‘Sellers Cut Ambitious Asking Prices’ In Orlando
The Orlando realtors have the July numbers out. “The relative slowdown in housing sales predicted by economic experts has begun to show itself in Orlando, where the 2006 year-to-date tally has dropped slightly below that of the red-hot record year of 2005. The number of homes sold in July of 2006 did drop by 26.5 percent when compared to July of 2005.”
“‘After the tremendous two years we had previously,’ says Orlando Regional Realtor Association President Beverly Pindling, ‘it would be nearly impossible for 2006 to not exhibit a slip.’ She says the proliferation of condo conversions on the market is absorbing housing demand”
“The increase in inventory continued its upward trend in July, with 6,862 homes listed in the MLS contributing to a total of 19,827 homes on the market. ‘We expect to see the MLS inventory to increase or hold steady,’ observes Pindling.”
The Orlando Sentinel. “At the recent, slower sales pace, the inventory ballooned to the equivalent of 9.38 months’ worth of homes on the market — a figure not seen in more than nine years. The last time a backlog topped that was in February 1997.”
“More homes plus slower sales equals mounting frustration for many home sellers. Ron Resch has been trying to sell his Lake County home for the past four months but conceded Monday that he is making no headway. ‘I haven’t had a single showing,’ said Resch, who recently changed sales agents and cut his asking price from $425,000 to $395,000.”
“In Seminole County, Susan and Bryan Teabout are trying to sell their Heathrow Woods home for about $1.3 million so they can relocate to Virginia Beach, Va. Although they have attracted only one offer since putting the home on the market in May, they are not ready to start worrying. ‘There are a lot of homes out there, but not at this price range,’ Susan Teabout said. ‘We’re in good shape, but obviously we would like to sell our house.’”
“Even sellers in great locations are having to cut their ambitious asking prices, often multiple times, yet many of them are reluctant to do so, said George Stringer, a sales associate with in Orlando.”
“‘We’re having a time with sellers,’ Stringer said. Even those homes in upscale areas such as Bay Hill in southwest Orange County, where Stringer lives, are not immune. Stringer noted that one Bay Hill house recently sold for $1.2 million, just above the asking price of $1.19 million, a rarity for a listing in today’s weaker market.”
“‘But the full story on that property is that the price was reduced, numerous times,’ Stringer said, and it still took nearly two years to sell. The original asking price was $1.45 million when the home was first listed, in November 2004.”
“‘The location is great,’ Stringer said, but even so, the five-bedroom, four-bath golf-course home, built in 1978, is expected to be extensively remodeled to bring it up to date. ‘Age is a question for a lot of these homes,’ which were built in the 1970s and ’80s, Stringer said.”
“Developers at a shopping center conference in Orlando said Monday they expect more retail growth statewide, particularly in Central Florida. ‘There are some clouds in the sky, but I don’t think the sky is falling,’ said Duane Stiller, during a panel discussion on the Florida market.”
“Still, some developers sounded a note of caution. Seth Layton said he’s concerned that rising interest rates, declining housing values, burgeoning credit-card debt and high gas prices may curb consumer spending. ‘I did not drink any of the Kool-Aid back stage,’ joked Layton. ‘The question is,’ he added, ‘how long are people going to spend more than they make?’”
‘The building boom has landed Miami-Dade County on the list of top five counties in the nation for adding the most new housing units, according to estimates released Monday by the U.S. Census Bureau. Between July 1, 2004, and July 1, 2005, Miami-Dade added more than 20,000 units.’
‘It’s an unprecedented boom, bigger than any single-year total of new units added in the past 25 years, records show. In the boom of the early 1980s, the county produced about 17,000 units a year, at the most.’
‘Figures show that 28 percent of new construction nationally was bought by speculators in 2005,’ said Lewis Goodkin, a Miami-based real estate analyst. ‘The top three markets for speculative condo sales were South Florida, Las Vegas and San Diego. That’s caused prices to spiral.’
Orlando?!? Not possible- things are different here! We have Disney and Universal and all of the high-paying jobs that go along with tourism! HousingTracker data for Orlando MSA;
January 7, 2006: units on market 13,500 and median asking price $325,000.
