‘The Summer Of 2005 Is Over, Isn’t Coming Back’
The Miami Herald reports that some homeowners are oblivious to the housing bubble. “This Miami-Dade neighborhood, like so many across South Florida, is a crucial piece of the giant wealth and job machine that is the real estate economy. Take Devon Rifkin, who moved his family to High Pines three years ago. Convinced of the neighborhood’s value, he bought the house next door.”
“He borrowed against the equity in his first home and renovated both. Then he listed them for $899,000 each, about double what he paid. And now he and his family have moved to a third home nearby, twice as big as the first. Rifkin knows that the real estate economy is slowing down, and he hasn’t yet sold his houses. But he’s happy he got in.”
“‘People have to realize this is life-changing wealth,’ said Rifkin. ‘This is real money.’”
“Just behind Rifkin’s original home, neighbors Alison and Michael Simon are busy adding a master suite and a second story to their three-bedroom 1959 house. The Simons funded those renovations mostly by borrowing against the equity in their home. They estimate that their home’s value has more than doubled since they bought it five years ago for $322,500. ‘It’s a good investment,’ said Alison, who works from home. The new house will include an office for her. ‘Once we’re done, we’ll have even more equity.’”
“Like the Simons, their neighbors down the street are borrowing money to pay for renovations. After a year spent looking for a bigger home, the Nyes gave up and decided to refinance about $500,000 to double the size of their home. ‘Everybody in my neighborhood is doing this,’ said Jamie Nye.”
“In the Miami area, 82 percent of the loans from banks with assets of $1 billion or less were related to real estate. That’s up from 58 percent in 2000. In the Fort Lauderdale area, that figure was even higher, 91 percent in 2005, compared with 81 percent in 2000.”
“Last month, the slowdown led Countrywide Financial to shut down a loan-processing center in Sunrise, costing the area 100 jobs.”
One columnist in Florida is starting to see the light. “Motivated seller. Price reduced. OBO. You see these notations more often in the real estate listings. I hate to scare you, but I actually saw a unit in Baldwin Park listed for under $200 a square foot.”
“The Summer of 2005 is over and isn’t coming back. This is a painful lesson for sellers trying to base their asking price on comparable sales from August. ‘Our members are telling us that owners are beginning to back off prices 10 to 15 percent because they’re not getting people pressing contracts into their hands,’ says Belton Jennings of the Orlando Regional Realtor Association.”
“The number of homes listed for sale in Orange and Seminole in January was a hefty 21 percent jump from December. There now are 12,015 listings, the highest number on the association’s database, which dates back to 1995. Inventory has quadrupled in a year. That generally is one reason why values dropped 4 percent in December.”
“Now we will see what our houses really are worth, based not on speculation but what traditional buyers will pay. Given rising interest rates and a skewed affordability index, I’m guessing not as much.”
“Builders are offering financing deals, reduced closing costs and throwing in free upgrades. But if you paid $350,000 for a house three months ago and the builder now is selling the same house for $350,000 but offering $40,000 in incentives, your house is worth less. Try selling a used condo when the developer offers to pay association fees for two years on new units.”
can someone please remind me what is so great about florida?
hot humid mosquitoes illegals …
…traffic out the wazzoo, rednecks and bluehairs competing for the same piece of road, and of course, a Cat 5 swirling offshore trying to decide if this is the year it will destroy your McMansion.
Depends which part of Florida you’re talking about, there are three different Floridas. One is everything above Orlando, the second is the Tampa area and the third is the Miami area. Each area is totally different.
It also depends on what you want to do, I like driving 20 minutes and being at South Beach, or driving 15 mins on Saturday to Fort Lauderdale beach. Also I like not worrying if I have to wear my parka or long underwear when I leave my house. Some people couldn’t live without snow, I prefer it that way.
People that cut down Florida, can you tell me where you live, and if you’ve ever been to Florida?
been there, done that…b inlaw lives in Tampa…did Disney for a week, Daytona for 1 week and Destin for 2 weeks, all between April and October…
Florida would be on my short list of places I’d like to be if people would get real with prices there.
miami . Born and raised. Family in the other two parts of the state-Orlando area and Panhandle too.
This state in all areas is going to hell in a handbasket.
Take your pick of reasons-hurricanes , crooked politicians,overdevelopment,traffic,lousy schools, no good paying jobs,housing costs (duh) and last but not least the coming water shortage.
And where did you move here from?
Water shortage?? They have desal plants going up.. the place that should worry about a water shortage is AZ.
Well, I’ve lived in a couple of different Floridas, and presently live in Dallas. Not a big fan of Dallas, either. I lived in Gainesville for 3 years for law school and spent a couple of years in SW FL where my family currently lives. I can say that my comments about drivers and traffic reflect my experience in both places. I haven’t spent any time in Miami and merely pass through Tampa on my way south. I like Naples, but until/unless prices take a nosedive, I won’t be moving to Collier county.
Go Gators
I moved to Ft Lauderdale from Chicago. I went back to Chicago for a visit in January and couldn’t wait to come back to Ft Lauderdale!
