“It’s So Over” For Floridas’ Condo Boom
The Palm Beach Post reports from Florida. “It’s so over for Opera Place. Reps are telling buyers and at least one attorney that both of the project’s twin towers have been canceled. Buyers of the West Palm Beach project’s second tower already were notified their tower was canceled and their deposits were being returned.”
“Sadly, relations between buyers and developers are considerably worse at another unbuilt West Palm Beach condo project. Last week, 24 would-be buyers at Palladio Terrace filed a lawsuit in Palm Beach County Circuit Court. They are demanding Palladio developer Merco Group return some of their deposit money. The luxury condo on North Flagler Drive is stalled, with no building plans, no bank loan and not enough sales.”
“The Miami-based developer is knee-deep in another condo lawsuit, this one over a project in Miami-Dade County. There, about 60 buyers are suing because an entity owned by Merco hasn’t gone through with redoing the Deauville Hotel in Miami Beach into a condo hotel. ‘We lost the opportunity to invest in other projects by investing here,’ said Luis Maseda, one of the plaintiffs.”
The St Petersburg Times. “Not long ago, popular south Clearwater Beach was teeming with tourists. But those hotels and others were knocked down or closed in recent years to make way for nine high-end condominium and hotel projects, valued at $1.4-billion. And more closures are expected.”
“Somewhere amid the ‘condo boom,’ however, prices skyrocketed, the market softened, insurance rates escalated, and buyers vanished.”
“What was supposed to be a time of great optimism, of unprecedented construction on the famed beach, has given way to quiet and an uncertain future. It could be many years before the rooms, and the millions of dollars in business, return to the beach. ‘We might never make up for what we’ve lost,’ said David Little, a real estate agent and redevelopment chairman for the Clearwater Beach Chamber of Commerce.”
“The nine projects cover a nearly 1 mile stretch of S Gulfview Boulevard. Work on eight of them was to begin by the fall; the ninth was to start early next year. But all but one have stalled or changed.”
“The market soon became oversaturated. In April 2005, there were 1,430 condos on the market countywide, and about 62 percent were selling. In April, there were 6,100 on the market, with 5 percent selling. ‘People are saying ‘enough is enough’ and they’re walking away,’ said Ray Ferrara, president of a Clearwater-based financial planning firm. ‘The prices simply got ahead of themselves.’”
“Even if developers break ground early next year, many say they’ll still miss at least four tourist seasons. Rob Remeikis, who works at Big Kahuna’s Wave Runners and Parasail, said the delays already are proving costly. ‘This is going to kill the businesses out here,’ Remeikis said. ‘They’re building these condos and no one is buying them. It’s going to be a ghost town.’”
The Miami Herald. “The once spotless apartment is a gutted shell now, a place where junkies shoot up and urine saturates the carpet beneath layers of fast-food wrappers, tangled window blinds and broken glass. Five months ago, it was the tiny but pin-neat home of Martha Pomare and her two boys.”
“All around the dilapidated Cameo, new condo towers are nearing completion. But Miami’s overheated real-estate market has cooled, and projects that haven’t broken ground face increasingly difficult conditions. The future of those projects remains in question.”
“Many planned projects have stalled, Miami real-estate analyst David Dabby said. In many cases, those projects already had cleared out rental apartments and knocked the buildings down. ‘If they had known the projects were going to bog down, they would have kept the buildings and collected rents to offset taxes,’ Dabby said.”
“Inside the Cameo, the newest residents are sleeping off last night’s high. Nearly every apartment has been vandalized. Larry, stretched out on a lounge chair in a second-floor apartment, keeps headphones on to drown out the construction racket. He has lived in the complex ‘a couple months,’ he said.”
“Martha Pomare, the former tenant who lived a few doors from the apartment where Larry now sleeps, says that learning what has become of the complex stings. ‘We didn’t have to leave,’ she said. ‘We could have been there all this time.’”
The News Press. “Tom Baker rents a furnished three-bedroom, two-bath condominium in the Cross Creek neighborhood of south Fort Myers for $1,000 per month, there’s no way he’s buying anytime soon.”
“‘This is the most overpriced area in the world, almost,’ said Baker. ‘We make good money, but I’ll be damned if I’ll buy it just to throw it away.’”
“Baker is not alone, experts say. Last year’s wave of buying by investors followed by this year’s bust in prices left an oversupply of houses whose owners are willing to rent at discount prices. They have given up on selling them for a profit, for now.”
