‘Markets Have Come To A Standstill’
A pair of reports from Florida. “In March, Russell Patterson bought a one-bedroom unit in the apartment-to-condominium conversion complex Oxford Place at Tampa Palms. Now, the developer has decided to turn the units it hasn’t sold, about 180, back into apartments.”
“The rents on those units are less than the $995 a month Patterson needs to charge to pay his mortgage and homeowner’s association fees. Even more frustrating, he said, his contract forbids him to sell his unit before the developer sells all of its own. ‘I’m stuck, and this complex is not what I was sold,’ Patterson said.”
“Nearly every converted apartment property has empty units, and some developers are changing course and renting units instead to keep from losing money or being forced into foreclosure. Some are taking drastic measures to compete with other condo sellers, a move that leaves people who purchased an apartment feeling trapped and fearing their property values will go down.”
“‘I’m not crazy about this. We’d rather have owners’ in the complex, said Matt Carter, who bought a two-bedroom converted condo in New Tampa. ‘At the same time, though, owners are renting out, too, so I guess this is going to happen one way or another.’”
“There is a glut of converted apartments, (developer) Tony Martin said, because too many developers jumped in on the condo craze. ‘It’s a tough business today,’ he said. ‘I don’t think anybody predicted this.’”
“The conversions led to a reduction of 18,000 rental units in 2005. The result is predictable. Apartment rents have soared. Because many of these investors will be renting out their units, Bernard Markstein said, the inventory will swell again, and competition will force rental rates down. ‘Real estate is cyclical,’ Markstein said. ‘This is the way it works.’”
From the News Press. “Bonita Springs-based builder WCI Communities has slashed an undisclosed number of jobs as the residential real estate market continues a rapid cool-down in Florida and across the nation.”
“Asked about the geography of the layoffs, spokesman Steve Zenker said they had occurred to some degree in WCI’s primary markets of Florida and the Northeast and mid-Atlantic states.”
“The job cuts came as no surprise to people following the real estate and construction markets. They said builders couldn’t scale back production as quickly as investors in new, multifamily developments got cold feet. ‘In Florida, we have the potential for seeing a downturn that could rival that of the ’70s,’ said Jack McCabe.”
“Florida isn’t alone in its vulnerability. ‘It’s soft everywhere,’ said Ed Bonkowski, a Fort Myers-based commercial real estate broker. ‘I was just in northern Virginia and in Cleveland,’ he said. ‘Both of those (residential real estate) markets have come to a standstill.’”
“Sluggish home sales in northern states have a trickle-down effect in Southwest Florida, Bonkowski said. Many baby boomers want to retire here, but some of them need cash from selling their northern homes to realize their dream. These days, ‘cash is king,’ Bonkowski said. ‘For those who have cash, there are going to be some good buys.’”
‘I don’t think anybody predicted this.’
Jack McCabe predicted this over a year ago, as readers here know.
‘I don’t think anybody predicted this.’
You had me at “think.” No need to finish the sentence.
We Rent!
Because many of us (here on the blogs) work at home we have the luxury of being able to research, analyze and pursue interests that many others do not enjoy. I try to keep that in perspective? But when some developer claims “no one could see this coming” but has an IRONCLAD clause in place you can’t help but think those poor specuvestors are getting little more than lip service! With constraints like that already in place it’s pretty obvious the developers had to have some doubts going in and protected “their” interests. Why didn’t Mr. Specuvestor?
No, I’m thinking most people know how to surf the internet. I only know one person w/o internet at home, and he is an IT guy who “gets enough of it at work.” I’m sure he knows how to look this stuff up.
Even then I am “allowed” to play in the internet at work, assuming my work is done or I’m on a break. I doubt I am different from most people.
Karen,
I agree completely! I was bending over backwards to accomodate Mr. Martin! Even with all of my contorting there is no way this guy shouldn’t have known. Considering they have clauses to protect themselves it would appear that someone in at least the legal dept. “predicted” this!
LOL. I think what Mr. Tony Martin meant to say is:
“It’s a tough business today. And with my head stuck so far up my greatest-fool rear end for so long, I simply was not capable of listening to or understanding the people who predicted this. I make my financial decisions based on happy talk and empty promises of mathematically impossible phantom-wealth-generating ponzi schemes.”
Anecdotally, I just bought a Lexus. I told the sales guy I will get a cashier’s check and he said, “We have great financing, blah, blah”. After saying no 5 times, I went outside and he effectively asked my wife if there was something wrong with me, why would I pay cash. She said it appeared that he’s never made a cash sale before.
Really? When we bought our car (paid cash, new car) it was easy.
They didn’t even bother trying to sell us the extra crap (extended warnety etc).
They even just took our reg check, tho I did offer a chashiers check.
Crazy idea, huh, paying cash for a big ticket item. Like you, I paid cash for my last car and will do the same in another 5 years or so for the next one. Makes the most sense to me…..especially if you have the money, and you now don’t have to pay finance charges.
