2008-09-30

At least I don't have a house in Miami

I really took a beating on the stock market yesterday and I wasn't able to enjoy the upswing today because the stocks were sold for me by my broker to cover a margin call. Ah, the joys of leveraged investments (what the heck was I thinking!). My leverage was only 60% (i.e. I had the money for 40% of the value of my stock, the other 60% was borrowed). But you have to feel sorry for the folks in South Florida who did what many people do: borrowed money to buy a house. Even if they didn't borrow money, they lost an average of 28% last year. That is some serious change on a median house price of  $276,000!

And as anybody in New Brunswick can tell you, those prices leave plenty of room to fall (you can buy a sea-side house in New Brunswick, Canada, for less than half that.).

Check out this comment after this article in the Miami Herald :

fstasfq wrote on 09/30/2008 04:31:34 PM:
I went to a foreclosure auction on Sunday at the Miami Beach Convention Center and I was able to pick up a bank owned 1650 sq ft 3/2 two car garage home for $125K which was previously sold about a year ago for $302K. I was approved by Chase, the current owner, for financing in about 5 minutes after they ran my credit and reviewed my income and liabilities. My payment is going to be $1,300/month with escrow. I can easily rent it for $1,400. If you have good credit and money for a down payment there are great deals out there.

If you are making a "profit" of $100 a month on your investment (before taxes and maintenance) and house prices are going down an average of 28% per year, that is one lousy investment!

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