‘Busted Deals Reflect The New Reality’ In Florida
The Wall Street Journal reports on Florida. “In Florida, school principals, real-estate developers and economic-development officials are scrambling to solve a troubling mystery: Where did the kids go? The reason: School officials say that even though it has cooled in recent weeks, Florida’s overheated housing market is pricing young families out of the state.”
“In Tampa, principle Shari Beaubien blames her school’s 10 percent enrollment dip on the conversion of four nearby apartment buildings to upscale condominiums. When the principal called the property managers last month, she was told 515 units were empty.”
“‘In some new-home neighborhoods in Florida, there are more ‘for sale’ or ‘for rent’ signs than there are drapes in the windows,’ adds Jack McCabe, a real-estate consultant in Deerfield Beach, Fla.”
“Debbie Terry, director of recruitment for the Collier County school system in Naples, says the district is suffering a ‘double whammy’ from steep real-estate prices. About 25 new teachers hired this summer later rescinded their contracts because they felt home prices in Naples were too high.”
“Meanwhile, a growing number of more-experienced teachers have been selling their homes to lock in big profits made during the boom, and then moving to less-expensive places like south Georgia.”
“Despite recent housing-price declines, including August decreases in 12 of 20 metro areas, economic-development officials worry that real-estate costs remain high enough to make it hard for at least some employers to recruit workers and expand their businesses.”
The St Petersburg Times. “With new homes sales down about 20 percent and industry confidence at a 15-year low, builders and developers are sloughing off property they may no longer need. ‘Many of the large builders have basically entered a no-buy phase,’ said Beat Kahli, developer in Pasco County.”
“A series of busted land deals reflect the new reality: Undisclosed developers bailed from plans to buy the 2,000-acre Cannon Ranch in Pasco County for more than $100-million. The land’s California owners were left in the lurch, having paid $31-million for the State Road 52 property in 2004.”
“Farther north, in Hernando County, Mercedes Homes pulled out of a contract in August to buy 416 acres near State Road 50. Up in smoke went a planned 900-home subdivision. Landowners’ representatives said Mercedes cited slumping home sales.”
“A contract for the 1,700-acre Kirkland Ranch near Wesley Chapel disintegrated in the summer. Diversified Property Group LLC would have paid the ranching family nearly $60-million but folded the deal in light of an uncertain home market.”
“KB Home, active in about 20 projects in Pasco, Hillsborough and Pinellas counties, is negotiating to shed land in the Tampa Bay area. For national home builders like KB and Lennar, Wall Street looms large. Land sales can raise cash and restore investor confidence. Divestment lurks in corporate reports behind such jargon as ‘managing our land portfolio.’”
“Kahli’s experience illustrates the changing fortunes of land sellers. Last year he tried to buy land between Tampa and Orlando and was told to get in line. His was the 27th offer. He recently got a sheepish call from the same sellers. Would he still be interested in buying the land?” “‘I said, ‘What happened to the other 26?’ Kahli said.”
“Tampa Bay area housing analyst Marvin Rose figures it could take six to 18 months for prices to tumble. From the prospect of developers, asking prices reached ridiculous heights, leaving little room for profit. At market peak, some landowners, after discounting for wetlands, were demanding close to $100,000 per acre. ‘We’re still at last year’s prices,’ Rose said.”
From MarketWatch. “People camped out for the chance to buy a unit in Radius, a condominium development in Hollywood, Fla. But that was in the summer of 2004, when the red-hot condo market was peaking.”
“‘You see some of these communities that investors purchased … there are no lights on at night,’ said Bill Donges, CEO of the developer of Radius.”
“The lack of post-dusk illumination in some South Florida condo communities is a sign that many buyers never planned to move into the units they bought, he said. Their plans now: sweat.”
“According to the NAR, inventory of existing condos and co-op homes rose to about an 8.6-month supply in August. ‘The market is clearly oversupplied in many places,’ said David Seiders, chief economist for the National Association of Home Builders. ‘The key symptom of that has been on the price front. Prices have taken a hit.’”
‘Given the tough home sales market, Bruce Sparks figured he needed to bring some attention to his multi-million dollar waterfront home. So he put up a ‘4 Sale’ sign — on the roof, in bright red, 12-foot letters. ‘I bought the property when prices were up and now nothing is moving on the beach,’ he said. ‘I want to sell the property as quickly as possible, so I thought an attention-getter might help.’
‘ Developers worried about their bottom line, coupled with a slide in the housing market, persuaded Palm Beach County commissioners Tuesday to ease new affordable housing rules. ‘I want to encourage builders to keep on building,’ said Commissioner Burt Aaronson. ‘I want to keep builders employed.’
‘Major Florida home builders and developers are preparing a report that will call on government to share more of the expense of building lower-cost housing statewide. ‘We’re willing to be part of the solution. But government needs to be part of the solution,’ said Ted R. Brown, an influential development-industry lawyer.’
What a creep. I hope he loses his ass on this place. Wants a 300K profit in less than a year?
Sparks, a real estate investor, is asking $1.6-million for the property, which he bought last spring for $1.32-million.
