‘Market Forces Slowly Overwhelming Sellers’: Florida
The Florida press reacts to the new sales numbers. “‘Reality-based pricing’ has hit the Charlotte County real estate market. Market forces are slowly overwhelming the desire of many sellers to hold out for the highest possible price.”
“Kristine Wishard, president of the Punta Gorda-Port Charlotte-North Port Association of Realtors, said, ‘When one of our agents goes out to list a home,..you often have to overcome the seller’s idea of what they’d like to list their property at,’ she said. In other words: The boom is over. Get over it.”
The Herald Tribune. “For the second month in a row, the Sarasota-Bradenton market posted a double-digit drop in median sales price. ‘They are just not selling out here,’ said real estate agent Bradford Hanley as he showed off his client’s 3,500-square-foot home. Hanley has been trying to move the house since February 2005. He started at $849,000. Next he got the owner to trim to $820,000. For the last two weeks, they have been trying $799,000. ‘We had a contract. It fell through. This is my longest listing,’ Hanley said.”
“Meanwhile, to his chagrin, a couple of neighbors only a few houses away just listed their house, a comparable abode with 500 square feet more, for the same price of $799,000. ‘It’s the lowest square footage price in the neighborhood,’ said co-owner Suzie Williams.”
“Sarasota-Bradenton’s inventory levels remain seriously high, with about 9,500 homes and condos for sale. At the present clip, it would take nearly two years to sell off just the existing inventory, assuming no more homes come onto the market. So far, the listing rate has been growing at about 1,500 or so each month.”
The St Petersburg Times. “Home sales have plunged and inventories have skyrocketed, according to statistics. In the Tampa Bay area, there were more than three times as many active listings in August as there were a year ago. ‘I had one of the worst summers ever,’ said (realtor) Lisa Levison. ‘There’s no demand.’”
“‘I had a listing in Madeira Beach three blocks from the beach that we had under contract in February at $275,000 when the seller decided to take it off the market,’ she said. ‘It was relisted for $249,900 and now it’s under contract for significantly less.’”
From Florida Today. “The Brevard County real estate market didn’t show any signs of bouncing back in August. Gene Collins, president of the Melbourne Area Association of Realtors, said there currently are about 7,700 single-family homes, 2,400 condominiums and 700 townhomes listed for sale in Brevard.”
“‘By historical standards, that’s twice or three times the normal level,’ Collins said.”
“Gail MacMillan, a broker associate in Titusville, said, ‘They’re just a bit afraid of what all the people in the media are saying about the market. We’re not going back three years ago,’ she said. ‘That’s not going to happen. This area had been tremendously undervalued.’”
“‘We’ve been in business for 22 years, and we’ve seen these things come and go,’ said Colleen Barneman, president of BSS Exteriors in Melbourne. ‘I don’t think it’s been quite this slow before.’”
The Palm Beach Post. “The price of an existing home in Palm Beach County dropped for the first time in more than seven years, while the number of unsold homes has more than tripled in a year. In August, 28,182 homes were for sale. ‘There isn’t much positive to highlight,’ said Mike Larson, an analyst in Jupiter. ‘And all that occurred despite a recent downtick in interest rates and a general lack of serious hurricane activity.’”
“‘Affordability in its broadest sense is the number one concern,’ said Manuel Iraola, president of an online real estate company. ‘It is easy to buy the elephant,’ Iraola said. ‘The challenge is to feed the elephant in an environment where wages and income are not keeping up with outrageous property taxes, property insurance and overall energy costs.’”
The News Press. “With more than 12,000 homes on the market in Lee County, triple the inventory of a year ago, the number of buyers is about what it was three years ago, real estate broker Brett Ellis said. ‘We just have too many sellers and sometime we have to start eating into the inventory,’ Ellis said.”
“Real-estate agent Ernie Horvath said he thinks it will take a year for more houses to sell, as new home builders try to move their stock. ‘A lot of builders are starting to seriously discount their homes,’ Horvath said.”
The Miami Herald. “Sherri Wells put her one-bedroom waterfront condominium in Fort Lauderdale up for sale in February. Seven months and four price cuts later, she’s still waiting for a buyer. She and many other home sellers are by now all too familiar with the languid pace of South Florida’s housing market, which continued through August with no end in sight.”
“‘At first I would at least get four or five calls over a weekend,’ said Wells. ‘Now I am not getting any calls.’”
“After Wells moved out, her property tax increases for the condo were no longer capped because it was no longer her primary residence. As a result, she said her property taxes shot up from $890 a year to more than $4,000.”
“‘There is no way I could ever charge enough rent to cover what the mortgage and taxes have become,’ she said. ‘I am trying to sell as soon as I can.’”
The Sun Sentinel. “In Tequesta, in northern Palm Beach County, agent Mary Hankey has a client who held an auction Saturday to sell his two-bedroom home. The suggested opening bid was $275,000, and the list price is $450,000. Two bidders stepped forward, but negotiations continue.” “Hankey said property taxes and insurance are holding back buyers. ‘Buyers are very scared,’ Hankey said. ‘They’re almost an extinct breed right now.’”
“The number of Broward homes and condos for sale in August was nearly 39,000, a 145 percent increase over last August. Michael Kaye of Cooper City, listed his house a few months ago for $399,500 before reducing it to $387,000. He said he’s still lucky to have one showing a week.”
“‘If I were to keep lowering the price, it wouldn’t even help,’ Kaye said. ‘Right now it’s just a lack of buyers.’”
“Marilynn Obrig, a Fort Lauderdale agent said, ‘Houses that look good and are priced right are selling.’ But Delray Beach analyst David Levin said, ‘I think it’s overly optimistic to say we’ve reached equilibrium in the marketplace.’”
These inventory numbers seem to be going through the roof! 7,000 here, 12,000 there, 39,000..they only sold 14,736 last month, statewide.
