‘Can’t Get Egregious Prices Anymore’ In S Florida
The Sun Sentinel has an advice piece for home sellers. ” If you think you’re seeing a lot more ‘Open House’ signs springing up on street corners these days, you’re not mistaken. The open house, which seemed so unnecessary in South Florida just a few months ago, is making a comeback.”
“There’s good reason why. Gone are the days when houses sold within minutes of hitting the MLS. Inventories of available houses and condominiums are swelling, prices are stabilizing and the time houses remain on the market is lengthening. All signs point to the return of a buyer’s market, good news for buyers after a long period of tight supply in many markets.”
“Sales in Palm Beach and Miami-Dade County plummeted, by 23 percent and 38 percent, respectively. As a result, sellers must adopt new strategies, or actually return to old ones, to sell their homes quickly and at optimum prices. Be realistic. Set a fair price, and realize that the more houses on the market, the more competition you face. ‘With the market settling down a bit, sellers have to be reasonable,’ Barry Rothman said. ‘They can’t get egregious prices anymore.’ Rothman said that if a house is overpriced now, buyers won’t even take the time to look at it.”
“Most importantly, sellers should try to think like buyers. ‘Honestly evaluate what you would buy if you were them,’ Rob Rose said. ‘If it’s not your property because there are other, lower-priced options, don’t expect an offer any time soon.’”
Thanks to the readers who sent this in.
Someone needs to forward this news story to Mr. Vitale in Liberty City that is trying to flip his home and won’t settle for 50%.
Hello… Mcfly???
I’m loving this Florida thing. I wish I had a nickel for every time i was told “I don’t know the Florida market” and “prices will never go down here. There’s too many people who want to buy and no land.”
This is Phoenix but look at this one. Dude paid 147K for this place in 2003 and is trying to get double that in less than three years. I don’t think that the idea they might not get what they want even enters the brains of these people
http://phoenix.craigslist.org/rfs/137347538.html
Txchick,
This should make potential buyers angry. What these people are really saying is, you should be willing to work for the next twenty years to pay off my windfall, with interest! Fat chance Phoenix.
But, what about this guy’s inflated $30,000 in upgrades. When you take out all the middle men, store profits and puffery, you’re talking probably $1,000 in depreciable upgrades.
I took the time to write the guy a nice email explaining why he will not sell at his price and the market dynamics. You’re right, it did piss me off. Zillow has the place at $267K.
This pricing is very common in phoenix. A lot of people bought right before the large run up of 2004-2005 and basically made 100% profit in most cases. It had gotten way overpriced here.
I can’t blame him for trying, but unless some greater fool comes along, he’ll never see that price.
There seem to be a lot of fools running around down here. Seems like they have deep pockets too.
I saw a post on recent visit to lodi. Is it getting ugly up there?
I was just there, Lodi is awash in for sale signs and open houses. There are not many greater fools there to soak up all those homes anymore.
…But the Zin they produce there is really good!
TXCHIC,
Did that lady ever answer your email :)?
The article assumes that there are buyers out there looking for these houses. I also love the line about not getting egregious prices anymore. What if the person selling the home paid an “egregious” price for it six months or a year ago? Many of the sellers can’t or won’t lower prices to sell and with the sales activity of the last couple of years at record levels, maybe we’re short on new fools at this point in the game.
My friend paid what I considered an egregious price in 2004 and despite the fact he’s overstayed the top, could probably still make a nice profit by offering 10% under the lowest once for sale in his complex. But despite the fact that none of them are selling, nobody’s lowering. And there are 14-15 identical units for sale! I truly do not understand the mindset of people like that. If the lowest priced one is 225K and I wanted to sell fast, I’d offer mine at 205K and if I paid 155K for it 18 months ago, I’d be thrilled with the profit.
Right now, sellers see this as a game of chicken- Who will blink first? Many have a lot of paper profits to play with. They are also uner the delusion that spring will save them as last last did.
