‘Prices Have Not Hit The Bottom Yet’
The Island Packet reports from South Carolina. “There’s a slowdown this year in the number of homes sold in southern Beaufort County, but those that have sold fetched prices only slightly lower than last year’s. Several factors are driving the cool-down, real estate experts said, including higher interest rates, insurance costs, overreaching investors, increased property taxes, fear of hurricanes and more competition in the market.”
“Several Realtors agreed that the roughly 5,000 total properties on the market in southern Beaufort County are between two and three times the number available at the same time last year.”
“‘People were buying homes for the wrong reasons the past few years,’ (broker) Bob Clarkson said. People saw real estate as a get-rich-quick scheme and not as a place to live, he said. Those who missed selling at the crest of that wave now are discovering they may have to give 20 percent of those profits back, Clarkson said.”
“Just 5 percent of the homes on the market are being sold in any given month, Realtors said. ‘There is a ton of inventory, and prices have not hit the bottom yet,’ a real estate veteran Bobby Sandell said.”
The Palm Beach Post. “The biggest secret in Boynton Beach may be the status of two projects once heralded as the benchmarks of a revitalized downtown. Board members will consider next month whether to continue to offer millions of dollars in incentives to 500 Ocean and Promenade, as neither developer has begun construction.”
“CRA member Marie Horenburger said market changes have affected most development projects and that she didn’t think a lot needed to be changed in the current agreements. ‘Everybody is in the same boat,’ Horenburger said. ‘There’s been a real slowdown in the market.’”
The News Press in Florida. “The hurricanes that tore through Florida in 2004 and 2005 have caused insurance companies to raise their rates and some have discontinued coverage for many in coastal Florida.”
“‘We may see an increase in defaults and delinquencies due to increases in the cost of owning a home because we have seen homeowner’s insurance premiums double and more,’ said Tom Tatro, recently retired VP for residential lending for Fifth Third Bank in Southwest Florida.”
“Some see a potential rise in foreclosures as a business opportunity but don’t think the real bargains are here yet even though some property owners are starting to consider bailing out. ‘We’ve raised $25 million to go after it but we still think we’re six months from the bottom,’ Fort Myers-based real estate broker Ed Bonkowski said. ‘It’s going to take that long for the lenders to file their actions.’”
“He recently passed on a foreclosed canal-front lot on Fort Myers Beach that sold at auction for $400,000, probably $100,000 down from what it would have sold for a year ago. Still, Bonkowski said, ‘We didn’t think the value was there.’”
“Lee County Property Appraiser Ken Wilkinson said some real estate investors will be hit with a double whammy this year. Even as the value of their assets fall, taxes may go through the roof because they’re based on the sky-high prices that prevailed in 2005.”
“He expects a storm of protests from the notices of proposed property taxes that were mailed out Thursday, but his hands are tied: legally, he must use last year’s prices to calculate taxes.”
A letter to the editor at the Sun Sentinel. “In reading the South Florida Sun-Sentinel lately, I could not help but wonder if some of the ‘journalists’ slept through the class where journalists learn the ethics of reporting the news and not creating the news.” “If you read the front page, one would get the idea that the real estate world has already gone to hell in a handbasket.”
“I grant you that the market has some selective problems and justly so due to reckless investments and not due to the people needing housing. These investors are going to get what is deserved for their actions in selective areas of the market, but the market as a whole is far from the doom and gloom that is headlined in the Sun-Sentinel lately.”
“Our country is in enough of a mess today from this type of activity by some leaders. Don’t put the Sun-Sentinel on the same train. That may not be a light at the end of the tunnel, it could be another train.”
The News Observer from North Carolina:
‘A couple of years ago, Jorge Perdomo left South Florida and a career as an English professor in search of riches in North Carolina’s go-go housing market. But a few months after becoming a residential real estate agent, the gamble wasn’t paying off. Perdomo hadn’t sold a single home. His savings were drying up, and he was giving his credit cards a workout. He was ’sucking down antacids.’
