‘What Goes Up, Must Come Down’ In Florida
The News Press has this from Florida. “Cape Coral may have fewer construction jobs by the end of the year if the four-month decline in single family home permits continues. The city issued 251 permits in June. That’s just under half the 525 issued in March and the lowest monthly total since 218 were issued in August of 2002.”
“‘Buyers are defaulting. They don’t like the market right now. It’s the resale market. It’s down,’ said Cheryl Sczesny, sales manager for Adams Homes.”
From The Palm Beach Post. “Looking for that dream home? Try scrolling past eBay’s ‘pottery and glass’ category. Click on ‘real estate,’ enter the keyword Florida, and stand back. Midafternoon Monday, the online auction house listed 528 Florida real estate and time-share properties; about three out of every 10 on the auction block were in South Florida.”
“Plenty of South Florida sellers clearly are looking closer to home. And some are willing to sell in bulk. Boca Raton businessman Giovanni DiStadio is back on eBay this month with another offering: A total of 67 West Palm Beach condos are up for grabs for a bargain-basement price of $7.7 million; ‘only $116,000 a unit!!!’ bellows the ad.”
“With only four more hours left to bid, a Jensen Beach time share topped out at $860, less than the annual maintenance fee. And in true eBay style, early bids seldom offer much in the way of profit to anybody: The initial asking price on a Delray Beach condo was a blushingly modest 99 cents.”
From the Miami Herald. “Developer Related Group announced it passed the $1 billion sales mark at ICON Brickell, a three-tower condo and hotel project in Miami. The condo developer, the biggest in the country, reached the milestone despite what it called the ‘gloomy forecast for real estate.’”
“In the heady days of the condo boom, Related Group would sell out projects in weeks. In a recent interview, Chairman and CEO Jorge Perez wasn’t gloomy, but he wasn’t bubbly either.”
“‘What goes up must come down,’ he said. ‘You don’t have huge expansions without a period of decline or adjustment. This is `Real Estate 101.’”
Which Statment is True:
1. About three out of every 10 on the auction block were in South Florida.”
2. Real Estate only goes up!
3. “South Florida,” he said, ”is working off of a totally new economic model than any of us have ever experienced in the past” according to a realtor who predicted that a land shortage will support higher prices indefinitely.”
- New York Times, Trading Places: Real Estate Instead of Dot-Coms, 3/25/05
2. Real Estate only goes up!
What do I win?
LOL!
1st Prize; a development lot in Orlando.
Runner Up; two lots.
Now that’s funny!!
That’s because it’s a lot older than anyone on this blog.
That’s because the premise for the joke is so true as well.
No really, buy a condo on the beach and receive 1 acre of prime genuine swamp land. Most of the beach in S. Florida has eroded. Thus, swamp land will soon be BEACH FRONT - YOU CAN’T LOOSE
Disclaimer - we are not responsible for acts of god such as large hurricanes that return Florida to it’s original state as a reef or domestic squatters on the swamp land such as herons, racoons, alligators, wild boar, deer, mosquitos, knats, etc.
“Real Estate only goes up”- I thought real estate 101 was “location location location” and “real estate always goes up up up”…. ???
What the heck is this developer talking about ‘You don’t have huge expansions without a period of decline or adjustment’ THATS NOT WHAT THEY TOLD ME WHEN I BOUGHT 67 CONDOS!!!!
I guess they changed the syllabus.
I don’t see the correlation between all this supply and prices dropping. With all this inventory and since prices always go up, you should buy now or be priced out forever!
::scratching head::
The initial asking price on a Delray Beach condo was a blushingly modest 99 cents.
At THAT price how can you afford NOT to BUY?!
99 cent condo’s? I’ll take 2!
I’ll wait for the “2 for 99cent” deal. Like churros at the Pollo Loco.
I will up the bid to an even $1.99.
$1.99 Delray Beach condos for EVERYONE.
: The initial asking price on a Delray Beach condo was a blushingly modest 99 cents.”
$1.99! that’s a 100% increase!
Quit bidding up the price of houses you guys! That’s how this whole mess got started!
“With only four more hours left to bid, a Jensen Beach time share topped out at $860, less than the annual maintenance fee. And in true eBay style, early bids seldom offer much in the way of profit to anybody: The initial asking price on a Delray Beach condo was a blushingly modest 99 cents.”
