‘Prices Have Plunged’ In Florida
The Palm Beach Post reports from Florida. “As sobering as last week’s existing-home-sales report was, Palm Beach County’s home prices declined for the first time in seven years, the reality is a lot worse, I’m hearing from some corners of my beat. Other corners still believe that any local housing-market slowdown is mostly the fault of the media”
“The Florida Association of Realtors’ report last week showed existing home prices in both Palm Beach County and the Treasure Coast fell 6 percent in August, year over year. But prices have plunged a lot more than that, some readers say.”
“‘My office primarily sells property in central Palm Beach County,’ writes broker Thomas Moffett. ‘Most neighborhoods where we sell property, the average sales price has dropped more than 20 percent this year.’”
“Moffett thinks the problem with association reports is that they include all sales in Palm Beach County, including the $1 million-plus ones. ‘It disguises what the true price is doing,’ Moffett says. ‘The over-a-million-dollar market is not affected by the economy and should be looked at separately from other real estate sales.’”
The Orlando Sentinel. “Buffeted by the slowing real estate market, an Orlando-area apartment-to-condominium converter filed for Chapter 11 reorganization Friday in U.S. Bankruptcy Court. ‘No question that the slowing market is a factor here,’ said lawyer Scott Shuker, who is representing the business.”
“Shuker said Main Street USA has more than 100 investors. At least one investor lawsuit against the company is pending, he said. The company bought the Waldengreen Apartments in southwest Orlando late last year and converted the rental property to condo units selling for about $150,000 to $180,000 each. About 100 units in the 276-unit project have been sold, Shuker said.”
“Main Street USA lost more than $3 million in deposits in an effort to purchase two other Orlando-area apartment complexes for conversion to condos. When its financial situation deteriorated, the company was unable to complete those deals.”
“Metro Orlando was engulfed in condo conversions last year, at the height of the frenzied real estate market. And thousands of converted units are still being marketed. Many of the sales last year were to investors who hoped to realize a profit from a quick resale.”
From the State in South Carolina. “Builders in Richland County are constructing homes at twice the rate that people are moving in, which means more homes are being left vacant.”
“The number of vacant houses in Richland County, whether on the market or not, is up 53 percent from 2000. That’s an increase to 14,840 vacant homes in 2005 from 9,692 in 2000. ‘If your housing stock is growing faster than your population, you would expect to have more vacant housing units,’ said Joe Cronin, research manager for Richland County, who added that it could be a sign of overbuilding or a slowing real estate market.”
“If the county continues to have more vacant homes on the market, it could translate to slower home sales and dropping prices. Some local real estate agents agreed the market has shifted. The total number of homes in the county is up 12 percent. Meanwhile, the total population is up only 6 percent.”
“Broker Len Ross called the leap in vacant homes ‘puzzling.’”
“Sherri Brosius, who sells homes in Northeast Richland and Kershaw County, said ‘it definitely has moved from more of a seller’s market to more of a buyer’s market. Sellers need to be a little bit more conscious,’ she said, meaning homes should be clean, in good repair and competitively priced.”
“Statewide, the new numbers also showed signs of overbuilding. The number of housing units in South Carolina increased 10 percent in 2005, to 1.93 million. The number of vacant housing units in the state increased 33 percent, to 291,957.”
‘Millions of homeowners soon will face a financial nightmare brought on by a combination of higher interest rates, risky mortgages and a housing market gone cold. It couldn’t come at a worse time. Housing prices have stalled or fallen in many areas and the market is flooded with homes that simply aren’t selling. In the Tampa Bay area, there are more than three times as many homes for sale as there were a year ago and 40 percent fewer sales.’
‘Boca realtor Alex Alpern feels that the current market slowdown has been given too much negative spin by the media. ‘It’s obvious that homes were selling at a frenetic pace for the past five years. Now, an adjustment is taking place,’ Alpern said. ‘It’s a natural part of the cycle.’
‘Alpern acknowledged that rising property taxes and insurance have made an impact in the market this year. Boca realtor, Scott Agran believes another reason for lower home sales around Palm Beach is that the seller’s asking price is much higher than the actual sale price.’
‘Once sellers make adjustments to their asking prices that reflect the reality of today’s marketplace, buyers will come because they feel it’s a fair deal,’ Agran said. ‘In the end, there will be more equilibrium in the market between buyers and sellers.’
‘Once sellers make adjustments to their asking prices that reflect the reality of today’s marketplace, buyers will come because they feel it’s a fair deal,’ Agran said. ‘In the end, there will be more equilibrium in the market between buyers and sellers.’
But how should prospective buyers factor downwards price momentum that might continue for another four+ years into that equilibrium calculation?
Right , and how about factoring in the higher insurance costs . I would say 30 to 40% lowball offers might do the trick . Oh how about factoring in the excess supply . How about just saying to the builder ,”How low will you go for me to take this monster off your hands .”
Don’t forget the Save our Homes tax jumps when you buy these beasts at an inflated price. Not only will your taxes jump up 2X-3X what the previous owner paid, but your insurance will jump up as well.
Ah yes, thank god for SOH, probably the dumbest law ever put on the books, which has the effect of making the state/local government budgets totally bulletproof. Who cares if govt is spending 10X as much money to do the same job? I don’t pay it, the poor sap next door does.
Ah yes, thank god for SOH, probably the dumbest law ever put on the books, which has the effect of making the state/local government budgets totally bulletproof. Who cares if govt is spending 10X as much money to do the same job? I don’t pay it, the poor sap next door does.
The flip side is:
You’re a little old lady living in a house.
Speculators move into the neighborhood and drive up “values” 2-3 times. Your little 100K house is now “worth” 300K.
Why should your property tax go up because crazy people think the houses near you are “worth” more? But it will because “comps” are how they establish value.
Of course, if our government didn’t subsidze and support bubbling, this wouldn’t be a problem….
Reuven-
Because it’s a real gain, that’s why. You can borrow against it, or sell it and take the cash.
Also, when values go down, smart people appeal the assessment, and win.
You can borrow against it, or sell it and take the cash.
Not everyone likes to borrow. And why should some old lady have to sell her house because of “speculators”?
“Because it’s a real gain”
I once read somewhere once that it didn’t become a gain until you sold the place. What happens to the “gain” when the price goes back down to the original $100K or lower?
Reuven,
Agreed, but the solution to this is quite reasonable.
If the home values go up (lets say 50%), should the little old ladies tax go up 50%? Of course not, the millage rate should be halved, so that the govt continues to recieve the same amount of money!! The idea that govt does not have the ability to move the millage rates is nuts; of course they do. Reduce the amount you tax per dollar on a home!
Makes me so mad, its just a way for govt to be totally irresponsible with the money, and have NO chance of ever getting in trouble (with the voters) for it. Of course the majority wants SOH exemptions, they are getting huge tax breaks from it!
Sorry for all the exclamation points, this issue really burns my a!@.
Mike, the Save Our Homes amendment is one of the smartest moves Florida residents made. I assume you and I both live in Florida, probably beneficiaries of the same law.
But did you notice the state has been growing too much, too fast, with no apparent controls on development? Just look at Orlando. I used to live there before Disney, and it was a little haven of a paradise. Now, 35 years after Mickey Mouse moved in, the city is nothing but beautiful (it used to bill itself as The City Beautiful.)
None of the once bucolic environs of Orlando has been spared this relentless development, and so we see dailly traffic bottlenecks, overcrowding, pollution, and a high crime rate that the city leaders profess not to understand.