However, once summer hits and they’ve thrown more PITI away, we’ll see panic selling al la 1990.
That’s a really stupid way of looking at things. If a seller sees this as some kind of war game where the buyer is the enemy, he’s really screwing himself. It gets ugly fast and when it really accelerates, watch out. I still remember the seller of a house in Plano, TX I looked at in 1989 and passed on calling me repeatedly on the phone and breaking down during once conversation because she was so desperate to sell. I really felt sorry for the woman (she was a single mother left with the house after a divorce) and actually lent her some money but didn’t buy the house obviously.
People are being too greedy. I hope it eventually does them in and they lose their shirt. Serves them right.
Good article. Buyers: jump in now to make sure you’re all moved in before hurricane season.
ben, OT but the az republic is going to have a in depth analisis of the phoenix housing market starting next sundays news paper.
It’ll be interesting to see if this is a balanced report or just an opportunity to let the RE establishment spin this situation.
Presenting Californians are Insane, Part 5.
I noted last week that we put our house on the market on Wednesday. On Saturday we got an offer that was a little low (535K instead of 540K asking) from people who have already sold their house and have 100K to put down. We countered at full price and they accepted but they have to check with their bank to make sure that the bank will OK the additional amount. We had an open house yesterday, (the other people didn’t have a chance to answer our counter offer until after the open house) and two more people said they wanted to make offers. We may have priced our house a little low, but I feel good about it because I know that the people who are buying it are not flippers, they have two children who go to school in the district and they will live in the house and probably take some loss eventually, but not as much as if we had priced the house higher. I don’t think our area has had as much of a bubble as other areas. Our price is only about 23% more than we paid 5 years ago, which isn’t really a profit after selling costs and expenses such as we have put over 20K into the house, mostly into replacing the huge deck, which was 20 years old, and some large windows with broken seals and some carpet, but I figure that we are coming out with our extra costs of living in such a large and expensive (for our area) house for the same cost of living in a much less attractive house if we had rented during this period. However, now is a totally different story, and I believe we will come out much better renting for the next year or two while the market deflates. If anyone wants to see what you can get for 540K in Arlington, Washington, about an hour drive north of Seattle, the MLS is 26025860.
You didn’t price it low. You priced it fairly, which is why it sold so quickly.
txchick, You know you are absolutely right, what is still distressing is that there are people who still believe that flipping is moral and right, and will still work for them.
Example, a conversation I overheard yesterday with some people I know:
Person 1: “Hey my friend is trying to sell their house in MI, they are comming out here to South OC and need the money to get a move. I am thinking about buying it, I could rent it out and come out positive per month”
Person 2: “Yea, that is pretty good, we’d would do that but we can’t afford to tie up so much money like that for the long term, we are going to find a flip to to have for a few months and take the appreciation to build cash for more property investing. Obviously it would be out of state, since there is much more available to flip out of CA.”
Person 1: “Yea, we really don’t have the money either, well, we’ll talk, let’s get together for lunch and talk about some of the properties you are looking at.”
These are two very nice people, who are not savvy investors, nor do they have any significant amount of capital (that I am aware of” to use for investing, but who have become so blinding by the speculation going on around them that they casually talk about in reality gambling hundreds of thousands of dollars in Real Estate because in their minds that is the path to quick profits. How many times have any of us in this forum heard those kind of discussions. I don’t even remember the dot com times being filled with this many speculators.
You know what just kills me? They could make money in the stock market if they spent one tenth the amount of time researching and investigating things there. Much lower barrier to entry capital wise, no comparison as to liquidity, very low transaction costs, WHAT MORE DO PEOPLE WANT?
I’ll throw out a challenge
In the fall of 2002, you could buy AMAT at 10, Cisco at 9. XMSR at 1.75, SIRI at 70 cents . SONS at 20 cents. Yahoo at 8. Amazon at 9. AAPL at 19
Can anyone find someone who bought a house in Cali, Arizona, anywhere for that matter, and can now sell it for anythign approaching the appreciation of these stocks? I doubt it. Shit! You could have bought Ciena at 1.70 LAST SUMMER and more than doubled your money in less than a year! Or JDSU!
