Buyer Arrogance Has Surpassed Seller Arrogance
The News Herald reports from Florida. “The model of the planned 155-acre NatureWalk at Seagrove includes trees, homes and meandering pathways, a testament to the sometimes extravagant plans dreamed up by developers during the real estate boom. But other than some photographs and renderings and a few pieces of furniture, the rest of the room is bare. Several dead or dying plants sit in an adjacent room and weeds sprout through cracks in the brick pathway outside. It’s a story being played out in many developments that took root during the real estate boom but have since died or are having a prolonged near-death experience.”
“A sign at the entrance of Waterview at Inlet Beach at the Bay County lines says ‘For Sale or Trade; Any offer considered.’ The sign references a lot close to one owned by Lane Betz of Madison, Ala. She said she and her husband purchased the lot in 2005 as an investment, but when it didn’t sell they decided to build a house there. Construction was completed last February and they’re still waiting for a buyer.”
“She said the developer ‘cut his price so low on his lot that it brought down all the prices in the neighborhood.’ ‘People are just uninterested now,’ said Betz, who added that ‘they want something for nothing’ and the lot is priced for a less than what she and her husband paid for it.”
“While sales at WaterColor appear to be doing well, Realtor Bobby Jones said developments such as Lakeside at Blue Mountain, Serenity at Dune Allen and Grayton Cove in Grayton Beach still seem to be struggling. ‘You can tell we’re at the bottom because the buyer arrogance has surpassed the seller arrogance of 2005,’ he said.”
The Ledger. “If the Four Corners real estate market starts to pick up - and there are signs that it has - it could once again be Europeans coming to the rescue. ‘We’re getting into the spring buying season, and we’re actually getting some sales now,’ said Pete Howlett, who runs Orlando Vacation Realty in Four Corners.”
“Howlett added that the low prices are making this a tough market for buyers to resist. ‘You are seeing the affordability index go down,’ he said. ‘That’s a good thing. Before, sometimes people were upside down on their mortgage before they even bought the house.’”
“For the construction industry, the timing couldn’t have been worse: new, expensive subdivisions opened for sale just as the housing bubble was bursting, leaving entire developments with a huge inventory of unsold units. Now some local Realtors say these subdivisions are facing a new, equally serious challenge: collapsing homeowner associations that can no longer afford to pay basic bills, because so few of the remaining homeowners are sending in their monthly HOA dues.”
“‘The HOAs are a mess right now,” said Sean DePasquale, a senior loan officer with Florida Mortgage Partners Inc. He said this is a particular problem for condominiums that have a lot of unsold or foreclosed units, and it’s tough to get a mortgage these days for anyone interested in buying one of these units at a bargain basement price. ‘Condos are not even on the radar right now for loans,’ he said.”
The Herald Tribune. “After the residential real estate market peaked in the summer of 2005 and the commercial market began to cool a year later, hotels enjoyed a brief period in which they were viewed as the hottest commodity in a rapidly shrinking real estate world. Even seemingly dead condo conversion projects were resurrected as fractional ownership resorts in which buyers could own a piece of a condo by the beach.”
“But now, in the midst of what seems to be the recession of a lifetime, hotel projects are disintegrating like sand castles by the sea. ‘These hotels that you see failing are the aftermath of attempted condo conversions that were purchased too high and were finished in a now depressed market,’ said Larry Starr, the president of Resort Quest of Sarasota. ‘They did not come off as condo conversions and are probably too expensive to cash flow as hotels.’”
“The result, Starr said, is that these properties will be seized by banks and sold to investors who will pay prices based on the cash flow these properties can generate as hotels. With regard to the larger hotel projects that hyped in 2007, most of those are not going to get built. ‘The only answer is to wait for tomorrow,’ Starr said. ‘But when tomorrow will come, I don’t know.’”
The Miami Herald. “During Miami’s recent land boom as developers rushed to erect as many soaring residential condos as possible, developer Alan Ojeda cut a decidedly different path when he built One Broadway, a 36-story rental tower in the growing Brickell residential district. So, up went a 371-unit luxury building — boasting ‘everything you love about Brickell living, without the Brickell mortgage. Or condo association fees. Or taxes,’ the property’s website says.”
“A glut of condos that either nobody wants or can’t buy for lack of financing is leading to a rapid expansion of the so-called shadow market, which is luring droves of tenants away from traditional rental communities like One Broadway. The trend is forcing owners of multi-family properties to reduce rents and offer other perks and incentives to draw tenants.”
