“Supply Will Continue To Overwhelm Demand” In Florida
The News Press from Florida. “Don’t expect Lee County’s residential real estate market to start recovering until the third quarter of 2008, real estate broker Frank D’Alessandro told a business group Thursday. ‘Supply will continue to overwhelm demand,’ said D’Alessandro.”
“He told the general membership of the Greater Fort Myers Chamber of Commerce that there’s a huge overload of single-family houses on the market: 12,654 listed for sale at a median price of $324,900, 23 percent more than the median sales price of $264,100.”
“There are also 7,819 condominiums for sale at a median price of $319,900, 35 percent over the median sales price of $237,500. ‘Right now there are 15 to 16 homes per buyer’ compared to about two buyers per home a year ago, D’Alessandro said.”
“The bottom line: even if builders stopped building in the county completely, it would take 22 months to absorb the excess housing.”
“But construction is still continuing at levels that probably aren’t justified by the market, D’Alessandro said, noting that in September there were 746 single-family home permits issued even though it’s extremely hard to justify putting up new houses with the glut of existing ones.”
“Jim Thomas, VP of Marco Community Bank, said that blunt assessments such as D’Alessandro’s comments could actually spur a quicker recovery by persuading sellers to come down to more realistic levels. ‘The sooner people do that, the better,’ he said.”
“D’Alessandro’s comments clearly had an effect on the audience, however, said Pascual Armand, project manager for a condo conversion project. ‘You can see how one person’s view can change the mindset of a whole room full of professionals.’”
“Lou Presutti of LK Graphic Design in Fort Myers said he’s a pragmatist. ‘I’m positive but we still have to watch our dollars and ride it out. You can’t be scared.’”
The Palm Beach Post. “Speculators hoping to flip their two-bedroom, two-bath slice of Palm Beach County condo heaven for a fast buck are feeling the pinch. ‘People would buy properties thinking they could rent them for what they pay for their mortgage and the world would be good,’ says real estate agent ‘Uncle Bob’ Hansen.”
“Many can’t, though. Take the two-bedroom, two-bath condo on Executive Center Drive in West Palm Beach that sold for $231,000 this month. With an 8 percent mortgage on a $200,000 note, the monthly bill on a 30-year note would be to about $1,467.”
“That’s a few hundred more than the average rental rate in Palm Beach County, and does not include $4,642 a year in property taxes, much less association fees or insurance. The unit rents for less than $1,000 a month.”
“Owners can shoulder some of the gap, but (analyst) Jack McCabe asks: ‘How long can that last?’”
“Condo owners already groaning under the weight of their investments may facing some new and formidable competition. Now that national apartment firms don’t have to compete with condo developers for land, they are starting to rethink building in South Florida, says Jeff Chamberlin, (who) develops multifamily projects. ‘We are just starting to hear rumblings,’ he said.”
“The number of empty apartments may be rising, too. There are some unexpected deals. ‘You can get a two-bedroom, two-bath for $1,100 now, which this time last year you could not have touched for $1,200 or $1,300,’ says Hansen,. Or better: Hansen’s list of lease options includes a two-story, 5,000-square-foot Wellington home for $2,000 a month.”
“McCabe recently came across an apartment complex offering two months of free rent, an incentive he said he hadn’t seen offered in ‘well over a year.’”
Long time readers may remember this house:
‘The bright-red 12-foot “4-Sale” sign is gone from Bruce Sparks’ Belleair Beach roof. Also gone: the threat of a $250 daily fine for violating the city’s sign ordinance. Sparks repainted his roof white Tuesday, just before the city’s Code Enforcement Board met to decide what to do about his sign, which was intended as an ‘attention getter’ for people willing to pay $1.6-million for the waterfront property.’
The Orlando realtors also report lots of inventory, but their numbers never seem to add up:
‘Year-to-date sales of homes — 21,617 — in the Orlando area have dipped below 2005’s red-hot record-breaking market. So far this year, 59,707 homes have gone on the market, compared to 33,730 this time in 2005. The inventory of homes dropped by 3.3 percent — or 758 homes — from August to September for a total of 20,319 homes currently on the market.’
