‘The Raging Market Came To A Screeching Halt Last Year’
The Post and Courier reports from South Carolina. “For two years it was a feeding frenzy. What began as a pragmatic investment alternative to a shaky stock market after Sept. 11, 2001, suddenly prompted thousands of regular people to jump into real estate. In Fort Myers, the raging real estate market came to a screeching halt late last year.”
“‘The brakes went on — boom! — it stopped,’ said local builder Bart DeRosso. ‘It’s definitely, definitely dried up.’”
“Is South Carolina the next Florida? In the Charleston area, the median price of a home last year was $188,000. It had risen nearly $100,000 since 1995.”
“In Fort Myers last month, nearly 12,000 condos and houses were on the market. Too many, DeRosso said. ‘If you want to know where the market’s going, you look at inventory,’ said Denny Grimes, a Realtor in Fort Myers. ‘We don’t have a demand problem, we have a supply problem. … We had a market binge and now we’re going to suffer a little bit.’”
“In the Lowcountry, some say the housing market has started to soften. Prices are starting to come down, said (realtor) Sandy Stone. The Charleston Trident Association of Realtors reports that the average area home price has slipped from about $305,000 in October to about $296,000 in February. The number of homes sold also decreased, from 1,365 in October to 998 in February.”
The Miami Herald. “Sellers face a transformed housing market. ‘There is a much bigger inventory on the market this year,’ said Leslie Kliger, co-owner of Assist 2 Sell. According to Kliger, there are an estimated 350 single-family homes on the market in Cooper City, compared to just 150 this time last year.”
“Steven Wall is trying to sell his four-bedroom, three-bath home in the Le Cristal section of Rock Creek for $549,900. He already has dropped the price because potential buyers have been few and far between.”
“Lynn Puccio has had her Flamingo Townhome property on the market for two months. At $334,000, potential buyers have not been knocking down her door. She is prepared to wait it out because she would like to let her son finish the school year in South Florida before moving to North Carolina. ‘However, if I already had a house waiting for me there, I would really be knee-deep,’ she said.”
The St Petersburg Times. ” It has been a profitable ride for St. Petersburg’s Signature Bank, which has hitched itself to the real estate rocket of the past few years. Eighty percent of its loans are in real estate, mostly commercial loans financing offices, shopping strips and housing developments.”
“So when the Federal Reserve and other regulators proposed tightening standards for such loans, citing potential volatility in the property market, Signature shot off a letter of protest. So did about 20 other lenders in the Tampa Bay area.”
“Alex Sanchez, head of the Florida Bankers Association, predicts dire results for development-reliant Florida if regulators start requiring banks to unload commercial loans. ‘If you take commercial real estate out of the equation, it would have a chilling effect. The economy in Florida? You might as well forget about it. Our economy is going to sink fast,’ Sanchez said.”
“‘Most of our banks - commercial loans is all they do. And if they don’t do that, what will they do?’ Sanchez added. Bankers such as Sharp fear their options will narrow. They could boost their bank’s capital by luring more deposits or else delve into other types of lending, such as car loans.”
“But after reaping big profits over the past few years in real estate, options such as financing a customer’s new Mustang holds less allure. ‘Car loans? We don’t want to do them if we don’t have to,’ Sharp said.”
Commercial loans include residential development loans. Another statue report today in Florida too:
‘Like other agents contacted to talk about the statue, Realtor R. Todd Dantzler, a former president of the Florida Association of Realtors, pointed out that in today’s market, help is needed to get homes moving. ‘Last year, no one really needed `divine intervention’ to sell their home,’ the Winter Haven broker said. ‘There was a lot of crazy money going into the housing market. Now, those sellers are really needing professional help to sell their homes.’
BREAKING NEWS: Phoenix market inventory up another 2% week to week to a NEW all time high: 54,568 homes for sale now!!!!!! That’s up 10,000 homes from just this past May just only 4 months ago. WOW!!!
http://www.ziprealty.com/maps/index.jsp
I predicted 55k by August , so what if I was about 1 month off hehehe . Serious , that number is scary especially when you realize that high % of those homes are vacant .
Just met e couple that moved to Germany.. The realotr told them not to rent their house becasue it would rive values down.. They took the Realtors advice!!! young couple with not much money just listening to the so-called epxerts.
incredible
“Now, those sellers are really needing professional help to sell their homes.’
They need professional help to figure out what the hell they were thinking when they bought with all that “crazy money”
I dont know who remembers the last RE down cyle in the late 80’s and early 90’s but Phoenix was one of the worst markets. I remember reading some where back then that some Phoenix home owners were just walking away from thier homes. I also remember reading an article around 1990 about a San Diego RE investor (I think it was in MONEY) who had been doing great for a couple of years was now upside down on all properties and I think had lost some due to foreclusure, he lost every thing-talk about deja vu. It seems like just yesterday.