Excellent job Ben; you fully captured Florida’s painful bubble popping reality with this thread; and it is bleak my friend, really really bleak…
Here in Miami Beach, the realtors (I think I am the only non-realtor in the building, 140 units) love to spew the “scarcity” value of the beach-front condo. That’s totally untrue. Prices went up, so all of the small, beach-front stores and hotels were bought, demolished and replaced with 30-50 story condos (still going up all around me). Yes, there were only 2000 direct-beach-facing condos in MB in the late 90s, but that number has increased X-fold (4x? 10x?) and is increasing daily. Glad you bought that exclusive beach-front condo, it’s becoming less exclusive daily.
it’s not bleak! It’s WONDERFUL!
“Sarasota-Bradenton’s inventory levels remain seriously high, with about 9,500 homes and condos for sale. At the present clip, it would take nearly two years to sell off just the existing inventory, assuming no more homes come onto the market. So far, the listing rate has been growing at about 1,500 or so each month.”
9,500 homes = almost 2 years supply
9,500 homes / 24 mos = (approx.) 396 homes sold per mo
1.500 new listings per month / 396 homes sold per mo = 3.8 months
Extrapolating linearly, for every passing month the backlog increases by about 4 months…
That is what is truly frightening. Historically, inventory numbers start to go down after labor day as the prime selling season comes to a close due to stale listings falling off and waiting for spring and a lack of new listings coming on the market. But last year and continuing on with this year, that is not happening at all. Looking at Housing tracker, inventory numbers just keep growing in almost all markets, especially Florida. And we haven’t even hit 2007, the big year for ARM resets, yet. It is going to get completely out of hand. Have there ever been times when there was 4-5 years worth of inventory out there in certain markets? Because there soon will be.
“…for every passing month the backlog increases by about 4 months…”
That is the part that hasn’t been addressesd at all in the MSM. Relatively simple math showing why it will get worse. Typically, the media are content to report what already happened and if they dip their toe into forecasting, it is a linear assumption for change.
Most in the MSM can’t handle that level of math. The only thing they seem to be able to do is retype the press releases handed to them.
Palm Beach County #’s for Aug. 2006
21,000 + inventory
600 sold
35 month supply
Dade County has almost 40,000 units for sale and Broward County over 39,000. Both are near 3 year supply of inventory.
Not to sound like a broken record, but this is before the 2 trillion in resets start to hit and this area has a substantial reset exposure.
add this
County foreclosures quadruple U.S. rate
http://immobilienblasen.blogspot.com/2006/09/foreclosure-zwangsversteigerungen-palm.html
sorry wanted to post the text
County foreclosures quadruple U.S. rate
Foreclosure rates in Palm Beach County soared in August to more than four times the national rate — and rose a sobering 226 percent compared with the same month last year,
As the five-year housing boom winds down, that includes creeping mortgage costs, soaring insurance premiums, rising property taxes, stagnant home prices and a growing inventory of houses for sale.
Statewide, 16,533 homes entered some stage of foreclosure in August, more than any other state in the country and a jump of more than 50 percent over July
On a year-over-year basis, considered the most accurate comparison because it eliminates seasonal differences, the 16,533 foreclosures statewide in August represented a 62 percent increase over the previous August, when there were 10,175, the report shows.
In Palm Beach County, a total of 2,241 homes entered some stage of foreclosure in August, up from the 688 homes in the same month a year ago, or 226 percent, according to the report. That is one in every 248 homes in the county. Florida’s rate is one foreclosure for every 442 households.
Wednesday’s foreclosure report comes on the heels of one published report indicating that 24 percent of all purchase and refinance mortgages in Palm Beach County are “option ARMs,” or option adjustable-rate mortgages
Also Wednesday, the delinquency rate for mortgage loans on one- to four-unit homes in Florida stood at 3.6 percent for the second quarter, the Mortgage Bankers Association said. Nationwide, the rate was 4.4 percent, down 2 basis points from the first quarter and up 5 basis points from a year ago. The August numbers, which aren’t included, will be reflected in MBA’s third quarter report
This collection of news stories from Florida is absolutely stunning … it’s as if the Florida real estate market is in the midst of a complete meltdown. I know we’ve all expected this to happen for some time now, but it still astounds me how fast it is occurring and how quickly we seem to be going into a serious freefall! Watch out below!!
At this point it looks like Florida has the Bubble ground zero bragging rights.
I ran our MLS in Orlando this morning. I covered the MSA which is Orlando, Osceola, Lake and East Polk counties. Ready for this? 42,085 active listings. The same area had 3,333 sales from 8/1/2006-8/31/2006. That is 13 months inventory excluding fsbo’s and 800 brokers and builder products.
Housing prices are cooling off
___________________________________
This is the headline from the Herald-Tribune paper. Cooling off?!?! 2 years of inventory. YOY declines of 11%. Spin city?
What’s cooler than being cool? Ice cold. The Florida market is crashing. A year ago it was red hot, today it is ice cold.
“There’s been a paradigm shift. Prospective buyers are coming in 30% below the offer and shooting the squirrels”
Your local realtor.
“Prices are dropping faster than Paris Hilton’s panties.”
Your local Bubble-sitting renter.
Too many empty homes in Florida, no problem we have a new cash crop:
http://www.news-press.com/apps/pbcs.dll/article?AID=/20060925/NEWS01/60924019/1075
This buds for you!!!!!!!
That’s pretty interesting. For those too lazy to click the link; seems that abandoned (partially built?) houses are being used to grow weed. Also a mention of a shootout involving AK-47’s. Imagine paying top dollar for some crapbox fliphouse, moving into the neighborhood, and finding out all the houses are empty save for grow lights and heavily armed insurgents. LOL. I bet we’ll be seeing a lot more of this in failed fliphouse subdivisions all across the country.
“moving into the neighborhood, and finding out all the houses are empty save for grow lights and heavily armed insurgents.”
The eventual story of new housing developments in (once again) overbuilt Lancaster and Palmdale, CA
Another blog went into why there were so many “pot house” police raids in Sacramento.
http://sacrealstats.blogspot.com/
Unfortunately, I fear there will be a number of these “instant ghettos” a la South Central Los Angeles; look in those homes, the Mahogany staircases, marble fireplaces, detail “gingerbread” woodwork… and its a slum today! Finished as the great depression started…
Neil
It’s amazing how people don’t realize that may of today’s slums (like Newark NJ, etc) are filled with blocks and blocks of once-nice houses! And how quickly these neighborhoods turned, too.
