‘It’s Becoming A Renter’s Market Again’: Florida
The Naples News reports from Florida. “First came the conversions. Now come the reversions. In the past year, investors have flooded the market with apartments turned condo. While sales are moving slowly at some projects, others flopped as demand slowed. In Southwest Florida, some developers are welcoming back renters they once sent packing.”
“Now, faced with a slowing market, the 356-unit Malibu Lakes apartment complex is wooing back renters with special incentives, including a month of free rent and six months of paid utilities. Units once going for $229,900 to $399,900 are no longer for sale.”
“In May, the owners of Monterra at Bonita Springs informed residents they weren’t converting after all. ‘Don’t pack,’ a flier stated. ‘As many of you have probably heard, YES we are staying A Rental Community.’”
“‘The supply pipeline is so full that it just takes longer to sell property today and a lot of these owners of these properties had projected in their business plans that they would sell out these condo communities within three to four months, and now it is going to be more like two to three years,’ said Ann Bailey with a real estate agency.”
“Some investors who gobbled up multiple conversions in hopes of making a killing will lose money, said agent Tom Doyle. It’s already happening. There are a flood of resales on the market from recent conversions. Some are listed at less than the buyer paid for them.”
“‘You can find deals,’ Doyle said. ‘There’s no question about that.’”
“Earlier this year, Michele Flocco feared she might be forced to pack up and leave Collier County. She was given only a 10-month lease as rumors swirled that Arbour Walk might turn condo. At the time, rents were on the rise and the average occupancy rate at apartments was 99 percent.”
“With the changing housing market, she’s found a nicer condominium to rent in East Naples. She’s paying $100 less a month for a place twice as big. Her monthly rent is $1,050. ‘Because nothing is selling they are trying to rent everything,’ Flocco said. ‘It’s becoming a renter’s market again.’”
The Orlando Sentinel. “For builders, buyers and sellers, the sure-sailing housing market of recent years is moving into uncharted territory. The area’s new-home inventory grew nearly 20 percent during the quarter, and the fastest growth came in the ‘finished but vacant’ category, up 136 percent to 6,787 homes. And in another clear sign of a slowdown, the total number of homes under construction during the quarter, 16,133, was only 20 units more than a year earlier.”
“There are benefits to a pullback, said Kohn, a custom builder. For one thing, the slowdown has relieved at least some of the pressure on construction materials and subcontractor labor, both in short supply, he said. ‘The subs are now getting back on track, because they are less busy. It’s getting back to normal,’ Kohn said. ‘The market was too crazy. I’m happy with this slowdown.’”
“Nany builders are resorting to attention-grabbing offers to keep drawing enough prospective home buyers to their developments. Bob Benjamin recently paid $315,000 for a new town home near Sanford. But the real clincher, Benjamin said, was the builder’s move-in deal: $1.”
“Buyers must obtain 100 percent financing through Morrison Financial Services. ‘I’m paying a few hundred bucks more than when I was renting, but it’s worth it,’ Benjamin said. ‘I own it.’”
The St Petersburg Times. “It had to end someday. The housing mania that gripped America and the bay area for several years would begin to subside. Otherwise sane Americans who had bought overpriced homes they couldn’t possibly afford would realize the fuse on their deceptively cheap loans was burning short.”
“Those who had expected to resell before the interest rate on their mortgage began to climb, for a stupendous profit, of course, might find themselves seated before their bank’s loan officer, weeping.”
“In August, mortgage lenders filed foreclosure lawsuits against 860 property owners across Pinellas, Hillsborough and Pasco counties, a 44 percent increase over August 2005, according to statistics.”
“Kraig Braeuning, regional vice president of an Orlando company that tracks foreclosure suits, said he expects the bay area’s situation to grow worse. ‘It’s going to be a tsunami in the next year or two,’ he said. ‘There’s going to be a huge wave of foreclosures.’”
“Foreclosure lawsuits grew 48 percent in Pinellas, 46 percent in Hillsborough and 33 percent in Pasco. Few neighborhoods were spared. In Pinellas, for example, 44 of the 45 ZIP codes with more than 2,500 households each saw at least one foreclosure in August.”
“The county’s 10th-wealthiest ZIP code, Oldsmar’s 34677, had the second-worst foreclosure rate. Low-income neighborhoods tended to be hardest hit, however.” “Although most of August’s foreclosure defendants lived in their homes at the time, a substantial minority, 40.5 percent, were investors. It’s testimony to the housing market’s recent fervor that so many people thought they could profit as a speculator or landlord.”
“Tampa investor Leigh Fiske has had a rough time, too. In the past year, lenders have tried to foreclose on 10 homes he owns, nine of them in Tampa. Fiske could not be reached for comment.”
‘I’m paying a few hundred bucks more than when I was renting, but it’s worth it’
Plus taxes, maintenance and insurance. Here’s an article this guy may want to see:
‘The contract was signed, the mortgage was approved and the buyer was set to close on the $299,000 home in Royal Palm Beach. Then the buyer, on the cusp of becoming a first-time homeowner, learned how much insurance would cost: $4,700 a year. The big premium pushed his monthly payment past the lender’s comfort level, and approval for the loan was yanked.’