The previous owners, who moved out of state, paid $275,000 for it 12 years ago, Sparks said.
The music stops, the last chair is taken away. Somewhere in another state there’s a couple with a nice $275,000 home owned free and clear with a million in the bank. When you look around the room and cannot see the person with the bucket of debt and box of stupid, that person is you.
Trying a 498 cash offer on the place from yesterday. Listing is 698. Tax appraisal is 337. I know, I know. We’d have to move too. But that one knocked me out.
A suggestion? If they don’t take your offer, don’t counter.
In the 90’s slump a friend made an low offer, it was rejected, he didn’t counter. Seller came back some time later, said they’d take his offer, he said, no, now I’ll pay x-10%. She didn’t take it. Time passed, seller came back, said I’ll take x-10%, friend says, nope, I’ll pay x-10%-10% more…..guess what? She took x-10%-10%.
When you are about the only buyer in the room it gets very interesting.
Jag, you beat me to it. That’s EXACTLY what I was going to suggest. I did the exact same thing once. It worked too.
Jag, thank you.
This is exacty going to be my strategy.
I have no intention of countering. I think 498 is too high but I think I’ve got less than a 1% chance of having it accepted.
Remember Txchick ,your in a strong position if your a all cash buyer these days .
Just out of curiousity. Tx, What happens if they accept? Will you feel like you are overpaying?
There’s no “overpaying” for that house. $498k and I’d smile my entire life and ask to be buried in the backyard. Did you look at the link? Or locate it on a map? Sweeeeet. The materials list for building that house has got to run close to $498k. In my ‘hood you’d sell in a day asking $2,498,000.
Yea but I’m a cheapskate. I’d take it and be happy though. Probably never move again.
Do you still have the link for the house you’re talking about?? …. Now you’ve got me curious to check it out (don’t worry, TxChick … I have no intention of bidding against you!).
http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=10609627&page=1&property_type=SFR&mls=mls_dallas&cKey=275ld9w3&source=GDAR
So far, the listing agent hasn’t called me back.
When you look around the room and cannot see the person with the bucket of debt and box of stupid, that person is you.
LOL.
If we can look for some small silver lining in this though. *and could that # be right - 550 vacant units? Sheeeesh. All these new units , presumable still paying school taxes (?), but not sending students. Enrollment down 10% etc , but I’d like to know if their budget has increased with all the new condos and higher assessments maybe. One would hope this might bode well for the education system. Let’s hope they put this money to work in the form of constructive spending (computers etc) and don’t just squander it.
Unfortunately, here in FLA each school’s budget is based on how many students show up on the first day of school. That is why the principals are all upset over declining enrollment. The county still gets the tax money though. Who knows what they’ll spend it on. Maybe some new road projects to serve these empty communities.
when people saw that despite everything that is going on, they are still letting developers get away with not developing true affordable housing, people are packing up and running to the hills. pbc is in deep, deep trouble. and the govt is causing alot of the trouble.
As long as he is using a rooftop sign with bright red, 12-foot letters, why not change the wording to “Fire Sale,” which would resonate better with the sense of desperation such a conspicuous sign will naturally generate.
This reminds me of the huge red balloons that our SD-area new home builders are flying every day above their sea-sized McMansion tracts with the wording “New Homes For Sale” boldly printed on the sides. I guess they thought nobody noticed that there were hundreds of brand new, unoccupied homes sitting right alongside the freeway.
I’m sure there must be a zoning/ code violation for putting huge signs on the tops of houses on the beach.
The place is probably worth about 550k, but he probably HELOC’d as soon as he bought for home improvements, so somebody will be taking a loss. I wonder who?
I believe that’s the preffered way to call FEMA for help.
Rainman,
LOL
>
But, but, but - these developers and builders are all good GOP supporters. I’m sure I’ve heard these guys say the most feared words are “I’m from the government and I’m here to help”. Don’t these guys believe in the ownership society? Trust in entreprenurial free-market methods of solving problems? But now they want government handouts to save their greedy little asses?
Hell no - never. You wanted this bubble, you made mountains of money off it, now you live with the consequences. You know - personal responsiblity, fiscal discipline - all those great family values.
Now you’re talking…not a nickle to save any of them. They believe in pulling themselves up by their bootstraps, on never needing a dime of government assistance…well, time for them to demonstrate the strength of their beliefs. And if they and the rest of the lemmings go over the cliff–so be it. Capitalism demands sacrifice–and who better to be sacrificed than these greedy pigs.
THis, as you probably know, is my biggest fear. Since SO MANY people have screwed around “playing real estate” they’re now in the majority.
People who spent a lifetime SAVING MONEY are going to be bailing out the get-rich-quickers. We already are….with these low interest rates meant to prop up the economy.
The “gold bugs” have a term I just learned yesterday: the “war on savers”. I don’t completely agree with the gold bugs, but the sentiment is dead on.
That’s exactly what this is - a war on savers - it has been for decades only now its in the open. As much as I agree with all these sentiments I cannot get over my fears that we will be made to pay for this in some way - taxes, lost equity, bad economy, crime, sour employment outlook, etc.