And to think that a year ago, I was thinking about investing in a company that was renovating and selling houses in neighborhoods like South Central. Oh, am I glad that my budget didn’t stretch far enough to cover the minimum amount the company wanted. It would have been gone by now.
-’Lancompton’
“Last October police raided the house on Southeast 15th Street, busting two men for running an extensive marijuana cultivation operation where 103 plants valued at $250,000 were seized. ”
Even their marijuana plants have bubble prices.
2.500$ for a plant?
An interesting perspective from SoCal…
There is a new community in Irvine that is in the middle of selling, and my wife and I visited about a month ago. Their brochure (published around 2/06) indicates the prices for a community starting “in the low $1mil”. However, when we got the price list, the lowest model was at $870K. That’s a $150K discount. Plus, they had the following incentives: upgraded kitchen to all stainless, upgraded counters to granite, upgraded cabinets, and $25K allowance on flooring. So, another $40K or so in incentives. Then, last week, the guy called and said that in addition, they upped the flooring allowance to $40K, AND was offering a 1% reduction in 30-year mortgage interest rate. That’s another $110-120K or so, which pushes the ‘real’ price down to around $750K. That translates to a 25% discount for a brand new home sold by the builder, which I think is a more realistic gauge of price adjustments than some bloke pricing his house outrageously, then coming down.
Is that the Villages of Columbus development? I live across the street.
Yes, it is. Great community.
Don’t by one too close to the industrial section. Waste Management has a big processing facility over there that reeks often. Other noisy operations over there.
buy
Don’t buy.
Yes, the new builders have the most reliable comps in this market. They are actually selling some homes at current market prices, not 2005 wish prices. It is funny how new home sales are not used as comps in an existing sale. They should be used and adjustments made for landscapeing etc.Then the real prices would show through in the NAR data.
I’ve been in South Florida for a little over a year now. There is a new home development in West Miramar (west of I-75) that had been advertising from the low $700Ks. A few months ago the ad in the paper changed to “from $499K, and they just updated their huge billboard at the I-75 (going north) off the Palmetto from $700K to $499K. COOL, but still priced too high since similar homes were about $350K 3 years ago.
…not sure if it matters, but I forgot to add the name of the development: “Sunset Lakes”
West of I-75? Are they giving away free alligator removal services with each house?
I know that area; my aunt bought a home near there for 225K back in 2000.
that is by GLHomes, a tad better builder than the lennars/shoma homes or Mintos..
you will see some builder unabashedly advertizing communties miilion dollar and above…but you know those are not worth more than 350k and up…
CRB is almost rolling over..fingers crossed for the emerging market and the US stock market to do the same…and the pieces of puzzles will be solved.
west miramar. with hurricane wilma, the lakes had 10 to 20 foot waves and washed out the shore lines to peoples’ pools. now everyone has to pay for damage. and, if you are too close to the miami dade line, house foundations were cracking, because of the mines blowing up rocks.
west miramar isnt worth a dime!
I bought and sold a house built by Lennar in Boca Raton FL (Boca Isles) fairly nice community. It was built back in 1993 so one would expect quality to be slightly better than the crap slapped up today. One of my neighbors did a major renovation on his house - i.e., tear down walls, etc. He found numerous beer bottles in the walls apparently deposited their by the craftmen
who built the house. I can only imagine what kind of garbage gets stuffed in the walls now a days - crack pipes, blunts. Almost every roof in the complex suffers from leaks so quality was an afterthought over ten years ago. I feel sorry for anyone buying a sub-standard new home today - I can only imagine the types of problems that they’ll have down the road.
My wife and I were talking to a furniture supplier a few weeks ago (looking for a new recliner). The sales lady mentioned that a friend of hers bought a new 2 story house 2 years ago. A year later the left side of it fell off.
Literally, the living room, kitchen, part of the upstairs just collapsed. Without warning. No way would I buy one of these newest places today.
My sister bought a home by Grand Homes in 1999 and soon after she sold it in 2005 the house started to split right down the middle. You could see the line from the foundation straight up to the roof.
Even if those incentives were offered on the ‘lowest model’ (somehow doubtful) the price is still 870K, the mortgage is based on 870k and the payments, insurance and property taxes (@ nearly $10,000/y!). All this upfront incentive bullshit is just that - like selling 1% teaser loans to the unwise. Exotic mortgages were stealing future buyers, and now these incentives are stealing future home improvements that Joe Sixpack should do for himself, by himself when he has the funds to do so. 25k for flooring!!!?? And who in the hell needs 3700 s.f.? That’s plenty for 2 families, with granny livin’ in the 3 car garage.
Agreed, the incentives aren’t equivalent to price decreases, but it is a way for the builders to keep the market afloat. A 15% decline illusion looks much better than a real 25% decline. And it’s for a 2200sf home, so the price is still outrageous. $750K is still outrageous!
These places have been amusing to watch. They are on tiny lots with windows that look into the neighbors windows (a voyeurs dream perhaps?). Right next to the concrete processing plant, Jamboree (very busy street), railroad tracks, and the toll road. Also, the design of these houses looks out of place and bizarre.
All yours, from the low 1 millions. Yet you can drive south for half a mile and pick up a used 1970s build home in woodbridge that is WAY better than these new homes in every regard. I do not understand who is buying these new homes. It doesn’t make any sense at all.
Yes, builders have to move inventory to make cash flow; they are the first to drop prices through incentives.
Data on Homes Sales Cause Jitters
By Tom Petruno
Nationally, prices are down for first time since 1995. It’s bad news for jobs and consumer spending.
http://tinyurl.com/rp7wk
I’m personally tired of being referred to as a dam consumer.I’m so bored with all this consumerism bullsh@t.How are you going to be remembered after your 6 feet under, as a consumer? Get out and do something for the environment or help your fellow man. Consumerism is killing us slowly.