SOH probably has done much to stop this grwoth, though this was not the motive that impelled voters to put that amendment back in 1992. It’s time to slow down, to make growth more orderly, and to cast away the popular notion that growth is progress. A lot of Florida’s pristine beauty has been destroyed, and this is an opportunity for state and local leaders to rethink their ambitious plans and to preserve what remains of old Florida. Yes, SOH has been a big savior for us.
I’ve got a question! Why do they call the county Orlando is in “Orange County”? Was it founded by Seymour Orange or something?
I don’t know if this is true or not, but the story I heard years ago was that Orange County used to be named Mosquito County. The name was changed to make it sound more attractive to newcomers.
The urge to runout and buy now in NE FL is really strong. Priced out buyers are relieved and elated with the market’s turn. The $50,000 builder discounts coupled with the $1 downpayments, hardwood floors, garden tubs, and granite counter tops is very tempting.
I kinda feel sorry for the poor bastards that bought recently in these neighborhoods and in others, particularly buyers that bought POS homes thinking renovation and so on was the answer to getting their dream.
I hate to admit it but I have a couple of those individuals in my family that are getting weak due to the temptations that have recently popped up in recent weeks.
I have countered by sending the IMF bubble report, the internal NAR report, DR Horton 30% discount ad, inventory buildup calculations, links to Good News by Ben, etc. I don’t know. I think I might have a GF in the family. I am soooo ashamed!
looks like Ft. Myers Florida might be in for a shake up.
http://money.aol.com/news/articles/_a/housing-slowdown-may-cause-price-drops/n20061003143809990021?cid=403
How about factoring out the your 6% sales commission, so we can bring this equalibrium quicker to the market place. Every body should step up and take a hit on the real estate cycle except me. Poor real estate agent. Bo Hoo! Bo Hoo!
How can you have “more equilibrium”? That’s like saying your house is “very unique”.
Millions of homeowners soon will face a financial nightmare brought on by a combination of higher interest rates, risky mortgages and a housing market gone cold. It couldn’t come at a worse time.’
Is there a good time to lose 100’s of thousands of dollars? If so, please let me know, I will be happy to stay in bed that day. There was NEVER going to be a good time for this to correct; people are going to lose everything and spend the rest of their lives trying to rebuild.
Sorry, but I just don’t think if it happened on a Sunday as opposed to a Thursday, that everything would be ok.
It’s not ok Mike ,it’s a bad deal all around as you suggest .People will lose alot of money unless they hold really long term . The only good thing about it is that maybe the first time home buyers ,or people priced out of the market , can buy a house again after a correction .
Mike Fink,
Glad you said that! I’ve tried to make “Is there a GOOD time to lose 100’s of thousands of dollars?” my mantra! In a word, NO!
Given my age (late 40’s) the answer is HELL NO but I don’t care how young you are this soothing language about “Well, if you really like the area and they have great schools etc. etc.” makes me ill! Especially now that we’re just starting our dive. Look, my guess is that for right now, if they’re trying to sell it? they’re open to renting it! (You know, just until things get turned around and resume their rightful 20% a year appreciation mode!)
DinOR,
And, from my experience, you would be totally correct. I don’t even look for rentals, I just go to open houses and ask “are they willing to rent”? Almost all are; although some at insane numbers (I think they are trying to cover their monthly expenses with the rent, which is not going to happen in FL for a long, long time.. Unless of course you bought 5-10 years ago).
If you really like the area, rent there, save the money, and actually enjoy the area; instead of spending every dime you have trying to service an insane debt level. That’s what I am doing, and let me tell you, Palm Beach is a great time if you have money to spend. If your house poor, trying to scrape enough money together each month to make the payment…. Nahh, there are lots of other, much nicer, places to live.
Your kids do get to go to school if you rent; I hope people do realize that!
‘”Millions of homeowners soon will face a financial nightmare brought on by a combination of higher interest rates, risky mortgages and a housing market gone cold. It couldn’t come at a worse time.”‘
Bring it on. You can’t have a revolution in the housing market (or make an omelet) without breaking a few eggs!
Spank those FB’s and greedy flippers!
I’m headed to the Sarasota-Bradenton area this morning, to check out the market. Great fish over there; wonder how they like it with sour grapes.
- Broker Len Ross called the leap in vacant homes ‘puzzling.’
You won’t find any sour grapes from ‘Len’….he is completely confused.
Sobay, will you send Len a link to this site? I think it will clear up his confusion.
By “great fish over there” do you mean the the “floaters” recently killed by the RED TIDE.
guess those 800 people a day are buddying -up
My old man can’t give his house away
20% off +
this guy gets to keep his job = brilliant !
‘If your housing stock is growing faster than your population, you would expect to have more vacant housing units,’ said Joe Cronin, research manager for Richland County, who added that it could be a sign of overbuilding or a slowing real estate market.”
He’s what we like to call a master of the obvious.
“The Florida Association of Realtors’ report last week showed existing home prices in both Palm Beach County and the Treasure Coast fell 6 percent in August, year over year. But prices have plunged a lot more than that, some readers say.”
This suggests the rate of price appreciation continues to decelerate, from a level which already hit negative several months ago. The gap between Halloween horror stories on the ground and low negatives in official price data probably relates to the fact that the latter is based on deals which closed three months ago. It looks like the price plunge is worsening, and as Mr. Ben Jones himself wrote a year-or-so ago, there is no plunge protection team for housing.
The momentum is definately strong down. Too many counties in Florida have *years* of inventory. The only way to sell is to immediately get well below the pack. Due to the huge inventory overhang, Florida is going to react even faster than Sacramento or San Diego.
But the other markets will follow.
Gee… someone should have asked what happens when most buyers are priced out of the market…
What do you think “Joe sixpack buyers” are going to do once they know prices are declining? They’ll wait… and wait… Before it was the wise waiting. Soon it will be everyone.
New post on my blog of zero readers of when I think the bottom will be (my SWAG):
http://recomments.blogspot.com/
Neil
Neil,
Gee… someone should have asked what happens when most buyers are priced out of the market…
Well, down here, most people realized that everyone was priced out who lived here. But we had the RE telling us that “everyone is coming from New York with buckets of cash” so the fact that everyone here was priced out was not a problem. If you did not buy NOW, you would rent forever, as the prices were going to continue to climb into the sky as more and more money flowed in from NY, NJ, etc (oh, and Europe and Latin America).
That’s what the mentality was; everyone wants to live here, there is never going to be anything affordable again… Blah, blah, blah…
That’s what the mentality was; everyone wants to live here, there is never going to be anything affordable again… Blah, blah, blah…
————————–
And this was the case in San Diego, Phoenix, Las Vegas, Los Angeles, San Francisco, Washington D.C., Austin, Boise…
It looks like we’ve got a complete market meltdown! Prices worse than reported in South FL; bankrupt flipper in Orlando, central FL; builders slashing prices in my neck of the woods, NE FL ; and, 291,957 vacant homes in SC. There is no escaping the horror!
Agreed, in PB county (which has 36+ months of inventory right now), we are in a total meltdown. You can see the fear on the RE agents faces when you walk though homes. I can see the conflicted disappointment when I tell them I just want to rent because I think the market is crashing (conflicted because they get some money, but pissed because they know they could put me into that house if I can afford the rent payment using a suicide loan).
Honestly, I have stopped talking about it to most people, especially those who bought in the past few years. I feel bad, I tried to tell them, but I am not going to rub their faces in it now.
What’s more, these reports are just the outer-bands of this storm. When the eye makes landfall it will hell on earth!
“What’s more, these reports are just the outer-bands of this storm. When the eye makes landfall it will hell on earth!”
What a great analogy! PURRRRFECT for Florida.
they know they could put me into that house if I can afford the rent payment using a suicide loan).
hehehe…the sales trap that was sprung on thousands of ignorant sods.
Yup..