A no-brainer. Congratulations Shawn.
BayQT~
0% is a good time not to pay cash of course. When I bought my last motorcyle I put it all on a 0% card even though I could have paid cash. I paid it off in 6 months plus I got two free airline tickets. I don’t have a credit limit large enough for a Lexus though
Car dealers make money on the financing. They get the money from the bank at x% and lend it to you at y%.
I hate to disagree on a side point, but in most cases buying a “new” car cash doesn’t make a lot of sense. Anything that depreciates that quickly obviously can’t be considered an investment. Secondly YOU are taking on all of the liability (not the insurance company). I realize in this “era of free money” it’s easy to get disgusted and throw your hands in the air and say the hell with it, I’ll pay cash! But there is opportunity cost (as always) so I prefer to draw 9 percent + and let the lender take the risk. Then again that’s just me.
I disagree in paying cash for a depreciating asset, especialy a $35,000 Lexus.
Even if you pay 5% you can still earn 5% on your money in the bank, washing out the interest. Plus, you maintain control over your money and it is not stuck in the car.
You can also in most cases at your bank borrow against the money at very favorable rates, using the money as collateral. Strictly my opinion of course, but I can see much better use of the money than paying cash for a car that loses 15-20% of its value as soon as you drive it off the lot.
Cars are a no win situation no matter how you cut it. You just have to find a way where you get f@cked the least. I currently lease a 2006 Lexus ES 330 for $400/month. I turned in my old car, which was only worth about $800 (drove it into the ground). A friend of mine is an auto broker and he got me the deal. All I do is change the oil and make sure it has decent tires when I turn it in. I don’t even have to pay a fee to turn it back over to the dealership because my FICO was over 700 . I only drive about 700 miles a month so leasing works great at this point in time. It is a case by case scenario for each of us and we have to do what works best given our individual situation. Cars are a necessary evil for almost all of us.
It loses value whether your pay cash or finance, so I don’t see the point of this argument.
Pretty easy to decide which to use (cash or financing). Run an NPV calculation of both senarios and use the most favorable
The point is who’s $6,000 in immediate loss in value do you want it to be? Yours or the finance company, especially with the current 0% deals.
If you finance it, you still have the $35,000 in the bank earning interest and available for you to invest, etc.
Considering a 5 year old 2001 es300 that sold for $32,000 is now worth about $14000, I would rather take that $32,000 and invest it and use the banks money than lose 56% on the actual cash.
Or just don’t buy new cars. Buy the ones that are coming off lease or used sales. Let someone else take the hit from the rapid depreciation in the first year or two.
Thank you Betamax for that small dose of sanity.
Can someone getting 0% financing get the same price on the car as someone paying cash?
I think a clarification is needed here. Shawn didn’t say he/she bought a new car….Karen *did* say she bought a new car. The car *I* bought 3 years ago was a used car….didn’t make sense to me to finance an already 5 yr old car which would probably have issues before I paid it off.
Buying a car is a crap shoot. Personally, I just don’t like bills. If I don’t have to have a car note, then it’s a better deal for me.
BayQT~
I planned to pay cash for my last car, but the dealer offered me an even better deal if I agreed to finance it through the manufacturer’s credit arm. I asked if there was a pre-payment penalty on the loan and there was not. So I financed it, got the lower price, and then immediately paid the loan in full a couple of days later.
“I disagree in paying cash for a depreciating asset…”
You ignore the mental satisfaction of owning it outright. Not the bank.
I don’t understand why someone would prefer to pay with financing rather than cash. Cash makes the most sense if the rate of return on what that cash could earn is less than the interest rate you will have to pay, which is almost always the case. What are your options for a riskless rate of return? Put it in a money market account, now earning about 5-6% interest. On the other hand, financing will certainly cost you more than that.
Can someone getting 0% financing get the same price on the car as someone paying cash?
Yes, you can.
You go in and get the dumbest loan you can and work down the price of the car as far as possible. They will do this because they think they are screwing you on the financing.
Then you come in the next day and pay cash (or use 0% financing from a credit card offer). They will do this because law (CA only?) gives you 72 hours to back out of the loan.
But I dunno. I bought my last car “used” with 5000 miles on it only 8 months old. I paid 25% below new, and in three years it has lost less than $3K in value.
People are stupid and Jesus wants you to take their money.
You need to learn how to buy new cars. First off, you leave a trade in off the table, PERIOD. That is the LAST thing you bring up after a price is given to you. You always say you are going to do financing. Then at the end, you say you would rather pay cash, and then you bring up the trade in.
You now know how much the dealer is willing to give you the car for. If you don’t do it like the above, you will get screwed, they will skim on financing and trade in.
Personally, I just would never buy a new car, and much less from a dealer.
Just get a reliable car coming off lease like a Lexus, Toyota, and Honda and drive it into the ground.
Don’t forget that if everyone was required to pay cash for cars we would all be driving Kia Rios.