AZdude,
Amen. It’s been just about the ugliest aspect of the “boom” (and there have been some ugly aspects to be sure!) Right now as a country we’re going through MEW’s (Mortgage Equity Withdrawal Symptoms!). It’s the “cold turkey” one goes through when your Housing ATM machine is tapped out!
When I was in the service everything I owned in the world could fit in two duffle bags. I used to be a pretty happy guy. After years of feeding at the trough, I’m going back to that. Little by little I’m getting back. True, I’ll never be able to fit my life in a “sea bag” again but I certainly don’t think I’ll need 3 acres and 2,400 sq. ft. ever again. It’s just too much of an obligation and I’d like to at least do one memorable thing before I go.
LOL
My ‘icon’ of a nomadic lifestyle was to be able to get all my possessions in the back of a station wagon. I was able to do this until I married a man who has not thrown away a piece of paper in his life…..;-) Opposites attract, so they tell me.
With you on the huge house - who needs it? - unless you have a large and extended family living with you, but I’d argue for the 3 acres: with that kind of land, I can grow all my own food and even keep some livestock.
We decided to acquire a large piece of land (20 acres) on which to build our (small) retirement home.
I really like city living–it’s the “greenest” way to live. But with the reality of condo boards, HOAs, etc, there’s no way I can live in dense housing today.
Try putting up solar electric in most HOA-goverened communities today–or (G-d Forbid!) using a clothesline! They’d do everything they can (within or outside the law) to block it.
The only way to survive today is to find a chunk of land OUTSIDE any development and live as efficiently as you can.
‘Realtors in the Orlando area said Monday the fast-rising inventory of homes and condos for sale is putting more pressure on sellers, and those who want to sell their homes in a relatively short period of time are the ones who are willing to start with lower asking prices.’
‘Rodriguez said housing prices in many areas are skewed by the large number of condo units that have flooded into the market in the past year or two, competing for entry-level home buyers and contributing to the downward pressure on prices.’
“A slowdown in home sales nationally and throughout Florida is beginning to take a toll on housing values, as sellers cut prices in markets where they sharply outnumber buyers.”
And in what areas do sellers NOT sharply outnumber buyers?
everywhere because of specs and flippers. plus, people are priced out. in south florida, the median income is 50,000. buying at 200,000 is asking alot a house hold. south florida house median was up ot 400,000 last year. even a 50% shave wont help with taxes and insurance increasing up to 100% this year.
Last week I went to South Carolina from Fort Myers, I was shocked at the number of moving trucks pulling cars with Florida tags heading north on I-75, I seen about 4 going south. I think that 1000 a day moving to Florida if off by about 98%. This is just the start of the migration out.
I noticed that too, at the end of the month, for the last two months. Lots of U-halls and moving vans on the road heading north. The exodus from Florida has begun.
Palm Beach County has got to be ground zero of this whole mess. 28,000 listings, of which 800 sold in August. We are barely into this downturn and there is already 35 months worth of inventory sitting unsold there. That is unbelievable. What is it going to look like a year from now?
Worse.
Hard to imagine, if you had to put your house up for sale and realistically expect it might take 3 years for you to sell it. Ouch.
GROUND ZERO!
655 sales in Aug and 28,182 listing = 43.03 months! WOW!!!
I wonder if the 28,182 includes FSBOs?
Crispy,
It might actually be 24 months, 28,182/1,170 = 24.1
FAR August 2006 SFH sales = 655
FAR August 2006 condo sales = 515
Mike Larson’s August 2006 Inventory = 28,182
Not sure if the inventory number includes condos or not. I bet that is a total inventory number but I could be wrong. At any rate, last month had 1,170 more sales than it should have. A 2 year supply is ugly and that probably doesn’t include FSBO’s. Florida could be Ground Zero.
I almost bought a home in Palm Beach County (PBC); it’s just so darn depressing. This bubble is really starting to hit home.
I live in PB county (West Palm/CityPlace), and I can tell you, its just staggering to be on the ground here. 800K homes renting for 2K a month. 100’s of condos for sale/rent in my development of about 500.
Parking spots, where I live, cost about 200/mo to rent. There are HUNDREDS open, with only one per unit assigned.
I live in a ghost-town, I walk though this absolutly awesome inner-city development (not being sarcastic here, it is very nice, I love it) and have it almost to myself every day. My pool area services 2 condo buildings; probably about 1000 people funnel into there. I have never seen more then 10-15 people out there at one time.
If I walk though the first floor of my building; about 30% of the doors have RE lockboxes on the front of them. Others are for sale (like my unit) with no lockbox because they are rented. I would estimate that 50% of my building is for sale right now.
Also, there is another new, really nice building right down the street that finished about 9 months ago (610 Clematis, for anyone local). I walk past that building in the evening, and its totally dark. It would guess its probably about 10-20% occupancy.
Palm Beach, may indeed, be considered ground zero when this is all over. Especially right where I live (downtown/CityPlace). I have never seen anything like this in my life. Everyone wants to live here; nobody can even dream of affording it until prices are about cut in half.
Yep, and the whole county is like that. Delray, Boynton, Boca are all just swamped with listings. Even areas like Highland Beach where everything is on A1A have high inventory and low sales. Take the Toscana development on A1A in Highland Beach, luxury condos most of which are well in excess of $1 million and have direct oceanfront views. About a month or so ago I looked, and there were 44 places on the market there, with 19 sales for the year so far, which equated to about 20 months worth of inventory for that luxury condo development with a highly sought after location. Think about the places that are 2 - 5 miles from the ocean.
Like in Naples.
I follow the inventory of two towers built by WCI. Approximately 50% of the units in both are for sale. In February, 107 units were available. Today, that number is 99. They have an inventory of just under 100 months.
Michael,
I am in WPB as well (Village Blvd). What about Opera Place and some of the others yet to break ground? What do feel the occupancy rate of Once City Plaza and The Prado are these days? The condo bubble there is going to be a bloodbath. I suspect prices will be cut in half or more when it is all said and done. It would be a great place for your professionals to live. Too bad your last name has to be “Gates” in order to afford it. I can’t see the Baby Boomers living there, definately designed for a younger crowd.