This sound familiar:
“Well, the rent is XXX per month, but I can get you a loan that will be just about the same payment and you will stop wasting all this money on rent…. This is an expensive property, do you want to throw 2,500 dollars a month out the window never to see it again?”
Nahh, I would rather through 5K a month at it, and then just chuck 150K into a fireplace at the end of the year when I find out my house is depreciating at 10% YOY into the forseeable future.
Builders have been taking offers as low as 1/3 off asking in NE Florida. The NE Florida numbers are also lacking St. John’s county where a lot of the recent growth and stagnation has been. If you factor in the St. John’s county numbers and then the upcoming correction, things look even worse here.
Yet if you drive through the north end of St.Johns, many of the McMansion builders still want 500-750k. They push the Option ARM loans though when you show intrest.
Some kid who works for a company I consult for was boasting about his condo in Orlando that he bought (for 400k!) with an i/o mortgage. It was a conversion.
I told him he was NUTS, nicely, because in his mind he was Donald Trump and Warren Buffett all rolled into one. I won’t even have to say “I told you so” now….
$400k? For a condo? In Orlando?
Let me guess, he’s probably proud as heck of his alma mater!
Gee whiz, what do they teach kids in school nowadays?
I can picture it now. ala Brando ’s Kurz - Lereah , in seclusion -50 pounds heavier , head shorn and sweat covered, head tilted to the side “The horror…the horror.”
Experience keeps a dear school, but fools will learn in no other.
Benjamin Franklin
Huck Finn,
Don’t forget about the line “They came in and hacked off each innoculated little “ARM”! “and threw them into a pile” a pile of……little ARMS”.
You sound like Col. Kurtz in “Apocalypse Now” asking me to ‘imagine the horror’.
Maybe you FL residents can give us non-FL residents some ideas on locations that might be worth watching as this clusterf*ck unfolds. (Worth watching = good to buy in after the correction.)
S. Fl is just toast; I don’t know how many ways it can be said. PB County (where I live), had a 400K median home price, and a 60K median household income. Come on! How does that happen?
I am actually in the market for a rental, so I am spending too much time with real estate agents. Its sad, you can almost feel their desperation. The development I am looking in; I walked out of one house, and from the front door, could see 6 other homes for sale. I could only see about 10 homes, so from right there, it looks like 60% are for sale.
Its sad, some of the homes are perfect for me, I would love to buy them for my primary residence. But, lets just look at some of the numbers (sorry if this is old hat for the S. FL people, but lots of poeple don’t realize what its like down here).
The home I want to buy would be in the 600-700K range right now (~3000 sq/ft). Lets use 600K for our numbers:
Traditional morgage on 600K @ 5.75 = 3,501.44 / mo
Taxes (approx 2% of value/yr) = 1K / mo
HOA = 300 / mo
Insurance = 1K / mo (I am guessing here)
So, we are right around 5,800 a month; before we figure in any maintance/upkeep etc.
That house; would be VERY, VERY lucky to get 2,500/mo for rent. Probably more like 2,000-2,250/mo.
Now, for the last trick, if we figure 5K/mo as a housing expense, and no more then 33% of your income on housing, we come up with:
15K/mo = needed income level to support this home (I think that’s low, but whatever, its workable).
15K/mo = 180K/yr
I used a 600K home for this example, but when you think that the median price in Palm Beach county was 400K just a few months ago, with a HH income of ~60K.
What a joke; these home sold (they were built during the run up, so I think their prices were already inflated) for 300-350K just a few years ago. Guess what, in 2 years, your going to be lucky to get 300K again for them.
Good summary, Mike. It really does tell the story of the state of Florida real estate. I’m still completely dumbfounded by the delusional aspect of this bubble/bust, most especially in Florida. Tons of people, investors and developers alike, HAVE to be losing millions (as a group) of dollars a month in mortgages, insurance, taxes, maintenance, etc. I wish there were some way to know the total expenses being spent statewide on vacant property and also property being rented below what the expenses are.
Palmetto,
Remember, its very, very hot in FL. That heat has some strange effects on people. I would say, in my experience, I am going to be a spuvestor in the next 2-3 years from the loss of brain cells due to the extreme heat.
Totally OT, but for those who live in FL but came from another area… It is just frieking wierd down here, that’s the only way to put it.
You have 12 year old girls wearing clothes to school that appear to be something they bought in a strip club. 50 year old women wearing the same clothes to work as their 12 year old daughters wear to school. 90 year old men with the most stunning women you have ever seen. 10 year old girls with DD breast enhancements..
Its just strange. As a guy, I not going to complain, keeps the mind occupied.. However, I do wonder if there is something to the radiation/heat from the sun that is causing people to behave like this.
Sorry for the OT post, I thought some levity may be needed today.
Mike, I lived in South Florida for 20 years and now having lived in other parts of the state, I can tell you that while a little of that phenomena may go on in other parts of Florida, it is pretty unique to Dade, Broward and Palm Beach Counties. But you are right, it IS pretty weird.
As a native whose roots to FLA go back to the Seminole war, I can tell you that the natives consider that the “Jersey trash” factor (amongst many other more profane/non-PC terms).
Hey, I am from Jersey.
I agree, those who I know/work with who have lived here a long time, generally, do not like northerners. They think that we are polluting thier state (they are right, of course) and making it more like NY/NJ.
My only problem is; it seems only the dumbest, sl*ttiest, people make it down here. Is there some restriction on letting smart people into the state?
“Do you have a box of cash and a bucket of stupid? No.. Well then back you NY for you!!”
No offense intended. Just relaying the local attitude to the situation. Similar terminology is used for about every northeast and mid-west state/city. The difference is some people move here because they like it, and they take the time to understand the culture that has grown over generations (both the good and the redneck). Others move here just for the winter weather, and anything else different from where they grew up is just wrong. The former is great, the latter gives all northerners a bad name here. I travel a lot for work, and I know that most New Englanders are polite and well-mannered, yet the ones who move down the street from me are living examples of why inbreeding is so bad. I guess it’s the same reason why the doctors and engineers in Mexico aren’t the ones sneeking across the border to pick oranges.
I lived in Boca for a year and I hated it. I did make some long lasting friendships while there, but I could never have lived there permanently. I moved to Florida for the warmth and culture. S. Florida has a culture but it’s not a Florida one. I now live in the Clearwater/St. Pete area and enjoy it much more. Less traffic, less expensive, with nicer, more real people. You can still find your share of plastic surgery lovers and hummer drivers, but not nearly as much as you find in S. Florida.
However, I still am a little disappointed in Florida as a whole. I have lived in many different places and Florida does not rank very high among them.
I lived in Clearwater/St. Pete for about 10 years (1992-2002) and it had a nice quality of life. I lived in West Palm Beach for a while and found it to be very different from the Tampa Bay area. I didn’t like WPB much at all.
One difference I found in Florida is that the west coast tends to have more midwesterner transplants and the east coast has more transplants from the northeast. Just look at the paths that I-95 and I-75 take and you’ll understand why.
Tampa Bay is more down to earth than South Florida, but my fear is that it’s changed a lot in the last 4 years due to the run up in real estate prices.
Mike Fink… I know EXACTLY what you are talking about. I moved to South Florida (work in Miami) a little over a year ago from SOCAL. Despite the reputation that California seems to have with the rest of the country, Florida is the strangest place I have ever visited / lived (& I have travelled a lot). We see things constantly that would NEVER be allowed/put up with in California. We refer to it as California Sensibility, whereas here in SouthFlorida it is absolutely non-sensible. Reading the Maimi Herald is more interesting than the National Enquirer.
