‘A Matter Of Oversupply And Overpriced’
The Palm Beach Post reports from Florida. “Complaints are nothing new to Ceebraid-Signal, the developer affiliated with Bocar. In addition to Bocar, home buyers have been frustrated by delays at another Boca Raton condo conversion, Eden.”
“Now it seems the wait might soon be over for some Eden buyers. Was it worth the wait? Buyers soon will find out. One thing they’re certain not to like is the view facing west. That’s where they’ll see the skeletal frame of the Eden’s second, unfinished tower.”
“Construction did start up a few weeks ago on the incomplete tower. But now progress looks slow. On many days, it appears that, once again, nothing is happening.”
The St Petersburg Times. “In the glossy marketing brochures for St. Joe Co.’s resort communities, the residents are wealthy and well-insulated from downturns in the real estate cycle. But in the real world, many owners in the developer’s second-home sanctuaries along Florida’s Panhandle are showing signs of strain.”
“Today, nearly 600 home sites, condos and newly constructed homes in St. Joe’s resort communities are up for resale. New sales by the developer, meanwhile, have slowed to a trickle or stopped entirely. Along Walton County’s Highway 30-A in WaterColor, about one-third of the community, more than 300 condos, single-family homes and vacant lots, are on the market.”
“Rather than add to the glut of properties on the market, St. Joe has quietly throttled back on new releases. Peter S. Rummell, St. Joe’s CEO, said just as the company profited from the real estate run-up of the past five years, now it must cope with the flip side of the cycle.”
“‘We are in a position where there was too much of a good thing,’ he said. ‘Now to some degree we’ve got to wait. And to some degree we’ve got to help the market correct itself.’”
“Michele Bertoldi thought he’d won the lottery when he and two partners picked up a lot at St. Joe’s RiverCamps on Crooked Creek in Bay County about 18 months ago. They paid $600,000 for the nearly 1-acre home site, then promptly put it on the market for $750,000. But Bertoldi’s lot is just one of more than 70 sites for resale, more than 40 percent of the total.”
“Across a 1,500-acre flatland of spindly pine trees and palmettos, there are fewer than a half-dozen homes in early stages of construction. More noticeable are the St. Joe-approved, tastefully discreet ‘for sale’ signs that dot the landscape like crosses in a graveyard.”
“‘This (downturn) is not a matter of diminished demand,’ Rummell said. ‘This is a matter of oversupply and overpriced (product).’”
“Monte Williams, a custom home builder from Pensacola, can’t afford to wait. His home has been on the market for nine months. Williams has cut the asking price once, by $400,000, to about $1.4-million. One offer fell through after the prospective buyer balked at how much it would cost to insure it. Two others were nixed by nervous spouses. Now the house is slated to be the first one in WaterColor to be auctioned.”
“‘The folks at WaterColor won’t like it, but there’s not much they can do about it,’ Williams said of the upscale image-keepers at St. Joe. ‘If we auction the house off at a decent number, there will be plenty more auctions at WaterColor.’”
“Some 40 miles east of Panama City at St. Joe’s WindMark Beach, director of sales Ray Markwell was waiting for a resurgence of interest. When WindMark’s first 15 lots were released in 2002, he was overwhelmed with 60 reservations. ‘I was raising prices as fast as I could,’ he said. ‘But those people were just flipping sand and the real end-users left.’”
“Today, just 10 homes have been built on 106 lots in WindMark’s first phase; half of them are for resale. More than 40 percent of the remaining lots are also back on the market.”
‘It used to be that the Collier County School District couldn’t build schools fast enough to accommodate the number of students flowing in each year. Now, those enrollment numbers look like the district has shut off its tap, and experts are blaming the slowdown on housing and insurance that is just too expensive for working families with children.’
‘Not so very long ago, Florida was considered something of a haven for people. especially retirees. fleeing high property taxes elsewhere in the nation. Welcome to the future. Anyone who hasn’t figured out that property taxes loom as the next big fight across Florida, not just the Pensacola Bay Area, hasn’t been paying attention.’
‘When Betty Weymann opened her insurance renewal bill last week, she was stunned. The 83-year-old Midway resident knew, as virtually everyone does by now, that the hurricanes of the past two years have driven up insurance premiums. What was shocking was how much. Her annual hurricane coverage from State Farm jumped from $1,100 to $5,600 a year, a 409 percent increase. And with her regular homeowner’s insurance, her total bill topped out at $6,400.’
