‘Sellers Are Blinking’ In Florida
The Florida realtors have the August numbers out. “Mirroring a national pattern, Florida’s housing sector continued to show signs of adjustment in August as many markets reported higher inventory levels of homes available for sale and a slowing pace of sales as buyers weighed more options. A total of 14,736 existing single-family homes sold statewide last month, a decrease of 34 percent from the previous August, according to the Florida Association of Realtors.”
“Looking to Florida’s existing condominium market, sales of existing condos also decreased in August, with a total of 4,375 condos sold statewide for a 41 percent decrease, according to FAR.”
The Herald Tribune. “Sellers are blinking in their standoff with buyers. Home prices fell 11 percent during August in the Sarasota-Bradenton market while dropping 6 percent in Charlotte County-North Port. The median sales price for a home in August was $309,700 compared with $347,400 in Sarasota-Bradenton during the same month last year.”
“In Charlotte County-North Port, the median was $210,300, down from $223,500 during the same time last year. Volume was down 28 percent in Sarasota-Bradenton, from 1,062 homes sold in August 2005 to 765 last month.”
The Sun Sentinel. “South Florida’s already-soft housing market weakened further in August. The median price of an existing single-family home in Palm Beach County was $386,000, down 6 percent from the $411,400 of last August, FAR said Monday.”
“Sales in the county plummeted 50 percent, the biggest drop in the state.”
“Broward County’s median price also fell 6 percent, dropping to $362,800 from last August’s $387,000. Sales in Broward declined 27 percent.”
The News Press. “Sales and prices for existing homes in Lee County were down 29 percent in August from a year ago. The number of homes dropped from 968 to 691 and the median price fell 7 percent from $283,600 to $264,100.”
“In Collier County, the number of homes dropped 45 percent from 472 to 259 and the median price fell 6 percent from $500,800 to $469,100. Charlotte County had a drop of 30 percent in sales from 365 to 256, and the median price was off 6 percent from $223,500 to $210,300.”
The Naples News. “Condo sales in Collier dipped 66 percent last month compared to August 2005. Sales of condos in Lee dropped 64 percent, from 280 to 100. Prices of condos in Lee are down 15 percent compared to last year.”
“Though agents and developers have grown accustomed to the frenetic pace of sales since 2002, the present slower rate of multifamily transactions in Southwest Florida may actually be healthy, according to local and national experts.”
“Even local industry insiders, whose income is tied to the flow and not the ebb of the market, agree that Southwest Florida’s rolling boil of a real estate market had to slow to a simmer for sustained health.”
“‘It had to stop,’ Michael Saunders, president and founder of the region’s largest and most prominent real estate brokerage firm, said of the current state of the market. ‘History is repeating itself. This is not a new market. Warren Buffett and Bill Gates couldn’t afford it here if we had 30 percent increases each and every year.’”
“‘Sarasota is on the map now, especially with baby boomers. And now, this is a more normal market. We need to take the past three years off the table when evaluating what healthy really is,’ said Saunders.”
The Miami Herald. “Last year the home builder Lennar brought in $13.9 billion in revenue, making it Miami-Dade’s biggest company. But now, the real estate frenzy that propelled Lennar’s growth has cooled. Lennar has stopped hiring, and in recent months outlined its way forward in the uncertain market. The aim is to position itself for growth when the market picks up, but the strategy has drawn some criticism.”
“Lennar’s response: Keep building. CEO Stuart Miller plans to ‘keep the conveyor belt running’ and finish building new homes in projects already underway. He also plans to offer sales incentives and slash prices to get the homes sold.”
“It’s an approach shared by several home builders, such as Centex in Dallas and D.R. Horton in Fort Worth. The pressure is on. KB Homes CEO Bruce Karatz said Thursday price concessions and incentives by other builders have ‘required us to do the same in some cases.’”
“For Lennar, Miller says he’d rather have cash now, even if there’s less of it, than sit on a house and hope it’ll sell for a better price down the road. ‘With liquidity we live to see another day,’ said Miller. Of course, that strategy also eats away at profits.”