When I lived in Miami, it used to drive me crazy that everyone parked in the fire lanes, got out, and went shopping. Do they still do that? By the way, once you get out of Miami it gets much better. I hated Miami, but love Palm Beach County. There are some things in South Florida that are better than anyplace else in the country - boating, scuba diving, sailing, big-game fishing. Try out one of those.
Florida was a very nice place to grow up, my wife and I are from the southwest area of Florida, Its not what it was when we where kids, Its miami west now ! most of the crackers sold to the land whores and moved out of state. its a total mess now.
Echoing what you said earlier about feeling bad for recent buyers…
I know this young couple that just bought a 20 yr old POS for 150k on the West side of town (longer commute) ; now, they realize it needs a new roof and windows, another 10-15k.
Just this weekend I see Dr Horton slashing prices on that side of town; if they waited just 3 mos, they would be in a brand new home with warranty, refrigerator, washer, dryer, and closing cost included for about 180 or 15k more.
Another couple bought an investment home last year down in St. Lucie for about 255k. Two weeks ago they bought another home in the same neighborhood for about 235k, a bigger home with hardwood floors, tiles garden tubs, hardwood floors, 4 bdr, the works.
Yet they can’t recognize the pay-off in waiting just a bit longer even though it’s smacking them in the face. Instead, they think both homes are worth more than the first. Rude awakening awaits these guys.
You can’t reason with these folks Mike; just let them be…
what mike said…
Yes. Thank You cereal. Sorry. My response to Mike Fink’s post got lost in the melee of other responses and now it seems detached from his earlier remarks.
Its been a melee this morning, that’s for sure. I am hopping back and forth from my work computer to my personal laptop; every time seems like there are 20 new posts!
I think they were expecting to sell to the move up buyers who sold their POS and would put maybe 200k down payment on a 500 to 600k house . Otherwise you have to make a hell of alot of money to afford a low down loan on that price range . Of course there is always stated income loans for people making 30k a year who want to flip one of those .
Isn’t that why people did negative amoritization(spelling ??) loans/interest only loans?
People either went on toxic loans out of fear that they would be priced out forever or they were speculators IMHO .Also I’m sure that people went on these adjustable loans because they were easy to qualify for/low down , and these people just couldn’t qualify for the fixed rate . I’m also sure that the friendly mortgage broker told these people that they could just refinance into a fixed rate down the road because they would be sitting on a gold mine in a couple of years . Now all these people are stuck .The flipper was just going for the short term kill so they wanted the toxic loans but now they are stuck with them .
You cannot imagine how loud the buzz was on the ground here in S. FL about being “priced out forever”. I knew that it was impossible, but I still went to bed thinking “well, maybe, if everyone with money moves here, it could happen….”.
People did these loans for a few reasons, but most importantly, because they could not service the debt level of the property using a traditional loan product. So they moved into these exotic loans to make the payment/home seem more affordable. What they don’t realize is they are taking a highly (fully in some cases) leveraged position on a risky asset class (especially for the past few years). They are playing roulette with 200-500K on the table, and don’t even realize that the mob (banks) lent them the money to pay, and does expect to be paid back at some point.
The bank won’t break your knees, but I think I would actually want that more then what will happen to these people. Its hard to live in this country with destroyed credit; even harder if you have govt tax liens/etc because of short sales. They are going to spend years rebuilding from this; which is going to really change the market. When people get really burned (and this is beyond that, this is like scortched to a crisp) they tend to be very, very cautious about every “doing that again”.
I think its going to be a decade before we see people have a “normal” feeling about homes again. Normal being what people felt about homes 10 years ago; nice place to live, provides forced savings; appreciates slightly above inflation level.
I think its going to be a decade before we see people have a “normal” feeling about homes again.
That’s how long it took to recover from the ‘90/’91 bust.
This current situation is far, far worse.
Personally, I don’t think there is a solution.
It’s too big and the corruption which set it up too rampant and widespread.
I mentioned this is a previous thread…
Right near where I own some (purchased long before the bubble) land Pulte built two years ago a little development of SFH. This is in the “Windermere” zip code of Orange county, but not really in Windermere.
Now 15 of the approximately 45 homes are listed (by 1st or 2nd owners ) as “for sale!”. There are only two styles of houses here, so they’re competing against each other.
Several of them are “price reduced” a couple of times. And if you do the math and add carrying costs for two years and subtract the 6% transaction fee, the ones with the lowest price are going to be losing money. They won’t actually have to bring a check to closing if they get their price, but they’re under water because of the tax/insurance/mortgage they’ve been paying for the last year or two (presuming a renter didn’t cover it.)
I’ve never seen 1/3 of all the SFH in a development for sale at one time (not from the original developer–these are people who bought the himes.)
It’s as if they all took the same mortgage in 2004 and they all reset at the same time.
Reuven,
I’m renting in Windermere now. Whereabouts is this development at?
It’s on the north side of reams road, 1/2 mile north/west of the disney back entrance.
I have a diagram showing the homes for sale here:
http://www.swampworth.com/Bubble/ZipRealty.JPG
I would say that between 1/5 and 1/3 is pretty average here in PB county, at least in a new development. Where I live (in a condo) about 1/3 of the units seem to be on the market right now. That’s about 100-150 units; right around 250-400 / sq ft (in West Palm Beach).
The developments that I visit (I am looking to rent a SF home) seems to be about 1 out of 5 or 4 homes if for sale. Usually I don’t even get back in the car, I just walk from home to home looking at them (no reason to get in the car to go from one driveway to another).
Got to be a great time to be a RE agent. You can look the “enemy” in the eye; they are 50 yards over in the home next door.
I’m going to be in FL next week (I’m only there one week/month now.) I think I’ll have some fun and ask an agent to show me some homes there.
(BTW: Going out with an agent is a great way to get a Free Lunch.)
I live in the Winter Park section of Orlando (NE Side). The homes in Winter Park keep their values, but lately the price people are asking for are ridiculous. I always thought location, location, location. However, the market may really test this saying. I recently came across an MLS listing in Brookshire Heights area (adjacent to Winter Park Pines, but closer to Winter Park High School and Lakemont Avenue). The listing was acquired in Mar/Apr 2006 for approximately 263,000. The house is a 3/2 approximately 1250 sq ft with 1 car carport. The house was listed 2 days ago for $365,000. The seller claims to have made improvements to the house. Sod in the back yard, new landscaping in the front yard, repainted interior and exterior, a new roof, redone kitchen and baths. Now, I don’t know whether or not $100,000 in upgrades were spend on the house, but doesn’t it sound reckless to upgrade a house that much.
On another note, I took a drive to Oviedo from Winter Park. It’s about a 15 minute drive on S.R. 426 (Aloma Avenue). I passed through downtown Oviedo and took S.R. 419. A little ways passed downtown Oviedo was a development called Sanctuary. There were tons of for sale sign from realtor and owners. These were huge McMansions (2500 - 5500 sq ft, 2 double car garages, 3 bedr / 2ba to 5 bedr / 4 ba. After gathering about 10 flyers, I went to MLS and found out that there were 60 listings. I was amazed. 60 listings in a 2-3 year old subdivision. Heck, some houses were still being built and the for sale sign was already up. Almost all the listings stated that the houses were vacant. The prices ranged from $350,000 to $560,000. Very overpriced for the Orlando Market.
I agree that Winter Park, being a more established area, bubbled less and will crash less….
There’s a tiny part of Lake County that has a Winter Park zip code…there’s been a lot of speculation going on there because they advertise it as “Winter Park” even though it’s in Lake County and people try to cash in on that.
(It’s like the Winderemere zip code that includes the low-income housing project across from Disney’s back entrance (Park 2 in cast-member speak, as well as a lot of other areas.)
