Reality Hasn’t Set In: Florida
The Palm Beach Post reports from Florida. “For Bob Healey, the city’s $2.4 billion waterfront redevelopment plan is like a yacht stalled at sea. His company was picked a year ago this week to turn 400 acres of blight into a dazzling waterfront. There is little to show, after 12 months and more than $50 million, Healey said.”
“‘We’re not going forward on anything,’ a frustrated Healey said. A glut in the condominium market..contributed to the project’s lack of progress.”
The USA Today. “With a median sales price of $177,900, homes around the central Florida city of Ocala are a steal compared with those in many housing markets on the East Coast. ‘We’re getting a lot of buyers from New York and the Northeast who are selling their houses for $500,000 to $600,000 and coming down here and paying cash and putting a wad in the bank,’ says agent Tom Rath.”
“But the trend has likely peaked, judging from the number of ‘just reduced’ signs around town. A big problem is the seven-month supply of properties on the market. The inventory of homes is up more than 300% from last summer.”
“‘Folks are still thinking they can get top dollar for their homes,’ Rath says of his recent clients. ‘I don’t think reality has set in.’”
The Sun Sentinel. “Florida leads the nation in the number of condominium-hotel rooms in the pipeline, but analysts fear an oversupply could prove troubling for developers and consumers. The Sunshine State has more than 31,500 condo-hotel rooms under development.”
“South Florida is a hotbed for condo-hotels, which investors consider a good alternative to second homes. Investors buy the individual hotel rooms from developers, who use the money to help finance the projects. Prices for condo-hotel rooms typically range from $200,000 to $3 million.”
“When the owners aren’t there, they can rent their rooms, charging fees of $275 a night or more at upscale properties.”
“Experts say developers are building too many rooms, just as they flooded the market with residential condos during the housing boom of 2000 to 2005. ‘I’m definitely concerned about overbuilding since some of these projects were fueled by the real-estate hype,’ said Richard Hollowell, a Fort Lauderdale consultant. ‘There are only so many bodies that are coming to certain areas to fill up rooms.’”
“There’s no guarantee that owners will have a steady stream of rental income, and many find that they don’t have enough money to cover their mortgages, insurance and other expenses. In addition, condo-hotel owners face restrictions..and owners who try to resell units within five years have trouble recouping their money.”
“‘Just like any investment, it doesn’t work out for everybody,’ said Bob Goldstein, president of a Boca Raton-based company that oversees troubled properties for banks. ‘Condo-hotels are not really designed to improve the net worth of the people who are buying the individual units. The owners are there to provide financing to developers.’”
“Condo-hotel buyers should expect that rental programs will pay 50 percent to 75 percent of their annual costs, excluding mortgages. ‘A lot of owners expect to have their unit paid for by the rental program,’ said Shadi Zaki, development director for the condo-hotel association. ‘That’s almost impossible.’”
The option ARM is “like the neutron bomb,” says George McCarthy, a housing economist at New York’s Ford Foundation. “It’s going to kill all the people but leave the houses standing.”
Option ARM = housing market weapon of mass destruction
my only regret is many of these greater fools have only put down deposits on unbuilt homes and condos. When the projects fail or they cancel, they get out for free.
Unlike criminal law where intent is still a crime, these fools have lucked out of misery.
Please correct me if I’m wrong. Your wish/desire is for an increase in the number of people to suffer financial hardship as the result of taking on an obligation that they may or may not have a full understanding of in the first place?
Regardless of the knowledge of the debt/obligation that these individuals are undertaking I would posit that it would be better for society and our economy in general if it were possible to hold steady or decrease the number of FB’s. In my opinion even if these individuals get “lucky” and walk away from there deposits it should be viewed as a good thing as opposed to a “crime” since the PTB are unable to rope in another sucker.
Hopefully the lucky ones will walk away with a lesson learned. I would rather see people get their money back. There’s enough FB’s to wreak havoc on our economy.
Yes, I definitely wish it. In fact, I’ll even pray for it.