And you can sell these stocks today for $15 You don’t have to pay anyone, you don’t havee to have open houses, you don’t have to beg and plead or whore yourself on Craiglist.
What am I missing?
Difference is, banks will give me “free money” to “invest” in RE, while if I went down to the bank and asked for $300k to throw into the stock market, they’d look at me like I was crazy.
And the reason these folks will not hear about how dangerous this has become is because the MSM refuses to accurately report bad news and the RE industry has paid them off for this favor. This bias is so blatant and insidious that it should at least be enlightening to the people reading this blog.
so, banks are apparently fine with lending people money to buy props they intend to flip or rent out even if they don’t have an appreciable capital to play with if things don’t work out? My sister-in-law is flipperwoman now apparently, but I can’t really get those sorts of details from her comfortably. She considers herself a good catholic, btw, and apparently doesn’t see anything wrong with flipping lol! at least she’s not doing it locally, where the people you’re profiting from might be your ‘friends and neighbors’. Charity begins at home folks!
But what surprises me more than the possible moral hypocrisy really is that she could get financing to do it! I don’t know for sure what kind of nest egg she’s built, but she spent years waitressing and teaching GED classes. Lived rent-free for most of those, but still…how can she have bought condos in FL to flip, and even one of those pricey chicago condotels? Should I be happy that banks are willing to lend the masses money to do these things, making them equal in the eyes of the financial institutions to the real investor types, or distressed?
cheers!
Sorry, but there’s nothing “wrong” with buying something, fixing it up, and selling for a profit. What on earth would be “wrong” about this in a free market economy like the USA? This is pure capitalism at work.
Some flippers may be stupid, and greedy, but there’s nothing wrong or immoral with what they’re doing.
Realtors intentionally pricing houses low, so they can create bidding wars, on the other hand does seem both immoral and unethical to me.
no, she’s not fixing these things up, to be clear. just hoping for the greater fool to arrive. Fixing it up would be adding value and expecting some return for that, and I see no problems with that. I don’t even have a problem with the basic premise that if you buy a commodity and it increases in value in some reality-based way then you should reasonably expect profit.
Still, I don’t think anyone’s going to hell for trying to get twice-your-price in a year on a FL condo, just unseemly for the devout to gouge the next sucker in the line, possibly causing them financial ruin to line their own pockets, and lying in the process. Yeah, it’s kinda old-fashioned, and not something I’m adamant about, really. Its human nature to be as greedy as possible, so how could it be ‘immoral’, right? I’m not asking anybody to ask ‘what would jesus flip’ really…
cheers!
doing flips is not a bad thing,, but you need to know when its the time to get out and that was by July 05 or so… but most of the current flippers are greedy and still have no concept of the start of the down trend 5 months ago.
so don’t put a moral value on this as its not wrong to make money and the smart money has already left the RE market.
—AL
Apologies if posted twice
I would like to throw down a challenge
In the fall of 2002, you could buy AMZN at 9, YHOO at 8, AMAT at 10, SONS at .20, SIRI at .70, XMSR at 1.75, AAPL at 19, the list goes on and on and on
Someone show me a house bought in Cali or anywhere for that matter that has appreciated more than XMSR, SIRI or AAPl during that period of time.
Hell, you could have bought CIENA LAST SUMMER and more than doubled your money since then! Hello! Has anyone doubled on a house since the summer of2005
In stocks you can buy and sell for $15. You don’t have to pay realtors, stage houses, whore yourself on Craigslist or write letters explaining why you are a worthy buyer. You don’t have to beg people to bail you out or monetize your “windfall.”
Why are people so obsessed with something that has so clearly passed the top and has diminishing returns, IF ANY, while ignoring something else that is 1) easy to get into 2) far more profitable if one puts in the time they do on this real estate junk and practices risk management?