The real stomach turning will start when all the sheeple who are up to their necks in debt start telling the rest of us to “trust” the pols to hold our country together.
Teamwork is only touted by the lazy. The campaign of 2006 - and especially 2008 will be painful to watch for savers. Can’t you just see the pandering to the broke masses that lies just around the corner?
“…on never needing a dime of government assistance…”
It isn’t “government” assistance — it’s taxpayer-robbed-at-the-point-of-a-gun assistance.
Chip,
correction noted. So it’s prudent taxpayers-robbed-at-the point-of-a-gun to fight the war on savers. Yeah, that about sums it up.
Spike - ??? Must be it’s late in the day. Guess you mean “wage” = “fight”, correct?
LOL. Agree w/that for sure. It’s gonna cost em this year and in ‘08.
A “market correction” is already under way, Brown noted, with record inventory of homes for sale and downward pressure building on prices. As time goes by, the gap between wage growth and housing price growth should narrow, he said.
“It’s not good public policy to make long-term decisions based on short-term market situations,” he said.
—————————
So, why are they asking for help based on the present situation? Land values are dropping. House prices are dropping. Let the correction happen, then figure out what the situation is. Personally, I’m opposed to both govt. mandated “affordable” or “inclusionary” housing and govt. subsidies, as they’re both just govt. attempting to manipulate the market, but the govt. never recognizes the unintended consequences of its actions.
I would never live in tenement housing. It is beneath me.
Homesellers and flippers - The calender is your executioner.
- “Kahli’s experience illustrates the changing fortunes of land sellers. Last year he tried to buy land between Tampa and Orlando and was told to get in line. His was the 27th offer. He recently got a sheepish call from the same sellers. Would he still be interested in buying the land?”
-‘I said, ‘What happened to the other 26?’ Kahli said.”
So, we begin to see the math more clearly. Raw land was spec’d out at least 27 times the real value if measured by greedy meathead builders standing in line.
- Now the only line is at the ‘Out House’.
I would have told the guy to get in line as I have 26 other lots to look at.
I like that. Kinda’ strange, but catchy.
‘ Developers worried about their bottom line, coupled with a slide in the housing market, persuaded Palm Beach County commissioners Tuesday to ease new affordable housing rules.’
No reason not to. They have already built lots of what will turn out to be affordable housing.
Flippers and Amateur Realtors are soon to be an endangered species. Loss of “food supply” will eradicate most of these horrid, disgusting creatures.
I’m looking for great examples of Florida-Bubble-related P.O.S. properties that are priced at moronic levels. Post your link at the new, Florida Bubble P.O.S. of The Week!
LOL. Good blog.
Now this sounds like fun!
Most home sellers now have missed the boat. Their ship came in, only to set sail without them.
“Their plans now: sweat.”
They should try prayer and tears. Bwahahaahaha.
I thought everyone’s plan was to bury a St Joseph statue upside down in their back yard. What, did the stores run out of them?
The article was talking about condo’s there.
Best of luck searching for the back yard when you’re on the 17th floor of a Dark Tower of Financial Doom ™.
“KB Home, active in about 20 projects in Pasco, Hillsborough and Pinellas counties, is negotiating to shed land in the Tampa Bay area. For national home builders like KB and Lennar, Wall Street looms large. Land sales can raise cash and restore investor confidence. Divestment lurks in corporate reports behind such jargon as ‘managing our land portfolio.’”
Land sales can drain cash and destroy investor confidence, as well. So why not just keep it on the books, and keep misstating its already-deflated value on the books, in order to keep your share prices high?
Thought that according to GAAP inventory had to be recorded as lower of cost or market, thus forcing inventory writedowns.
jb
How do land sales drain cash? I understand their effect on investor confidence, and the fact that HBs are very slow to write down the value of their land, but I’m having trouble figuring out how they drain cash.
my old man in ft meyers has gone from 1.1 mill to 850k w/o a nibble
on canal w davits and real pool……………
It would have sold for about 350k just a few years ago.
The ponzi scheme is over. Get real.
How much does someone need to earn to afford $850, I wonder?
Depends. 50K for an Option Arm; 225K for a thirty fixed. Looking at the spread, how any maroon can say ‘no bubble’ simply confines their status as ‘crazy as a loon’.
“How much does someone need to earn to afford $850, I wonder?”
“50K for an Option Arm; 225K for a thirty fixed.”
In other words, $225K. Key word is “afford,” rather than “buy.”
Well, not that many families in Florida earn that kind of money. The state median is about $58,000.
“The state median is about $58,000.”
Therein, the problem. And the reason why selling prices will tumble.
“How much does someone need to earn to afford $850, I wonder?”
“50K for an Option Arm; 225K for a thirty fixed.”
No way.
I make over 225k, and I would NEVER feel comfortable with a mortgage for an $850k home. Sure the bank might tell you that it can be done, but that’s what got us in that mess.
the PITI on $850k home would be like $5500 to $6000 a month, wouldn’t it? Probably MUCH higher since it’s in Florida (that darn insurance, not to mention the property tax). PITI may be in the $7-9k/month range even if you add that in.
