June 18, 2007
It's the P/E stupid: Typical story from Florida about renting a luxury condo for pennies on the dollar as median prices crash $100,000 or 31% (so far)
1) Rent amazing homes for pennies on the dollar
2) Don't suffer the horrific depreciation during the housing meltdown
3) Save up massive cash, invest wisely, retire early
4) Have the flexibility to move anywhere in the world, taking full advantage of globalization
5) Enjoy falling rent prices, get treated like royalty by landlords and failed flippers desperate for renters
It was the P/E stupid. It will always be the P/E. And people who believed their cheerleader realtor and bought homes whose rental income could only pay their taxes and association fees made the biggest financial mistake of their lives.
Watch now as prices fall to the point that rental income covers carrying costs. And it's a long, long, long way back down.
Lee County’s burgeoning skyscraper condominium market is a renter’s paradise — but a landlord’s hell.
Experts say as increasing numbers of condo units pour into an already overflowing supply of residential real estate, renters can almost name their price for even the costliest luxury units.
Jim Simon, for example, recently moved into a condo in the 32-story High Point Place in downtown Fort Myers, where the owners of its 105 units typically paid as much as $600,000 for the convenient riverfront location.But Simon, a commercial real-estate broker, is paying only $1,350 a month — barely enough to cover the taxes and condo association fees.
“It’s like living in the Ritz-Carlton,” Simon said. “It’s got great amenities, it’s clean, it’s safe, it’s got a beautiful view.”With only about 20 people living there, he practically has the place to himself, and with a number of similar projects under construction around downtown, he expects the good times for renters to last for awhile.
“It wouldn’t surprise me to see people get in for a little less than I’m paying,” Simon said.
The median condo resale price maxed out in February 2006 at $353,900, and by April 2007 the price had fallen to $244,100, down 31 percent, according to Florida Association of Realtors statistics.
As prices have fallen, so have rents. In late 2006 the average rent for a two-bedroom house was $940, down from an all-time high of $1,041 a year earlier, according to rental information service RealFacts.Rents have continued to fall in recent months, as well, while the inventory of dwellings for sale stays at an all-time high of about 15,000, experts say.