Housing Market A “Soft Underbelly” Of Florida’s Economy
The News Press reports from Florida. “The desperation may not be so obvious these days, but as the real estate market cools, some people are turning to auctioneers as a way to unload property they want, or need, to dispose of. As the once red-hot real estate market chills in Florida and other states, more houses are for sale, about 12,000 in Lee County, and area auctioneers are beginning to see more business.”
“Neal Van De Ree, who heads Venice-based Auctions by VanDeRee, says he’s added more phone lines and almost doubled his staff to 20 because of interest in the service, including from Lee and Collier counties.”
“‘We work with Realtors on a regular basis, because a lot of them have seen what has happened to the market in Florida with the exception of Tallahassee and Jacksonville,’ says Van De Ree, who, as required by Florida law, is also a licensed Realtor. ‘It’s a bad market for people who bought in the last year or two and instead of making money they are looking at losing money.’”
“Van De Ree, who estimates it could take two years or more for the real estate market to stabilize, says his clients range from retirees, ‘to regular people who are needing or wishing to sell and then the investors who were in the marketplace to make a profit but are now seeing losses. A lot of those are blue collar workers who saw all the money being made and thought they could get a piece of that market and are now looking at losing their retirement and everything else.’”
“Some of those customers include fellow Realtors. ‘I heard from one Realtor who had three houses that were about to be completed and he called and wanted me to help sell them, to just stop the damage,’ says Dan Mahaney who operates Luxury Auction Group from offices on Sanibel Island and Indianapolis. ‘I think these auctions will continue, based on the amount of calls we are getting.’”
“While there are more auctions in the area, including a recent group sale in Naples that was slated to sell 45 prime properties, many local Realtors say it’s not yet affecting their business.”
“‘I think some people get discouraged by them,’ says Lynette Schwab, owner-broker in Cape Coral. ‘I know of one house that was listed at $1.8 million then it was suggested they do an auction and put it up at $999,999 and that’s kind of misleading because they turned down a bid of $1.2 million.’”
“Even Mahaney, who recently opened an office in the Boston area and is looking into going into California as well, says some would-be sellers still aren’t aware of just how much the market has changed or how to market what they have. ‘A lot of people can’t afford to auction a property,’ he says. ‘They have to pay for the marketing and if you take a property to market that is not going to sell, it’s a waste of time and money.’”
“As more owners want to make residences available to renters, condominium and homeowners’ associations are having to decide whether to allow rentals.”
“‘What we see now in large complexes is an extremely high percentage of people who bought to flip them,’ said Joe Adams, a Fort Myers-based attorney (who) represents many condominium and homeowners’ associations. ‘Obviously they want to get some cash flow out of it while they hold them,’ said Adams.”
“Some financial institutions such as Freddie Mac or Fannie Mae won’t offer loans in condos with more than 50 percent renters, he said.”
The Sun Sentinel. “For more than four years we’ve been growing and adding jobs at a pace envied by the nation. It’s an expansion cycle that started in October 2002. The tourists came back and the housing market took off. But in the world of economic cycles, every beginning has an end. It’s just a matter of when and a question of how.”
“Perhaps the most immediate threat comes from the housing market, whose red-hot growth has generated high-paying jobs and a massive surge in personal wealth in the form of home equity. ‘If there is a soft underbelly to the Central Florida economy, that’s where it is,’ said economist Mark Zandi.”
“Investors have quit snapping up homes, removing much of the pressure that once pushed prices upward every month. Now homes are piling up, with more than 20,000 existing homes in the inventory pool, compared with less than 4,000 two years ago.”
“The biggest worry is a mass exodus of investors, they may have stopped buying, but many of them are still holding onto their last purchases. ‘They aren’t panicking and selling at a big discount,’ Zandi said. ‘At least not yet.’”
“A crash of the housing market would ripple throughout the economy and its job machine, eliminating the need for some of the higher paying jobs it creates, including construction workers, real estate agents and a host of financial services workers.”
“‘You would see a screeching slowdown, if not a halt in the job market,’ said Bruce Nissen, economist at Florida International University. ‘Suddenly, we’d have all these unemployed construction workers sitting around.’”
The Palm Beach Post. “Florida-based WCI Communities reports that third-quarter orders for ‘tower homes’ (that means ‘condos’ in WCI-speak) were a negative four compared with the third quarter of last year.”