Notorious,
Very much agreed, I love living here, but I really, really question the assertation made by many that 610, CityPlace, Opera, etc are all for the retiring baby boomers. Honestly, I can’t imagine living here as a retiree; this is not the place that you want to be. You almost have to walk most places downtown (there is no parking anywhere closer then where your going to put your car, unless your going to drive 5 blocks and valet); there is too much volience, too many kids, way too many bars, etc. I have wondered for a long time about all these “boomers” that were supposed to buy up One City Plaza, Opera, CityPlace, etc.
I have a friend renting in One City. That place is really neat, I would love to live there. But apparently, I am like the only person. Its totally empty; just devoid of life. I think another that is in “meltdown” is the Slade. That’s not in a good neighborhood at all (although some do have intercostal views), and they were asking 600-1mil. Your not walking anywhere from there (except to get mugged), and you still have all the hassles of city life.
My personal favorite though is the high rise in Riveria, just north of the Blue Heron bridge. That’s a total clusterfuxxx. I went over to look at them one day; and, with all seriousness, I would not park my car there. Its in a ghetto; and the starting prices are over a million. Yes, its direct intercostal; and maybe even has a deepwater dock. But come on? You can’t walk outside! Drive over there one day, just make a left right before you go over the bridge (don’t worry, you won’t miss it).
I know several have been cancelled (550q comes to mind, as well as one right next to the court house). Also, they are still trying to get the one just west of CityPlace done (right near Publix). That place is going to be another empty building, I am sure.
I love living here; which is really the crappy thing. I make pretty good money, am under 30 years old, and love living in the city and walking to bar/clubs/resturaunts/etc. It’s a perfect place for young professionals to live. The problem is, none of them can afford it. Its really a shame, these would make great “starter” condos; and could really be a haven for inner city culture and “yuppies”. However, what is has become is a total ghost town. You need to be making ~100K to live here and enjoy it.
On a side note, have you been down to CityPlace much? They are having BIG problems down here. Apparently, the traffic is not what was promised, many, many stores are going out of business/changing hands/etc. No crap; you told all these store owners there were going to be 3000 people living here, there is more like 300!
Its sad, but I have a feeling that CityPlace is going to go back where it came from; and turn back into a ghetto in the next 10 years.
I agree. Downtown WPB and Riviera Bch can be dangerous. I never understood building luxuary condos next to crack houses. They have done it all over South FL. Been to Miami lately? They got one being built next to I-95 and the 1-395 (or I-195) causway. A auto accident could literally end upin someone’s kitchen.
It doesn’t surprise me that the City Place stores are going out of business. Too much high end stuff. People think everyone in Palm Beach County is rich. They aren’t. Most live at or near the poverty line. Our median income is $50K per family. How is a family suppose to live on that here? The economy is predominantly service industry and tourism type jobs which don’t pay much. We’ll always have the ubber-rich on the island, but that is nowhere near indicative of the true demographics of Palm Beach County.
palm beach county is ground below zero. off of congress and gateway in boynton beach is unbelievable. 100s of units going up and now they are talking about development north of the acreage, all the way up to pga? crazy. now we are beginning to know which developers have to build. 2 to 4 years of stock, it doesnt matter. THE ONLY WAY TO SELL IS TO DROP PRICE. what people dont realize is that the 200,000 home cost is now 150,000 with taxes, insurance and goods increases. houses have been priced so high, you need a 50% just get a few people back into buying houses in pbc.
why not squat as a house sitter
$ 250 a month !
I’d love to hear a realistic assessment of Naples.
It might look worse, or it might not. Sooner or later, some of those sellers will just pull their properties from the market, if they don’t have to sell. And if the cycle stays true to form, near the bottom the sales activity AND the number of properties for sale will be low. There will just be a huge “silent majority” with negative equity who will stay put longer than they might otherwise like, until they slowly dig themselves back out again.
What about all the flippers and speculators who purchased with neg-am int only toxic mortgages? They made up 60-70% of that market with no intention of ever living in them. How will they hold on? I think the “silent majority” will be make a very loud sound - KA-BOOM! These folks can hold on for their equity to come back. IMO
*can’t (hold on)
What other market in the country includes the entire state? Florida is ground zero, and I thought all markets were local, guess not.
This guy seems a little delusional:
Michael Kaye of Cooper City, listed his house a few months ago for $399,500 before reducing it to $387,000. He said he’s still lucky to have one showing a week.”
“‘If I were to keep lowering the price, it wouldn’t even help,’ Kaye said. ‘Right now it’s just a lack of buyers.’”
He reduced the price 3% - not enough for him to make any judgments about not reducing it further. Real estate used to be location, location, location, and now it’s location, price, price.
It really is about location. I’m sure that areas that are truly “nice” will simply reset to prices from 10 years ago.
But swampland in the middle of Florida with ticky-tacky houses on it, or houses in the middle of the desert, etc, may actually to to ZERO because there will be no buyers at all.
Some markets have excessive prices, like New York. Some have soaring new inventory, like Dallas. And some have serious economic issues, like Detroit.
Florida, given rising insurance premiums, seems to be the Tri-fecta
Yep!
Prices aside, things have been slow for the Realtors due to the “portability” issue. Homesteads (full time residents) are capped for ad valorum tax purposes as the lower of 3% or rate of inflation. Lots of people have lots of tax consequences built in when they move. Basically this insulates a lot of taxpayers from caring about local government raising taxes. For Miramar the city commission is raising city taxes 16 +% this year on top of an additional 22% increase in taxable value. They have spent lots of money attracting businesses, which are now leaving because businesses do not get the Save our Homes restriction. If you are considering Miramar, check out the tax situation. We currently have > 8 different taxing authoritys County, City, School Board, S. Fl Water Mgt, Children’s council, Inland Waterway and S. Broward Drainage district. My tax bill (bought in 2001) on something like $285,000 is > $6000
Fiona,
Glad someone else realizes the REAL reason behing SOH. It totally insulates local/regional govt! Nobody gives a crap what they do with taxes/money, because no matter what, they are not going to be taxed on the increases. Everyone thought it was/is used to control govt spending! Its totally the opposite, govt spending has gone crazy in my area (Palm Beach); and from reports elsewhere, I am not alone.