‘Even as some sellers have lowered their asking prices, skyrocketing insurance premiums and property taxes have killed deals and sent buyers to the sidelines. Rill calls taxes and insurance, once little more than an afterthought for home buyers, ‘a double whack on the head’ — and countless homeowners are feeling the pain. ‘It’s squeezing buyers,’ Rill said. ‘At least it’s not a triple whack. Insurance and taxes are going up, but prices are softening.’
“In a cooling home sales market, three things are changing the discussion over affordability: insurance, interest rates and property taxes. In the first nine months of last year, 395 Bonita and Estero homes were listed for sale at prices ranging from $250,000 to $300,000. That number grew by 65 percent to 653 for the same period in 2006.’
‘What is scary is there are more than 1,000 properties over $1 million,’ said Greg Gorman, also a Realtor. As the market cools, sellers are reducing prices to make a sale, and those reductions are quickly being eaten up by increases in insurance costs, taxes and interest rates.’
‘I’m paying a few hundred bucks more than when I was renting, but it’s worth it’
And another FB jumps lemmingly over the cliff.
There is unfortunately still some wiggle room for home appreciation, even in bubble markets. Undoubtably a dead cat bounce.
But that doesn’t negate the fact that sales are still at 2003 levels in many areas… so our message isn’t out in full yet. This FOOL (I can’t believe he exists) shows that there are people every day still buying in bubbleland.
I think we’ll see much more movement (down) come next spring. this is due to the fact that we’ll have had almost a year of negative YOY numbers, it will be in the regular Joe’s psyche, and they will have heard an entire winter of bad economic news.
Oh yeah, and because we’ll be in recession.
Hehe. Lemmingly.
Yep, another one bites the dust.
It was so depressing reading the insurance/tax article. Now, only the most determined lemming will purchase a home in South FL; this RE storm is going to wipe out more families than any category 5 hurricane ever could; how did things get so out of control?
The exodus North started a while back, roughly around 1999/2000; back then it was just a trickle but now it looks like throngs will be forced to desert their homes and the neighborhoods they knew just to escape the insanity.
I have a question for the board; are taxes and insurance this outrageous in California?
I left South Florida six months ago to return to California in large measure because taxes and insurance are NOT this outrageous in California. When I did the math and figured I could life in San Diego for less than Ft. Lauderdale and make 30% more in income and have better benefits it was a no brainer. Yes, I know we have state income tax here, but I am still so much better off financially here in San Diego. How sad is that! South Florida makes no economic sense at all.
http://homepage.fcgnetworks.net/patrick/lemming.html
Ode to a Lemming, dedicated to Bob Benjamin.
Ode to a Lemming Pt VI: We’re not finished yet
by Clayton S. Caddy
Brown and furry,
short of sight,
in a hurry,
in a fright,
Move in masses,
run like hell,
to some safety,
perceived well.
High and stony,
grey and cold,
soaring cliffs,
seas of old,
give no warning,
do not cry,
for falling rodents,
from the sky.
[Forgive my misty eyes....]
Golf clap!
Josh
‘ As the market cools, sellers are reducing prices to make a sale, and those reductions are quickly being eaten up by increases in insurance costs, taxes and interest rates.’
Which is why Florida is major burnt toast and will lose the most in this housing bust. Insurance costs aren’t coming down anytime soon, taxes won’t come down until prices do. Something’s gotta give, and that something is the price of the home. As buyers walk when they see the payments rise due to taxes and insurance, sellers who have to sell will have no choice but to drop the prices like stones. Florida prices have to go back to pre-2000 levels, maybe even then some, to make up for the taxes and insurance.
Plus, anytime you have a 40% speculation driven market like Florida did in 2005 ,which was before the insurance rate increases , your going to get a big correction .Lets see , how much do you have to reduce the price to make up for a 4k a year raise in insurance rates in one year . The insurance increase will also force long term owners to sell their house because they can’t afford the increase . Does anybody have any doubt that Florida is going to have a massive amount of inventory for years ?
No doubt about it, Wizard, the housing bust will be the big story in Florida for years to come. I took a walk in my new neighborhood yesterday evening. It’s an older part of town with the little modest concrete block houses from the 60s, 70s. They could have been bought for like $85,000 in 2000. Many of these are now for sale, I pulled a flyer that said “$179,000 and taking offers”. In other words, $179,000 is wishful thinking, you tell us what you’ll pay.
tell us what you’ll pay.
I’ll pay $ 40,000
“I’ll pay $ 40,000″
Given the tax and insurance situation, that’s just about right, krish.
In Florida, the RE inferno burned so hot no one is going to escape the heat.
Insurance is a much larger issue than has been widely reported; especially along the Gulf Coast and FL. I just got a quote for my auto insurance from Allstate…..same coverage….same terms. The premium?….2 1/2 times larger. Normal increases for homeowners are 40-50%.
Regardless of where you live, insurance companies are going to raise rates to pay for claims…..shared risk means shared premium increases.
And don’t forget the HOA which can charge you whatever they want, and FORECLOSE on you if you don’t pay!
From my experience, HOA’s are run by homeowners and increases have to be voted on. As homeowners, I doubt they want to stick it to themselves.
What kills me is the new state supported program called, Florida reBuilds, which offers free training and job placement for most construction trades. We’re spending millions of tax dollars on this.
