“The Fun Time Has Ended” In Florida
The Naples News reports from Florida. “Ross McIntosh sold his home for $735,000 when there were several other homes in his neighborhood listed for $790,000. Some lowered their prices to $760,000 and, after months on the market, one recently sold for $675,000.”
“‘There is a lot of speculation about how far (down) the market is going to go and how long the (downturn) is going to last,” said McIntosh, a Naples-based real estate broker. The slowdown in the housing market is already greater than anyone had expected and it could get a lot worse before it gets better, he said.”
The News Press. “Naples’ real estate market seems to be in a nosedive from last year’s heights. Home sales in the first nine months of the year, for both single-family homes and condos, were off 50 percent. The inventory of properties on the market is up 300 percent, to a 21-month supply.”
“During the real estate boom, the Naples market was overrun with investors who helped drive up prices far beyond what a median-income family could afford. ‘The valet parkers at hotels were buying (property on speculation) and saying they’re going to flip it, and they’re all getting caught,’ says agent Karen Van Arsdale.”
The Palm Beach Post. “The prices buyers paid for the brand-new homes on Fleming Way tell the tale of what happens when a market cools. In a handful of deals during the last several months, Miami-based builder Lennar Homes slashed prices on the street by as much as 51 percent, unloading the last of its houses in the Martin’s Crossing development to select investors.”
“That means residents such as Mark and Kim Andersen, who locked in $506,400 when they signed a contract for their five-bedroom home in early 2005, are living just down the street from a nearly identical five-bedroom home that Lennar sold to another buyer for $250,000 in late October.”
“That buyer flipped the home three days later, reselling it for $425,000, records show.”
“‘Generally speaking, I think a lot of these discounts we’re seeing today are kind of shocking,’ said Alex Barron, a San Francisco-based analyst. ‘And they’re much more aggressive, I think, than most people realize.’”
“From Palm Beach County to Indian River County, many big national homebuilders are heavily discounting prices, with the biggest cuts showing up on the Treasure Coast, said Brad Hunter, a housing economist for West Palm Beach-based Metrostudy. ‘They’re offering extraordinary value, just to get rid of the standing inventory,’ Hunter said.”
“Jupiter resident John Icart closed in August on a three-bedroom, 2,176-square-foot house at 896 Fleming Way. The price: $245,000. That’s $165,000 less than what Daniel and Claudette Henry paid for the same model house.”
“The Henrys signed up for their home in early 2005, when many homes were still selling themselves. ‘At that time, they were hyping that they were sold out, or were selling out, and that they only had two lots available,’ Daniel Henry said.”
“Donna Mau, is trying to sell the Henry house and four others in Martin’s Crossing. ‘I hope prices stabilize in there, because my people are going to get hurt,’ said the agent.”
The St Petersburg Times. “Year to year, overall housing prices in the Tampa Bay area still show small increases. But don’t be fooled. So large is this area’s unsold inventory of homes and so comparatively few the buyers, most housing prices have actually retreated 5 to 15 percent.”
“It’s not so much prices are coming down, it’s that prices should never have been there in the first place,’ said Craig Beggins, owner of a Century ‘21 franchise in southeast Hillsborough and Pinellas.”
“Look what happened to the investment dreams of Jodi and Jeffrey Roberts. The real estate climate was so balmy the past few years, the Robertses’ investment homes showered them with hundreds of thousands of dollars in easy gains.”
“Now they are bracing for a different forecast: stormy with a chance of foreclosure. Four Pasco and Hillsborough county properties they bought at the tail end of the property boom can’t find buyers willing to offer more than the Robertses paid for them.”
“Price cuts aren’t doing the trick. In west Pasco’s Gulf Harbors, the couple listed a home for $50,000 less than what they paid. The result? Zero buyer interest. ‘I know how it feels to be poor,’ Jodi Roberts said as she contemplated her combined $15,000 monthly house payments.”
“‘Investors bought lots of new construction, held for several months and now they’re getting at the end of their fun time,’ said Hillsborough Realtor Craig Eaton.”