Its a total joke, let the rates float, then everyone will actually care about what the taxing authorities are doing.
I fully anticipate a challange in the next year at the supreme court level about this issue. If this is not taxation w/o representation, I don’t know what is!
The rate cap has had fascinating consequences. My taxes are 1/3 that of my new neighbor. Adding to the consequences are the fact that you only get the cap if you have a homestead exemption… something speculators, flippers and rental properties don’t have.
Go for it, the era of Robin Hood is back!
I recently spoke with a friend who wants to buy a house in Texas.
I did my part to discourage her, giving the y-o-y declines nationwide stats, don’t catch a falling knife, etc. I get the feeling though that she’s already drunk the kool-aid.
I can’t even rant, I’m so demoralized… another one bites the dust…
Cheer up! A close relative of mine just last week closed on her second investment home in 12 months here in FL. That’s right, already owns and lives in one and levered up to buy the other two.
God bless her stupid ass!! LOL
Have you asked what her plans are for the other two? Is she going to rent them, or does she still think she can do a quick, profitable flip?
Rented one with neg cash flow after about 5-6 months. Plans to the same with the other. Also, wants to leave secure 80K+ job to become RE agent. Everyone has tried talking but you can’t talk someone out of a dream.
Maven,
Remember the good old days when people dreamed about being an Astronaut or a baseball player? A realtor? Sheesh!
Baseball player?
No. No ‘homeruns’ anymore these days!
Ah yes. the dream of becoming a realtor.
I was watching an open house across the street while cahtting with a buddy when the realtor pulled up. Ditzy looking blonde dressed to kill.
My buddy nudges me and says ” She used to be my dog’s groomer.”
“We’re not going back three years ago,” she said. “That’s not going to happen. This area had been tremendously undervalued.”
Yeah, right, lady. You just go stand out there in the middle of the higheway when it is time for prices to stop falling, with your Price Stopping Guard outfit on.
That comment bothered me, too. Can she guarantee prices won’t dip that low? Maybe if she and her company could put that promise in writing a few “frightened” buyers might step up to the plate.
I saw that quote and spit coffee onto my computer. I can accept an economist can make statements without data (due to the data being previously supplied), but this lady, is only wishing.
Yep… September will be the last “strong sales month” for a while. And yes, I realize September sales will be down YOY, but by historical standards, it will still be a strong month…
Florida is in huge trouble. Years of inventory? ALREADY?!? Oh boy… So is California, Pheonix, etc. Once the mentality sets in that homes are overpriced and people overpaid… its going to create a downward pressure on prices that will be… Interesting.
Thus I think we’ll undershoot funamental values due to the reverse mania that will set in.
Neil
This area had been tremendously undervalued.
People say that about every sh*tbox town across North America. In reality, prices were cheap because industry jobs disappeared (the mill/factory/mine shut down years ago), and only late in the current RE mania have prices rebounded. Once the mania is over, prices in these burgs will crater.
This is the effect of the internet on home buying. Regional markets that were priced right for regional COL and construction costs become “undervalued” when compared to higher cost areas, and out-of-area investors have been willing to drive the price up to (and above) the national medium, and now are surprised when locals won’t buy the “right priced” houses.
There are some important national issues revealed in the special circumstances of Florida. The most important being the concept of the “monthly nut.” IOW how much to you shell out every month to maintain the fact or fiction of homeownership. Floridians use about the same energy as most americans so they mostly just suffer equally with us but they also use a lot of electricity and those rates are higher. There’s the higher interest rates. With above averge prices they are more affected by rates. The elephant in the corner; insurance. Floridians are just now making the first installments on ‘06-’07 insurance at rates soemtime 50-150% higher and these only include the ‘04-’05 approved increases. Next year even if this is a quiet season they’ll get the bill for the monster ‘05-’06 storms. That’s a big chunk of nut. From what i hear taxes are also out of control with increased valuations but little or no decrease in the mil rates. 1% on a $120k is $100/mo. $240k; $200/mo. More nut. So, a theoretical buyer has $2000/mo to put towards housing. Before; 5% rates, $200 taxes, $200 insurance, $200 utils. They could afford to “pay” for a bigger house. 6.5% rates, $400 each tax and ins. and an extra $50 each to the utils and gas tank. The only negotiable item in the monthly nut is the purchase price equivalent.
And of course recent high growth places more of the stock in the recently purchased segment exacerbating all of the above.
We should do this for all bubbletopian areas to see their individual character. For instance California won’t have a tax shock but they pay even more for electricity and our higher general taxes uniformly depress all forms of productive economic activity. Contrast Boston where a building boom was counter to a population shift. Whereas California could never truly overbuild relative to appareant demand, Boston way overbuilt to that apparent demand only to find the true demand for housing stock actually was falling. And Boston’s stock cannot “sit” as Bastahn’s wintah’s beat up on the physical condition something wicked. Same for Phoenix where we already hear stories of “closed” houses decaying rapidly.
You forgot HOA dues. Utils on a home are roughly 300+ a month plus in South FL taxes and insurance are about 400 a month each and increasing.
not only that, but HOA dues are a ticking timebomb. There’s no protection against raising rates.
And if you live in a deed-restricted community governed by an HOA, you don’t really own your house.
Say you want to modernize it a bit, or put on an energy-saving lighter colored roof. If the people on the “Review Board” think your house will look too nice and devalue theirs, they can prohibit you from making external changes.
You don’t really own your house in a deed-restricted HOA-governed community. Your neighbors do! And that’s the majority of homes in Florida.
Agree to both of you, thanks. I can’t think of everything.
HOAs are an abomination. Nothing but a new level of unelected, unaccountable, unanswerable bureaucracy. Need community services? We call that the municipality. Need to pay for community services? We call those taxes. Well at least we do in a nominally representative democracy that is. You may recall that HOAs were on my list of fatal flaws when I was asked for the character of potential investment properties. The potential for and actuality of abuse are unacceptable IMO.