I think because people can understand houses, while stocks remain a mystery to them. And they have bought the crap about RE never being something that can lose value. They also like the leveraging power. Double your money on 5K, you get 10K. Double that houseprice in 3 years, you get 150K for your 5K down. Hey you could always rent the thing right? Can’t rent your shares of Amazon, and you could lose it all, right? People don’t really think forward to the possibility that they’d need to sell that house at a loss, and thusly lose the 5K.
The difference of stock-market investing versus real-estate investing is a thing called “leverage”. Leveraged investing in stocks (i.e. margin trading) became very hard after the stock market crash. However, leverage in the housing market is easy…. any smuck can get 100%+ financing in a hartbeat… Hence the upcoming bloodbath…
You all are right about that of course. I keep forgetting that people buy houses with no skin in the game. All mine have been bought with cash and I have never had any debt on them.
Reminds me of a San Diego friend of mine. He did a cash out refi on his condo and was biting at the bit to start flipping some properties (this was mid 2004). He was on the phone with Realtors in ARKANSAS that he found on the internet. He was sure that all that Arkansas lake property was going to skyrocket. I tried to talk a little sense into him that he should at least VISIT the friggin place as he had never been to Arkansas. He is a smart guy (college educated etc.) and even though he agreed with all my points regarding the housing bubble, I would still see his eyes gloss over as if he didn’t want to hear any of it. The big deal was just waiting for him out there and he was going to find it (mean while he was paying interest on the cash from the refi). He won’t let me know what he ended up doing.
You can find out how he did by searching Arkansas lake properties on EBAY. There are several wholesale sellers on there auctioning them off for peanuts.
you guys are right on the money with your read of the attitudes of sellers and buyers I think.
It has been making me angry for a good couple of years now, and it has officially gotten to the point where I refuse to play chicken anymore. There are still people out there willing to play though, out of fear that if they don’t blink they will be forever screwed.
They start to really believe that if they don’t let themselves be taken advantage of this round of sellers asking ‘egregious’ prices, or in the case of my little neck of the woods just merely ‘ridiculous’ prices, they will let themselves become vulnerable to the next round of assholes and feel even stupider. Or really never be able to free themselves from landlords at all. It’s really shitty for a community, really shitty for a society.
Hubby still wants to go and look at open houses, and part of me does too just to keep on top of the culture, but it was cold cold cold yesterday and when I looked at the paper there were too many listings that were so overpriced I wouldn’t even bother considering them. I’d be in the position of freezing my ass off just to look at props for 20% more than I’d consider paying for them. It really disgusted me. Every year at this time, I know, the ’spring market’ is supposed to kick in and the asking prices get their 10% or more jackup overall from the year before and the buyer pool is supposed to adjust to that new reality, hope they can afford it, and pony up. Some areas believe they’re entitled to a 25% jackup if they’ve been “hot” relative to others in town the year before. But this year inventory has been sitting forever, nothing is selling, it’s *gotta* be the case that many people are shelling out two mortgages because the increase in the number of props that are empty or ’staged’ to look like someone very neat and minimalist lives there is amazing, and *still* nobody’s lowering prices much if at all. The new crop of listings comes in at the new levels and the older stuff gets relisted at a little off, couple K off. People stopped listing as ‘reduced’, I think because late in 2005 the ann arbor news ran a piece on how “challenging” the market has been for sellers and the new spring market will tell how bad things might really be getting. So, of course, the realtors don’t want the sellers to show they’ve reduced their prices. As one of them said in the article, if the neighborhoods are awash in forsale signs that would be bad, worse if they all say ‘price reduced’. I love it when they say ‘new price’ (like it would be higher now? can you be more specific for us idiot buyers?), but even those are disappearing. I think they are now so worried about the disappearing pool of buyers that they are being cautious about when they schedule openhouses too, doing what they can to avoid cluing the buyers in to a falling market and waayup inventory. My realtor also recently decided to limit the pool of listings I get in email. Never asked me if I wanted that, just did it. We had casually mentioned that some neighborhoods work less for us than others because of where we need to be for work and school, but *never* said we don’t want to at least get the listings for those areas…Ann Arbor is a small town of 155K people; takes 15 minutes to drive surfaceroads thru the whole thing really, and we can be anywhere in the district schoolwise given our kid’s school. I wouldn’t doubt that a motivator for her move is we’d be less “up” on how much damned inventory is out there and at what range of prices. We started wondering why the nos. of new listings were reduced, and had to really push her to admit what she did. I had to basically make it sound like I was going to find another realtor and then finally she gave a song and dance about how she thought we had narrowed down our search and was just trying to make our lives easier, blah blah. Now I’m getting the couple new listings a day again. Some parts of town show the distress (the poorer parts, where more people I’m sure are on the financial edge) and some show listings jacked up the usual 20% from a year or two ago and say ‘better hurry; this will go fast!’, on the theory that if you say it, *someone* will believe it. And some people probably do, unfortunately.