My god, who wants to be cutting it so close, ESPECIALLY when you earn a good income and don’t have to live paycheck to paycheck.
I don’t see how people can go around just signing these sky-high priced mortgages.
Sure, it CAN BE DONE, but you’d have to sacrifice a lot to do it.
Insane.
I had a post on my blog several days ago about a property listed for sale in Jupiter Inlet Colony, here in the northeastern tip of Palm Beach County. It’s called “Buy Vs. Rent Insanity in South FL” and you can read it in the September archives (9/10) here …
http://tinyurl.com/lly4x
The property is in a great location, just a couple blocks from the beach. But it’s decades old. Insurance would be a fortune. And the price is completely nuts. List price of $985,000 vs. rent cost of $2,000 (it’s up for sale AND rent). I did the math on what we’re talking about in terms of monthly costs to purchase vs. rent. Enjoy the results!
In my opinion, while waterfront property in FL is always in demand to a certain degree, it experienced some of the biggest price gains during the boom. Therefore, some of these waterfront and “close to water” properties could see really big dollar/percentage declines when all is said and done.
“Therefore, some of these waterfront and “close to water” properties could see really big dollar/percentage declines when all is said and done.”
It’s already happening with condos, at least in central Florida.
“Close to the water” also means uninsurable, or insurable only by the state’s insurer of last resort. That’s an annual homeowners insurance bill of around 2% of the insured amount (not including land value). By contrast, I pay a quarter of a percent here.
For those under 30, that means the Florida insurance bill would be 8 times higher for the same amount of coverage.
This is what’s going on in SW Florida.
A post on the Sarasota Herald Tribune site:
————————————————————–
The odd thing is that as prices have fallen, demand hasn’t picked up. For example, I have the cheapest block, post 1980 house for sale in one area @ $164,900, down from $179,900. (In 2005 it would have sold in days for at least $200k.)
There are a total of 6 properties under $165k post 1980, 2 bath min for sale in that area. The other 5 are frame and for the most part fixer-uppers.
Logically, if there was anybody looking in that range, I’d at least get a look. No showings in 45 days, 1 showing in 90. About 5 sign calls throughout the same period and remember, the sign caller doesn’t know the price; it could be $125k for all they know.
There simply aren’t many buyers in the market. The few I’ve seen are locals who were priced out last year. It seems North Port is their location of choice; $175k for a newer 3/2/2 close to I-75 the house of choice. Easy to find I might add.
This is the first time in my career where price cuts didn’t stimulate activity. This is not a problem local to SW Florida I might add.
———————————————–
Clearly, the price cuts aren’t deep enuf. Sellers are stuck on stupid in 2005.
AGREED.
There is a price at which EVERYTHING will sell, but remember, they’re not going to “give them away” .
They clearly need to start baking cupcakes for their open houses.
Maybe Suzanne could research the best recipes.
Penina, its a different demand curve from last yrs mania; as a result, equivalant price cuts will not stimulate expected demand; this yrs demand curve is steeper; in other words, it will take much larger price cuts to stimulate very little demand. FL was overbought and overpriced; as a result, it is now overbuilt!
“A series of busted land deals reflect the new reality: Undisclosed developers bailed from plans to buy the 2,000-acre Cannon Ranch in Pasco County for more than $100-million. The land’s California owners were left in the lurch, having paid $31-million for the State Road 52 property in 2004.”
WTF? These Californicators wanted to triple their money in two years? Nice work if you can get it. I don’t blame the developers for bailing, they could have been the greatest of the greater fools in Florida with that deal. But, this story just illustrates the insanity of this stupid bubble and insane specuvestors behind it. Watch for cows to populate the property, so these meathead investors can get their ag land tax deduction on it. Hopefully, though, they already had it re-zoned. If so, their tit is in the wringer.
‘Major Florida home builders and developers are preparing a report that will call on government to share more of the expense of building lower-cost housing statewide. ‘We’re willing to be part of the solution. But government needs to be part of the solution,’ said Ted R. Brown, an influential development-industry lawyer.’
Oh, how is wish I could say what I REALLY, REALLY want to say about blowhard lawyer Ted Brown. Whassamatter, prickface, your creepy clients didn’t make enough money during the boom? Now you want to make the taxpayers subsidize their own demise? As if the housing already built isn’t substandard enough. Kiss my ever-lovin’ shiny Moon Over Miami butt. I’ll show you affordable housing. We’ve got plenty of it around here, except you can’t or don’t want to live there unless you are illegally in this country and have fake documents to prove it.
“Hopefully, though, they already had it re-zoned.”
Yes, absolutely agree with that. They gambled, they lost. Tough.
Lots of interesting details… From the WSJ (don’t have the link):
Pricing Your Home Gets Trickier; Sellers Test Different Strategies As Houses Languish on Market; How to Trigger a Bidding War
“AS THE HOUSING market cools, one of the hardest decisions facing home sellers is how to price their properties.