Reuven,
You probably mean Seminole County. There is a small portion of unincorporated Seminole County that shares a Winter Park zipcode. That area is actually very nice, especially along Tuskawilla Road (reason being is that there is a spring fed lake in the area that is a private lake with no public access). Other subdivisions in that area (along Aloma Avenue and Howell Branch Road) like Eastbrook, Wrenwood, Citrus Point, Country Lane, Garden Lake Estates, Woodcrest, are asking for $250,000 for approximately 1500 sq ft. It may be a little bubbly. Drove through there the other day, many of the homes are for sale. There was a lot of speculation there b/c of the Winter Park zipcode.
“The over-a-million-dollar market is not affected by the economy”
Well there’s another urban myth that can’t die fast enough to suit me. True, “pre-bubble” a cool mil. might have meant something but enter exotic lending and that barrier has been shattered. Keep saying it if it makes you feel any better but when this huge swath of posers and their paper wealth is exposed you’ll find out just how “desireable” these homes truly aren’t!
Right, DinOR, there’s another 500 pound gorilla in the room that isn’t getting much attention at this time, and that is the fallout from the truly lousy construction on these “new” homes. Any fellow Tampanians see the story on Channel 8 about Jim Walter Homes and one of the places they built? I think the buyer had lived in Jim Walter home and was impressed with the quality and so contracted for a new one. What a disaster! I call it “Nails to Nowhere”. Jim Walter for some reason seems to be getting these consumer alert stories in the local media, but it is just the tip of the iceberg. So many of the “new” homes in our neck of Tampa Bay have been built with unskilled, illegal workers. Get the idea of workers swarming over a house, randomly hammering away without any rhyme or reason as to what they are nailing. The availability of this so-called “cheap” labor is a large part of what fueled this bubble. Because otherwise the developers and builders would have been forced to proceed at less of a feverish, destructive pace. I think we’re going to find, especially here in Florida, that in the end, this supposedly “cheap” labor will end up costing far more in uninhabitable housing, lawsuits, stress, etc.
nd that is the fallout from the truly lousy construction on these “new” homes.
Yes! I’ve mentioned this, too.
Flippers don’t give a darn about quality of their home construction (or a crazy CC&R/HOA). They just want a nice looking countertop.
I think in a few years, people looking for homes on the secondary market (i.e., used homes) will avoid those built during the bubble years!
EXACTLY, Reuven. The concept of a “new” home in Florida should conjure up mental images of a Halloween Horror House. (LOL, what a great theme for a Halloween thread on this blog…vote for the best “Horror House”.) What’s even worse is that most of these places pass inspection!!!!! Who the hell is inspecting them? I would advise any person contemplating the purchase of a home in Florida at this time to get some serious counselling first and then, if they absolutely must do it, avoid like the plague any home built after the year 2000.
to add on the Florida stories & poor new construction …recently had the story of the man electrocuted in his new home due to bad wiring from the sub-contractor and there are the lawsuits against Lennar for poor construction. Just the tip of the iceberg!
On his daughter’s birthday at that.
That is f-d up.
palmetto said . . .
‘EXACTLY, Reuven. The concept of a “new” home in Florida should conjure up mental images of a Halloween Horror House. (LOL, what a great theme for a Halloween thread on this blog…vote for the best “Horror House”.) What’s even worse is that most of these places pass inspection!!!!! Who the hell is inspecting them? I would advise any person contemplating the purchase of a home in Florida at this time to get some serious counselling first and then, if they absolutely must do it, avoid like the plague any home built after the year 2000′
I’ll tell you who is inspecting them: the builders themselves. It was recently reported on the news that because there is so much construction going on in Florida, there are not enough inspectors to handle the increase, so the State is now allowing developers and builders to hire their own “inspectors.”
Where else, but in some Third World country, would be this be allowed?
“I think in a few years, people looking for homes on the secondary market (i.e., used homes) will avoid those built during the bubble years!”
If this is so, won’t this create fewer homes, therefore higher demand and higher prices for the homes that were not built during the frenzy?
When I am ready to buy, I will not buy anything built from 2003 to 2007. It’s all shoddy!!
I owned a house built in 1773 and had less trouble and work than a good number of friends who bought new or nearly new homes built in the 1990s or early 2000s.
I agree. Anyone can qualify for a “million dollar mortgage” these days. It’s probably 5 Mil and up that will be unaffected.
You want to get to the range where few people financed anyway….a lot of people bought multi-million dollar houses in FL as a way of protecting some money against judgements, divorce, etc, in California….
I agree. In the 1991-94 down turn in Naples, listed prices for million dollar and up homes fell around 30-35% in high end areas like Port Royal and Aqualaine Shores. This is going to be worse this time.
the million plus homes are going to be the biggest bust of all time. Many of these folks actually had down payments from 20 to 40%. In San Mateo, Calif
their are miles of million+ homes, as if everybody and his brother can somehow trade up and buy. I know of several people that purchased homes in 2000 for 1.8
million to 2.0 million and have been trying to sell them for the last 3 years. NO offers!!!!
Also, Ryland Homes cleared out a big plot of land near my Florida land. Their website talked about “Oasis Cove” townhouses going up there.
Now their website has removed all traces of “Oasis Cove”! I can find it in google cache, but they’re not talking about it any more. (This is Orange County, FL, just north of WDW.)
Palm Beach Post again. LOL. Porn for bubble sitters.
“Porn for bubble sitters.”
Rumor has it Congressman Mark Foley will be writing a column.
TxChick,
Totally true, I love the PB Post (I subscribe because I love their insight into this market). I think this blog is more like the “porn” though. I can’t get away from it, there are so many stories, so many good comments/field reports. Its educational, interesting and simulating at the same time. Much like porn.
Sorry, I had to do that.
any browardites out there with some firsthand data on current selling prices in palm aire?
(i hope not to be a seller for a very long time on a fully paid off property in palm aire, which is a non-gated, but huge and very nice development west of i-95 near fort lauderdale, pompano beach. i sure don’t intend to be buying anything in florida — at least not for the next 15 years or so….)
i think florida is going down — in the bubbliest areas by a good 60-70%. but i’m wondering if anything, even the most established communities, will only lose 30-40% of their peak value!
I have a family member who lives in Palm Aire. Pretty nice area, good location.
To answer your question, I would be suprised if older communities are hit as hard as new ones. Because the price did not bubble out of control there as much (not that many sold, most likely) people are likely not expecting 100% returns anyway.
I would say your numbers are about right, 30-40% off in older communities would seem about right. The price did not rocket as high, so, in percentage terms, will not fall as far.
manhattan, I remember palm aire from when I used to live in that area, not a bad development, actually quite nice. As to losing value, with the way Florida has been double-whammied by the insurance and taxes, especially in South Florida, 30-40% loss from peak might be optimistic. If I owned something here in Florida, especially if it was fully paid for, I’d be dropping the price to where a buyer just couldn’t refuse. Reason? We are really in for some VERY tough times. Think it is bad now? Wait until after the elections. Neither candidate has any clue about how to get anything done, so expect conditions to worsen. Plus, since Bush’s Saudi buddies have been artificially holding oil prices down in advance of the elections, buyers will be even scarcer when prices at the pump skyrocket afterwards. Now, add to this scenario the overwhelming illegal immigrant population that will be or are being laid off due to the housing bust. It is not a pretty picture. Florida will be good for little else but a haven for retired Congressional reps looking for some underage keester-poking.
thanks, mike. i hope you are right.
thanks, palm. i’ve also got a real 1926 kind of feeling about florida….