Old Lincoln Towncars and cupcakes in SCV are the answer. Read about the “Smucks” bought but forgot to sell old house and now hoping that cupcakes seal the deal:
http://www.the-signal.com/?module=displaystory&story_id=32837&format=html
“After six months, we would like to sell it, just so we have peace of mind, but I am not giving away my beautiful home I raised my children in. Maybe we will rent it, but I am not going to throw it away.”
Sillies.
Her house was built in 1990, in Castaic? Chances are, it cost no more than $200,000. She could sell it tomorrow for $400K, but apparently $200,000 in profit is “giving it away.”
Greedy little witch.
This woman expects someone else to pay a huge dollar
price for her memories.
Get real.
“‘Most of our banks - commercial loans is all they do. And if they don’t do that, what will they do?’ Sanchez added. Bankers such as Sharp fear their options will narrow. They could boost their bank’s capital by luring more deposits or else delve into other types of lending, such as car loans.”
“But after reaping big profits over the past few years in real estate, options such as financing a customer’s new Mustang holds less allure. ‘Car loans? We don’t want to do them if we don’t have to,’ Sharp said.”
____________________________________________________
So you can see the coming tsunami and you still avoid moving to higher ground. Banks with this mentality will fail in droves!
Are people still thinking that CDs covered by FDIC (think about how great the insurance was after a hurricane in relatively isolated area versus the entire country) and short term treasury bills are a “safe” place for your money?
I sure hope that those with the foresight too see the housing train wreck are not having their entire financial future tied to the US dollar. A lot have said they don’t have sympathy for the FBs. Do you think they’ll have sympathy when the banks fold? It’ll come down to “I’ve got mine”.
Car loans, what a great idea…not!! Have these idiots noticed what’s been happening with the car manufacturers lately?!? Their sales are in the toilet and it’s only PARTLY due to poor demand for gas-guzzling truck, suv’s etc. Bubblevision (CNBC, etc.) would have you believe that high gas prices are the one and only cause of poor car sales, but they never mention the impact of the housing crises and the house-ATM drying up. I guess the days of leveraging up to buy a boat, a lexus, and a hummer are now officially over.
Also they don’t tell you that car sales are a virtually 100% bullet-proof way of predicting whether or not a recession is in the works, and car sales (as well as home-builder sentiment) are screaming that a recession is virtually guaranteed if not already here.
Amen brother. I think the same thing everyday I watch CNBC. They try to make everyone think that high gas prices are to blame for everything wrong with the economy. If gas prices come down to $2 a gallon, I’ll save $500 a year, then I’ll really be able to afford that half million dollar house, and that $30 thousand car. Yeah right. And everybody was born yesterday.
if people read this blog you could tell in real-time, when ben first posted about sales going down, that the bubble was bursting.
“…you look at inventory,’ said Denny Grimes, a Realtor in Fort Myers. ‘We don’t have a demand problem, we have a supply problem. … We had a market binge and now we’re going to suffer a little bit.’”
No, you’re going to suffer a lot, because after you suffer a little bit, prices come down, then, you have a demand problem and the suffering really begins.
“The number of homes sold also decreased, from 1,365 in October to 998 in February.”
I love the way these people choose their verbs. Just suppose that your weekly pay went from $1,365 to $998. Would you say that your pay “decreased?” Or would you say that it “tumbled” or “nosedived” or something similarly, and appropriately, dramatic. In fact, if home sales had gone from 998 to 1,365, I’ll guarantee that they would have “rocketed” up.
It’s insidious and it’s consistent. The music on the Titanic.
Yeah, the MSM are so deeply aligned with the real estate bulls that every negative story is peppered with positive spin. It really is incredibly annoying. I guess the stories won’t be completely negative until the full-blown recession hits.
I hear these stories of people moving (or trying to) from FL to NC. What is the allure of NC (or another SE state) relative to FL?
“What is the allure of NC (or another SE state) relative to FL?”
For a large number of those emigrants, it is because NC is “halfway back” to where they came from originally. Thus the term “halfbacks.” A lot of others, seking temperate weather, might move to another area in the South and expect either to be able to adapt to Southern culture or to change it. The latter seems to have worked in Atlanta proper. But a lot of real Yankees are likely to be disappointed; my guess is they’ll then strongly consider going all the way back to their roots. As for those who’ve not yet retired, I think it likely there will be a noticeable increase in those who stay in the same general area as their roots.
Western North Carolina is a traditional summer vacation spot for Tampanians. Plus, like what Chip wrote about “half-backs,” this state is not for everyone. During the summer and fall, it is brutally hot and humid. It used to be cheap; now it’s not. Employees get paid in sunshine, and there is no cutting-edge industry to speak of.