I think when it comes down to it the main question is why would the homes cost so much, it makes not sense as their are not many good paying jobs and the main people that earned money the last 4 yrs was in RE, what ya think will happen after that is gone.
BTW moved to N Miami in July 05 from Boston, where I did make lots of money, and happy renting while my landlord subsidies my rent as I’m paying 60% of his monthly cost
—AL
Ellian gonzalez???????
Ben,
Your unscruplessssssss. Hahah, I hope you get a nickel for everyone that clicks on this crap. This is one of the ads on your blog “overworked RE investor”. I don’t think there is a chance in hell he will see one dollar from someone clicking from this blog. LMAO when I clicked this ad and read it. At least you might see some $$ from morons placing ads like this on your sight, I just thought it was sooooo funny as a link from your blog.
Isn’t the internet great, Ben gets support from the same people he is dubunking and they don’t even know it???
http://pagead2.googlesyndication.com/pagead/iclk?sa=l&ai=BzFDqSUv5Q5m1NZrypQLrvJzUA5i93wym1JOqAcCNtwGwr2gQBBgIIJqGvAMoBUiMOVCpt7m3_v____8BoAGTl4D_A6oBCjQ4MDg3NDE3OTWyARh0aGVob3VzaW5nYnViYmxlYmxvZy5jb226AQoxNjB4NjAwX2FzyAEB2gEgaHR0cDovL3RoZWhvdXNpbmdidWJibGVibG9nLmNvbS_gAQKVAhVESAo&num=8&adurl=http://www.joecrump.com/overworked/&client=ca-pub-4205366296275175
I live in Jacksonville, which is not too expensive, has mild climate, great beaches, no snow, shows change of seasons (mild), no hurricanes, etc. Florida is not the same all over.
It doesn’t get cold and until very recently it was much cheaper than the northeast. I realize that many in the Northeast are very provincial and think that the world revolves around them, but cold weather sucks.
“‘People have to realize this is life-changing wealth,’ said Rifkin. ‘This is real money.’”
In this case, Yes it is. But real life comes with ZERO guarentees that thing are going to be positive and turn out in your favor, and ZERO guarentees that if things are going that way, they will stay that way. You have been warned.
Life Changing Wealth… Flip a sign (+/-) and it’s Life Changing Debt.
Real Money… Yes it is. You owe it, and they expect you to pay it back. Or else.
Hey, Dewon. Yes it is real wealth which is why you and the rest of your nincoopia cohorts will never see it.
Actually, IT’S ONLY FAIR that we read the entire article… shall we??
at the bottom it reads:
“Back in High Pines, Devon Rifkin’s 24-year-old sister is RENTING one of the renovated homes he has for sale.” It goes on to say that sis “can’t afford to buy. ”
But… but… but, at the top it read:
“‘People have to realize this is life-changing wealth,’ said (BROTHER) Rifkin. ‘This is real money.’”
SO MY QUERRIE IS….
How is this “REAL” money if you leveraged yourself to the gills, can’t get the INVESTMENT house SOLD in a market that’s tanking…
renting it to little SIS, whose hard on her luck-
‘SPLAIN to me how THIS REAL MONEY/WEALTH???
This to me is just another one of those stories where the “investor” THINKS they are wealthy. Look dude, it’s only real when you pocket the money after a SUCCESSFUL “flip” (which includes purchase/renovations/sale of property).
Anything else is a figment of your imagination.
AND BEFORE I GET HATE MAIL from all those that want to b!tch that I am envious, jealous, or chicken of getting in to the market… save it. You don’t know my financial status.
This post is only intended to warn those that think they have “profits in the bag”… and that they have full control of their financial destiny. In this rapidly changing market, there are a lot less “slam dunks” on getting rich quick.
Actually, I think that was the point of my root comment:
That all they have is potential, which is yet unrealized. They also have Risk, which seems to be unacknowledged.
The other point was they are playing with a lot of money (”real money”), and like fire, if mishandled one can get burned.
Deepintheheartof,
Yeah, you and I are ON THE SAME PAGE… I totally agree with you.
My comment was toward TxChick57 who seemed to be railing on “nincoopia cohorts” (see his/her comment above) Thanks
I agree with you, goes back to never counting the chicks before the eggs hatch.
I to made money on flips but got out of it in 2001, did not want to be greedy.
— AL
‘Once we’re done, we’ll have even more equity.’
I scoff in her general direction. Quote her no more, or I shall scoff at her a second tiiiiiime.
Cheers,
prat
somebody tell these folks the equity machine is currently broken and the parts to fix it are on backorder.
This jumped out at me too. I’ve heard this line many times in the last few years. I am beginning to wonder if the average American understands elementary finance. Do they not know the difference between debt and equity?
The average American can’t name the three branches of gov’t. ‘Nuff said.
I’ve seen homes sit on the market for months here in gilbert az. Seems the higher in price the longer they sit. Sellers are not coming down on their prices fast enough. They are hoping for nibbles on a 5000k decrease, which doesn’t seem to be working very well. I have to say that homes around 250 and less are selling quicker. Well I wasn’t happy with the outcome of daytona 500. Too many cautions toward the end for sure.