‘The Monster Local Employment Index for Tampa Bay fell three points to a level of 103 in September. The latest numbers demonstrate a softening in online recruitment activity at the end of the third quarter, Monster officials said. The decline was broad-based, reflecting elevated demand at the peak of the housing boom last year. Protective service tops the list of fastest-growing categories over the year, followed by food preparation and serving related; and computer and mathematical occupations.’
‘However, several categories have actually dipped yearly, including construction and extraction, and building, grounds cleaning and maintenance, underscoring the impact of the cooling housing market on local employer demand.’
A letter to the editor: ‘A developer dropping the Murdock Village project is one visible symptom of a deepening disease. Stock Development cited ‘market conditions’ as the reason for dropping out. In reality, the taxes are so high that businesses and homebuyers won’t buy into the project.’ ‘CNN and USA Today have reported that Lee, Charlotte, and surrounding counties have experienced the most severe drops in property values, with the most increases in property taxes! The nation is learning what residents and business owners already know. Moving to this area isn’t advisable.’ ‘We’re shooting ourselves in the foot. The consequences are evident: Every resident is watching his or her home value drop..We’re losing our future tax base…Businesses are leaving; prices for products and services are increasing…The disparity in taxes is causing neighbors to be resentful of each other..Unemployment, loan defaults, foreclosures, crime rates and general stress levels are rising..People are trapped in their homes while being bombarded with these taxes.’
The consequences are evident: Every resident is watching his or her home value drop..We’re losing our future tax base…Businesses are leaving; prices for products and services are increasing…The disparity in taxes is causing neighbors to be resentful of each other..Unemployment, loan defaults, foreclosures, crime rates and general stress levels are rising..People are trapped in their homes while being bombarded with these taxes.’
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Nice Summary!
Welcome to the dark side of mania; all hell is breaking lose; there are signs of burgeoning pandemonium in neighborhoods all over town; mayhem.. pain.. suffering.. carnage.. they all took up residences here in FL…. Muuuu!meeee!
telling the truth. every store in boca needs help and needs help bad. with the snowbirds coming in, the service industry will be stressed to the max. there will be a point where the rich folks will realize that money doesn’t matter if no one is cooking your food, cutting your grass and selling you some clothes.
and this is just the beginning in south florida!
Is there a more odious place in the U.S. than Boca? I don’t think so.
Here’s where supply vs. demand kicks in, in the general employment sector as well as in housing. There’s no shortage of willing workers in Florida. But why work for a crappy wage that won’t pay a person’s basic expenses anymore? Seems like the employers are just as stubborn as real estate sellers. Won’t up the wage to attract workers, or offer some “incentives”, like benefits. In a sense, what employers are experiencing is a strike of sorts. The solution? Illegal labor from other countries selling cheap crappy goods from China.
Frankly,
I could care less if all of the damn snowbirds never came down again. They are rude, pushy, and complain about everything. Plus they drive like idiots.
It will be interesting to see if there is a decrease in the migration of the flock this year. A small part of my business depends on snowbirds, but I could sustain the hit if this segment of business fell off.
BigDaddy , my parents are snowbirds and I know what ya mean though about the driving. I would go down to visit them and Boy! , you take your life in your hands with all the little blue-haired biddies and 4′ 7″ superseniors. They seem not to actually ‘drive’ the car , so much as just ‘point’ it in one direction , until it starts to veer into something , and then correct the tac and repoint. Over and over again. As they peer through the steering wheel.
We’d go to Denny’s or whatever (like every other soul there) for the early bird special (natch). When it ended at 6 o’clock , dozens of the Silver Panthers would flow out into the parking lot. Thing is , they all drive dark Lincoln town cars that look the same , and they were all tought the same trick by their kids of clicking the the alarm button on the keychain to try and locate their car. So you’d have this tidal wave of little old people wondering around the lot amidst blinking and flashing and beeping sounds. The general disorientation of it all was disturbing. Then , when they all located their car , they’d climb on their phone book prop-seats and try and spill out onto A1A at the same time. Chaos! Danger!
That’s why , at all these Denny’s and similar places in FLA , you will find , swept to the side of the road , pretty little piles of clear reflective auto glass .
Welcome to the dark side of mania; all hell is breaking lose; there are signs of burgeoning pandemonium in neighborhoods all over town; mayhem.. pain.. suffering.. carnage..
Cats & Dogs living together..