Financing is a great way for the manufacturers and dealers to sell you way more car than you need or want.
Paying cash eliminates this hazard by showing the ‘real’ cost of the vehicle instead of the monthly outflow.
Of course a friend of mine tells the story of his father going into a dealer and paying cash. He negotiated the price, and when the dealer started talking financing he pulled out his wallet and started counting out $100 bills. This was probably ~40 years ago, and ISTR that there was no FBI rule mandading the reporting of large cash transactions back then.
Exactly!! That’s why I financed (80%) our car in 2003 with a 4% loan from our credit union and left the rest invested. I’ve received roughly 11% annual return since then. Like some folks have said here: do the math.
By the way, finance cost is not the only determining factor when deciding whether to finance or pay cash. You also need to consider opportunity cost and liquidity. I mean, if you take every last dime you have in order to pay cash for a car and avoid financing, is that really smart?
If you have good credit and can get a good interest rate and interest rates, in general, are low, then there’s a good chance that financing is a sensible choice.
“I mean, if you take every last dime you have in order to pay cash for a car and avoid financing, is that really smart?”
It may not be the person’s “last dime” as you state. And as someone else said, if you can get the same price as someone getting 0% financing, the good credit, yada, yada….what is REALLY the point in doing this dance? Why have a bill and have to come back and pay a loan off? I think it would be best to agree to disagree on this subject since there seem to be so many options that work for a variety of people’s situations. For me, I have a “thing” about bills and I’m not trying to add any to my small pile, thank you.
Someone won’t like what I just said…but I’m ok with that.
BayQT~
I’m going to second sm_landlord. Lease returns can be a great way to go if you feel you must pay cash.
My wife’s car (540i wagon, all options-1) would have been $65K out the door new (if purchased instead of leased). Instead we bought it as a lease return, for $25k cash, and have kept it in like-new condition since. When we finally dispose of it (planned for @ 200-220K miles), we’ll probably recoupe ~$10k and the owenrship cost per mile will have been quite reasonable. Was the $40k saved worth giving up the pride of new car owenrship? heck yes.
Or used. I bought a Lexus SC300 2 years ago, asking price from a private party for $7,500. Agreed with seller to buy at $7000 after splitting cost of repairing any defects revealed by my mechanic (cost me less than $100 for him to check.)
No major problems since, still worth $7,000, and still a sweet ride,
Universal CYA escape clause
From financial community:
“No one ever predicted that…”
From legal community:
“I am so surprised that…”
‘I don’t think anybody predicted this.’
Predictions are the wrong tool for this application… Maybe they should have applied some some math, addition and subtraction.
Even with news of this around the nation, I’ve been reading about apartment conversions still in the planning stages in Phoenix, or at least in Ahwatukee, where I share an apartment. My sister’s boyfriend’s apartment on Desert Foothills road was going to convert, but decided against it months ago. But there are some that are going on. Rumors are that my own apartment complex will convert. The situation is: if there is no attached garage, it ain’t worth calling a condominium. It’s still an apartment, which the buyer is stuck with, especially in the peak of the market and for many years. It would probably take more than 15 years for a buyer to break even on those losing propositions. And the neighborhood could go downhill in the meantime. I’d rather have my rent increase by $300 per month than be a mortgage slave to an apartment I cannot move out of. A one year lease is better than a 15 year sentence on a slave mortgage, especially when you know eventually you will move to a different place in a few years. My sister saved a colleague from buying in Phoenix by giving him a link to this blog. For people seriously considering buying a slave apartment unit. DON’T. YOUR FREEDOM IS AT STAKE.
I guess they haven’t run out of greater fools yet in Phoenix?
I see condo conversions all over town (Phoenix, Tempe). They seem to have popped up everywhere. Even places that look old and run down. Who on earth would buy one?
Here in Orlando it was the purchase of last resort. Iy you wanted a house under $150,000 then it was a converted apt/condo. Basically in appraisal terms an aprtment was worth the cash flow it could generate. A long held way of valuing was capitalize the income stream into a present value per unit.
The the housing sucker punch and that same unit was worth $135,000 instead of $60,000. NOT! But the condo guys paid off the apartment guys and the world was awash in converted condos.
Now with out the funny money and the frenzy that same unit that sold for $60,000 and was bing marketed for $150,000 is free falling to the lesser number which is based upon utility and not BS ponzi schemes.
I am an appraiser and met with a condo apartment flipper recently and he stated he can hang on for 6 months at most. Then, the apartment guys get to come in and take over again.
Good riddance to the flippers. Sadly, the folks that purchased will be hard pressed to find any financing as lenders do not like mixed project for the obvious reasons. Lack of pride in homeownership is the largest as well as the inability to get agreements between homeowners associations and landlords in the same project.
It is gonna be a nightmare.