“The average rent for a two-bedroom, two-bath house in the Fort Myers area is $940, down from an all-time high of $1,041 less than a year ago.”
“That comes as the supply of unsold houses has ballooned to more than 12,000 in Lee County. The median price has dropped 18.9 percent from the all-time high of $322,300 in December 2005 to $261,400 in September.”
“‘For Rent’ signs are plentiful in neighborhoods in Cape Coral, Gateway and Lehigh Acres, where they were rare six months ago.”
“Keith Hopkins, a real estate agent in Naples, said there has been a change in the type of people choosing to rent. Renters once were people who couldn’t afford to buy, he said. ‘The renter has changed,’ Hopkins said. ‘They’re not renting because they can’t afford to buy. They’re renting because they think it’s prudent at this point.’”
“Lee and Collier counties have a combined total of 30,000 homes on the market. Drew Schlosser noticed a year and a half ago that he was having a hard time getting anyone to help him rent his properties. So he started a real estate practice specializing in home leases from Estero to Bonita Springs”
“Now Schlosser’s turning away would-be landlords because he has too much business. ‘We can’t take anymore,’ he said.”
“Randy Bacik, owner of Sanibel-based Royal Shell Vacations, said it’s not just new owners who are feeling the need to rent. He said he has owners who owe nothing on their condos but have to pay $35,000 to $40,000 per year in condo fees, insurance and taxes.”
“People are saying for the first time that they need to rent out their unit to defray those costs, Bacik said.”
“Also contributing to the glut of rental homes is the conversion of numerous Southwest Florida apartments into condominiums in the past three years, said Brad Hunter, of Metrostudy.”
“‘Most of the rental units got converted and now some of them are reverting to rentals and others are joining the shadow market for rentals, being rented out by the owners,’ Hunter said. ‘Some of those owners thought they’d make a quick flip and sell, and their fallback plan was always to rent.’”
‘The Naples Area Board of Realtors office wouldn’t release comparative membership numbers for last year and this year. But Realtor Greg Gorman said the last meeting he went to, 130 people turned in their key cards. Key cards are what Realtors use to get into listed properties.’
‘Those who fail are finding themselves in hard times, said Ross McIntosh, a Naples-based real estate broker who sees a halt to what many thought of as the ‘easy money’ days. ‘Are many Realtors having trouble making lease payments on their vehicles and investment properties?’ he said. ‘I think so.’
‘Anecdotal evidence suggests the Southwest Florida home construction market has slowed to the point of significant layoffs. The layoffs even may have been deeper than reported in the media and than most people realize, said Ross McIntosh, a Naples-based real estate broker. ‘Of course, of course. Every home builder has had layoffs,’ McIntosh said. ‘They are just not all reported in the paper.’ That’s true, said Jeff Maddox, president of Maddox Construction Co. and Collier Building Industry Association vice president.’
Ben,
Tens of thousands of houses with blue roofs still line the Gulf Coast, from Florida, around the bend to the Panhandle, on to Alabama, Mississippi, Lousiana and on to deep East Texas. These houses haven’t been repaired for the past 3+ years for a variety of reasons (shyster insurance companies, people blowing the proceeds, no insurance), but the biggest reason is the inflated cost of replacing or repairing the roofs due to labor shortages. With all of these idle contruction workers looking for something to do, let’s hope they jump on this opportunity.
Repairing these roofs is not difficult. But after Hurricane Andrew in 1992 (complaints about inadequate fasteners, followed by shady repairmen) Florida passed tough regulatory measures on who is allowed to do roofing, with stiff penalties to the homeowner for allowing unlicensed contractors. Licensing, bonding, and workmen’s comp requirements are very high and mean that roofing contracting can only be undertaken by well-capitalized businesses, even though putting down shingles on a one-story, 3/12 pitch, shed roof with no chimney or other penetrations is a piece of cake. This is clearly a case where over-regulation has exacerbated the problem it was trying to correct.
I thought rents were supposed to be going up. What happened?
Busted as Donald Rumsfeld, Dick Cheney and George W. Bush and Jeb. No they are not busted. It’s the middle class with their houses that will be busted. Is America great or what? 1929 depression started in real estate and in Florida. It would be very ironic to see a nice big real estate Florida bust again.