The first link above has the city-by-city detail in tables at the bottom. It looks like the talking point is, ‘it’s a good thing.’ Related links:
‘As of September 11, there were almost 23,000 properties in the foreclosure process in Florida,’ said Alexis McGee. She added that the number of properties in default was an indication of trouble on the horizon.’
‘We’ve known for some time that, especially in south Florida, the market was seriously overbuilt,’ said Ms. McGee. ‘For example, there were about 25,000 condo units under construction at the end of the second quarter of 2006. That is more than have been sold in that market in the last nine years.’ She added that the Florida market, like others in America’s Sunbelt, had been impacted by speculators intent on flipping properties for profit. ‘It looks to us like they have been selling to each other in Florida, rather than to end users. Now, like elsewhere in the country, the party’s over.’
‘Marjorie and Dick Brooks never questioned their decision to retire to Florida in 1988 until Hurricane Charley ripped apart their Punta Gorda home. They now live on a half-acre of lakefront property in the foothills of the Great Smoky Mountains in eastern Tennessee, where they are living hurricane-free and forever soured on the Sunshine State. ‘I don’t care if I ever come back to Florida — not even to visit,’ said Marjorie Brooks, who retired in Florida from Michigan.’
‘Joan Dorsey, a widowed retiree from Philadelphia, left Orlando for Tennessee in January 2005. She was tired of preparing for hurricanes every year, then dealing with rising insurance costs. Besides, she figured the housing market in Florida was about to tank. ‘So many people were leaving and moving, I was afraid if I didn’t sell right away that I wouldn’t be able to sell,’ she said.’
‘Dorsey sold her Orlando home for $225,000 and bought a similar-sized, one-story home, tucked away in a wooded neighborhood of Tellico Village, for $249,000. She pays $632 a year in property taxes, a savings of about $120 a month from what she paid in Florida.’
“Lennar’s response: Keep building. CEO Stuart Miller plans to ‘keep the conveyor belt running’ and finish building new homes in projects already underway. He also plans to offer sales incentives and slash prices to get the homes sold.”
The ultimate self fulfilling prophecy - homebuilding is a cash flow business, they have to keep building to their own chagrin…
Lennar continues top be #1 in my town, while others have slowed:
http://bakersfieldbubble.blogspot.com
It sort of reminds me of earlier societies (The Roman Empire, for instance), which increased it’s frequency of rituals and sacrifices as it went into decline and subsequent destruction. “If things are going bad, it’s because we haven’t sacrificed enough virgins (or in this case, build enough ridiculously overpriced McMansion in depressing and sterile artificial environments called ‘Suburbs’). I also see a disturbing parallel to the ‘cargo cult’s of the pacific (check out Wikipeda for a definitive explanation of same). I can easily evision an environmentally and economically future that is inhabited by desperate, previously middle class families, caused by foreclosure/layoff/BK/Illness/outsourcing/war…take your pick…living 2 or 3 families to a McMansion, trying to eak out a living by growing gardens in their backyards, with the kids building scrap wood mockups of H2’s parked out front in a religious offering to the Gods to send us cheap gas, to rain down upon them like manna from heaven.
Cargo Cults are a perfect example of anything that has ever come out of the mouth of anyone to appear on CNBC.
“Stocks went down today on Warrent Buffet having the sniffles”.
Fascinating stuff, these cargo cults.
Yes , I see Lennar just put up a sign on a planned development near me. Coming soon , 14 luxury estates. Used to be a driving range. I have heard they’ll start at about $1.5 . They had some delays because there’s one of these massive underground gas pipelines running right through the middle of the development.
It makes me wonder about the true designs that these CEOs have for their corporations. Maybe the CEO of Lennar has a secret death wish to sink the Co just as soon as possible, and now he has a plausible way to do it?
It kindas also reminds me of Nasser when he ran Ford. Looking back, it seems like everything he did at Ford was designed to bankrupt Ford.
I think these large builders actually thought that the RE mania was going to keep going. Kind of like a lottery winner that adjusts their lifestyle expecting to win again and again, instead of a one time payout. They adjusted their balance sheets expecting the continued flow of money, and because of their increased debt payments, they have to keep building & selling to make their payments. Like the article said, cash flow is everything.