The St Petersburg Times: ‘We weren’t looking to make money on an investment. We were looking for a home,’ said Janet Jurkowski. ‘Now, the property taxes have quadrupled. It’s ludicrous.’ She mentioned investors, she said, because she blames them for the skyrocketing value of lots in Spring Hill. Another indication of speculation: 2,034 lots in the county were sold more than once in 2005, compared with 336 lots so far in 2006.’
‘But prices for lots and homes have definitely fallen in the past year, said Jeanne Gavish, a real estate broker who works in Pasco and Hernando counties. Gavish bought a small house in Spring Hill in 2003 for $42,000 and thought of putting it on the market in November, when she calculated that the asking price should be $129,000. By the time she got around to listing it in March, she asked $99,000. She has since dropped the price to $89,000.’
Anyone seeing any emerging trends in the Manhattan and Ulster County (NY) markets. I’ve finally put away a good chunk of money for a down payment, but definitely am in no hurry to jump in. Still, I keep eyeing the market.
For Manhattan google ACRIS. It’s the NYC property record online search engine. I did a quick search of Manhattan mortgage filings for July of 2005.
Short story is there is somewhere 10% to 20% ARM loan ratio for condos and other real property here. Not sure for coops.
Yes there are suicide loan people and speculators here. But I don’t think it’s in anywhere near enough numbers as other places.
Drove through Ulster County this weekend. Many for sale signs, some blocks every-other house. It got a bit creepy after a while.
It doesn’t matter that I’ve been reading this blog for years. The speed of this downturn is shocking to me. And yet… I’m still talking with people who urge me to buy vacation property, even raw land, since “they’re not making any more land.” Really. I swear to G-d someone said that to me this weekend. And that guy’s been trying to sell his own vacation house for months! And he pointed out the six or seven other houses for sale about a block away!!!
Anyone seeing any emerging trends in the Manhattan and Ulster County (NY) markets. I’ve finally put away a good chunk of money for a down payment, but definitely am in no hurry to jump in. Still, I keep eyeing the market.
Blame the MSM for reporting what they should have years ago, eh?
Here some more news not widely reported http://www.slate.com/id/2148327/?nav=tap3
Dunno why some people got sex ad links with the article (I didn’t), but for those who ca’t get to it, here’s an edited version with some excerpts…
________________________________________________________
Since the beginning of this summer, at least a half-dozen companies, including eBay and Nike, have disclosed in their routine Securities and Exchange Commission filings that they’re now protecting their executives from real estate market forces. The terms in the filings vary—”protection against loss”; “loss protection”; and “price protection”—but the meaning is the same: They are essentially guaranteeing that executives’ homes will sell for a good price. In other words, companies that depend on free markets are making sure their own executives are safeguarded from them. In the past, companies often offered to buy a relocating executive’s house if didn’t sell after a specific amount of time. But that’s different than the price guarantees being offered now.
Orlean Homebuilders: [For Executive VP C Dean Amman II, bought in 2000 at $619k] Orleans was promising that if Amann sold his house, it would make sure he got at least 97 percent of its appraised value […]
eBay: $700,000 “supplemental relocation allowance” [for new CFO Bob Swan moving closer to eBay's headquarters in San Jose] If Swan’s Texas house sold for less than $3 million, eBay would make up the shortfall, up to to $700,000. […]
Nike: $3.1 million to purchase the Portland home of former CEO Bill Perez—the same amount that Perez paid for the home nearly a year earlier […] The five-bedroom, four-bathroom house built in 1908 is currently listed at $3.99 million.
“If the market continues to soften, you’re probably going to see this become more of a negotiating tool for executives,” says [listing broker] Steen. “I can imagine executives turning to their companies and saying, ‘Who is going to make the hurt go away?’ ” The rest of us homeowners—those without a corporate sugar daddy to bail us out—will remain subject to the normal market forces of supply and demand.
(a) That’s outrageous.
(B) I’m not surprised.
It ought to be considered income and taxed at 40%.
It is considered income. You have to report all moving expenses that the company paid out. They do pay taxes on it.
If I were a shareholder in these companies I would be on the warpath. I think the “bling” approach to executives has been way out of hand for the last 10 years.