So your idea of utopia looks something like this:
A subdivision on the margin locationally speaking (new or old doesn’t matter because of the HELOC/refinance money) suffers a 10% foreclosure rate. These foreclosures create eyesores and problems(crime) for the remainder of the people that live in the subdivision. After suffering through increasing crime and decreasing values remaining owners sell (if they can) at a loss to get out of the burgeoning slum / downward spiral that is now in place. This “bad money” forcing out “good money” creates problems even for those individuals who may have bought well before this credit bubble ever started. This creates additional “losers” out of households that were potentially fiscally prudent and well timed in their purchases. Do you think that these yet to be created FB’s should burn in the pyre that was created by the loose credit supplied by the Fed and FCB’s or is this “class” of FB’s treated differently? Is this your hope for the future so that you can buy in at bargain prices?
If this thing unwinds to the point where credit creation stops as a result of systemic losses (foreclosure/bankruptcy) to the banking system beyond the fractional reserves that they hold than the last thing any of us are going to be worrying about is a “bargain” price on a house.
Personally I’m disgusted by the actions that have been taken by our government not only in the last four years pertaining to credit creation but over history starting with Wilson signing into law the creation of the Federal Reserve Bank for the benefit of a number of commercial banks, however; I’m even more worried about central bank failure to manage the current problem and the ensuing financial panic that may result. I have yet to meet/read anyone who can fully explain/contemplate the ramifications a panic would have pertaining to MBS, CMOs, default swaps, volatility, contra party performance, etc. and what the financial world will look like afterwards. Given your hope and desire for additional FB’s it seems like you’ve got this figured out? If you do I’d like to hear how you think this will play out as a piece of good news (financially) these days would be most welcome.
You would need to study FIRREA and all the other Federal aphabet creations which spent $500 billion in the financial clean-up which occurred following the ‘90/’91 collapse.
So $500 billion got allocated in deficit spending in 1993 $$$ and the US taxpayer never said boo. Think the amortization term was 30 years.
Guess the ho-hum demeanor stems from the fact that like 65% of the US populace hasn’t read a book since HS.
Super HedgefundGuy can do the final tally. I’m a moron.
However, with this bubble infinately worse, my guess is the solutions provided in ‘93 won’t have a chance.
I’m starting to throw my cards in with the “start a war to deviate attention and postpone the depression” crowd.
‘Condo-hotels are not really designed to improve the net worth of the people who are buying the individual units. The owners are there to provide financing to developers.’
I’m sure the Realtor® points this out to each and every buyer!
I don’t get it. Why the hell would anyone subsidize the developer (and ultimately the hotel guest too) when they could just rent the room for a week for far less??
Stupid is as stupid does…
Just another byproduct of a mania. This happens when way too much capital is chasing one asset class; inevitably, investor imagination and expectation slowly decouples from reality.
If any of these investors were rational they’d be asking themselves, “What do I know about the hotel industry and is this really the best way to compete with other hotel owners?”
The incredible thing is that this guy actually said it.
Maybe if you give the developer a check for $25k, he’ll let you stay in his back room when you come to town.
Argh, you beat me to it.
Sounds like a great deal.
I pay for it, get negative cash flow, and help the developer finance the project.
What a wonderful idea. Not only do I have negative cashflow, but now its in someone else’s hands to make sure I am as negative as possible.
Why on earth would anyone do this? 300K for a room in a hotel? I thought that was the nice thing about hotels, you can go to anyone you want to, whenever you want. So you tie up 300K and have to ask permission to use your room? And have to stay in that particular room? This ONLY makes sense when property is appreciating at 20%+ per year. Its a totally hands off investment. When values go down, this is like an anchor around your neck; you can’t move into it, and it just costs money. Oh, and your chances of selling it in a down market? LOL!
Mike,
You’re trying to be too rationale about this. They are not tying up 300k. The money is “free”. They are just getting in on the real estate gravy train. ZERO DOWN, and someone else makes the payments, without the hassle of managing your “investment” property.
You just need to get a better understanding of this “new paradigm”.
My thoughts exactly. Who on earth would seriously buy into this?
High net worth individuals who travel frequently to a destination. ‘Their’ room is always ready, and there are no maintenance/ repairs. Plus the corporation picks it us and there’s some little income to help offset expenses when you’re not there.
It’s about convenience, and you really can’t worry about the money.
They are offering it to Joe Soccer Mom who sees it as a ticket to easy street.
Not likely. “High net worth individuals who travel frequently to a destination” just buy a condo and leave it vacant when they’re not there; they don’t want to worry about finding cum stains on the bed from somebody else.
P.T. Barnum, call your office. There really is a sucker born every minute.