I thought people hear on this blog would find this link interesting.. Go to videos 1/2 way down the page to the left.. I still love Florida..Winters suck here in MA
http://www.naplesnews.com/news/2006/sep/24/fall_hurts/?housing
I do too. When the temperature drops below 85 degrees, I get very grouchy. 95 is even better.
When the temperature gets to 85, I get very grouchy. 95 is living hell. (Give me a high of 48 F and light rain, and I’m happy!) So my years living in Florida were even worse than the years spent in Texas! Why people would pay so much for a mosquito-ridden, humid hellhole like Florida is beyond me, but to each his own. I sure don’t miss the air conditioning costs, that’s for sure.
Why is it that all these wrinklies are moving to Tennessee? Seems like you don’t have to move that far north just to escape hurricanes and high housing prices. Or is it the income tax thing?
It’s the income tax thing AND you didn’t used to have car insurance!!!! I grew up in Bristol VA and know the area intimately - cheap but housing is expensive comparitively speaking. Not impressed with housing costs as we live in Potomac Falls VA now and had considered moving back home to Bristol but were shocked at the price of real estate in the area….Tennessee is getting worse.
Oh God… influx of senior citizens without auto insurance… could be very bad for Tennessee.
it could be armageddon man…think of it, they running into each other while looking for more properties to buy up but they can’t see cause they have cataracts so they’re buying up barns, thinking they’re mcmansions, then that drives up the price of horses, cattle, feed, see where I’m going with this????????
Wrinklies like myself also coming to the Carolinas and Georgia.
I do miss Florida’s warm weather. You could find me pulling my golf cart on a course even in July (when green fees are much lower). Did I sweat? Sure, but it beats shivering.
There were only about 10 nights here last winter when the temp got below freezing, but it was still tough on me. I hope the blood has thickened a bit and I’ll be able to better put up with the chill this winter.
But not worrying about hurricanes and having MUCH lower homeowners insurance more than makes up for two months of chilly weather each year. The house prices are cheaper as well.
OT, but looks like our 24 year old flipper from IamFacingForeclosure.com is now enjoying his 15 minutes of shame…Motley Fool is now covering his story
http://www.fool.com/news/commentary/2006/commentary06092517.htm?source=eptyholnk303100&logvisit=y&npu=y
Oooo Casey, you poor b@stard…
I checked out his site yesterday…www.iamfacingforeclosure.com and saw that he heeded others advice and took it down. It’s gone now
Too bad, it was a lot of fun while it lasted 
If you goggle “I am facing foreclosure” and click on “cached”, you can still read a little bit of content from yesterday, and from Sept. 5th. Do it quickly, as they may not be accessible at all very shortly.
BayQT~
“The pressure is on. KB Homes CEO Bruce Karatz said Thursday price concessions and incentives by other builders have ‘required us to do the same in some cases.’”
If HB CEOs can backdate stock option strike dates, KB homebuyers should be allowed to reset their 2005 purchase prices to 2006.
You gotta love a price war! When the dust settles, the carnage in this industry will blow everyone’s mind even Ben’s.
Market strategist live to see these wars; I’ve got front row seats; Bring it on Karatz; bring it on. Get on with the show; I love it!
“Lennar’s response: Keep building. CEO Stuart Miller plans to ‘keep the conveyor belt running’ and finish building new homes in projects already underway. He also plans to offer sales incentives and slash prices to get the homes sold.”
Can he guarantee that you won’t get electrocuted by the house you bought?
Normal seasonal decline (Oct thru Mar) + ARM resets (underwater “homeowners”) + popping of speculative bubble demand + this latest “strategy” of the homebuilders to dump and run = NASDAQ style pricing collapse.
“Auction Heaven in ‘07″ - dude, you are still trending correct! We should ultimately see 50% off the peak, just as the homebuilders stocks have done, for residential home values. Maybe more in certain areas. I see homes that were listing for $850k that are still “unaffordable” at $425k in terms of traditional metrics like DTI, down payment requirements, and equivalent rent.