‘You’d be smart to keep a close eye on that escrow account attached to your mortgage. There’s a good chance many Florida property owners won’t have enough money squirreled away this year. ‘I’d estimate one in three of my customers will have a serious shortage,’ said Norman G. Fisher, head of The Mortgage Shoppe in Fort Lauderdale.’
These numbers for some 13 states may or may not be accurate however to do apper to be going up.
mid may was 799,000
6/10/06 was 836,471
6/14/06 was 840,935
6/17/06 was 846,120
6/20/06 was 850,317
6/22/06 was 855,892
6/24/06 was 860,647
6/29/06 was 866,037
7/01/06 was 858,675
7/09/06 was 870,854
7/11/06 was 882,239
7/13/06 was 886,055
7/14/06 was 890,896
7/18/06 was 895,022
7/21/06 was 900,000
7/25/06 was 905,170
7/28/06 was 910,001
8/01/06 was 903,718
8/12/06 was 915,336
8/19/06 was 920,755
8/26/06 was 925,176
8/29/06 was 951,242
9/17/06 today 955,300
http://www.ziprealty.com/maps/index.jsp?usage=search&cKey=74rbwvlk
“South Florida,” he said, ”is working off of a totally new economic model than any of us have ever experienced in the past” according to a realtor who predicted that a land shortage will support higher prices indefinitely.”
- New York Times, Trading Places: Real Estate Instead of Dot-Coms, 3/25/05
Crispy, I’m sending you a bill for a new keyboard.
Yes, yes! Of course, it must be so! Only a brainless fool could begin to doubt the obvious fact that real Florida estate always goes up in price and that we are all destined to be millionaires- no, make that billionares!! In another decade we’ll all be TRILLIONAIRES!! Waiter- another round of Kool-Aid for my TRILLIONAIRE friends and I!! Bwaaa-Ha-Ha-Ha-Ha!!
“If you paid your mortgage off, it means you probably did not manage your funds efficiently over the years,” said David Lereah, chief economist of the National Association of Realtors and author of “Are You Missing the Real Estate Boom?” “It’s as if you had 500,000 dollar bills stuffed in your mattress.”
He called it “very unsophisticated.”
Source: L.A. Times (August 28, 2005)
“Equity Is Altering Spending Habits and View of Debt”
“Michele Bertoldi thought he’d won the lottery when he and two partners picked up a lot at St. Joe’s RiverCamps on Crooked Creek in Bay County about 18 months ago”
Greedy, undereducated GFs — they should have stuck to buying actual lottery tickets.
…like crosses in a graveyard. The imagery certainly portends a bleak future. Soon the MSM headline will scream, “RE is Dead!”
wierdly ,that will be time to buy
Yes,that will be the time to buy, but it depends on the definition of “pretty soon.” According to NAR, pretty soon is early 2007. However, the “light at the end of the tunnel” will only appear when the unsold unventory is much lower and trending strongly down.
It will only be the time to buy when they ALL scream that “real estate is dead”. Unconditional surrender is necessary. Make no concessions.
Is that 600K for a handful of dirt? Remember the Tarzan movie where the greedy plunderer suffocates to death on a mound of gold?
Only this time, there’s not even poetry to the justice.
what a god forsaken stretch of swamp that area is, although you can drive 40 miles to the vortex of the redneck riviera, panama city. $600,000 for an acre lot, sounds like a lottery win to me. another example of how much out of control the whole game was.
I can only imagine the look on the SELLER’S face when these rubes handed over a check for $600,000. He must have ran to the bank, cashed it, and threw a party. Doesn’t anyone read a history book about Florida land crashes?
Bet he took then $600,000 and bought a $2 million pre-construction hi-rise condo on the beach in Miami. Gotta keep that money invested!
Check out “No Money Down A High Risk Gamble” in th Denver Post today to see how the lenders have been pushing high risk loans.
When WindMark’s first 15 lots were released in 2002, he was overwhelmed with 60 reservations. ‘I was raising prices as fast as I could,’ he said. ‘But those people were just flipping sand and the real end-users left.’”