“…if there is no attached garage, it ain’t worth calling a condominium. It’s still an apartment,…”
Good point, in perception if not by legal definition. In most places, these units will have to compete with real condos that have real garages or at least covered parking for all. I’ve seen some entry-level condos here in central Florida that do not have covered parking, but they all are very old. One, in downtown (crowded) Winter Park, has some units that have no deeded parking at all — they must be close to impossible to re-sell.
I am not very familiar with apartment/condo complexes in the Phoenix area. But one that I drive by when dropping a family member at work a few days a week kind of amuses me. It is in Glendale, basically a so-so looking garden apartment complex right next to a hospital. While I suspect that the ambulance sirens would get tiresome, the kicker is the hospital heli-pad about 100 yards from the complex.
I also like how they placed a metal “condominums” sign right over where it said “apartments” at the entrance. I guess that if they change their minds, they can quickly revert with just a a screwdriver.
A complex that converted a few months ago near me must be depending on the “fool” part of “greater fool”. They have a big sign out front that says “Interest List Now Forming!”. How many people, really, will see that, think they’re talking about a waiting list (which has been a big scam for the HBs the last few years) and rush in and snap up a unit?
Next-door neighbor bailed out earlier this year to Glendale. She could have paid cash for a house there, and I tracked the MLS. (Realtor.com) for several months.
Seems she got what she wanted - over an acre with a pool for under $250k. When I look at listings now. it seems that they are all newer, and they have much higher prices. Old good-quality inventory seems to have moved quickly!
‘I’m stuck, and this complex is not what I was sold,’ Patterson said.”
Boo hoo.
My neighbors have all received $100/mo increases in their rent due to people like this - thankfully these dot-condos are coming back on the market as rentals and will provide downward pressure on local rental prices. My neighbor who confronted the landlord was simply told “where else will you move around here, we’re the only game in town”.
Not sure I want to live in a dot-condo complex; as this thing unwinds I expect there will be an increase of arson.
How about we coin a new term for these idiots who got sucked into moronic real estate investments and are now complaining their buys aren’t working out: “Specu-whiner.” I kind of like the sound of that.
Renter-Specuvestor-Wanna-Be, Got-To-Be, Hates-To Be, now Lowest-End-Big-Time-FB!
“I don’t think anybody predicted this”
Uh, you’re kidding right? Mr. Martin, are you from this planet or just visiting? Had you been a “Ben regular” you would have known! (Personally I just see this as a way for another greedy developer to absolve him/herself from all responsibility). They knew. How could they not? I wish I could give credit where it’s due but will the proud (and wise) individual that coined the phrase “repartments” step forward and claim your prize! This has to be the very definition of “repartment”. Btw, if NO ONE could see this coming how is it that you have a clause already in place to preclude sales by individual owners until you have completely bailed? Another good case for being on the sidelines. IMO.
I might have been the one who coined the term “repartment”, but it’s such an easy reach that many could have coined it simoultaneously. Don’t remember if I coined it, or endorsed someone else’s coining of it. It’s still a fun, apt description of the lowest form of homeownership, with the possible exception of a bad trailer park.
What I DO remember is that it was used in an article in the WSJ just days later.
Lurkers?
“There is a glut of converted apartments, (developer) Tony Martin said, because too many developers jumped in on the condo craze. ‘It’s a tough business today,’ he said. ‘I don’t think anybody predicted this.’
Yes, of course, we have been predicting this on Ben’s blog since the inception. But, even a half brained dimwit who took the time to sit down for 5 minutes and think this through would have reached the same conclusion. Let’s make this simple.
Take all apartments, kick out good tenants, convert everything to condos. Flippers come in, pay high prices, developers build more, flippers turn flopper, good tenants don’t want to buy at triple rental costs, developers don’t want empty ‘condos’, turn back to apartments and re-rent to original people living there. Flippers screwed, now more rentals and condos than greater fool flippers and real renters. What a moron that dude is with that statement is - as already noted.
I have 3 condo conversions on my street (Village Blvd. WPB, FL). The 1 bedrooms start at about $165K for 2ofthe complexes, not sure on the third one. Doesn’t sound bad, but you need to remember the rent was only about $800 per month, which probably puts the true value around $96K using the 10 x yearly rental rate formula. That is only a 42% premium!!!! Rents in my area have gone up quite a bit due to the conversions taking viable rental units. However, now these rental complexes have jacked the rents up too far and people are leaving and the vacancy rate is increasing. My neighbor just got evicted last week. I agree with B. Markstein in the above article, rental properties will again swell as coversions fail and speculators try to rent their properties. Our rental rates have peaked and will start to grind lower, just like home prices.
In Nevada they have overbuilt. I see how it can “look” like a tight rental market as people try to sell their investment. Be it a home or apartment. But at some point the smoke is going to clear
“There is nothing more attractive right now than Nevada.”
LV will run out of land.
I’m sorry that still cracks me up.
