Dropping Home Prices in TV is a Good Thing

[Craig Vernon]

The Villages success is based upon likeminded folks that save and move to a beautiful place to reward a lifetime of effort. The last few years have priced homes out of many savers range and moved sales into an elevated investment cycle that hurts the environment for snowbirds and full-time residents. As the place we love becomes a less desirable investment many of the problems that have come with it simply go away. This morning's listings Zillow 384, TV preowned 394, TV new 314 and growing. This is the largest number of listed new construction since I started keeping track in 2020 and just short of twice the number which was 199 in January of this year. I asked the Village Newcomers Jerry and Linda on their YouTube channel if they would or could have moved here if prices were where they are now. The answer was "No," and they are a prime example two retired teachers with pensions coming to their happy place. See you all in February. Have a Great Day!

[ThirdOfFive]

It isn't just price that is the determinant. Interest rates have as much or more to do with the slowdown in sales, particularly for those who cannot afford to pay cash for a home here.

Some rough-and-ready examples (courtesy of mortgage calculator website:

$500,000 home, 20% down, interest rate 7.5% = monthly payments of $2796.86
$600,000 home, 20% down, interest rate 2.5% = monthly payments of $1896.58
$700,000 home, 20% down, interest rate 2.5% = monthly payments of $2,212.68

These numbers don't give an exact figure, but are ballpark; they also don't include things like insurance, bond, etc., which raises the monthly costs. But it is a good approximation.

[dewilson58]

" Dropping Home Prices in TV is a Good Thing"............are they dropping???

[dewilson58]

It isn't just price that is the determinant. Interest rates......

Sad if a retired person purchases in TV and has a mortgage.

:popcorn:

[DeweyBeach]

Real estate is correcting everywhere, as it should. I've moved multiple times due to transfers and have seen the difference in the "need to move" vs the "nice to move" markets. When rates were crazy low there were so many investors and "nice to move" buyers out there it drove values insanely high. Let's just keep in mind that The Villages will always be higher in value since the buyers are from every category imaginable (Last Time Moves, Investors, Second Homes, Nice to Move, etc) ... while I expect our statistics to decline, I believe it will be at an anomalous rate to the rest of the state.

[tophcfa]

It isn't just price that is the determinant. Interest rates have as much or more to do with the slowdown in sales, particularly for those who cannot afford to pay cash for a home here.

Some rough-and-ready examples (courtesy of mortgage calculator website:

$500,000 home, 20% down, interest rate 7.5% = monthly payments of $2796.86
$600,000 home, 20% down, interest rate 2.5% = monthly payments of $1896.58
$700,000 home, 20% down, interest rate 2.5% = monthly payments of $2,212.68

These numbers don't give an exact figure, but are ballpark; they also don't include things like insurance, bond, etc., which raises the monthly costs. But it is a good approximation.

By all reasonable measures interest rates really aren’t high. Interest rates are supposed to be set so responsible savers and investors can earn a real rate of return above inflation. Since the housing market crash of 2007/08, the Federal Reserve long time irresponsible monitory policy of artificially low interest rates created a society dangerously addicted to unsustainable debt. Current interest rates are around long term averages if the period of artificially low rates are excluded. Housing values should adjust to reflect the Federal Reserve returning to doing their job responsibly.

[MX rider]

Sad if a retired person purchases in TV and has a mortgage.

:popcorn:

You shouldn't paint with such a broad brush. Everyones situation is different.
We bought about 18 months ago when the rate was 3.5%. Our investments make more than that, so we decided to finance and leave our cash invested.

That said, some people may be able to afford a mortgage payment and not have enough liquid money to pay cash. There's no real right or wrong way to do it. If people can do this and find their happy place, good for them.

Interest rates do factor in on sales, in my opinion.

[dewilson58]

By all reasonable measures interest rates really aren’t high. Interest rates are supposed to be set so responsible savers and investors can earn a real rate of return above inflation. Since the housing market crash of 2007/08, the Federal Reserve long time irresponsible monitory policy of artificially low interest rates created a society dangerously addicted to unsustainable debt. Current interest rates are around long term averages if the period of artificially low rates are excluded. Housing values should adjust to reflect the Federal Reserve returning to doing their job responsibly.

I think my first mortgage was 12%. OUCH!!!!

[MX rider]

I think my first mortgage was 12%. OUCH!!!!
LOL. I remember at some point in our lives we got 9% on a refinance and thought we hit the lottery!

[dewilson58]

You shouldn't paint with such a broad brush. Everyones situation is different.
We bought about 18 months ago when the rate was 3.5%. Our investments make more than that, so we decided to finance and leave our cash invested.


That's an investment decision, not I need a mortgage on my retirement home.

[MX rider]

That's an investment decision, not I need a mortgage on my retirement home.
Read the second paragraph. It's not as cut and dried as you think

[dewilson58]

'''

[dewilson58]

Read the second paragraph. It's not as cut and dried as you think

I did.

I said, "It's sad"

:thumbup:

[MX rider]

I did.

I said, "It's sad"

:thumbup:
We'll just have to agree to disagree on this. If they can afford to make the payments and still enjoy life, go for it.
I don't think it's sad at all that they can be happy and live out their retirement dream in such a great place like TV, even if they have to finance.

Hell, you can't take it with you.

[Craig Vernon]

Agree that interest rates are causing sales to slow and also prices are still at levels related to lower rates. There is a series of videos by Realty Executives on YouTube, David is in Florida that tracks price reductions and sales data from the MLS. New construction prices are lower, and it is interesting to see how it is being done by lowering lot prices some to zero dollars.

[Laker14]

Sad if a retired person purchases in TV and has a mortgage.

:popcorn:

Really? I have a comfortable 2.75% mortgage, while I'm making over 5% on CDs in my IRA with money I didn't have to distribute, and pay taxes on, thanks to my mortgage.

I don't feel sad. I don't think you need to feel sad for me either. It's working out OK.

[Normal]

Just look at the sales price drops. “REDUCED” is everywhere.

[dewilson58]

Really? I have a comfortable 2.75% mortgage, while I'm making over 5% on CDs in my IRA with money I didn't have to distribute, and pay taxes on, thanks to my mortgage.

I don't feel sad. I don't think you need to feel sad for me either. It's working out OK.

Yes "really?"

Like I said, That's an investment decision.

[dewilson58]

Just look at the sales price drops. “REDUCED” is everywhere.

Marketing.

Increase the price 20% over last year, then show a 5% reduction........that's not a sales price drop.

[retiredguy123]

Sad if a retired person purchases in TV and has a mortgage.

:popcorn:
I agree. In 1980, I had a $35K mortgage with an interest rate of 7.75 percent, which was considered a bargain at the time. I couldn't sleep at night, so I paid it off in 3 years. I offered the bank a discounted cash payoff, but they refused. That is the only loan I have ever had. To me, borrowing money has never been a good financial decision.

[BrianL99]

The Villages success is based upon likeminded folks that save and move to a beautiful place to reward a lifetime of effort. The last few years have priced homes out of many savers range and moved sales into an elevated investment cycle that hurts the environment for snowbirds and full-time residents. As the place we love becomes a less desirable investment many of the problems that have come with it simply go away. This morning's listings Zillow 384, TV preowned 394, TV new 314 and growing. This is the largest number of listed new construction since I started keeping track in 2020 and just short of twice the number which was 199 in January of this year. I asked the Village Newcomers Jerry and Linda on their YouTube channel if they would or could have moved here if prices were where they are now. The answer was "No," and they are a prime example two retired teachers with pensions coming to their happy place. See you all in February. Have a Great Day!

I'm not sure where everyone is getting this nonsense about home prices dropping like a rock in TV and everywhere else.

I bought a home in TV, less than 2 years ago. I can make a reasonable profit, if I sold it today.

For the last year, I've been looking for another home in TV, as the one I bought, doesn't exactly fit my needs ... there was very limited availability 2 years ago.

I watch the Listings every day, for homes for sale in the geographic area I want in TV. Pound for pound, the houses that I see (& are being sold) are still 10%-15% more than I could have bought them for, 2 years ago.

There was rampant speculation over the last few years, in TV and other locations. That's over with for now. If you did your due diligence when you bought, you're still sitting with normal real estate appreciation of 3%-4% per year.

[Craig Vernon]

Marketing.

Increase the price 20% over last year, then show a 5% reduction........that's not a sales price drop.
Totally agree but the reductions are just beginning to correct the pricing related to rates. If this continues it simply makes TV not a good market for investors and a better market for individual buyers.