My wife and I go out every Sunday to look at all the empty houses in Tampa and Riverview. I went to a KB Homes development yesterday (by myself) and before I could say anything, the rep told me prices were reduced another 15K and that you get free upgrades if your preapproved with another price cut coming in Dec. I asked about KB’s 10Q filing and he stared at me and than said, “Ohhhhhh!” like he was pretending to be scared. Well, me and the wife are heading out at 10am to be lookie-loues. We’ll buy in 2008 or 09. I’m amazed at the number of boobs in real estate who are still spouting the 1000 people a day moving to Florida.
Have you looked at the townhouse development on US41 at Palm River??
There are two developments. One along the river that is still being completed and is for sale, and one just about a half-mile south of there.
I don’t recall the name. When the construction started, the site was quickly cleared, a bunch of slab poured and I guess a model center constructed. But for the past month or so, it looks like activity has been S L O W. Have any idea what’s up with this project??
Do you have a job that requires that you live in Florida? Or maybe you have family close by? If the answer to both of these is “no,” then why would you EVER consider buying in Florida?
So, if he is already telling you that price cuts are coming in December, why would you buy? That is a huge departure from the past. We bought a Ryland home a few years back (since turned it over to somebody else and happily renting in the Big Apple). They were raising prices by $2,000 every 4 weeks or so. I doubt Ryland, KB, Toll or any of them are rasing any more. It is absolutely stupid for a “salesman” to be telling of future cuts. I guess the snowball isn’t moving down the mountain fast enough, so he is giving it a good shove. Do the villagers below know how big that snowball will be by the time it crushes through their walls? I doubt it. It won’t hit their house, just every one of their neighbors’ houses.
“Do the villagers below know how big that snowball will be by the time it crushes through their walls? I doubt it.”
That’s right! Stricken with panic and urgency, they are too busy looking for second and third jobs to pay for rising insurance, taxes, and ARM resets. If not, they are busy selling their homes trying to escape the Tsunami of bills heading their way. Otherwise, they are extremely wealthy, comatose, or oblivious.
I know people in my home town that between the married pair they are working a total of five jobs. Why? Because they bought a house. And this was before 2005.
I have always refused to buy into this insanity. Why destroy your life like this for the sake of keeping the RE industry going with commissions? Is it worth it? The Realtor (TM) gets his/her lifestyle for “showing houses” and you get to spend every waking minute of the rest of your life working.
I can only hope that this “housing correction” will be severe enough (where even the banks in rural counties in America are inundated with foreclosures of poorly constructed and unsellable homes) and last long enough (ten to fifteen years would be about right) so that the masses will learn their lesson once and for all.
ICI home builders over on the NE Coast of Florida is still raising prices…..Very Naturally of course, they have been selling almost NONE.. |||PERIOD |||….They’ve slowed building/construction to a crawl….layed off 30 people in their closing dept…BUT comp. prices are up on new construction…
[per the website]
“I’m amazed at the number of boobs in real estate who are still spouting the 1000 people a day moving to Florida.”
Ever heard that old Florida say’n, a sunny place for shady folks?
We learned on this blog that public school enrollments dropped this fall, for the first time, after a decade of rapid increases. My guess is that Florida is now seeing a period of level or declining population.
I like the term “shadow rentals”.
I live in a shadow rental unit right now. Kind of makes me feel very special ops/covert about things.
This would have been news a year ago. Now its just another article in the tsunami of bad news about housing developments. I really wonder if those people who told me housing always goes up; and WPB is different realize the error in their ways now?
Finally, a description of the rent vs buy analysis for all to see, far and wide. Now if only the rest of the local papers around America would do the same, maybe we wouldn’t have people so anxious to catch a falling knife. Who’s buying now anyway, I just don’t understand it!
I was impressed that the News-Times had the courage to make this the top story regarding how attractive rentals have become. I went directly to their web site and it was the top story on page 1. My guess is the writer and the paper will take some heat from the Realtors but it is what it is and how can reporting the truth be bad.
Deutsche’s loan call on Technical Olympic is the start of a credit crunch in this failed FL market
Anyone have any idea what the effect of the loan call is going to be on Technical Olympic? They are actually a client of ours, and I want to know if I should start to be concerned about their finacial liquidity?
Thx!
Do not overestimate the amount of time it may take for things to fall apart. It seems to me that the economy is degrading in housing at an exponential rate. Only when the rest of the US economy’s failures become evident will the degree to which housing has degraded be truly revealed.
“It’s only when the tide goes out that you learn who’s been swimming naked.”
- Warren Buffett
Its the start fo the crunch… but its going to take anouther 6 months for this python to really tighten up.
still very interesting…
Neil
“They’re building these condos and no one is buying them. It’s going to be a ghost town.”