The asking price was 99 cents?
Maybe the guy is ticked off at his realtor and wants to give the ultimate FU by flicking him a nickel as his commission.
I wonder if the next big vegas promotion won’t be 99 cent condos to go along with the 99 cent shrimp cocktail?
even at 99 cents you should take a look at hoa fees and insurance,it might still be cheaper to rent.i’m in california,and some of the cond’os i have seen being built here have redefined the term “shoddy”.
i posted before but relevant again -
“In resort areas - given the number of days people actually use their second home - staying at the Ritz for $500 a night could be a much better deal. Do the math; it’s not pretty.” - http://www.moneyweek.com/file/10891/six-months-to-housing-hell.html
OT For those who are interested in the Plunge Protection Team:
http://tinyurl.com/jx9tg
Tom Stone you are one heck of a bargainer. Would you low- ball them $.50 ?
Trully admirable. If only there were more like you, this never would have happened.
The only time it makes sense to buy a timeshare is…never.
The absolute best time to buy a timeshare is right after you buy a ship condo thingy that is only going to be at its home port in SF one week a year and costs 20K per month in fees.
not that it makes sense but…
Sister in law has one in Aruba that she bought through her business. She uses it as a perk for her employees. She gives the week to one each year. Last year, the girl she offered it to declined.
We had a great time in her stead! It was a nice place.
Some guy tried to sell me a Timeshare. I ended up getting a free hotel and food for 6 people. It was great! I also ended up drinking tons of free drinks and ate all their food. I kept throwing out objections and was enjoying the entertainment at watching the answers the slime would give me. He finally said, “A Timeshare is not intended to make you money, it is intended to save you money.” To which I laughed in his face. He then told me they don’t want to make any money on the Timeshares, just breakeven. He said they just want to make money on fees. Yeah! That saves me a lot of money I said. He just gave up and I walked out all giggly and stuff.
Being a reformed salesperson, it is sometimes entertaining to yank the chain of a new/inexperienced salesperson.
It is only fair, you know the cycle of life and all.
“In the heady days of the condo boom, Related Group would sell out projects in weeks”
Yes, Gatsby really threw great parties. Ah, halycion days of old. I remember 2005 like it was last year.
Wow Ben, you’re busy today…and every busy HB day is a good one for all of us.
Cape Coral is dead for building, I said this weeks ago. but the sellers wont change the price. the market will turn around, Yes in 2012, but if you ever seen cape coral its a swamp filled in by sand from miles of canals. most of the buyers where flipping and the greater fools just dont think its worth the price. The boomers come and dont think twice about buying,
It appears that Cape Coral is like most of S. Florida, with the exception of the beach front. Florida = Swamps, canals, and sugar cane/orange groves/nurseries. Oh Forgot, to throw in animal and vegetable mixture: alligators, mosquitos, panthers, etc. Florida is good for sportsman, like Louisiana - Sportsman’s Paradise - a proverbial swamp. Fishing and hunting. One needs to calculate the actual area of Florida that is desirable as RE - A two mile wide strip of land that borders the east, south, and west of the state.
On another note, did anyone catch this letter to the editor on the left sidebar at Inman News?
“LETTERS TO THE EDITOR
What’s the eventual impact of relaxed borrowing standards?
Re: ‘Home prices threaten Fed balancing act’ (June 30)
Dear Editor:
I would love another article by this writer, expounding on the ideas in the second-to-last paragraph. It’s what I’ve been warning about ever since 95 percent and 100 percent financing became the norm for new-home buyers in our area, and mortgage brokers magically started getting so many borrowers qualified for properties they clearly can’t afford. “No problem! In six months you can refinance and take cash out to pay your mortgage (and credit cards, fancy cars, vacations, etc.). Or so they’re told.
My work volume is down 80 percent from what it was two years ago. I’ve done preliminary research on properties before starting an appraisal that tells me there’s no way there’s enough support for the value these lenders are looking for to make their deals. They tell me their borrower is in trouble and needs to pull out cash, or they’re going to lose the house. Two calls in as many weeks are from lenders trying to refinance properties that were purchased within the last year — and I can’t even find data to support the value at what they paid for it, let alone enough to take cash out.