[DeweyBeach]

Totally agree but the reductions are just beginning to correct the pricing related to rates. If this continues it simply makes TV not a good market for investors and a better market for individual buyers.

Great point regarding the tapering of investors ... again, that was driven by insanely low rates.

For resales' price reductions; I take those with a grain of salt because (at least in my experience) that's typically caused by emotional sellers who've talked their listing agent into an unreasonable original list price. I've always hated the initial pricing decision for my moves. So ... i wouldn't get so alarmed by the rising number of "Reduced" listings ... agents are not always able to get owners to price accordingly.

[cjrjck]

Definitely noticing much lower prices in my village. Several listed at prices I haven't seen in years. Two went pending in no time while others that are higher priced have been on the market for a long time. Small sample but certainly seeing a trend.

[Michael 61]

There is no way I would have moved here if I had to take out a mortgage.

[Normal]

Definitely noticing much lower prices in my village. Several listed at prices I haven't seen in years. Two went pending in no time while others that are higher priced have been on the market for a long time. Small sample but certainly seeing a trend.

Same here, we are not only seeing the large inventory of new homes, many 1 and 2 year old homes have been on the market a while. We know of a man down the street who is willing to take a 10 K loss from what he paid two years ago on a 1500 square foot home.

[tophcfa]

I think my first mortgage was 12%. OUCH!!!!

Mine was 11% and we were thrilled to refinance it down to 8 1/4%.

[VApeople]

" Dropping Home Prices in TV is a Good Thing"............are they dropping???

Yeah, I think they are. According to Zillow, the value of our house has decreased about 10% in the last year.

[Craig Vernon]

Mine was 11% and we were thrilled to refinance it down to 8 1/4%.

Mine was 8.85% in 1988 with first time home buyer rate.

[asianthree]

Sad if a retired person purchases in TV and has a mortgage.

:popcorn:

OPM (other people’s money or mortgage) is why one would always have a mortgage, when your money makes more money that interest on mortgage. Your financial advisor, and COA can explain benefits

[R20-Matt]

The data doesn’t support much of a drop or even a collapse as many of the YouTubers are claiming. Available inventory is still nearly half of normal levels. (See chart) As interest rates rise, the inventory problem gets worse, folks park on their 3-4% mortgages. This creates big demand for new homes (because no one gives up a mortgage to sell the home)

So this is how its playing out as of now:

1. TV builder is incentivized to increase pricing from one neighborhood to another, as is any new home builder. This ensures new buyers have “equity” and are comfortable buying. Thus pricing is always slightly moving up.

2. New folks moving to TV need buyers for their existing home (up north?) in order to move. With inventory so low, even with mortgage rates high, there is demand due to lack of inventory.

3. Boomer population is in the peak retirement years and therefore needs additional retirement inventory. Also, folks are living longer so retirement age property is in higher demand.

4. Price increases have slowed but prices are still holding above year over year.

5. Existing home sales have slowed a bit (someone mentioned David is in FL youtube which is good data to understand some of the market dynamics in TV)

6. TV new home inventory is finally getting back to where they want it. In speaking with experienced agents here, the last few years have been way too low. TV wants inventory on the ground when snowbirds come in so they can select home, hence the run up in new inventory in the fall.

As of now there is no catalyst to create an inventory recovery. We would need much larger unemployment to create the need to sell property or inability to repay the loans. Until that happens, the volume of home sales will be low, but the pricing likely will hold due to lack of inventory. Maybe a formal recession or job slowdown creates this, but until that happens retiring folks moving to TV should have buyers who want their home simply because they don’t have other options. And likely those retiring will have equity to pay cash or the ability to pay cash and therefore are not as sensitive to interest rates as the average buyer.

[HandyGrandpap]

This property at 6039 Swicord
purchaed 09/21 for $464K
Listed 4 sale 08/23 for $594K
dropped $30 now at $561

Still making a good profit, but not sold yet. Place is empty, suspect would take a lower price as still profit from paid $.

Pardon Our Interruption (https://www.realtor.com/realestateandhomes-detail/M99302-79264?ex=2958858296&MID=2022_01_HomeAlerts_PriceDecreaseDaily_PROD&RID=5407129902&cid=eml_trans_HomeAlerts_1to1_PriceDecreaseDaily20 2203_cons.14052222_2022_01_HomeAlerts_PriceDecreas eDaily_PROD-HomeAlert-RDC)

Access to this page has been denied (https://www.zillow.com/homes/6039-Swicord-St-The-Villages,-FL-32163_rb/2055614650_zpid/)

[melpetezrinski]

Marketing.

Increase the price 20% over last year, then show a 5% reduction........that's not a sales price drop.

Yes, this is a common pratice in retail. However, it's not the case in the real estate market. Just look at the data. The 2nd and 3rd quarter of 2022 was the height of the market. Average selling price was upper $380-400k. For 2023, it's $365-$385k.

[melpetezrinski]

I'm not sure where everyone is getting this nonsense about home prices dropping like a rock in TV and everywhere else.

I bought a home in TV, less than 2 years ago. I can make a reasonable profit, if I sold it today.

For the last year, I've been looking for another home in TV, as the one I bought, doesn't exactly fit my needs ... there was very limited availability 2 years ago.

I watch the Listings every day, for homes for sale in the geographic area I want in TV. Pound for pound, the houses that I see (& are being sold) are still 10%-15% more than I could have bought them for, 2 years ago.

There was rampant speculation over the last few years, in TV and other locations. That's over with for now. If you did your due diligence when you bought, you're still sitting with normal real estate appreciation of 3%-4% per year.

I don't think "everyone" is saying it's "dropping like a rock". You keep referencing 2 years ago. That's a long time in "market" terms. Being that you watch listings every day, you surely noticed that the last 3 months have been different. Prices are down 5% YOY.

[OrangeBlossomBaby]

It isn't just price that is the determinant. Interest rates have as much or more to do with the slowdown in sales, particularly for those who cannot afford to pay cash for a home here.

Some rough-and-ready examples (courtesy of mortgage calculator website:

$500,000 home, 20% down, interest rate 7.5% = monthly payments of $2796.86
$600,000 home, 20% down, interest rate 2.5% = monthly payments of $1896.58
$700,000 home, 20% down, interest rate 2.5% = monthly payments of $2,212.68

These numbers don't give an exact figure, but are ballpark; they also don't include things like insurance, bond, etc., which raises the monthly costs. But it is a good approximation.

Mortgage rates don't really apply in the Villages, because the majority of homebuyers don't have a mortgage. This is their retirement home - which means they're moving from somewhere else. Supposedly selling their previous home, and using the proceeds to buy their Villages home, and living off their retirement income.

Though there are people who get a mortgage here, it's not the norm.

[OrangeBlossomBaby]

There is no way I would have moved here if I had to take out a mortgage.

We couldn't afford the mortgage we had on our house up north, plus the utilities and taxes. We sold for around $60,000 less than we had hoped to get. We were able to pay off the mortgage and put half down on our house in The Villages. We borrowed from family for the rest and paid it back after the first year. We would've been homeless if we hadn't sold the house when it finally sold, almost a year after we put it on the market.

It was a rough last year up there. Not easy being a skilled tradesman in a dead trade, and going to work one day to discover your entire department is being eliminated and you don't qualify for your "full" retirement package.

[melpetezrinski]

Mortgage rates don't really apply in the Villages, because the majority of homebuyers don't have a mortgage. This is their retirement home - which means they're moving from somewhere else. Supposedly selling their previous home, and using the proceeds to buy their Villages home, and living off their retirement income.

Though there are people who get a mortgage here, it's not the norm.


The "majority" don't have a mortgage. Your are CORRECT! However, I bet you didn't think that % was 60%. So, mortgage rates DO apply in TV.

[Robbb]

I maybe in the market for a new home, are you seeing those prices decline? I have not seen that but could be wrong. The problem I see with the new homes is there is nothing around them to go to without a long golf cart ride. Richmond is perfect but its all rentals.

[Toymeister]

Richmond is perfect but its all rentals.

Soon many Richmond homes will be on the secondary market when the speculators can sell them for a profit. Which you can't do in the first twelve months of ownership.

[kkingston57]

I think my first mortgage was 12%. OUCH!!!!

Mine was more than that. Some interesting mortgages back then. 30 yr fixed was 16%+/-.

[BrianL99]

This property at 6039 Swicord
purchaed 09/21 for $464K
Listed 4 sale 08/23 for $594K
dropped $30 now at $561

Still making a good profit, but not sold yet. Place is empty, suspect would take a lower price as still profit from paid $.