In an amusing episode of “The X-Files” (Season 6’s “Arcadia”), Mulder and Scully (posing as a married couple) moved into a planned community to investigate a series of disappearances. It turned out that residents who repeatedly violated the CC&Rs regarding the appearance of their property were being torn to pieces by a Himalayan demon originally summoned by the founder of the HOA, who’d spent time in Tibet. The funniest sequences involved Mulder’s attempts to provoke an incident by flagrantly violating the CC&Rs, beginning with plastic flamingos on the lawn and escalating to installation of a pool in the front yard.
I always think of that episode whenever I read about the antics of real-life HOAs.
You are so right; my poor Ma is in one of those communities and she hates it; she had to sell her 4dr pickup b/c its not allowed; review board rep said he thought it was an SUV at first that’s why he said nothing prior to closing. What’s more, my Ma had to get review board approval to fix her roof after hurricane Wilma!
Wha?? are you kidding me??
HOA’s are a necessary evil. Just have your neighbor park his 36′ RV on his lawn beside the ‘68 Opel on jack stands in his fluorescent green house. If that’s what you want, buy where there is no HOA.
If you think tyrannical governments are a necessary evil, why don’t you move to China?
HOA compared to China? I don’t think HOA’s can arrest or execute anyone. My sister in law’s father was arrested in China for printing in a paper something the Chinese government didn’t like… For six weeks! HOA’s don’t have that power.
And in this area, the HOA’s are pretty mild, so maybe I have a different opinion. They forced through rules to allow solar panels and TV dishes, but banned certain windows (solar glare) and instituted fines for “weed yards” and abondoned cars. Overall, a positive. But its a democratic HOA (committee is elected with certain issues requiring a community vote).
Neil
In California, a HOA can foreclose on your home WITHOUT a judicial hearing. So if they fine you for putting up a “We support or troops” sign, or an American flag in your window, and you decide not to pay it, they can (and have!) take your home away.
Past tense.
New law (SB137) changed that. There must be a debt and a chance at debt resolution. What you said *was* correct. They can no longer foreclose over a flag or whatnot.
http://realtytimes.com/rtcpages/20060104_newlaw.htm
> Same for Phoenix where we already hear stories of “closed” houses decaying rapidly.
I thought houses (or airplanes or other things) in the desert are relatively easy to preserve. What did I miss?
They build them so cheaply, it doesn’t take much for them to decay. A friend of mine in Las Vegas was recently chatting with the guy who was installing his cable, and the cable installer told him that a couple weeks ago he was installing cable in a new McMansion and propped his ladder along one of the sides of the house, and about halfway up, the ladder and he along with it fell through the exterior wall and into the house. Now that is some top notch construction right there.
Of course, the homeowners blamed the cable installer.
Take a look at new models in Central Florida. NONE of them have a gutter system. That’s right–in one of the highest-rainfall parts of the country, there’s no GUTTER system on these new houses.
Nearly everyone I know who has bought one of these houses had to install one wihin a year or two to prevent water from dripping into windows, from compromising the foundation, and from running into the pool, etc.
Yep. I know somebody who bought in Lantana. No gutters. I didn’t think it was possible to buy a home with no gutters.
Airframes are not houses. When we store aircraft we mothball and cocoon them and remove delicate components. Houses are wood and stucco and water and air and plastics and fibers. Difference.
Trouble with houses in the Arizona desert is that termites think they’re tasty snacks. Doesn’t matter if they’re newly built, or getting on in years.
Tax rates in Florida are worse than you describe. Hillsborough County just voted to drop the tax rate by a mili-fraction, saving a resident with a 200K house a whopping 100 dollars a year on his 5,000 dollar tax bill. Since even slums are now appraised at 300, 400, 500k, you can imagine the tax bills. My sister’s property tax bill last year on a nice, but not very big, waterfront house with an ordinary-size yard was 50,000 (fifty thousand) dollars, and this year it’s going up, because she claimed homestead exemption on it, and the tax office immediately sent an appraiser who decided it was worth more than she paid for it. So much for the tax bill being based on the buying price; somebody was careful to include a loophole that makes even this unreliable.
The Mayor of Tampa says she does not want tax rates reduced. City and country employees have all gotten raises and stuffed money into their retirement accounts, and according to the St. Petersburg Times, all the massive new revenues in both Hillsborough and Pinellas Counties have already been spent.
counties will be sceming like mad to get more $
for illigit breeding programs and FREEer healthcare
florida govt is just greedy and dont know how to manage their money. all of this tax windfall and just gave away tax breaks to developers and pet projects. and, they cared less about infrastructual needs. now with high housing cost, govt have to pay higher salaries or they wont find anyone will to work for them.
broward county wants to close a library and decrease hours.
its is getting rough in florida!
Robert Cote,
Couldn’t agree more with your analogy. I have been watching the Sarasota/Bradenton market for three years now, even if prices drop 50% or more it still does not deal with the real estate tax and insurance issues. If I purchased a home for say 250-300 thousand in Todays market I would not be able to afford the yearly costs of insurance and taxes based on current salaries. Even when home prices drop to affordable levels the people that will be catching the falling knives will soon find out that it’s just to expensive for most given added insurance and taxes. I believe Florida as a whole has a long way to go before these issues are addressed and hopefuly repaired. In Florida at least it’s not just prices that are the problem!
Non-Floridians don’t understand how big a millstone insurance premiums have become in coastal Florida. Think 1.5 to 2% per year. Say you have a very nice 3,000 square foot home with 10′ ceilings, lots of tile, etc. that would cost $100 a square foot to replace. So you buy $300,000 of coverage. Your insurance bill will be as much as $6,000 per year, which is more than most SOH-capped annual tax bills. Imagine escrowing $500 a month just for the insurance.
Non-Floridians, get out your latest homeowners insurance bill just for comparison. I pay about $750 a year for that much coverage here.