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“prices for products and services are increasing…”
This will be temporary as the loss of House Money will destroy the demand that has been pushing prices up.
It was the Debt, via House Money, that was driving force behind the cuurent bout of inflation.
Jas Jain
superEasyDebt is the new drug for the masses; it is like financial cocaine… go on masses.. get all high and euphoric.. buy baby buy.. there is more where that came from..
…can you give me another line please!!!
the retirees will save florida, it’s just at much lower prices.
When the snow vultures see their tax bills, and insurance bills this year, the least of their worries will be about the lousy service they are going to get.
They will spark a sell-off of biblical proportions in the spring.
…and the roads and highways under construction will never get finished.
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“Supply Will Continue To Overwhelm Demand” In Florida
And in South Carolina
And in most regions of Californica
And in Arizon
And in Nevada
…
And even in Tejas.
Jas Jain
Unfortunately you are right.
He is right, but I think it’s not so unfortunate: we do want to see a rational market in housing, don’t we? Rationality would consist of reasonable price/wage and price/rent ratios. Those will be achieved only through a protracted period of excess supply and very little demand.
envision that if you can? House prices based on local income ,people actually living in them ,and supporting their community, Teachers, Fire, Police being able to live in the districts they serve, Local govts spending within their means…Coming soon to a town near you..
Reversion to the mean!
Excellent, eastofwest. Like it used to be. Something’s gotta give.
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“Something’s gotta give.”
Yeah, like the American econo-political system. It will not survive the financial devastation caused by the Twin Bubbles. They are going to flatten the American middle-class to less than 10% of the population. The harm has been done and it is too late to reverse.
Jas Jain
The News Press from Florida. “Don’t expect Lee County’s residential real estate market to start recovering until the third quarter of 2008, real estate broker Frank D’Alessandro told a business group Thursday. ‘Supply will continue to overwhelm demand,’ said D’Alessandro.”
Translation: Prices have to fall further to get supply and demand back into balance.
And the supply and demand will not be back in balance until the cost of construction (plus reasonable profit) is more than the price that a builder can receive. Until then, builders will continue to over-build. With the cost of materials, land and labor dropping the downward spiral is just beginning.
Another observation: People are finally waking up to the fact that the downturn will last more than one quarter.
It is one more step closer to the phase of “stay away from housing as an investment”, which is progress.
“start recovering until the third quarter of 2008″ BASED on what?
Here comes all the hot shot real estate “gurus” who missed the projection upturn in 2000, and now have the ability to project the bottom of this downturn. Let’s not quote these goof balls unless they back up their projections with some facts. I study this trend daily, real time in Clark County (Las Vegas) NV, and there is nothing in my crystal balls that gives any clue as to how far down prices will be going, and for how long. Right now, absolutely nothing is selling, NOTHING. The #1 zip code for first time homebuyers in the last 5 years, shows 10 sales since Oct 1…
and the really slow season of December is almost here. I expect bloodbath right after all the XMAS parties, when the water cooler talk will be about all the houses in foreclosure. That will finally get the (m)asses attention
Is it ten or is it nothing?
“….12,654 listed for sale at a median price of $324,900, 23 percent more than the median sales price of $264,100.”
LOL, keep dreaming you hopped up giddy cranks; all the GFs and stupid money is gone… 61,000 above median sales price… GetFrikkinReal!!
That $61K reminds me of the bid/ask spread in the stock market. When it gets very wid things get very interesting. Sombody usually comes out a big loser. In this case it will be the sellers.
Notorious D. A. P,
You called that on the money! It’s called a “sloppy market” where we just can’t seem to define where things should be priced. This is what happens when “bombshell news” gets dropped on a company. We’re all shell shocked and aren’t sure what comes next. This can happen on the upside as well, but in this case…… If at happens at the close it usually annotated by “Trade Imbalance” which is what we have here. This “sloppiness” has had me worried for some time. I think in this case it will occur in stages. Early bottom feeders will get slimed. 2nd wave? Not much better. The 3rd “crater” usually gets it right.
see lots on ebay now
=wow
“Wow” is right. There’s a gulf access property on there going for less than what I got for my freshwater property a year ago. Granted, there’s a boat lock — but still. Gulf access?
Damn. I’m not sure what I’m feeling now — I think it’s almost survivor’s guilt.