“The fun time has ended for Leonard and Joyce Sondheimer. In October 2005, the Bradenton couple bought a $338,900 MiraBay townhome on Aberdeen Pond Drive. The bayside investment home with stone counters, hardwood floors and stainless steel appliances was sure to appreciate to half a million dollars. Or so the Sondheimers thought.”
“After a year on the market, no one has nibbled. Their Realtor chopped the price to break even. The tax bill alone on that single investment, $8,900 a year, is draining the Sondheimer’s nest egg.”
“‘I was retired and now I’ve had to go back to work. I’ve got to pay all these bills,’ Leonard Sondheimer said of his new job as a mattress salesman. ‘It’s getting sickening.’”
“”The get-rich-quick atmosphere has already bypassed southeast Hillsborough. As Beggins gathers his agents, he explains the new rules. Look to sales prices from late 2004 or early 2005. Sellers don’t want to hear they won’t make 20 to 30 percent as before. ‘Ninety-seven percent of people selling their homes are p—– off at me,’ Beggins said.”
“Jodi and Jeffrey Roberts say they are more angry with themselves. They say they made $310,000 last year, a combination of salaries as employees of MI Homes and gains from flipping investment homes. The home in Gulf Harbors, Pasco’s highest flying neighborhood during the boom, drew so little buyer interest that Jodi Roberts moved in with her family of six to wait out the slump.”
“The $185,000, 1,500-square-foot house in Wood Trail Village north of State Road 54 hasn’t fielded an offer of more than $175,000. Roberts is three months behind on payments for a Carrollwood condo she bought in December with no cash down. ‘These houses are a ticking time bomb depending on how fast the mortgage companies come after me,’ Jodi Roberts said.”
’sold to another buyer for $250,000 in late October. That buyer flipped the home three days later, reselling it for $425,000, records show.’
These people are just manufacturing foreclosures in Florida.
‘Jodi and Jeffrey Roberts.. say they made $310,000 last year. The $185,000, 1,500-square-foot house in Wood Trail Village north of State Road 54 hasn’t fielded an offer of more than $175,000. Roberts is three months behind on payments for a Carrollwood condo she bought in December with no cash down. ‘These houses are a ticking time bomb depending on how fast the mortgage companies come after me,’ Jodi Roberts said.’
Typical of speculative runs, the last bet wipes out even huge previous gains.
‘Florida builders really clamped down on new construction in October and switched their attention to cleaning out inventories,’ Wachovia Bank senior economist Mark Vitner said. ‘I haven’t run into an optimistic builder in the last couple of months. Most tell me that things are worse than our numbers are indicating because they’re still seeing large numbers of cancellations.’
‘ I probably have five calls a week from people that have been laid off and are looking for work,’ Christy Jones said. Jim Tooney, owner of Aspen Construction of Southeast Florida, also noted the change in the work force. ‘Things have slowed down dramatically,’ Tooney said.’
‘There’s a rapidly growing audience for programs dealing with selling and buying homes. You can get tips preparing a home to sell, how to market it and even ‘flipping,’ which doesn’t have the sometimes negative connotations associated with Florida real estate. Higdon sometimes recommends a program to a prospective investor, ‘although there are a lot of books with maybe more specific information. But these shows feed your brain and anything that does that has to be good for you.’
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>Typical of speculative runs, the last bet wipes out even huge previous gains.
Great line. So true.
Also, “Your first loss is your best loss.”
I learned that in the Texas boom/bust. It was amazing how many oil/RE millionaires ended up with nothing.
I’d say that the tech millionaires fared better; as long as they didn’t blow all of the money in the late 1990s. Tech has had
a pretty good second chance since October 1999 and folks with options (honest or dishonest) are better at taking the money off the table these days.
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Most average investors did not “take the money off the table”. They rode them all the way up, and all the way back down - and further.
But yes, many of tech insiders with boatloads of stock options and grants did cash out though.
Mark Cuban sold not at the top but pretty close to it. He lived through the last tech bubble and downturn and was smart enough remember and collar and cash out of his $2B Yahoo stock when they bought his company.
I’ll never forget watching this interview on CNBC right around the top of the tech bubble:
Joe Kernan: “Mark, I understand that you have your own private jet - one of those GVs - a Gulfstream V?”
