“The Bear Is In The House”: Florida
The Florida press reacts to the home sale numbers. The Palm Beach Post, “Even the most steadfast residential real estate bull is going to have a hard time denying the bear is in the house with Wednesday’s sales report from the Florida Association of Realtors. Now, buyers are calling the shots.”
“The slowdown has caused an astounding 49-month supply of existing homes for sale in Palm Beach County, Regional MLS records show. ‘It’s very frustrating because there aren’t a lot of buyers, and all the negotiating power is on the other side now,’ said Richard Klein, who has had his four-bedroom, three-bath home west of Boca Raton on the market for three months.”
“He has had no serious offers, even though he dropped the price $50,000. ‘The buyers who are out there now are very aggressively looking for tremendous price cuts,’ said Klein’s agent, Barbara Siegel.”
“‘In most neighborhoods where we sell property, the average sales price has dropped more than 20 percent this year,’ said broker Thomas Moffett, whose office sells property in central Palm Beach County.”
The Sun Sentinel. “Palm Beach County existing home sales fell a whopping 53 percent in September. The county’s year-over-year median price dropped $34,500 or 9 percent last month, the Florida Association of Realtors said Wednesday.”
“Mike Larson, an analyst in Jupiter, said that builders are offering $100,000 discounts, one-day sales and other perks, which are helping lower home values across the region. Sellers of existing homes can’t match those incentives, so inventory is piling up. Palm Beach County had nearly 33,000 homes and condos on the market last month, more than double the number from September 2005.”
“A sense of uncertainty continues to grip sellers across Broward County as the housing slump plods on. Prices and sales of existing homes fell again in September. Broward had nearly 40,000 homes and condos on the market last month, more than double the number from last September.”
The Ledger. “Polk County’s home sales fell in September as the market continued its descent back to pre-boom levels. ‘Buyers are being shrewd and patient. They know there’s a lot of inventory out there and are waiting on prices to come down,’ said Marlene Duffy Young, a Realtor in Winter Haven. ‘We also know that we had zealous building and an oversupply of inventory.’”
The Miami Herald. “With the market sluggish, the backlog of homes and condos for sale in Miami-Dade and Broward counties grew in September to 62,000, about 1,800 more than in August, and almost triple the inventory from a year ago.”
“‘Business is one-fifth of what it used to be. There are brokers that don’t have anything to do,’ said broker Esslinger Maxwell.”
The Sun Herald. “Only 206 existing houses were sold in the Punta Gorda metropolitan statistical area in September. This represents a fall of 42 percent from 353 units in September last year. Metro Punta Gorda posted only a moderate decline in median home prices, down 10 percent from September 2005.”
“Sarasota-Bradenton saw volume collapse 33 percent. Meanwhile, the median sales price dipped to $290,000, down 16 percent from September 2005. ‘This data confirms what I already know … it’s not a large surprise,’ said Kristine Wishard, president of the Punta Gorda-Port Charlotte-North Port Association of Realtors.”
“In recent public appearances for the Realtors, Wishard has advocated what she pointedly calls ‘reality based pricing.’”
“Local agents ‘are telling me that when they go out to meet with potential clients, those clients are starting to understand what their property is now worth,’ Wishard said. ‘It’s either fact or fiction. You’re either going to go with a factual price and move your property or play with fiction and the property will sit,’ Wishard said.”
The Herald Tribune. “‘I think the prices have dropped so much that the buyers are realizing there is very good value in the market right now,’ said Steve DuToit, a high-volume real estate agent in Sarasota.”
“Real estate agents in Sarasota-Venice-Englewood closed 436 home deals in September, down 33 percent from a year earlier. The median price on those deals fell to $290,000 from $343,000 a year ago. If generally less-pricey Manatee were thrown into the mix, it would likely have pushed the median sales price lower.”
“Kent and Valley Hayes decided to take advantage of the hot market by building a speculative home. They took out an equity line on their residence to make the down-payment on the $215,000 home.”
“A deal closed this month for $235,000, nearly $30,000 less than they were first looking for. Valley Hayes said it ended up being a loss. ‘We had to pay the commission, and we had a year’s worth of the construction loan, and then eight months of full mortgage payments, plus a home equity line payment, so yeah, we lost a lot. ‘Everywhere you look there are new homes, empty homes for sale. People are getting kind of desperate down here.’”
“Centex Homes’ decision to drop plans for a 10,000-home ‘new town’ beside Palm Beach Gardens has prompted a renewed push for tougher rules to rein in western development. Centex representatives on Wednesday announced they would not renew an option to buy the 4,763-acre Vavrus Ranch.”
“A slowdown in the real estate market prompted Centex to drop out of other projects in Palm Beach County and elsewhere, and on Wednesday Vavrus Ranch was added to that list. Vavrus should stay a cow pasture and the County Commission should ‘rethink’ its plans for Mecca Farms, Palm Beach Gardens City Councilman Eric Jablin said.”
“‘If we are going to develop out west, there needs to be an employment base,’ Palm Beach Gardens Mayor Joseph Russo said. ‘Now all we are going to have is the houses.’”
The Naples News. “Buyers and sellers have until midnight Friday to complete deals resulting from 45 potential sales in a property auction this past weekend in Naples. Naples Area Board of Realtors President Jo Carter said Wednesday her members didn’t object to the idea of an auction, only that the true property values weren’t reflected in the opening price.”
“For instance, Collier County Property Appraiser Abe Skinner’s records show that a Crayton Road proprty has a taxable value of $788,257. Assuming the seller doesn’t reject the high bidder’s offer, someone will walk off with that Moorings home for $660,000, a price that includes the auction house’s 10 percent commission, figures released Wednesday show.”
“At the other end of the spectrum is a home at 539 Rudder Road that was purchased in April 1995 for $180,000; in April 2004 for $535,000; then resold in October 2004 for $809,000. Skinner’s records show the property has a taxable value of $933,269.”
“The top bid, or proposed contract price if the deal goes through, for that house was $671,000, Naples auctioneer Paul Drake said. Drake’s next auction will likely be absolute, not reserve as this one has been, he said Wednesday.”
“The slowdown has caused an astounding 49-month supply of existing homes for sale in Palm Beach County”
49 months!!!LMAO!!
Liereah: It is just a healthy adjustment!
I live in West Palm Beach and it is a complete meltdown. You can’t walk 10 feet without tripping over a For Sale or For Rent sign. The scary thing is there is more supply coming. I had lunch downtown yesterday and there are about 5 more condo towers under construction. Add that to the continuing re-setting of the ARMs and you have a full blown disaster. The numbers don’t show it (yet) but prices have dropped 20% or so the past year and this is with an unemployment rate of under 4%. This proves my point that the run-up in prices was due to speculation and crazy lending and not due to job growth.
DAP,
I posted several months ago that builders will continue to build, regardless of the demand. It is simply not a factor in their equation. They already own the land.
Builders are like sharks. If they stop moving, they die. Builders that stop building are out of business.
Regarding the meltdown that is apparent, not like we didn’t see it coming. Sit back and watch the movie.
IMHO we have another 20-30% to go. Alot of pain here .
I’m guessing another 40-50%.