August 21, 2006: units on market 25,500 and median asking price $300,000.
No bubble here, just the normal progression of a perfectly normal market. No slow down here, it makes perfect sense for inventory to double in 8 months. Everything is just peachy. Its perfect.
Sounds just like my father in-law before he plunked down $319,000 on a house that is now only worth $275,000 in Phoenix. Get used to it! You speculators are going to destroy many families in the process of this bubble POPPING. We have a historically high number of homes for sale… Speculators are bailing out and taking their losses. This is also occuring in San Diego as we have relatives there who have seen their house appraisal drop from $800,000 to $700,000 in a space of three months! The bottom has yet to be discovered on this one.
-Jeff
Right, Jeff. And just wait until we learn how many San Diegans own ten or more “investment” homes, each of which took a $100K haircut…
I heard an ad on the radio last night (here in OC, Cal) about investment opportunities for a condo/hotel in Orlando. Prices were around $80,000. It’s pretty telling when they’re placing radio ads in So Cal for Orlando property.
That’s like the 1/2 page ads in the Miami Herald for condos in Vail, Colorado. They try to sucker in flippers from anywhere.
20,000 new units? plus broward and palm beach county and the condo conversions. good GOD! blood on the street!
“Sellers Cut Ambitious Asking Prices”
How come a low-ball offer is “insulting”, whereas a 50-80% overpriced asking price is “ambitious”.
I say revise that headline to “Sellers Back Down from Insulting Asking Prices.” Offers of 50-60% below insulting asking prices are realistic and based on fundamentals. The sellers are ones being insulting, not the offerors.
I agree when real estate was going up 20% a year it was considered a market. Now that real estate is going down it supposed to be a social problem that needs assistance. SCREW THEM!! They bought at the top and are going to pay for it by leaving the keys with the Bank. Or maybe with Auntie Fannie or Uncle Freddie.
What bothers me is the person who buys a house and puts it back on the market in under a year with this expectation that they are entitled to a 25 to 30% gain for doing nothing . In prior real estate cycles you would be lucky if you had a gain within the first 5 years if you didn’t do anything ,(considering the cost of re-sale ).
Some of these listings you see have turned over 3 or 4 times in the last 5 years .That’s speculation buying . The flippers took the risk and now they are crying the blues . When you have to hold a property for a while the rental ratios become alot more important than investors have given these numbers in recent markets . It’s just a quick money find a greater fool game that ended .
I have said it many times ,”When everyone wants out ,nobody wants in .”
Toll Brothers lowers outlook
Luxury home builder says buyers still waiting on sidelines
By John Spence, MarketWatch
Last Update: 9:32 AM ET Aug 22, 2006
http://tinyurl.com/nzynz
————————————
This nice positive news should result in a nice bounce for Toll today… Seems that on days of release, bad news is good and good news is bad…
Here’s some of what I think is driving price:
If I’m a guy that thinks the downturn will last
(damn those less-than signs… full post)
Here’s some of what I think is driving price:
If I’m a guy that thinks the downturn will last less than 3 years, and I’m a slow learner from the days of the bubble, then this looks like it’s worth a look.
TOL is near book value. Looks like they have 3 years of cash flow in the bank (if they made no change to the biz), if earnings drops to 1/4 of ttm it will have a pe of 16.
Compounded by the fact: they could take a bath on current inventory by selling it at 75%, and be out before all of the people that purchased in the ttm with 80-100% financing.
After that, they go back to building with the margins from the 90s.
So in summary, to somebody the price looks low. Perhaps low enough for M&A as well.
Fair is foul, and foul is fair:
Hover through the fog and filthy air.
These buyers are novice stock traders thinking they are getting a deal from Toll’s 50+ dollar high; so, they buy on bad news. With current industry trends it will probably trade even lower, 8-12 dollar range.
Lastly, every housing industry CEO wants you to believe the current downturn is not going to adversely affect his or her company as much as the other guy’s. However, when it rains everyone on the playing field gets wet, including Toll. Housing reports over the last year indicate storm clouds are building.