In the last six months, at least two-thirds of the requests I’ve received can’t be processed due to lack of sufficient equity. And the percentage of loans made that are “hard-money” is nearly double what it was last year, according to my clients.
What will the impact be on the economy when lenders are forced into short sales? What will the impact be to the economy when the new housing market dries up? (I agree that the oversupply of new houses is putting a significant pinch on re-sales). What about employment in the construction and building materials industries when that happens? And, when lenders quit making the 95 percent and 100 percent loans, how many first-time buyers will that knock out of the market?
A lot of fundamental things need to change before the housing market can rebound with any kind of strength, in my opinion.
Michael A. Powell
Powell & Associates
Stockton, Calif.”
I’ve heard the phrase “hard money” used to describe a loan a couple times here. What exactly is a “hard money loan”? I’ve Google’d it, but can’t immediately find a clear definition–is there a well-defined meaning?
The borrower can’t “qualify” for a loan, therefore, the property must “qualify”, i.e. sufficient equity must exist in the property to protect the loan from loss in the event of a default and foreclosure. Secondarily, the borrower may own other assets that can be attached after a default, foreclosure and deficiency judgement. Hard money loans may be double the market rate for traditional financing.
“Hard money” or “private mortgages” usually don’t require any type of income documentation or credit checks. A hard money lender only requires sufficient equity (at least 35%). Sometimes a hard money lender is an individual or a corporation (Yale Mortgage out of Miami comes to mind). The rates are high, and points charged by broker and or lender can be pretty exhorbinant. These loans are serviced quite aggessively, meaning if you get behind on a hard money loan, you will be out of your home a lot quicker than you would by going to a traditional lender. The typical recipient of a hard money loan is someone looking at a foreclosure that can’t even qualify for a subprime loan but has a lot of equity in their home. The loans are usually designed to be repaid within 3-5 years (i.e. - 3 to 5 year balloons). Basically, you have to be really desperate and destitute to get a hard money loan. You would probably be better off selling the home, taking your equity before getting a hard money loan.
That’s a great letter! The cutoff of the housing ATM is going to hurt the economy pretty bad (in my opinion). I have not seen the major media discuss the implications of what happens when the RE and contstruction jobs dry up when the market tanks. I also anticipate hard times for retail businesses who have boomed as consumers spend their “house ATM” money.
That letter is such a great indicator of where this whole mess is heading.
Hard money loans tend to be short term ,(1-5 year ),bail out loans that are funded by private investors . The lender/investor looks at the equity in the property only ,so the loan to value ratios are low like 70% or under and the interest rates are much higher . The borrower can’t qualify for a regular loan . The hard money lender is actually prepared for the property to go into foreclosure and they feel they can make a profit if it does.
Also one would think that a borrower would sell their property before resorting to a hard money loan,(if they had that much equity ) ,but people sometimes don’t want to sell and feel that if they just had a little more time they could solve their problems . The problem might be a job loss where they have gotten behind on all the credit cards etc.
So rare, gotta share. News from the home front:
http://www.tulsaworld.com/BusinessStory.asp?ID=060705_Bu_B8_Forec5
No bubble in the midwest, we’ve got foreclosures and bankrupcies out the wazoo, but no bubble here. Credit here, credit there, sleazy credit everywhere. I always wondered how so many people lived so high off the hog. Now I know. No bubble here, move along.
“From what I’ve seen, the foreclosures are going up,” he said. “And I’ve heard through the pipeline there’s a lot more that are starting the foreclosure process.”
_________________________________________
Head for higher ground - someone yelled FLOOD!!!!!!!!!!!!!!!!!!!!!
Local real estate brokers who resell foreclosed houses, such as Mike Haley, president of Patterson Realtors, said more and more houses are becoming available thanks to defaulted loans.
“From what I’ve seen, the foreclosures are going up,” he said. “And I’ve heard through the pipeline there’s a lot more that are starting the foreclosure process.”
So it’s getting worse
“Haley also said the quality of foreclosed homes has been increasing overall. Still, he said bargain-hunters looking to capitalize on foreclosed homes shouldn’t get their hopes up. Sales prices tend to be somewhat below average market prices, but they typically aren’t distressed.”