Are the people running this state completely clueless? New construction permits are down 66% from last year. New home construction will come to a screeching halt next year. 66% of the people currently employed in the building trades will be unemployed next year. We should not be wasting tax payer money on free training in the building trades. The legislators in this state are not only clueless, their a bunch of morons.
Not only that, they can’t stop talking about making affordable worker tenement housing. Give me a break. Prices are already down nearly 20%, and will probably be down 75% before all is said and done.
Our legislators should be saving the win-fall tax profits for a rainy day, and I’m not talking about hurricane days. I’m talking about financial disaster days that are right around the corner.
“Tampa investor Leigh Fiske has had a rough time, too. In the past year, lenders have tried to foreclose on 10 homes he owns, nine of them in Tampa. Fiske could not be reached for comment.”
Mr. Fiske would not comment on his situation. Do we really need to comment? This is so obvious. I think the stupidity and greed speaks for itself.
We need to bring back the concept of debtor’s prison is the only comment I will make.
Who were the lenders that gave that jerk 10 loans ? I bet they are low down /owner-occupied liar loans and the guy won’t be able to declare BK .
Housing Wizard,
Please explain, why won’t he be able to declare BK? Because of the fraud involved in “owner-occupied” loans? If so, the lenders probably won’t be able to get their money from this guy even if they foreclose and seize any assets he has and garnishee his wages from now until kingdom come. If anything, all they have on him is criminal proceedings. Please explain your thinking. Many thanks.
spike 66 . The investor ,or the lender ,will object to bk because of fraud because this dude might have other assets they can get . It depends on what State this guy is in regarding the final analysis as to what recourse the lender has .If the guy doesn’t have a pot to piss in than you can’t get blood out of a rock . In this guys case he has alot of lenders that might be objecting to BK . I just can’t imagine that this guy didn’t obtain all those loans in a fradulent manner .
Housing Wizard,
Thanks for your answer, so it looks as if the lenders are stuck..even after they seize say any assets he has, basically even if they get him thrown him jail on criminal fraud,they’ll never recoup the money and are stuck with the forclosures.If I understand you correctly, they can object to bk, but what will they gain from that?
Right, if the guy doesn’t have other assets to tap ,the lenders might be out alot of money . I’m sure they are looking at each case on a case by case basis .
IMO, the lenders are not going to go after anyone. They are going to file BK right along with the FBs. They don’t have the resources or the moral high ground to go after anyone. This whole mess stinks to high heaven. Hang the bankers! Hang ‘em high!
This is interesting and from in hindsight it may explain something that has been nagging me. The last time I was seriously looking to buy was in 2003. At one development I was talking about the financing and they seemed shocked at my financial picture. FICO 800, good down payment, good steady employment record. This gave me an indication of what the other buyers were like. I have also paid off multiple mortgages and 2 small business loans. They told me there was a problem with my application, because my current rent was too cheap. They wanted me to inflate my rent, because they said it might not look good to the lender, because he might not think I could handle the jump to the mortgage payment. I was a little offended, the whole reason I had a good down payment was because I had rented cheaply for a while and saved my money. I did not want to lie so I walked on the deal.
In hindsight, I wonder if the lenders were actually encouraging people to lie to have a co-conspirator. It gives them a, “Well the guy/gal lied on there application, we(lenders) are off the hook. I saw this going on more than once. In hindsight, I think they were scrutinizing
my application to find a place where they could get me to commit fraud.
Great point, janni.
You are probably right, the lender had only been dealing with A- and below credit apps and when they saw that you would have an increase in mortgage over your current rent (known as payment shock), the person thought it might hinder the loan approval. If they had any experience they would know that you were a prime FNMA / FHLMC borrower, and the payment shock would not matter as long as you were within the payment/income ratio guidelines.
I don’t think it was fraud, just lack of experience on their part in terms of dealing with “A” paper - they had none.
It’s funny you mention that thing about inflating the rent. You’re right about the reason behind it — the computerized underwriting systems evaluate “payment shock” as one risk characteristic, from what I understand. If you’re going from a $700/month rent to a $1,500/month mortgage payment, it can be seen as a negative and in theory, could jeopardize your approval.
What’s ironic to me is that such a trivial thing is seen as a hindrance, but some lenders don’t even blink at approving mortgages for people with DTI ratios in the 50% and up range. I mean, that’s insane to give someone a mortgage that’s going to eat up 50% of a borrower’s monthly income. Completely insane. And yet it happens every day.
I never understood those higher DTI ratios either because they still dont include all of the other monthly commitments that a borrower would have that dont show up on a credit report. 50% is a big chunk especially when the borrower lied and/or has an ARM.
Fraud is what most of this bubble is about. Lets see how this pans out.
Fraud is definitely the major component of this bubble. But I’m not sure much will come of it. Government at all levels has encouraged or at the very least ignored the fraud. In some ways, I’m experiencing a bit of schadenfreude for the banks and money interests. If this brings down a banking giant or a hedge fund or two, I’m happy. More likely, there will be another bailout attempt, but since the US is pretty much bankrupt, not sure how that will work out. Maybe some foreign investors will get screwed. That would make me happy, too.