Egregious is a good term because it lays bare the ugliness of profiting from fear and deception on something so basic as housing.
I agree also with the comment that RE is something that most people feel they can understand. They understand buzz terms like “snapping up properties”, “not making any more land”, “not enough supply”, “showing up on the international radar”. But when speaking of stocks, things like valuation, market cap, P/E, even a balance sheet is beyond their capability. Since most of the world is of average to below average intelligence, and it takes above average intelligence to understand these concepts, then I guess it should be no wonder why the equity market is a mystery. But something has to be said about the quality of education, my family are recent immigrants (legal of course) and invest in the equity market (albeit conservate) to secure their future over the long term. I think that TxChick makes her money by investing in the market which I feel does take above average intelligence.
By the way, please forgive my occational grammatical and spelling mistakes, I certainly don’t mean to sound arrogant as I am still mastering the English language.
This is great… An add in the Sunday Orlando Sentinal for “The Stratford in Winter Park” (A condo conversion) is now listing this as one of their deals-
“Buy 5 and get 15% off” That basically means buy 7 and get the 8th free.
I beleive they are also advertising this location as a Winter Park location (Winter Park being a more prestigous address). The problem is the physical adress of the condo is Maitland.
OMG, that’s amazing! My local Kroger’s does that deal, 10for10$. A scary number of people don’t understand that this means 1$ a piece. Have we gotten to the point where flipper-wannabes are in the same cognitive boat? Or are there people who really can come in thinking to buy multiples in a conversion at this point in the RE game? Wow, what a great deal…one free! think of the profit you’ll turn on that one…
My story — take as you will. In December 1979 we bought a 1878 Victorian in Toronto for $82,500 in the downtown core. 3900 square feet semi with parking on property ( big deal since most only have street parking). A good deal since the financing was VERY restricting — we had to buy with an assumed first of $6,700 and the rest a very large second… not too many could swing the deal since that first expired in one year and had to be paid in full and the second would become the new first… we did have the required 20% down but we now were on the hook to pay the first in full at the end of one year. Interesting times when that 1st came due. I am, was, a restoration contractor… We managed that nut. Also spent over $300,000 in bringing the house up to standards over the years — all the plumbing; knob and tube wiring replaced with 200 amp service split into three 100 amp on each floor… etc. Insulated but retaining *most* of the character —for example I spent two days hand striking (making from scratch — couldn’t afford white pine so in was so called ‘white wood’ or tulip/poplar five piece casing to match the original for one side of one new doorcase ( casings were over 8″ and baseboards were close to 12″) — Got all the double hung windows back to original specs and working as they should—- lots of my sweat equity not included in that out of pocket expenses. Also got very fair prices from my trades since they were beholden. Finished the basement ( not included in that 3900) with a proper sauna not the crap sold in NA — for example the Finns require a specially trained and certified architect for ALL their saunas… it is a skill requiring knowledge to do right. I sold a year and a half ago. We have a far smaller bubble in Canada, but still a bubble. Sure I could have held out for that last $100,000 but then I would have been risking far more. The house was paid off but still was costing over $800/ month. The slate areas of the roof were far past their ‘best time’ and I was looking at $80,000+ if to restore; the floors were mainly carpeted since to have replaced them would have cost a bomb originally — now to replace them will equally cost a bomb— just two items. I was into restoration because I enjoyed the thinking — I have an honours Economics degree — equivalent of a masters in the USA. My main complaint is that most people are enumerate — whether RE or buying lottery tickets they go for the *wish* rather than crunching those numbers. Yeah, I could have made far more by running my purchase as a rooming house ( 15 renters when I bought) but we did have a pretty nice place for 20 years…. go for those lottery tickets — that is your pension. Yeah, we are now renting an apartment in a high-rise — 1400 feet… some down scaling but we never came close to using that house — damn it is nice to be far ahead of the curve of $800 fixed and no risk.