What’s really bizarre is, there are thousands of these units all over the US. This has been going on for over 30 years, it just booms in every up-cycle.
Ocala- a cultural wasteland
Raford at least has a prison
Ocala has the women’s prison.
You obviously don’t know the finer Florida travel routes.
Just head up 301……….prison row.
Be careful. That route takes you through some of our state’s more notorious speed traps, including the infamous town of Waldo, Fla.
I actually like the horse country part of Ocala, which still has some roadside stands where you can buy fresh fruit. Unfortunately, “horse country” doesn’t translate in this state’s economy, unless we can turn the land into strip malls and subdivisions and sell those things using the imagery of what we destroyed.
Do you know what you get when you put the entire popluation of Ocala together in a stadium?
A full set of teeth.
Too funny! The only kind of New Yorkers/New Jersey people I can imagine settling in Ocala are the big hair, Fran Dresher accent types. Should be an interesting mix of Florida and New yorks finest.
Ocala is BFE. I cannot imagine living there unless you are raising horses. Might as well start shilling the swampland to the GFs. However, if you are road tripping down from up North recommend that you spend the night in one of the hotels for about $50 per night and visit Silver Springs which is a nice 1/2 day day nature park. Just look out for the crazy ass wild monkeys!
Check out Ocala:
http://maps.yahoo.com/maps_result?addr=&csz=Ocala%2C+FL&state=FL&uzip=34475&ds=n&name=&desc=&lat=29.187021&lon=-82.139519&mlt=29.187021&mln=-82.139519&zoomin=yes&BFKey=&resize=l&trf=0&mag=6
Silver Springs:
http://www.silversprings.com/
Do you know what people in Ocala call “Hee Haw”?
The “History Channel.”
The “History Channel.”
Funny.
- the city’s $2.4 billion waterfront redevelopment plan is like a yacht stalled at sea.
- His company was picked a year ago this week to turn 400 acres of blight into a dazzling waterfront
I can see them planning this project 2 or 3 years ago … just like a Boiler Room Gig. The young genius’s are excited because the market can only ‘Go Up’, there is no more land, 1000 new folks moving into the state daily, etc.
- Is Harvard Business school only producing dumb asses that will not analyze the future business model from different perspectives?
As long as they didn’t lose their shirts already, this will probably be a good project going forward (10+ years). The story of the now extremely popular docklands project in east London (UK) is littered with the wreckage of bankrupt developers.
I hope I’m not forced to move to Ocala because it’s the only place that is ‘affordable’. As semi-recent college grads my spouse and I have watched all of our friends in their mid 20’s buy places and look at us like we’re crazy for renting. I keep telling them and my spouse I’ll buy a house when prices aren’t insane anymore here in Orlando. I have this bad feeling however that prices may not return to ‘normal’ for a while and we’ll be forced to move because of it. Oh well, if it happens so be it, Orlando is becoming less attractive everyday.
What is the name for those whose parents moved down and raised them here because it was cheap, then the children couldn’t afford to live here on their own? New-backs? I guess that is the real history of Florida, where it’s native’s way of life is destroyed by invaders.
if they bought 04 or later they’re fckd
Be patient - I am in the Orlando area as well - plenty of places to rent for far less than the cost of ownership - This house of cards is tumbling, but it will take at least 2-3 years before you see any real value on a widespread basis. All of these condos in and around Orlando - I anticipate a 50% haircut. Patience in the Key - keep your powder dry and you’ll be in a position to pick thru the rubble.
Right ,its a good opportunity to save money while your are waiting .So many people were put in houses by the skin of their teeth and they don’t have any money for a rainy day .
Really, going into home ownership without a pot to piXX in is just stupid.
I have noticed that many times after couples buy a house ,very shortly after ,they buy a new car and a bunch of new furniture on credit .Talk about being in hock up to your ears .
Orlando Renter, Don’t be discouraged. Do you really think real estate can go higher from here? At best, I think prices will stay flat for the next 10 years. That option gives you 10 years to save up a large down payment = lower mortgage payments.
My belief is that you will see lower prices if you wait it out 3 years - maybe 30% to as high as 40% less. I am no expert, just someone close to 50 in age who thinks there is way too much debt and way too many people in over their heads.
Most experts say we have been through a strong period in our economy. If that is true, doesn’t it make you believe that things can only slow down somewhat, meaning layoffs?