Don’t get me wrong, I like it here. But I think a lot of people have a vision of paradise where they play golf in the morning, and fish or sit on the beach with a Corona in the afternoon, and repeat that every day. Then they get here and sweat and get paranoid about crime and sit in traffic just like everybody else. All of a sudden the place they came from doesn’t look so bad.
Sound just like South FL
Bubble economy.
I notice the lady who is “waiting it out” rather than lowering her price. Does that ever work when the market is going down?
Why/How would that work Andra?
If the market is going down, by definition that means that the longer you wait to sell, the less money you’ll get.
Just think about it this way: If you could have sold last year when the market first began turning, would you have made a better profit then or now, once the slide has already begun?
Now compare the phase we’re in now (slide begun) to the phase we’ll be in a year from now (slide continuing).
Or, you can listen to your realtor who is telling you that this is temporary and will begin back up to stellar heights next year. If you believe that then yes, wait for the market to turn back up next year.
But consider what your knowledgable realtor said last year: Probably something along the lines of “RE is hot, it will never go down, X amount of appreciation in the bag, etc.”
Was the realtor right about this year and last? If the answer is no, perhaps you should consider that they are either: 1) not very smart, in which case you might want to stop listening to their advice and start trusting your own instincts.
Or 2) the realtor is a crook who is only interested in selling you a house so they can make money, no matter WHAT the market’s doing. If that’s the case, do you often listen to crooks who are only out to get your money?
If she waits, IMO the house could sell for 40% less in about 2-3 years. Maybe in five years it will get back to this summers prices. So, if she’s will to wait 5 years or so, it would work
If you have a winning lottery ticket worth $100,000.00 and don’t cash it in, and if you are still holding that same lottery ticket 366 days from now, it’s worthless.
Not as many posts as usual today. Sure can tell it’s football sea
son!
Here’s a good one. I have posted before about the on-going saga of someone my wife works with who’s husband became one of the several thousand “fly by night carpet bagger mortgage broker” in 2002. Until 2002, he was in the construction business. Not an executive - just an hourly worker. This is in Ventura County Ca, btw. Anyway, he worked (cooked) the books and in 4 years traded his $175,000 condo up into a $1.4 McMansion. He just kept re-writing his own loans, getting a “friendly” appraiser to jack up the value ech time, then took the money and bought to buy a boat - or atv - or rv, exotic vacations, etc. Basically, using his house like a Ponzi Scheme. Now the proverbial crap has hit the fan. His monthly mortgage is over $5,000 and his income is zero. He’s now basically abandoned the mortgage business (or should I say the non-fuctioning mortgage business because his customers were mostly sub-prime borrowers) and has been looking for the next scam. So far no luck but the mortgage payments keep coming due. Problem: He knows he’s going to get foreclosed on and probably end up bankrupt. How does he handle this situation with a wife and kids? I suggested he stay in the house, don’t pay the mortgage, save his money and, in about 6 months time after the bank posts the “foreclosure” notice on his front door, he can walk away and at least have saved enough to rent a 2 bedroom apartment for his family. However, his mind is obviously more devious than mine! He has a better idea. He has moved into a small apartment for $1,400 a month and rented out the house for $4,500 a month. Of course, like the bubble itself, a day of reckoning will come in a few months but I figure it simply means the “renter” will have to move quickly or maybe the “renter” will drag it out and go to court, thus tying the $1.4 property up for a long period of time. My wish: As much as I really cannot be on the side of the mortgage holder - I am even more NOT on the side of the bank. Frankly, I hope they tie the house up in litigation for 5 years and the bank has to suck up the loss.
Notify the renters of his scheme. That should be an interesting outcome.
He’s now basically abandoned the mortgage business….and has been looking for the next scam. So far no luck…
LOL. There is no next scam. RE speculators found the one scam that was simple enough for them speculate in, and there’s nothing else comparable waiting in the wings.
I’d say that he’ll have to go back to his old job - except it was in construction, so it probably won’t exist anymore. He’s f*cked.
Unfortunately, there is another scam. I’ve been reliably informed there’s good money to be made in strong-armed robbery.
wondering what kind of house it is , to rent for 45000. Also who is shmuk paying so much rent??
Is the renter businessman who can use the home as office and write the rent off?
How much does the renter make in a month?
Do we have those kinds of jobs in ventura county??
I’m not sure I understand where the scam is. If the renter is bona-fide, and the wife works, then perhaps by this method they can keep afloat as they are now paying only $2,000 towards housing per month.
Methinkest it’s high time to amend that pithy saying of yore to: “If it floats, flies or f#@%$% (or forecloses) — rent, don’t buy!”