“Builders, who failed to diagnose the bubble before it was too late, vastly overestimated demand for their product among buyers who intended to live in the properties. Instead, speculators rushed in. Now, in some recently completed projects, walk-away rates are higher than 70 percent as investors, chastened by plunging values, leave deposits on the table.”
“Also adding to the surplus are some 16,000 condo conversions that have once again reverted to apartments in so-called ‘conversion-reversions’ in the last two years, according to Jack McCabe, a South Florida real estate analyst who specializes in the multi-family market. ‘Right now, they can’t sell the units; they can’t tear them down. You can’t mothball them. The only alternative is the rental process and for them it’s a losing proposition,’ McCabe said.”
“As for developer-owned rentals, tenants still face having to show their apartments to prospective buyers and move out if the unit is sold or the developer goes bankrupt, Ojeda said. Often enormous buildings are run by skeleton crews. But because One Broadway was planned as a rental, it avoids those problems. One Broadway has luxury appointments rivaling its condo neighbors as well as a large staff of 22 people, four of whom live on site.”
”’Here we are in the business of pampering you,’ Ojeda said. ‘Condo owners are captive owners, but if I don’t treat my customers well, they leave.”’
The News Press. “Bargain hunters picked up riverfront condos for as little as $145,000 Saturday during an auction of 62 units at the 27-story Riviera towers. Homes for America Inc. held the auction at the request of lenders, to stimulate sales at the Riviera, a three-tower project east of the Caloosahatchee Bridge. Previous sales at the Riviera sold 94 of its 160 units. Prices ranged from $179,000 to $325,000. Units originally sold for $450,000 to $600,000.”
“Jack and Rise’ Gian of the River Forest community in Lee County came to bid for a unit. ‘We would be investors,’ Jack Gian said.”
“They expected the cost of a unit to exceed their bid. ‘The maintenance fees, taxes and holding costs are going to be the downside,’ Jack Gian said.”
“A lot more. Those three words sum up how much a Lee County homebuyer can get now than when the market was at its zenith in 2005. In almost every price range, larger. Cape Coral instead of Lehigh Acres. Waterfront instead of dry land. Four bedrooms instead of three.”
“Since December 2005, when the median cost of an existing single-family home hit its all-time high of $322,300, prices have fallen by more than two-thirds. In March 2009, the last month available, the median was $88,500. And for those at the bottom, the difference is between owning your own home and being doomed to a seeming life sentence of paying rent.”
“Welcome to the golden age of house hunting.”
“‘I just sold a pool home in Waterway Estates (in North Fort Myers), a little bit older house, for $99,900,” said Steve Koffman, a real estate broker in the Cape. ‘I bought an older pool home for $85,000 in 1991.’”
“The same home in 2005, he said, would have gone for more than three times that. One person who bought recently said he’s glad he did, although prices have continued to plummet. ‘It’s better than renting, period,’ said Bob Pearce, who bought a three-bedroom, two-bath house in the Cape for $40,500 five months ago.”
“His mortgage is about $400, which is less than he’d been paying in rent. He keeps an eye on prices, and knows they’ve continued to decline but isn’t worried about it. ‘They’ve come down a little bit, but now I’m hearing they’re possibly going up again because of the investors,’ Pearce said. ‘I’m happy because it’s going to keep my value up.’”
The News Journal. “Through a partnership with the federal government, local United Way, private donations and area agencies, about 64 families could become homeowners — some as early as next summer. The prospective homebuyer steadily saves up to $2,000 and attends about 10 classes, such as budgeting, savings, household management and credit repair.”
“In return, they’ll get another $4,000 toward the purchase of a house — $2,000 from the Community Foundation and $2,000 from the federal government. ‘The whole program is teaching them the habit of being successful in their home,’ said Renee Gay, project director for the United Way, which is administering the $300,000 program. ‘We don’t want to put people in a home that they can’t keep and will be foreclosed upon.’”
“Brenda Voss and her husband, Luke Bodigon have been living in the Neighborhood Center’s transitional house in DeLand with their two daughters since March after Bodigon said he was laid off from his carpentry job last year and their three-bedroom Orange City house went into foreclosure. The family spent some time apart while Bodigon tried to find work out of state and they spent time at the agency’s shelter and housing for women and children.”
“The family is saving about $100 a week by not running the electricity as much, not eating out, and getting free movies at the library. ‘It’s tough having your own place and your own cars and thinking your job is secure and you go from that to nothing,’ Bodigon said. ‘Never say never.’”