The Miami Herald reports that some homeowners are oblivious to the housing bubble.
Ya think!?
BayQT~
rudekarl,
what is a bluehair?
thanks,
Mark
Old people. Probably referring to the snowbirds…retirees.
My folks live in Fort Myers and I’m always amazed at the mix of drivers. There are young guys with mullets driving pickups extremely fast and recklessly, and then there are the old folks, many of whom should have had the keys taken away along time ago. When these two worlds meet, the accidents can be unbelievable. I think they had a record for traffic fatalities last year and with more crowding, comes more blood on the highway.
I couldn’t agree with you more Karl… that’s another blog.
The women are bluehairs. The men are mouth-breathers. Generally refers to the 80+ crowd.
its old women who have there hair dyed so much it turns blue,seems like there all attracted to old guys like me.
He says this is real money… NO SH*T it’s real, and you’re gonna have to PAY IT ALL BACK! The Debt is real too. With BK reform, you can’t just walk away. They will take everything you own, right down till the last $1000 including your car.
I totally agree. As I mentioned to someone on another thread, I hate car notes…don’t have one, don’t want one…driving a 98 Honda Accord. But I’m saving now to replace it in 5 years (if I really need to). Will probably spend about $15K..cash. No, no…no car loans for the QT.
BayQT~
BayQT - ditto. I, too, hate car notes and drive a 98 Honda - civic, not accord. I, too, am currently saving to replace my Honda in 5 years fro about $15K. Great minds think a like.
Observer
What a coincidence! Yeah, I’ll say…great minds DO think alike.
BayQT~
Rodger that. Paid cash for our last 6 cars (covers about 15 years), none of them bought new (let some other sucker take the brunt of depreciation). To me It’s just not worth the stress another payment puts on you.
I hear ya,, call me old school at 36 but the last time i had a loan on a car was in 97, I figure if i can’t pay cash then i don’t need it.
don’t get me wrong and think i live life and don’t hoard all my cash but you need a good balance and not live to excess.
–_AL
‘Everybody in my neighborhood is doing this,’ said Jamie Nye.”
These obituaries are getting grimer & grimer.
‘Everybody in my neighborhood is doing this,’ said Jamie Nye.”
Christ people! Even ants have collective group consciouness.
Problem is they are grasshoppers not ants!
The problem with housing is that it takes too long for things to shake out. We’ve gotta think ahead to what things will be like in 2008.
I’m rooting for the downfall because i’m cashing out. I think this upcoming spring/summer is the last chance for people to get out. The inventory is building and it will take a while before people wake up.
I think most people on this blog will survive any downturn.
You remember the famous Willie Nelson song, “Bluehairs Driving in My Lane”
Mo money– thanks. always wondered why it ended up looking that way.
‘The Summer Of 2005 Is Over, Isn’t Coming Back’ sounds like the title of some nostolgic Beach Boys song. If Brian Wilson were a guitar strumming realtor he could not have come up with a better title.
http://www.dcbubble.blogspot.com
Not sure I agree 2005 won’t be coming back.
Maybe it’ll come back in 2025 or 2030, when everyone has forgotten 2005 and another group of suckers comes of age.
I remember people quitting their jobs in 1999 and 2000 to day trade. I remember people planning on retiring on the profits from Pets.com, Priceline, Lucent, Enron, MCI, and JDSU. I remember how you could get rich selling beanie babies and sports cards. Alas, Fear and Greed are the oldest and most common forces that control our lives.
I have a blog that is solely for the south florida market. I welcome you comments..http://southfloridarealestatebubble.blogspot.com/
” a fool and his money are soon parted.”
Hmmm….I’ve got some beanie babies…in a plastic bag, in the closet, on the top shelf….in the back. LOL! Anybody want to buy any?
My daughters had no use for them when they moved away for college. And what’s the name of those ugly baby dolls? Oh! Cabbage Patch dolls. My oldest daughter (27) had one when she was about 5, I think. I don’t know *where* that thing is now. I remember when there were rows and rows of newspaper ads with people asking $1,000 for 1 doll.
Crazy.
BayQT~
Hahah, I’ve got a bunch of useless crappy beanie babies in my closet as well. My mother in law insisted on giving them to me as gifts because she considered them an “investment”. What a moron. I’d rather her have just given me straight cash for a savings account, new home down payment, retirement fund, whatever, to use for an investment then a useless toy beanie baby. What a scam. Look up the price of beanie babies on ebay, people can’t give the stupid things away now.
At least the stupid things make good cat toys. My mother in law has a heart attack every time she sees a “rare beanie baby” being mauled by a cat at my house every time she visits, and sometimes comments that “we must be doing well” for us to let our cats play with such an “expensive” toy. What a fool. She’s planning to fund a big part of her retirement on useless toys and geegaws like that.
Don’t tell us what you *really* think of your mother-in-law!
That Orlando columnist changes his tune each week.
And does he do interviews, or just navel-gaze all week and write up whatever he wants? The best columnists are out and about, seeing and hearing things. Taking in their community.
Doesn’t seem to be the case with this guy.