“… so, they buy on bad news.”
I thought “buy-the-dips” investing died with the tech stock crash, but maybe not…
…some people never learn
…they see an asset 50 percent cheaper than it was a year ago and think to themselves, “what a deal!” What they fail to realize is these stocks represent a market/industry and when the industry heads south so does the stock.
(’The question is,’ he added, ‘how long are people going to spend more than they make?’)
That is indeed the question.
On my wall at work, I have an advertizement saved from a weekly community newspaper here in Brooklyn. Here is what it says:
Mortgage
No Down Payment
Purchase or refinance: 3.25%*
No Income Verification
No Asset Verification
Monthly Payment $200,000 = $843 per month; $400,000 $1,616 per month.
Direct Lender No Broker Fees
Money Warehouse Licenced Mortgage Banker
*(in small print) Restrictions, rate increases and fees may apply.
Yeah, I was just working the numbers on a pop-up I saw online for a $510,000 mortgage for $1,698/month. That’s obviously a teaser, looks like it starts at around 1.25%, then obviously balloons way up. 30 years fixed at 7.5% would be $3,700/month. We haven’t even added in taxes, insurance, PMI. that $1698 would wind up being like $2600. And the 3,700 would be more like $4,500/month. Ain’t no way that’s gonna work.
You think that’s bad. I heard an ad on the radio yesterday with a teaser payment (ad didn’t say how long the teaser payment remained in effect). The gist of it was that you could get a $300k loan, with the interest rate locked for 5 years, and the payment was $63/month. That’s right, payment of approximately .25% interest only. WTF? I’d hate to see the neg am schedule on that loan.
Now that the MSM is discussing the slowdown, you hear people saying, “as the economy slows and housing cools, the Fed will lower interest rates again, so it’s a good idea to get into an ARM now.”
The mistaken assumption they’re making is that mortgage rates will always follow the ups and downs of the Fed funds rate, which isn’t the case. If housing goes into a protracted decline, lenders are going to be waking up to the risk premium and mortgage rates will climb, regardless of what the Fed does.
http://biz.yahoo.com/special/pf082206_article3.html
Advice for GEN X and Y, wait to buy a home. Its from an Article about Blogs giving advice to young people. I was hoping to find this Blog mentioned.
Good to hear more are waiting. I’m a “Gen-Xer” (although the stereotypes don’t seem fitting for me) in his late 20s. Back in 2001-2004, I had several friends who bought overpriced condos and all had ‘help’ in one way or another - help from parents or, more scarily, purchased the property with another 20 something year old.
I cannot imagine buying property with someone other than your spouse. What do you do if the other owner loses his job? Or wants to move? Or gets married? Or dies? What happens when the mortgage rates adjust and the other person can’t afford his “half” of the monthly nut? Scary stuff. I wonder if this will be a more discussed problem in the next few years…
Ha Ha !!
I’ve personally seen three Gen-X / Y couples from here at work get themselves shoehorned into overpriced shitboxes by asshat Realtors(tm) / Mortgage Brokers.
None of the three are married. Just “boyfriend/girlfriend”. It’s great to be young !!!
Gives you a warm fuzzy feeling…doesn’t it ? This kinda stuff is evidence of lending diligence tossed under the bus.
I’m 45 and when I “came of age” back in college here in Florida in the ’80’s there was NO WAY a young puppy-love / livein twentysomething couple could get financing on a house. Back in the day, you had to come up with 20% down and they put a microscope up your rear end. If you were married and applying jointly they wanted to see the Marriage License along with 2 years of W-2’s….from BOTH of you.
This whole mess has been to easy for young unsuspecting kids to get hamstrung into.
Us old school types can sit here all day and say “its the kids fault”….but let’s be real. A 23 year old doesn’t yet have the maturity to realize just what a COMMITTMENT a mortgage is…in every sense of the word.
Not to insult younger people, but you have to live a while and go through paying off a debt or two to realize the ramifications of paying off and being responsible for large loans. It takes seasoning and some real world experience to see what you are getting into.