Nah, don’t feel guilty. You rule! This could be a renaissance for Florida, after everything shakes out. Cheap Gulf access lots. Whoohoo! Just drag a cheap RV or trailer, or a throwaway tiki hut and live the good life, just like the old days. Don’t forget the fake flamingoes.
It’s Schadenfreude you are feeling — easily confused with survivor’s guilt
“The number of empty apartments may be rising, too. There are some unexpected deals. ‘You can get a two-bedroom, two-bath for $1,100 now, which this time last year you could not have touched for $1,200 or $1,300,’ says Hansen,. Or better: Hansen’s list of lease options includes a two-story, 5,000-square-foot Wellington home for $2,000 a month.”
Yeah… and some are afraid increasing rents will skew the CPI forcing the fed to increase the ffr … Ever heard of substitution pal?
The regions most infested by equity locusts should see the greatest drop in rents. Florida would seem to be a prime candidate.
It will be interesting to see how the Florida rent drop affects the locusts. There could be an effect where increased carrying costs in Florida eventually lead to increased bankruptcies and foreclosures in other states.
emcee,
I think its even worse than you state. Due to declining rents, I do agree it will increase bankruptcies. But what is also happening is that due to certain real estate markets “locking up” and not selling, other regions of the nation are suddenly starved of buyers.
So the real estate market slows nationally. Even areas that are growing economically will have slow home sales. We’ll see transfers from Florida, California, Pheonix, Vegas, DC (et al.) renting as they cannot buy until they sell their previous place.
Auction said it best. This is a blockage that’s going to need a big enema to fix it.
Neil
That’s an interesting question … how severely will the housing implosion affect worker mobility? How will the decrease in mobility affect the greater economy?
There will be some wage pressure on “niche” jobs that relatively few can fill. A company looking to check backgrounds, bankruptcies, etc….oy. Some standards will probably have to be relaxed outside of financial and other critical industries, but a lot of “above the table” employers are going to be very skittish of workers with issues that may translate to garnishments and other stresses impinging on worker productivity. I’m guessing employers will be more interested in how much a candidate has debted lately, no mater how good their FICO, over 3+ year old ancient history. A renter may be considered a whole heck of a lot better risk than someone with a house to sell back home.
Under the best of circumstances, you see families failing to adjust to a relo and so much for that job. I think companies may really scrutinize the situation of an out-of-state candidate.
You’ve got me thinking now. Just one more really good incentive not to be in a hurry to buy? Damn.
Its good to see people thinking. For right now buying is… stupid or worse.
But in a few years, it will be a buying opportunity like we haven’t seen since 1995.
The question is when and will we collectively recognize that time?
Neil
Ps,
I expanded on the geographical lock on a newer thread.
Median price headed down in Tucson:
http://www.azstarnet.com/business/151956
And you can bet your sweet bippy that it will go down even further.
“We’re seeing people dropping their prices in retail and getting back to what was normal,” Strobeck said. “We’re falling back to normality.”
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BAHHAHAHAH! Keep dreaming!
Last year - 1000 retirees were coming to Az.
This year - back to reality?
There has been a steady “de”flux of snowbirds moving to AZ over the last 3 years. That old notion about all the whitehairs moving here is dying. If they come, they rent. They keep the family farm in Iowa…taxes are less and they’ll let the kids worry about it later.
More on “retirees”…
http://biz.yahoo.com/special/retire1010_06_article1.html
Man, I hope none of you guys live in Mt. Airy!
Not all the news is bad, said Paul Olson, president of the Tucson Association of Realtors Multiple Listing Service. Although not yet released, MLS numbers for September will show a decline in the number of new homes listed for sale, Olson said. The figures will be released this week.
“I think it’s a positive thing for sellers, because they’re having a hard time right now with the inventory,” Olson said. “Right now they have so much competition with 9,600 listings that they’re waiting a lot.”
Wait until people realize that even falling inventories don’t help sales. Why? With no speculators, no marginal borrowers and only reasonably strong buyers left, they’ll take their time. Why will “strong” buyers take their time? Because most of them are conservative otherwise they’d have already jumped in having the wherewithal to do so earlier.
No, the prices for sellers won’t get better even with falling inventories because those left with the ability to buy are those with the stongest ability to wait some more and drive a monsterous “bargain”.