Pardon Our Interruption (https://www.realtor.com/realestateandhomes-detail/M99302-79264?ex=2958858296&MID=2022_01_HomeAlerts_PriceDecreaseDaily_PROD&RID=5407129902&cid=eml_trans_HomeAlerts_1to1_PriceDecreaseDaily20 2203_cons.14052222_2022_01_HomeAlerts_PriceDecreas eDaily_PROD-HomeAlert-RDC)

Access to this page has been denied (https://www.zillow.com/homes/6039-Swicord-St-The-Villages,-FL-32163_rb/2055614650_zpid/)

With the lack of curb appeal, that house is going to be sitting until they make a drastic price reduction. U G L Y !

[kkingston57]

Really? I have a comfortable 2.75% mortgage, while I'm making over 5% on CDs in my IRA with money I didn't have to distribute, and pay taxes on, thanks to my mortgage.

I don't feel sad. I don't think you need to feel sad for me either. It's working out OK.

Good moves. Timing this was good. Another reason that cash is king.

[Michael 61]

I maybe in the market for a new home, are you seeing those prices decline? I have not seen that but could be wrong. The problem I see with the new homes is there is nothing around them to go to without a long golf cart ride. Richmond is perfect but its all rentals.

Richmond is not ALL rentals, though higher in rental properties compared to some of the other newer villages, because of it’s proximity to Brownwood - will be interesting to see how many of the investments properties in Richmond will come on the market at the one-year-mark (Nov-Dec-Jan), and may flip to resident-owners.

The developer also is busy moving dirt on the east side of Meggison, and beginning to lay the groundwork for the final construction of Richmond homes (approx 85 new homes) — expect those to sell like “hotcakes”.

[tophcfa]

Mortgage rates don't really apply in the Villages, because the majority of homebuyers don't have a mortgage. This is their retirement home - which means they're moving from somewhere else. Supposedly selling their previous home, and using the proceeds to buy their Villages home, and living off their retirement income.

The problem with that is that many of the people up north who are buying those homes being sold by people moving to Florida are younger people who need sizable mortgages with low down payments.

[Normal]

Soon many Richmond homes will be on the secondary market when the speculators can sell them for a profit. Which you can't do in the first twelve months of ownership.

Many houses were likely bought up by salespeople working for the Villages. They have first dibs and it’s time to turn for profit. Look for more of the same in 115.

[Randall55]

Sad if a retired person purchases in TV and has a mortgage.

:popcorn:Not if your mortgage rate is 2.5% and investments earn over 5%. I think this may be one reason people are not buying at the moment. Who can blame them?

I know several people who are waiting to buy homes near Eastport. They want to be closer to the championship golf courses and the square. They realize those homes will be a better investment than the surrounding preowned homes.

[manaboutown]

"In fact, although he was already very wealthy, Buffett himself used a 30-year mortgage in 1971 to finance the $150,000 purchase of a vacation home because he thought he could do better with the money than the interest he was paying for the house. (Note: Mortgage rates were in the 7.3% to 7.7% range in 1971)."

From: Here's Why Warren Buffett Thinks Using a Mortgage Is a Smart Move (https://www.fool.com/the-ascent/mortgages/articles/heres-why-warren-buffett-thinks-using-a-mortgage-is-a-smart-move/)

[Robbb]

Many houses were likely bought up by salespeople working for the Villages. They have first dibs and it’s time to turn for profit. Look for more of the same in 115.

Are the sales people allowed to buy this homes as rentals? I was told they are sold to he first person who puts an offer in at 8am the day they go on the market.

[Normal]

Are the sales people allowed to buy this homes as rentals? I was told they are sold to he first person who puts an offer in at 8am the day they go on the market.

Of course they are. They get the cream off the top. They know what is a good buy and what isn’t. In most cases they buy the homes and rent them for a year, then the home is resold. Salespeople just put their name in, if they want a house it’s theirs. Why would you even think otherwise? The investment corporate boogeyman exists, but holds nothing up to a certain group of salespeople who work for The Villages. If they want a house, you won’t have a chance at it. It’s a perk.

Just think of it as legal insider trading that hasn’t ever been addressed and few know the market as well as your “friendly” Villages salesperson.

[Two Bills]

Never been keen on personal debt, but a wise man once told me to never pay off a loan, if the amount was earning more when invested.
Lived by that all my working and earning days.
The advice never let me down.
Thanks Uncle Joe!

[Jhnidy]

Sad if a retired person purchases in TV and has a mortgage.

:popcorn:

You have to put the money someplace. Mortgages are cheap. The money can make more elsewhere

[Kelevision]

I did.

I said, "It's sad"

:thumbup:

Why do I want 400k tied up in a house that I’m not taking with me?

[asianthree]

Not if your mortgage rate is 2.5% and investments earn over 5%. I think this may be one reason people are not buying at the moment. Who can blame them?

I know several people who are waiting to buy homes near Eastport. They want to be closer to the championship golf courses and the square. They realize those homes will be a better investment than the surrounding preowned homes.

It’s hard for certain ages to see the bigger picture, of one can make more money by investing, and use OPM mortgages money.

My parents are that age bracket, use all your cash so you don’t have a mortgage. Problem is money doesn’t grow, until house is sold. Usually upon death, so one is sitting on debt free house, with no tax write off, and unless they take out a equity loan (which is 12.5%) money is stagnant.

Our financial guy for the last 6 houses, always has us take large mortgage, 30-60 days pay down 30- 50% or more, especially when rates are above 4%. All the while our investments are making us money, more that the interest debt.

So no matter what interest rate is, your monthly interest is reduced by half and then some. Re-amortization of payments for $175.

[ROCKETMAN]

I have a lot of friends who have mortgages. According to citizens bank approximately one third of villagers have mortgages for different reasons. Some people think everyone in the villages is a millionaire. Biggest reason some have mortgages is between 2011 and 2020 the s and p averaged 14.9 percent gain. In this time frame everyone got a 3 per cent mortgage or re financed their current mortgage to 3 per cent. Paying 3 percent and getting a 15 per cent return made sense. Now with the market and rates may not make that decision.

[Rwirish]

Retire with a mortgage? Not a good move.

[BrianL99]

It’s hard for certain ages to see the bigger picture, of one can make more money by investing, and use OPM mortgages money.

My parents are that age bracket, use all your cash so you don’t have a mortgage. Problem is money doesn’t grow, until house is sold. Usually upon death, so one is sitting on debt free house, with no tax write off, and unless they take out a equity loan (which is 12.5%) money is stagnant.

Our financial guy for the last 6 houses, always has us take large mortgage, 30-60 days pay down 30- 50% or more, especially when rates are above 4%. All the while our investments are making us money, more that the interest debt.

So no matter what interest rate is, your monthly interest is reduced by half and then some. Re-amortization of payments for $175.

Some ages, just don't have a clue ... but they're never in doubt.

[GizmoWhiskers]

The Villages success is based upon likeminded folks that save and move to a beautiful place to reward a lifetime of effort. The last few years have priced homes out of many savers range and moved sales into an elevated investment cycle that hurts the environment for snowbirds and full-time residents. As the place we love becomes a less desirable investment many of the problems that have come with it simply go away. This morning's listings Zillow 384, TV preowned 394, TV new 314 and growing. This is the largest number of listed new construction since I started keeping track in 2020 and just short of twice the number which was 199 in January of this year. I asked the Village Newcomers Jerry and Linda on their YouTube channel if they would or could have moved here if prices were where they are now. The answer was "No," and they are a prime example two retired teachers with pensions coming to their happy place. See you all in February. Have a Great Day!
The Village Newcomers are hardly new comers. 2020 they said "The wind never blows in The Villages". A neighbors outside grill was lifted up and hit the eve of the house. It was a beautiful day without a cloud in the sky. They lost all credibility in my mind lol.

I stopped watching their videos. They WERE "new comers". They are building an audience and with that revenue just like ToTV. Some stuff is informational but it's still opinion to be digested like a grain of salt.

As far as the pricing in The Villages... it's a sellers market where those in charge have not tanked their city/state economy. Interest rates have done the rest of the damage for buyers as many have better interest frates from the PAST. How to fix that, oh, dare I say elections matter... even at the local levels.

[newgirl]

I think my first mortgage was 12%. OUCH!!!!