“Government at all levels has encouraged…” the bubble.
President: “We need an ownership society.” Well now we have it, but does the ends justify the means?
“Fraud is definitely the major component of this bubble. But I’m not sure much will come of it.”
Palmetto — Have you checked out Galbraith’s book, “A Short History of Financial Euphoria?” If you do, then you will realize that this time is no different. As JKG pointed out in the early 1990s, before the dot com bubble and the housing bubble were on anyone’s radar screen, all speculative euphorias encourage and hide fraud during the boom phase, and lead to an epic bout of fingerpointing once the tide goes out and all the naked swimmers are clearly visible. This time is no different. And the fact that federal regulatory guidance for lenders is getting press coverage these days provides a hint that we are currently in the end game of the bubble.
Wow, Stucco, thanks for the tip on the book. I have not read it and it sounds like something that should be required reading in school, and I’m serious as a heart attack about that. It seems the fraud in this bubble is more massive than ever in history.
Another thought in hindsight. During the bubble runup it was just not a level playing field for good quality buyers. Now that it is coming out that there were kickbacks to the brokers, etc, to get people into these exotic mortgages, it is easy to see why the worst buyers were ushered to the front of the lines.
The guy with 10 mortgages HAD to get risky loans which made him a VIP with the kickback system. Buyers with 20% down and good credit requesting a fixed rate were pushed to the back of the line. It all makes sense now doesn’t it?
why do you think option ARMs are so much of the market these days? Brokers have posted here saying that the lenders funding them pay HUGE fees for each origination. It’s not just that borrowers are ignorant and stupid and willing to believe that someone will give them a 1% mortgage without a catch. It’s also that they’re being steered into these Frankenstein Financing loans by unscrupulous brokers who get paid more to originate them than plain vanilla 30-year FRMs.
Exactly. When I was working at Wells Fargo, it sucked doing loans for “A” paper people. They could always walk if DiTech offered a better rate and lower closing costs, so then W.F. started offering no closing costs on customer refi’s. But I didn’t make any money off those loans, because W.F.’s attitude was that they already had the customer, and it was their advertising that brought in the business, not my mortgage acumen - which was true. But I made a killing when I did a subprime loan because we brokered those to Option One, First Franklin, World Savings, Fremont, etc. W.F. was mote than happy to see me originate those loans from Realtor referrals because we got such a high kickback, err broker fee.
So when the traditional banks say that they don’t originate subprime and/or toxic loans, they are full of B.S., it’s just that the loans aren’t on the books because they brokered them just like ABC Mortgage in the corner strip mall.
In the late 90’s, I was one of the first loan officers to broker subprime, before then W.F. didn’t want the business. But all of a sudden Mark Ernst (CEO I believe) decided to go after the illegal, err emerging market, meaning those that were unbanked (without bank accounts). After I left, they started offering accounts to anyone who could mark an “X” on the signature card and had a Matricular Consulor card.
Fast forward to today and illegals and illiterate all own homes with toxic mortgages - and all these banks have record-level profits.
Fiske could not be reached for comment.”
Have you looked under the bed?
My supposed condo-conversion in Tampa just sent me a notice that I can renew my lease for another year. Plus they offered an incentive of one month free rent. I decided to take the offer, which puts my monthly rent below what I was paying 3 years ago. I feel sorry for anyone paying the overinflated prices still being asked for houses around here. A house I looked at last month sold for $160K in August 2004 and then sold again for $240K in April 2005 (a 50% increase in 8 months!). I could have bought it for $240K, but I suspect it will fall to the 2004 level eventually (maybe 2-3 years).
Wait a minute, I thought the rental market was tightening.
You mean to tell me that the massive amount of inventory created in the last few years is going to have an effect on the rental market?
Why didn’t anyone tell me?
I keep thinking that too. In most bubble markets, I expect rents to briefly increase before tumbling. L.A. is experiencing this, and even some S.F. Bay locations are seeing this. FBs will try to squeeze higher rents to cover costs, and there is a lag between them doing this and renters finding cheaper places. Many FBs will tolerate vacancies in the short term, expecting the higher rents, but enough of them will need tenants that it won’t matter, and they’ll drop the rents. Another short term effect is people trying to sell their rental, and thus not renting it out. Makes the rental inventory temporarily tight. I doubt the set of circumstances align themselves twice in the down leg of this cycle, so I only see one rent price spike coming, then a return to realistic rents…
Renter’s market all over the country, especially FL. We are always hearing quotes from realators who say what a great “buyer’s market” we have. When ever we hear or see that, we should speak up or write in with the correction, that it’s a renter’s market.
I am not a renter, but would be one in a bubble market. Now I own an 8 year old house, with geothermal and a 2 1/2 acre lot. I bought the house from the Bank (foreclosure) 5 years ago for $170k and it might be worth $190 K by now. Hopefully it will not fall below my nominal cost basis.
“It’s becoming a renters market again”.
Whew that is good to know. There was a short lived squeeze here in Tampa for about 6 months, where they vacated all the hugh apartment complexes here to condo convert them and it was hard to find a place to rent.
There was a lot of pressure on my landlord from people who told him that they would pay more to rent my apartment than I was paying. He wanted to raise my rent $200.00 a month, I met him halfway and raised my rent $100. My rent now is $600 month. Housing prices have not come anywhere close to reality here yet, so buying now is not an option here yet. It was a squeeze.