“Traditionally, brokers have set listing prices by reviewing how much comparable homes sold for in a neighborhood. Now, with prices edging lower in many places and the number of homes on the market climbing, checking comparable sales is becoming less useful. At the same time, many would-be buyers are sitting on the sidelines, waiting to see how far prices will fall. Bigger inventories of unsold homes also are making it harder for sellers to figure out how to make their house stand out amid the competition.
“What it takes to sell a house varies from market to market. Some brokers are telling customers they need to underprice the competition — even if they think their home is more attractive. Sharon Baum, a senior vice president with the Corcoran Group in New York, recently listed a two-bedroom, two-bathroom apartment for $3.7 million. That was $100,000 less than the asking price for a similar unit five floors below, even though apartments on higher floors typically carry bigger price tags. “As buyers have more choices, you’ve got to make your apartment stand out,” she says.
“Sellers are also being told to cut prices aggressively if their house isn’t moving — or risk chasing the market downward. If a home doesn’t get any showings in 21 days or gets 10 showings but no offers, Ned Redpath, president and owner of Coldwell Banker Redpath & Co. in Hanover, N.H., often advises the seller to slice the asking price by 10%. “We don’t like to see $2,000 or $5,000 price adjustments,” he says. “We want to see a real whack” that attracts attention.
“Builders of new homes also are tinkering with their pricing formulas to generate sales. Mid-Atlantic Builders in Rockville, Md. is offering to adjust the sales price downward up to 45 days before closing if the price on one of its similar homes declines. Waterford Development Corp. will have homes in its Woodland Pond at Manchester development in New Hampshire reappraised two years after closing. If the price drops, the company says it will write the buyer a check for up to 15% of the original sales price, not including the value of any optional upgrades.
“Even in relatively strong markets, brokers are paying closer attention to price trends. Wallace Perry, president of Coldwell Banker United, Realtors, Carolinas region, says he has begun checking multiple-listing service data every week or two instead of once a quarter to see how recent sales compare with deals that closed three and six months ago. “Things can change . . . very quickly,” he says.
“The renewed emphasis on pricing represents a dramatic turnabout from the heady days of the housing boom, which peaked in the middle of last year. Bidding wars were common and, in many markets, homeowners simply looked at the last sale and asked for more.
“That’s all changed. The National Association of Realtors said this week that the median sales price of existing, or previously owned, homes fell 1.7% to $225,000 in August from a year earlier, the first such drop in 11 years. There’s now a 7.5-month supply of existing homes on the market, the most since April 1993.
“With so many properties vying for attention, sellers are also looking for creative ways to catch the eye of would-be buyers and their brokers. Some sellers are offering to pay closing costs or provide other incentives. When their 3,500-square-foot carriage house in Exton, Pa., failed to sell this spring, the owners dropped the asking price twice, to $449,000 from $479,000, says Beth Koser, an agent with Prudential Fox & Roach, Realtors. When that didn’t do the trick, the couple agreed to offer $10,000 toward closing costs to any buyer or agent who attended an open house within a two-day period. The home sold a few weeks later for $430,000. “The incentive created a sense of urgency,” says Ms. Koser. Buyers “saw that the seller was willing to negotiate.”
“Other brokers are using incentives to counter competition from new home builders. In Tampa Bay, Fla., Craig Beggins, president of Century 21 Beggins Enterprises, recently put together a list of 16 incentives homeowners can offer, from paying the mortgage for several months, to outfitting a media room with a big-screen TV, to picking up the cost of day care for some period.
“Another approach is a personal plea. Traci Smith, president of Century 21 Smith & Associates in San Antonio, encourages clients to court prospective buyers with a letter explaining the intangibles that make their home and neighborhood so appealing, such as the fact that the kids on the block trick-or-treat at Halloween together. During the height of the housing boom, some brokers were encouraging the same type of personal notes — but from buyers eager to get their bid accepted.
“Some brokers are trying to trigger bidding wars by setting an asking price sure to attract attention. Romeo Aurelio Jr., sales manager for Century 21 Hartford Properties, recently listed a small one-bedroom, one-bath fixer-upper in San Francisco’s fashionable Noe Valley neighborhood for $650,000, even though he figured the home would sell for $100,000 above that. “If we priced it at $750,000, it was going to sit,” Mr. Aurelio explains. “We marketed it aggressively at $650,000 and it generated 20 offers.” The house sold this week for $845,000.
“And with more buyers hunting houses online, selling strategies are adapting to the new technology. Michael Gallagher, a financial- services executive, initially listed his four-bedroom house in Shawnee, Kan., at $274,500. When the listing expired, Mr. Gallagher’s new broker suggested that he boost the price to $275,000. Within weeks, the home sold for $271,000, $36,000 more than the best previous offer.
“The explanation? Buyers who use the Internet typically search in increments of $5,000 or $25,000, says Kerwin Holloway, a managing broker with Reece & Nichols, a unit of Berkshire Hathaway Inc., which handled the sale. At the higher price, Mr. Gallagher’s home was likely to turn up in more searches. It also looked like a bargain to someone whose search started at $275,000. At the lower price, it was one of the most expensive homes priced between $250,000 and $275,000. Until recently, brokers had taken their cues from retailers, pricing a home at $199,500 because it seemed like a better deal than one priced at $200,000.