In 1984 they were 24% when I bought my first home. We were able to do a wrap loan that brought it down to 13.5%

[huge-pigeons]

Not everyone needs to retire here. You are asking the residents here to sacrifice some of their wealth (home asset worth) to allow others to move in.
If people can’t afford it, then they need to look at places where they can afford it. I wouldn’t want to see people move here that then can’t afford to keep their house looking good because their mortgage is killing them to repay.
But if I was looking, I would like this downturn with higher interest rates because I would just pay cash, IMO, most retirees should pay cash for their home.

[Mrfriendly]

Sad if a retired person purchases in TV and has a mortgage.

:popcorn:

Unless the person wanted the 2.5% mortgage and choose not to liquidate much of their savings.

[dewilson58]

Unless the person wanted the 2.5% mortgage and choose not to liquidate much of their savings.

Again......................that is an investment decision.

:loco::loco::loco:

[G.R.I.T.S.]

I think my first mortgage was 12%. OUCH!!!!

First one was 8 1/2% and was considered “high.” Seven years later, our second mortgage was 11 1/2%. Our goal to pay it off was achieved in two years and we’ve never had another mortgage.

[JGibson]

No wonder TV residents get a snobby reputation.

If someone retires and takes out a mortgage because they don't have the cash who cares it's their business.

Not everyone is as fortunate as others in life or know what may have happened in their life that they don't have the cash for a house.

Stop being so judgmental and condescending of other's finances.

[Rzepecki]

Sad if a retired person purchases in TV and has a mortgage.

:popcorn:

Or wise. Why would I pay cash for my home when my mortgage rate is so low and I can make more by investing my money.

[Rzepecki]

I think my first mortgage was 12%. OUCH!!!!

Our first was over 13% in 1986.

[RCMill531@comcast.net]

Many people in The Villages have mortgages and could not afford a house now because of 7+ percent interest rates (double our rate in January 2022). Because this is such a desirable area, values go up. It’s happened since the beginning and of course nobody wants their values to remain the same as when they bought. I’m happy mine has gone up $100,000 since we bought and we probably couldn’t afford it at today’s prices and interest rates. Some retirees cannot afford to move here or need to buy a smaller home. That’s life. The same everywhere.

[Mrfriendly]

I think my first mortgage was 12%. OUCH!!!!

My first mortgage was a 10% seller financed 7yr balloon. I got the house one percent less than going rate and he made 10% on $180K for the 7yrs. We were both happy after crash of 1987.
I would consider doing same as a seller of up north property if rates continue to rise.

[dewilson58]

Or wise. Why would I pay cash for my home when my mortgage rate is so low and I can make more by investing my money.

That's called leverage..............that's an investment decision........taking a market risk......not what I'm talking about.

[TeresaE]

Sad if a retired person purchases in TV and has a mortgage.

:popcorn:

Why? Financial security is about cash flow not mortgage debt. I’ve met many homeowners over the years that are equity rich and cash poor. They can’t pay for repairs, taxes or insurance, even with a reverse mortgage in place. They outlive their money.

[dewilson58]

. I’ve met many homeowners over the years that are equity rich and cash poor. They can’t pay for repairs, taxes or insurance, even with a reverse mortgage in place.

Yep....................that's sad....... a very sad financial position.

[dewilson58]

My first mortgage was a 10% seller financed 7yr balloon. I got the house one percent less than going rate and he made 10% on $180K for the 7yrs.

Oh yes, balloons...................probably become more popular now with slightly higher rates.

[retiredguy123]

Why? Financial security is about cash flow not mortgage debt. I’ve met many homeowners over the years that are equity rich and cash poor. They can’t pay for repairs, taxes or insurance, even with a reverse mortgage in place. They outlive their money.
If you live your life debt free, you will accumulate enormous wealth. The worst advice some adults give to young people is that they need to "establish credit". The advice should be "don't borrow money".

[Normal]

When The Villages starts discounting more of their new homes, you know the crash is here.

[Randall55]

If you live your life debt free, you will accumulate enormous wealth. The worst advice some adults give to young people is that they need to "establish credit". The advice should be "don't borrow money".Once you accumulate the wealth, you use the money to make more money. You shouldn't pay off debts that are lower than what you can earn. Keeping a 2.5% mortgage while earning 5+ percent in investments makes sense to me.

[BlueStarAirlines]

You shouldn't paint with such a broad brush. Everyones situation is different.
We bought about 18 months ago when the rate was 3.5%. Our investments make more than that, so we decided to finance and leave our cash invested.

That said, some people may be able to afford a mortgage payment and not have enough liquid money to pay cash. There's no real right or wrong way to do it. If people can do this and find their happy place, good for them.


This is exactly right. We have a mortgage at 4% and funds that we could use to pay off the house earning 5.3%. Other investment funds are earning much more. The mortgage tax deduction plus earning a higher interest rate makes paying off our mortgage early foolish.

[MX rider]

If you live your life debt free, you will accumulate enormous wealth. The worst advice some adults give to young people is that they need to "establish credit". The advice should be "don't borrow money".

Thats just your opinion, not fact.

The FACT is, there's many ways to live your life successfully and happy. There's no right way. What works for you may not work for others.

If someone wants to move to TV and mortgage their house, go for it. If they can afford the payments it's all good, imo.

You only live once.

[Marine1974]

By all reasonable measures interest rates really aren’t high. Interest rates are supposed to be set so responsible savers and investors can earn a real rate of return above inflation. Since the housing market crash of 2007/08, the Federal Reserve long time irresponsible monitory policy of artificially low interest rates created a society dangerously addicted to unsustainable debt. Current interest rates are around long term averages if the period of artificially low rates are excluded. Housing values should adjust to reflect the Federal Reserve returning to doing their job responsibly.
Maybe you recall supply and demand ? When American oil drilling was restricted , oil prices shot up from $30 a barrel to $130 a barrel overnight.

Tell that to the people priced out of buying a home . 60 % of Americans can’t afford to purchase a home . The huge massive amount of national debt ,
printing of money and shutting off the spigot of American 🇺🇸 oil is driving inflation and interest rates higher . .

[vintageogauge]

Maybe you recall supply and demand ? When American oil drilling was restricted , oil prices shot up from $30 a barrel to $130 a barrel overnight.

Tell that to the people priced out of buying a home . 60 % of Americans can’t afford to purchase a home . The huge massive amount of national debt ,
printing of money and shutting off the spigot of American 🇺🇸 oil is driving inflation and interest rates higher . .

Historically interest rates are not high they were simply artificially low for a few years and are now back to where they were for decades. Buyers will have to get used to looking at lower priced homes if they can't afford a mortgage on the home they want. There are a lot of new pre-fab communities being constructed by smart builders where zoning allows them. Today's prefabs are quality homes with all the amenities and are quite affordable and the developers doing this found themselves a gold mine.

[Birdrm]

Sad if a retired person purchases in TV and has a mortgage.

:popcorn:

So what is your point, that those that don't have 300-500K in cash when retired shouldn't be moving to the Villages?

[charlieo1126@gmail.com]

Retire with a mortgage? Not a good move. I’ve owned numerous homes and condos since I retired including 6 , 5 new ,one preowned in the villages , I’ve never paid cash or have I paid the bond off on any of them ,it made no sense during these periods of low interest rates ,I bought my last one here a couple of years ago at 83, I know many others who do. the same thing . I realize many people like to have the peace of mind by paying off the mortgage and that’s fine , and there are many here that can’t afford to pay cash and others like me who don’t look at a house as a home but as an investment tool, there nothing wrong with debt , rich people use it all the time to get richer ( not me lol)FYI I do pay cash for my cars which I probably shouldn’t, but there’s that peace of mind thing I was talking about

[GoRedSox!]

Maybe you recall supply and demand ? When American oil drilling was restricted , oil prices shot up from $30 a barrel to $130 a barrel overnight.

Tell that to the people priced out of buying a home . 60 % of Americans can’t afford to purchase a home . The huge massive amount of national debt ,
printing of money and shutting off the spigot of American 🇺🇸 oil is driving inflation and interest rates higher . .Respectfully, the spigot of US oil has not been shut off, and this year, American oil production reached a record high of over 12.8 million barrels a day. This is simply a fact, and it can be verified easily.

In the last three weeks, the price of oil on the open market has fallen precipitously. On 9/18/2023, the price of a gallon of regular gas on the market was $2.70. On 10/6/2023, the price of a gallon of regular has plummeted to $2.19. That is a 19% loss in 3 weeks time. When the price of gasoline moves like this, it's obvious that the market is based on a lot more than American oil output. There is lots of speculation in that price. And estimates of future demand. A report came out that American gasoline demand is at its lowest point in 22 years. Another report showed crude oil stockpiles growing by 6.5 million barrels. Demand is way down. Since it's denominated in US dollars, part of the price is the strength of the American greenback, which has been increasing, not decreasing. That huge market decrease should start to show up at the pumps fairly soon....it takes some time but if gasoline futures stay here, we should see a significant drop in gas prices at the pump pretty soon. However, with the sad events this weekend in Israel, it is unknown how that will affect the markets.

