declines. Renting is a cash business that proves what people can really pay based on their salary, not how much they can borrow. Salaries and rents prove that those high prices will keep falling for a long time. Anyone who bought a "bargain" in those areas last year is already sitting on a very painful loss.
On the other hand, prices in some poor neighborhoods have now fallen well below the cost of renting. In those housing markets, gross rents exceed 10% of the price of a house. Housing prices could still fall more if unemployment rises or interest rates go up, but on a month-to-month basis, the buyer of a very cheap house wins. So the housing market is split.
It's usually still much cheaper to rent than to own the same size and quality house, in the same school district. On rich neighborhoods, annual rents are 2.5% of purchase price while mortgage rates are 5%, so it costs twice as much to borrow the money as it does to borrow the house. Renters win and owners lose! Worse, total owner costs including taxes, maintenance, and insurance come to about 9% of purchase price, which is more than three times the cost of renting and wipes out any income tax benefit.
The only true sign of a bottom is a price low enough so that you could rent out the house and make a profit. Then you'll know it's safe to buy for yourself because then rent could cover the mortgage and all expenses if necessary, eliminating most of your risk.
Some of this assumes a logical market movements without major distortions though, doesn't it? Because from my recent experiences, the residential rental market around town is so completely distorted that I completely buy Trulia's rankings.
The biggest problem with the rental market are people who are "forced" landlords - i.e., they're stuck with an underwater place and figure putting it up for rent is better than foreclosure since it helps pay the mortgage. A straight check of Craigslist bears this out - landlords are charging rent based on what they owe rather than the fair market value of the house. In two different parts of town that I've looked into (Mandarin and Fleming Island), rents were something like 10-15% actual market value. I'm sure this varies by neighborhood, but holy hell, I would have LOVED to find a nice neighborhood where annual rents were 2.5% of the purchase price. And this isn't in "poor" neighborhoods - this is everywhere. So even if total costs of ownership ended up at 9% of the purchase price, if rents are at 10-15%, then at least it's a wash from a financial standpoint.
From there, there's a ton of other variables - being tied down vs. being able to move easy, how much one puts down, how long someone plans on staying there, having a place to yourself to customize, etc. But for someone in the right spot that wants/is able to buy now, to me it made a little more sense to buy than rent from a pure financial position (which is what I did last fall). As always, YMMV.
Quote from: Clem1029 on January 27, 2011, 01:00:10 PM
As always, YMMV.
Of course that, along with "Past Performance Does Not Predict Future Returns" should be everyone's perspective.
QuoteI think I just got tired of lining my landlord's pockets while being unable to change the house to suit my tastes. At least now I can paint, pull up flooring, build fences, install crown molding, etc etc...
This is my main reason for wanting to buy. I don't require much, but I have very specific tastes. being able to cater my living environment to my needs, lifestyle, and preferences is huge in my book. You can hang pictures, change lighting fixtures (sometimes) and paint walls in an apartment, but you've got to undo it all when you leave or pay the fee. A lot of the time, the changes you made added value to the space you were renting as well.
My fiance and I bought last March, and our total payment is only $75 more a month than what we were paying in rent. Both the rental and our home are in Riverside. So once you thrown in the tax effects, we are easliy paying less than we were. Of course upkeep and putting your own touches costs some bucks, but as others have stated, thats one of the pluses.
If you already bought why the hell worry about what you could be paying in today's market for the same house as long as you can make the mortgage (which you should have known anyway when you bought) and you plan to stay in the house for 5 - 6 years. If you bought it as an investment you bought it for the wrong reason. When I buy a car, I consider the manufacturer, whether it fits my needs, and if I can put at least 100k miles on the sucker. She is worth 20% less anyway the minute I leave the parking lot. Worse for a house. I don't think about Joe Blow down the block in the same size house worth a whole lot less.
The development of "Old San Jose" will be building new homes on the site, no more condos, as their is more interest in homes, than condos and really little money available for condos.
Quote from: Cricket on January 27, 2011, 04:55:47 PM
If you already bought why the hell worry about what you could be paying in today's market for the same house as long as you can make the mortgage (which you should have known anyway when you bought) and you plan to stay in the house for 5 - 6 years.
It's funny you mention this - my monthly house note just went up over $100 thanks to not enough money in the escrow account for taxes, apparently. So now it's $125 more than I signed up for when I took on the mortgage.
It's not too big a deal but suddenly, I can see how people who "did the right thing" - were truthful about their income, put in a cash down payment, bought within their means, etc - can still get screwed.
the same freaking thing just happend to me! last year I had a huge surplus in my escrow, now this year instead of getting a check I get a higher monthly payment. WTH???
Quote from: Cricket on January 27, 2011, 04:55:47 PM
If you already bought why the hell worry about what you could be paying in today's market for the same house as long as you can make the mortgage (which you should have known anyway when you bought) and you plan to stay in the house for 5 - 6 years. If you bought it as an investment you bought it for the wrong reason. When I buy a car, I consider the manufacturer, whether it fits my needs, and if I can put at least 100k miles on the sucker. She is worth 20% less anyway the minute I leave the parking lot. Worse for a house. I don't think about Joe Blow down the block in the same size house worth a whole lot less.
Thats not it. Its that values fell so far, so fast that now people are literally stuck in their homes & cant sell them. So your "live in it for 5-6 years & shut up" mentality doesn't change that fact.