I blame the Realtors(tm) and other RE asshats more than I do the kids in these circumstances. Somebody shoulda had the ethics and the gall to tell some of these lovelorn kids to rent for awhile and enjoy life before tying themselves down to a mortgage / town / responsibility / relationship / job. At least have a comittment of marriage before buying a house.
This thing WILL end badly.
From the article:
“Who in the world is buying the $500,000 condos?” says James Chung, president of marketing strategy firm Reach Advisors. “It’s Gen Y, but they’re coming to the table with 20% down payments given to them by their parents…..”
An additional strain on the ‘family wealth’ will rear it’s ugly head when the GenY’s can’t make the payment due to job loss, rising interest rates, realization that the payment was just too much in the first place, can’t afford repairs, loss of interest due to declining values, etc. What parent who has made this investment will let junior hand the keys back to the bank? Nope, anti-up some more dough gramps! Probably bought them a new mustang when they turned 16 too…… where did that car end up? Oh, that’s right, wrapped around a telephone pole out in front of the high school. Wasn’t ready to own that either …..
Being a FB can now be a ‘Family Affair”.
(Pretty sad when the kids will be telling the parents “let’s be smart buyers this time ….”)
Sorry Les Pendens - didn’t see you had already, and more eloquently, covered this rant…..
The hit’s just keep on coming!!!!!!!!!!!!!!!!!!
http://www.nypost.com/business/unsold_manhattan_apartments_at_10_yr__high_business_tom_bawden.htm
Orlando native here - and i am very suspicious of ONLY a 26% decline in sales. I would say more like 50-60%+ decline in sales. I talk to countless RE industry folks weekly and the market has imploded. Massive inventory and little sales. Condo conversions cancelled, projects delayed- Anyone at ground zero here understands the true nature of the slowdown… This sales data is very suspect
Winter Haven here.
I agree with financedork; there is no way we are seeing a 25% decline in sales. People, its more like a 50%-75% decline in sales !!. I personally know one title and escrow worker who got laid off just last week and two realtors that haven’t sold a damn thing in 5 months….and they are gettin’ ready to find something else to occupy their time. One of the realtors told me the other day that he wanted to get back into new car sales but sales are down somewhat ( with the American lines ) and the local dealerships are flooded with applicants who are also “Real Estate Refugees”. It’s gettin’ competitive and everybody is very nervous….some of these Realtor(tm) asshat types are young and they haven’t saved a dime over the last five years of living large in the land of Milk and Honey. Money dropped outta the sky and they spent it all.
For me, I am a gubmint worker on a modest, fixed income. I ain’t buyin’ no house down here either…..not for the next 2-3 years…I am waiting for that deal on a nice clean, used 18-20 ft Center Console Sport Fisherman that I have always wanted. I plan on paying cash ( around 8 to 10 grand ) in Jan. 2007 —- before income and property taxes are due and right after the Christmas buying binge. I’ll bet you guys that I come up with a beautiful boat down here around that time.
That’s all I want in life. Simple things that I can afford and own. When housing returns to something I can afford, then I’ll buy a house. Till then, I’ll be buying nice used stuff from the stressed out flippers / megaconsumers down here for pennies on the dollar……
i’m tellin ya, if you don’t have a wife and kids then get a boat and live on it. i know i sure would over here on the left coast
The “live on a boat” plan probably works better on the West coast, where there isn’t the threat of hurricanes!
Amen Dork, they cook the hell out of the numbers here.
Realtors are very ethical they would not lie. Of course they are fudging the numbers. They are bunch of crooks.
Friends of mine in Naples were discussing Florida’s bleak RE market and one of them said that the only place in Fl where prices are holding is Naples. Is this true? Can anyone weigh in on this?
LOL. Sure they are. Point them to this:
http://www.naplesinsider.com/CurrentReport.htm
Many jobs, little pay: In 2004-05, the area added 100,000 jobs, but 40% of them paid less than $27,000- Orlando Sentinel (Florida), August 13, 2006
I wish I could post the story; here are a few excerpts:
“…there are questions about the value of thousands of new service-sector jobs in a region where the cost of living is exploding.”