“We are really in for some VERY tough times. Think it is bad now? Wait until after the elections.”
but it’s ultimately a good HURRICANE that truly finishes off every florida r.e. boom. and with the latest ‘innovations’ of mcmodern slipshod construction… and vast tracts of UNOCCUPIED mcshacks, florida r.e will be scattered like matchsticks in the wind. it’s just a matter of time. and unlike land, there really is plenty of time.
There is plenty of land too..
That’s the biggest myth of the RE bubble, I really believe that. Running out of land?
About 2 blocks from my front door, there is an empty (totally empty, no houses, just grass/dirt) city block. This is in the “best”, “most desierable” area in West Palm Beach (CityPlace). No land my a@@.
There is so much land in S. Fl, is like an ocean of lots down here. Yes, all the beachfront is developed. Go 3-4 blocks back, and you will find land (it will have a trailer/dump on it; and have a million dollar price tag, but land is there).
No land is NYC; where you have to knock down a nice building to put a nicer building there. This country has so much land we don’t know what to do with it all. And that includes all the bubble areas, imho.
There is plenty of land too..
That’s the biggest myth of the RE bubble, I really believe that. Running out of land?
About 2 blocks from my front door, there is an empty (totally empty, no houses, just grass/dirt) city block. This is in the “best”, “most desierable” area in West Palm Beach (CityPlace). No land my a@@.
There is so much land in S. Fl, is like an ocean of lots down here. Yes, all the beachfront is developed. Go 3-4 blocks back, and you will find land (it will have a trailer/dump on it; and have a million dollar price tag, but land is there).
No land is NYC; where you have to knock down a nice building to put a nicer building there. This country has so much land we don’t know what to do with it all. And that includes all the bubble areas, imho.
“No land is NYC; where you have to knock down a nice building to put a nicer building there.”
but the 4 story nice building is replaced by a 40 story nicer building. ‘no more land in nyc’ is as much a myth in manhattan as in s. florida.
p.s. mike, i was being tongue-in-cheek w/my comment about plenty of land and time….
Sorry if I took that too seriously.
But I agree, the no land thing really does not hold up anywhere. My point is that when you have to knock down a nice building to put up a nicer one, that’s going to push up costs. We have lots of grass here in S. Fl, in the hottest neighborhoods. People are telling me (RE agents) that there is no more land, and we are standing in an empty lot while having the conversation. Its just nuts.
I agree, no land holds up nowhere; because of high rise buildings, you don’t need land to make more units.
I don’t think anyone will disagree that you can get all the grass you want in South Florida!
Oil inventories have been way above “norm” for over a year now. The idea that Bush’s “buddies” have been toying with the market is silly.
Oil prices have been “gamed” yes, but largely by speculators over the last two years. There is only so long as supply can exceed demand in ANY asset class before prices begin to fall. I’d have thought someone who checks out this “bubble” site would understand as much.
Go to the site below, scroll down to the inventory chart on the left for oil. Supplies have exceed the norm range by 10% or more for over a year.
http://tonto.eia.doe.gov/oog/info/twip/twip.asp
” The idea that Bush’s “buddies” have been toying with the market is silly.”
the only question about this statement is whether the saudis continue to have adequate supply to manipulate the market. i don’t think that there is any debate that for the past 30 years or so, the saudis ABSOLUTELY have had the ability to manipulate the mkt by controlling supply. the real question, considering the current supply excess, is: 1) is this temporary glut caused by economic contraction, and will prices spike when demand returns? 2) is it a temporary anomaly that the saudis can no longer control supply, i.e., are we actually experiencing the first pangs of peak oil?
as to bush’s buddies…? why get personal!
“The idea that Bush’s “buddies” have been toying with the market is silly.”
Well, nanny, nanny, boo-boo, aren’t we just so drippingly superior? Prince Bandar did indeed recently promise Bush that his cabal could do something about oil in advance of the election. Try google, if you are not too superior to use it.
“as to bush’s buddies…? why get personal! ”
Why not? That’s what they are, his buddies. Sorry, I just couldn’t come up with a politically correct term on the spur of the moment.
yes, palm, of course they are his buddies. and they’ll help him if they can. but i’m more concerned with whether and how long they can continue to do so — how much and how fast can they pump?
Manhattan, I share that concern and my take is, we’ll see gas prices held down until after the election and then the party is over and we’ll see some real pain at the pump and in our power bills. This will affect Florida in a very big way and I have felt for some time now that Florida has been on Bush life support, due to Jeb being governor. I think if he hadn’t been governor all these years, Florida would have been toast a long time ago. If, six months after the election, this state is not an even worse disaster than it is now, I promise I will eat a huge, huge plate of crow. But I have a huge feeling of foreboding.
While I think that prices will drop, I think that at 40% drop in prices of South Florida homes in established neighborhoods would result in a sales volume of almost nothing. I would think that of all these type of houses in South Florida (not just the ones for sale), a very small percentage are owned by people who would (and more importantly have enough equity to) sell their houses at those prices. Now if the price of houses in every other area someone from South Florida might want to move into also drop 40%, I can see it.
“I would think that of all these type of houses in South Florida (not just the ones for sale), a very small percentage are owned by people who would (and more importantly have enough equity to) sell their houses at those prices.”
the marginal transaction (that rare 100% equity owner) sets the comps. one or two such sales — and there goes the neighborhood. no?
as to your 2nd point, about prices dropping similarly everywhere else the seller might move to, i think this is a very likely scenario. the more i hang out on this blog, the more i consider a 40% AVERAGE drop (over the next 5-8 years) to seem like a reasonable scenario. yes, in the LESS bubbly areas: -40%!
I think people may think that the average family home in an established South Florida neighborhood had tripled in price over the past 5 years, but that’s just not true. I can only speak for South Palm Beach county - Boca-Delray-Boynton. Of neighborhoods more than 10 years old, with 3-4-5 bedroom single family homes. These houses average maybe $650,000. Five years ago they were probably about $400,0000. If they lose 40% they’d be down to $390,000. I think there were a lot of $100K houses that went to $300K, but except for the one’s on the water (and that’s a small percentage), $400K homes never got anywhere near $1.2 Million.
I have a Browardite friend still drinking deeply of the Kool-aid down there but I doubt he’d be of much help. If I told you his current rationale, you’d spit up on your keyboard, so I’ll save you the $20 for a new one.
i’ve learned to keep a good distance from my keyboard when perusing ben’s blog!
Since I’m at work, tell away
“Broker Len Ross called the leap in vacant homes ‘puzzling.’”
Here’s an astute, informed, REALTORtm, that you’d want to represent you in a real estate transaction.
“The number of vacant housing units in the state increased 33 percent, to 291,957.”
———————————————————————-
I can barely keep up with taking care of my modest home, and I live here. Who is going to cut the grass and wash the windows on all those empty homes? Solution comes to mind: illegal aliens.
“Moffett thinks the problem with association reports is that they include all sales in Palm Beach County, including the $1 million-plus ones. ‘It disguises what the true price is doing,’ Moffett says. ‘The over-a-million-dollar market is not affected by the economy and should be looked at separately from other real estate sales.’”
He’s right! But why stop there? Why not just release the spreadsheet of sales? This is the computer age, so stop telling me how to break the data; I’ll take the raw data and process it myself.
And don’t forget those sq ft numbers in the spreadsheet.
Anyone with updates from West Palm Beach? Hows the market there?
The market is D.O.A. We have roughly a 24 month supply of homes with more supply in the pipeline. Taxes and insurance premiums are screaming higher adding more problems. The neighborhoods look like there is an election going on. ReMax is running against Centurary 21 with FSBO as the independent candidate. You can’t walk 10 feet without tripping over a For Sale or For Rent sign. Foreclosures were up 226% YOY in August and up 50% from July-August 2006. The ARMs are just starting to reset so it is reasonable to think the forclosures will only get worse. Ultimately, I wouldn’t look to buy until 2010 in the WPB area.