“A property that’s not priced properly can languish on the market and get shopworn, says Dan Elsea, president of brokerage services at Real Estate One in the Detroit area. A four-bedroom house in Troy, Mich., has been sitting on the market for 10 months, even though the price has been cut to $349,900 from $394,900, Mr. Elsea says. By contrast, a similar home in the same market sold this month for $360,000, just 23 days after it came to market priced more appropriately at $369,000, he says.”
“Other brokers are using incentives to counter competition from new home builders. In Tampa Bay, Fla., Craig Beggins, president of Century 21 Beggins Enterprises, recently put together a list of 16 incentives homeowners can offer, from paying the mortgage for several months, to outfitting a media room with a big-screen TV, to picking up the cost of day care for some period.”
OK, I’m in a mood today, but quoting Beggins just took the rag right off the bush. You should have seen one of his recent full page ads in one of the local weeklies, where he editorialized on the market. Basically, he listens to Liareah and just regurgitates the same stuff.
What????? Cut prices and offer incentives in San Antonio? I thought that was the current destination of choice for the discerning California house flipper! Why on the SDCIA board, they’re all convinced there’s gold in San Antonio. WTF?
All this proves is that there are still greater fools out there.
Buyers that over bid on a house because it’s priced way under market to begin with end up paying to much as the example above shows . Under-pricing is a way of creating the urgency factor that sales people need to sell . If 20 other people want the place …I’m gone . Really this sales ploy is a game that makes me want to puke and it shows how stupid buyers really are .
I have the best way to start a bidding war. Take out an ad in the local news paper stating; Offers accepted. I will accept the lowest price offer for sale on a 3/2/2 house in zip code. All offers will be reviewed, but only one will be accepted, on the one with the lowest sale price. Submit offers to PO box.
Let he bidding wars begin.
I’m famaliar with all the areas mentioned in this article, and the land prices are hilarious. State Road 52 has a few horse farms which look nice, and St. Leo’s College, but developing the open land would destroy the entire countryside, and who wants to live in Tinbuktu? State Road 54 is horrible.
Tampa prices have not really come down at all. A new condo that opened recently has seen a jump in prices from 500k pre-construction to 2 million now, and there really are fools (mostly New Yorkers) willing to pay these figures, though there are an awful lot of empty condos around town. And every square inch of land, no matter how hideous, dangerous, and potentially toxic the location, is now sporting one or more “luxury townhomes,” meaning the particle board has been wired for electricity. It may take years before truth dawns on the people around here.
AMEN! SR 54 is ridiculous. You can’t even hardly drive it anymore.
I know the area well too. These subdivisions are nothing to write home about. The houses are very close together and it’s miles to the nearest stores and restaurants. I’ll be up there this weekend and take some pictures for the HBB photo blog.
Palmetto, have you seen that nice house going up on the west side of 275 just north of Bearss? Who in their right mind would build next to an interstate?
Moman!! How’s it going? No, haven’t seen that house yet, as I haven been avoiding the 275 through Tampa route like the plague. I’ve sort of been holed up here in the South Shore area, FINALLY got some new digs and got out of that creepy apartment complex. So I’ve been doing all those things people do when they move, lotsa hassle, but well worth it. Took me about 7 months to find the right place, because I was stubborn on staying put in this area, on account of business and wanting to avoid traffic. But I need to take a little trip through Tampa and see some of the bubble fallout there. Hey, glad we dodged the bullet on the Republican convention. That would have been some fiasco for the area, that’s for sure. It’s about the only thing good that comes out of hurricane season, the fact that politicians don’t want to be here during that time.
Where have you been young man? Any update on your efforts to rent? Or more interventions by Mr. Bud Light?
“‘You see some of these communities that investors purchased … there are no lights on at night,’ said Bill Donges, CEO of the developer of Radius.”
Really? You don’t say.
I have nothing against condos ,in fact I have owned some in my lifetime ,but lets face it, they got to many over priced condos in Florida and families aren’t really interested so much in that product .
Families are fleeing from Florida because the builders catered to a certain target buyer .
Condos are great for a turn-key situation for snowbirds ,second homes for baby boomers ,young people without big families etc.,but come on , the “market makers ” over estimated how much demand there would be for this product .
When the builders start building affordable housing for young people with families they might get some demand ,but builders have to many unsold units of condos/homes that do not meet the real housing needs .
Excellent point about the product mix favored by builders. People in their 30s, 40s, and 50s, with or without children, do not want condos as a primary residence, unless they are divorced without residential custody.
Maybe the condo product is simply for “investors” and not really intended for habitation!
“Maybe the condo product is simply for “investors” and not really intended for habitation!”
I believe that the great majority of recently built and under-construction condos were/are just that. Condos are very easy for flippers to hold, while empty and for sale, so they became the flip of choice. Turning into the flip of doom.
And that’s why, when they do trade, the “median” price” stays high. The only buyers out there now are either fools or people with the financial wherewithal to comfortably afford a place. That skews the data on sales towards relatively higher priced, higher value, transactions.