A NASDAQ style collapse would mean that “most” of the price drop would occur in the near term, with the longer term (maybe five years or more) being necessary to completely flush everything out and hit final rock bottom.
ot to the smartypants here, please:
Buy muni’s now? Or too scary?
How far out would you go?
I know next to nada about this.
I need to park a wad…like soon.
The muni question depends on if the money is in a tax defered account and what state you live in. Right now it is a crap shoot with bonds, rates could go either way or just stay the same. If I was in that position I would look at the various ETF and pick a country that you think their currency would do better then the dollar.
like SWZ or MF
I’m guessing SWZ is Switzerland. What/where is MF? Thanks.
Thanks so much for the good suggestions…
I’ll look into it.
If you just need to park the money, how about short-term treasuries? Then, once the economic situation becomes a bit clearer you can think about where to place the money on the long term.
I’d love to hear some more suggestions, myself.
Short term treasuries or CDs for sure. Sit back, collect the 5.5% and wait until there is a lower risk environment. Forget international equities markets, if the US tanks so will they.
Treasury yields are falling fast. Everyone seems to want in on the safety they offer. TreasuryDirect.gov
FAR again “adjusts” last years numbers to paint a pretty picture…
August 2005 data shows statewide median sale price for SFH @ $246,500…
The adjustment up to $248,400 conveniantly matches the data for Aug 06 @ $248,400…
What a blatant manipulation of data so they don’t have to admit a YOY price decline state wide in FL.
Misread statistics… disregard crappy post
Anyway to delete post???
No way, you’re here to stay!
“Lennar’s response: Keep building. CEO Stuart Miller plans to ‘keep the conveyor belt running’ and finish building new homes in projects already underway. He also plans to offer sales incentives and slash prices to get the homes sold.”
Evidently this smart as a whip CEO remember how well massive inventories and even more massive incentives worked for GM and Ford…. Oh, wait a minute….
The thing to remember is builders work off of draws and so called interest reserves. If they stop building they fold, and quickly.
An old builder told me years ago, “Jack, we builders are like dope addicts, you keep giving us money and we will keep building and to hell with the consequences. We figure the deeper in the pockets we are with the bankers the more leverage we have to use on them.”
This was a guy who went bankrupt every bust and built in every boom and lived like a king. The name of his boat was, “FIRST DRAW”.
Miller is grandstanding; he is inviting industry cohorts to a pricing war; don’t you see it?
Moreover, the profit margins on industyr wide homes are really fat; as a result, they have a lot of margin to cushion any price declines blows.
Follow the industry’s communications mix including advertising and CEO statements and read between the lines. The last two quarters, they rolled out incentives all across the country. The only ammo left in the barrel is price cuts.
It’s no longer happy times in the RE industry, drinking ’shine down by the river while counting the loot. Its about cash flow, maintaining market share, and most of all SURVIVAL.
The real consequences for any builder price war aren’t with the builders, at least not initially. As the previous post said, they tend to have hefty margins built into their original asking prices. The real losers from a builder price war are the individual resellers, who may not have as much “equity” in their homes. Who is going to buy a $500K resale when you can buy an equivalent new home for $400K? The builders are going to crush the FB’s and flippers.
“Right now, Jaguar fever is here and providing positive exposure of the Jacksonville area to the nation,” says Kay Seitzinger, president of the Northeast Florida Association of Realtors and assistant manager with the South Beach office of Watson Realty Corp. in Jacksonville Beach. “Our housing market benefits from Jacksonville’s strong economy that features diversification of industries and service companies.”
The only thing the Jacksonville market benefits from is the non-reporting of the St. Johns County numbers. St. Johns County is the area of greatest carnage for the Jacksonville housing bust. It had the largest number of new communities from 1999-2005 and is seeing the worst of the areas sales declines.
“Right now, Jaguar fever is here and providing positive exposure of the Jacksonville area to the nation,” says Kay Seitzinger, president of the Northeast Florida Association of Realtors and assistant manager with the South Beach office of Watson Realty Corp.