Other than all of that, things are great!!!
“The neighborhoods look like there is an election going on. ReMax is running against Centurary 21 with FSBO as the independent candidate.”
LOL!
http://iprecom.tempdomainname.com/trendg/index.htm
Latest #’s from PB county 8/06 showed about 23000 units for sale with about 600 or so actually sold.. 36 month supply. One year ago 8/05 there were 7700 units for sale and about 1800 sold - 4.3 month supply.
Average days on the market rose to 109 from 101 a month ago while the median price of a house sold went from $312,000 to $295,000 in 1 month 5% +
Average price for sale dropped from $553,000 to $548,000 and average price sold went from $424,000 to $401,000 in 1 month.
IT would appear that the depreciation is accelerating.
Notorious pretty much summed it up.
Its a bloodbath; plain and simple. See my above comments about rent vs buy. That’s a development in Palm Beach Gardens (about 15 miles from downtown West Palm Beach, and in the “rich” area that’s not beachfront).
People are scared; for sale signs are everywhere. As I mentioned above, I typically drive into a development and just park, there are so many homes for sale there is not reason to drive from one driveway to another.
West Palm, in particular, has many, many cancelled condo projects. The taxes are crazy; the city is building a new city hall building for 200 million dollars (wonder where they got all that money?). The downtown district in WPB is dying, mostly because everything is SO high end (20 dollar drinks; 300 dollar jeans; etc) and also because nobody lives here (many businesses assumed they would have a “captive” audience of ~2000 people living right next to them; that never happened because most of the units are empty/for sale).
Bar traffic is average; restarunt traffic feels a little light. Store traffic feels like it fell off a cliff; shopping in higher end stores (Lucky/Juicy/etc) you could be by yourself for hours.
Let’s see… Not much else comes to mind; if you want to know anything in particular just let me know. I know between myself and the other S. Fl people we can get an answer for you.
In general, if feels like a meltdown.
Just a small detail:[This is happening all over]
A big double townhouse has just been sold. The identical units where sold for:
2947 shipping ave. 759K2949 shipping ave. 697k
zip 33133
These where bought at preconstruction purchases way back (at least a year) but are registered as sold in September 2006 and reported as such in all statistics.
“There are three kinds of lies: lies, damned lies and statistics.”
- Autobiography of Mark Twain
good yuks in the Palm Beach article for those who didn’t click on the link:
“Speculator/investor demand has abated, Lawler said, and they are now selling what he called their “silent inventory.” Housing affordability is at 15- to 25-year lows, Lawler also said.
As dessert was served, Lawler put up a slide that read, “Other Signs We Should have Heeded.” Here are a couple of them:
• Jake Gyllenhaal: Starred in 2001’s Bubble Boy; in 2005, starred in Brokeback Mountain. “I wish I knew how to quit you,” he said in that movie, probably referring to a spec condo he bought a year ago.
• Jamie Westenhiser: May 2005 Playboy Playmate of the Month, announced in that edition she was ending her modeling career to begin a career investing in real estate.
Lawler also quoted Seinfeld’s George Costanza: “Can you, uh, go in the bubble?” from the famous “Bubble Boy” episode.
Lawler, former senior vice president for risk policy at Fannie Mae and now head of his own housing consulting firm in Vienna, Va., is also an occasional Real Deal blogger.
Jamie Westenhiser
Yeah, I would buy a house from her, I don’t care how much it cost!
Maybe that’s the new model; buy a overpriced POS, get a night with a Playboy bunny. At least I would feel like I got something for my money then.
And he has posted here.
Particularly the links to his presentation at the NAHB conference which was quite bearish!
• Jake Gyllenhaal: Starred in 2001’s Bubble Boy; in 2005, starred in Brokeback Mountain. “I wish I knew how to quit you,” he said in that movie, probably referring to a spec condo he bought a year ago.
OT, but I saw this Gyllenhaalesque subway advertisement when visiting NY in April, and found it pretty funny. Someone else’s photo.
http://flickr.com/photos/sayanything/129457590/
http://www.naplesnews.com/news/2006/oct/01/prices_stabilize_market_falters/?housing
I drove by a for sale sign on a dry lot in NE Cape Coral today, The price was 29K. Thats 46K less than it was 18 months ago, which is 60% off. The panic selling has begun. Don’t let anyone tell you otherwise.
This is what I’ve figured. I’m up here in Jersey but down that way a few times a year. The only info I can get is online. I’d love to see what’s going on on the ground. Thanks for the update.
I met a guy down in Marco that’s friends with my sister’s family. He made it big down there about a 2 years ago that flipping houses. Moved his family down and everything and started flipping properties in Cape Coral and the Rotunda. He said that’s where all the action moved to. I wouldn’t be surprised if he had to move back up north. He probably used the ‘equity’ in the place he bought in Marco to buy those props in Cape Coral. He did this fulltime. Definite Kool-Aid drinker. Almost got me hooked, then I started doing research about 18 months ago and found sites like this and did a complete 180.
They still need to come down. Wasn’t that long ago they were $10k- $20k. I remember lots on Pine Island going for $5k about 6 years ago. Still not a lot of development there either.
‘Boca realtor Alex Alpern feels that the current market slowdown has been given too much negative spin by the media. ‘It’s obvious that homes were selling at a frenetic pace for the past five years. Now, an adjustment is taking place,’ Alpern said. ‘It’s a natural part of the cycle.’
Its a natural part of the cycle to give back the last two years appreciation. Gee, where does that leave us?
Seriously. I can’t wait to see what things will look like in 2 or 3 years. I’d love to buy an inexpenisve place down there in a few years. My parents live down there part-time, so I’m familiar enough with the area and what’s happened over the years. Totally unsustainable. 2 years ago I was in the Ft. Myers airport and overheard a number of conversations by people from Europe and all over the country that were flocking there to scoop properties up. Total bubble.
That is an interesting tidbit!
I like the comparison to CA too. As if CA is going to levitate forever, therefore so will SW FL. Yeah, ok. I think FL will return to a backwater over the next 10 years. Places like Naples will slowly turn into Miami, just a dump with a few nice houses and the rest slums filled with illegals. FL seems to have a history of boom-bust poverty. 20 years ago Ft. Myers and Tampa were places you definitely didn’t want to go at night or day.
I’m not used to saying nice things about Miami, but calling it “a dump with a few nice houses and the rest slums filled with illegals” is way off. Have you been to Coral Gables, or Coconut Grove, or Miami Beach, or Pinecrest, or Miami Springs, or Miami Shores, etc., etc.? And while the prices are certainly out of whack, Naples is beautiful.
Yes, I have been there. Particularly 20 years ago it was a real dump. Then this boom made it more fashionable for awhile. It’ll become a dump again. Naples will have more dumpy areas in the future. That will get run down too. Boom bust cycles do that. 20 years from now, Naples will have a significantly sized run-down area. Right now it’s only Gold Gate Estates and some neighborhoods east of 41 south of the airport. There’s some others around there, but those come to mind right away. Naples will get it wish, plentyof afforable housing. Ever been there? Seems like everytime I go there there’s more worker-bee Mexicans and whatnot in the area
Coral Gables, Coconut Grove, and Pinecrest were real dumps 20 years ago? Wrong. And the area you refer to isn’t Naples, that’s East Naples. I was in Naples a month ago, didn’t notice any slums. I’m not saying there aren’t crappy parts of any city, but to say that Miami is, and Naples will eventually be, mostly slums is totally untrue.
My brother-in-law has lived there for 30 years. Grew up in Miami, even he admits Miami ain’t all that. Knowing how bubble work, Naples will be hit with strife for sure.