_____________________________________________
I read recently that a HB CEO was SHOCKED and SUPRISERD at the amount of flipping that was going. Maybe they should have talked to their sales staff.
“When WindMark’s first 15 lots were released in 2002, he was overwhelmed with 60 reservations. ‘I was raising prices as fast as I could,’ he said.”
Wait a minute- ‘raising prices as fast as I could’!??! Then he and other realtors will understand when I’m ‘lowballing as hard as I can’!
Recently, Joe suddenly announced its depature from the building side of the RE equation. This thread provide another solid explanation for Joe’s decision; they could’nt accurately measure demand. Given this inability, it makes me wonder if they are properly scaled for the future.
Don’t kid yourself. He knew. Executives can sometimes be the biggest boobs but the homebuilder CEOs have typically been in the game for many years. It’s not like Ford Motor Co., an auto maker, that brings in a guy from Boeing, an airplane manufacturer. The builders typically know the business inside and out.
To make a long story short - he is lying his a$$ off.
http://robblack.typepad.com/
Mortgages . . . What is Predatory Lending? In communities across America, people are losing their homes and their investments because of predatory lenders, appraisers, mortgage brokers and home improvement contractors who use tactics to get you make them some money. Things that you should watch out for are lenders who convince you they should use a false appraisal. When you get an appraisal compare it to the neighbors. Watch out for lenders who tell you to lie about your income or cash available. Beware lenders who overextend you. Your house should not be 50% of your salary. Of course check the services every lender charges you for and question every thing you are being charged for. Don’t knit pick but don’t pay $300 for a courier either. Last thing I want to warn you about are lenders who tell you to refi every 2 years and they use sales tactics to pressure you.
Good summary .
While I would agree the terms of these loans is predatory and all involved seem as corrupted as original sin, the mentality that drove folks to use these loans was the promise of HUGE profit from the appreciation of their homes. Hundreds of thousands of people made huge profits in the recent bubble and I don’t see anyone crying for them. Now when those left holding the bag go bust we are supposed to feed pity and remorse. I could have gone out and bought in the past year or two, and chose not to even at the risk prices could have climbed yet higher…
True ,greed /fear made people close their eyes to the risks they were taking . The housing boom became a herd following full blown mania ,similar to the stock market run up in the 20’s IMHO.
I remember that turd on Cnet radio. Back in 2001/2002 era, he was telling people that paying off mortgages was a dumb idea. Put it all in stocks, said Rob Black! Of course, the program was called ‘Stock Talk.’
I completely agree with your post. I’ve seen a lot of posts that have me baffled. The sentiment of many posts today is that all of these crooked lenders are safe from legal action because of their contracts. I don’t get this.
This is a country where coffee being hot is grounds for civil litigation. A burglar can fall through a skylight while in the act of robbery and sue the homeowner. I worked with a woman whose dog attacked another dog and she got a small scratch. She walked away with $15,000. Does anybody really believe there won’t be massive class-action suits against these lenders? I sure don’t. All of the FBs will make us doubly hate them when they are crying on TV and saying that they deserve millions of dollars for their pain & suffering. This is going to be a grotestque chapter in American history. Get your barf bags out.
All of the FBs will make us doubly hate them when they are crying on TV and saying that they deserve millions of dollars for their pain & suffering.
In Georgia, I don’t think this will be the case. I was talking with a friend the other day about this who is an attorney. Case law in GA states that any document you’ve signed, you are assumed to have read, and understand. So borrowers will not be able to go in claiming they didn’t understand as they have all “read” the terms of the note.
That was his take on it for what it’s worth.
‘If we auction the house off at a decent number, there will be plenty more auctions at WaterColor.’
Good luck on getting that “decent number.” What is a decent number? Something like 1/3 to 1/2 of what you are asking for it now?
3br, 2300 sf for $1.4M? Is this a joke?
TO the article…
It IS also a factor of diminished demand. Why? Because flippers have left the building. There is no way demand for fully (properly) approved mortgages/buyers is anywhere near enough to buy all those houses built. Yes, we have population to get into them - but at what cost.
Yet another moron getting press play.
Not so much that the flippers have left the building, than that they’re all trying to scurry out the same exit.
” Not so much that the flippers have left the building, than that they’re all trying to scurry out the same exit. ” …..You got it!