Well, that’s a bit of an exaggeration for Clearwater, but it finally focuses on what I have been posting for this area for about a year now.
To recap, there are at least a dozen bull-dozed sites that have signs for pre-construction “L*U*X*U*R*Y Condos, with no construction.
Several very large projects are SLOWLY heading toward completion. The biggest project completed, Belle Harbor, is supposedly sold, but is always mostly vacant. About 10-20% of lights are on in the evening. Folks tell me they are being bought by rich Europeans, Oil sheiks, Football stars and very wealthy folks who only live there a few weeks a year.
That never made sense to me. Why would anyone with money sink it into an annual expense for which they got no use. There are plenty of LUXURY hotels. I think they are dreaming.
But speculation has been plenty and prices are all above 500k. This used to be a FAMILY vacation spot, where little mom/pop hotels provided inexpensive rooms for family fun. The businesses catered to that crowd, and still do. But the mania took over and I was even told by one speculator that Clearwater Beach was going to be the next “MONTE CARLO”. I laughed.
However, if gambling was what he meant, it has not missed out.
One Company, Rogers Beach Development trashed 21 sites they are currently in the process of “selling”. In some cases 3 or 4 hotel/motels were razed to make room for wealthy Madison Avenue types who just really didn’t want to move to the Hamptons.
The townhouses that were completed last year, mostly sold out. Within weeks, half were for sale or for rent. Many had California phone numbers. Some of the large condos are just finishing completion and are going on the market. As you can read from the article, they are not selling.
And then there are the vacant sites with the “pretty picture” of what you can own if you buy this Pre-construction Price condo.
I spent my youth and a great deal of my adult life on Clearwater Beach and Sand Key Island. It has been very painful to watch my memories razed to make way for greedy speculators. No one driving a limosine or a Hummer/Jag/Lamborghini is going to be visiting a swim/surf shop or stopping at a local hotdog vendor, or getting a tattoo. The target market for all these developers here and across every beach-front community in America has been “HIGH END”, i.e. Luxury, and I’m afraid there isn’t that much money in all of America. (Oil Rich Sheiks, please come to Clearwater. We need your money).
Lucky for us, however, behaviors tend to revert to the mean and a lot of these financially ruined speculators will end up flopping like fish on the shores of Florida’s beautiful beaches.
..LOL, a sort of red tide fish kill of speculators.
This is a shame. I have family in the Tampa area. While I’m not a big fan of Florida in general, I really enjoyed the slightly seedy, beach town aura of Clearwater. The beach is really nice, too.
The townhouses that were completed last year, mostly sold out. Within weeks, half were for sale or for rent. Many had California phone numbers.
I’ve read that 40% of California’s wealth is in speculative real estate. Does anyone have a link to the real number. Judging by the huge number of coworkers who own two homes (current and soon to be retirement), I bet that number, via leverage, is higher.
And people wonder why I’ll wait for California real estate.
Neil
Spent many years in Clearwater area. Owned on Madeira Beach till 2001. Sold and moved to NYC. Parents still on St Pete Beach. They pd 45K in ‘75. Next door asking price is 2.5mil. I love NY, and many I know are staying here rather than move into Florida debacle.
This is the 21st century equivalent of ‘urban renewal’, that devastated our cities in the 1950’s and 60’s. It took many of these cities 30 years to recover, and some never have.
From the St. Petersburg Times, “The nine projects cover a nearly 1 mile stretch of S Gulfview Boulevard. Work on eight of them was to begin by the fall; the ninth was to start early next year. But all but one have stalled or changed.”
Can you imagine the mindset of the locals at the start of these projects? They were probably all wild-eyed busy bees full of zeal yet completely mindless of their actions. Gripped by mania, panicked with urgency, and full of greed, they destroyed the objects that once made them a great tourist destination.
I’m not so sure about that. I know some people who had to close their businesses because condospeculators took over the properties where their small businessess were located. I don’t believe local working people knew what was going on. Right now as you go around Tampa, downtown Tampa included, you will find storefront after storefront closed down because of plans to convert those parcels into condo developments.
Sorry. I recognize there was a lot of diplacement as a result of these developments and should have been more specific and outlined beneficiaries such as local land and property owner’s, local construction workers, local tax collectors, local developers, local bankers, local realtors, and any other local entity that gained or was expected to gain from these developments
They certainly cut open the goose, so to speak.
I miss the old days. “Shabby” beach towns were my faorite thing about Florida.