“During that two-year period, the average wage paid in the Orlando area grew 9.12 percent, according to new state employment numbers. That’s higher than the 6.2 percent inflation rate but well behind the 58.9 percent growth in the median home price during the same time frame, according to the Orlando Regional Realtor Association.”
“According to that data, at least four of every 10 Orlando jobs were created in a field paying less than $27,000 a year — much less than the region’s average annual wage of $36,449″
This is why the Orlando Bubble cannot sustain- the pay simply cannot support the elevated price level over the long-term.
Related: http://vdare.com/roberts/060820_jobs.htm
The July report from the Bureau of Labor Statistics lists 113,000 new jobs, all of which are in services . . . Manufacturing lost another 15,000 jobs.
how much does it take/cost to go to county records and get the sales info?
I’d be willing to contribute few bucks to some enterprising individual who is willing to that for selected market, SOCAL, MIAMI etc.
That should nail the sales data issue isnt it?
All previous sales and taxes paid are a matter of public record and can be easily obtained for most counties in Florida online.
I do it all the time just for laughs. I access the local MLS and check the asking prices for some of these crackerboxes down here…then compare it to the PIC Report at the Tax Assessors website to see what the lowdown is.
The greed of some of these people here in Florida is hillarious. I have lived here for 25 years ( since college ) and I can tell you I have never seen anything like it.
Free for LA county. Go to LA county assessor, print in pdf the search results for the area you are interested in, and build a little application to analize the data. You’ll get the evolution of sale numbers, prices, sqft, etc. without having to rely on the realtor pirates (sorry mr income).
It costs $0 in SD. You can get the sales price numbers off the County Assessor’s web site. (Some prices seem to be missing, however — for instance, good luck getting info on Rancho Santa Fe home sale prices…)
http://www.sdarcc.com/arcc/services/propsales_search.aspx
Zillow will provide sales records across the country. It’s not as detailed as individual county records, but it’s a single website.
Just go to the county website. I haven’t found a county yet that doesn’t have the property tax records online. You need the address or the name of the homeowner. It’s interesting when you have the name. You can see people holding 4,5, 6…..properties.
(For Generations Y and X (terms often used to describe the twenty- and thirtysomethings), “homeownership is coming later than it did for the baby boomers,” )
A decade ago my generation — the back end of the baby boom — had a lower homeownership rate than either the 1960s generation that came before or the Gen-Xers that came after. Came of age at a bad time, in both the job and housing markets (early 1980s recession, late 1980s housing bubble). Similar to the young of today.
I wish I’d cared about real estate in my early 30s. Would have been THE time to buy. I was too busy enjoying my life ~ and being mobile (moved to and from Chicago a few times; traveled a lot). Now that I’m ready to really settle down (my son being the primary reason for that), it’s the absolute worst possible time. So lump my old self into the category of these Gen X and Yers! (At age 40, what generation am I anyway?…)
(At age 40, what generation am I anyway?…)
A Slacker-Boomer, the worst kind!
Signed,
Another SB.
The bubble is moving to Austin, Texas:
AMERICAN-STATESMAN STAFF
Friday, August 18, 2006
Home sales elsewhere in the country are cooling, but the Central Texas housing market remains hot.
Sales of single-family homes in July were up 11 percent year-over-year, according to the Austin Board of Realtors. The median price rose 5 percent to $178,190. Area real estate agents say out-of-state investors are fueling a significant portion of the demand in Central Texas.
“Other areas are cooling off, and investors are looking around for opportunities,” said Peter Sajovich, broker-owner of ReMax Austin Advantage. “They can’t believe how far their dollar goes in Texas.”
Sajovich, who primarily represents out-of-state buyers, estimates that investors, largely from California, account for up to one-third of July’s 2,712 home sales.
“It’s good for tenants because there’s an ample supply of homes for rent,” Sajovich said. “Unfortunately, for home buyers, it just drives up the price.”
The strong July showing keeps the Central Texas housing market on track for a fourth consecutive record year.