…is it lost on anyboday that, Watercolor was where The Truman Show was filmed? Fictional town ,with fictional prices …Poof* Reality is what is perceived….
Also on St. Joe..” the company’s major stockholders - 15 of whom own 71 percent of the shares - are looking for long-term payback.”
I realize this is an old family Co. so can understand them spinning off their builders,and CYA’ing….
wow …maybe they can manufacture some more unreality to survive losing their shorts!
- Don’t cockroaches ’scurry’ out when the light goes on?
Comstock Partners, Inc.
The Hard Landing For Housing is Already Here
September 14, 2006
The market is suddenly assuming that since energy prices are declining and mortgage rates are drifting down, consumer spending will pick up and the housing industry decline will end. In our view this outcome is highly unlikely. Our negative outlook for consumer spending is based far more on the end of the housing boom than it is on high oil prices. In turn, it is now evident that housing is already undergoing a hard landing that can’t be cured by a downturn in mortgage rates, and that the situation is likely to worsen. Here are some facts to consider.
Ø 32.6% of new mortgages and home equity loans in 2005 were interest only, up from 0.6% in 2000
Ø 43% of first-time home buyers in 2005 put no money down.
Ø 15.2% of 2005 home buyers owe at least 10% more than their home is worth.
Ø 10% of all home owners have no equity in their homes
Ø $2.7 trillion in loans will adjust to higher rates in 2006 and 2007.
Ø 70% of borrowers who took out pay-option ARMS in the past year have loan balances larger than their initial loan.
Ø Homeowners face higher payments as mortgages are reset. Generally, monthly payments rise between $200 and $500 depending on the size of the mortgage.
Ø According to Reality Trac, August foreclosures were up 23% over July and 53% over a year ago.
Ø The number of homes for sale is at record highs, and inventories are 59% higher than a year earlier.
Ø New home sales are down 22% and existing home sales down 11%.
Ø The NASB housing market index has recorded an all-time decline.
Ø The housing affordability index is at a 15-year low.
Ø The house price-to-income (rents) ratio is off the charts. According to HSBC, in 18 states accounting for over 40% of national home values, the price-to-income ratio is 3.6 standard deviations above the mean.
Ø The OFHEO index of house prices deflated by the consumption price deflator has soared to a record high of 350 from 250 in 2001. From 1976 to 1996 it never was above 220.
Ø According to the NAR the year-to year prices of existing homes are now flat. A short time ago they were rising at a yearly rate of 16%.
Ø Nationally, home prices have not declined on a year-to-year basis since 1933. Recently, however, prices have been dropping in the North East, West and Mid-West.
Ø Sales incentives are now estimated at 3% to 7% of selling prices.
Although new housing starts directly account for only 5% of GDP, the indirect effects are far greater. Some studies show that the housing industry and all its related activities have accounted for 30% to 40% of the entire employment growth in the current cyclical expansion. In addition it has been well demonstrated that mortgage equity extractions have been a cash cow providing home owners with hundreds of billions of dollars that have gone into consumer spending. With housing already in a hard landing, it will be extremely difficult to avoid a hard landing in the economy as well. In our view the stock market is in the same kind of denial it was in 2000 when the vast majority of strategists and economists already knew the dot-com bubble had burst, but mistakenly thought it would have little impact on the rest of the economy or on stocks.
And this is only the begining…
OK DL at the NAR how do the above stats. translate into a recovery and uptick in 2007.Don’t you think its evil to be leading people on ,turning people/flippers into landords based on false hope and fanciful dreams .No wonder the sellers aren’t coming down in price ,they think its all going to blow over by next year by what your cheerleaders are telling the buyers . Alert; Sellers read in the newspapers what the sales pitches are to the buyers, in case you didn’t know .How about telling sellers and buyers that there is a 2 year inventory build up or more in alot of places .
“WaterColor” … “WindMark” - what is it about developments with oddly-capitalized names that screams “will be a dump in 10 years!”
Or am I the only person who thinks names like these look trashy?
I’d love a job coming up with subdivision names: WoofenHaven and WaterMark come to mind… Or how about MoldyMildew? “We live in the MoldyMildew section of Lake Serene.”