“There, about 60 buyers are suing because an entity owned by Merco hasn’t gone through with redoing the Deauville Hotel in Miami Beach into a condo hotel. ‘We lost the opportunity to invest in other projects by investing here,’ said Luis Maseda, one of the plaintiffs.”
Oh, come on now. Here we go into the “Legal Phase” of the housing crash. I have said all along that it was this phase that would really hasten the destruction. The lawyers will eat through this like hungry termites. Everybody that has anything to do with housing can plan on being named in a lawsuit. Americans never blame themselves for stupid decisions. They blame everybody else, ie the realtors, builders, mortgage brokers, contractors, sub-contractors and anybody else that can be named at defendants. All these buyers, or potential buyers, are “victims”.
This guy’s complaint is pure bull$hit. Mr. Big Wheeler-Dealer had to move on to other “investments”. He should be thanking this company, not suing them. They probably saved him a lot of money by protecting him from his own stupidity. I’m sure the lawyers didn’t put it that way to him. The victimization of these investors was probably preached ad nauseum. Yep, we are entering the phase that will be the final needle in the arm of the housing market. That is my prediction. Dr. Kevorkian has entered the condo.
About a year ago, when some of the condo developments were just beginning to crumble, I remember reading about irate buyers (speculators) who were going to sue the developer for lost appreciation even though they got their deposits back.
I couldn’t imagine a claim even getting to the first MSC because the plaintives are going to have a rough time proving the properties would have appreciated.
Interesting times ahead indeed!
plaintives=plaintiffs
Naples Construction layoffs…
” When is it going to end?
It is discussed within builder circles but no one would predict when the residential construction market may rebound.
“There is word out on the street, but I’d hate to speculate,” Henning said.
http://tinyurl.com/y6lmhd
‘We lost the opportunity to invest in other projects by investing here,’ said Luis Maseda, one of the plaintiffs.”
Sure. You would have just taken a bath somewhere else.
“Sure. You would have just taken a bath somewhere else.”
And probably a worse bath with them stuck with an empty condo building. Luis Maseda sounds like one of those ‘investors” who think they have some sort of guaranteed of a profit. The rule of investing is that if you can make money doing something you can also lose money doing the same thing, it all depends on the timing and the exact details.
You got it NYCB…..This guy should be happy the project wasn’t built . That’s alright the lawyer will take his money instead . They must have a clause in the construction contract about what happens if the project is never built etc. Plus its not really bad faith if a developer couldn’t get all the sales the lender required to proceed .I guess every case is different ,but wow ,this guy can’t see that he was lucky , especially when hes getting his deposit back .
I was thinking that there might be a issue with the interest that he might of earned on his deposit ,so if the builder was earning interest on it ,than maybe he should get his interest back also.
[x] Amateur investors, toast.
[x] Amateur flippers, flopped.
[x] Amateur agents, turning in their keycards.
[x] Amateur reporters stumbling across the real story.
[x] Amateur observers speculating about rich foreigners.
[_] Amateur landlords.
Yes, time to fill in the next box: idiot landlords. Any guesses whether they do any better at this than they’ve done with any other adventure? The difference is landlording is real work, something they don’t understand.
Rich foreigners = smart foreigners. I expect them to be among the vultures who come in and buy once prices settle down to fire-sale levels. My crystal ball is showing increased future Indian and Chinese colonization of nice coastal California neighborhoods.
Isn’t Dubai the place to be for the rich ?
Dubai is the place for the rich to invest in real estate and lose their shirts when the global bubble tide fully recedes.
“Isn’t Dubai the place to be for the rich ?”
Dubai is Globalism personified, 7 star hotels built by imported $4 a day labor.
And, yes, they are making more land in Dubai.
http://www.palmsales.ca/
Ah yes, the amateur landlords. The last resort of propoganda for permabulls who claim that rents will rise significantly to meet the price of houses because this is how their equity will be saved…don’t bet on it.
You are correct about that part but rents are still going to rise as stealth inflation and other factors intrude. Rents are going to rise but landlords won’t be making more profits. For instance, anyone seeing property taxes, energy, other costs going down enough to make up for increased vacancy rates, renter defaults, cost of money, etc?
I’ve already seen noticeable declines in rents. How can rental prices rise in an environment of excessive home vacancies? It defies the supply/demand relationship. Landlords will lose pricing power even in the face of increasing costs.