Exactly!!!!
I posted on another thread the latest numbers from Palm beach county for September of 2006.
There were about 600 sales and over 22,000 for sale . A three year supply. The number sold from 9/05 went down about 40% and the inventory went up almost 200%. Yikes.
why rent ? in 07 you can squat
pay utilities and offer to paint the place………….
That wasn’t too far off the mark in Detroit in the late 80’s and early 90’s. Code enforcement and renter’s protection laws drove landlords and homeowners to totally walk away from property they owned outright - not foreclosure - total abandonment of non encumbered properties in blighted neighborhoods. Squatters lived in a lot of them, even more turned into cat houses and crack houses. Neighbors and the city were certainly not bothered by squatters as long as they mowed the lawn, and had the tireless cars, parked out front, towed away.
And, yes, the suburbs had a hard time, but not nearly so bad as the city core. Above all other factors that the Kunstler types try to harp on, it’s the character and morals of the people in an area that determine how an area ends up during hard times. If anything, high population density is a liability even in the best of times.
“it’s the character and morals of the people in an area that determine how an area ends up during hard times”
In that case, Washington DC is headed for gulag status.
If anything, high population density is a liability even in the best of times.
Must be why they have so much crime in Tokyo, eh?
Actually even within the US, it’s low density cities like Houston and Miami that have the most crime, not Boston or New York.
The intense heat in an urban setup makes everyone angry, smelly and violent. Imagine a hot, humid August day in Brooklyn - but then imagine that it stays that way for 6-9 months out of the year. Hello downtown Miami.
you saw that in nyc, chicago and most major northern cities. now you see it in new subdivsions in south florida. go by bellaire boca (441 south of palmetto park) hundreds of condos and not one light on. they were selling at 200,000, now they are 190,000. quite stubborn and stupid. there condos all over boca and north broward at 150,000 now. too much inventory.
(i meant that when the snowbirds come back, i wouldnt go to any food joint) it will take an hour to get a happy meal!
There’s a good Florida anecdotal on a recent thread at patrick.net from a poster calling himself John M. I’ve suggested he post it on this blog as well, so this is just a precis.
Apparently he has just bought (at a reduced price I think), and had something like a 75% downpayment. When he was making the arrangements to transfer the money, the bank employee he was dealing with mentioned the house was a couple of blocks from where she lived herself, and asked somewhat nervously whether the amount being transferred was the full purchase price.
Sounds like the psychology is indeed starting to change in some areas.
In reality, the taxes are so high that businesses and homebuyers won’t buy into the project.’ ‘CNN and USA Today have reported that Lee, Charlotte, and surrounding counties have experienced the most severe drops in property values, with the most increases in property taxes! The nation is learning what residents and business owners already know. Moving to this area isn’t advisable.’ ‘We’re shooting ourselves in the foot. The consequences are evident: Every resident is watching his or her home value drop..We’re losing our future tax base…Businesses are leaving; prices for products and services are increasing…The disparity in taxes is causing neighbors to be resentful of each other..Unemployment, loan defaults, foreclosures, crime rates and general stress levels are rising..People are trapped in their homes while being bombarded with these taxes.’
The only people in Florida who are being bombarded by property taxes are the fools who bought at the top of the market. In Florida, you are taxed based on what you pay for your home. If these folks did their due diligence, maybe they would have thought twice before making their purchase. I had a conversation last night with someone who was thinking of trading up. They found a home with more space, closer to their POE, priced below comps, only the home was going to cost almost double of the home they were moving out of. This was going to raise their annual RE tax bill from $4,200 to at least $7,900. I think I at least succeeded in making them think before getting too infatuated with this idea.
The folks who have kept their homes 20 years will be paying at least 2 to 3 times less than the ones who they sell their homes to. The only way to remedy this situation is to do away with the Save Our Homes law, and go to a system that taxes you on what your property is worth now. Good luck getting that passed in Florida with all the seniors living here.
Are you kidding me? Due diligence? There was’nt time to do any due diligence. You had to buy right then and there or be priced out forever!
Laws like that do appear to contribute to the RE roller coaster, but they don’t actually stop prices from coming down:LA early 90s.