The Tampa article is hilarious–I think the reporter must read this blog, because the only thing missing is a sarcastic reference to granite countertops. The article’s accompanying photos reveal that one conversion near me has resorted to sign spinners (”$1 moves you in!”) and a gigantic plastic inflatable Superman, in addition to naming itself “Melrose Court,” making me believe that anyone stupid enough to buy there is doing so under the delusion that Heather Locklear, Grant Show, and Laura Leighton are hanging around the swimming pool.
The article also quotes an officer of one Miami-based conversion company, one Eli Reisel, stating that Tampa is the last good place for a conversion, because “it’s the only big city in Florida that hasn’t had it’s prices inflated … we don’t focus on end users because we have investors from England, Russia, etc.” So that’s why my rent went up–the globe is being scoured for greater fools who don’t live here and never will. Especially in Tampa Palms, buying one of these cookie-cutter units as an investment is about as smart as me buying a pre-construction condo in Siberia.
Tampa FL - Here are some fun stats for what is happening in this area of the country. As of last weekend there were over 45,000 total listings in the MLS for the greater metro area. Lets see how the market health is:
Single Family Homes, May 30, 2006
Market Count: 24,845
Median Price: $280,900.00
Average Price: $398,179.00
Single Family Homes, July 8, 2006
Market Count: 26,891
Median Price: $279,000.00
Average Price: $388,776.00
So that works out to be an 8% gain in inventory in the past 5 weeks, while the median price has dropped about 1.5% in those same 5 weeks, average asking price is doen 2% in that same period. The fastest growing inventory seems to be around the $1M price point, showing a 26% gain in inventory in the past 5 weeks.
But this story was about condos, so lets look at them:
Condos, May 30, 2006
Market Count: 10,684
Median Price: $269,000.00
Average Price: $398,086.00
Condos, July 8, 2006
Market Count: 11,281
Median Price: $261,670.00
Average Price: $385,626.00
So the median price of a condo in the Tampa area is now down 3% in just the last 5 weeks. The average asking price is down 3% as well. While the inventory for condos is not growing as fast as it is for SFH in Tampa, they are cutting prices on condos more aggressively. Even so there is a surprising 333 condos on the market with an asking price between $900K and $1M. I guess they really are planing for an invasion of rich Europeans to come in and save the day? The price point that is adding inventory the fastest is around $600K, with $1M a close second.
This for an area that had a median single family home price of $96,748.10 as of the 2000 census with a median household income of $39,461.00. For those of you curious, that is a 188% run up in the median price of a single family home.
“in addition to naming itself “Melrose Court,””
Hey, if Marcia Cross and Daphne Zuniga lived there, I’d buy. Don’t know if my wife would go for it, though.
“There is a glut of converted apartments, (developer) Tony Martin said, because too many developers jumped in on the condo craze. ‘It’s a tough business today,’ he said. ‘I don’t think anybody predicted this.’”
I think I predicted this, about eighteen times already. But I will repeat myself, just for fun:
THERE IS A HOUSING GLUT IN THE USA.
RENTS AND OWNER-OCCUPIED HOUSING PRICES WILL FALL AS A RESULT.
“The job cuts came as no surprise to people following the real estate and construction markets. They said builders couldn’t scale back production as quickly as investors in new, multifamily developments got cold feet. ‘In Florida, we have the potential for seeing a downturn that could rival that of the ’70s,’ said Jack McCabe.”
Too bad the situation is similar in many other places, especially in California.
I think the potential for downturn could rival the 1926 downturn in Florida ,never mind the 70’s.
Ya got that right! And just remember what will be right around the corner circa 1929!
That’s hillarious seeing as the last Florida hurricane full cycle lasted from 1926 to 1970. Coincidence? Not.
BZH and LEN - 52 week lows today. I hope our TXChk57 doesn’t own these.
She does, appropriately hedged. Still not worried.
Greatest lesson I ever learned from a Wall Street Bond Broker with 25 years on the street “The Trend is Your Friend”.. I would also ad bad news always seems to follow with worse news. Look at the charts of S&P Housing, LEN,KBH,PHM over last 2 years. If a picture is worth a thousand words, you might want to rethink your belief in a housing turn a round. These charts might show a time to get long in housing, but it sure doesn’t look like today is the day
Any thoughts on JOE? I sold my HB puts last month, but I have bought smaller positions recently that have been doing well (WCI, TOL, BZH, CTX, and PHM), but I keep getting stopped out of JOE. I would have been better off, by the way, if I had sold my puts and just sat out, like I told myself I would.
The day WCI warned in June, I bought JOE puts at the open and JOE went down about 10% and the puts doubled. Since then, all the news has been bad, but JOE keeps rallying. I like to go long strength and short weakness, but JOE keeps tricking me into picking a top (not sure what the opposite expression is of catching a falling knife).
Here’s a link to a story in BusinessWeek about how retailers are noticing that consumers are pulling back. Retailers are expecting sales to be poor and are adjusting the size of the workforce accordingly. The article makes point that economy is good, so it’s strange that retail is weak. Obvious question is… is economy really in good shape?
