‘Freakish Pace’ Of Home Sales Over On Florida Island
The Bradenton Herald reports on a housing slowdown where they aren’t making any more land. “In the not-so-long-ago island real estate market, sellers had to do little negotiation and buyers had little power. But a larger inventory and leveling listing prices are more signs the real estate frenzy here is balancing out.”
“The number of active real estate listings jumped to 632 as of Feb. 13, compared to 431 at the beginning of the year, according to the Anna Maria Island Property Sales Report. Current listing prices have stabilized, or in some cases, fallen slightly. For instance, the average listing price of the 250 single family homes on the market is about $1.12 million, compared to $1.13 million a year ago.”
“The average listing price for condominiums has fallen nearly $20,000 from $819,339 in January to $799,575 in mid-February.”
“‘It is clear at this point that while we don’t see a broken bubble, where prices drop precipitously, we do see a flattening,’ said John van Zandt, a sales associate in Holmes Beach.”
“Pending sales during the month of January were significantly lower than the year before. For instance, there were 13 pending sales last month, seven of which had listing prices of $1 million or more. ‘We’re not going to have that frantic pace of sales that were abnormal, almost freakish,’ Barry Gould said.”
“But that doesn’t mean the area has lost any of its desirability, particularly now, which van Zandt characterized as a ‘heavy looking period.’”
“Gould believes the current slowdown will be beneficial in the long run. ‘We’ll look back years from now and realize it was a very good thing of getting more toward a level playing field for sellers and buyers,’ he said.”
Maybe some locals will give us some insight into this market. I wonder if this is correct:
‘The number of active real estate listings jumped to 632 as of Feb. 13, compared to 431 at the beginning of the year..there were 13 pending sales last month’
How many months (years) of inventory is that?
It will take 4 years to sell all this inventory. Wait next month this number might jump up to 10 years. Wow, that’s a long time. I wonder what’s the average household income in that area?
a “broken” bubble??? I swear, someone has GOT to write a book on all the metaphors, euphemisms, realtor-speak, and other crazy use of the English language used in describing pretty simple economics.
Aren’t the proper terms “burst bubble” or “popped bubble”? I have seen bubbles burst or pop before (when my kids blew soap bubbles) but never have I seen one break.
the 5th definition in the dictionary for bubble is as follows:
“A fantastic or impracticable idea or belief”
The belief that real estate will appreciate 23% per year on average a “fantastic or impractiable idea or belief”. This was the amount, that the average real estate purchaser BELIEVED real estate would appreciate moving forward.
I know that there are debates about the housing bubble, whether there is a bubble, and to what extent a bubble might exist, but there is NO DEBATE on if there is a bubble per the definition above. Realtors aren’t even debating this.
You’re about to.
This whole thing is some thing like this.
Some people have hitched a ride on a rocket zooming up into the sky. Those on the ground are wondering how high it will go. Some even hitchthemselves for the ride withit
Thos on the ground are watching closely debating. one wonders I think it is slowing down. another says ‘not at all it wil probably go on (for some time/ever).
Some of those inside the rocket are also wondering, how long the ride will last. Some are optimistic that they will reach the moon.
Some others would want to get off before it drops down(use a parachute). Others are holding on till reaches the top and then decide if they want to get off.
…Then the rocket suddenly explodes in a spectacular fireball then tons of wreckage crash into the sea. All aboard are declared dead in a national tragedy. Amen.
I was just on Longboat Key & Seista Key this past weekend. There are for sale signs every 100 feet or so. In some cases 2-3 homes for sale right next to each other. Those islands off Sarasota & south of Tampa are not that big, I wonder how many single family homes are out there and what percentage are listed for sale.
Those islands have always been a big hot spot for second homes, through out Florida history Sarasota, Venice, Seista Key, Long boat key and all the other islands over there have mainly been second homes for wealthy people from New York & New Jersey… Rumor has it lots of former Mafia & union bosses retired to Venice/Sarasota or had second homes there.
Its always been a second home & vacation home market, on the mainland things might be a little different. Its one thing to have a vacation home or second home on the intercoastal or on one of the islands but another to have a vacation home in the middle of a track home subdivision miles from the water. whats the point, for the monthly cost of owning a 300-400K vacation home you can just get a hotel room for one week each month or for 3-4 months a year. I think people are starting to realize this, 4-5 years ago when you could buy a house for less that 100K there it was a good idea, if you had the money. Now that 100K home is 400-500K its not really worth while anymore to own a vacation home there you are going to use a couple weeks out of the year. Throw on the insurence costs and other expenses that went up substantially over the last 5 years and its really not worth it even if you paid cash for the house you are still paying hundreds a month in taxes, another couple hundred for insurence then you have HOA fees and all the other junk that comes along with it. Depending on the house or condo you could be paying 500-800 or more a month in fees, taxes, insurence and interest alone…
$1.13 million to live on Anna Maria Island ?