Not yet and I would get my hopes up I’ll be buying one until they are distressed there Mikey
“They’re a good opportunity, but they’re not a great opportunity,” he said.
But if more are coming the market that means price will drop right Mikey ? Lower price = great oppertunity, Right Mikey ? you did take math in school right ?
“While foreclosures have risen, Sharga said the number is not at an usually high level.We’re coming off historically low foreclosure rates,” he said. “Even though Tulsa is higher than average for the country, it’s relatively low, historically.”
But the rest of the artice makes it clear that historically never have so many people borrowed so much under such onerous loan condtions.
Hmm, more people who doen’t see the writing on the wall despite it being in glaring neon.
Trustee’s Sale Notices for Maricopa County (Phoenix metro area)
Jan 05 1297
Feb 05 940
Mar 05 1040
Apr 05 766
May 05 759
Jun 05 767
Jul 05 748
Aug 05 795
Sep 05 669
Oct 05 728
Nov 05 704
Dec 05 749
Jan 06 726
Feb 06 687
Mar 06 790
Apr 06 638
May 06 764
Jun 06 797
If a market price is set by a widely marketing (internet auction), and finding a willing buyer with a market-clearing price, then you have found the market value for that condo, congratulations. It’s just under $900.
Do you want to stop payments on your mortgage and declare BK today or maybe tomorrow?
Remember that the timeshare is sold in one-week increments, and the builder/developer typically sells 50 weeks per year, holding back one or two weeks to allow time for maintenance. So the market-clearing price is $900 X 50, or $45,000.
Also, the maintenance fees are paid weekly, so if the fee for a week is $850, the equivalent monthly fee is $850 X 50 / 12, or just over $3,500. Keep in mind this is for a fully furnished condo with maid service and all amenities taken care of, but still … nice racket.
The market price with the internet auction didn’t attract any greater fools or other suckers to pony up the big money to give them the price that they need to pay off all of their stupid debt and still make a ‘profit’ for owning the albatross for a short period of time.
Tom, where did you get that ‘experience’ for eating, drinking, and having fun at some idiot timeshare’s experience. Picturing your ‘objections’ made me laugh so hard where that worm had to be dancing on fire.. Where was it at and how do some of us get to benefit for a free weekend getaway? LOL
I was on condoflip.com the other day and saw some of the inventory these guys are pushing. Has anyone seen taken a look at the asking prices for some of these Miami condo projects?
It’s hard to find a place for less than $500k and these are units offerred by the developers, I think. It’s funny because it’ll say units range in size from 700-1400 sq ft. Who’s paying $500k for 700 sq. ft. of living space?
More money than brains…
My mistake. It’s $750,000 for 847 sq. ft.
Developer: Setai Group, LLC
Architect: Alayo & Denniston International
Builder: Skanska USA
Year Built: 2004
Number of Units: 163
Number of Units Listed For Sale: 46
Unit Sizes: From 847 to 5800 s.f.
Sales Data as of 7/5/2006
Lowest Available Price: $750,000
Highest Available Price: $29,000,000
I was at the Setai over the weekend (South Beach- Miami) and while it was a holiday weekend, the Setai (large tower portion) was very dark…Sobe is a late town so it would not be unusual for people to be getting ready past sunset so you could see the lights. The big empty bldgs remind me of the re situation in Blade Runner. This is a very nice property in a good location, but why buy now? Also, the $29,000,000 unit is the top penthouse and is purportedly 3 stories with a rooftop pool and a lot of other amenities. It’s very private - so it should sell…
there is a big showdown in south florida. sellers dont want to bring the price down, buyers are not buying. the breaking point has arrived this year. there are so many properties for sell, it is crazy. ben jones, buy the palm beach post on saturday and just say, WHAT THE??? housing everywhere and no buyers. and now they want to build at yahoo junction and belle glade. PURE SWAMP AND WILDERNESS!!!
Correction: Yeehaw Junction not Yahoo junction my good friend. Drivng north on the Fl Turnpike, from Yeehaw Junction, 40-50 miles will pass before you reach the first exit. Many times, late at night of course, I have parked my car in the fast lane and ‘take’n relief.’ No cars, just you and the alligators.