BigDaddy,
I agree 100% that they will keep building. They have no choice. Like you, I always thought the meltdown was obvious. It was always a question of when it would happen. My prediction of 30% nominal delcines here in PBC might need to be adjusted to 50% now. What a mess.
I agree that they have no choice but to keep building.
The decline in PBC? My old $155k (my buy and sell price, in PBC) home zillowed for $450k. Inflation should have taken that home up to ~$220k. Thus, 50% would be optimistic (assumes no undershoot). I’m thinking that in 3 years it won’t be worth even $200k. And PBC will still be burning off inventory then!!!
Neil
And that’s assuming no more houses come on the market, an assumption I don’t think one can make.
the bad part is that more homes are coming on the market, and the “new money” entertainers are going to miami. there is a new mall off of 39th and biscayne, and it is condo mania. sucks to be a seller of a home in south florida!
Notorious,
I am moving to Evergrene in 45 days (in PB Gardens). If you have some time, take a drive through there. I am renting a 600K (that’s the price they want to sell it for, last sold for 550K) home for 1995 a month, 2200 sq ft, very nice (at least I think so).
Anyway, drive up to the front gate and tell them you are meeting a realtor; they will let you in. Then just drive somewhere and find a home for sale and park. There are some streets in there, where 7 out of 10 homes on the same block are for sale. No reason to get in your car, just walk to the next home and look at it.
Total meltdown is really the only way I can describe it. Where I live now (CityPlace) is just as bad; 100s of condos for sale, probably below 50% occupancy.
I’m in Paseos, just north of Evergrene. House across the street for sale. Two of three houses on the corner of my street and the main street for sale. House kitty-corner to me soon to go on the block. House two houses down from the one across the street from me just put up for sale. Two houses on the corner right when you drive into the neighborhood for sale. Need I go on?
Incidentally, I just updated my blog with a chart showing the YOY change in new home prices going back since the mid-1960s. It really jumps out at you how big a move this is, historically speaking.
http://interestrateroundup.blogspot.com/
Were all these houses bought by flippers? If not, I keep wondering where are all these people moving to, and why. Or is it just that the amount of folks moving is the same as always, but since nothing is selling the inventory has grown so high.
I know some are being squeezed by taxes and insurance, but I wouldn’t think that’s why the majority of these houses are for sale. They liked the area well enough when they moved here - are they just trying to cash out? From my perspective, all the things I like and dislike about this area are the same today as 5 years ago, so what do you think is driving this inventory?
I really don’t know. Flippers definately invaded Evergrene, it came on the market just as the boom was going into psycho mode (2004 or so). I also think a large portion of them were bought using toxic loans, which puts us right between now and 2 years until reset. Homes in Evergrene go for up to about 1.2 million, yet if you walk though the development you can tell that many, many people are up way over their heads. 600K homes with 2 10 year old cars in the driveway. I am not saying buy 2 Lexus SUVs, but come on, if you can afford a 600K home, you should very well be able to afford 2 nice, newer cars. You can see that the middle class (60-80K year HH income) really stretched to get into the development, and they are just getting crushed by the payments.
So, although flippers play a part, I think more of it is just people in way over their heads in that development. I would not spend 600K on a home without a 200K income (and even then would be a bit nervous). I can tell you, I am not driving a 10 yo Honda civic if I have a 200K income.
SFC — I only know the “story” behind a couple of these homes. House across the street was purchased by a nice couple in 2004 — wife is half of a mother-daughter real estate agent team. They bought the completed home in our early phase of the development while they waited for their pre-construction home in a later phase to get built. So while they weren’t “flippers” per se, they were definitely buying for the short term and hoping to make money. The house has been on the market since last December. We haven’t talked to them to see how things are going with the new place, but since they had a baby recently and I believe the wife now stays at home, it’s probably tough on them. Several price cuts have not resulted in a sale.
Of the other two houses right around me, it looks like the soon-to-be sellers want to move home to Nebraska after living in FL for several years. They have not yet listed, but we think they’re going to do so soon in order to sell by next spring. The third house is a couple that also just had a baby. They indicated their IO loan is causing them headaches now that she is staying home. In short, these two last couples are not flippers, but two out of three are being pressured by the forces we’ve discussed here.
I don’t know about the two houses at the end of my street, but the two by the community entrance had to have been flips because no one has ever lived in either.
HMMM….moving FROM Florida TO Nebraska. So much for the ‘everybody wants to move to warmer weather’ theory and ‘all the boomers want to retire here’ pipe dream…
Evergrene is nice. You’ll be close to Downtown at The Gardens as well. I had a friend who sold a townhome in Evergrene this past winter. She took my advice and undercut her neighbors. $1995 is a steal compared to what it costs to own that place. Maybe you should teach the owners about rent/own ratios.
Nope, not even going to mention it to them.
If I wanted to buy it, I would be very happy to give them an education. However, when I am renting it, I will just keep those numbers to myself.
I had to get a credit check done for this home, and I am dealing with a realtor. She called me up to come in to finish the paperwork whem my credit came back. Started with my favorite lines:
We can put you into a million dollar home with your credit and income.
You will pay less to buy this home (its for sale) then rent it (600K purchase price, 2K rent).
Intrest rates will never be lower, even if prices drop your payment will be the same.
And so on and so forth.
Also, my favorite was.. I gave her a check for 6,500 bucks (first, last, security, pet deposit) to secure the property. She says “I can put you into that home with no money out of pocket too!”.
As soon as they see you can qualify, they see blood in the water, that’s for sure!
Plus, if you buy a house they don’t need a credit check! Or a job, or a downpayment….
And I can just use the appreciation to pay the morgage note!
Man, I am an idiot!
Why would anybody take on hundreds of thousands of dollars of debt to buy an overpriced depreciating asset right now? First you get raped by the property tax collector, then you get raped by the insurance companies. Then a hurricane damages your roof and the insurance company doesn’t pay up. Then you get raped and ripped off by the guy who you pay to fix your roof. Then, in 2009, you find out your house is worth 40% less then when you bought it in 2006.
Home ownership in Florida………. you gotta love it.
And just a couple of months ago, it was only a 36-month inventory. By January, perhaps it’ll be a 60-month inventory. Wonder when the prices break down…
But a 49 months supply?!? That has GOT to be enough to slaughter prices. I can’t believe speculators are hanging on to their wishing prices the way they seem to be. (Or maybe there really are NO buyers left in FL?)
the reality is that the people that brought homes the past few years, are selling and buying.
if they brought at peak, they want to sell at peak no matter what. maybe by 07, reality will set in.
I am sure there are buyers. But our median HH income down here is about 60K. Median home price is still somewhere in the 300s. Those numbers are not going to work, no matter how you try to put them together.
I think that there are a few buyers like myself, who have an income to support a median home here, but are just not willing to buy a 350K POS because we think that 350 should buy a nice home. And with the rent/price ratios this out of whack? You have to really believe that the home is going to appreciate at a rapid pace, something which most people are starting to question (duh!).
I think there are people like myself, but I am not buying until the cost of ownership (using a traditional morgage) is near the cost of rental. Not a large multiple of it.
I wonder if that means it’s only 49 months until the bulldozers start going to work eradicating the excess inventory?