I agree HW, “the “market makers ” over estimated how much demand there would be for this product.” They also underestimated the competition from ready to move-in condo-conversions. In may area, 3 apt complexes converted immediately after a new condo developer entered the market.
What’s more, the condo developer largely attracted paper flippers who were not interested in occupancy. Whenever I drive by, I see “For Rent” and “For Sale” signs. More recently, however, I saw the developer advertising again “New condos for Sale.” I thought it was sold out! The agent said, “contracts on a couple units did not make it to closing.”
They should all move to SoCal, today’s UCLA Anderson forecast, a respected authority on economic trends, predicts that prices in SoCal will be exactly the same in 5 years as they are today. Where do these morons get their data?
From Robert Toll and Gary Watts, so you know it’s accurate.
In 2011, I would expect lower prices than today, but who can forecast the distant future? Inflation might have taken off then, or deflation gotten a grip on the country, Japan-style. The important point of the UCLA forecast, however, is that potential buyers shouldn’t put a positive number for appreciation into their rent versus buy calculators, even if they expect to stay for five years.
Oh, I guess the new sales pitch for the real estate industry will be ,”buy now , it’s a “buyers market”, your house will be worth the same five years from now ” ,and than the prices will go up.” Forget it , there is no “urgency” to buy anymore .
Really , buying a house should not be a big urgency thing anyway because it’s to big of a purchase to enter into with urgency and lack of thought . A person is not of sound mind when they are blinded by “urgency “. Don’t think ,the situation is to urgent to think .It’s insulting to me that people would be treated like a mark for a salesperson.
“The important point of the UCLA forecast, however, is that potential buyers shouldn’t put a positive number for appreciation into their rent versus buy calculators, even if they expect to stay for five years.”
Agreed. And that is very, very sobering news for would-be buyers. By buying any time soon, they will be paying more for shelter than if they rented, and gaining zero equity advance in return, much no HELOC to tap.
Yes your right Chip . Im just trying to think how the real estate people will spin that article to try to get people to buy by saying prices aren’t going to go down so therefore its a “buyers market”,if you know what I mean .
If the prices will be the same in five years, I see no reason to buy until then, since it is so much cheaper to rent. No-brainer.
That reminds me, what happened to the community college economists who came up with that radical new valuation formula that shows being cash flow negative is a good idea?
“what happened to the community college economists who came up with that radical new valuation formula that shows being cash flow negative is a good idea?”
LOL — I think I missed that one.
Look what Jeb Bush is doing for St. Joe:
http://www.sptimes.com/2006/09/28/Opinion/Bush_s_46_million_fav.shtml
Jeb’s just following the standard Bush family SOP. No news there.
I was amazed when I read about this a day or two ago. Isn’t there something the Fla. Legislature can do to stop this purchase? The land isn’t worth a fraction of the price.
“The land isn’t worth a fraction of the price. “
It will be once the taxpayers build roads on it. And St. Joe’s other land will be worth far more.
This is just another taxpayer giveaway to developers that you see all over the US(both Republican and Democrate). Without the roads the St Joe’s other land would be worthless yet instead of making the developers pay for the roads they make the taxpayer pay so the developer can make the profit.
Even with roads, it’s crap in the middle of nowhere. What are the roads for? So potential “investors” can check out the swamps?
That sucks.
Great article. Not that we needed any more evidence that our supposed leaders are just lap-dogs for the developers, but man, that is very, very, very BAD.
The link is definitely going on my site.
Although it surely is true that some teachers and parents have moved out of state for better relative cost of living, I thihnk that there is another boogyman involved that school and other government officials do not want to admit they overlooked: I will bet you a dollar to a donut they used building permits and construction for their student growth/population estimates and not one of them bothered to note that a lot of this new housing was just standing empty, especially condos. Over-construction to sell to flippers was not even considered. Now how is your fancy planner going to explain that to the school board or county commission?
I wonder if they counted those one bedroom condos, not a lot of kids going to be in those.
Some brokers are trying to trigger bidding wars by setting an asking price sure to attract attention. Romeo Aurelio Jr., sales manager for Century 21 Hartford Properties, recently listed a small one-bedroom, one-bath fixer-upper in San Francisco’s fashionable Noe Valley neighborhood for $650,000, even though he figured the home would sell for $100,000 above that. “If we priced it at $750,000, it was going to sit,” Mr. Aurelio explains. “We marketed it aggressively at $650,000 and it generated 20 offers.” The house sold this week for $845,000.
SOME STUPID BAGHOLDER IN SAN FRANCISCO WITH A MOUNTAIN OF DEBT AND A POS APARTMENT.
“Things can change . . . very quickly,” he says.
AMEN, BROTHER
Yep. He had a bucket of cash and a big box of stupid. Now, the cash is replaced by a mountain of debt, and he’s left with his big box of stupid and his newly acquired POS.
a must see!!!!!!!! copy from the bits buckets.
make sure you see this video!