LOL
Anna Maria Island is a dump. Well, in fairness to dumps, there are probably less unemployed people at the dump.
It’s gonna be funny as hell when a hurricane hits that sandbar, and they can’t give those houses away for $150k.
Anna Maria island is nice on the FAR north end. Holmes Beach is ok.. but not worth 1.13 Million.. I will take some pics of the island.. it is nice… Bradenton Beach and Holmes ar around 400k range
Tom,
Hang on to those pics. The new photo gallery should be ready soon.
Ben,
These pics will be a nice time capsule when people look back 60 years from now at the “Great American Housing Bubble Bust.”
The island is a nice place-for high taxes. Many of the locals have had to try and sell their homes due to the huge tax increases in the past few years. Oh, and after living through Charley and Katrina I would never wish a hurricane on anyone.
OT, but another intesting sign of investors (flippers) in trouble: http://boise.craigslist.org/rfs/136114402.html
The add is corrrect, the yards are tiny and a very large powerstation is over the back fence. $300k for these tiny places is crazy.
i suppose you could run a long extension cord and get free power.
Those big transformers on the power stations really scare me….electromagnetics fields and cancer concerns. Whenever I looked at houses I always looked for these things. No thanks.
BayQT~
“But that doesn’t mean the area has lost any of its desirability…”
Nope. It means it’s cheaper.
This is OT, but a new one.
Just think, deflationary PRESSURES.
Contrairian, this might be good for your blog.
The outsourcing wave hits investment bankers
The outsourcing wave hits investment bankers
It’s not just IT support anymore. Banks increasingly are taking their research analysis operations abroad — and deal-making may be next.
By Shaheen Pasha, CNNMoney.com staff writer
February 22, 2006: 9:45 AM EST
NEW YORK (CNNMoney.com) - First came IT outsourcing. Now comes investment banking.
After years of outsourcing technology support and other back-office operations to countries like India and China, financial institutions are increasingly looking to move large portions of their investment banking operations abroad, according to a recent report by Deloitte Touche Tohmatsu.
Faced with a dearth of skilled workers and shrinking profit margins, banks that want to remain competitive in the global marketplace can’t afford to miss out on high-quality — and cheaper — foreign talent, the report said.
As a result, what began as technology support is now morphing into more analytic operations.
“Most of the large financial institutions were in the IT side of outsourcing but as they leveraged that experience, they got more interested” in moving more of their investment banking and research activities abroad, said Niket Patankar, chief executive of outsourcing firm Adventity Inc.
Among the leaders in outsourcing and offshoring are the big investment banks: Citigroup (Research), Morgan Stanley (Research), Lehman Brothers (Research) and JPMorgan Chase (Research). Typically, those banks have moved their research analysis operations offshore in order to take advantage of the time difference between the U.S. and Asia as well as the cheaper labor.
“Investment banking has a lot of number crunching that to a large degree can be done anywhere,” said Alenka Grealish, manager of the banking group at Celent LLC. “By taking press releases and data feeds and digesting them offshore, the components can be made into basic analyst reports” that are available to clients early in the morning.
Going one step further
JPMorgan Chase, however, is taking its investment banking activities abroad a step further. The company was one of the first investment banks to not only transfer the company’s back-office and call-center operations but to also hire research analysts in India, Hong Kong and Singapore to complement its U.S.-based research team.
After piloting the program in 2003 with about 1,200 employees in India, the company announced late last year that it plans to have a total of 9,000 employees in India by the end of 2007, with one-third of those employees working for the company’s investment banking unit. Not only will the Indian workers handle research and analysis for the bank but will also be responsible for its foreign exchange trades and its highly complicated credit derivatives contracts.
Some experts expect that as banks become more comfortable with their offshore operations and foreign talent becomes more attuned to the companies’ way of doing business, financial institutions may even shift some deal-making responsibility onto its foreign employees.
The Deloitte Touche Tohmatsu report indicated that offshore operations give financial services companies a foothold in new and emerging markets such as China, where there are more revenue opportunites than mature markets like the U.S. The report also predicts that driven by the need to take aggressive cost-cutting measures, the financial services industry will move 20 percent of its total costs base offshore by the end of 2010, compared to the current average of 3.5 percent.