Mark Cuban: “Yeah. It’s really nice to have for when we go scouting for players for the Mavericks in other cities or countries.”
Joe Kernan: “Don’t you feel dumb that you cashed out your Yahoo stock at $70 and now it’s trading at over $110?”
Mark Cuban: “Well, it’s hard to feel dumb when you’re flying around in your GV.”
Mark Cuban: “I sold all my stock. I asked myself - what’s the worst that could happen? I walk away with two billion dollars in the bank?”
Mark Cuban: “I saw this tech mania once before.” (implying he knew what happens at the end of the movie)
Cuban probably doesn’t lose much sleep over the people who had Yahoo stock in their mutual fund, either. Didn’t they basically fold the outfit he sold them?
Ben, what are you saying?? Hopefully we never get to the point where anyone who makes some serious cash has to feel sorry or obligated in some way… Oh sure, we have our stories of complete horses’ asses but lets not meander down that road.
What I find most telling about this current RE bubble is how this will effect people’s behavior going forward. Our country as a whole is really going to have to do some soul searching. A lot of families will be hitting the reset button… Those of us who have our financial house in order will undoubtedly have an oppurtunity to increase or upgrade their current situations…
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It’s not Cuban’s fault or problem. When you buy and hold a particular stock, you take the risk - you are buying the management. This is the free market.
pv tom - I know i will get attacked for this but I like these two quotes:
“I have about had it being told that the plight of the homeless is my fault. I’m sick and tired of turning on my TV and being told that the AIDS crisis is my fault too, because I don’t care enough. That burned me up. The homeless man on my TV screen wasn’t in that condition because of anything I had done or because I didn’t care. I hadn’t done anything to cause his homelessness. The fact that I had a home and a turkey wasn’t the reason he was in a shelter, any more than cleaning my dinner plate as a child would feed the starving Chinese.” - Rush Limbaugh
“Whether you are a businessman or someone earning a salary, you should never apologize for trying to earn more money. Never feel guilty for wanting to keep more of it for you and your family. Do not accept the silly notion that there is poverty and suffering in America because you are greedy and aren’t paying enough in taxes. Realize that regardless of the job you have, you are helping to create other jobs. The goods and services you consume help create employment for people who wouldn’t otherwise have it. The confiscatory percentages in income and social security taxes you pay on any extra money you earn helps keep checks going to widows and orphans. If anything, you are morally SUPERIOR to those liberal compassion fascists who claim you are greedy. You have a real job; they just beg for a living.” – Rush Limbaugh
Rush Limbaugh is your spiritual master. Somehow, that doesn’t suprise me.
pv tom,
I am saying he sold them a worthless company for a fortune, and it didn’t come from thin air. I used to work in the internet biz, I know how dumb they were. But lots of people then and now have exposure to bubbles and don’t even know it.
>Rush Limbaugh is your spiritual master. Somehow, that doesn’t suprise me.
Enough with the ad hominem attacks.
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Cuban COULD have sold his YHOO at the bottom - or maybe got greedy and hung onto his broadcast.com company thinking he would could make MORE money, but he didn’t. The fact of the matter is, if Cuban LOST all of his money and went BROKE instead of making $2B, NOBODY WOULD HAVE LOST SLEEP FOR HIM, EITHER.
This is the free market. Capitalism at its finest. You are free to win or lose and that’s the way I like it.
“One never knows, when he boldly enters the investment arena and puts his hard-earned capital at the mercy of the market forces – all in hopes of creating a better life for himself — what tricks of fortune may eventually unfold. Every day creates a new set of circumstances; and around the next corner may be a turn of events - good or bad - that change everything.” - Robert M. Campbell
Ben, Fair enough… I guess that could be said about the majority of tech buyouts of the late 90’s & early 2000’s.
gekko- On whole who could argue with this sentiment? People like Tx should understand that you don’t have to be a fan of Rush’s to embrace his underlying message.
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Ben Jones - are you saying that if tomorrow morning someone offered you $2 BILLION dollars for this blog, you wouldn’t take it?
And if you did, you’d feel guilty and you’d lose sleep over it?