Looks like that worry is over. Yesterday when I paid the rent my landlord said that he was so glad that I am his renter. He also said, “I don’t even look at that apartment as mine, it is yours”.
So we will see how this week shapes up. I mentioned on Thursday that I had gotten wind of a lay off of 160 people at my job. I was guessing it would be Friday, but it looks like it will be next week. I will let you know. The employment picture here and the low pay, never did add up to the run up in prices here. Now that the tide is going out we are seeing why.
lay off of 160 people at my job
What industry?
The industry on the cover of Sept 25th, 2006 issue of Businessweek which claims, “What is really propping up the economy”.
Great! The layoffs must mean that fewer people are getting sick.
Or fewer people can afford to get sick…
Maybe you can get on at one of the new Euthanasia Clinics.
http://www.businessweek.com/magazine/content/06_39/b4002001.htm?chan=top+news_top+news+index_businessweek+exclusives
He also said, “I don’t even look at that apartment as mine, it is yours”.
Wow. No more throwing away rent money! The place is “yours,” even without the title papers.
So, when do you get to lower the rent?!?
“So, when do you get to lower the rent?!?”
When I get layed off.
Did anybody catch this part from the St. Pete Times article:
“Recently, things started looking up. Solomon’s lender, perhaps reluctant to acquire a hard-to-sell home, offered to refinance his defaulted loan at a lower interest rate. Solomon was thrilled.”
Here come the bailouts. ARRGH.
As I keep posting, borrow a few trillion and it’s OUR [taxpayers'] problem….
I’m all for the lenders waving the pre-payment penaly ,if it means the difference between someone going into foreclosure or not .
Here the mortgage broker agent was telling the FB that they could refinance down the road if they didn’t like the loan ,yet they put a pre-pay on the loan that would make it pretty costly to refinance the loan or sell the property .
A person I know has one of those adjustable loans with a pre-pay of around 10k . They are upset because it will cost them 10K to get into a new note and the pre-pay penalty prevents them from doing this because of the loan to value ratio .(I know they didn’t read the loan docs.).
What would really make alot of people mad is if they found out that the real estate agent got a kick-back from the mortgage broker for sending them this stupid FB . Alot of this type of sh-t going on in the business .
the Real Estate agents get kickbacks from the mortgage broker?? Hmmmm. this is very curious, indeed!
We sold our house in Elko for $200,000. in August (73-yr old concrete block 2,000 sf home) but there was a second offer that came in about 24 hours after the first offer who was a friend of mine. The agent kept coming back with a higher offer from the second buyer but never let the first buyer know. It was a young couple who didn’t qualify for an FHA loan on the house if it went over $200,000. but the agent kept calling us and begging us to take their offer which slowly crept up another $20,000. It was over what FHA would loan and then suddenly, they could buy at $220,000. IF they wrote the loan for it as a two-apartment complex, upstairs and downstairs could be used as two apartments but that was how this young couple could get the loan.
We kept wondering what was up with this whole deal besides the small increase in commission on the second offer that was up $20,000. from the first offer. I kept wondering if the agent was in cahoots with the bank that was going to do the loan for the higher offer. I thought she was going to cry for days after we refused and sold it for $200,000. to a friend.
Kick backs to agents …it just seems highly unethical and in conflict with the Code of ethics agents/brokers are supposed to follow.
I hate the kick back situation also ,especially if it’s under the table and written up as something else . The mortgage brokers were making so much money that they were paying to get people to send them business .
Once of the problems I use to have when I was in the business was I was always discovering this cra-p and I would bust it so everyone would hate me for stopping the foul play .I even ran across a realtor one time who tried to take advantage of a retarded person on a real estate deal .
Nope , when it comes to money ,it’s amazing what some people will do .I don’t like it , I’ve never liked it ,and it’s no excuse that just because everyone else is doing it ,than it’s OK .
I got a notice from the landlord that rent will be increasing, so I read the first line and did a gulp…
The raise… $10/month, less than inflation, and not worth the time arguing. I do feel for them a little tax assessments are way up in the area. I live in Bellingham, WA a very bubbly area! My rent is 1/3 to 1/2 of PITI for a reasonable house not to mention the other hidden costs.
Still plenty of housing bulls in the area, it will be an interesting next few years with all of the POA and I/O loans used in this area by the locals to get in the market. When the California equity locusts are tapped out for good this area will be TOAST! Maybe I’ll be interested at 60% off… maybe not.
I have been roundly made to feel like second class for renting at work. I’m paid pretty well, my wife and I together make about 3X median income for the area, so we could easily get something almost reasonable for the area, but choose to rent.
Slowly but surely at work some people are coming to grips with the bubble… these things take time though, hell a year ago nobody would even consider there was a housing bubble in this and many other areas.
I live in Bellingham, WA. Maybe I’ll be interested at 60% off… maybe not.
I am right accross the border in Vancouver, BC. It is as bad as California. Total mania. I am holding off too, but 60% off might still be too much. I am going to offer, when time is right - next recession with 15% unemployment, 1984 prices. This is about 80% off today’s level. Kill them FBs.