“‘That is, cancellations exceeded gross orders,’ said analyst Thomas Lawler of Lawler Economic & Housing Consulting in Vienna, Va. ‘I’m not sure I’ve ever seen that,’ Lawler added. ‘What’s scary is that cancellations are occurring on orders placed in the latter part of 2004, which should give you an idea how bad that market is.’”
‘Suddenly, we’d have all these unemployed construction workers sitting around.’
Interesting that most Florida economists only see this when it’s right upon them. A related link:
‘ Man’s best friend isn’t a dog. It’s a snowbird. Take the case of just one oceanfront property owner in Indian River County. He spent only a few weeks on the Treasure Coast, but contributed $102,143 in local taxes last year on a home appraised for tax purposes at $6.6 million. The real estate boom helped increase the value of his home from $5.3 million in 2003 when he paid only $81,247 in taxes. Not all snowbirds live in oceanfront mansions, but dozens do across the Treasure Coast. They are the geese who lay golden eggs for local taxing authorities.’
‘Unfortunately, Florida is slaughtering its favorite fowl. Snowbirds and businesses pay an unfair share of local property taxes. That’s because the taxable values of full-time residents can increase only 3 percent a year. There’s no limit for snowbirds.’
Funny how this whole thing is starting to pan out now that it isn’t just ‘easy money’ anymore.
Now things like taxes, and carrying costs are ’something to think about’ when being a homeowner.
I got a new post up called ‘reality check’.
http://www.housingbubblecasualty.com
SoCalMtgGuy
also…let me know if shorter, but more frequent posts would be welcome (see the post)
Anything you write is ok, long or short. Thank you for all your effort.
SoCal- Glad to see you are back! I’ve been a reader since practically day one, and yes, you have nailed it once again. Frequent short posts would be cool, but you sound busy and work must take precendence!
Pesky little things, those fundamentals. You touched on the most important of all: incomes. They don’t even come close to supporting these prices. How long do you think the lenders will be able to delay the inevitable? With values declining, and so many people on 100% financing, I can’t imagine the wheels staying on much longer.
Also, I fully expect to see Appleton-Yound and Liereah stepping down from their positions by the end of ‘07. Kind of how scandalized politicians don’t seek re-election because they have suddenly decided to spend more time with the family. I’m just wondering who would hire these clowns when their forecasts are obviously nothing but steaming heaps of dung?
What’s more, some national economist don’t see the relationship between the housing industry’s expansion and GDP output. They falsely conclude GDP output is strong; therefore, housing should continue to expand. When in fact, housing has been rapidly expanding; hence, we have had strong GDP output. GDP is not driving housing; housing is driving GDP.
Now that housing growth is falling of a cliff, GDP is lagging and also trending down and will soon be near recessionary levels.
Exactly, I wonder what the GDP would be if housing was subtracted from GDP. Say core GDP without housing. In some areas of the country housing accounts for 30% of all new jobs since 2001.
“‘Unfortunately, Florida is slaughtering its favorite fowl….”
The same thought occured to me yesterday when I was reading the Clear Water Beach thread where 9 condo projects are on hold. Some Florida cities could easily be renamed Slaughterville!
‘Suddenly, we’d have all these unemployed construction workers sitting around.’
Isn’t this always the case regardless of their employment status?
Ben-
All I can say is bravo to FL.
F*ck the second home owners.
A person used to live and work In northern NE, not so much to earn a pile of dough, but for quality of life reasons.
10 years ago a year round resident, with careful planning could afford to purchase a small camp on a decent coldwater lake, or even the ocean in sections of Washington or Hancock Country.
That entire concept is dead and buried now, with the Mazzholeland equity locusts have driven up the cost of ALL shorefront and quality recreational land way beyond what any native could hope to pay.
Locals are now second class citizens in their own states.
These arrogant 2nd homes pricks should be bled dry by any means possible.
Couldn’t agree more.
hd74man - I’ve never been to northern Nebraska - is it nice there?
Ooops…
Typo…”N” should be “ME” for Maine
Ben, It kinda reminds me of back in the days when people hunted whales for fuel. They slaughtered so many whales , due to their own greed, that some species suffered near extinction.
Looks like what we may be doing to snowbirds here in Fl.
The possibly extinct snowbirdus floridicus. (Wyle E Coyote like reference)
Exactly. The lack of foresight in this bubble is going to kill us. These economists are too enamored with their efficient market theories and formulas to actually be of any use. Like Ben said, they claim to not see this stuff until it smacks them upside the head.
gov subsidies and the community banking bill
what free market ?