You can probably rent a lovely home or apartment in Arizona for the cost of your insurance + HOA + taxes in Florida
“…We’re not going back three years ago,” she said. “That’s not going to happen. This area had been tremendously undervalued.”
Were home prices 3x incomes? If so, you were not undervalued.
“I think it’s overly optimistic to say we’ve reached equilibrium in the marketplace.”
Agree. But I am in the minority. Just had a discussion at lunch today. Every time there’s an article in the local newspaper mentioning a housing correction, co-workers ask me if I’ve read it. (And then some, thank you.) Anyway, here is what the average person in my area thinks of the current state of housing. They think that because it’s been announced that prices have dropped, that we are now at the bottom and it’s a “great time to buy!” I responded with, “Well, actually, buying now would be rather dangerous as they are forecasting further drops.” Not one of them agrees with that. Every single person at the lunch table was convinced the little blip in sales/prices is just that - a blip. Tired of the constant war over the topic, I just let it drop.
Stupid, stupid, stupid people.
And people don’t think the NAR/Dl/Realtors have influence on the way people think . These spin doctors do influence people . It’s very important that they tell the truth to people ,but they won’t.
When someone makes that argument to me, I just show them a 10-year chart of the NASDAQ. You could use the Nikkei, or lots and lots of other charts. What goes down can keep going down. Until 0. Another approach is to hide the right hand side and ask if they would buy here, or here, or here as you slide the paper to the right.
Anyone here of Blanche Evans, prez of Realtytimes and author of “Bubbles, Booms, and Busts: Make Money in Any Real Estate Market”?
Man, this woman is so full of you-know-what. Makes all sorts of statements about the market without any facts or figures to back herself up. What a miragee. What a maroon.
My translation of her interview with the NY Times:
Snake Oil Saleswoman
Pardon my grammar…
“Anyone hear…”
Thanks for clearing that up! For a second I was thinking you were a “maroon”.
(just having some fun here).
Isn’t that Blanche Dubois in “A Housing Price Named Desire”?
X^)
Or was it “Blanche, the sleazy one from Golden Girls”?…
I hear you eastcoaster - I pretty much given up talking about it to my friends over here in Los Angeles, too.
The ‘quote-of-the-month’ is:
“oh, yeah, prices will go down about 5%, then slowly rise in line with inflation, come Spring next year”.
When you bring to their attention the fact that, as things stand today, only 1 in 50 people earning an ‘average’ income can afford to buy here, they just looked sort of glazed. Its as if unaffordable housing in L.A has always been the case, and if they sucked it up then eveyone else should expect to as well.
Yeah, that’s the funny thing, too. They’re all saying, “Great time to buy!” and “Prices will be back up soon!” but yet not one of them can figure out who’s buying at these prices. So, uh, how can it be a great time to buy? How can no one conceive of the possibility that prices will drop substantially if no one can afford to buy?!
One co-worker told me she’d like to downsize and can’t see doing so because the downsized homes cost so much more than the home she has now originally cost (she bought around 2001, I think). Doesn’t matter how much she could get for her house currently, she can’t justify downsizing to a place that costs that much. She’s about the only one in my office that sort of gets it (I say sort of because she still thinks prices are here to stay).
Now is a great time to buy, if you don’t mind loosing a couple hundred thousand dollars over the next few years. This is what I tell people who tell me it’s a good to buy. And, sometimes I respond, when I don’t feel like being flip, Now is a bad time to buy, because you will loose a couple hundred thousand dollars over the next few years.
A couple hundred thousand dollars is like 100% of 5 years net take-home pay. It’s real money.
Prices have sky rocketed due to flippers, low interest rates and a psychological fear of being “left out”. With the possible exception of the roaring twenties, these price hikes have never been seen.
Thanks to this blog (thanks Ben!) I kept my sanity but have had burst of panic attacks, seeing renters leave buildings that became condo conversions and having tough times to find a decent affordable place to live. It sickens me when I hear my neighbours complain that they can’t sell their unit ( they only demand a 100K mark up for the 2 years or less they owned the place). Disposible income is down not up since last year due to the high inflation (food, gas, health insurance, FPL, even my daughter’s school lunch went up from 1.25 pd to 1.75 pd). Yes, nothing much but add it all up and it looks quite different. The new “norm” is that your home is your piggy bank and it entitles you to a well deserved nest egg. I think once the flippers left the “sheep” stopped following them and all of a sudden realised that homes are just too expensive. Not a matter of principle but a matter of money, pure money.
In the building I rent in North Bay Village ( one mile from Miami Beach) there are 59 units for sale and 2 pending sales ( for months allready). The developer ( condo conversion) still has about 75 units for sale but rents these out. I have a feeling during the condo meetings they discourage sellers from slicing their prices and I even suspect that some people put their condos on the market at such high prices just to make a point. The location is great and I wish I would have bought 2 yrs back when prices were still in the low 200s.
Florida and esp S.Florida has always been quite a colorful state, we have the worst hurricane threats, the most incredible politcal stories ( anyone remeber the voting machine problem in WPB in 2000 , and Elian Gonzales?) Our local gov is known for being corrupt and it is the norm here,so that said, who knows what will happen. I hope for the best that means a 30% drop of 2005 rates.
According to the HeraldTribune.com, “Forbes keeps his own stats and says that the median price on the Gulf Coast Regional Multiple Listing Service, mostly Bradenton homes, has dropped 16.4 percent from a year ago to $292,000. Sales are starting to pick up, but are still down 35 percent from a year ago.”
This is mind-blowing! YOY prices and sales are both down! At what price point will demand stop falling YOY? Only when we get to that price point will we be nearing the bottom. What a mess!
this set of articles excerpts had me really feeling like we’re watching the koolaid wear off…all this inventory…true, a lot of it *did* appear really quickly, but the increases were happening and happening and happening, and nobody spoke about it, apparently didn’t really *see* it. But now, suddenly, what was there all along is visible. And the realtors are sounding like they’d sobered up first and are trying desperately to move on, shaking the still-under-the-influence sellers and yelling ’snap out of it already!’ . Buyers are sitting back waiting for a fresh punchbowl because they don’t trust the one that’s still on the party table.