Only when properties begin to be absorbed from the market through foreclosure and the available pool of rentals shrinks may landlords regain a temporary modicum of pricing power. Longer term, however, those properties will in turn be bought at distressed price levels and return to the markets as new prospective rentals, and a glut of cheap housing drives down rents as well as values.
Right, “over the longer run.” Vacancies mean fewer rented properties. Everyone needs a place to live now so they are in a sense competing for a smaller supply made even smaller by unrealistic amateur landlords pricing too high and thus also effectively taking those off the market. It’s a complex subject and my posts don’t always show up here anymore and akways take too long so we’d have to duscuss more elsewhere.
The rent on my 2/2 dropped from $849 last year to $735 this year. People keep telling me I’m wasting my money renting, all the while I’m stashing away $800/mo into 5% CD’s and living a very fun carefree life. The people telling my to buy can’t even stash away a penny and can’t afford any vacations at all. What kind of life is that when you’re a slave to your home?
And amateur Central Bankers.
And amateur Bankers.
And amateur Economists.
And amateur Politicians.
They haven’t even been sworn in yet. Don’t you think it too early to judge their perfomance? The professionals we have now have certainly screwed things up. Maybe a few terms of amateurs will be okay. I sure as heck know that Pelosi is gonna get Gingriched time two. People have no idea just how liberal she is. Expect her personal agenda to resemble the California agenda. Carbon taxes, anti-business, social programs that reward unproductivity.
I am currently in fort myers visiting. What a difference a year makes. I was at the pool and it seemed almost everyone had their own discussion of the current real estate situration. One in particular stood out among the rest, it was among a older gentleman and lady. She says ” My real estate friend from lynn massachusetts says that next year in the spring things are going to be picking up. They are ecpecting next year to be a banner year, since interest rates have come down. In fact her real estate friend is expecting to come down to naples and buy a few bargain priced condos.
IMO, its only the beginning stages we’ll see alot more bloodshed going forward. Prices may be down 10% now but they’ll be down another 10% plus next year.
Been a blog reader for some time now. I live in New Smyrna Beach FL where the market has been just as insane as so. FL up until lately. Things have really changed in the last few months however and nothing is selling around here. That is except some new developments which are somehow still enticing buyers with reductions and incentives - I can’t believe this works, but whatever. Here is an excerp from the Daytona Beach News Journal today:
Despite what’s happening now in the real estate market, his construction crews will be busy for quite awhile, he said. “Sales have slowed here, like in other areas, but we pre-sold so many homes that we have enough of a building backlog to keep us busy for another year and a half
Nice. What do you think? Here is the link to the article:
http://www.news-journalonline.com/NewsJournalOnline/Business/Headlines/bizRE01BIZ111206.htm
Been a blog reader for some time now. I live in New Smyrna Beach FL where the market has been just as insane as so. FL up until lately. Things have really changed in the last few months however and nothing is selling around here. That is except some new developments which are somehow still enticing buyers with reductions and incentives - I can’t believe this works, but whatever. Here is an excerp from the Daytona Beach News Journal today:
Despite what’s happening now in the real estate market, his construction crews will be busy for quite awhile, he said. “Sales have slowed here, like in other areas, but we pre-sold so many homes that we have enough of a building backlog to keep us busy for another year and a half
Nice. What do you think? Here is the link to the article:
http://www.news-journalonline.com/NewsJournalOnline/Business/Headlines/bizRE01BIZ111206.htm
I think he will be rudely awakened when he gets a ton of “cancellations”.
Diogenes: “I spent my youth and a great deal of my adult life on Clearwater Beach and Sand Key Island.”
memories of loss are important
“This used to be a FAMILY vacation spot, where little mom/pop hotels provided inexpensive rooms for family fun.”
the sense of past worth must be applied to the present
God bless America!
Same thing is happening on Ft Lauderdale beach. They’re buying out bars and shops to build condominiums in their places. But now all you have are boarded up businesses because the condos will never be built. Looks terrible.
Ditto in Daytona.
Seriously, where in Florida did this not happen?
All,
Just a quick salute to those who appreciate a different opinion that is actually backed by statistics, logic and fact and who have recognized that I have been consistently correct.
Unlike the crap spewed by NYCboy and Txchick, who using words like “stupid” or “regret” without really providing any evidence to support their case. Typical reaction from a child.
Nobody really knows what the outcome of this housing deflation will be. If you told somebody in 2000, that the stock market would decline 50%, and houses would appreciate upwards of 100%-200%, they would have laughed at you. After all, “recessions” and “inversions” are supposed to lead to asset deflation…Remember that crap? OF COURSE you do, because it’s being spewed again!