That’s right, these clowns who say they are for a free and efficient market are usually the same ones who couldn’t imagine an economy without the fed.
I have an old t-shirt that says:
“Protect Natural Florida, Eradicate Snowbirds”
And I have seen firsthand how the 2nd homeowners have driven lakefront to unreasonable levels. In 2001, we considered selling our home and buying a 2,000 ft2 1920’s lakefront bungalow for $100k (desparate seller plus the home needed about $40k in work). We passed, but someone else bought it, did the repairs, and sold it 2 years later for $160k when he got transfered out of state. Since then, it has been sold three times, the last one for $480k at the beginning of this year. A Lakefront lot in central Florida used to be a $20k~$40k premium over the same non-waterfront lots (normally under $30k). Now, the starting price for lakefront is $200k, if it is in a bad neighborhood, with a bad school district. In a livible area they are $350k+ for a tiny piece of land that might be buildable.
It’s not just the snowbirds. I have friends from Northern US, who came to Fl in 2001 for tax reasons. Since then, they bought 6 properties (as their pension plan). They live in one property which has the householder’s grant, sold two others and made out like bandits, but are now stuck with three other properties which they know they can’t rid of. They are toughing it out, trying to rent them etc. They believed, like so many others that FL real estate could not go down, that there was no more land to build on….blah, blah. The point is, they are sucking wind now although they have doubled their money on other places. They spend 6 months in Fl and then to Philly for the summer. So, not just the snowbirds who have caused this. Many came as residents to Fl for tax reasons in the first place.
Maybe I missed something. How is it that they spend only 6 winter months per year in Florida and are not snowbirds?
It seems fair they pay higher taxes since they drove the prices up.
Ordinary people who want to live in florida full time can not afford homes because snow birds and investors have driven the prices up. If they are forced to leave - prices will come back to affordable.
Odd Reference Alert:
I have always admired Bermuda’s solution to a similar problem. Some wise planners decades ago realized that with the proximity to the eastern seaboard of the United States, they could see their limited land colonized by rich americans, leaving nothing within reach of Bermudans.
The result was a network of laws, not just tax laws, that makes it all but impossible for non-Bermudan citizens to own property in Bermuda. Foreigners (americans) can visit. They can pay lots of money to stay at Bermudan-owned resorts, but they can’t buy. The result is next to no homelessness, high literacy and high quality of life.
Snowbirds don’t much care for hurricanes. Maybe they will come back next winter, since the recent hurricane season was so mild compared to 2005.
‘Unfortunately, Florida is slaughtering its favorite fowl. Snowbirds and businesses pay an unfair share of local property taxes. That’s because the taxable values of full-time residents can increase only 3 percent a year. There’s no limit for snowbirds.’
Wasn’t this the case when they bought the property in the first place? They knew what they were getting into.
Who the hell came up with the term “snowbird”? It’s extremely offputting.
“Who the hell came up with the term “snowbird”? It’s extremely offputting.”
Yeah, I like “Old Farts” better. Unambiguous.
Actually, the other common-usage terminology here in Florida is “Bluehairs and Mouth-Breathers,” but that has too many syllables. One or the other commonly is used to describe the driver ahead of you.
I received an email from Centex today offering a one day sale of houses in Jupiter. The sale price is discounted from between 22- 26% of the price listed on their web site. I would hate to be a person who paid the listed price and all of a sudden see all of my equity gone.
what equity? these idiots are probably 100% financed!
Don’t know if this has been already posted, but talk about negative equity: http://tinyurl.com/y7u2eq
“‘You would see a screeching slowdown, if not a halt in the job market,’ said Bruce Nissen, economist at Florida International University. ‘Suddenly, we’d have all these unemployed construction workers sitting around.’”
No problemo, just add them to the state welfare rolls and up the property taxes to off set the cost.
Many of these “unemployed construction workers” in Florida are illegal immigrants and won’t be able to go on the state welfare rolls. I doubt if they will be “sitting around”. They will move on to other work in other states. Some that were around here have already taken their money and gone back to Mexico and purchased houses there, where they can afford them. There was a story about that in the local newspaper a couple of months ago.
Good. I hope they do. Because all their wives and girlfriends and daughters work in all the restaurants here in my town.
Like many posters here have noted the ilegals have a deep resentment for legal americans. When I go to get lunch all they do is give you cold hard stares, and thats even if you smile at them and say, “HI.”
I’ll Be glad when they go back home. Then the displaced realtors and fraudulent home appraisers can serve my fries with a smile again.
