An article from the New York Times.
Real Estate in Florida
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Deflation is coming to western economies. The states of Florida, California, Arizona & Nevada are on the leading edge.
We can expect the same type of situations to develop in Canada, England, and other highly leveraged markets.
As deflation tightens its grip, we can expect local rental rates to decrease as the price of housing declines. It may make sense for many in areas where prices have not yet fallen much, to sell their overpriced house, save the cash (or invest in tangibles like precious metals) and rent. The timing of this market decline could vary considerably from country to country and state to state.
One thing that can be assured, is that as interest rates rise, there will be even more downward pressure on housing prices.
We need to remember the objective during Economic Winter is not to make money by investing, as much as it is to hold onto what we have.
Real Estate in Florida
Elaine Pellegrino, then 53, was disabled, living on Social Security. Her daughter was jobless. They had resigned themselves to losing their home and had stopped making the mortgage payments. Yet they were cognizant that they could stay for many months as their case worked its way through a local court system already overwhelmed by foreclosures.
Now their days there have ended. Tax documents sit in a rain-matted stack in front of the garage. A “for sale” sign lies warped and discarded in the weeds.
Inside the house, bills are scattered across the floor with playing cards, a March 2008 TV Guide and the innards of a VCR. A plastic trash bag brimmed with foreclosure documents. Behind the house, green slime chokes the swimming pool — the same green slime that now colonizes countless pools left to the elements in South Florida.
The Pellegrinos moved out in July 2008, Charlene explains. A bathroom pipe had burst, and mold had grown on the walls. She and her mother couldn’t afford repairs.
The strangest thing was how the bank implored them to stay, she says. Even after it became clear that they were not going to pay their mortgage, the bank figured that it would be better having them there to deter scavengers who would strip out the cabinets, the wiring, the toilets.
“They wanted us to stay on indefinitely,” Charlene says. “It was weird.”
When the Pellegrinos left, they found an upside to the bust: the seemingly limitless array of affordable rentals.
After walking away from their house and its $1,500 monthly mortgage payments, they rented a nearby four-bedroom home for $950 a month. Now Charlene, earning $2,400 a month as a home health worker, has designs on moving to a better place still, for $700 a month.
Comments:
Deflation is coming to western economies. The states of Florida, California, Arizona & Nevada are on the leading edge.
We can expect the same type of situations to develop in Canada, England, and other highly leveraged markets.
As deflation tightens its grip, we can expect local rental rates to decrease as the price of housing declines. It may make sense for many in areas where prices have not yet fallen much, to sell their overpriced house, save the cash (or invest in tangibles like precious metals) and rent. The timing of this market decline could vary considerably from country to country and state to state.
One thing that can be assured, is that as interest rates rise, there will be even more downward pressure on housing prices.
We need to remember the objective during Economic Winter is not to make money by investing, as much as it is to hold onto what we have.
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