Tango in Uniform
2006-09-28 05:46:41
Hi, folks, your Billings, MT field agent here. I’ve changed my nickname (thanks to RC for the idea).
Without further ado:
Video report for Billings, Montana
Now for the ado. Lou Minatti’s cool videos inspired me. Unlike his nice short ones, though, mine got out of hand and turned into a 20-minute monster! It’s kinda long and boring, partly because I want to use this video to make a case for the bubble to friends, realtors, etc. around town. It’ll face close scrutiny there, so if you see any flaws let me know. If you want to skip to the condo action, fast-forward to the 5:50 mark.
Also, kind of a funny story. I was going to have a friend of mine do the narration, since he has a better speaking voice than I do. He got half way through the script and started getting really uncomfortable. He was afraid that his employer’s clients (developers, realtors, others in the REIC) would recognize his voice and get angry at him! So I let him go and did it myself.
Here are a few highlights of the video:
- Downtown condos with 40+ units in the last year. Of five developments, three have not sold a single unit. One has sold 2 out of 5 units since summer 2005. Incredibly, one conversion, with 14 units in a historic building, reports 11 have pre-sold (with prices up to $440,000).
- High-end Ironwood subdivision. Started in 2003, now 1 in 6 homes is up for sale. Median price around $500,000. (Just yesterday, I got a tip that a lot of them might be realtors looking for a quick flip. I’ll have to check county records against the list of realtors, hmmm..)
- Copper Ridge subdivision. Roughly 20 houses under construction, and 15 of them are on the MLS (median around $300,000)
- Even with danger signs, construction at a breakneck pace in every direction. Inventory up 50% since December, now holding steady.
So that’s it. I hope you enjoy it. Lou’s got a new blog featuring housing bubble videos, so let’s get going out there!
sorry the link is here
http://video.google.com/videoplay?docid=2923166850569585085
Doug — awesome video — watched the whole thing. Really nice, professional-looking production. Looks like Billings is toast like everywhere else, just not quite as badly burned. Thanks for your work on that — too bad we don’t have one for every metro area!
I watched the whole episode as well - great job / great production. I like the way that it dealt with facts, not wild assed speculation, and stupid slogans/mottos that the REIC complex employs. Growing up in North Dakota and knowing Billings a bit helped to pique my interest. The bubble IS everywhere my friends!
The story about the one BR / one BA in Noe Valley (San Francisco) going for $850k or whatever is UNBELIEVEABLE. They don’t ever run out of STUPID here in Frisco! Lots of GFers / FBers left unfortunately.
> Just yesterday, I got a tip that a lot of them might be realtors looking for a quick flip.
Same thing in Bozeman. A local builder told me roughly the same thing last weekend. Realtors had a bunch of the houses in new subdivisions. They got them before they got out on the MLS. Spec houses are still being built.
I told him that the game was up in Sacramento, the same thing had been played there, gave examples, and that Bozeman was about a year behind the curve. Also told him to check blogs on conditions and invest accordingly.
Here’s to hoping for the best.
I used to think FL was flat. Now, when I look around my neighborhood and across the horizon all I see are mountains upon mountains of insurmountable debt.
Here in Brandon fl we just had one complex revert back to apartments after trying to sell their overpriced units to people who would take the bait. They told us that they had less than 30% of the units sold and decided that it was better to go back to apartments.
One more bit of information about how the market is in Brandon, Fl. The complex I live in has alot of people who have been selling their house and moving into apartments due to the cost of insurance and taxes. Amazing how the market has changed in just the past 9 months.
One note of interest. The cost differential for renting a UHaul truck one-way from Sarasota to Raleigh, NC is now less than double the cost of renting one for the opposite direction. When I checked about a month ago, it was about 3 times higher to rent from Sarasota to Raleigh vs. Raleigh to Sarasota. Does anyone know what might drive short-term variations in the quoted rates?
My guess — volume fell way off after the summer, because of school, while ther would be a slight uptick headed south because of snowbirds.
Rates get adjusted quickly, probably in response to shortfalls or surpluses of only a couple of vehicles in a particular location. This could be anything, but is just as likely to be a relative decrease in the movement toward Raleigh as a decrease in the movement away from Sarasota. Has something to do with a change in the relationship BETWEEN Raleigh and Sarasota, but does not necessarily imply an actual change in movement patterns in BOTH Raleigh and Sarasota.
The problem of attracting middle-class families is pervasive across Florida, particularly on both coasts. This has in turn created difficulties of municipalities in filling up slots for teachers, nurses,
firemen and policement, and workers in various other fields. Yes, we find a common culprit: artifically high costs of housing. Making the situation worse is that developers are reluctant to build affordable housing, since there is little, if any, profit to be made.
The number of foreclosures, reported in my hometown paper last week, is also on the rise. A lot of people bought houses beyond their means, tricked into doing so with so-called new creative mortgages. On top of that, everybody is up in arms against the continous climb of taxes and home insurancd costs. Which means all the volatile ingredients of a harsh housing bubble are there, with great ramifications for the economy.
Oscar Wilde indeed was right in saying that we know the costs of everything, but the value of nothing.