Although no numbers are yet available, Peter Lowes, principle and head of outsourcing advisory services at Deloitte Consulting LLP, said in a few years, banks may increasingly rely on offshore talent to conduct due diligence and to screen prospective clients for investment banking business.
And while there is no single, authoritative source on the specific number of U.S. investment banking jobs that could be lost to offshoring, Forrester Research predicts that within 10 years, at least 3.3 million U.S. jobs across industries will be shipped to lower-cost and developing countries such India, China and the Phillipines.
A competitive necessity
“I believe the industry has reached such a level of globalization that it matters less and less where the actual (research) is generated and matters more what the cost of generating those products are” said Richard Bove, analyst at Punk Ziegel & Co. “Banks can’t afford not to do (outsourcing) anymore.”
It takes about three years for banks to see full benefits from an offshoring program, said Deloitte’s Lowes, as companies overcome the initial learning curve of doing business abroad and gradually build their scale. Firms that aggressively expand their scope and scale will deliver much higher returns on the foreign investments than those that simply dabble in the practice, he said. Top performers can see cost savings of up to 60 percent while bottom performers report savings of less than 20 percent, Lowes said.
Lowes added that those companies that reinvest some of their cost savings towards continuing to expand their operations offshore are going to be the true long-term winners.
“The economics (of offshoring in banking) are strong and the risks are being successfully mitigated” he said. “Today it’s a competitive necessity.”
I think it’s OK for the Indian and the Chinese to conduct investment research in their own markets, isn’t it? On the other hand, I don’t think they are up to the task to do global research yet. Only a few locations - London, Berlin, NY, and San Francisco have big international investment talents. This stuff doesn’t grow on trees.
Lato,
You nailed it on the head. I was looking to invest in a condo on the SC coast in 2002, 2003 and thought prices where too high then to make it better than other investments. Just didn’t make sense as we lived 4 hours away and would have to pay someone to care ofr it. Back then it almost made sense at it would pay for some of itself with summer rental. But only marginally then. Now it’s a joke but you know I could have doubled my money if I would have bought back then??? That was not why I was buying then and what we have seen is a simple pyramid scheme and not normal economics.
It’s funny, few years back I had a patient who was upset that her husband had went to Florida and put 25,000.00 on their credit card to attend an rela estate investment course. How to make money in real estate. Really sad but that is the mentality that we are dealing with. You cannot squeeze water out of a turnip! Another sh@# sandwich in for the Amreican Taxpayer. Maybe we can get a reality TV show out of this?
We’ve got “Flip That House” now….I’m sure someone is working on some kind of documentary if not a reality show about this current phenomenon/
BayQT~
http://tinyurl.com/ouqyf
Article from the News-Press in Fort Myers concerning the RE market. Of course, the “experts” predict the downturn won’t last forever. That’s a no-brainer - at some point the market will bottom out. One realtor predicted the market would continue to go down for 2 years. Another had this quote, “They are simply turned off by high prices and scared by what he called the “irrational decline” of the past few months.”
I love how this guy characterizes the decline of the past two months as irrational.
“But houses in Lehigh up to about $250,000 continue to sell because there’s no competition in other parts of the county for homes that inexpensive, he said.”
Lehigh Acres is 15 miles east of I-75 in the middle of nothing.
Back when I lived in Fort Myers, Lehigh was a pit where all the migrant farm workers lived (or was that Immokalee). Never been to either place, but never really heard anyone else having any reason to go to either place. $250,000 sounds like a lot of money to be spending over there. And yes, they are making plenty of new land in this part of town.
Tom,
I promise as an average American, I will go out of my way to avoid company’s that use overseas as help although it will be very difficult. My business gets calls daily from India for various reasons and as a small business owner I will not deal with them. I can’t understand them half the time and I don’t have time to repeat myself. I have already cancelled several contracts with some of them being long term deals. Sometimes it’s just not about the money. I am an average guy and I am not going to put up with it if I don’t have to. Maybe it’s time for a the Mom and Pop to reemerge?
I agree 100%. The Wal Mart’s of the world have done enough damage to the average American.
“I promise as an average American, I will go out of my way to avoid company’s that use overseas as help although it will be very difficult.”
Strange. I go out of my way to find the best quality my $ can buy. That’s why I drive a Toyota, use a Dell computer, and play music through USA-made speakers.
But I do hate Wal-Mart though. I find the store so f-ing hard to navigate and finding specific stuff there is impossible. The idea of shoping at one stop is ridiculous, unless it’s some sort of wholesale store.