Median HH income in OC Cal is about the same, but our median price for SFR is $708K. And, trust me, you’re not getting a very nice house for that price. So, as out of whack as prices are there, they are even more out of whack here. It’s truly amazing.
49 months is 4 years of supply. Very amusing. And it said that in some parts of US 40% of the economy depends on real estate. How amusing.
Gee, someone bought a $180,000 house for $670,000. They must have brought Lincoln Navigator loaded with stupid to the auction. Just because it was listed for $900,000, or sold for $800,000 last year doesn’t mean it is worth $670,000. Its still only worth $180,000 and if the moron follows through on the purchase from the auction, then they will have grabbed at, and been cut by, a falling knife.
Let me amplify that previous comment. One third of the way down the sloap is the WORST time to buy a house. In fact, because the burst bubble is now so obvious, this may be the worst time in human history to buy a house, and Florida may be the worst place on the planet to buy a house. I suggest that potential buyers forget buying a house and instead take $50,000 in cash and set it on fire. They will come out way ahead.
“because the burst bubble is now so obvious,”
It may be obvious to you and me, but the MSM is still quoting the likes of Lereah saying the bottom will be reached in 2007. Sheeple will still be fooled.
Lereah needs to convice sellers to accept price reductions inorder to restart sales activity … and commissions for his members.
But when he says we’ve hit bottom and prices will start rebounding is a few months then sellers will just wait it out and not reduce prices and buyers will continue to wait on the sidelines.
“But when he says we’ve hit bottom and prices will start rebounding is a few months then sellers will just wait it out and not reduce prices and buyers will continue to wait on the sidelines.”
Meanwhile, HBs will continue to mercilessly slash prices all the way to the floor while F’d Sellers in the existing homes arena watch in awe!
I have to admit that I don’t know what I’d say if I were in Lereah’s position (assuming that I had no ethics was willing to say whatever I thought would help NAR the most). He represents (and his sole allegiance is to) Realtors. He will say whatever he can to increase transactions. From that perspective, he can’t say that prices are going to crash, because he will spook buyers and sales will dry up. OTOH, he can’t say prices are going to shoot up again because in the current market no one (not even the sheeple) would believe him. So, it looks like he’s trying to go for the “prices might fall a little and then level off” tactic in the hopes that sellers that need to sell will drop prices (at least a little) and buyers will buy (no need to wait for the very bottom). I assume that he will continue on this path until it, too, becomes totally unbelievable to the sheeple. But, he’s going to say whatever he can to increase sales. Please note, I don’t like him or condone what he’s doing, just trying to explain what I think he is doing. I really hate the MSM who quote him without ever suggesting that maybe, just maybe, he might have some vested interest in misleading people.
GS, So true…yesterday someone had a link to CNN Money where they say Panama City Beach is the ‘Best” place to buy a house and should see a x% increase…3of the top 5 were in Fl. …talk about unethical,and irresponsible.
….Now that this is unraveling all the RE experts are chiming in about how they knew this what they expected ,and it’s normal. …It’s getting bad, real bad, and is JUST starting.
LMAO. I try to tell people, just take you downpayment out of the bank in cash, bring it back to your rented property, light it on fire, and watch it burn. You will get more enjoyment out of it, and much less long term stress. The 40K you burn on your couch is nothing compared to the 100s of thousands you will watch burn in equity.
I agree, Palm Beach county in particular, and S. FL in general, has to be one of the worst places on earth to buy a home right now. Although I would say that PHX and LV have to be up there (just because, imho, there is nothing at all desireable there at all!).
slope, not sloap. Really, I am educated.
campbell’s sloup
shouldn’t they just set themselves on fire?
George, you are exactly right. We might be seeing the “sucker rally” coming up, when some buyers emerge, thinking the bottom has been reached. From the Charles Hugh Smith chart I saw, I think this comes a couple of years into the bust. Allowing for the time compression aspect of the internet/information age, the rally seems to be happening a little sooner. But, if things go according to that trend chart, the real tanking of the market starts after the sucker rally. This could be the most entertaining part of the whole phenomenon for us bubbleheads. Should be an interesting show to watch. Any thoughts?
Can someone spot the sucker rally in the HB stocks that is ominously following that of the NASDAQ…
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=DJ_3728&siteid=mktw&time=20&freq=1&comp=&compidx=NASDAQ%7E3291&compind=&uf=0&ma=&maval=&lf=1&lf2=&lf3=&type=2&size=1&txtstyle=&style=&submitted=true&intflavor=basic&origurl=%2Ftools%2Fquotes%2Fintchart.asp
Hard to believe that could really happen on a scale. Everyone who wanted a house has one (except us) and most of them have to sell one to buy another. There were so many future sales stolen already, I think any bounce would peter out very quickly.
Agreed TXChick,
There are so many future sales that were stolen in the past few years, I think we have a very, very long time before an influx of qualified buyers hits the market again. Yes the baby boomers may have some cash to throw around. But they need to sell their primary residence to get it. If that home does not sell for as much, less cash to chuck around down here.
RE is really a zero sum game, one house sold in NY, one bought in FL. Yes, some people have 2, but I would say that’s the minority.
Actually, this holds true regarless of boomer status or not, if I was selling my condo in the city to buy a home, I still need to sell one and buy another, same amount of inventoy on the market. We need an influx of buyers; which I just don’t see where they are going to come from. Has to be people who do not need to sell one home to buy another, and are totally insenstive to the tax system/insurance problem in FL.
I know, we need FLIPPERS and exotic loans! Oh, crap, we already did that one.
“Yes, some people have 2, but I would say that’s the minority. “
It will become an even smaller minority when the true cost of having two or more homes hits people. Especially since the magical 25% increase per year in equity machine has sputtered to a stop and is now running backwards.
“Hard to believe that could really happen on a scale. Everyone who wanted a house has one (except us)”
Speak for yourself. There seem to be two camps here- those who bought 5+ years ago, and those who are renters.
Well, and then there are those of us who fall in both categories - owned in 1999, but sold my house last month, now renting a townhouse.
With the fed deciding not raise interest rates for the third time, and the markets starting to bake a “rate reduction” into their models…the high debt ARM population just got early Christmas present. This housing market is going to go sideways for 6 - 9 months - I had thought it was heading straight down. The high debters can tread water for another 6+ months, before price reductions are back in play. Summer 2007 should be interesting.
Remember how much refinancing was going on in 2003/2004 when rates were at an all-time low? And what were those brilliant folks refinancing into by and large? ARMs. So even if the Fed keeps rates exactly where they are for a while (my personal bet), you’re still looking at a huge reset jump (at *least* a couple of percentage points higher) this year and next. I actually like the idea of people not being able to use “high” rates as an excuse for whatever pain they will be feeling.
Good point, lalaland,
The Fed will probably have to keep rates constant; but they sure as heck cannot drop them without destroying the dollar. Thus, peolple are going to be squirming at historically low to normal rates!
It will be even funnier when they lose their homes if rates drop a little. But then we’ll have inflation. The Fed will only be able to pull that off if rents start to drop and the “core inflation” isn’t bad… Hmmm….