The shareholders are comatose, it’s the incestuous boards that run the show now. Most CEOs are board memebers for other companies. Every proxy I get I look up the board members coming up for reelection and see what other “jobs” they have.
The rest of us have to play by the rules, while the elite CEO class gets all risk removed from their lives…it truly is disgusting!
Agreed.
Capitalism for you - socialism for me!
The sex ads were to find girls in my hometown. It didn’t look to alarming, but my Mcafee virus went off. I’m sure if I had clicked on find girls… it would have been a little more graphic!
As far as the article, that’s nothing new. Whenever we get relocated, we get three appraisals. They give us the average of the appraisals, if we take a buy out. We are also guarunteed the price we paid plus any home improvements(landscaping, blinds….). Out of 8 houses, we’ve only had one that came in at a loss(Dallas early 90’s). We have been relocated 10 times over the last 25 years, so this is nothing new.
The flip side of the corporate exec’s getting the help of the sugar daddy, is that they probably wouldn’t take the job if they had to sell their home at a loss. They don’t have time to wait out the real estate market.
Isn’t S.Carolina the area where that jacka$$ from “Flip this House” operates? I could be wrong, but I would love to see him holding the bag on his places.
Also, haven’t I read that all the FL refugees that leave are all migrating to SC, NC, TN, GA, etc…this article seems to dispute that notion.
Yeah that’s where those bozos are. Maybe the show encouraged other flippers to buy there. The problem is, it’s in the middle of nowhere! Beautiful beaches and great southern hospitality, but not much else. Most halfbackers I know are going to larger cities. Atlanta, Columbia, Charlotte….. not a great place to try and flip homes! The job base in Beauford is worse than Florida!
NC’s coast is even more exposed to storms and surge than FLA. Basically, just thin sand bars that storms will cut channels through. (Google what happened when Isabel came ashore in 2003).
Visit only. Don’t buy there. The old timers at the turn of the century built their homes on the side of the islands AWAY from the ocean for good reason.
he an economist. great! this is the attitude of south florida real estate royality. how dare we say, “the bubble has burst” naugle the dictator mayor of fort lauderdale called working class people looking for a home, communist. only coral springs, an middle and upper class city has actually set aside homes for working class. coral springs needed to maintain police and fire, so they were obligated to do something. (from the coral springs city council). these flipfloppers are a joke. now, we may have ernesto which will expose more house building flaws. there are “million dollar homes” with shingles ripped off their roofs, every where in parkland and west boca. i love them cheerleaders. all you see here is showdown at the ak coral. just other re cheerleader blaming the man1
Sheesh, is Naugle still up to his political shenanigans? We left that area in 2000 and never looked back.
naugle and everyother politician in south florida are so deep in the developers pockets, they dont see any thing else. there is a multi million dollar corruption scandal in miami dade. people stole money from affordable housing fund. they continue to build in broward and palm beach today and now the buzz word is HOW DID HOUSES GET SO EXPENSIVE? like they never notice the tax windfall they have had over the past 5 years.
JUST CANT TRUST THEM!
Democracy doesn’t give you the best government, only the government you deserve.
Warning: Larry, while I’m sure what was represented in your link is well founded, the site advertises sex and my virus protection went off. I would warn others not to open that link. Larry, maybe you can post the article at length.
Sorry, that’s not definitely not from Slate (i read it daily), you have some sort of spyware installed on your computer that is redirecting your browser or showing ads on top…or you’ve spawned a tiny window from another site you visited.
“In reading the South Florida Sun-Sentinel lately, I could not help but wonder if some of the ‘journalists’ slept through the class where journalists learn the ethics of reporting the news and not creating the news.” “If you read the front page, one would get the idea that the real estate world has already gone to hell in a handbasket.”
“I grant you that the market has some selective problems and justly so due to reckless investments and not due to the people needing housing. These investors are going to get what is deserved for their actions in selective areas of the market, but the market as a whole is far from the doom and gloom that is headlined in the Sun-Sentinel lately.”
“Our country is in enough of a mess today from this type of activity by some leaders. Don’t put the Sun-Sentinel on the same train. That may not be a light at the end of the tunnel, it could be another train.”