(sarcasm off)
Not to mention that they were drinking up all our beer so the prices got jacked up to $15 a 12 pack!
capt. Jack:
Here’s how you can get a big smile from the illegal servers:
instead of saying “Hi!” as a greeting, shout: VIVA LA RECONQUISTA!
Good, let them go home where they belong.Maybe the housing crash will help with the illegal immigration disaster. And, after all, they’ve left plenty of shoddy workmanship behind for us to remember them by.
Under Clinton the welfare rules were changed. Now welfare is a short term work placement assistance package. In Florida, for example, the welfare rolls went from over 700k individuals to just a bit over 100k. Together this means welfare been reduced by roughly an order of magnitude through reductions in participants and benefits.
Are you seriously arguing that the 100k or so on welfare in Florida represent a highly significant tax drain? Even if that number doubled it would be tiny compared to almost any other block of spending, for example on roads. Of course that is a bad analogy because things have value and people do not?
people that refuse to work aren’t worth sht
what was “unemployment” in 1776 ?
“what was “unemployment” in 1776 ?”
Flat — excellent, original, punchy.
flat posts “what was “unemployment” in 1776 ? ”
In those times there were 3 main classes of people.
1 Freemen
2 Those who work for wages
3 Slaves
You forgot indentured servants…forbears for the future mortgage serfs. History repeats herself.
“A crash of the housing market would ripple throughout the economy and its job machine, eliminating the need for some of the higher paying jobs it creates, including construction workers, real estate agents and a host of financial services workers.”
I was wondering about all those new high paid jobs that were created and now I see: financial service workers, RE’s, and construction workers. Now that’s an economy to die for…barf.
OT, but how is the market in these days in Salinas? Lot’s of for sale signs?
Slowly but surely the info is getting out. They are not willing to say it ‘WILL HAPPEN’ only that it might be a problem. These quotes should have read as follows:
The crashing housing market is rippling through the economy and its job machine, eliminating the need for the higher paying jobs it created, including construction workers, real estate agents and a host of financial services workers.
We are seeing a screeching slowdown, if not a halt in the job market, said Bruce Nissen, economist at Florida International University. Suddenly, we have all these unemployed construction workers sitting around.
I recently spoke to a banker in Miami, and he admitted that most banking and banking jobs in the city are real estate related and that a shake-out is due. On top of that, even trade and private banking have downsized compared to ten years ago.
Basically, finance jobs in Miami at least means real estate and insurance, and let’s not forget that army of lawyers that revolves around them.
I thought buying a home was a long term process. You get a fix rate and pay the mortgage for 30 years and then you live in you home till you die. Now we have people who think their home is an ATM machine. What ever happen to the good old days of living and die with the same house. Hmmm Maybe I am old fashion for a 39 year old man.
Sean,
Well, up until we turned the tax code on it’s ear (1997) that WAS the standard. The one time exemption was a little inflexible but look at the alternative. Now that we can sell (for up to a 500K profit, *see details) and pocket it TAX FREE only freaking losers stay in their homes more than 2 years. After all two years is a long time. Sure, we can ATM our house (that’s tax free too) but selling means you get to “lock in” the gain and get an even bigger one on which appreciation is guaranteed to repeat the whole process all over again! It’s the “new” American way. Sheesh, get with the program Sean!
* (May de-stabilize entire neighborhoods resulting in out control property taxes, negative equity, depression and in some cases suicidal tendencies.) See your trustworthy mortgage broker for details!
I think I better sit this round out and wait for the “new” American way to die the same death as the dinosaurs.
Get ready for the great Real estate asteroid to fall and kick up enough dust to block out the sun, and cool the RE dinosaurs.
Sean_From_NVA,
Last year about this time (peak of the market) there was a presedential panel assembled to evaluate the impact of sub-prime lending, MID (mortgage interest deduction) among other housing/affordability issues. The end analysis was not encouraging. Many here (and at Patrick.net as well) are of the firm conviction that cheap money alone is solely responsible for this runaway train. Mostly TRUE! Absolutely no question it’s been a driving force. But there are other factors. I see tax implications guide client’s behavior every day. Even those that suspect a stock they own may be headed for tougher times, they stay the course b/c to sell would mean an awful and ugly tax bill! People get married (on paper anyway) for tax purposes. People cheat (shocking) on their taxes.