I’ve been back here in Ft. Lauderdale for the last 2 wks, and have more stories from the housing bubble:
1) A good friend of my GF is a mortgage broker, as is her husband. Her husband told me over the weekend that he just closed on a condo in Aventura (n miami). This unit is in addition to the house in Boca Raton that they bought June, 2005 and the townhouse in Ft. Lauderdale that he already owns. So while his income is heavily levered to the housing cycle, he’s tripled up his bet. I’m very concerned about them, but nobody likes someone forecasting gloom and doom, so all I can do is keep my mouth shut. Oh, and while he admits the condo market is slow, he’s going to find a renter for the new unit and wait for it to appreciate.
2) At the specialty running shop in Boca where I buy my shoes, the store manager told me that he just bought a condo in January. He’s put in granite countertops, stainless steel appliances, crown moldings (insert generic yuppie upgrades) and is hoping to flip it next year. This is from someone who, while a fantastic runner and shoe salesman, has no experience in real estate.
3) An acquaintence is a stock broker at a bucket shop down here. He was renting for ~$2k/mo in a fancy new apartment building and bought his unit for $500K last spring. Then, last summer, he decided to sign up for a $1.2m townhouse nearby and got on a payment plan for his deposit. Now, he’s trying to sell his condo(apartment), and his agent told him that there are 45 out of 300 units in the same building for sale, and that he has no chance of moving his unit w/o taking a loss. So now he can’t figure out if he should walk from the $240k in deposit money on the townhouse or “try and find a renter” on the condo. Genius.
4) I went for a run through Victoria Park yesterday. About 10% of the houses/condos/townhouses are for sale. Several of the “garden apt” buildings (think melrose place) have been condo converted, and are sitting completely empty, with big signs advertising open houses and empty parking lots.
5) At lunch w/ old colleagues, most of them agree that RE is going down, but there is a difference in opinion as to by how much. One is predicting another S&L crisis and general mahem, but he’s always been a pessimist.
Was in Victoria park yesterday myself and was aghast at the amount of for sale signs in there. UNBELIEVABLE!!!!
A pessimist vs. a realist can be hard to tell apart at times….
What do you call a pessimist?
Wait for it……
Wait….
An optimist with experience!
Not everyone likes that joke but I do.
Some people who post here predict 30% price declines and an impending recession. We call THEM optimists.
“A good friend of my GF is a mortgage broker”
Boy, be careful with those acronyms around here. Is she your girlfriend or your greater fool?
Amazing factual info. When shoe salespersons are flipping condos… well it tells you where the market will go (is the guy named Al Bundy by any chances?). Remind me of stories of shoe shinners giving stock tips before the 1929 crash. Is there a correlation between the shoe industry and financial manias? In addition to walk with them (feet), people appear to be thinking with them.
what we need is % of j6p sentiment
market watchers don’t tell the tale
0T
Looks like Prices in England are now dropping……
U.K. House Prices Fell the Most Since 2004 in June, HBOS Says
http://www.bloomberg.com/apps/news?pid=20601087&sid=a5PlkYUWTPtE&refer=
Making payment on a down payment? $240K DP, what happened to the 100% financing and all the thinking that this is Monopoly money? Times a changin’, and some folks will be belly up real soon.
latest (7/1) Housing numbers from the housing tracker for Miami
http://www.benengebreth.org/housingtracker/location/Florida/Miami/
Trend 07/01 1 month 3 month 6 month 9 month
Median Price $389,000 -0.7% -2.5% -2.7% -6.3%
Inventory 35,805 +5.6% +18.5% +76.5% +139.5%
So it looks like the price dropped from $425,000 to $389,000 and the invemtory has gone from some 12000 to over 35000 in less than a year. Looks like about a 3 year supply of product.
I have zero sympathy for the flippers and specuvestors. Prices are still 20%-30% overvalued IMHO.
I am looking for land in rural central FL for a weekend hunt camp. Found a number of lots for $2500-3000 for 1/2-1 acres when out driving around. BUT when I looked online, I found a neighboring 80×100 foot lot (the next sand road over) for DING DING, $25,000!!!! 5% discount if paying in cash. Must be a lot of suckers in the world. I bet the appriased value of that land is $1500 an acre.