Neil
Neill,
I’ve got bad news… we’ve already got serious inflation. What they report as “core inflation” (like everything else we’re fed by the ‘experts’ these days) is a joke and doesn’t come close to real inflation.
Along with a follow-up on the developing Molen investigations, the Tampa Tribune had a story today on the state and national slowdown, stating that experts felt that the slump could continue for a few more months. The only “expert” quoted? Lereah.
As for this group of articles, there’s that word again–”reality.” Who knew that making decisions based on facts could be so hip, cool, celebrated? I think we’ve spotted the leading edge of a trend. My favorite local condo conversion was sporting a “NOW LEASING” banner this morning; perhaps it should be renamed “Reality Place.”
Would that be Legacy Place in PB Gardens? I used to live there, rented a 1BR for 900/mo, they went condo, wanted me to buy it for 255K, what they claimed would be “the lowest price ever offered”. Why do I think that claim is probably up in smoke, along with the 10-100s of thousands that people are losing there in downpayments!
No. It’s a place in Tampa originally called the Coachwood Apartments, renamed following its conversion to “Bayshore Landings.” I was just thinking of the 1990s TV series Melrose Place when I tried to come up with a new name; there’s actually a place here that converted and used the word “Melrose” as part of its rebranding. I posted back then that the owner must have been trying to give the impression that Heather Locklear, Grant Show and Laura Leighton were hanging out by the pool.
My favorite local “condo” conversion is “The O.C.” (no, I’m not joking) on S. Himes near Henderson. It is a 1960’s “No-Tell Motel” looking place in which the biggest units can’t be more than 600-700 sq. ft. The converters painted it a grotesque combination of chartreuse and lemon yellow. It is so fugly I laugh every time I see it. The neon sign is the best part.
Speaking of another Tampa conversion biting the dust, the former Archstone Bayshore on Himes is back to renting. This spring, they renamed the place a much tonier-sounding “Bayshore Villas” (make sure you insert a sarcastic tone in there when reading that last part) and slapped a new coat of faded-looking paint on it, but apparently it wasn’t enough to sell those holes. My fiance and I checked out renting there when we first moved to Tampa a couple of years ago, and the model unit was dark, reeked of cigarette smoke, and had spent firecrackers all over the patio. Looked like a real peaceful place. The kicker was that they were asking over $1,000 a month for a 2-bed, 1-bath that was under 1,000 square feet. I was ready to pack up and head back to the midwest when we finally found an OK place.
“The top bid, or proposed contract price if the deal goes through, for that house was $671,000, Naples auctioneer Paul Drake said. Drake’s next auction will likely be absolute, not reserve as this one has been, he said Wednesday.”
Absolute auctions are what is needed to find the real market value…
Now, we’re moving in the right direction but are there any seller loopholes?
“to find the real market value” - You are right, GetStucco, and I’m sure you agree that even the absolute auctions will find prices that are higher than NEXT year’s absolute auctions.
I don’t know GS ,if I went to a auction I would expect to get lower than market value at the time . It’s just like with a foreclosure you expect to pick up a deal because of the position of the seller .
I’m not saying that auctions and foreclosures couldn’t set eventual prices ,but you would have to have a high % of the homes in the tract going into foreclosure or selling at auction ,something that might happen alot down the road .
That is why you are taking a greater risk buying in a project that has a high amount of speculator that bought in and got caught in the downturn.
I’ve said it before. Absolute auction. Take the money you were planning on wasting on a realtor’s fee and advertise the shite out of your auction. Not only is it the easiest way to find market value and sell your house, but will eventually cull the bloodsuckers from the RE agent industry asw well. There’s a business opportunity here for an auction site that can be tailored to locality etc. Could be a big business. For a small fraction of what a realtor would steal , people would gladly try it. Get crackin’ ome computer savvy entrepeneur , and give me a small % ownership if it’s okay.
Since the *buyer* pays a 10% fee at an auction, that pretty much covers the discount once you also subtract out the 6% realtor ™ fees. Ok, maybe another 5% discount. But with the price uncertainty of today… that’s in the noise.
I expect auctions to become much more common *nationally*. But Florida certainly is going to take the cake.
The buyer pays a 10% buyer’s premium. The seller pays a commission. (This is how the auctioneer gets paid.) There are no “realtor fees.” Auctioneers typically take care of all the legal aspects of the sale (checking the title, etc.) to cover their own behinds. Also, many auctions are “cash only” meaning you need to have some way to pay that doesn’t involve trying to get financing.
“Valley Hayes said it ended up being a loss. ‘We had to pay the commission, and we had a year’s worth of the construction loan, and then eight months of full mortgage payments, plus a home equity line payment, so yeah, we lost a lot. ‘Everywhere you look there are new homes, empty homes for sale. People are getting kind of desperate down here.”
Ironically, this is a good story b/c he got out early; later on it’s going to get much much worse.
Hayes may have a bit of heartburn right now but in six months he will look back and will count his lucky stars. Hayes will have a wonderful story to tell his great grandchildren.
off 16% and bradenton/sarasota is actually a decent part of FL
imo
Venice is my fav…….
is there an MLS for squatters- no joke, if I wnated to rent I’d offer soem handy work + pay taxes+ utilities and live big
- “‘If we are going to develop out west, there needs to be an employment base,’ Palm Beach Gardens Mayor Joseph Russo said. ‘Now all we are going to have is the houses.’”
NO SH!T. These city officials are such morons, where in the heck is all of the employment for these new developements? How many Costco, Target and Walmart Supercenters can be built. These crazy developments in Calif are absolutely hundreds of miles from medium pay jobs.
Amazing how all these HB’s are selling of huge parcels of land because lack of buyers…. Just last year the RE industry was spouting off about how we are running out of land…
What a joke
Maybe they meant un-optioned land. That’s how the big guys lock the inventory of available land.
I am going to be interested in St. Joe’s earnings over the next few quarters. They exited the building business to focus on selling land. I wonder who they are going to sell land to when the builders seems to also be sellers, rather than buyers of land. JOE’s stocks is up since September, however.
This article amazes me. Burt Aaronson acting like the taxpayers of Palm Beach County want to have these huge developments built because we want “our money’s worth” for the Scripps investment. I live in PBC, and I know noone that would be in favor of building these things. Like we sit around and say “you know what we need here? More crowding, more of the everglades being polluted, more traffic jams, more obnoxious people from New Jersey and Long Island. I’d pay money for that”. Most of us would pay more money to stop them from being built. The only people in PBC that would want them are the developers, politicians on the take, and maybe the illegal aliens that build them.
Hey, I live in PB too, and I am from NJ. I am that guy driving a H2, living off HELOC, throwing my beer can out the window as I drive by. I am drinking and crying in my beer, because I realize its all about to end.
I would agree, the only people who want more building are the politicans; who make a living off the money brought in by these huge projects. The tax base increase, kickbacks, etc.
Its sad, because, honestly, I love it here. Yes, it definately has its problems, but I really like S. FL (I am 29, have a very good job, and really like what this area has to offer). That said; I really don’t know why people making the between median and 2x median in PB county are still here. This area sucks if you don’t have some money for entertainment/fun.