With the “new deal” much of this fancy foot work is simply no longer necessary. Just buy a house, wait 1 year 9 months, plant “For Sale” sign, wait for bidding war, collect winnings and buy even bigger place. No fibbing, no stretching the truth, no hassles. Does anyone here know of ANYONE that has gotten busted for declaring their 2nd/vacation/investment home as their “primary residence”? Of course not. You’d have to be trying. It’s strictly done on an “honor system” basis. Even if it’s in a neighboring state or opposite coast, doesn’t matter. There seems to be NO enforcement and Capitol Hill has basically “bought” all of our silence. They don’t charge us capital gains on basically ALL of our RE transactions and we shut up and don’t complain. It’s how we work it these days.
DinOR: Yes, the tax codes are often overlooked as a contributor. And the sitution you describe, with people planting their for sale sign at 21 months, has been very commonplace. Take the tax code change, add in a bunch of free Monopoly money, and you get housing musical chairs.
Sean: don’t worry, you are not alone in the old-fashioned camp. I am only 32, and have the same thoughts every day. I think the “old-ways” will be coming back in fashion though.
It is never worth while to spend a dollar to save 28 cents.
And of course the change in the tax treatment of property will tend to make the prices fall more quickly since people who are moving and have to sell don’t feel a need to purchase into a declining market to avoid capital gains.
jbunniii posts ” It is never worth while to spend a dollar to save 28 cents.”
GWBush need’s to hire you. Your Nation calls, we need you in government!
I feel exactly the same way, and I am 39 too ! I don’t think we are old fashioned, I think we are smart !
“What’s scary is that cancellations are occurring on orders placed in the latter part of 2004, which should give you an idea how bad that market is.’”
my estimate is market is at nov-dec 2004 value in south florida right now..even though many benighted folks have asking prices much higher than that.
market will get another jolt in spring 2007,IMHO..
crazy stock market around the world is a big indication of the extent of liquidity out there…inflation is NOT dead for the time being..yet treasuries seems manipulated (or hedge fund pimps have placed big bets on it already) keeping mortgage rates low as well.
Lenner is finishing off projects but new pours have been postponed. sales are not bad in homestead as prices are 30% cheaper then miami MSA.
some new design projects are coming on line w/ reduced floorareas (for cheaper prices)..some have been redesigned multiple times…
construction folks are affected but not despondent..still optimistic of late 2007/2008 reversal.
2007 will determine the extent of rout and if exuberant psychology is punctured for good.
Ben needs a doomsday clock we can see where the market is
still 05 pricing here in N VA
In Coral Gables and Pinecrest, the prices are still way above 2004 level. In fact, anything listed at mid-2005 prices still sells briskly. Smart sellers list properties at this level, and sell them within weeks.
Stupid sellers still list way above the end-2005 peak - but then maybe they don’t really want to sell, and just fishing for the GF.
Hopefully, by mid-2007 we’ll see 2004 prices even in these desirable areas.
Agreed, Prices are still way to high in miami-dade. Especially relative to average income. A fifty percent haircut is needed. Don’t know if it will happen. Depends on interest rates and lending standards. Now still too low.
If Homestead prices were about one-third of Miami’s for a comparable place, then I’d consider it! Maybe.
“The biggest worry is a mass exodus of investors, they may have stopped buying, but many of them are still holding onto their last purchases. ‘They aren’t panicking and selling at a big discount,’ Zandi said. ‘At least not yet.’”
But soon, baby. The alligator needs to be fed every month and the flippers will soon have nothing more to toss to it. At that point, they’ll become the alligator’s dinner.
Oh, so thats what happened to Flipper. REmember the 1960’s T.V. show. I always wonder what happened to him in his retirement after his show was cancelled. Now I know. He was eaten by an alligator. LOL
Remember, Flipper did live in Florida. LOL
So true Jack. Oh I’m sorry, that’s “Captain Jack” right?
U got it. Captain Jack sparrow of the Black Pearl. Pirates of the Caribbean.
” ‘They aren’t panicking and selling at a big discount,’ Zandi said”
You nailed it. This is the source of the disconnect between the level of market activity and understanding what’s driving it. Economists are not appreciating the reason for the hard stop in price declines. It’s the point of no return for a lot of would-be sellers - A LOSS THAT EXCEEDS THEIR ABILITY TO WALK AWAY. This number gets eroded with each month of negative cash flow. Sooner or later the FBs, hanging on by their razor-thin fingernails, will simply lose their grip. Once that happens, FB by FB, in large enough numbers, the real tumble off the sharp cliff begins…
AZ — I think this may relate to the builders’ stock supports — the builders smell this blood in the water and know they can reliably continue to underprice the FBs and, therefore, sell more houses. Most FBs will be a day late, a dollar short all the way to the bottom of the bust.