This economic recovery has been unusual in that consumers didn’t pull back when businesses cut capital spending in 2001. Is it possible that consumers could cut back spending and the economy still grow?
http://tinyurl.com/k5q5y
Short answer.
No.
And no, capex will not pick up either in the absence of demand.
even msnbc village idiots don’t claim that cap ex will save us anymore
BTW, clever blog handle you use
Well, business spending is a bigger percentage of GDP now so a consumer slowdown might not be quite as painful. So GDP could go up but the median family might not reap the benefits.
The good news is that as the rich get richer the government will be better able to soothe the masses with social programs (because the rich pay most taxes).
I think we’ll see te middle class’ wages are declining while their standard of living goes UP thanks to progressive taxes on the increasingly wealthy and the productivity gains which are the result of job killing automation.
Businesses never willingly expand in the face of a retrenching consumer. Hell, they haven’t even wanted to expand these past few years because they knew the boom was borrowed; that’s why they’re sitting on so much cash. The capex & hiring boom that Richard Berner (of Morgan Stanley) keeps claiming is right around the corner simply isn’t going to happen.
What planet are you from? The “rich” may pay the most taxes on a per filer basis, but as a percentage of total income…not the case. All the tax breaks given the rich by legislators elected by poorer taxpayers surely has reduced fiscal distress by the rich few. In addition, the middle class has 20x as many people, so most of the tax burden are paid by the middle class.
Every year Oxford dictionary adds a few new words that make their way into popular usage in the English language (for example, “internet”):
Maybe in 2006 we can add:
“Reapartmentation”(v) – The act of taking apartment units that were recently converted into condo units and converting them back into apartment units.
“After failing to sell enough overpriced condo units in the converted apartment building, the speculator decided reapartmentation
I thought it was reapartmentalizationalism.
repartmentalizationalism - a capital intensive process by which delapidated apartments are flushed of tenants, upgraded, then re-listed as a rental.
dilapidated
condonts?
CONDUMBMENTS
Conpartment(n) : Con job of selling an apartment as condo. Came into usage following the last real estate crash starting 2005. Also see BensBlog.
‘It’s a tough business today,’ he said. ‘I don’t think anybody predicted this.’”
“The job cuts came as no surprise to people following the real estate and construction markets.
Which is it? If nobody predicted how tough business would be today, then everybody SHOULD be surprised by the job cuts.
And likewise, if job cuts came as no surprise to you, doesn’t that mean that you predicted this?
Which is it.
DOUBLESPEAK.
On the one hand they’re trying to make us feel ok “don’t worry, the experts predicted that we’d have some job cuts, but they’re done now and we’re at the soft landing”
on the other hand they’re trying to step away from culpability. “Hey, nobody could’ve predicted this!”
Sheesh.
clouseau
The Greater Fools are finally waking up!
clousea …I responded again to your San Diego post about your friend toward the bottom because I didn’t see it until today ,(if you care to look at it ).
Wiz;
read it… cool post.
Clouseau
Insp. Clouseau,
Precisely! The amount of “spin” in a few sentences these days is just incredible. It’s as if they’re anticipating a Senate Hearing and they’re already rehearsing.
What did he know, and WHEN did he know it!?
ben could do a whole blog just on FLA.
I’d personally like to see that.
“Now, the developer has decided to turn the units it hasn’t sold, about 180, back into apartments.”
“The rents on those units are less than the $995 a month Patterson needs to charge to pay his mortgage and homeowner’s association fees.”
__
Lower rents for everyone, not higher like some have said. Then again, Tampa is different.
I guess I should change my ID to rent2rent
Note to unhappy conversion owners: you bought an apartment.
And with interest-only payments, you will continue to rent it forever.
Just at a higher net cost.
BZH’s share price is definitely not at a standstill. It appears to be undergoing metamorphoses from a permanently low plateau into a waterfall.
http://tinyurl.com/q9jq9
BZH’s share price is definitely not at a standstill. It appears to be undergoing metamorphoses from a permanently low plateau into a waterfall.
http://tinyurl.com/q9jq9
Banker, Enron witness found dead in London park: BBC
___________________________________________
These guys are dropping like flies!
big RE guys are dropping like flies in the Amsterdam (NL) area lately. One of the reasons is that the traditional mob (drugs criminals etc.) is getting worried about getting their RE ‘investment’ money back.
any signs of this happening in the US yet?
It is the drug cartel that was laundering their money in Miami condos, so it’s all clean now….Wanna buy a condo?
This reminded me a bit of an Italian banker who was found hanged at a London bridge 20+ years ago. Name was Calvi, if I recall correctly.
OT: Just seen this on bloomberg.com A video inerview with a Housing Analyst (Rick Murry) for Raymond James of St. Petersburg Florida. I love the commentators remarks at the beginning of the five minute vid…”rarely does a sell side analyst recommend to avoid all stocks in a paticular industry”
The development where I live considered going condo. A few of their other developments did go condo and they expressed they are having a difficult time in selling the units and are considering going back to rentals. These are fairly “high end” rentals.