[donnamayo]

Yes "really?"

Like I said, That's an investment decision.

I, for one, totally get what you are saying

[Normal]

Maybe you recall supply and demand ? When American oil drilling was restricted , oil prices shot up from $30 a barrel to $130 a barrel overnight.

Tell that to the people priced out of buying a home . 60 % of Americans can’t afford to purchase a home . The huge massive amount of national debt ,
printing of money and shutting off the spigot of American ������������ oil is driving inflation and interest rates higher . .

Inventory is the key for the housing market too. National inventory is up to 7 months according to FRED. Anyone that tells you that doesn’t matter here in The Villages is a liar. Many want to sell before they buy etc. Another issue is the ever climbing inventory locally which likely won’t slow anytime soon.

[VApeople]

On 9/18/2023, the price of a gallon of regular gas on the market was $2.70. On 10/6/2023, the price of a gallon of regular has plummeted to $2.19.

Did you get that info from a government publication or by visiting your local gas station?

[Federspiel]

Don't forget about property taxes. Taxes on my 20 year old $410,00 are $6,000/year.

[MX rider]

Did you get that info from a government publication or by visiting your local gas station?

Not sure where you're getting your numbers. Gas here in southern Indiana hasn't been anywhere near that since Trump was in.
The cheapest around here is 3.29 and it hasn't been below $3 for a long time.

I'm not a big Trump guy, but I do know when he was in, gas was cheap and the economy was on fire.

[Pat2015]

Agree, as my mortgage that I took was 2.5%.

[Pat2015]

I sold a two year old home I built here in TV for almost twice what I paid for it in March this year. I’m in a new Village now of 1100 homes where’s there’s only 6 left. I think sales are going quite well here in TV.

[GoRedSox!]

Did you get that info from a government publication or by visiting your local gas station?It's not info from a government publication. It is the daily closing price on the publicly traded commodity market. RBOB, which is the trading symbol for regular gasoline (it actually stands for Reformulated Blendstock for Oxygenate Blending). This is the grade of gasoline used for futures contracts on the public traded commodity exchanges. If you were long on the futures of gasoline over the past month, you got clobbered and if you played it short, you made a big return in a short period of time.

It usually takes some time for the commodities price to work its way down to the pump. Unfortunately, it takes longer for price drops than when the price is going up.

As an aside, the entire oil market has gone down. I keep track of the guaranteed home heating price offered by my oil company. Gasoline is one thing, but we go through 850-900 gallons of home heating oil a year in CT and the price of home heating oil is far more impactful to us than gas prices. In the space of one week, there was substantial decline in the fixed price I could contract to buy oil for the remainder of the winter, going from $4.179 to $3.859. That's a 7.7% drop in five days, pretty significant. Even at the lower price, that's still close to $4,000 a year with the service contract included....I won't miss paying that if we ever move full-time to FL.

All of this could easily change this week due to the situation in Israel. The oil markets do not like geopolitical events or uncertainty, particularly in that region of the world. Oil could go right back up.

[GoRedSox!]

Not sure where you're getting your numbers. Gas here in southern Indiana hasn't been anywhere near that since Trump was in.
The cheapest around here is 3.29 and it hasn't been below $3 for a long time.

I'm not a big Trump guy, but I do know when he was in, gas was cheap and the economy was on fire.It's the commodity price per gallon on the futures market, not the price at the pumps. The gasoline still has to get transported, there is usually a distributor who has their profit built in, the gas station has to make their profit per gallon, and there are federal and state taxes that get added to the cost to make the price at the pump. However, when the underlying cost of gasoline decreases by 50 cents a gallon, a good portion of that will work it's way to the pumps.

As I said elsewhere, who knows where the oil markets go tomorrow, however....

[JMintzer]

It's the commodity price per gallon on the futures market, not the price at the pumps. The gasoline still has to get transported, there is usually a distributor who has their profit built in, the gas station has to make their profit per gallon, and there are federal and state taxes that get added to the cost to make the price at the pump. However, when the underlying cost of gasoline decreases by 50 cents a gallon, a good portion of that will work it's way to the pumps.

As I said elsewhere, who knows where the oil markets go tomorrow, however....

As of 9/18/2020, the average price in the US was $3.88...

Nowhere near $2.19

Gas prices hit 2023 highs as oil stays hot | CNN Business (https://www.cnn.com/2023/09/18/business/gas-prices-2023-high/index.html)

[Bogie Shooter]

Not sure where you're getting your numbers. Gas here in southern Indiana hasn't been anywhere near that since Trump was in.
The cheapest around here is 3.29 and it hasn't been below $3 for a long time.

I'm not a big Trump guy, but I do know when he was in, gas was cheap and the economy was on fire.

So was the national debt….:duck:

[Pballer]

Not sure where you're getting your numbers. Gas here in southern Indiana hasn't been anywhere near that since Trump was in.
The cheapest around here is 3.29 and it hasn't been below $3 for a long time.

I'm not a big Trump guy, but I do know when he was in, gas was cheap and the economy was on fire.

During the 3 years before COVID, GDP growth averaged 2.5% - this is "on fire"?

[JMintzer]

During the 3 years before COVID, GDP growth averaged 2.5% - this is "on fire"?

As of December 2019, it was 3.18%, the highest it had been since 2004...

Oh, I forgot to add... The average GDP for years ending 2017, 2018, 2019 (the 3 years before Covid) was 2.97%, not 2.5%

US Real GDP Growth Rate by Year (https://www.multpl.com/us-real-gdp-growth-rate/table/by-year)

[Normal]

As of December 2019, it was 3.18%, the highest it had been since 2004...

Oh, I forgot to add... The average GDP for years ending 2017, 2018, 2019 (the 3 years before Covid) was 2.97%, not 2.5%

US Real GDP Growth Rate by Year (https://www.multpl.com/us-real-gdp-growth-rate/table/by-year)

Revenue has also climbed. We were steady till about 2018 at about 4trillion. This year’s revenue should top a little over 5 trillion dollars. To bad the government still spends like drunken sailors.

[Pballer]

As of December 2019, it was 3.18%, the highest it had been since 2004...

Oh, I forgot to add... The average GDP for years ending 2017, 2018, 2019 (the 3 years before Covid) was 2.97%, not 2.5%

US Real GDP Growth Rate by Year (https://www.multpl.com/us-real-gdp-growth-rate/table/by-year)

Don't know how you get a 2.97 average from 2.99, 2.12 and 3.18. It comes out to a 2.76 average whether arithmetic or geometric. Still not "on fire" compared to Reagan and Clinton years.

[KenLee100]

When I purchased my first home in 1983, I was told by a savvy real estate investor, "Property is usually too expensive on the day you buy, and in 10 years, you'll wish you had purchased a dozen of them." I doubled my money in 5 years. There will always be those who are priced out of the market. That does not make the market bad or evil. You should buy what you can afford.

[MX rider]

Don't know how you get a 2.97 average from 2.99, 2.12 and 3.18. It comes out to a 2.76 average whether arithmetic or geometric. Still not "on fire" compared to Reagan and Clinton years.

Yes, the economy was on fire due to low energy costs and more well paying jobs than there were people to fill them. A big Toyota plant near me was begging for workers and so were the trade unions. All great paying jobs.

I work selling food for Sysco to restaurants (retiring in 4 weeks), My business was rocking during those years.

Yes Reagan and Clinton had great economies, but I've never seen a time like 17,18 and 19. So many high paying jobs and employers competing for workers. It was even happening in my industry.

[Craig Vernon]

Many great points to this post. I have enjoyed reading all of them. There is nothing wrong with the housing market pricing according to rates and making TV what it was just a few years ago a quiet and happening place to live with likeminded retirees enjoying the fruits of their labor. I am pleased to see so many different opinions about so many related issues. Feel blessed in your life in TV and I look forward to living full time myself within a couple years. Until then I will continue to enjoy my visits. Keep up the posts I will read them all. Have a Wonderful Day!

[Rainger99]

Gasoline RBOB Futures Historical Prices - Investing.com (https://www.investing.com/commodities/gasoline-rbob-historical-data)

[dewilson58]

Many great points to this post.

Few different bunny trails.