Here in Maryland, in my neighborhood, the “lower priced” homes are having to reduce prices, and then some of them sell. The ones who still have summer 2005 prices sit and don’t sell. The
“high end homes” just aren’t selling at all.
This time last year, I became the executor for an estate of a family member who owned (no mortgage) a home in Melbourne. After researching what had been going in the FL market, I sold that house as fast as possible. The house sold for $215K. It needed paint throughout, new carpet in some rooms, had original early 80s bathrooms and kitchen - no updating, no repairs done. I asked how much rent I could expect if I kept the home - I was told by 3 realtors $850/month. At that time, the taxes were $1200 and homeowners insurance was $1200. Once the homestead exemption was lost, I don’t know how high the taxes would have gone. I do know the insurance would have gone up to over $3000 per year because it is in Brevard County. In round numbers, you are looking at about $400 per month in insurance and taxes, not to mention repairs, vacancies, legal fees. I think it would have been hard to make a profit on that house and it had no mortgage! Also, given that it had doubled in price between 2003 and 2005, where could the price go? At best, stay the same for a very long time, more likely to go down. The woman who lived next door told me that almost all the homes purchased in the previous two years in this neighborhood were investors with no money down, interest only, adjustable mortgages. If I can barely break even with no mortgage, what is going to happen to them? I see TONS of houses on the market coming your FL way in the next three years, and prices only going down.
Orlando Renter, I just zillowed the home I sold in Melbourne using a 10 year time frame. I know the home was purchased in 1985 for $68K. From 1985 to 2003, the house slowly and gradually increased in price to about $110K. That’s about a $30,000 increase in 18 years. Then, it doubles in price in the next two years. Why? Did average incomes in Melbourne double in those two years? No, it doesn’t add up.
Thanks for reply Marylander, I too have family in Melbourne and they bought your house. Well not the same one but a new one for 210k in an area where 3 or 4 years ago the median was $120k. Average incomes have certainly not doubled anywhere around here, and you’re so right about the debt everywhere. My only concern is will I be able to save enough money and exactly how long will I need to wait. Rents here while low compared to owning are still on the high side due to speculators trying to cover their carrying costs. I think that a problem going unoticed is that when people cannot afford even to rent (around here finding a ‘nice’ (meaning safe) place to rent on the cheap side is tough) the only option they see is to buy. After all buying with some interest only ARM can be cheaper than renting… for now.
Orlando Renter, I certainly don’t know your area. I have never lived there. I hate to sound so “we walked 5 miles in the snow to school every day”, but is there some way you and spouse can dramatically lower your expenses without living in a high crime area? I am thinking of other people my age and how we saved up for a house. One couple I know lived in the husband’s parents’ unfinished basement for 4 years (fixing up a kitchen/bath with rejects from renovated houses), one family actually took an old school bus and turned into a trailer sort of home and lived in it 5 years while saving money for a home downpayment, couples and even couples with kids who shared a rental house with another couple…like I said, I don’t know your area, but most people in my age group didn’t have the money to buy something until around age 30 or early 30s. Of course we were saving to have a 20% downpayment…
I was surprised by your comment that it is cheaper (at least initially) to buy a home with an ARM than to rent…now I understand why so many young people are doing this. I’m not saying I think it is a good idea, because it isn’t, I just understand why so many are tempted, especially if they don’t really understand what this loan will evolve into $ wise. When I was your age, there was no option but to save up your 20%, buy a small, in need of repair starter home, and gradually move up as you saved more money/made more money.
You should be able to rent a house in the Melbourne-Palm Bay-Viera area for $1,200-$1,400/mo., 3BR, 2BA, 2-car garage and maybe even a pool.
Very true. We currently rent a 3/2 in a nice neighborhood for $1200. I would like to be ‘owning’ such a place for $1200 a month though. We moved from a large 1 bedroom in Orlando when they raised our rent to $900. Because of the recent grad status we are unfortunately paying off debt rather than saving though. It would be nice to find a livable two bedroom close to downtown for under a grand, but I guess that is pushing it these days.
Orlando renter — if you don’t mind small and definitely not classy, check out areas like the blocks from well south of Briercliff all the way to Michigan Avenue, between Delaney and Orange Avenue. Possible some stuff on the east side of Delaney as well. You might be able to rent for super-low $. If you buy, at least *eventually* that whole area should come up in value because it is so close to ORHS and downtown. Sort of the next Thornton Park.