You’re not old fashioned. I’d say you are very sensible. Society dictates that we must have the latest and the greatest. Greed is probably to worst of the 7 deadly sins. We have to learn again to live within our means. But we have to keep the economy going, so that means buy buy buy. In order to buy buy buy, and in the process keep up with their neighbors, most people just ATM’d their only asset. I suspect most people are probably going to be upside down on their primary, and secondary homes. Receipe for disaster. What will happen to our economy once we can no longer take $$ out from the equity on our homes?? We are in for a bumpy ride!!
In the 90s bust in SoCal, we had a huge problem selling condos because many exceeded the allowed amount of renters to meet conforming guidelines. Seems to me that they allowed 70% renters back then.
There are many hazards to owning a condo that do not become appearant until things turn down. Condos can be very difficult (immpossible) to sell if there is a high non-owner occupancy rate, a lawsuit (we should see lots of these), financial problems with the HOA (like owners not paying??), etc, etc. Any of these things can make it very difficult to get financing for a new purchase. No one seeems to think about all this when prices are going up, but boy, does it matter when they are falling!
This about sums it up…
http://www.rntl.net/history_of_a_housing_bubble.htm
Northeast version..
http://njrereport.com/80sbubble.htm
Does this mean the co-ops, with the persnickety rules, are right?
In NYC, co-ops trade at a discount to condos, to get around the income and character checks, the owner-occupant checks, the rules against renting, etc.
deb ” There are many hazards to owning a condo”
You are right. The basic one is you can only do anything as fast as the dumbest son of a turd can “get it”
The local markets are at an absolute standstill. I noticed that more than a few FB’s pulling their MLS listing. Looking ahead, we are faced with several months before the spring “buying season.” In the meantime, there will be insurance and tax increases, ARM resets, foreclosures & auctions rising, increased inventory, massive cancellations,and a much smaller pool of GF’s.
Yet, affordability remains at 30 year lows. The income gaps are alomost $200,000. Rent vs. own numbers are laughable. Something has got to give. This cannot continue indefinitley.
Right. For the FBs whose loans reset in Jan 2007, just two or three months of the increase to the monthly nut could be enough to convince them to put their house up for sale…just in time to coincide with all the 2006 would-be-sellers who delisted their houses in order to take advantage of the 2007 Spring Bounce.
There’s going to be lots of homes to choose from come April 2007.
OH yeah.
Reposting this, because I put it up late last night.
Reported 85% drop in county’s condo sales, Sept-Sept.
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% 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, I think very few of the 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.
What happened in Daytona, Panama City, and Ft. Walton? Do you think the median lost some luxury units?
I have been watching the MLS week to week for Pensacola, Fort Walton, and Destin since March 2006 and it seems to me properties over $300,000 are just not moving. There are a ton of expensive properties (condo and houses) listed in Northwest Florida but very little turnover with the same properties on the MLS month after month. Every now and then somebody will drop the price a few % but not much. Most sellers are holding the line waiting for a GF to fall into their lap.
and the high end properties are just stuck.
Direct link to PDF:
http://media.living.net/statistics/2006/Sept%2006%20Condo%20Chart.pdf
Thanks, turp.
so sheople cough up 10% and the realwhore gets a cut ?
selling FSBO is the easiest sales I’ve ever made
We have been FSBO buyers twice and sellers twice. They all went off without a hitch.
“The National Association of Home Builders in Washington, D.C., is making a package of ready-to-use ads available to its members for free. The package includes sample letters to the editor, op-ed pieces and newspaper columns.”
A press release says, “Housing economists are predicting that the current adjustment period in housing from the unsustainable high levels of the past few years (that’s builder-speak for ‘oops, the bubble burst’) will be relatively short-lived, bottoming out by the middle of next year and leaving many markets with an insufficient supply of new homes.”
Now the builders are upping their PR game right on que going into the fourth quarter. It wouldn’t surprise me if the housing economists referenced are led by NAR’s David Lereah.
That is truly pathetic. Sample letters? Joe Six Pack is not the sharpest tool in the shed, but even he will catch on the fundamentals as this market further deteriorates. I see this campaign working about as well as the NAR’s. Joseph Goebbels would be so proud.
“Housing economists are predicting that the current adjustment period in housing from the unsustainable high levels of the past few years (that’s builder-speak for ‘oops, the bubble burst’) will be relatively short-lived, bottoming out by the middle of next year and leaving many markets with an insufficient supply of new homes.”