You never know what is going to generate 100 posts.

:BigApplause:

[Bogie Shooter]

Few different bunny trails.

You never know what is going to generate 100 posts.

:BigApplause:

Round-a-about threads come close. :wave:

[CoachKandSportsguy]

Once you accumulate the wealth, you use the money to make more money. You shouldn't pay off debts that are lower than what you can earn. Keeping a 2.5% mortgage while earning 5+ percent in investments makes sense to me.

That is all based upon the assumption that there is no abnormal event your assumed risk profile of your investments can't withstand. Investments are an inherently risky holding, and assuming that the current rates and levels will continue through the life of the decision is the uncertainty that many people do not want to take.

I want the house free and clear, and not have to assume that all my investments can withstand any unforeseen event. I have lost everything once, that is not happening again, and I am not the only one who can get surprised by unforeseen events.

remember, as with all things in life, everything works fine, until it doesn't.

[GoRedSox!]

As of 9/18/2020, the average price in the US was $3.88...

Nowhere near $2.19

Gas prices hit 2023 highs as oil stays hot | CNN Business (https://www.cnn.com/2023/09/18/business/gas-prices-2023-high/index.html)As I have been patiently trying to explain, the price I am quoting is the price on the commodities market for gasoline futures. As I said repeatedly, it takes time for the price of gas futures to make its way down to the price at the pumps. The bottom line is the underlying cost of gasoline went down 51 cents a gallon in 3 weeks. The price I quoted was the accurate price of RBOB futures on that date, you can easily look it up and verify that.

By the way, futures are up .06 already tonight to $2.25 per gallon due to the events in Israel....The price of oil is up by over $2 a barrel....there are two main types of oil that trades in futures contracts...Brent North Sea Crude, and West Texas Intermediate.....Brent always trades a little higher than the Texas oil....

[Randall55]

That is all based upon the assumption that there is no abnormal event your assumed risk profile of your investments can't withstand. Investments are an inherently risky holding, and assuming that the current rates and levels will continue through the life of the decision is the uncertainty that many people do not want to take.

I want the house free and clear, and not have to assume that all my investments can withstand any unforeseen event. I have lost everything once, that is not happening again, and I am not the only one who can get surprised by unforeseen events.

remember, as with all things in life, everything works fine, until it doesn't. We are at the age where you invest in low risk investments.

[MrChip72]

Sad if a retired person purchases in TV and has a mortgage.

Most people that are even moderately savvy with with finances would consider that a misguided take to be honest especially if their mortgage rate is 3-4%. You can beat that rate moderately with a variety of extremely safe investments currently, and beat it by a lot long term invested in index funds.

It's better to optimize your money than have it 100% tied up in real estate making you zero returns. Many of the world's billionaires don't own most of their homes outright.

[hifred123]

We are 2 retired teachers that came to the Villages in 2019. If we had to buy our home now it would cost more than what we paid in August 2019 when we bought it. But the home we sold in 2019 also has gone up in value so to me it would be a wash. We would have received more from the sale of the home and bought in TV at today's prices. I am not sure what the author of this thread is getting at. The prices have risen here but that is true of many places. I can sell my home in TV for more than I paid for it. So why do they think buyers wouldnt be able to afford now and what is the point about falling prices?. Given the majority of people are selling a home and then rebuying here don't the prices cancel out.? Mortgages cost more now but a lot of people who sell their homes to buy here dont depend on getting a mortgage. I dont agree with the thread author.

[huge-pigeons]

Why is it a good thing for an asset I own to come down in price/value so somebody else can afford to move here? Makes no sense at all!! That’s like saying it’s ok for my Apple stock to tank so somebody else can buy shares. I want all my assets to grow in value, and if somebody can’t afford to buy in this market, then they should look elsewhere

[Zenmama18]

I think my first mortgage was 12%. OUCH!!!!

Ours was 12 3/8% and we felt lucky to get that!

[dewilson58]

Most people that are even moderately savvy with with finances would consider that a misguided take to be honest especially if their mortgage rate is 3-4%. You can beat that rate moderately with a variety of extremely safe investments currently, and beat it by a lot long term invested in index funds.

It's better to optimize your money than have it 100% tied up in real estate making you zero returns. Many of the world's billionaires don't own most of their homes outright.

That's an investment decision............NOT what I'm talking about.

Love the billionaire justification. :1rotfl:

[dewilson58]

That is all based upon the assumption that there is no abnormal event your assumed risk profile of your investments can't withstand. Investments are an inherently risky holding, and assuming that the current rates and levels will continue through the life of the decision is the uncertainty that many people do not want to take.

I want the house free and clear, and not have to assume that all my investments can withstand any unforeseen event. I have lost everything once, that is not happening again, and I am not the only one who can get surprised by unforeseen events.

remember, as with all things in life, everything works fine, until it doesn't.

There you go again....................Sound financial advice / experience.

[Sheri]

Are you a sales agent for The Villages? I’m wondering how you got these numbers for current preowned and new homes?

[Lovey2]

...

[jimbomaybe]

Most people that are even moderately savvy with with finances would consider that a misguided take to be honest especially if their mortgage rate is 3-4%. You can beat that rate moderately with a variety of extremely safe investments currently, and beat it by a lot long term invested in index funds.

It's better to optimize your money than have it 100% tied up in real estate making you zero returns. Many of the world's billionaires don't own most of their homes outright.

I don't know how anyone could argue with your logic , I have no qualifications as a financial planner but I think anyone so qualified would advise anyone buying a home to take advantage of the dramatically low 30 year interest rates , risk is unavoidable, home ownership has been historically a low risk proposition, that's why mortgage rates are lower than most other types of credit, when you take a mortgage at a 2 to 3% area the entity providing the funds are taking all the risk, anyone one would be much better off taking as large a mortgage as their cash would allow

[BoatRatKat]

Agree.

[GATORBILL66]

My designer home has doubled in value since I purchased it in March of 2020!

[Normal]

My designer home has doubled in value since I purchased it in March of 2020!

Sell it now. Redfin just released data determining that demand for housing in Florida is at a 7 year low! Cash in while you can. We are just entering crash mode. Just look at the Villages website for homes. Things are starting to look ugly.

[FredJacobs]

According to the demographics that the Daily Sun sends out to advertisers, over half the sales are paid in full without a mortgage.

Think about it - you bought a house up North, in the '70's for $40K. You are much older, the kids are on their own, you can't stand the cold, etc. so you sell for about $700K and, after expenses, you net $600K profit. The first $500K is non-taxable so, you pay $20K tax on the remainder. You now have $580K - plus savings - to spend for a new house in a warmer climate.

Put 50% to 65% down, get a very low interest, pay what the higher interest rate required and you can be mortgage free very quickly.

[Marine1974]

Sad if a retired person purchases in TV and has a mortgage.

:popcorn:

Not if your mortgage rate is 2.399% and you’re earning 8 % on the money you didn’t use to pay cash for a home . It’s called smart not sad . Plus you can write off interest and taxes .and any energy efficient equipment you add to your home .

[dewilson58]

Not if your mortgage rate is 2.399% and you’re earning 8 % on the money you didn’t use to pay cash for a home . It’s called smart not sad . Plus you can write off interest and taxes .and any energy efficient equipment you add to your home .

Dude, that's an investment decision...........not what I'm talking about.

If you want to leverage, leverage.............I don't care.

[vintageogauge]

Ours was 12 3/8% and we felt lucky to get that!

In our younger days when we needed mortgages they ran between 9 and 14%, the last one we had was 9% and that was in 1993.

[patfla06]

With the lack of curb appeal, that house is going to be sitting until they make a drastic price reduction. U G L Y !

I think this house is nice, it just needs some landscaping.
I wouldn’t ever say this house is ugly.

[Craig Vernon]

Are you a sales agent for The Villages? I’m wondering how you got these numbers for current preowned and new homes?

I counted them on TV and Zillow sights. No, I am not a realtor or Village sales agent.

[melpetezrinski]

Most people that are even moderately savvy with with finances would consider that a misguided take to be honest especially if their mortgage rate is 3-4%. You can beat that rate moderately with a variety of extremely safe investments currently, and beat it by a lot long term invested in index funds.

It's better to optimize your money than have it 100% tied up in real estate making you zero returns. Many of the world's billionaires don't own most of their homes outright.

I agree with your 1st paragraph but are you sure about that "zero return" as it relates to your opportunity cost argument? And I'm not talking about capital appreciation.