I actually thought about taking photos of all the cranes in Richmond, BC and Vancouver I havent seen anything like it. I havent been to SoCal, but it it cannot be much “worse”. I really enjoy going to Richmond, BC for world class asian cuisine, its a nice area.
Speaking of the 80’s… One lister on craigslist for Bellingham has a house listed for 1.3 million. 1986 price via tax records, 124K. That is over 12%/year compounded.
If anybody wants a good time just look at the delusional sellers on CL-Bellingham and the Whatcom Assessor site to see what they paid. Mind-boggling.
Buyers must obtain 100 percent financing through Morrison Financial Services. ‘I’m paying a few hundred bucks more than when I was renting, but it’s worth it,’ Benjamin said. ‘I own it.’”
No, Bob, the bank owns it. And in the next year or two some smug bubble-sitter is going to taking it off their hands — not yours — at a firesale price.
- “There are benefits to a pullback, said Kohn, a custom builder.
- ‘The subs are now getting back on track, because they are less busy.
- Kohn said, I’m happy with this slowdown.’”
Ok, one of Kohn’s sub contractors is “Franks Plumbing”
- Frank hired Juan, Jose and Raul to handle the increased demand.
- Juan, Jose and Raul each bought new 4 x 4 trucks.
- Raul even bought a home with 110% financing.
With the ‘SUBS LESS BUSY’…how does this help Juan, Jose and Raul?
Florida is ground zero for this bust, however in my neck of the woods Parrish area it’s a bedroom community of Bradenton prices aren’t dropping to fast. Example, Bruce Williams builders recently lowered prices just above peak 2005 levels and are pushing financing with 1 dollar down and no closing costs. Many builders are following suit like Morrison Homes and others. I read these articles and think when will the builders get it? I’ve been looking at homes monthly and I don’t see any price reductions past 2005 levels. I think this is going to take a lot longer than most people think, even here at ground zero imho. And lets not forget that Citizens insurance just voted and received another huge increase in costs!
Parrish was somewhat expensive even in 2000. We looked there. But, just over the border in Hillsborough, prices were much cheaper, due to a number of factors. Those who couldn’t afford to invest in Manatee looked to Hillsborough County for property. I think Manatee will be one of the most sticky counties in Florida on the way down.
Palmetto,
That may be true however, Manatee county was touted as having yoy increases in value higher than anyone else in the state. Don’t you think this will be reversed in declines?
Hi, still, yes, I remember Manatee having those incredible yoy increases, it was amazing. It will reverse in the decline for sure, but my reason for saying it would be stickier in Manatee is the stubborn factor. Because of the incredible run up, sellers will be more inclined to denial. At least I think so. I have a feeling Hillsborough will decline more percentage wise at first, but it will be interesting to see what happens in various areas.
I regard the present stickiness in Manatee as being due to the fact they mixed the Kool Aid stronger there than anywhere else in the state. There is no industry in Manatee to justify the pricing, and let’s face it, as a retirement place it’s got nothing on Naples, etc. Manatee was one of the cheaper counties until recently, and the fundamentals have not changed.
I’m with you on this one.
Hillsborough (Tampa) is a Port Town, one of the biggest in the State, behind Miami, but I believe ahead of Jacksonville. MacDill was always a big plus too, although base operations are much smaller, CentCom is still here.
Lots of cargo/phosphate, and even the cruise business.
Tampa Int’l airport, one of the busiest in the country.
There is Port Manatee to the south, but not near the volume.
Hillsborough has a very diverse economy. It actually generates money from various industries. Palmetto/Bradenton/Manatee County have retirees, and a few assorted supporting businesses.
The price run-up there was a sheer feed off the other areas and the retirees made more enthusiastic traders.
Go to a casino room sometime. Watch them play. I don’t feel bad about taking their money, because I figure it is mostly my money, anyway.
They will lose at this game, also.
You did not look at the Century 21 for sale ads in todays Sunday news-press. 5 listings for nice gulf access properties between 218k and 254k. That’s just about 50% off from 18 months ago. It looks like a fire sale to me. The panic selling has begun.
I haven’t checked Parrish, but in Lakewood Ranch, the builders aren’t lowering prices but are throwing in so much $$$ in upgrades. Still not enough to make me buy. We’re waiting for the phone call that the builder is willing to take our offer of asking price with 45% of the value in options. I wonder if they are afraid of lawsuits from 2005 buyers?????
Brandon, Fl has had a condo revert back to apartments. More to come in my area I think.
LInk to condoconversion story in Tampa.
http://www.tbo.com/newtampa/MGBUNWK20PE.html
Good article. Another bubble bust, these condo conversions. And notice the South Florida influence on the market. I’m glad they got their tit caught in the wringer.
New Incentive Program for Builders and Sellers in Florida: forget about plasma TVs, granite counter tops, paying mortgages, HOA fees, insurance, taxes, etc. for a year. If they won’t drop the price, here’s a great incentive: how about paying the buyer an outrageous salary for the life of the loan so he can make those outrageous payments? Now, there’s an incentive.
EVERYONE NEEDS TO READ THE PALM BEACH POST ARTICLE.