Well I moved down from New York because it was too damn expensive to buy a place up there. All I heard was how cheap it was down in Orlando. When you add up all the additional expenses such as car payments (no need to have a car in NYC), car insurance payments, gas and tolls, and add that to the rent I am paying, housing becomes just as expensive down here! I am living in an apartment with the wife and two kids. Last year I told my wife and my mother that there is no way I am buying a house. They kept on badgering my but I essentially told them that If I buy a house and it goes down (and I knew it would go down) I will kill both of them! Thankfully I waited because I am sure I would be $50k in the hole at this point. That being said, I still see invenotry going up up up but the home owners are staying put on their prices.
If you need a place that is as close to Orlando as Ocala, and you feel you must buy one rather than rent, take a look at Polk County from Haines City on to the south and west, toward Bartow and past Lakeland. There is still some really cheap housing there, but there also is no free lunch.
Hey Renter,
Keep on renting! Paying off your loans is more important. After owning homes for the last 25 years we are renting. Refusing to pay what housing costs here in Florida.
While it is exciting to own your first home, let me tell you a story of a friend. Back around 1988 she and her husband bought their first home. They were thrilled. However, the Dallas market tanked. They loved their home and didn’t worry. Then came along child number one. Then child number two. Oops, their beautiful home was crammed with baby gear, toys……Time to buy up in 1991. They couldn’t sell. Foreclosures had flooded the market causing housing to go DOWN. They finally sold for a $30K loss. Had they rented the same home for less than their carrying costs, saved money then not only would they still have that 30k, but whatever money they were able to save during that time. She always says if she had to do it over again she would definately rent for the first few years.
The Orlando market is in much worse shape than Dallas. I know we are a society of instant gratification, but you could be making the worst financial decision of your life. I know what it’s like. My first home was 1900 sq. feet four bedrooms. It was my dream home. I imagined raising my family there. I didn’t need a huge house. It was perfect. Then the kids come, then the stuff starts building up. Soon your garage is stuffed to the max. Time to move up. Your salary is higher, you can afford more home…. In a normal market this is all well and good. Not in this market though.
As a homeowner for the last 24 years, I can honestly say I find renting refreshing. No, I can’t paint the walls any color without having to repaint… Whether I own or rent, this is my home. The difference is if the dishwasher breaks, the landlord has to pay to fix it! Let me tell you, repairmen are expensive. They build things so you have to have them fixed shortly after the warranty runs out. You are so much better off.
Let me clarify, we have been renting for the last 16 months. So we haven’t been homeowners for the last 25 years. We took a year off that’s why I said 24 later. My mistake.
Condo-hotel buyers should expect that rental programs will pay 50 percent to 75 percent of their annual costs, excluding mortgages.
What?!? So you lose money every month even BEFORE you pay the mortgage?! That’s an incredibly stupid investment.
What if you wanted to stay in your Condo-hotel for half the year ,(say your a snowbird ),would they let you ? In other words do they limit the amount of days the owner can occupy the property ?
Normally a limited number of days per year, and a maximum duration of each stay. Varies per property.
So, the hotel owner/developer is going to hire his buddy as manager, pay him $800,000 a year, and charge the salary to the condo/hotel buyers.
Life is good.
Great point Orlando,
We’re now at a 12+ month supply in Tampa, yet the prices are still clinging at the top. Somethings got to give, and my money is on a certain little principle known as “gravity”.
Did anyone see what our geniuses in the legislature came up with? Seems there are just too many “hurdles” slowing the growth of our state, and something MUST be done about it!
Florida Needs More Construction Workers
HA!!! A 12 month supply is for little girls.. Here in Palm Beach county there is a 36 month supply. In July of 2006 there were over 22,000 properties listed and only about 600 sold.
The first wave of toxic loans are resetting. The next six months are going to be painful.
Sorry,need to clarify. This is for the West Palm Beach Area. Here’s the link.
Enjoy.
http://iprecom.tempdomainname.com/trendg/index.htm
I was shocked when I read that! That is absolutely insane!!!!!!!!!!