It is a grossly unfair law. It stagnates the “natural” movement of people by grossly distorting the rent/buy and consumption equation. I know of more than a few seniors who stay in houses they cannot keep up (or even clean) because of the tax subsidy they receive.
Distortions aren’t good for markets and, ultimately, they aren’t good for anyone. If you’re 70 and want to stay in a four bedroom home alone, fine. But don’t expect the rest of society to subsidize that choice by giving you a tax break because of your age.
I like Save Our Homes, until the bubble, it encouraged stability and pride in neighborhoods. Not many complained about it until the recent boom/bust. The biggest complainers right now are the builders/developers.
it is the builders and developers behind the tax protest. any (dumb***) should know that the higher the price of your property, the higher taxes and insurance will be. (everyone in south florida want to rich, based on status but wont pay the price for being rich. =)
Exactly, postman. Many Floridians were gloating over the value of their property and then started crying the blues when they got the double whammy of tax and insurance bills. Although, wanting to be rich while not wanting to pay the price of being rich is nothing new under the run. That’s how the rich try to stay that way. They have the means and clout to pay the least in taxes. Builders and developers are a large business pressure group in Florida. They are pissed as hell about Save Our Homes, because Floridians are now more likely to stay put rather than “move up” to one of their overpriced, underconstructed s**tboxes. I do agree with jag that Save Our Homes is grossly unfair….to the rich and to the builders/developers.
Whether you are “rich” or poor a tax that is based on WHEN something is purchased more than WHAT is purchased is stupid. It subsidizes the KENNEDY’S who’ve happened to own a house in Palm Beach for ages over EVERY OTHER middle or lower class couple. That makes a ton of sense.
Imagine taxing the income’s of people just at the end of the year…with just those STUCK in a state getting taxed and people who happened to leave getting off scott free. Just as dumb. Just as inequitable. Why the current value of property is not taxed (just as the current value of one’s income) is simply a political sop to the elderly (big voters) and long time residents.
Its about as fair a way to raise revenues as the lottery (most of those who play are lower middle class if not poor).
The KENNEDYS! Oh, hell, yeah! I plumb fergot, jag, it’s the damn KENNEDYS to blame for the woes of the po’ folk in Palm Beach. Sure, and Jebbie Bush enforces a law that says families in public housing must be evicted if one of the family members is snagged for drugs. HELLO! Can you say Noelle Bush, his darling druggie daughter? And Jebbie is still in the governor’s mansion, the ultimate in public housing. He shoulda been out on his ass, like every other poor schmoe family that gets evicted under the law. Ooh, I plumb fergot! Jebbie’s going back to the development biz when he finally vacates his pubic housing. Now that IS interesting, all this hoopla about Save Our Homes. Interesting timing.
Rents dropping - A natural response to a severe slowdown in sales and price declines. Those that have been in properties for 5yrs+ and refuse to sell can afford to cut their rental rates to keep their properties rented and still end up with +ve cash flow as their basis is at managable levels. This is another reason the FBs are in a corner as prices decline and they are unable to compete on rent - even if they want to.
Defaults are guaranteed to skyrocket as the FBs panic in the face of a cash crunch with no way out…
I think we have finally reached a point where we are almost at concensus. I am watching Morning Call on CNBC and every other story mentions the slow down in the housing market. Today they are blaming Caterpillar’s problem on the housing market slow down. These financial so called “experts” are the same ones who said there was no bubble 6 months ago. Now you will start to see some things happening-watch out below.
Like the housing market itself, the current response to the bubble has been ‘regional’, as in disconnected parts of the media and financial sectors talking past each other, unable to see the emerging patterns. We seem to be at low boil - lots of problems apparent - but with no single headline event to bring focus. Personally, I’m expecting a major meltdown from a national builder, or the default of a regional bank to snap around the heads of those intent on the slow boiling of frogs.
I think you may be right….and my bet it will be a bank with big problems.
Wells fargo bank had a gang buster quarter from Commercial Loans…the real estate loan guy at my local branch is no longer there. I think Wells is staying a head of the curve, and the borderline buyer won’t be coming to Wells for those I/O loans
The locust bought not even thinking about long term costs like taxes and Insurance . Short term thinking is always different than long term thinking and the locust didn’t think about how the long term users would not be able to afford the taxes and insurance .