Why are you reporting bad news. All those years when you told us how the Real Estate gravy train would last forever were great. You hid the truth about housing then, why can’t you keep quiet now. You’ll ruin everything. It’s all your fault.
I’m not listening (fingers in ears) nenenenenenenenenenenenene!
- if some of the ‘journalists’ slept through the class
- where journalists learn the ethics of reporting the news and not creating the news.”
The writer was on to the truth, he just missed it!
The media reported only the ‘upside’ for the last 4-5 years …..
not warning of the probable drop.
For every shark, there must be chum. These people are the chum.
She should ask Robert Kiyosaki for a seminar refund.
This person needs to learn the difference between “selective” and “selected,” but then, realty is the “profession” with the lowest educational standards in the known world, so I am not surprised.
Welcome to your NAR 1 800 Dial A Prayer Automated Hotline.
NOW is the Best Time to Buy a Home. Dispite a Minor Correction in the Hosing Market, Nothing Can go wrong
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“Minor Correction in the Hosing Market”,
“HOSING” MARKET is RIGHT-LMAO!!!!!!!!!!!
Those who missed selling at the crest of that wave now are discovering they may have to give 20 percent of those profits back, Clarkson said.
Give back 20 percent of the profits? More like 20 percent of the PRICE? :-O For anyone who bought last year, looks like the latter. Big difference.
“More like 20 percent of the PRICE”
Agreed. That looks like a clever manipulation of the wording, to me.
The only “profit” I see is an old man with sheep.
Gavish, who also invests in real estate, bought a small house in Spring Hill in 2003 for $42,000 and thought of putting it on the market in November, when she calculated that the asking price should be $129,000.
By the time she got around to listing it in March, she asked $99,000. She has since dropped the price to $89,000.
NOW THAT IS A SHAVE! 40% WHOO NELLY!
“We showed the house twice last week, so now I know I’m in the ballpark,” Gavish said.
Gavish, who bought six lots last year, said investors should have known to expect higher tax bills.
“People don’t realize that when lots appreciate in market value they are also going to increase in (taxable) value.”
To property owners like the Jurkowskis, who bought a lot so they could build a home, Gavish offers this encouraging thought: Based on this year’s market, their tax bill will almost certainly drop next year.
THIS IS THE FLORIDA MINDSET. DONT TAX ME FOR THE 500,000 VALUE, TAX ME AT PURCHASED PRICE 200,000. STOP CRYING, YOU ARE RICH RIGHT?
Yep, that is the Florida mindset. The people who bought our place were all warm and fuzzy when it appraised higher than what they purchased it for. But when their insurance hiked dramatically and they received the tax bill, they screamed bloody murder and contested the assessed value with the county and got it back down to the purchase price.
Gavish is a realist, she’s been selling in Hernando County for years. That county and Pasco County are a tough sell. The insurance rates are among the highest in Florida on account of the massive sinkhole claims in those counties.
Just to add a thought, it does appear as if prices are dropping more in the Pasco and Hernando counties of Florida, probably due to the sinkhole/insurance issues. Not enough, but they are dropping. For me to buy in a county where the insurance bills add dramatically to the monthly payment, prices would have to drop below 2000 levels to compensate.
Housing numbers in South Florida will be adjusting in a couple of days. Hurricane Ernesto is coming ashore to do a little ‘creative landscaping’ even as we speak…
“Just 5 percent of the homes on the market are being sold in any given month, Realtors said. ‘There is a ton of inventory, and prices have not hit the bottom yet,’ a real estate veteran Bobby Sandell said.”
That’s 20 months of inventory. If prices aren’t adjusting now, wait another year. The same houses will be on the market.
Yesterday, we went to an open house at 3:00 three doors away from us. The couple (married) showing the house said we were the first ones to show up that day. They were both very nice, and after following us around the house, she asked if we were interested….we started chating with them about the market turning. The confident team said there werent many buyers these days, but that was just a temporary lull in business? They have been in RE for 6 years. moved here from Seattle in the mid 50’s I would say, telling us they have made good money, own three rentals that were purchased in the last three years, and looking to buy another one. The husband said he is a mortage broker -said it was not possible for the market to go down that much! That this was a lull in the season, to go up again! We were saved from more conversation when a young married couple entered the house…I am not sure if they really believe the market is stable or not. But interesting to talk with an RE couple who both are in it pretty deep with recent rental purchases.