[MrChip72]

I agree with your 1st paragraph but are you sure about that "zero return" as it relates to your opportunity cost argument? And I'm not talking about capital appreciation.

My intention behind that comment was that having your home paid off you're only getting capital appreciation. That money is "dead money" otherwise. In the past 20 years it was easy to pull a modest amount of money out your home in a home equity line of credit (HELOC) for under 5% or much less in most cases and then invest it to generate income if you're willing to take on a small amount of risk for extra income.

Obviously that's not necessarily as viable of a strategy now in the current interest rate environment.

[Laker14]

Again......................that is an investment decision.

:loco::loco::loco:

I remind you that your original statement on this subject was a blanket statement "Sad if a retired person purchases in TV and has a mortgage."...

you said it was "sad", you didn't specify that it was sad "unless of course it was an investment decision" which seems to be your new stance.

you seem unwilling to acknowledge that your initial blanket statement was, in fact, just wrong.

It's OK...

[Laker14]

What would be sad would be buying a home that proves to be too much of a strain on the finances, or as they say, become "house poor". That can happen by buying a house that costs too much, relative to one's ability to pay for it.

Whether one overspends on a house with a mortgage, or by depleting one's reserves in order to pay cash, the result is still a lot of stress.

If one can afford the house, and still have resources left over to comfortably pay for the other things in life that need to be paid for, whether it's a cash deal or an affordable mortgage payment, there is no need to be "sad".

[dewilson58]

you said it was "sad", you didn't specify that it was sad "unless of course it was an investment decision" which seems to be your new stance.



i stated it's an investment decision 120 posts ago. :shrug:

read and educate oneself

jus found a new sad.

:ohdear::ohdear:

[Laker14]

i stated it's an investment decision 120 posts ago. :shrug:

read and educate oneself

jus found a new sad.

:ohdear::ohdear:

So that was your acknowledgment that you were wrong when you said having a mortgage was sad?

[Normal]

So that was your acknowledgment that you were wrong when you said having a mortgage was sad?

Almost aloof. We all put our pants on one leg at a time, and we all have the same Maker.

[thelegges]

Almost aloof. We all put our pants on one leg at a time, and we all have the same Maker.

Actually never put on pants one leg at a time. You truly believe everyone has this Maker that you speak of? Some have very different beliefs

[CoachKandSportsguy]

Dude, that's an investment decision...........not what I'm talking about. If you want to leverage, leverage.............I don't care.

Actually, I think the cash versus mortgage is the financing decision, after the investment decision, but I understand your point. But then i might reject the investment decision since buying a home to live in is never an investment decision from a finance point of view.

so we are back to being at a mexican standoff..


obviously, none of us have enough to do in our regular lives today

[melpetezrinski]

Actually, I think the cash versus mortgage is the financing decision, after the investment decision, but I understand your point. But then i might reject the investment decision since buying a home to live in is never an investment decision from a finance point of view.

so we are back to being at a mexican standoff..


obviously, none of us have enough to do in our regular lives today

So, back in 2019, we were looking to move to a different home in TV. At the same time, we were deciding where to invest a recent inheritance. We were fairly risk averse and yields on treasuries and the like were very low, so we decided to invest the inheritance in a way more expensive house than we needed. Our plan was to sell in 3-5 years, which we did, and reap the capital appreciation. How is this NOT and "investment decision from a finance point of view."

[Topspinmo]

The Villages success is based upon likeminded folks that save and move to a beautiful place to reward a lifetime of effort. The last few years have priced homes out of many savers range and moved sales into an elevated investment cycle that hurts the environment for snowbirds and full-time residents. As the place we love becomes a less desirable investment many of the problems that have come with it simply go away. This morning's listings Zillow 384, TV preowned 394, TV new 314 and growing. This is the largest number of listed new construction since I started keeping track in 2020 and just short of twice the number which was 199 in January of this year. I asked the Village Newcomers Jerry and Linda on their YouTube channel if they would or could have moved here if prices were where they are now. The answer was "No," and they are a prime example two retired teachers with pensions coming to their happy place. See you all in February. Have a Great Day!

IMO If two retiring teachers (what age 50?) don’t have enough funds to buy house approaching retirement they have either overspent ( on children or taking trips every summer ect…). Or been divorced or have medical expense which I doubt the cause due to teachers union healthcare. Each situation different can’t lump all to one example.

[Topspinmo]

Actually, I think the cash versus mortgage is the financing decision, after the investment decision, but I understand your point. But then i might reject the investment decision since buying a home to live in is never an investment decision from a finance point of view.

so we are back to being at a mexican standoff..


obviously, none of us have enough to do in our regular lives today

Or could lose the investment from bad advice or bad decisions and be without house? Meaning I’d you got mortgage really not your. It’s the banks.

[CoachKandSportsguy]

Our plan was to sell in 3-5 years, which we did, and reap the capital appreciation. How is this NOT an "investment decision from a finance point of view."

executive summary: housing is a consumption decision, with no expected income generation, and conflating consumption with investment because there is a price attached, and potentially a taxable gain.

The truth? Your house is not an investment | Money Under 30 (https://www.moneyunder30.com/why-your-house-is-not-an-investment/)

A House Is a Home—Not an Investment - The Atlantic (https://www.theatlantic.com/business/archive/2013/09/a-house-is-a-home-not-an-investment/279658/)

A Wharton Professor Explains Why a Home Isn't an Investment (https://www.businessinsider.com/wharton-professor-home-not-an-investment-2016-10)

Why Your Home Is Not An Investment | by Adam Del Duca | Making of a Millionaire (https://themakingofamillionaire.com/why-your-home-is-not-an-investment-52f33e29b41b?gi=7bf2eca176f2)

What you are engaging in is human bias, and in this case, mental accounting and resulting. Understanding Common Types of Bias in Investing (https://www.investopedia.com/terms/b/bias.asp)

https://www.investopedia.com/terms/m/mentalaccounting.asp

The other being resulting, which is a really hard one to grasp
https://www.bjjmentalmodels.com/resulting

best explanation
https://www.amazon.com/Thinking-Bets-Making-Smarter-Decisions/dp/0735216355

this all comes under the heading of behavioral finance, which is infinitely more accurate in understanding hoomans handling money, than the 1950's rational man model. Economics is actually the study of hoomans handling money, so behavioral economics and behavioral finance explains much more of reality of decisions than the rational man, which we know we are not. If we all were rational, many industries would not exist

[manaboutown]

///

[melpetezrinski]

executive summary: housing is a consumption decision, with no expected income generation, and conflating consumption with investment because there is a price attached, and potentially a taxable gain.

The truth? Your house is not an investment | Money Under 30 (https://www.moneyunder30.com/why-your-house-is-not-an-investment/)

A House Is a Home—Not an Investment - The Atlantic (https://www.theatlantic.com/business/archive/2013/09/a-house-is-a-home-not-an-investment/279658/)

A Wharton Professor Explains Why a Home Isn't an Investment (https://www.businessinsider.com/wharton-professor-home-not-an-investment-2016-10)

Why Your Home Is Not An Investment | by Adam Del Duca | Making of a Millionaire (https://themakingofamillionaire.com/why-your-home-is-not-an-investment-52f33e29b41b?gi=7bf2eca176f2)

What you are engaging in is human bias, and in this case, mental accounting and resulting. Understanding Common Types of Bias in Investing (https://www.investopedia.com/terms/b/bias.asp)

https://www.investopedia.com/terms/m/mentalaccounting.asp

The other being resulting, which is a really hard one to grasp
https://www.bjjmentalmodels.com/resulting

best explanation
https://www.amazon.com/Thinking-Bets-Making-Smarter-Decisions/dp/0735216355

this all comes under the heading of behavioral finance, which is infinitely more accurate in understanding hoomans handling money, than the 1950's rational man model. Economics is actually the study of hoomans handling money, so behavioral economics and behavioral finance explains much more of reality of decisions than the rational man, which we know we are not. If we all were rational, many industries would not exist

Did you just search for your post from months ago and copy and paste those links? I can search google and post counless links also to substantiate my stance but all you need to do is think about the decision I made. Can I make more money by investing in a bigger house than in another investment vehicle. Can I realize more capital appreciation than the gains in bonds, treasuries or equities. It was a financial decision of how to invest my inheritance to realize the highest ROI, PERIOD.

[CoachKandSportsguy]

Did you just search for your post from months ago and copy and paste those links? I can search google and post counless links also to substantiate my stance but all you need to do is think about the decision I made. Can I make more money by investing in a bigger house than in another investment vehicle. Can I realize more capital appreciation than the gains in bonds, treasuries or equities. It was a financial decision of how to invest my inheritance to realize the highest ROI, PERIOD.