————————————————————————-
Wonderful.
The Jags are winning ( actually lost to Indy yesterday ).
Let’s all move to J-Ville and buy a house.
What will these Realtor(tm) assclowns come up with next ??
Where are you getting ur data; Times Union? Drive-bys? MLS? I’d like a sniff. Please post links. Anything.
Miami-Dade YoY price is UP 6%. If this is true, then Miami prices are holding much better than the rest of South Florida. Or maybe Miami prices peaked later - in late 2005, as opposed to mid-2005 peak in the rest of SFl.
Or is it indeed too much of foreign money STILL coming into Miami?
“‘Sarasota is on the map now, especially with baby boomers. And now, this is a more normal market. We need to take the past three years off the table when evaluating what healthy really is,’ said Saunders.”
I think what he meant was we need to start by taking 3 years of appreciation off of the price, then maybe people will start buying.
The numbers are worse than stated. How many FB’s used number hitters to get a loan? I bet many are under water a lot more than 6%. Factor in the carry cost, taxes, insurance, interest, commission, etc, I would say more like 15-20 % in the hole.
Those Broward numbers are pretty shocking. Man, if you could hear the BS I’ve had to listen to the past 3 years about Broward . . . Now we find out it was just FBs flipping to each other. How nice.
TX Chick,
I have had to hear the same thing about Palm Beach. I felt ill everytime I heard 1000 people a day move here, or baby boomers are all going to move here, or …. I am sure you have heard them all by now.
And, frankly, I so feel like printing out the articles and graphs, and sticking them to someone’e forehead who would not listen to me, and told me that I was crazy, and how “PB is different” blah, blah, blah..
Anyway, now is not the time for gloating, although it would feel so good. People are not going to want to hear anything about it at all anymore; so now we just sit back and watch our worst nightmares about housing come true. Fortunately, most of us have hedged our positions (renting/paid off/etc). For those who bought in the past few years… My god, the pain your going to feel.
guughuughguugh…
Home Prices Drop After 11-Year Ascent
“The median price of a previously owned home fell for the first time in 11 years last month, and inventories of unsold homes swelled to levels not seen in more than a decade.
“The number of existing homes sold also fell, but by only a small amount, suggesting that the sharp decline in home sales seen earlier this year has leveled off for now.
“The National Association of Realtors reported today that existing home sales dropped 0.5 percent from July to August to a seasonally adjusted annual rate of 6.3 million units. That compares with a decline from June to July of 4.1 percent.
“The median price in August fell to $225,000, down 1.7 percent from August 2005. That was the first time since April 1995 that the national median price was lower than the same month a year before.
“David Lereah, chief economist of the association, said he expects prices to continue to fall. “We do expect an adjustment in home prices to last several months, as we work through a buildup in the inventory of homes on the market,” he said in a written statement. “This is the price correction we’ve been expecting — with sales stabilizing, we should go back to positive price growth early next year.”
“At the end of August, there were enough unsold, previously owned homes on the market that it would take 7½ months to sell them all at the current sales pace. The association said that was a bigger backlog than at any time since April 1993.
“With inventory still rising, there is no chance of any short-term relief” for sellers, said Ian Shepherdson, chief United States economist with High Frequency Economics. “Prices and volumes have a long way to fall yet.”
“The decline was sharpest in the West, where the volume of sales in August was 2.3 percent lower than in July and 22.8 percent lower than a year ago, in August 2oo5. Prices in the West held steady.
“In the South, sales volume in August was 0.8 percent lower than July 2006 and 7.4 percent lower than August 2005.
“Sales volume rose moderately in the Northeast (up 1.9 percent) and the Midwest (up 0.7 percent). Compared with a year earlier, prices were off 3.9 percent in the Northeast and 1.1 percent in the Midwest.”
“We do expect an adjustment in home prices to last several months…”
i guess 60 to 90 months qualifies as “several”.
Lennar’s approach is certainly bizarre, but this other statement is the one that really confused me:
Others, such as Pulte Homes in Michigan and KB Homes in Los Angeles, have taken a different tack. These builders are scaling back production but holding firm on prices until buyers return — a strategy some have called quality over quantity.