“The husband said he is a mortage broker -said it was not possible for the market to go down that much!”
Has he got a nice car? One that you’d like to own, cheap? Mention that you’ve always wanted a car like that. The good fairy might visit you in a few months.
They have been in RE for 6 years
Of course this mortgage loan bozo says the market never goes down, because his ludicious brevity of tenure in the biz has never shown him a down side.
Absolutely astounding as to the morons wandering around plying themselves off as professionals.
You can thank you local state licensing boards for this fiasco.
Bottom-Feeder: Fort Myers-based real estate broker Ed Bonkowski
Gotta love him!
We relocated to NC from Palm Beach County because of work. The number of houses for sale in the community we left looks like it almost doubled in the last few months. I can’t imagine the amount of stress some of these homeowners are under. I feel like we dodged a rather large bullet.
So, how will the Miami city birds hold up in Ernesto - all of the cranes building these 75,000 new condos on the beach for all of the rich baby boomers who are moving to FL in the next few years? Isn’t everyone in Miami supposed to be really rich and money is no object? Isn’t it a special place where ‘everybody’ wants to live, streest paved with gold, beautiful people, etc? And really a safe place to have a family? Bring on Ernesto!!!!
Is Ernesto an illegal alien?
Just asking.
Ernesto might be a blessing to several developers if it knocks down a few empty condo towers.
I enjoy a good storm blog, but Ernesto will be nothing more than some showers and breeze for FLA. Fickle things, they are. Maybe the next one…
We relocated to NC from Palm Beach County because of work in early spring. The numbers of homes for sale in the community we left looks like it almost doubled in the past few months. I can’t imagine the amount of stress those homeowners are under. I feel like we dodged a rather large bullet
I just wonder if the realtors disclosed to the new buyers in Florida ,(before they bought ),that the State had pending property Insurance issues .
It’s hard for me to believe that just all of a sudden ,out of the blue the Insurance Companies just increased the insurance payments 200/300/500 % along with reducing coverage ,(however Katrina might of been the straw .) Was it disclosed in escrow that there was a major pending insurance issue ?
Maybe the buyers were in such a frenzy to get rich quick that they never read the fine print disclosures ,but usually you get a insurance quote prior to closing of escrow .
The insurance premium has to be paid at close on a purchase, so the borrower should understand how much they have to pay. Where borrowers really are in for a reality check is when they see their first RE tax bill or their first escrow adjustment statement. What happens is that some LO’s use whatever the last occupant paid for their home. But in FL, the tax is based on what the current occupant pays for the home. So the seller who paid $100,000 five years ago, might be paying $1,500/yr, whereas the buyer who pays $200,000 now will be paying $3,500/yr. The LO who sets up the deal only has $125/mo set aside for taxes, when in reality they need to sock away $292/mo. If they escrow, not only does the buyer have to pay the $292/mo, but they pay an additional $167/mo because a the shortage has to be repaid to the mortgage servicer. Throw in a doubling of the insurance premium and the buyer begins to feel remorse. (and we won’t get into the part where the IO period ends).
They got the disclosure, they just thought they’d sell before the premiums would be an issue. Title people have told me they’d spell everything out, very clearly to people…who got a glazed look in their eye while grasping for the pen to sign.
“…who got a glazed look in their eye while grasping for the pen to sign.”
Reminds me of your earlier comment about ceasing to warn friends and colleagues about the bust. Of all the many I’ve told, only one, who was ready to buy, is grateful. One other could have cashed out and been way ahead when they relocate in a couple of years anyway. All the rest are either “Uh, huh.. pass the sugar, pls.”, or just glazed over with polite disinterest.
Let’s see where we stand after Ernesto hits. All of south Florida is very nervous. This is the first hurricane since Katrina. ANY type of damage and it will IMHO be the straw that breaks the camels back.
Non-event. Go to work. Don’t worry about Ernesto. He’s a kitten.