Whatever you want to believe, you can. My only comment is confirmation bias can be a real beetch! I answered your question, you don't like / agree with the answer, that's fine. There's common knowledge and there is expert knowledge. I am not an expert, but worked in the finance industry in many capacities, and i read the experts when i can to learn from them.

I could say that our purchase of our house in 2018/9 was a brilliant investment decision, with an ROI gain, yada, yada, yada, because I am in finance and that's what i do. .

but i don't, it was an impulse and pure luck. it was nothing more than planning for the future in a good area with a custom design which we love. after that, nothing was planned nor thought to be an investment, even being in an LLC and generating revenue and income.

peace out

[GoRedSox!]

I'm not sure that there's any one right answer to the question.

It's certainly reasonable to have a low-interest mortgage to free up cash for investing.

The last mortgage I had was low interest, but I still made conservative investment decisions. I did consider paying the minimum on a 5 year ARM at 2 3/8%. But in that time frame, 2014 forward, I could not find a risk-free investment that was going to significantly provide a better return. Interest on US Treasuries and CD's was far below 2 3/8's. So I paid every extra dollar I had against that mortgage and paid in off in 7 years, and then sold it at a profit and that's the money we used to buy our home in The Villages.

In retrospect, had I invested the money in the stock market, I would have done a lot better than 2 3/8%. But I didn't have the benefit of hindsight when I was making that decision. I also had peace of mind. At the time of the financial crisis, 25% of the mortgages in the country went underwater.

That being said, in a rising interest rate environment, the investing paradigm has changed. If I still had a 2 3/8% mortgage, I would not pay it off early today because I can get a guaranteed 4.66% on the 10 year US Treasury, and the interest I pay on the mortgage is tax deductible if I can get over the threshold for itemized deductions. It's a no-risk decision.

Good luck to everyone on their investments in their homes, the markets and everywhere else.

[Aces4]

I agree. In 1980, I had a $35K mortgage with an interest rate of 7.75 percent, which was considered a bargain at the time. I couldn't sleep at night, so I paid it off in 3 years. I offered the bank a discounted cash payoff, but they refused. That is the only loan I have ever had. To me, borrowing money has never been a good financial decision.

That was a deal. In 1981 we had a land contract for 20 acres with a small home, rate was 18% and we negotiated to pay only the interest on the loan of $75,000. purchase price until our home sold. Our home at the time was under contract, contingent on the rezoning permission from county on the buyers home. It ended up taking a year for their home to rezone and then close on our home. That was painful but when we sold the home in 2000 for close to $300,000., we felt much better.

[Craig Vernon]

insight on housing costs in TV and financial discussion on finance v investing. Good Stuff thanks all!

[BrianL99]

Did you just search for your post from months ago and copy and paste those links? I can search google and post countless links also to substantiate my stance but all you need to do is think about the decision I made..

A Leopard doesn't change its spots. I laugh every time I read the "ex-finance guy" line. I think I'm up to reading it, about 700 times now.

I once provided $10 in financing for my daughter's lemonade stand, so I guess I'm an ex-finance guy, too.

[NorineBerlinski]

Hi Craig, do you have any other statistics on home sales/prices, etc. you can share with us? Thank you for putting this together.

[Robnlaura]

Sad if a retired person purchases in TV and has a mortgage.

:popcorn:

That’s life for you

[Robnlaura]

It’s happening slowly but it will get a lot harder as they continue building the same boxes everywhere.. I look at used homes values and have to laugh at the current values..

[Dusty_Star]

Why is it a good thing for an asset I own to come down in price/value so somebody else can afford to move here? Makes no sense at all!! That’s like saying it’s ok for my Apple stock to tank so somebody else can buy shares. I want all my assets to grow in value, and if somebody can’t afford to buy in this market, then they should look elsewhere

You are correct. It does not make sense, it only appeals to someone wanting to buy here, hoping for a lower price, then praying for prices to rise again once the house is purchased.

[Normal]

The Villages median price on a home from a year ago dropped 6%. Ocala’s median price dropped 9.2%. The crash is undisputed, speculators or investors are really the only ones that need to worry.

The Villages Housing Market: House Prices & Trends | Redfin (https://www.redfin.com/city/25985/FL/The-Villages/housing-market)

Ocala Housing Market: House Prices & Trends | Redfin (https://www.redfin.com/city/13058/FL/Ocala/housing-market)

This brings great opportunities to bargain as a buyers and who should have been able to do that from the start. The inflexible will be left in the dust. Trending analysis demonstrates the downward movement till next Spring? Wages and inflation should push this in the other direction by Summer 24.

[Craig Vernon]

Hi Craig, do you have any other statistics on home sales/prices, etc. you can share with us? Thank you for putting this together.

If you go on YOUTUBE and look at Davids in Florida he does a weekly break down of real estate activity in TV.

[Craig Vernon]

You are correct. It does not make sense, it only appeals to someone wanting to buy here, hoping for a lower price, then praying for prices to rise again once the house is purchased.

I disagree TV has a problem with speculators, flippers and AIRBNB short term rentals. The thirty percent increase over two to three years was a benefit to short term investors not full-time residents or individuals. TV has an excellent history of 6% a year in value growth if property values drop by 10% of the 30% they gained in the last few years it only takes incentives from short term investors and hopefully removes some of the speculators from the market. IMHO.

[Normal]

I disagree TV has a problem with speculators, flippers and AIRBNB short term rentals. The thirty percent increase over two to three years was a benefit to short term investors not full-time residents or individuals. TV has an excellent history of 6% a year in value growth if property values drop by 10% of the 30% they gained in the last few years it only takes incentives from short term investors and hopefully removes some of the speculators from the market. IMHO.

We actually are seeing a decline in home values for last month. The Developer created a huge inventory that isn’t moving. Retirees haven’t absorbed the financial impact of fixed income versus active workforce. Obviously continued active workforce buyers aren’t generally buyers in most cases for a retirement community. This is being exasperated by the continued recall of workers back to their offices.

IMHO this isn’t the time to buy, look to the Spring of 2024. Buyers now would likely see financial loss. The downward correction will last until at least the early summer of next year.

Major losers ironically will be small home Villa owners. Investment properties will take the largest hit since they are the surplus in existing sales and inventory.

If you are a buyer, it’s advisable to use the home value metric of price per square foot and compare it the existing market. Comps are out the window. Banks are savvy to previous problems after 08 with lagging comp value calculations.

Speculators absolutely will take the largest hit during this crash. Be very cautious if you are a buyer.

[Altavia]

There's still about 100 names a week showing on the news residents boards in the sales centers so not much has changed.

[Normal]

There's still about 100 names a week showing on the news residents boards in the sales centers so not much has changed.

Great, 5,200 homes sold this year then? Sales maps, county records, the news, WallStreet and the Villages own websites are all wrong. Who knew?:1rotfl::mademyday::a20:

[vintageogauge]

A crash???? I don't know what village you live in or if you even live in one but in our village the majority of the homes listed are sold in a week or two at unbelievably high prices. You also need to put into your equation the number of family homes TV has built outside and sold this year using the builders that would normally build within TV, these homes are not included in the numbers they release. I would not hesitate in buying a home here now nor would I expect to have to accept a lower price to sell my present home, I keep an eye on re-sales and our particular model continues to command a higher price than last year or the year before. There are several designer home models that are in great demand and very few are for sale, 2 that I have noticed are the Woodside and Ivy models, both being 4 bedroom homes. Another thing I noticed in some of the patio villas is the lack of window and patio blinds, lesser amount of sidewalks, smaller patios, no washer/dryers, no glass shower doors in the masters, etc., they have cut back a lot on features and therefore they can sell them at a lower prices with the same profit.

[Bogie Shooter]

Great, 5,200 homes sold this year then? Sales maps, county records, the news, WallStreet and the Villages own websites are all wrong. Who knew?:1rotfl::mademyday::a20:

So, where did you get this ax that you seem to continue to grind?
What is your point?

[Rcflyer55]

The cost of new homes are definitely up. In Dabney the bonds are high 30k-mid 40k with high interest rates. Land 25k-60k. Taxes 16.8mills. By the time your done building a mid 500k home taxes + bond will be close to 11k. That’s what we pay in the Northeast. Basically no savings when moving like there used to be. Add in higher home insurance and idk. I’m just glad we’re not the people who need a 200k house and are on a strict budget. TV is definitely not what it use to be. Eastport is going to be even worse.