Lato1394: I’ve passed the Stratford. It’s located on Howell Branch Rd, just west of Semoran. From what I understand, it’s a conversion of a 30 year old apartment complex. So it shouldn’t be a surprise that it’s surrounded by several other old apartment complexes (some of which also have converted to condos).
When “The Stratford” started advertising in the Orlando Sentinel last year, they made a big deal about it being in Winter Park and “minutes from Winter Park Village”. But it’s really not close at all. And now they’re getting desperate. According to their website, they’re throwing in a year’s worth of HOA fees and $4k towards closing costs.
By the way, have you seen the new sign hanging from the side of “The Crest”? They’re advertising prices now. The two-bedroom is down from $225k a few months ago to $193,900. Oh how the mighty have fallen!
OTownCajun: I saw it, live down the road from it. The problem is Crest was one of the first on that side of town to go condo. They are in a bad situation, even if I was in the market for a conversion why pay 160,000 for a one bedroom when I can go a few miles away and get one for 140,000.
There are few buyers willing to purchase them. Great idea if you are a true investor, pick up an entire building and rent them but you can’t get a good return on investment at those prices. They are just waiting until they go into foreclosure, the real real estate investors will come out of the woodwork then. In South Florida they even have vulture funds set up for when the foreclosures start. They plan on buying up condo-conversions from lenders and renting them back as apartments.
Did you check out “Heritage” yet? The 3bed2bath are going for 307K plus another 300 a month in HOA fees. I went in there and told them they were out of their mind because I could by new home with a pool and a garage for 300K and less fees.
The girl selling them looked at me like “yeah I know, I’m sorry”.
so, why are they trying to ask those prices? to catch my sister-in-law who doesn’t know the market because she’s from out of town?
so fascinating…
Shel, Thats pretty much it. That condo conversion is run by a company out of Miami. I knew a couple who lived there when it was apartments and who actually expressed interest in owning one but the developer blew them off. They are trying to specifically cater to out of town investors with cash from what I understand.
Unfortunately most experts have no idea how many speculators were out in force last year. I know one girl who is a sales rep for a developer here in town. She received 100+ calls a day at one point this summer from speculators looking to buy 3,4 or 5 homes. Very few calls were from people looking to live there. Many of the new developements, town homes and condos down here look like ghost towns when they are finished. Another couple we know living in Waterford bought 3 years ago. They hate it there, all renters and there are 8, yes 8 homes out of 21 homes on their street for sale right now.
Many sellers here it has not sunk in that things are going to be different. Listings are piling up at record levels but not many are buying, speculators are all but gone leaving true owner occupants, many of whom can’t get financing or simply can’t afford the prices.
One justification speculators and sellers use is “oh all the people from up north getting top dollar will have huge down payments” nope the markets even colder up there. Same old story, speculators gone, lower and middle class entry level buyers are completely priced out = not many buyers and a whole lot of sellers.
Same old story, speculators gone, lower and middle class entry level buyers are completely priced out = not many buyers and a whole lot of sellers.
That is a line for the ages.