How can they “hold firm” on prices if no one is buying? Delusional. Also, I am still seeing Home Depots and Lowe’s stores being constructed. At first I thought that was absurd with the coming implosion, but then I thought that maybe they will do all right. With the quality of construction in these slap-stick projects, maybe there will be alot of demand for building supplies as people try to keep their homes from falling apart! I have become convinced that we are headed for the worst housing bust in the history of the world.
wow, we’re barely into it in FLA and some places are already down more than 5%.
Robert Schiller says his hedge sees 6-8% ,and still stands by his 40% correction is possible…
YOY declines today ,yet Hb’s are leading the market Dow over 100 today ?? WTF…
Kudos to Mike ..This chart is incredible!
http://photos1.blogger.com/blogger/1243/2622/1600/SFH%20price%20change%20chart.1.jpg
Sorry, here is the chart on his blog ..Un-F’n-believable
http://interestrateroundup.blogspot.com/
The charts make me happy… thanks.
This stuff never gets on the news. Interesting stuff. Thanks.
I talked with someone that has sold furniture for 22 years and he said that this time of year is supposed to be busy but it’s not. I never realized how this bubble has effected so many things.
Thanks for the kudos. As I mentioned in an earlier post, the charts really tell one heck of a story here. What’s also worth noting is that the last time prices fell YOY (1995), that decline was virtually nothing — 0.09%. This 1.7% (for single family only) decline ALMOST made the cut as the largest ever (November 1990 was a 2.08% drop).
Oh and right now, on the tape, LOW is warning about sales falling below previous expectations, and earnings potentially being weak. LOW would be Lowe’s, the home improvement retailer.
great!
Read about 1 in 5 flippers losing money.
“One out of five flippers who sold a home from April to June of this year lost money on the deal, says Home Smart Reports . That’s the highest ratio of losses in two and a half years.
“In all but four of the last 23 quarters, the flippers who lost money lost a greater amount than the flippers who made money,” says Mike Ela, president of HomeSmartReports.com.
“We’re bombarded with ‘Get Rich Through Real Estate’ ads and infomercials that promise get-rich-quick opportunities,” Ela says to USA Today. “So much work needs to go into proper research to buy and sell.”
Just got a flyer in the mail a few minutes ago from some builder here in NoVA “doing away with all “options” and adding ALL options in the basement - den, rec room, baths, shower, built-ins, etc. Starting in the low 600’s” Let me run down the road and contract on TWO!!
One for me too, please sir!
Not so fast, we do quality over quantity!
Well never mind two, if the deal is this good give me ten as I can resell them at a profit later.
Nov 21 1990
33. This is not a typical recession. There is no glaring problem with
inventories of conventional merchandise. Instead,Nov 21 1990 the system is clogged
by bad debts–most notablyNov 21 1990 , real estate that nobody wants to buy or
occupy. [SF Examiner]
34. California has experienced an unprecedented decline in real estate values
in the last year, with almost a 6% decline in median home prices since
the peak in July 1989, according to the Calif. Association of Realtors.
Bay Area home prices have fallen even further, more than 8% since August
1989. What is incredible is that there is seemingly no outside cause.
Housing prices simply rose higher than most people can pay.
Joe Arsenio, an analyst with Hambrecht & Quist Inc, says that the
fuel for further home price increases is not available. “We are not
getting the explosive growth of the past, and there will be a more
extended period of flattening in real estate prices.”
First Interstate Bank chief economist Jerry Jordan expects 3 to 5
years of flat to stable home prices in California, with actual price
declines early in the decade, especially hitting the higher-end homes
–those costing $400,000 or more.
Kenneth Rosen, chairman of UC Berkeley’s Center for Real Estate and
Urban Economics says, “There are not as many people out there trying to
buy a new home. And the absolute level of home prices is so high, it
scares people. There’s risk of more pronounced home price declines
because we are at such a high level already.” Rosen expects a 15%
decline in home prices from the peak in July 1989.