We've had our house for going on 4 years now & all signs point to a market that isn't coming back for a very long time (and it probably shouldn't anyway. it was an artificial bubble after all). We could probably stay in it another 4 years & still wouldn't be able to sell it for anywhere near what we owe. And there's no Gov program, no help from the banks, etc that is alleviating that part of this mess. Which is why it will just continue on & on. The system was setup with the presumption that housing always increases in value. It doesn't know what to do when they plummet & stay there (which is why I said people dont need to buy period unless they're really really sure that they will be staying in the house most of their lives).
Thats why people are ending up bailing on their homes. Its not that they're greedy or want a "better deal", its that they literally can't sell it when/if the time comes to move & have tried going through all the normal means to fix it (and there just arent any). People lose jobs & have to get work where they can these days, so being anchored to a house doesn't exactly make sense when your family can't eat. So "doing the right thing" sorta takes a backseat these days. The "right thing" is to be able to provide for your family no matter what, not be a servant to some no-name giant banking entity.
Granted there are those people who bought for the wrong reasons (flippers) or can pay & plan on staying for most of their lives but just want a better deal, but there's another side to it too.
Howdy!
Quote from: Clem1029 on January 27, 2011, 01:00:10 PM
Some of this assumes a logical market movements without major distortions though, doesn't it? Because from my recent experiences, the residential rental market around town is so completely distorted that I completely buy Trulia's rankings.
Agreed. Being relatively new to the area, I am pretty amazed by the disparity between home prices and rent. I haven't been here long enough to observe, and I don't feel like looking for actual "facts," but it seems as though the rent prices are more in line with 2006 or 2008 house prices rather than reflective of the current market (I imagine rent prices are supposed to lag behind home prices, but they seem pretty far behind).
Quote from: peestandingup on January 28, 2011, 09:56:36 AM
Thats why people are ending up bailing on their homes. Its not that they're greedy or want a "better deal", its that they literally can't sell it when/if the time comes to move & have tried going through all the normal means to fix it (and there just arent any). People lose jobs & have to get work where they can these days, so being anchored to a house doesn't exactly make sense when your family can't eat. So "doing the right thing" sorta takes a backseat these days. The "right thing" is to be able to provide for your family no matter what, not be a servant to some no-name giant banking entity.
I don't think you can discount greed as a cause of the problem. Purchasing a home that is priced at the absolute limit of your means, when those means can change abruptly, is greedy. A great deal of foresight is required when buying a home. At the risk of sounding unsympathetic, if you are not absolutely sure of the security of your job, you should not count on that level of income for the next 30 years. Losing a job or your house losing a significant amount of its value is horrible, but those are possibilities one should consider when entering into a multiple decade agreement (just as the perpetual upward motion of housing prices should never be an assumption - and the housing bubble was fairly-widely forecasted prior to its bursting). I don't think you can fault the bank for asking you to make modest monthly payments after they give you 300k upfront to buy a house. Where I think you can fault them is in giving you 300k when you could only realistically afford 150k (and for packaging a bunch of these into magical bundles of confusion that they proceed to sell back and forth with other banks). But they get burned just as badly (if not worse) when you stop making payments. You are out a home that the bank owned 80% of anyway and get a black mark on your credit history. The bank, however, is out 300k and now has to unload a home that you may or may not have destroyed on your way out. Not to sympathize with them too much.
I agree that owning really is not right for everyone, especially someone that wants geographic flexibility. But if you are willing to stay within your means, even if you don't plan to hold onto it for many years, now is not the worst time you could think of to buy.
Quote from: peestandingup on January 27, 2011, 11:58:34 AM
Maybe for basic necessities like housing, food & oil/gas, they should just cost whatever the materials & labor costs to produce them, instead of letting pure speculation determine their worth?? Seems like that's where we run into trouble.
Absolutely. Housing prices are completely artificial. Banks own most of them and the government subsidizes them so that they can give us houses we can't afford for 3.5% down. Actually, I'd put it mostly on the government.
I own a house and have rented houses to others. Renting and owning are two different markets which explains why the relative relationship in monthly/annual costs fluctuates.
Renters typically consists of newcomers still learning the area, people who can't muster down payments (often young people just starting out or people with lower incomes who can't manage to save enough), those with lousy credit that can't get a mortgage, people who don't plan to stay "still" for more than a few months or years due to their itch to move on or changing job assignments, and those who just don't want the hassle of maintaining real estate (often single moms). Homeowners are often the opposites of all the above. The numbers of people who find themselves in the above categories determines the demand for each and the resulting rental rates or home prices.
There aren't that many people who are indifferent to renting or owning and will make their decision strictly based on the best economic choice at the moment.
By the way, the strict economics of owning vs. renting can vary greatly by neighborhood. It's probably almost always cheaper to rent in premium areas (such as waterfront, upscale subdivisions) as the ratio of rent to value will drop substantially. In low priced neighborhoods, you are more likely to find the opposite. Rents will only go so low or it's just not worth the hassle to a landlord to rent. Also, the inherent value of having a roof over one's head is roughly the same for all of us. After that, its just the amenities of the house, neighborhood, and location. At the margin, the market will support less and less rent for greater increments of value. For a property owner, it really makes almost no sense to rent out much more than a "starter" house if the landlord is looking for real investment returns. Higher priced housing is rented usually because the landlord wants to just "carry" the property at minimal expense until certain other conditions are more favorable for disposal or moving back in. Most neighborhoods fall in the big middle of rent vs. buy economics and one must do the research and run the numbers to truly see which is best.
If you know you are going to live in a home less than 7 to 10 years, it more likely pays to rent in most cases. Not only is the cycle too short to weather the market's ups and downs but the transaction costs of buying and selling a home and taking out a mortgage are significant and will likely eat up much or all of the appreciation historically averaged for homes.