‘Right now there are 15 to 16 homes per buyer’ compared to about two buyers per home a year ago, D’Alessandro said.”
My simple math says that inventory has increased by 30 time!
“…even if builders stopped building in the county completely, it would take 22 months to absorb the excess housing.”
And they will not stop building, because it is their livelihood and because they will be able to build and sell at prices that will shock the “entitled” used-home sellers. That is my elephant in the closet — where I plan to buy, I fully expect to be able to build for well less than $400K, in 2008, a house identical in every respect to one that sold for %500K in2005. And I get a warranty, my choice of appointments, etc.
“My simple math says that inventory has increased by 30 time!”
Chip –
Inventory per customer has increased by 30 times. The problem is that as inventory builds, and rumors of potential price declines are substantiated by emerging sales data, buyers have a tendency to disappear.
They can’t stop building in these places b/c they have no choice. Like a mathematical 1 to 1 function, that’s where the lots on a builder’s balance sheet map to. Its iron clad illiquidity and in this environment Illiquidity is a bitc#. No one wants to buy these lots b/c they already have too many on the books and no one wants to admit they have too many on the books b/c their stock prices will get slammed. It’s the mother of all catch 22s. So, they build.
They build and spin half-truths that the market is nearing bottom and will soon climb back to its previous peak…they build and pray that the lender of last resort (FRB) will step in and re-open the liquidity flood gates and rescue the industry.
the new buildings coming up is massive. go to boynton off of congress. hundreds of new property coming in. but the cherry on the top is downtown miami. everywhere there are cranes. the buildup will leave you breathless. that is where the playboys and hot chicks are going. not to broward or pbc. can we say recovery after 2010?
FED cant lower the interest rates soon. At least they should not if they have a grain of IQ. USD would plummet as our creditors (China, Japan, Russia etc) have been dumping dollars steadily for a long time now. Only thing that keeps them coming back is the government papers with high return. With inflation fears mounting up FED can , may be, hold the rates for few more times for the sake of elections and then it is over. Rates go up, excess money supply diminishes, economy slows, inflation goes down and FED people can sleep OK. in the mean time well being common folks or housing are not their priority.
It’s all going down the toilet in Florida even without hurricanes. Imagine if they’d had another season like 2004.
Bill, if we’d had another season like 2004, we might be a lot closer to the bottom right now. Provided there were no loss of life, a repeat hurricane season would have reinforced the reality check that Florida so desperately needs. Right now it’s like having a band-aid peeled off in an agonizingly slow fashion, rather than in one sharp rip. It is going to get so much worse here, people have no idea.
The storms of 2004 and 2005 have really been a boon for the insurance industry in Florida. “The Man from Nationwide” just filed for a 71.5% increase from the state insurance commission. What a riot, these guys!
Nationwide - Greed, Inc.
Just another SOH comment. No one has mentioned the impact it has on first time home buyers. All those people with SOH were at one time first time home buyers. Bet many of you could not be a first time home buyer in todays market. Also, god forbid you were to sell your house for some reason, then you would be whistling a new tune. Also, the impact that it has on landlords needing to drive up rent to cover tax increases.
So it is not just the Rich who are being targeted here.
Dave, I understand your point of view about the impact of Save Our Homes on first time homebuyers. And, I did sell my home at the peak of the market, am happily renting and giving Florida another year to see how things shake out. I’m not whistling a new tune. I want to see Save Our Homes stay just like it is. The issue of taxes will fade as prices come down, although it might take a few years. Taxes come down as values come down. Inflated home prices are the main issue. Now is not the time for people to be buying a home, whether for the first time or for investing or whatever. That’s one of the main points of this blog. As to landlords needing to drive up rent to cover tax increases, they may need to, but they can’t. People won’t pay the increases, that’s why many are moving out of state. Check some of the Florida craigslist rental ads. They are interesting to track over time. Same units, same prices, month after month. Save Our Homes is doing for many people exactly what it was designed to do, allow them to maintain their residence without being taxed out of house and home during crazy times like these. I understand some may want to move and can’t right now, but Save Our Homes is not the reason why. It’s the inflated values and the insane insurance rates. Patience will take care of the inflated values, as to insurance rates, it remains to be seen how that will be remedied.
SOH seems to somewhat prevent an exodus of unseen proportions.