It amazes me that people are foolish enough to blindly make to largest purchase in their life. Multiply this fool’s story by 1000 and that’s what is transpiring in South florida alone. The local paper ran a story regarding the alarming rise in foreclosures do to resets.
I strongly believe that the TRUE picture of the bursting bubble is being covered up and misrepenseted by the real estate and mortgage industry. Their entire livelyhood is at stake and they will continue to slant,obfuscate, and misinform the public regarding the truth.
Presently in Palm beach county there are over 22,000 homes for sale and only 1200 homes sold last month, or a 18 month supply. The inventory has more than doubled in a year while the prices have dropped almost 10%. We are rapidly approaching peak hurricane season and all it will take is ONE major storm to transform this bubble from a slow leak to an outright burst.
Bigdaddy63,
You mean to tell us that there WASN’T a market for thousands upon thousands of condo conversions? Shocking!
When we look at the avg. American and their avg. lifestyle ther is NO WAY to make these numbers work. In FL or Oregon for that matter. They already offer timeshares for goodness sake!
… 22,000 homes for sale and only 1200 homes sold last month, or a 18 month supply
looking from the bright side: there will still be plenty of homes to choose from even after a devastating hurricane season
Apparently everyone east of U.S. 1 is screwed re insurance costs. It’s a pretty easy definition for the east coast — the west side is tougher. I supect that, from the Tampa area south, the line could be the Interstate.
The line is west of US19 in Tampa and northwards - 90% of homes west of US19 are in flood and/or wind zones and are screwed (per my contacts in insurance there) Of course, everyone has the sinkhole problem, which is actually greater longterm problem from what I’m told.
‘Real estate is cyclical,’ Markstein said. ‘This is the way it works.’
Someone alert the media…
But I thought we were working off a totally new economic model in Florida.
Duh, I know it’s cyclical.
Sometimes it goes up. Other times it goes up a LOT.
I can see that there might be some sort of a demand for turn key condos in Florida for the ’snowbirds” etc. ,but ,if the price goes to high the snowbirds will seek out trailer parks instead . Wasn’t Florida always a big place for trailer parks for retirement and snowbirds?
In fact, it seems to me that moveable homes might be just the ticket in Florida in Hurricane territory . Why don’t they build a bunch of parks where you just move the home whenever a hurricane is bearing down ? Am I nuts ?
Demand for condos by already-snowbirds began dropping off a couple of years ago, as prices rose. Many, probably, thought they’d wait for prices to drop back. Who knows? They might see that while they still have time to enjoy it a little. But I think the bigger issue is that they did not budget for the property taxes and now insurance costs they’d have to pay.
From what I see, in the past 2-3 years boomers and younger people have driven the market. And last year there seemed to be hardly a condo complex that was not infested with flippers. That’s where you get to the “drive by at night and see how many lights are on” part.
“hardly a condo complex” should be “hardly a brand-new condo complex.”
Thanks Chip ….So it was the speculation thing that drove the market up . Curious if the speculators were advised of the possible pending increases in Insurance rates when they bought ,say in 2005 ?
“Curious if the speculators were advised of the possible pending increases in Insurance rates when they bought ,say in 2005 ?”
I don’t think anyone knew. By the time the total cost of Katrina was becoming clear, sales were already drying up becvause of sticky pricing — in other words, I think that rather than a direct correlation, it was an unfortunate coincidence. Once talk of rising rates became pronounced, the market was already relatively dead. So to speak, the rising rates will tend to keep out, many of those buyers who already were out.
Why don’t they build a bunch of parks where you just move the home whenever a hurricane is bearing down ? Am I nuts ?
Yeah, you’re nuts! OK, maybe not “nuts”, but think this through: Have you seen the incredible queues of crawling traffic leaving places like Houston and New Orleans when a hurricane is bearing down on them? Each time they do it, they get better, but it’s a miserable, slow ride.
Now add in about 500,000 wide-load trailer homes on the road. Oh, wait, you can’t — you need the trucks to haul them. Doh! But if you did have the trucks, I shudder to imagine the gridlock that would ensue and the blinding wall of glass and sheet metal flying everywhere when the hurricane arrives with all those trailers stuck on the Florida turnpike! :-O
Those are called RVs, and Florida has plenty of them already…
Not to mention that hurricanes are a little bigger than tornados. Hurricane force winds can extend for 200~250 miles wide in big storms with banding covering 400~500 miles wide (the entire length of the state). Kind of hard to totally dodge something that big.
“There is a glut of converted apartments, (developer) Tony Martin said, because too many developers jumped in on the condo craze.”
I get the sense that Tony excludes himself from the “too many developers who jumped on the condo craze,” don’t you?
It was the other developers’ fault, right?