You built 2X the housing required for a time period, but that backlog will be cleared in a year? Don’t think so! People are not produced that quickly. This is their mistake, a lot of people don’t realize that actual housing demand was anywhere from 30% - 50% LESS than was believed. So they built 30% - 50% (more in condos) than was required or needed.
Nice recipe for disaster.
‘Some financial institutions such as Freddie Mac or Fannie Mae won’t offer loans in condos with more than 50 percent renters, he said.’
Check my logic here: condo flippers who swarmed to new construction may have f***ed themselves and each other in a whole new way.
First they can’t sell right away, so they rent to stanch the bleeding. Then all their flipper buddies do likewise. Voila! Complex is now over 50% renters. (If they can even find renters, but work with me here.)
Potential end-user buyers just lost a huge source of financing. Therefore it is even LESS likely that the flipper can unload.
Or is financing still so easy that this isn’t a problem?
“Therefore it is even LESS likely that the flipper can unload.”
Could be. I’d guess there is a big difference, as noted earlier, between very large condos and small ones. The small ones probably attracted more owner-occupiers, while the recently-built large ones sold mainly to flippers. When we search the tax records, we see beaucoup out-of-state owners, many from areas that do not traditionally send snowbirds here each year.
I thought that in the past, for commercial lenders, the difference was in the interest rate, rather than go/no-go on a loan.
Im sure that many condo purchasers probably just lied and said that they were going to be primary residents.
I’m not sure if they could pull the wool over the board of directors of the condo, but by then it would be too late. They would allready have purchased the condo and lied just as they would lie on a stated income liars’s loan.
Doesnt matter if they lie. For any prospective buyer of these props., the lender will verify with the condo association the number of owner occupied units. If it is less than 50, then it is a no go period…..at least for conventional loans.
“…at least for conventional loans.”
MD — do you not think that hungry lenders will make it work anyway?
I have a feeling it might end up happening a little different in Miami. This place is surreal.
They should pay more in taxes - they are part of the reason there isn’t affordable housing for those living here and making 7-10 dollars an hour. Someone needs to pay for all the upkeep for roads, and beach for these people. They can afford it and if they can’t - then prices will come down when they leave and full timers can live here again.
Surely you’re not suggesting that someone earning $10 per hour has any business buying real estate.
posted ” Surely you’re not suggesting that someone earning $10 per hour has any business buying real estate. ”
Casey must have gotten a few raises.
can you have a RE “bottom” w/o a recession ?
ever happen before
History is not important; DL has assured us that this time is “different.”
Stucco:
LOL. The sarcasm on this board makes my day. Amazing that we could have another new paradigm so soon after the dot-bomb. DL should go into politics. I must give the guy a hand. Keeping a straight face while announcing the NAR’s “forecasts” takes true skill. Perhaps White House spokesperson would be a good fit?
CA Guy ” DL should go into politics. I must give the guy a hand. ”
He is our ” Bagdad Bob” do you recall him….LOL
“‘You would see a screeching slowdown, if not a halt in the job market,’ said Bruce Nissen, economist at Florida International University. ‘Suddenly, we’d have all these unemployed construction workers sitting around.’”
Time to add some additional lanes to Florida freeways, I guess…
Hmmm. Is it as easy to GET BACK into Mexico as it is to get into the US? If so, there will be a lot of “reverse” tracks leading to and back across the Mexican border if the property market gets really bad.
I was just noticing the oranges outside my window are geting ripe.
I’m not a religious man at all but I am saying 2 little prayers. #1 that realtors have bought at least 5 houses each and at least 4 are under water. #2 that they used exotic loans.
Of course, the banks or should I say the Fed, under the control of yet ANOTHER incompetent clown in this era of incompetent clowns, Alan Greenspan, are the main culprits of this daily unfolding horror story which is bringing a lot of pain to many Americans and probably damaging a lot of family relationships as love flies out the window and housing money troubles fly in BUT the brokers and realtors are the main offenders in my book. By dangling the “Prices will only go up” and “This time next year you will be too late” or “Of course you can handle a no interest loan because future property price increases will more than cover the loans when they reset,” etc, they suckered in the financially naive and unwary by painting false pictures of future untold riches. Then some of them paid off crooked appraisers or were complicit in helping to fill out fake mortgage applications. The truth is, the government needs to set up a special “Property Corruption Force” to track down these offender realtors and mortgage corporationsThe and ream them a new a**hole. Don’t hold your breath. NAR and whoever represents the mortgage companies, are probably paying out big bucks to politicians in one way or another.