I tend to like the development names that are in the form ” at ”
For example, “The Legacy at Diamond Hills”, “The Regency Collection at Seaview Estates”, or “The Moneypits at Foreclosure Canyon”.
Very funny!
That’s a great name.
We have a development in Tampa called Corporate Oaks.
Sound like an oxymoron to me.
Given the thought process of the purchasers, GreedyFlipper sounds like a much better choice. I actually like these oddly capitalized names better than “Verano” or “Luna” or anything else that makes panhandle Florida seem like the Mediterranean coast. I doubt there could be any more of a discrepancy in that regard.
It’s all the same though: the developers are selling an image of cosmopolitan peacefulness, but in the long run most people’s boring and harried lives won’t be appreciably different whether they buy there or not.
I follow the listing on my mother’s old home on Long Island. She sold it in 1999 for $300,000 and last year the new buyer put it on the market for almost $800,000. He only dropped it twice, $10,000 each time during the course of that listing then took it off. Then it went back on this year at $720,000 and its dropped another 2 x $10,000 to $700,000.
When it went on the market last year, one of my brothers was steamed that she had sold it back then (my mother is in her 80’s and coping with any of the maintenance of that house, even getting heating oil delivered was stressful. Her whole income was her Social Security so any repairs were very upsetting. My brother was also furious with me because I encouraged her to sell.
That original $800,000 figure came from the town appraisal; I found it on Zillow at that figure. So the towns are part of it, too, in their greed for more tax money. Who could look at that property, a 1600 sq. ft. - 50 year old 3 bedroom ranch with no aircondition and no garage on a narrow lot, and think it was a home for the kind of people who make the kind of money to afford $800,000 on a home? My father drove a truck. This was his home. The people who could afford $800,000 would have to have 2 very good jobs or 1 high level executive job and they’re going to want that house?
I can’t look at pics of places like Water Color or Seaside without thinking about The Truman Show. Those highly regulated, scripted little communities give me a serious case of heebie jeebies.
“WaterColor” … “WindMark” - what is it about developments with oddly-capitalized names that screams “will be a dump in 10 years!”
oddly named assets have been, curiously, cited as a signal aspect of a bursting speculative frenzy, whether ‘enron’ or ‘whatever.com’ from the dotcom bust — or ‘windmark’ or ‘watercolor’ from this housing bust. such strange monikers usually scream, “watch out! no bottom below.”
I would rather live in refrigerator box under a freeway overpass than in a place called WaterColor. (And why not spell it WaterColour, all frenchy style, like they do with make-up?)
…And why not spell it WaterColour, all frenchy style…
You mean in an English-stylee I think..? as in ‘colour, favour, labour’ etc…;-)
Okay you’re right. I’d hate to live in a place called WaterCouleur.
Whitewater comes to mind….
“Michele Bertoldi thought he’d won the lottery when he and two partners picked up a lot at St. Joe’s RiverCamps on Crooked Creek in Bay County about 18 months ago.”
———————————————–
there is a bright side to the tale, the empty lot didn’t have a hurricane insurance increase of 408% this year.
Very funny!!
Down here in central fl. the subdivision names are what used to be there…Example: Live Oak Preserve, where they rip out every tree for miles.
I have a poster in my office that reads… “Welcome to suburbia, where they cut down all the trees and name streets after them”.
That is the most telling description of all.
Touche.
Saw this bumper sticker this morning:
“If you are not a Gator, you are Gator bait.”
Was down in that neck of the woods last week. In fact, I toured a 4,000 sf home that Joe built. It was ACROSS THE STREET from the water and they wanted over 5 million for it. I could not get a firm price without going to the sales office and I was not about to subject myself to that. The tour was a benefit, wife and I paid $26.00 to go through the house.
I saw plenty of the crosses that had buyers names on them, they are now in the process of getting their clock cleaned. Appalachicola/Port St Joe/Carabble are some of the less built up areas of Fl but they did experience a hell of a run up in prices.
I made it a point to drive back to Pensacola via Panama City Beach so I could see all the condo action. Now THAT is a market that will be fun to watch. For the bozos that paid 600k for 1 acre from St Joe, the old saying ” a fool and his money are soon parted” applies in this situation. Oh and just for information sake, if you trace the lineage back far enough, St Joe is actually Dupont money.
RM