On TV at mid-day (I believe “Power Lunch”) there was a report on Orlando Housing, interviewing the Orlando Sentinel’s business editor. She noted that inventory is up from less than 2 month’s supply to over 9 months’, without verbally connecting the dots that this is a hair under five times the inventory of a year ago. She seemed pleased that the median selling price is almost unchanged. Little wonder, if the great bulk of the additional 7 month’s listings are priced at or above that median. I’ll bet the market is reasonably active at prices below that number.
Here are listings in 32746, which is mostly Heathrow, a yuppie capital, for SFRs 3+2+:
- - - - - - Listings priced - - - - -Total
- - - - - - $200K - $600K - - - - -Listings
9/12/05 - - - - 50 - - - - - - - - - 120
9/10/06 - - - -267 - - - - - - - - - 550
“‘We’re getting a lot of buyers from New York and the Northeast who are selling their houses for $500,000 to $600,000 and coming down here and paying cash and putting a wad in the bank,’ says agent Tom Rath.”
“The inventory of homes is up more than 300% from last summer.”
Obviously “a lot” is a relative term.
Further, perhaps they’re not puting “a wad” in the bank; maybe they’ve all bought 2 props, and now everyone’s trying to dump the spec house.
That’s the worst thing about Florida. As much as I like it there, everyone you talk to sounds like dey’re from da hood in Brooklyn. Get all the New Yorkers out, it might be a decent place to live.
Don’t be so sure those who talk like that are actually from NY. Lots of losers walking around with phony ghetto accents these days. It matches oh-so-well with their pimped out Escalades.
A common jest used in the past by us Natives:
What is happiness to a Floridian??
100,000 New Yorkers headed back north,
with a Canadian under each arm.
The canadians have never really bothered me. At least they have manners! Used to be the New Yorkers settled on the East coast. Now they’re over here too. They whine about the traffic they created, they whine about the schools, they whine about the restaurants, whine, whine, whine!!!!!!!!!! “In New York they this, In New York they have that…..”
I must add I have many good friends from New York that aren’t like that. It just seems that in the last 5 years we have been inundated with New Yorks biggest losers.
As noted above, I moved to Orlando from New York and I agree with everything you noted above. (not so much the traffic though) IMHO, everything about New York is better. That being said, I never bitch and moan to anybody about it except the wife. It is what it is. You make the best out of where you are and enjoy life. Likewise, I have met a lot of great people down here and have no worries about terrorism like I did when I worked downtown in NYC.
Yo yo yo - don’t be dissin’ tha Brooklyn playahs !
Seriously, we are not all ghettoed out & flocking down in our Escalades to pump ‘n run your housing prices and pimp out your kids. Some of us (even us with degrees in Information Systems) just cannot afford a decent home in Brooklyn and so are traveling down in our beat up old ‘92 Nissan looking to our sister state for a clean, affordable (to us) place to live where our children can have their own backyard like we did when we were young.
At least that’s what’s in it for me. Hopefully, we can make some positive contributions to the state and counter some of our bad stereotypes!
I knew I would take some heat for that comment! sorry, it was just too tempting. I know not everyone falls under my stereotype, it’s just those that do are so ANNOYING!!! You lump them all together! Sorry!
That’s ok - believe me, i find plenty of New Yorkers annoying.
It is amazing how many are in Tampa area. I’ve been down there about ten times in the last year scouting out my place, and everywhere I go I meet someone from the northeast - many from NYC.
In Tarpon Springs, half the Greek waiters I spoke to were from Astoria. I went to the Tampa home show (lot’s of action at the home improvement tables - NO ONE stopping at home builders tables) over Labor Day weekend and met at least 10 people from NYC.
I keep keep hoping they would put their bread making skills to good use down here. After two years down here, I still can’t find a decent roll for my cheese steak sandwich. Can somebody please help me. I’m about ready to move back up north, just so I can get a decent Philly cheese steak.
I can help you! I can help you pack for your move back up there.
On the bright side, there’s likely to be some really reasonable condo-hotel rates for the traveler! They’re going to have to charge what the market will bear. I don’t see how the firm managing the hotel end is likely to do well either. Does anyone know who those firms are? Maybe REITs?
…..and if you own a “condotel room”……
Just whose rooms do you think will get priority when it comes time to book them…..your room or the rooms owned by the hotel ????
——————————————————————————
In summary, this entire “housing” mess MUST end badly.
And it will end sooner than most of us ever thought was possible. It will unwind with breathtaking speed…..I see a Major Recession in early 2007 after Santa Claus visits one last phat time and property / income taxes come due.