Hey you should throw the beer cans into the bed of the truck like I do! I didn’t say that all people from NJ were obnoxious (most are very nice), just that most of the obnoxious people here are from NJ and LI. I love it here too, love the ocean and that there’s so much to do. As far as incomes - I think that if someone moved here by 2001, bought a house with a fixed mortgage at those prices, gets the homestead exemption to keep their taxes about the same, PBC isn’t any more expensive than most areas of the country. Except for the increase in windstorm insurance, their monthly costs would be about the same as they were in 2000.
Agreed, unfortuantely I moved here at the end of 2004, and was in no position to buy, even if I wanted to. Now I am in a position to buy, but would not even consider it.
If you bought in 2000, and did not HELOC yourself to death, S. FL is not a bad place to live at all. Unfortunately, we have priced just about everyone out of the market, so now, we sit and wait to see who blinks first. I am guessing sellers, 49 months of inventory and climbing.
BTW, I have SOH! I think its the worst idea ever put on the books; and shifts the tax burden to those least able to afford it (new home buyers). If they put portability in, it will just KILL the first time home buyer market; as they will wind up taking an even larger chunk of the tax burden. Also, SOH totally insulates politicans. Taxes are dropping for those with the exemption, and doubling for those without. Who doesn’t have the exemption? People who do not live here, ie, cannot vote. Its taxation wo representation at its best, and it needs to be removed ASAP. Until then, expect taxes to keep the home situation a total mess, and expect politicans to keep spending like drunken, high, slightly retarted sailors (drunk does not even do it justice anymore).
Fav example of drunken spending:
http://www.wpb.org/citycenter/index.html
Sure, WPB citizens need to pay to build a photo muesuem, and a city hall with a huge dome on the top. I am sure that’s exactly what all these small businesses being crushed by taxes are thinking. “We need a bigger city hall with a 10 million dollar dome on top!”
“I am sure that’s exactly what all these small businesses being crushed by taxes are thinking. “We need a bigger city hall with a 10 million dollar dome on top!”
Globalism is hitting everyone over the head with the idea that low cost is the way to go yet the politicians spend more and more.
I have also noticed that these “City Center’s” is a big thing nowadays, I know of several such taxpayer subsidized projects that are being pushed through.
I agree with you that the politicians spend way too much, but I don’t think removing SOH would fix that. They’d spend the additional resident taxes AND the same amount they do now from the new home buyers and part-timers. I think they should extend SOH to businesses with owners that live here. I believe the people that live and work year round in a community should get some benefit over those that don’t - after all, if 100% of the part-timers left, the place would still function, but if 100% of the full-timers left, it would be uninhabitable. How many snowbirds came down after Wilma and helped us clean the place up?
The reason SOH needs to go away is that govt has NO incentive to lower the millage rate at all. Those who can vote don’t care (because they are capped at 3%). Those who can’t vote get f**ked. Works great for the politicans!
Do you really think that everyone would be paying 2X the taxes now that they did in 2002 if there was no SOH? The uproar would be deafing, people would burn down city hall. However, now its only a tiny subset that get 2X the tax, the rest pay their 3% increase.
Home prices doubled in 3 years while the millage rates remained constant. How does that work?!? Millage rates should have 1/2ed as the home prices grew. And if the public cared, they would have (because they would have very, very quickly priced everyone out of the market).
I don’t think that we’d be paying 2X the taxes, but I do think that, as someone who is homesteaded, I’d be paying more than I do now. I think I’m already paying too much, as the school I pay taxes to is lousy, so I pay $10K a year for private school for my kids. I agree that there’s no justification for the politicians to double someone’s taxes over the past few years. It’s unfair. I just don’t see them lowering the millage rate substantially. For that to happen, the politicians would have to agree to a lot less money, and you know the chances of that. They could not even stop themselves from taking every penny they could get as the home values increased, with no possible justification. There is no way they’re going to give anything back. We could vote them out, but we’d get more of the same.
If any subset of homeowners is paying taxes at a lower rate than someone else - or even worse have their taxes capped - they have no personal stake in controlling government spending. Just let the other guy get screwed.
The way to control local government spending is to make everyone pay the same taxes on houses of the same value. Then they all have skin in the game, and they’ll elect local government that keeps spending under control.
What’s going to happen in Florida is that the snowbird market is going to be completely destroyed, and that’s going to melt down property values for everyone.
What is this “price guarantee” crap I’m reading in the Mass. newspapers? How the hell can you give a price guarantee?
wonder how they accounted for the FREE garage ?
future taxes payable ?
http://biz.yahoo.com/ap/061026/economy.html?.v=8
Is this the first time the word “bear” has been used in a MSM housing article? I love the PBP! Great paper!
U.S. new-home prices plunging at fastest pace in 36 years
By Rex Nutting
Last Update: 10:00 AM ET Oct 26, 2006
WASHINGTON (MarketWatch) - The median sales price of a new home fell 9.7% in the 12 months ending in September, the fastest price decline in nearly 36 years, the government said Thursday. The government reported that sales of new homes unexpectedly rose 5.3% in September to a seasonally adjusted annual rate of 1.075 million, the most in three months and well above the 1.05 million expected by economists. New-home sales are down 14.2% in the past year. Inventories of unsold homes fell 1.9% to 557,000, representing a 6.4-month supply at the September sales pace. It’s the second consecutive decline in inventories. The inventory peaked at 7.2 months in July. Inventories are up 14.4% in the past year.
And CNBC reported b/4 the report that chief BubbleMan™ Greenspan said the worst is behind us; perhaps the worst is behind him since he is no longer chairman at the frb. This is a devastating report yet the spin never stops… Unfreakingbelievable!
We keep going farther and farther back in time to get comparables. Anybody venture a guess when the Florida comparable will be 1926?
“We keep going farther and farther back in time to get comparables. Anybody venture a guess when the Florida comparable will be 1926? ”
____________________________________________________
Land prices will plummet here in Central Florida first.
With a straight face I can say that in “inflation adjusted terms”, 1926 prices may very well come to pass here in agrarian Central Florida….especially when it comes to all the agricultural lands ( citrus groves, etc ) in the middle of nowhere that were bought on development speculation during the 2000-2006 boom.
It will be MUCH cheaper down here to simply buy a developable lot and build your own home. I am guessing that in about two years you will be able to build a nice, modest ~1500 ft2 3/2 out in the county for around 100K, if you get your own plans and contract it yourself.
At least that’s what I am hoping for.
The current bagholders will become naked swimmers when they see that the builders are gonna keep doin’ what they do…BUILD….Builders will still find a decent profit point in a falling market and will outprice the FB’s all the way down….
mrktMaven, Greenspan is just spinning the sucker rally and he knows it. The pronouncement of “the worst is over” is nothing new. Prices drop somewhat and the spin is to coax out the last uncertain fence sitters. And there will be some. We might see this for the next year, maybe a little less. And THEN the real games will begin. But at least there will be some amusement in the meantime.
Would be interesting to see the “real” medial sale price drop, if you added in INCENTIVES…
Cancellations not included though. Factor those in and that 5.3% increase will disappear.