Do not underestimate the power of liquidity and the power of the savings glut. If inflation expectations were to go under 2%, and ISM contracted (which by the way HAS NOT even happened yet) the Fed would begin shoot off interest rate cuts in a manner of months. Why? Because they can!
Then what will happen to housing? Well, it may not go up in Palm Beach, but it could certainly start bubbling again in areas such as the NY metro area, Boston, Chicago, Seattle, San Francisco, LA,…just like it did after the initial slowdown in London.
Will housing prices fall significantly? My gut is yes. But I know that it will only happen under a regime of much higher real interest rates both domestically and globally. And you’ll only get that if inflation expectations gallop much higher.
BUT, If the Fed were to cut rates 125bp and you could get a mortgage for 5% again, you’d be absolutely nuts not to buy a house in 85% of the country if your holding period were more than 5 years.
First,
You would have been taken more seriously if you hadn’t started off needlessly insulting other posters. TxChick has quite a following on this board…
Now the though, you do realize a lot of this liquidity is via the yen carry trade? What happens if that stops? All it takes is Japan actually demanding a real return on their loans…
2nd thought? What if companies move out of the overpriced markets. It takes income to pay for a property. While it doesn’t matter if that income in salary or passive income, the money must come from somewhere. We’re beyond where interest rates alone are required to drop housing.
I’ve blogged how rumors are sweeping my company about an out of state move. Its cheaper for the company to move than offer salaries that cover today’s housing costs. Cest la vie.
And with an interest rate cut of 125bp and a 5% mortgage… it would still be nuts to buy in LA. We’re that overpriced. In five years you would still lose hundreds of thousands of dollars. But then there would be inflation.
This is going to be bad. So I’ll wait. I’ve seen this happen twice before in California. Its always the same pattern. We’ll repeat again. Now the rest of the nation will wake up to how cyclic real estate truly is. My company’s executive management estimates that LA salaries would have to double to attract any workers there. If that doesn’t say something…
Neil
I am also in the camp that argues that substantial price cuts, at least 20-30%, are needed to get a big enough increase in buying to really cut down on the inventory. That will probably take a recession. It’s very unrealistic to think that prices go up 80% over 7 years or so and then that a 5-10% decrease is enough to bring back the buyers. Sure, some people might trade up, but the speculators are net sellers for the next few years. Last year, the self space at the book stores devoted to “real estate investment” was enormous. At the bottom, it will be just one or two rows of one shelf.
He’s a tiny little man. Who cares what he thinks. Probably a back office clerk at some fund.
I appreciate a different opinon. I do however disagree.
Ask Japan what happens after a bubble and you attempt to drop rates and flood the “island” with money. Didn’t work. The confidence game was over and 15 years later they are finally digging out of that mess.
There are many difference between us and them, I will give you that. However, the amount of mass speculation and credit fraud here is much worse then they every experienced.
Its far too late for the FED to come in a “save the day” by cutting rates, as you expect. They will need a big mop and pail to clean up this mess. FED President Fisher appears to be the only member with the balls to dissent at this point in public. I am sure in private that many others are very worried about the ticking time bomb they created by keeping rates way too low for way too long.
Time will tell the tale, I hope you are here to see it.
Thank you for mentioning me by name. I still don’t respect your opinions. I see you as being the typical hedge fund shyster, trying to spew contrarian garbage.
“Will housing prices fall significantly? My gut is yes. But I know that it will only happen under a regime of much higher real interest rates both domestically and globally. And you’ll only get that if inflation expectations gallop much higher.”
What? That’s some good double-speak there. You are predicting too things at once so you can’t be wrong. Of course you can’t be right, either.
This thing no longer has anything to do with interest rates. Interest rates can drop 1 1/4 basis points. It won’t matter. The $2 trillion in ARMs resetting in 2007 & 2008 would be impacted minimally at best. It would be like a pigeon flying into a skyscraper. I would think Mr. Big Investor would already know this. But, that is not to be.
Suckers! HFA is long gone. He never responds to other people’s posts. Moreover, the issue he raises has been debunked over and over again on this board. Consequently, anything he says should be interpreted as trollish and ingnored. Don’t waste your time!
I think he and that “Gekko” are the person. Stir it up and then dissappear.
I thought it was pathetic getting addicted to a blog. The only thing more pathetic is trolling blogs just to try to rile people up. HFA must really have a pathetic little life.