We are now on very thin ice and all it will take at this point is some minor event to tip the balance in our economy and start the rapid cascade downward into Deep Recession.
Save your cash and stock up on shotgun shells and canned goods. It will be ugly when this unwinds, I fear.
so what’s the plan les? do you need the ammo to open those cans or are you thinking about taking out some fellow americans trying to get into that double-wide of yours?
“But the trend has likely peaked, judging from the number of ‘just reduced’ signs around town. A big problem is the seven-month supply of properties on the market. The inventory of homes is up more than 300% from last summer.”
Ocala is a nice area but let’s not forget there is a reason it is cheap. NO INDUSTRY!!! Unless you are in the service industry, it’s a one-horse town. Out of staters always love to cite the low cost of living without realizing there aren’t any jobs.
The shopping stinks too! They shopuld visit the Ocala mall and that should be enough to tell them why it’s so cheap!
Thought I’d throw in a woman’s perspective on Ocala.
oh but it must have a ‘we made it all in china’ super walmart, complete with a nice parking lot to walk across for some true ocala style shopping entertainment
Speaking about ridiculous investments.
A close relative of mine called yesterday to brag about a third home purchase. That’s right already owns and occupies a home; refinanced said home and bought another last August and intends to close on the third in 2-3 weeks. BTW, financing both projects with, you guessed it, INT ONLY ARMs and both homes are projected to be negative cash flow for some time.
Help! How should I respond?
Respond with prayer. Sure, it’s unlikely to work, but it’s about a good as anything else you’ll be able to do right now, and once people are in the middle of the path they are on now, it will take almost a religious experience to get them to cancel out on this third house.
Let’s just hope they have good, stable, high incomes to keep these “alligators” fed for many years to come, because chances are, they’ll be holding them for a long time.
Get this… The banker is trying to talk relative into a fixed rate loan. I think the bankers are aware these assets will deflate over time.
In the secondary market,s fixed loans are more valuable than ARMS. Mortgage companies would prefer to sell fixed rate loans if possible.
Has the secondary finally wised up and said we’re not buying any more of these $#!T loans that are guaranteed to default? It’s about time.
Point to this blog. Watch while they’re reading. If the eyes widen and there is stunned silence, you’ve done your part. If it’s, “Well, the media’s biased and these guys are just gloom and doomers,” there’s no hope. But you tried. Praying is all that’s left.
Tried it and did’nt work. Replied that I was too negative, possibly envious, and something about not supporting her goals and dreams.
It gets worse. Recently got her license and thinking about leaving 80k + job to become FT realtor. Continuously repeats NAR mantra. Worships DL; after all, he is an economist.
Tell him to read what economist that work with some of the nations top financial institutions have to say rather than someone that gets their bread and butter from the selling of homes. Every financial news outlet is now admitting the bubble has burst. Even yesterday on CNBC they called the commodities bubble the second to burst recently. The first being Real Estate. Nobody in their right mind can claim ignorance in this market! If they are stupid enough to get in NOW, then let them learn the hard way!
I know. I know. The information is everywhere, the bubble is bursting; yet, they are still stuck on stupid. The hard way is probably in the only way. It’s a monumental tragedy, however.
I will never forget this time of my life. Manias can be really gripping…its not beanie babies you know…
As a bystander, its like watching a really bad wreck in slow motion and wanting to scream “Getoutoftheway!!” as loudly as I can and not being able to say anything…
My sister became a realtor; you really can’t tell people anything, they have to learn for themselves. Even if they realise you’re right later, they may just resent you. Better to speak your mind, then be supportive of whatever they decide and be around to help pick up the pieces afterward (emotionally, not financially).
Ask him if on his last two mortgages he is claiming that he will occupy the residence. Ask him what happens if the lender finds out he is living in three different residences at once
“Ask him if on his last two mortgages he is claiming that he will occupy the residence.”
Great point.
Get family members together and have an Intervention. The cult of FB has very powerful hold.
“When the owners aren’t there, they can rent their rooms, charging fees of $275 a night or more at upscale properties.”
Yes, like I want people doing the nasty in my condo even at $275 barely covers all the bedspreads I’ll have to replace. Yuck.
Doesn’t this sound an awful lot like the time share condos they used to sell back in the day? Except with this new twist the condo owner is on the hook for his entire unit rather than for just 2 weeks of it. And if it doesn’t rent the owner is out the money, not the developer.
