Here are June’s stats for my zip code in North Florida.
The number of listings is falling off a cliff as prices rip higher. Average list price went from 400k to 589k, up 45% from June 2019 to June 2020. Average sale price went from 293k to 335k during the same time period.
An average sale price of 335k equals a mortgage of around $2,000 a month. With a 33% debt to income ratio required by the bank, the buyer would need to make appx. $40 an hour or 72k a year to buy an average home. The average salary in the US is 55k a year, so to buy an average home (in Florida) both spouses would have to work.
Debt slavery is a hell of a drug.
Real estate prices have soared through the pandemic? Not so fast says Wolf Richter
The Case-Shiller Index operates on a “three-month rolling average” basis. And the price data is collected from public records. So the release today, titled “April,” was the three-month moving average for deals whose data became available in the county deed recorders in February, March, and April.
There is also a time-lag between when a deal closes and when the data becomes available in the county deed recorders.
So what the Case-Shiller showed today were closings that had occurred in prior months and that became available in the county deed recorders in February, March, and April. This included some of the deals that closed in January and excluded some of the deals that closed in April.
This is not a secret. S&P publishes the methodology. And reporters should have studied it before reporting bull-malarkey and misinforming their readers, many of whom paid a subscription to be misinformed.
So, what the national index told us today is nearly all based on home prices before the impact of the pandemic. It will be another three months – the index to be released on September 29 – before every month in the National Case Shiller Index’s rolling three-month average fully reflects home prices of sales that closed since the beginning of the lockdowns. Each month will get us a step closer. And even then, it will take a while because house price data is sticky and moves slowly. So be patient.
Real Estate Valuations Post Covid
Continue reading “Real Estate Outlook in a Collapsing Fiat Based Economy”
Let’s say someone bought 10 units in 2019 for 1.2 million dollars. Each unit renting for $1,000 a month. He made 10k in gross income and after expenses his net operating income was 6k a month. The mortgage payment was 5k, leaving him with cash flow of 1k a month. OK, so a fairly good deal, certainly many investors would have done that deal in 2019 as the commercial property market was hot.
Then covid hits and 2 renters move out. A third renter has asked for forbearance and a fourth renter is not responding to calls or answering the door. So instead of making 1k a month our investor is now losing 3k a month. He is paying handsomely to own this investment property.