About 30 years ago, I sold R.V’s for a year. One day I sold an 33′ R.V to a couple which was supposed to have been a one owner vehicle. Before the deal was done, I discovered it WAS a one owner BUT the previous owner had rented it out as an investment to many, many people over several years. It had been driven to places like Mexico and Alaska and had undergone a LOT of rough treatment. A closer inspection (by me) revealed that the fiberglass was bubbling on the side and the floor in the kitchen area of the r.v was buckling. I was concerned that the buyers were being taken to the cleaners by buying, what they thought, was a one owner well maintained vehicle. I expressed my feelings to the boss of the R.V company. His response was, after I told him about the defects, “Are the buyers over 21?” I said they were in their 50’s. He shrugged and said, “F**k ‘em”. Then he turned to another sales guy and said, “When these buyers come in you sign them up. Split the commission.” Then he turned back to me and said, “I don’t want this sale lost because you’ve got a conscience. If they’re over 21 that’s their problem and I’m covered.” As far as I’m concerned, Real Estate brokers and realtors are no different. The attitude seems to be, “If they over 21, can fill in a mortgage application, and got suckered in that’s their problem.”
The “If they’re over 21 it’s their problem,” still seems to be functioning via people like David Learah of the NAR. Even though he knows this is a horror story, he’s still out there hyping and spinning, trying to sucker in the naive.
By digging so deep into the group of remaining GFs, the REIC is killing itself.
Mike, now I’ve gotta know, did they go through w/the sale? Inquiring minds and all…
Yes. However, I left a few weeks after that so I don’t know what happened BUT, from my experience working there I realized that you need to think REALLY HARD before buying an R.V. I would estimate that 75% + of those who buy big R.V’s end up with it sitting in the driveway until they get sick of looking at it and sell - with a big loss. I think, for the very big majority of people, buying R.V’s are like buying a boat. “The two best days are the day you buy it and the day you sell it.”
Mike posts ” I’m not a religious man at all but I am saying 2 little prayers. #1 that realtors have bought at least 5 houses each and at least 4 are under water. #2 that they used exotic loans.”
Praise be!
The divergence between WCI and Avatar is amazing; they are both competing in the same space, yet: http://tinyurl.com/yn8qvn
Looks like a good short candidate, IMO. Any seconds?
az_lender now in Florida. Started out at my brother’s place in “Pennbrooke Fairways” in Lake County. He and whichever friends of his I met agreed that all of a sudden zillions of (used) places are for sale while the builders hammer away at erecting new ones. They agreed with some phrase suggested by a realtor friend of mine who had said that “the market turned on St. Patrick’s Day at 2:38 pm” — the idea being just to express how SUDDENLY it turned.
As I drove into Indian River County later this morning, I expected (from reading this blog) to see a county-sized sink hole. But no. There was no outward and visible sign of trouble except for a whole lot of builders’ billboards. I do have a 2nd cousin in Vero Beach who represents an owner whose house (1.5 blocks from ocean) used to rent out for $2,500/mo on an annual lease. Now he is having trouble finding an $1,800/mo tenant.
Next chapter: with my other cousin in Jupiter (Palm Beach County). Although he and his wife are of the opinion that the biggest trouble spots in the county are Abacoa and City Place, nevertheless they are feeling NOT GOOD, because they have suddenly learned that a property possibly comparable to their own is listed at about 85% of the amount my cousin & his wife would need to clear themselves of their own fixed-up property. They are hoping the low-priced one is in need of repairs. Maybe we will go find out this afternoon.
Couple of days ago was with another friend in Volusia County. Their mortgage is small and will be paid off soon. Their price range was low, and they may be saved by that fact. Nevertheless, it’s interesting to observe how everybody likes to characterize the housing bubble bust as NIMBY. (Even me, in Pinal Cty RV parks.)
“…whose house (1.5 blocks from ocean) used to rent out for $2,500/mo on an annual lease. Now he is having trouble finding an $1,800/mo tenant.”
AZ — if RENTS are dropping this much, imagine prices needed to actually close a sale.
Melissa Data is a good site to keep track of recent sales by ZIP codes. Enter Code for a list by month of the number of homes sold and the average price. This information comes from the local County Recorders office.
https://www.melissadata.com/lists/ezlists/ezhomeowners.aspx
gordo