Highlights of CTX second quarter earnings report:
* Total revenues decreased 3% to $3.32 billion
* Home closings decreased 7% to 8,525
* Housing gross margin decreased 480 bp to 24.4%
* Earnings from continuing operations were $0.70 per diluted share
* Unit backlog declined 26% on a decrease in sales (orders) of 29%
Up $.60 a few minutes ago. WTF?????????????????????????????
It’s the new New Economy. You know - kind of like how the stocks of pets.com etc. were going through the roof even though the performance of the companies were going down the toilet. I think the stock prices are managing to sneak their way out the roof vent instead of continuing down into the sewer system.
Eventually the investors will wise up and the prices will go down. Last year’s home FB is this year’s stock FB.
Disclaimer BTW - I’m shorting several HB stocks. I figure eventually the institutions holding these stocks will realize that there’s a good chance they’ll be worthless when the companies start going bankrupt (already happening) and try to dump them on the market, only to find that there aren’t enough stupid buyers left, which will drive the prices way down. It’ll start happening when the bulk of the builders start reporting quarterly losses, which I figure is just 1-2 quarters away.
Better secure your place for cardboard box under the bridge because it will get crowded. Luckily, dollar bills make good insulation.
From todays WSJ- Home Prices Keep Sliding; Buyers Sit Tight
“Some people who are forced to sell quickly are suffering huge losses. At an auction in Naples last weekend, the highest bid for a three-bedroom lake-front house was $440,000, including commissions and auction fees. The house had sold in July 2005 for $690,000.”
There were several on a lake near that house that Zillow said was $600,000. that went for $275,000.
WOW!
Wow is right .
Cheapest by square foot were 1185 14th Ave N, 1965, a 3/2 1349 sq’ that went for $192.5K (incl. the 10%), or $143/sq’. Other examples: 522 94th Ave N, 1972, 4/2 2002 sq’ for $352K ($176 sq’) and 1095 8th Terr. N, 1968, 3/2 1425 sq’ for $275K ($193 sq’).
OTOH, 1848 Crayton Rd., 1969, 3/2 2428 sq’ for $687.5K ($283 sq’), 2196 Beacon Ln., 1965, 3/2 2218 sq’ for $880K ($397 sq’), and 261 5th St. N, 1961, 4/1 1458 sq’ for $660K ($426 Sq’).
This is only the “first landing” in what will be a multi-stage drop. Anybody who closes on one of these houses thinking they’ve gotten a deal will be underwater within a year. I’ve been to Naples a couple of times and have tried to figure out what makes special - still working on it. . .
Naples in January is a nice place… to rent.
Breaking news on the new home sales stats just out. Here’s my take from my blog…
http://interestrateroundup.blogspot.com/
The latest new home stats just came out. Here are some details. But the headline, from my perspective is “Fire sale in new homes!” Median prices dropped a whopping 9.7% YOY — the most in 36 years. Details below …
* Sales fell 14.1% YOY in September, an improvement from the YOY declines shown in August (20.9%) and July (29.1%). The seasonally adjusted annual rate o sales was 1.075 million units, up 5.3% from August’s 1.021 million units, which was revised up from the originally reported 1.05 million units. That MOM gain beat expectations.
* Total homes for sale on the market were 557,000, down a bit from the summer peak (570,000). The months supply at current sales pace reading of inventory was 6.4 months, down from the July peak of 7.2 months. There are lots of completed, empty homes within the mix, however.
* The biggie in the report is the whopping decline in median prices. Median home prices plunged 9.7% YOY in September to $217,100. That appears to be the single-biggest decline in any month going all the way back to December 1970 (when they declined 11.2%).
I think the decreased sales drop month over month (20.9% vs 14.1%) may show where the bubble started to unravel. If sales started falling off precipitously by the end of summer ‘05 then it would make sense that we will see smaller YOY sales drops in the months to come.
I love the chart you have on your blog. Imagine what the drop would be if dealer incentives were taken into account!
(The biggie in the report is the whopping decline in median prices.)
The builders are clearning the market. Their profit margins must have been fat if they bought land pre-bubble.
Is the new home median now below the existing home median?
“‘Business is one-fifth of what it used to be. There are brokers that don’t have anything to do,’ said broker Esslinger Maxwell.”
Wait until the boom collapse starts sweeping away all the hordes who piled into the various industries associated with the real estate biz once the MSM started touting the instant riches to be made.
Maine licensed 5X (2000 vs. 400) the number of real estate appraiser’s needed to adequately serve a stable market crashing fee’s and destroying businesses.
I knew the jig was up when I went into a continuing ed class in my coat and tie, and sat next to an obese woman doing her knitting in a jogging suit decorated with pink “bunnies”.
You can see what the export of the mfg. job’s has done with the virtual legions of lawn mowing and landscape services trucks runnin’ around.
Real estate has been the last refugee of those who aspire to a white collar facade.
40% of the jobs for the last 4 years have been real estate and financial servcies generated.
It will be interesting to see where the lemmings will run to now employment-wise, ’cause there is no place left to hide.
“I knew the jig was up when I went into a continuing ed class in my coat and tie, and sat next to an obese woman doing her knitting in a jogging suit decorated with pink “bunnies”.’
Did you get her number?
Get your disaster “Duct Tape & Plastic” domes ready! The Fallout from this DreamHome Fiasco is going to be real Messy when the Croppola hits the fan in 2nd Quarter of 2007 kiddies.
I’ve been stating for a while that 2Q 2007 is when the fun truly begins. This is all interesting, but its only the warm up act.
Save anyone you like from buying then.
We have a coworker that… no one likes. He has the big vehicle, the sports car, and three homes. Its pretty obvious that he is living off HELOC’s and that is about to come to an end. While I have no doubt he could survive 2007… I’m going to be curious what happens in 2008. Two of the properties are “near the water” in a very seasonal resort town. While I used to think it was going to be a short pain, I’m leaning towards more and more “landings” due to people like this individual.
I’ve seen far too many flips “escape” into 6 to 12 months of renting. They’ll be back… But how many will keep holding on even then?
Man, I really wish my dentist hadn’t banned me from popcorn… But I’ll sit back with my coffee and enjoy the show.
Neil
Got this piece of email from an old college buddy who’s now selling real estate. This is his justification to buy now - anyone care to comment?
“If you can find a good deal now then there is no better time than the present. The question you should ask is: “What am I waiting for?” Because if the answer is that you’re waiting for the market to drop further, you may find yourself paying as much if not more, if the interest rates move back upward. Take a $450K property at 6% and take the same property at $400K at 7% and your payments are almost the same. And that difference would signify over a 10% market shift. As recently as early 2000 the interest rates were hovering around 8.5%!! At 8.5% your monthly payments are with a $340K property the same as they would be at 6% and $450K.”
I wasn’t aware you could get a 6% rate. When you add in the points wouldn’t it be closer to 6.5-6.75% currently? Secondly, who says that mortgage rates are going back to 8.5% anytime soon? I think they could get to 7% or higher next year but not anywhere near 8.5%. That $450K house could be selling for $275K (or less) and I would still come out ahead at 8.5% and would look like a genius it it was at 7.25%. I think your friend underestimates the severe price drops ahead and overestimates the increase in mortgage rates. If we got mortgage rates to 8.5%, home prices would crash through the floor as affordabilty is already very low. There is NO REASON to buy now, period.