When I say dump, I’m not talking Camden, NJ style dump, but Miami isn’t all that. I sure as hell wouldn’t want to live there. Just like I wouldn’t take a place in Wildwood, NJ if you gave it to me but I had to live there. Wildwood NJ is not ‘the shore’ that people really like, unless you’re from S. Philly. In which case it’s just like having Pasayunk
Ave. teleported to the Jersey shore for maximum enjoyment.
If you missed the run down scary parts of Naples you probably just stuck to 41. East Naples has some scary neighborhoods, yes. There’s also a whole area south west of Tin City that aint too cool either. Then there’s plenty of little neighborhoods down off of Henderson Drive near the Conservatory. Then there’s lots of little neighborhoods just south of 951 and all along the east side of 41 between 951 and Rattlesnake, but not Leyly. Who’d of thunk trailers (literally trailers) on stilts on Goodland would go for $400k. You’ve gotta be kidding me. Neat area, in a Southern Man kind of way. I’d definitely own a gun or two if I lived there though. $400k for homes in an area that looks like a tropical Woodbine, NJ. (believe me, Woodbine is not desirable). And in all this time hasn’t even been fixed up at even a little, just the prices go up because of excess M3.
Even giving back the last two years and we’re down 40% in Naples.
I believe home prices in Florida have fallen down more than what some people would like us to believe. In an oceanfront condominium in Daytona Beach where my friend lives, a 2-BR unit that would have fetched a price of close to $400,000 last year sold for $285,000. We met the new owner, and he was ecstatic that the so-called boom is over.
Sales in the adjacent condos are way down too, and this trend is bound to continue until those who bought them for speculation or old owners still wishing to cash in on suckers get their prices down realistically. A lot of new condos are unoccupied, and “resales” are being widely advertised. The ugly reality is now dawning on a lot of people that the frenzied buying that took place over the past few years was fueled, in large part, by speculation. Some developers too will be losing their shirts as these speculators find out they cannot afford those mortages and taxes, and will be marching to join hundreds who would be under foreclosure. Real-estate scams in Florida just keep repeating themselves!
A condo like that should be about $85k if it’s not oceanfront. Ocean-front, maybe $130k, tops. Christ, it’s an effing box for godsake.
Is all of this going to be the beginning of even more time-shares nobody wants. I haven’t heard much about times-shares recently. They seemed to be a thing of the late 80s right around the time of that RE bust. I suspect time-shares came about through people who couldn’t sell their property to one person, so they devised a way to sell it to multiple people. Still, there’s not enough people to take care of all these POS, but I’m sure timesharing will come back in vogue for awhile.
While I agree people will *try* to sell their units as timeshares…
Why buy one when full condos will be so cheap in two years. There are more condos under construction than can be absorbed in 5 years (10 years in localized markets).
To think, we don’t hit the peak depreciation rate until 2Q2007… (or maybe a little later…)
Neil
Neil: I know you’ve been claiming that 2Q2007 will be the peak depreciation rate. I think that it’s as good a guess as any for the time frame, but I was wondering if you were basing that on any particular info or if that is just your best estimate?
I’m thinking it may even be hard for a lot of people to come up with even enough money to buy these places at a discount. A situaton like that would definitely support time-share action. Seems like back in the 80s people were strapped for cash. A vacation was expensive no less cominng up with enough cash to buy a vacation home on the cheap by yourself. I think time-shares will happen again, so basically they’ll be some time-shares and a lot of empty places. I wouldn’t be surprised if back in the 80s there were plenty of time-shares condos as well as plenty of vacant condos in the same building.
Andy, reports last week of foreclosures showed that 1/3 of those are time shares. The only place I know where time shares have been successful is Orlando, what with all those theme parks. David Siegel, the time share king of Florida, is now building a 90,000 square-foot mansion to replace the one he and his family now occupy - a 45-,000 sq. ft. house in Isleworth, where Shaquille O’neal, Grant Hill and those pampered athletes have all built their humongous houses.
Time shares in Daytona Beach are not selling at all. After the initial enthusiasm, buyers (almost always from out of state),
find out about the mortgages, the taxes, and the maintenance fees. The money to buy these time-share units is not worth it,
never mind the developers sell them fantasies that disappear like bubbles.
This is a time for all Americans to restore their sense of balance and sanity. It’s long overdue.
I can’t believe people are still involved in that crap. I can believe it though.
Foreclosing on timeshares! WOW!
Speaking of FL, WCI Just warned:
Homebuilder WCI Communities Inc. (WCI.N: Quote, Profile, Research) warned on Tuesday that its third-quarter earnings would fall “significantly” short of estimates as it writes off some costs and orders for new homes fall some 80 percent.
WCI said the write-off of about $13 million of costs associated with land options which were terminated will trim about 18 cents a share from its quarterly profit.
The company, which said it still expects to report a profit, previously forecast earnings of 52 cents a share for the quarter. Wall Street analysts, on average, expected the company to earn 54 cents a share.
“With the current slowdown in demand, we believe we own sufficient land to support our operations through the foreseeable future. We have concluded that it is more prudent at this juncture to apply our cash flow from operations primarily toward debt reduction and stock repurchases.” Jerry Starkey, WCI’s chief executive, said in a statement.
Andy,
Your comments totally ring true. I’m from Philly, and I lived/worked in Tampa most of the ’90s. I always described it as Camden w/ palm trees. You couldn’t go outside w/o tripping over streetwalkers. South Tampa was a little better, but overall was highly overrated. I rented a bungalow for $280/mo; I see on Zillow some fool bought it for $125K. When this market crashes, all bets are off. By way of conclusion, I believe it is likely to play out according to your scenario.
Yeah, that’s agood description, Camden with palm trees.
hah
You get people coming from up north that think “oh wow, Florida!” But the truth is, spend anytime at all there and you realize it’s just another place to live and then you realize it has all the same day to day problems as other places, only worse. Shit, back in the 50s Key West was a real hole apparently according to my Dad. His Dad took family vacations there because it was a cheap fishing hole, nevermind the seedy people. And yet 20 years before that Hemmingway lived in the lap of luxury there, it was the palce to be. You look at the architecture of Tampa and Miami’s crappy areas and you can see that in the 1920s it had a lot of money dumped into it and was the happening place. Same with places like West Philly. I always wondered why there were such mansions in such a shitty place. But then you realize they were all built in the 1920s. 1930s on they were split up and went in the shitter. Same will happen with all these new McMansion developments. Here’s a fairly recent small scale example. Youre from Philly, interested in living in Wilingboro? Hell no. And yet that was built in the 1970s and intended as a nice community, then housing went in the shitter. Same will happen again.
Yeah, that’s agood description, Camden with palm trees.
hah
You get people coming from up north that think “oh wow, Florida!” But the truth is, spend anytime at all there and you realize it’s just another place to live and then you realize it has all the same day to day problems as other places, only worse. Shit, back in the 50s Key West was a real hole apparently according to my Dad. His Dad took family vacations there because it was a cheap fishing hole, nevermind the seedy people. And yet 20 years before that Hemmingway lived in the lap of luxury there, it was the palce to be. You look at the architecture of Tampa and Miami’s crappy areas and you can see that in the 1920s it had a lot of money dumped into it and was the happening place. Same with places like West Philly. I always wondered why there were such mansions in such a shitty place. But then you realize they were all built in the 1920s. 1930s on they were split up and went in the shitter. Same will happen with all these new McMansion developments. Here’s a fairly recent small scale example. Youre from Philly, interested in living in Wilingboro? Hell no. And yet that was built in the 1970s and intended as a nice community, then housing went in the shitter.