“A lot of buyers who bought just last year have lost their equity,”
said Michael Rivers, National Directory of Real Estate Advisory Services
for Ernst & Young. [SF Examiner]
35. Coming hard times will be made even harder by the historically high debt
that American households have piled up during the past 2 decades, an
economic research group warned yesterday. If a lot of people lose their
jobs in a recession, bankruptcies, delinquencies and mortgage foreclosures
will come quicker and more often than if savings had been piling up.
[SF Chronicle]
We have not seen this much yet
37. The slumping housing market is continuing to take its toll on local real
estate firms, as several have reorganized or closed in the past few weeks.
[San Jose Mercury News]
We have not seen this much yet–prediction like this
49. Home prices in California will decline another 5% to 10% in the
continuation of a “buyer’s strike” according to Kenneth Rosen,
chairman of the Center for Real Estate and Urban Economics at UC
Berkeley. Rosen believs a revival will not occur until 1992. He
blames the current real estate slump on the “totally unsound practice”
of government and consumers ringing up record debt loads in the 1980s.
[San Francisco Chronicle]
50. With a few exceptions, the real estate market in most U.S. cities is
flat. Market values are stagnant and sales volume has slowed. [San
Jose Mercury News]
51. The U.S. Chamber of Commerce said that a recession has begun and that it
will be deeper and longer than previously expected. [Reuters]
We are not here Yet
52. Auctioneers advertise exclusive estates in Menlo Park, with minimum bids
40% off the current bank appraised value. Custom homesites reflect
discounts 47% off the current bank appraised value. [Wall Street Journal]
We have seen this
56. Builder advertises: $50,000 Price Reduction! Executive homes in San
Jose’s Blossom Hill area from only $325,000. [San Jose Mercury News]
57. Builder advertises: $50,000 Price Reduction! Luxury view homes in the
Almaden Valley from $525,000. [San Jose Mercury News]
61. The University of Michigan reports that formerly strong real estate
sites in California, such as Anaheim, Orange County, San Francisco,
and Los Angeles now lead the list of the nation’s riskiest real
estate markets. [San Francisco Examiner]
We have seen this
59. If you must sell now, be prepared to make significant concessions. House
prices and sales are stagnant because prices rose out of the reach of
most buyers. [San Jose Mercury News]
We have seen this
58. As a slowdown settles over the Bay Area, people wonder how they can keep
up the high expense of life here. Jean Bishmann, a credit counselor with
the non-profit Consumer Credit Counseling Service of Santa Clara County
believes that many people in trouble are living on credit cards and 2nd
mortgages rather than scaling back spending. She predicts that in another
5 or 6 months “the bottom is going to drop out.” The people who face real
troubles, said Dan Feshbach, head of the Mortgage Information Corp., are
first-time home buyers who purchased at the market peak, especially those
with adjustable-rate mortgages. [San Jose Mercury News]
bold off.
Closing Bold
I find item 34 interesting… All the explanations for the RE decline in the early 90’s was due to massive cuts in the defense sector… This was continuosly used of the past few years to solidify the argument that without massive layoffs, recession, etc., that the RE market is strong and will continue to be so…
Now we have a referenced article that says nothing of the sort to trigger the downward spiral in the 90’s… rather the RE cycle created it’s own demise…
34. California has experienced an unprecedented decline in real estate values
in the last year, with almost a 6% decline in median home prices since
the peak in July 1989, according to the Calif. Association of Realtors.
Bay Area home prices have fallen even further, more than 8% since August
1989. What is incredible is that there is seemingly no outside cause.
Housing prices simply rose higher than most people can pay.
