Dropping Home Prices in TV is a Good Thing
 

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!

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.

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

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

:popcorn:

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.

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.

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.

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!

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

'''

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.

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.

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.

Obvious
 

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

Yes "really?"

Like I said, That's an investment decision.

Marketing.

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

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.

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.

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.

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.

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

Same
 

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.

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

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

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

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

Single Family Home Inventory
 

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.

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 $.

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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.

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.

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.

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.

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.

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.

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.

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