Yup.
It was that last guy there on the left. No, not him. That other guy.
Yeah, him.
Totally his fault.
Jerk.
I don’t undersand people who finance a car, even at 0%… you are SCREWED on the insurance which requires a $500 deductible. So add a hefty $100 a month at least to that payment. Mine has a 2k deductible… basically I will only make a claim if my truck is totalled. Big deal if they pay me 6k instead of 8k for the low probability it will happen. Besides that within 2 years the car has lost half of its value and the “replace as new” clause of a full coverage, if offered, is nullified.
Back to housing now… same applies. Funny how you could have paid cash for a house 5 years ago for the downpayment required for a 20% loan for one of those overpriced turds today. Remember if you have trouble finding insurance or if your insurance is cancelled… foreclosure galore! Florida will be hit so hard if another monster hurricane comes around.
The system is oprimized to milk you out of your money at every step, be it insurance required for items loaned from a bank, or the extra minute charge over your limit on your cell, or the fact cars are required everywhere (whereas I ride a 250cc motorcycle… 65 mpg, $20 insurance, car pool in cali and free parking everywhere… truck only used once a month). Being a contrarian garantees wealth…
TOL sneaking up on 2 yr lows and almost exactly 50% off 1 yr highs. Don’t worry about TXchik she knows how to trade and it is only trading. Maybe she sees a dividend play? P/Es look huge on paper. If they’d stop buying back their own stock I’d be ready to buy soon.
Tried to close some PUTs today but couldn’t QUITE get the price I wanted.
Hope I wasn’t being greedy.
I smell some real tired sweaty bulls. I can see trading the HBs but who in their right mind would want to own them? I’m not a trader but the urge to short is strong. LEN is looking at some legal trouble and TOL is about to write down a lot of raw land. Everybody is trying to unload their financial units. WCI is laying off an undisclosed number. WTF? They are a freakin’ public company. Who lets this go unchallenged? THen there’s Robert Toll saying he’s not exactly sure how high cancellations are running? Yeah, like he doesn’t have an RSS feed to the company database. Weird things too like Pardee Homes updating their website stressing their loong family history and removing any mention of Weyrhauser.
Ha, you mentioned two of my put positions (TOL/WCI) and the third (LEN) I am considering!
These companies are such obvious targets. Borrowing money while buying stock is insane.
Buying back stock = I can’t figure out what to do with all this cash.
Borrowing money = I can’t figure out how to generate cash
What’s wrong with this picture?
Ryland just updated their entire website with a slick new look - and they don’t have (at least not yet) their inventory homes on there - I have been tracking Water’s Edge (where i almost got sucked in) for a year now - it went from a 6 month waiting list last summer - to a call through their whole list in october (they got through to me then - took a month to get through the 6 month waiting list) - to 3 inventory homes in January, then 5 in March, then 8 for a couple months - then two weeks ago there were 22! (and at least 30 from flippers on Realtor.com)
This is a really nice looking community, and I liked Ryland’s designs - but with a gradual buildup of unsolds, and now all of a sudden over 50 out of the 500 homes built there are on the market - and the website update just in time for the 2 Q. numbers release with no inventory homes on there. WTF???
And why don’t they drop their price? They have been offering BS 15K type incentives but it’s obvious the tide has turned. They raised their prices 15K every 3 months since they started the project - they could obviously make good profit from day 1 pricing, so just revert already and clear the chaff!!!
Most of the people who buy converted apartment condos are “investors” looking to “get rich quick.”
Since when is it a right to make money on all your hare-brained investment ideas? If these folks decided to make $$$ raising chinchillas in their backyard, nobody would “feel sorry” for them when they lost money.
I hear many times finace a car and then invest what you would have paid cash to get more % than the finacing cost. uh huh, were. stock market, OK, thats not risky. I choose the rebate and pay cash. 5.6% on a 1 yr CD I am pretty sure finance costs are more for a car?
In the ol days I heard the same thing about housing, re-finace and use the money to buy more housing which goes up faster than the interest you have to repay. this was a good idea until a few years ago. because too many people started doing it. always a bad sign when that happens.
When I bought my car a year ago I was able to get a 60-month 4.1% loan from my credit union, so instead of paying cash I kept the money in WaMu CDs that currently are paying 4.5%.
Since my credit union accounts have autopay, it’s zero effort on my part and I make 0.4%… possibly more has interest rates keep going up. If the return on my CDs drop below 4.1%, I just pay off the loan immediately.
I live in the Cincinnati, Ohio area. I deal a lot with developers and home builders. The market hear has also come to a ’shocking’ slowdown. I was told the other day that one of the larger home builders in the area has only sold 25 new homes this year and that another national builder just fired 10 supervisors on Friday. The average home price from July 05′ (its peak) to May 06′ has dropped about $13,000 dollars. We are also starting to show year over year declines. The local media has done very little to ‘prepare’ people for the potential yoy declines when the July numbers come out.