IT IS SO TRUE AND THE CRAZY PART IS THAT SO MUCH MORE INVENTORY IS COMING ABROAD. I WAS IN FORT LAUDERDALE YESTERDAY AND ON EVERY BLOCK IN NEIGHBORHOODS, THERE WAS FOR SALE SIGN. NOW HERE IS THE SECRET, POOR AND LOW INCOME AREAS ARE GETTING CRUSHED BEYOND BELIEF. POOR PEOPLE WAS GIVING SUBPRIME LOANS AND WITH INSURANCE, IT IS BEYOND CRISIS. THESE HOMES WERE SELLING AT 200,000 IN THE HOOD. TODAY WHO WOULD BUY AT 50,000 . SCHOOLS ARE HORRIBLE, CRIME IS GOING UP AND THE INFRASTRUCTURE IS COMPLETELY DAMAGED. IT TOOK NEARLY A MONTH FOR AREAS OF FORT LAUDERDALE TO GET THEIR POWER TURNED ON. THIS MEANS SO MANY LESS BUYERS OF HOMES. AND WITH INVENTORY IN ALL AREAS AT A ALL TIME HIGH, BLOOD ON THE STREETS.
BEN NEEDS TO COME TO SOUTH FLORIDA AND YOU WILL SAY, “OH MY GOD”
Are you shouting (ALL CAPS) because you are excited?
YES, THE TRUTH FEELS GOOD!!!
Sorry if this was linked in elsewhere (I did not see it), but is this the article which got you so EXCITED?
http://www.palmbeachpost.com/goodlife/content/home_garden/epaper/2006/05/28/a1k_renters_0528.html
“The situation is creating sleepless nights for investors, such as Dena Webster of Wellington, who hasn’t been able to sell any of the 14 houses that she purchased at the peak of the boom. Eleven are in Olympia, a Wellington development where houses routinely carry price tags of more than a million dollars, but where rents are in the $1,800 to $3,000 range.”
I think we read about her a couple months ago. She had 14 properties then. It looks there will be 14 properties added to the foreclosure pile in the future.
‘According to local real-estate agents, condominiums and single-family homes throughout Palm Beach County and the Treasure Coast are leasing for 30 to 50 percent less than the monthly costs, including property taxes and sky-high insurance premiums, of owning the same property.
In Riviera Beach, for instance, three-bedroom townhomes are renting for as low as $1,150 a month. Owning one would cost about $1,800 to $3,000 a month, after a 20 percent down payment.
In West Palm Beach, $400,000 townhomes are renting in the $1,500 range. Owning one would cost nearly twice that per month.
In Lantana, a $450,000 three-bedroom condo with an Intracoastal view is available for $1,850 per month.
In Port St. Lucie, three-bedroom, $450,000 houses are renting for about $2,200, a third less than they would cost to own.
And in Wellington, $800,000 homes that would cost nearly $6,000 per month to buy are renting for about $3,000.’
Is anyone in Florida still saying that you better buy now because rents are on the increase? Because it sounds like you would need something in the range from 50% to 100% increase in rent relative to the cost of owning comparable property before monthly costs of owning and renting balanced out, and that is before factoring in the considerable risk of losing money by owning property when prices are dropping.
riviera beach is the hood. who in their right mind will pay 1,150 unless they have a waterview with a dock. i mean there are shootings every week in riviera. lantana and west palm is not much better. and port st lucie is a swamp for real. wellington is horse country and they have so much horse poop, it stinks. all these ideas of rent cost is too high. when every unit condo converts, a few hundred people are out of homes and they are force to move out of south florida when there are not enough rentals or the cost is too high. two years ago, most apts. where 90% + full. now some places are sitting at 10 - 20% condo owner and 80% empty. now, no renters are going back to pay for the condo owners’ insurance and taxes. and no buyers of homes or renters of apts.
‘Because nothing is selling they are trying to rent everything,’ Flocco said. ‘It’s becoming a renter’s market again.’
Renting is the new black!
(Sorry, TxChick, I just couldn’t resist
)
“Renting is the new black!”
with all due respect gs, i believe i coined that one on this blog….:=)~
Fair enough — credit where credit is due…
And CUPCAKES are the new GRANITE COUNTERTOPS
maybe everyone has seen this? apparently Lereah bought condos all over florida.
http://www.youtube.com/watch?v=lPnA1cnewLA&NR
Come-uppance at its best!
One of the seminal features of a psycopath is that they believe their own lies. Will be interesting to see what happens to this guy as the cruel universe clubs him about the ears.
Wow, doesn’t that explain everything about good old David .
Condos in Florida of all places ……he he he he HAHA HA HAHA
That is almost unbelievable, and if it is true, then it suggests that Lereah has a terrible conflict of interest as a national spokesman on real estate. How can his prediction for a shallow correction followed by a resumption of price appreciation some time in 2007 hold any credibility if he owns a bevy of Florida condos? This guy looks to me like a future posterchild for Nassim Nicholas Taleb’s book, “Fooled by Randomness.”
He has had a major conflict of interest ever since he conceived his infamous work, “Are you missing the RE boom?” I like the title of his new work, “Oh Sh!t!” We do have a lot of creative bloggers on this board; it great to be a part of it.
“The county’s 10th-wealthiest ZIP code, Oldsmar’s 34677, had the second-worst foreclosure rate.”