Sounds like your buddy is making the bear argument why that $450K house will drop to $340K in value, once interest rates return to a more historically normal 8.0-8.5%. Honestly, does he think these lofty house prices - which the average joe can barely afford now, with help of suicide loans and the lowest interest rates in history - will stay at these ridiculous levels when interest rates rise 2 or 3 full percentage points??
“CHICAGO (MarketWatch) — Those who anticipate getting a mortgage or refinancing one anytime soon listen up: Fixed mortgage rates aren’t expected to spike dramatically in the next few years, according to a forecast released Tuesday.”
There is no urgency on the mortgage rate front. Just another reason for buyers to wait on the sidelines and ride out the decline.
Well, he’s right about that. But not right that you should buy now! If you buy now for $450k and then get a job transfer in two years when interest rates are 8.5%, guess what? You just lost $90k on marketable value of your house!
And those are HIS numbers. Now, I’m not sure that’s the intention he had when he posted them, but there they are!
My opinion: One of the best times to buy a property is when interest rates are horrendous. Purchase prices are drive way down simply because of that, and *if* you can afford those high-interest mortgage payments, it’s only a matter of years before interest rates cycle downwards. Then you refinance. Hence, given the choice of buying $450k at 6% typical non-prepayment-penalty fixed or $340k at 8.5% where payments are the same, I would WAIT and take the latter.
Yes, that’s correct. To use that other argument is to expose ignorance.
And I’ll second that. This would be as plain as the nose on their faces if they would just utilize grade school math skills.
Don’t forget that the higher selling price also brings higher taxes for that $450K house, and higher interest rate bring higher deductions for the $340K house.
a higher interest rate does not bring higher deductions in this instance. if both prices are amortized for 30 years, you’re paying the same dollar amount of interest for both
NoVa, you are exactly right. When interest rates are high, prices adjust lower (mostly). Rates fluctuate both up and down. It takes guts to buy with high rates (because they seem likely to go even higher) but that is also a time when fewer people consider buying.
You want to make a profit? Go into a market when few, if anyone else, are there and credit is tough. Want to get hosed? Go into a “hot” market, where every dope has cash falling out of their pockets and credit is “easy”.
It takes guts to act in the former situation because you are alone; there’s no “crowd” to support your decision. On the contrary, when the crowd is roaring its approval it is hard NOT to get swept away by their “confirmation” of your choice.
It is a matter of understanding both economic fundamentals as well as individual and mass psychology. To reduce risk you have to act when no one else is and to preserve capital you have to sell just at the point when “everyone knows” it is a great “deal” ………..ironic, no? To be successful you have to fight the most basic human instincts; be “greedy” when everyone else is afraid and be afraid when everyone else is confident (and greedy).
Easy to say, even to understand; always hard (for most) to execute.
Some of us are planning to buy (if ever) for CASH. Duh.
You got it pal. In 2009.
Typical realtor pap. You get the same simple minded sales pitch from any one of them.
Here is what I would say:
Assume you buy it a year from now at a 15% discount with a higher interest rate. Guess what, when interest rates go down again, you can refinance (assuming you have equity) in a fixed rate morgage at the lower rate. Unfortunately, you cannot “re-price” your home as prices go down. Interest rates float, your home PRICE does not. So, pay less, even if IR are high; then when they drop lower, get into the new IR. Best of both worlds.
If you overpay significantly, your F’ed, not 2 ways about it. You can re-fi because you will have to bring cash to the table. You a total victim of the housing market, unless you happen to have the cash to dump in to make up for the lost equity.
I don’t care if IR are 2%, overpaying is ALWAYS a bad idea.
He’s not factoring in the higher real estate taxes, either. I’d rather have $100,000 off the purchase price and pay a higher interest rate, than the other way around. You’ll save big on property taxes year after year, as Florida’s Save Our Homes law caps property tax increases to 3% per year. But the initial taxable value is based on what the value was when you bought the house.
Which creates an incentive for people who bought high to sell into a falling market, if possible, and downsize to lower their tax bills, further depressing house prices.
Gee Florida homeowners are smart.
so now real estate agents are predicting mortgage rates? gosh
Sounds like your friend has been fully indoctrinated (I still feel the NAR hands out a handbook to every new licensee entitled “Make Them Drink The Koolaid: Realtor Propaganda 101″. I think if we were to get our hands on it we’d find in more brilliant than Hitler’s “Mein Kampf”). Hopefully he realizes he’s shoveling bullsh-t and doesn’t actually believe it. Of the “koolaid cocktails” the NAR serves up, this one about heads up the list of Realtor Spin. Unfortunately, it still falls behind the “You need a home for the tax deduction” on the long list of bullsh-t.
If mortgage rates ever get close to 8.5% in the next 2 years for fixed 30 , you can forget paying 450k or 340k altogether. There will be tens of thousands of abandoned spec homes to squat into, or take off the county’s hands for taxes due.
We are already seeing some of these articles quote ARM FB’s paying that level or more on resets. How?, I don’t know, but they signed whatever they signed. An 8.5% fixed 30 level would imply seeing these hammerheads have their teaser adjust from 4.25% or whatever up to like 12% or 13% I bet on some of the scarier paper.
If you are honest with him, you will surely lose a friend. That’s the choice you have to make. If you don’t want to lose him as a friend, delete the email and move on.
Brian - your friend is brainwashed by his broker. The prices will be coming down more, especially if you are in Clownifornia.
Sorry, I wasn’t clear - he *is* a real estate agent. I didn’t know him all that well but ended up on his list because when he went from bartending and playing in a rock band he just transferred all the names over.
The fact that both he and my former drug dealer are now in real estate (both within the last 18 months) says a lot to me, but I… I am a renter.
We were talking in the office yesterday, and one of the “Office Ladies” whose husband is a realtor said, how do any young people buy a house these days, with these prices? How can they afford it? I said, well, they can’t, and that’s why the prices will have to come down, there’s really no alternative. They (all older than me) gave me a disbelieving look, then said, well, I don’t know about that. I persisted a little, saying, if there are no buyers with money to buy your house, you can’t sell it for a high price. You have to drop the price until someone has the money to buy it. Still disbelief. I said, well, why do you suppose there are so many houses on the market in Cheyenne right now? Because no one has the money to buy at the seller’s asking prices. That started the conversation moving in the direction of houses on the market, to their relief. I’m sure they didn’t want to call me a dummy, buy they sure weren’t buying my thesis that at the median house has to be affordable to at least 40% of the population to have anything approaching a normal market.
Ah, the disbelieving looks simple common sense can elicit! Good for you.
I don’t know whether to applaud the fact that these numbers are so awful or scream in disgust over the fact that there are still a substantial amount of people buying in these markets. Sales may be down 40% but, who the hell are the 60% that are buying?
“Sales may be down 40% but, who the hell are the 60% that are buying?”
Exactly.
oh here they are….omg check this out
http://www.sun-sentinel.com/business/local/sfl-zhomes24oct24,0,886683.story?coll=sfla-business-front
sorry, no html skills. Maybe someone who does can create the link for me……an unbelievable read though
$350K and up is “affordable housing”? What a joke - just goes to show that there are still LOTS of financially-illiterate folks out there. And good luck to the couple who need to unload their current townhome before moving into the new place - welcome to 2-payment-land!