Not to mention traffic sucks, lines are packed, and that plaze is like a zoo. That’s an hour of my life I’d like to have back.
GetStucco writes”
“Aren’t the proper terms “burst bubble” or “popped bubble”? I have seen bubbles burst or pop before (when my kids blew soap bubbles) but never have I seen one break.”
“Break” is also correct. If the surface of a bubble (as in blister) ruptures, it can be described as breaking, popping, bursting, or what-have-you. Not all word choices are necessarily significant. However, the excessive use of euphemisms by realtors and investors suggests either an unwillingness to face facts themselves or an intent to mislead the public.
I hear you Max but as a small business owner I have to draw the line somewhere. You draw the line at dealing with know nothings in a endless maise of crap and I draw the line at talking to individuals who have to spell every word for me to understand. Wait until they mess up your credit card bill or misunderstand your neeeds in a contract? Companies don’t give a sh#@ about you anymore because they don’t have to deal with you face to face. Half the time the callers from India have to spell every word for me to understand what they are saying and have messed up my orders. I also don’t think we are talking about building a beter Toyota or Dell. In my business it involves service calls on contracts with insurance companies dealing with electronic media. Such things like your medical records. How would you like someone using your identity in another country. You don’t have much legal recourse in this country. I also don’t think this reversion of the mean that globilization is going to create in our world is going to give you higher quality products for less in our country.
There are a couple of decent restaurants on Anna Maria Island and I go there every few months for a meal. It’s a nice, beachy strip of land, but for an island this small, that is a LOT of listings. Prices there were already getting ridiculous a few years ago, with mediocre condos off the water, with no view, listed for more than $500,000. In a bad enough storm, I’d think the island could just about disappear.
Is that “warm beer lousy food” seafood place still there? It was one of the only good seafood places I found down there, the other was a bait shop in Sarasota. I wonder what happened to those cottages which were up for about 60-100,000 back in 1994. When prices get this crazy, I wonder if there are any “real buyers” in the market or if they’re all treating property as a substitute for tulips or pets.com stock. Who in their right mind would pay so much to live in a hurricane trap surrounded by dead fish and a toxic red tide which has gone on for 1-2 years at a time? Especially when you can rent similar places for less than 1/3 of the monthly cost and when the next hurricane comes, tell the landlord “good luck” and bail!
Denial is not just a river in Eqypt. It is the Real Estate Market in Florida. Everyday I come across people that think there house for sale is worth top dollar. They feel they can still get last years’ prices. When I mention that there are alot more houses on the market, they don’t care because their realtor tells them to hang in there, that inventory is tight and there is no more land.
This is like watching a train wreck. Although I will welcome the return to normalcy when prices come down another 30% or so, the accompanying damage to the economy and to individuals will be beyond comprehension.
My latest post on my blog goes over the upcoming crash.
As far as companies outsourcing, that has backfired big time. Dell and other big companies lost a lot of business because customers did not want to deal with a call center in India & China.
I bought a Dell laptop and when UPS lost it my phone call was routed to a help desk in India. The guy on the phone, all he did was say “we are sorry” “we are sorry” I finally yelled at him and told him to transfer me to a desk in the US, he was not allowed to do that. I had to send out a bunch of emails to Dell to finally get them to ship another laptop and investigate the loss.
A lot of these companies like Dell who were outsourcing help desks ended up having to re-open centers here in the US to take care of big customers like large businesses who threated to take their business elsewhere.
As far as the IT programming work, accounting, engineering and other services offered by these “highly skilled” workers in 3rd world countries there is another issue… They screw up and no one is liable, very difficult to backcharge or sue a small company based in India or China because their detailers or accountants made tons of mistakes causing you to loose business or worse.
Tom-
Glad you see the light. I know lots of babyboomers (my parents now included) who sold their homes in South East and South West Florida in 2005 for huge profits and are now retiring to small towns in the Carolinas, Georgia and so on to escape the traffic, high costs of living (housing, insurence, ect…). My parents and many of their freinds are very happy, they paid cash for their homes with plenty left over, go hiking in the mountians, drive down to the beach and lead the active lifestyles they wanted when they retired (not being couped up in some over priced shoebox condo).
Ironically many of them sold their homes in 2005 to investors who plan on renovating and flipping them to “all the retiring babyboomers moving down to South Florida to retire”. Some of the offers these people were getting for 3 & 4 bedroom average homes built 20-30 years ago were well over a half million dollars, even into the 750K range for homes in the more upscale towns like Boca Raton and Coral Gables.