As long as they were handing out free money and real estate was always going up, it made the most sense to buy the biggest, most expensive home you could stretch yourself to (not) afford. Doing this offered the prospect of “earning” the largest-possible home equity gain during the boom, especially if you leveraged your the gain on your primary residence into investments in ten or so other homes.
Live very close to Oldsmar, and know it well. This area used to be a bit of a no mans land chock full of rednecks and trailer parks. all of the sudden (last 3 years) it has become the place to be. Of course with all of this new found popularity, there is now a full compliment of the usual (crapy) chain restraunts and 2 starbucks within about 2 miles where there were none before. That’s how you know you have made it to the big time. Just to make things even better, the area is located in a low lying area Just barely above sea level, and as you can immagine there is quite a bit of flooding. True story: Last year durring a big storm, I was unable to get thru due to street flooding and there was actually a catfish swimming up the street! True story i promise!
I just did a ZipRealty check of a small development about a mile north of where we own our 20-acre (bought pre-bubble) land.
Search for “Greenbank Blvd, Windermere Florida”, and do a “find within 1/2 mile” search.
You’ll see 11 houses for sale in this small development! All are nearly identical (some are 3 br and some are 4). There are three sets of houses for sale that are right next door to each other…and some have been for sale for 120 days!
All of the houses here have been built in 2004 and 2005, so these aren’t “new” sales. I have a feeling all these people bought thinking that this swampland would make them quick millionaires. Several are already “price reduced.”
Because of the HUGE number of amatuer speculators in Florida (as well as a large popualation of easily-duped people!) who don’t have enough cash to hold their “investments” for a while, you’re going to see MASSIVE crashes in Florida.
There’s no sour grapes here–I OWN land right in that area, and I see it coming. Fortunately, I have no loan on the land, and don’t care what it’s worth. Still–I don’t want to see these neighborhoods decay into slums, but that’s exactly what will happen. They’ll be rented out to kids in the summer, and fill up with section 8 people, meth labs, etc.
I just checked out one of them–The listing is a real HOOT!
This is a small-ish home (for that area), 1600 sq/ft. They bought it from Pulte 2.5 years ago for $225K
It’s been listed for 119 days, price reduced TWICE, and has this puzzling statement in the listing:
Seller to entertain offers between $300,000 to $335,000, with $335K being a full price offer
I feel like calling them up and saying $299,999.99! Why put your “range” in a R-E listing? Why wouldn’t you offer the MINIMUM, especially when there are 10 other houses for sale in the same development?
Owner has an address elsewhere in Orlando, so this was definately a “get rich quick by flipping” plan.
Let’s see, if he sells it for 300K - 6% fee, that’s 282,000. He bought it for $225. Let’s assume he pays $2000/month for mortgage, taxes, HOA, insurance. That’s 60K for 30 months. 225 + 60K = 285.
Now I see where his minimum price was! If he and his wife instead took part time jobs at starbucks 2.5 years ago, they may have had an extra 15K to call their own!
Of course, if/when he sells for 300K, he”ll tell all his friends how he made a killing in real estate!
At his current price, unless he’s been renting it, he’ll barely break even. If he was renting it, he did just as well as he would have done had he worked as a WalMart greeter part time for the past few years…
In the same development, an identical floor-plan house (also Price Reduced, but not as far as the one above) has this in the description:
Price reduced! Great investment opportunity.
Exceptional 3 bed, 2 bath home w/ front & rear covered porches. Partially furnished but some items do not convey. Magnificent gated community w/ pool/playground & picnic areas. Minutes to disney & major roads! Priced reduced! Get it while you can
So, the seller keeps having to drop the price, but it’s an EXCELLENT INVESTMENT OPPORTUNITY!
Hmmm…..
So, continuing to rise at an accellerating pace indicates a flight to quality at the end of this with properties in nice locations with updated features selling while others do not? Sounds like that to me. Time for a drum roll yet?
Renters market? Not so sure about that. Even rents are more than they were 2 yrs ago and even though it is much cheaper to rent , rents have still gone up! (live in Miami)
Also, insurance rates will not come down, even though hurricanes were absent this summer. Home prices have gone up so much that a home bought for 200k now will be much more to replace .
What I don’t get is the property taxes. I read today in the Miami Herald http://www.miami.com/mld/miamiherald/15648845.htm that salaries at the airport are the highest in the nation! people how say “Oh by you don’t have state taxes” don’t see the large picture! I’d much rather pay a percentage of state taxes on my 40K income than pay a 2.5% (yes, 2.5% in North Bay Village, Miami and the rest of Miami between 2 adn 2.5% ) over say a median home of $350k for the life of the loan!!
Our wonderfully corrupt S. FL government must have a blast with all that money! The Safe Our homes ammendment should be re named toT axwithout representation ammendment!
Don’t forget the Florida “Intangible” tax! That’s the most disgusting tax in the entire US. A tax on your bank accounts! (Not interest, the money you have in stock and bonds!)
I think that Florida is finally planning to phase out the Intangible Property Tax as of January 1st. About time. But that type of tax has been around a long time, just not all that common in the English Common Law areas. Check out Germany (got rid of it in 1997, to their credit) and Switzerland, Iceland, etc.