Which means this market hasn’t really slowed yet and we’re seeing serious damage. We’re only at historical sales rates right now. We still need to spend time below that to do justice to ‘return to the mean.’ Right now it’s just the difference between hysterical buying and normal rate of buying and it’s ugly.
“‘If we are going to develop out west, there needs to be an employment base,’ Palm Beach Gardens Mayor Joseph Russo said. ‘Now all we are going to have is the houses.’”
Gee, someone is using common sense? I thought the “new thinking and paradigms” didn’t rely on “old thinking and fundamentals”.
To think, someone actually realized that JOBS have to be, at least SOMEWHERE around a bunch of houses? Why does he think so? I thought we just build houses, build build build buy buy buy!!!
There’s still a lot of suckers out there.
Who says the boom’s over? Boynton development sells out phase one in 5 hours
You forgot to mention this little snipet from that article, “David Dweck, a real estate agent in Broward and Palm Beach counties, estimates that 20 percent of the people who signed contracts at Greystone ultimately will back out of the deals.”
‘Affordable’ houses, starting at $311,000…ok, right. Where do I sign up. 20 % of fifty MILLION in houses = um….. yeah. People really are stupid. I will drive by in 2008 when the first houses are being occupied to see how many FOR SALE signs there are at $200,000.
Still,
80% sales should be break even. So the builder was smart.
Couple of observations:
- Last year, buyers were offering 20 % above the list price. Now they are offering 20 % below the sales price.
- The speed at which this implosion is picking up amazes me. It started as a trickle, then a stream. Now is is a full on tidal wave.
- The increase in the visible supply is shocking. We have gone from 24 months, to 36 months, to 48 months in less than 6 months time. We are talking about 40,000 homes in Palm beach, 40,000 in Broward, and 40,000 in Dade counties.. think about that . 120,000 homes for sale. Staggering amount.
- The ARM situation has just started. Wait unilt 2007 and 2008 when another 2 trillion reset.
- “Season” is just starting. Let’s see how the snowbirds react. It wil be very telling. I bet that many of them come down, and put their places up for sale.
- Foreclosures are going to be rampant. Not a good thing for exisiting FB’s to see a house on your street go to auction.
- Ninety percent of the people cannot afford the median house. Simple math. Doesn’t matter if it’s paper clips, potato chips,or houses.
All in all, it is a long way down from here. You can’t fight gravity or the laws of physics. You can’t go up 100% and only go down 10% and celebrate a return to ‘normalcy’.
The increase in the visible supply is shocking. We have gone from 24 months, to 36 months, to 48 months in less than 6 months time. We are talking about 40,000 homes in Palm beach, 40,000 in Broward, and 40,000 in Dade counties.. think about that . 120,000 homes for sale. Staggering amount.
Who can tell me how many people in those counties? Is it possible “A house for each resident”? This is our new life style.
at lest 5.5 million people in south florida until hurricane wilma
And from Ben’s link to the article from the Sarasota Herald Tribune:
“Still, add in the 4,067 condominiums that are up for grabs, and there are 11,511 available residences just in the Sarasota-Bradenton area.
“With current sluggishness, that adds up to a 98-week supply of homes and a 141-week supply of condos, an analysis of MLS statistics shows.”
Don’t you wish you were a seller in Sarasota-Bradenton? Also, I found this quote from the article to be very telling:
“Manatee County is usually included in the broader Sarasota-Bradenton market, but data from the Manatee County Association of Realtors was unavailable.”
That’s because Manatee is doing very, very badly. Nothing but new bedroom communities and no real jobs. I love how they fix the numbers by saying, “uhhhh….the numbers aren’t available yet…uhhh yeah, I know, it’s already been almost a month but uhhhh….”. Bad excuse, but not surprising.
Listen to me now, and believe me later: the market in Florida is much worse than even what the FAR is reporting.
Another big reason to stay on the sidelines in FL is that many of these neighborhoods (and condo complexes) that have large numbers of houses for sale will completely turn over in ownership in the next few years, and you cant predict what kind of neighborhood it will be. Even if the national housing decline stops, the value of a house in a bad neighborhood can decline to zero–just look at all the empty lots in former nice areas of Detroit, etc.
Plus you have to worry about all those places(which seem to be popular) with some form of HOA since without enough homeowners who is going to pay for the fees, and who is going to be enforcing the rules, the banks, the out of state flippers, the city?
The neighborhood can decline even faster if all the houses that cannot be sold are rented in desperation.
I don’t know how this guy got elected with clear-headed thinking like that. What we need instead are more idiots like commissioner Burt Aaronson, that think the citizens of Palm Beach County lie awake at night hoping for more developments in the middle of nowhere.
“‘In most neighborhoods where we sell property, the average sales price has dropped more than 20 percent this year,’ said broker Thomas Moffett, whose office sells property in central Palm Beach County.”
The Sun Sentinel. “Palm Beach…county’s year-over-year median price dropped $34,500 or 9 percent last month, the Florida Association of Realtors said Wednesday.”
There you go. DO NOT accept median sales numbers as a measure of the decline. The real measure is what a seller might be able to get now vs. what was a slam-dunk certainty last year. That’s a 20% haircut in PBC.
The fallacy behind Forida real estate prices is that retiring baby boomers will eventually bail out this market. Not at those prices. Most including me, will be looking to decrease their cost of living, not be saddled with a huge mortgage. Obviously, people are entitled to sell their homes for whatever they can get, but why would I want to begin a new career at WalMart, just so I can own a prefab and a palm tree.
What???? You mean that you are not going to buy a 6 bedroom/5 bath McMansion that you can then spend the rest of your days, paying a mortgage, cleaning, repairing, heating/cooling, paying taxes, paying insurance? Oops I guess someone forgot to tell the building industry.
Ok, I found this article and wanted to SCREAM!
“Top 10 places where to buy now.”
http://money.cnn.com/popups/2006/biz2/newrules_bestinvest/index.html
And they have links to the “bubble proof” market too. Grrr… Boston and Los Angles are certainly not “bubble proof”. Man this stuff pisses me off! Oh well, more speculation means fewer sheeple I’m competing with.
Neil
Yeah. I saw that earlier today about ‘bubbleproof’ cities. It’s just ridiculous. The cities listed Boston, San Francisco, New York, Seattle & Los Angeles have had huge RE run ups with tons of toxic real estate loans outstanding. I would list these cities as some of the bubbliest in the whole nation. Bubbleproof to me would be someplace that hasn’t had a big run-up, in a financially conservative area, say, somewhere in Kansas.
I was in St. Pete last week and looked at waterfront homes on Boca Ciega Bay. There are plenty for sale. Two on the same street listed for well over $1 million, and they were nothing special. Near zero lots, 50’s interiors, bathtub sized swimming pool, etc. Agent doesn’t bother to show up at open house, uses a next door neighbor to unlock the almost unfurnished property in case some fish like me swim by to look. Good luck to the investor on this one. Please continue to pay your taxes and insurance. Prices have a long way to fall.