For the first seven months of the year, sales of existing single-family homes were up 13 percent compared with the same period last year, according to the report.
The median sales price from January through July increased 8 percent to $173,750 from the same period last year. Nationally, the median sales price is $229,000.
I wonder what the national average (the mean) is.
Yeah, this is something that has been bugging me. Aren’t any statisticians reading this??? Median is the MIDDLE value of a distribution. Mean is the AVERAGE of the sample. So, if they always say that the median is say, $229,000, then that means for each outlier (the top and bottom) are essentially 2 x $229,000 = $458,000. What this also signifies is that IF a place sold for $0, then the top sale would be $458,000. IMPOSSIBLE!! One place selling in ANY market for more than, say, $1MM, would skew the MEDIAN. Let’s take a look at another example:
One house in X sells for $1MM (the highest sale price)
Another house, also in X sells for $100,000 (the lowest price)
The MEDIAN of these outliers - and therefore this sample distribution (high and low, with everything else in between) is $550,000.
Does anyone else see where I’m coming from?
I see where you’re coming from…but its more semantics than bad math.
‘Average’ is just a measure of central tendency - a fancy way of saying the middle.
The three most common ‘averages’ are the Mean, the Median and the Mode, although there are a mutlitude of them, used for various purposes.
Here’s a Wkipedia entry on averages:
http://en.wikipedia.org/wiki/Average
I don’t know, but I’d hazard a guess that the reason the Median is used rather than the Mean is precisely because it suffers less from being skewed by outliers than the Mean is.
The Median is just counting a ranked set of data points and finding the middle value, therefore data points at the very low and very high ends have less effect on the value. Its not completley immune, but it is more ’stable’.
Having said that, not showing the lowest and highest data points, and not having the number of points in the sample does make the Median ‘just a number’, as you’ve lost most of the information needed to make sense of it.
Still, I wonder what the national average is.
The monthly NAR stats in Excel form, which are free downloads at http://www.realtor.org, give both the median and the mean.
http://www.realtor.org/Research.nsf/Pages/EHSdata
Oh, crap, you are right speedingpullet. I forgot, median is the middle value represented as half of the values in the data set are higher, and half are lower. Man, my mind must have been foggy yesterday. And yes, you are also correct in stating that it would most likely be less prone to fluctuations by outliers.
Sorry about that rant.
“The relative slowdown in housing sales predicted by economic experts has begun to show itself in Orlando”
And who might those experts be?
Here is the actual data for Austin from 1990 to the present. It does look a lot different from say Arizona. The number of listings has been dropping since a peak in 2004.
http://recenter.tamu.edu/data/hs/hs140b.htm
The question is,’ he added, ‘how long are people going to spend more than they make?
This question succinctly sums up the entire credit/housing bubble in a nutshell and suggests why an external ‘pin’ isn’t required to pop it.
We are only at the beginning of price cut. I work in a law office and have been receiving calls from buyers holding 5-6 homes/condos. THEY ARE DESPERATE. Some,foreigners from England, are willing to just walk away rather than sell. Lenders require foreigners to pay 25% down. When these foreclosures hit the market, it will get ugly.
change buyers to sellers
‘A decade ago my generation — the back end of the baby boom — had a lower homeownership rate than either the 1960s generation that came before or the Gen-Xers that came after. Came of age at a bad time, in both the job and housing markets (early 1980s recession, late 1980s housing bubble). Similar to the young of today. ‘
Exactly. Those born in the 1960’s tend to have a more realistic view of the world and conservative nature towards investments than older boomers or gen Y.. People forget in the mid 1990’s most of us who were in our early to mid 30’s and had never seen RE go up, couldn’t buy RE the conventional way without 20 percent down and incredible scrutiny by the underwriter and were stuck in the glass ceiling in the labor market due to the older boomers getting all the choice opportunities.. Even music wise we never had our own identity except for perhaps Bon Jovi and Nirvana and all changed with hip hop in dramatic fashion.. I will always cherish the older boomer music relative to the music of recent times..Starts to make me feel old too..LOL