Yes, I’ve been thinking “time-share” the whole time I’ve been reading this condotel stuff. Around 1990 I bought a time-share and eventually got pissed off with the maintenace, turned the time-share back to the company (Village at Loon Mountain), wrote off the whole thing as a $4,500 capital loss, and now consider it to have been a cheap education in the business of Not Getting Stuck With Worthless Property. Very delighted that the only house I own is under contract to be sold to someone else: closing this Friday, holding my breath, THIS is where prayer is needed!
Not sure what time,but just saw a blurb for a “Realty check ” segment about Orlando on CNBC today.
I’ll try to catch ,and see how indepth these clowns get in their 8 second sound bite…
Don’t worry, not much said. It’s different in Orlando.
for $275 a night, it better have a view of the Taj Mahal
for $275 a night, it better have a view of the Taj Mahal
LOl , They better give breakfast and those movies free to .
25,000 property tax notices returned as undeliverable in Broward.
http://www.sun-sentinel.com/news/local/broward/sfl-ctax12sep12,0,5465023.story?coll=sfla-news-broward
“Despite Hurricane Wilma and a year-end softening in the real estate market, the total value of property countywide hit $158 billion as of Jan. 1, a 20 percent increase from last year, according to Parrish’s office.”
The one-two punch of insurance and tax increases may be the knockout blow for sellers in Broward..
“There are thousands and thousands of them being returned, thousands,” Parrish said. “We have a mess over here. Here these people will miss their budget hearing if we don’t get the word out quickly.”
Oh Darn!
Abandoned condotels for everybody. Woohoo!!!
Maybe someone already mentioned this, but in the Herald Tribune today there is an article titled Citizens Cry Out For Tax Relief. The article is about the unfair tax laws and how Sarasota County’s tax base went from 12 billion to 59 billion. One poor guy that bought a house 6 months ago found his tax bill to be 800% higher than the previous owner! Citizens threatening to move out. Of course, they can’t sell their houses. They are screwed! Maybe someone could attach the article. without my teenagers, I can barely post on this blog and google a few things.
Here it is: http://tinyurl.com/hw3g3
I don’t get it, isn’t there a new law ( since July of last year) that a realtor must advise buyers of a property tax increase esp. when the seller had the property for years and their prop tax is based on whatever the milage is on the purchase price of their home plus a max increase of 3% per year for tax purposes?
A friend of mine just bought a condo , the previous owners bought it 2 yrs back for 250K and he paid $340. He had no clue about how much his taxes will be and it is sooooo simple to find this out. Just call your county appraiser and ask what the proposed milage is for th next hear and voila, you got your answer!
Realtors should let buyers know ( although most realtors don’t have a clue!)
Caveat Emptor?
I totally agree, but have to confess, I’ve never called the tax office to find out what taxes will be. If they were higher than the current owners, it’s wasn’t that big of a deal. Never would have imagined an 800% increase on any purchase. Of course we never bought a house that doubled, tripled, quadrupled in value.
That was back in the day when you were told you don’t always get your money out of a pool, crown molding, custom shutters, custom drapes……. You put things in your house for your enjoyment at the risk of not recovering your costs. Ahh, the good ol days!
Florida has a horrendous triple whammy… already high insurance is 2x-4x what it was… taxes will also double or triple or more when you buy new… and of course the insanely high cardboard-state. And people dare say buyers are ‘waiting’ no sir buyer cannot afford a studio in most of FL…
I agree!! I can not believe the bs about how when inventory shrinks prices will go up again because of our “strong job market”! What strong job market?? The low paying incomes many FL companies offer is barely enough to buy a home at 2003 prices and incomes have gone down ( inflation). Why are there so many ARMS out there ( in the last 2 years)… of course, people could not afford A) a conventional loan and B) not at all on a Stated income. If people could not afford their homes in 2004, how in the heck do they expect them to sell those same homes at a decent mark up in 2006??? I am a buyer and yes i should have bought as I was able to afford a home ata $200 in 2004 , now that same home is for sale for 350 and I am out. I have a higher then median family income and a good savings account but I feel cheated. Not only are interest rates higher so a higher mortgage, but my taxes will be nearly double at this price and insurance has gone up.I don’t know the calculations but in this market my income should have gone up with at least 35% and where does that happen??