“Just a quick salute to those who appreciate a different opinion that is actually backed by statistics, logic and fact and who have recognized that I have been consistently correct.”
Hah! Why don’t you offer one for the first time ever?
hfa seems to be as stupid/ignorant/low self esteem/arrogant/as Jas.
I’ll listen to PIMCO’s Paul McCulley over any hedge fund analyst. It’s going to require quite a bit more than a few rate cuts to get people interested in real estate as an investment again. You’re going to need the price to rent ratio to become reasonable, and that my friends, will require quite a few rate cuts indeed. All the absurd “RE always goes up” type of expectations are gone. Debt induced liquidity is drying up. Real estate funny money loans are turning toxic to the subprime industry, the HB’s are feeling a big crunch. The avalanche has begun, and it has a huge momentum. If this thing keeps rolling for longer, bringing the FED funds to zero might just spell out the same way it did with Japan - as deflation.
Sure let then lower rates, it will do no good now. Most people who bought in the last year are underwater and will not be able to refinace and not able to come up with the differenct to refi.
“Then what will happen to housing? Well, it may not go up in Palm Beach, but it could certainly start bubbling again in areas such as the NY metro area, Boston, Chicago, Seattle, San Francisco, LA,…just like it did after the initial slowdown in London.”
This is why you have no credibility on this board. It shows how little you understand. Any idea, big thinker, why our economic predicament is so dissimilar to the U.K.? Get back to me when you’ve figured it out.
BTW, real nice call on that interest rate movement a few weeks ago.
The bubble is so differant that no one knows how bad the results would be and most of the people on this blog are trying to share their views and you also have your views but GetStucco,Txchick, NYCboy and others are much smarter,responsible and mature than you.
that is actually backed by statistics”…
“Will housing prices fall significantly? My gut is yes.”
What a fake. Claims all opinions are based on statistics and analysis, provides no statistics or thoughtful analysis whatsoever, and then just pulls an opinion out of the air based on “gut feel”.
Talked to a friend yesterday and he said that where he lives in north port (a nice country club community) you can buy a new 2,600 sq ft house with pavers in the drive and pool area, granite and stainless steel appliances. For 459K. Plus, when someone said they were worried about selling their current home ,the builder said no problemo, we will paid your mortgage for up to 1 year.
This guy also has a friend that has two investment properties, same as the above property, but he wants $519K for them.
So, the builders are under cutting the resellers and are more flexible regarding financing. Not good it you have to sell a house in this market. I can’t see this market going anywhere but down from here. In fact it is already down, sellers just don’t want to believe it.
In the village of Northbrook IL, where I grew up, all the rage has been the teardown. Happy to say activity in that arena has all but dried up. 99% of the tear dowms are rebuilt as McMansions, with a $1Mil + price tag. In Sep ‘06, only 1 1MIl+ place was sold, out of 55 sales (2% of the market). There are currently 70+ McMansions for sale, at that rate there is at least a 2 year supply. Poor, poor re-habber you will be carrying you construction loan for a very long time. Has re-habbing been so strong in other areas of the country?
33021-Hollywood, FL
Height of boom-69 properties
Today-840
More sobering news re Florida condos. One of Orlando’s main TV stations aired a piece Friday night and Saturday about condo sales, particularly noting that the volume of Brevard County’s condo sales is down 85% YOY September to September. That’s a higher rate of drop than I recall reading anywhere else, yet. The report from which they got their statistics:
http://www.wftv.com
On the right end of the black button bar at the top, click on “Web Links.” Under “Week of November 6,” the report is “Condo Sales Report.” The report is a PDF file.
Brevard County is the Melbourne, Titusville, Palm Bay area. From the median price shown, very few sales were “direct-ocean,” as the average direct-ocean sale, or even “ocean view,” should run well over $300K.
Since it is late in the day, I’ll re-post this tomorrow or next time there is a Florida thread.
Chip - FYI, the pdf actually comes from the Florida Association of Realtors’ website:
http://media.living.net/statistics/statisticsfull.htm
Data are doctored/updated every month.
Since when has Clearwater Beach ever been a great tourist attraction? The last time I was there (about 3-years ago) I couldn’t believe what a dump it was. Nice beach though. All this new stuff sounds like they’re just putting mag wheels on the double wide.
Count me in as one of the renters… After selling my NYC coop last month, I am going to rent in Daytona, Ormond or Palm Coast until the bottom arrives. gordo nyc > dab