——————
Why don’t you take a look at a recent Open House in Manhattan? So sorry I missed this one:
“We’ve always been of the mind that realtors are the human incarnation of pure evil (see: the CorcoDevil), but perhaps the situation is a bit more literal than one might think. It’s one of those great, insane, “Christ, we love this town” sort of stories: Upper West Side resident Daniel Farash put his condo up for sale and then left town for the weekend so that his broker, Julie Johnson of Warburg Realty, could host an open house”…
http://www.gawker.com/news/metro/manhattan-realtors-satans-happy-footsoldiers-203004.php
Jean Bishmann, a credit counselor with
the non-profit Consumer Credit Counseling Service of Santa Clara County
believes that many people in trouble are living on credit cards…
Confession here. What made us put our Cape Coral property on the market a year ago was that we had credit card debt. Yeah, we could make the payments (more than the minimums), but then I read about some provisions of the bankruptcy bill that allowed credit card companies to possibly double their minimum payments. We had no idea if it would apply to us, but we knew it could mean trouble if it happened to us. We thought it best to sell, pay off the cards, and have some money put aside so we’d have a safety net for a change.
We hadn’t planned on just being investors there — we had originally wanted to move there one day. We certainly didn’t sell because expected the bubble to burst — but looking back now, it seems we got the buyer, and our comically high price, just as the burst was beginning.
We were just afraid that regardless of the fact that we weren’t using our cards anymore and we could handle the payments, our payments might still end up skyrocketing and possibly one day breaking us. I wonder how many other people got pushed into selling for the same reason.
Thank you for sharing.
The problem right now is there are too many people who should have done what you did. Instead… they’re going to hit a wall with their option ARM resetting…
I haven’t added to the equation that CC companies might soon double their minimum payments. Yikes! That would… change the credit market.
Neil
I haven’t added to the equation that CC companies might soon double their minimum payments. Yikes! That would… change the credit market.
I believe it’s already happened — I think it was due to happen at the beginning of this year. The mailers about it started going out late last fall. We finally closed in late January (the buyer dragged the process out), the check cleared the first week of February, and I had a new CC bill due a week later that was considerably higher than the previous bills, despite the fact that I hadn’t added anything to the balance in ages.
One of my cards had sent me a confusing (and I can usually understand legalese just fine) mailer “explaining” the new changes to minimum payments, and who they did and didn’t affect. I did understand one part, though, which said that some customers would have their minimums recalculated; others would just have their interest rates jacked up.
Higher minimum payments screws with the debt to income ratio, and makes it harder to get credit — who’s to say how many people would have been buying, but can’t get mortgages anymore? Couple that with sellers like me who suddenly want to sell ASAP (even without insane balances, the CC companies might still break us, just because they can), and I wonder how many people are selling because of that, and how many people can’t buy because of that.
There’s no way I believe this is the sole cause of the bubble bursting, but I wonder how much of a role it’s playing?
“I haven’t added to the equation that CC companies might soon double their minimum payments.”
are you kidding? they doubled them months ago. i know. mine doubled back in … whenever — but quite a while back.
Jean Bishmann, a credit counselor with
the non-profit Consumer Credit Counseling Service of Santa Clara County
believes that many people in trouble are living on credit cards…
They are the lucky ones! Soon some will have to live under their credit cards.
“Mirroring a national pattern, Florida’s housing sector continued to show signs of adjustment in August as many markets reported higher inventory levels of homes available for sale and a slowing pace of sales as buyers weighed more options. A total of 14,736 existing single-family homes sold statewide last month, a decrease of 34 percent from the previous August, according to the Florida Association of Realtors.”
“Looking to Florida’s existing condominium market, sales of existing condos also decreased in August, with a total of 4,375 condos sold statewide for a 41 percent decrease, according to FAR.”
34% to 41% yoy drop in sales an “adjustment”? A fulminant crash is more like it. Where do these idiots come from?
Remember, the market isn’t soft like a comfy bed, it’s soft like rotten floorboards.
More wordplay!
Sellers aren’t just blinking in Florida, they’re hitting the snooze button twice, getting breakfast at noon and going back to bed. And that’s on a Tuesday.
OK. I need some help here. Someone please tell me what the big deal is about this morning’s news. I mean a 1.5% decrease in the price of an average home from last August is big news?
The house I sold in ‘99 for $245,000 was selling last summer for $800k. Now, the sky is falling because the price came down by 12k. I’m sorry, I don’t see how this is big news.
If the price came down 50%, I may take a look but it’d still be over priced in my book.
Am I missing something here?
Any clarification would be appreciated.
Thanks.