That’s a decision I won’t have to make. Personally, I believe a person should need to create something of real value in order to make hundreds of million$. Many stocks are mere gambles, but people are told they are ‘investments.’ What is Yahoo’s dividend?
“Personally, I believe a person should need to create something of real value in order to make hundreds of million$.”
Well said Ben. That’s my philosphy too — create value.
EXACTLY! That is what true wealth is. Anything else is just air and paper.
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Value is in the eye of the beholder at any given moment in time.
>Personally, I believe a person should need to create something of real value in order to make hundreds of million$.
Of course you’d take the $2BILLION without flinching and so would I.
>Personally, I believe a person should need to create something of real value in order to make hundreds of million$.
“Of course you’d take the $2BILLION without flinching and so would I. ”
You’d like to think so, wouldn’t you? Well maybe he would and maybe he wouldn’t. First of all, the key in Ben’s quote are the words “should need”. He’s right. And, IMHO, Ben’s blog is easily worth $2Billion in value, considering all the misery it has saved for some, the misery it could have saved others, the future misery it might stave off, and the wisdom and amusement it has provided. Of course, that’s in Main Street terms, which differs quite widely from Wall Street.
See, Gekko, this is why some folks who believe as you do, that there is actual value in all that paper and hot air (LOL), blow their brains out when the market crashes. Because all that paper and hot air went “poof” and there went the “value” of their lives. (Oh, man, am I going to get flamed for that, but hell, bring it on!)
“Value is in the eye of the beholder…”
GG, I know you don’t understand the value creation concept but that’s o-kay. After all, we’re all different, see the world and interact with it differently, and have varying fulfillment needs.
Some of us are completely fulfilled by creating great art, food, wine, books, blogs, businesses, and other profit and non-profit models. In other words, the process of creation and the value we knowingly add to other people’s lives is part of our profit.
On the other hand, some people think value creation is a complete waste of time and focus solely on balance sheet profits. You should ponder this question, however: Where would you invest if we chose not to create?
“Where would you invest if we chose not to create? ”
AMEN, BROTHAH!
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“I create nothing. I own.”
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Liberals love money too. They just don’t like to admit it.
Something has to be created first in order to be owned. No creation, no ownership.
BTW, nothing burns the butts of a financial parasite than to be told their money has no value. Some of these types, when they get their money, come to South Florida and get a yacht of some sort. Back in the 80s, this was all the rage. Some heard they could get the work done cheaper on their yacht over in Puerto Rico, so off they went to save a few bucks. Then they started wondering why the work crews were taking so long. These were guys who were used to giving orders and having people hop. They’d ask the Puerto Rican crew chief “When’s it going to be done?” The answer was always “Next Tuesday”, except nobody ever specified which “Next Tuesday”. Well, these nouveau rich BSDs (big swinging dicks) started having Wall Street apoplexy, but if anything, that just slowed the work down. Then they would start offering more money to get the work done faster (having the yacht sit in Puerto Rico wasn’t helping when it was needed to impress others back in Florida) and some of the Puerto Rican crew chiefs would just shrug and say “Man, that’s too much money”. So the yacht would sit until the crew chiefs got around to it, on their time, (at which point the work was done extremely well, by the way) or until the BSDs just hauled anchor and went back to Florida. I saw this happen a number of times. The good people in Puerto Rico valued their free time and families more than the money.
Gekko shows us his soft underbelly with Enough with the ad hominem attacks. and then opens up with Liberals love money too. They just don’t like to admit it.
I’m a liberal and I love money, but I make my boodle with creative efforts. Seeing people take on bad loans in order to move into my area was one of that factors that convinced me not to sell at the top.
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>The good people in Puerto Rico valued their free time and families more than the money.
Ah yes! If we could only just be more like the Puerto Ricans! What a wonderful, prosperous economy they’ve built over there! It’s amazing any of them ever leave!
>I’m a liberal and I love money, but I make my boodle with creative efforts. Seeing people take on bad loans in order to move into my area was one of that factors that convinced me not to sell at the top.
So you will sell at the bottom on liberal principle??? Silly.
“Ah yes! If we could only just be more like the Puerto Ricans! What a wonderful, prosperous economy they’ve built over there! It’s amazing any of them ever leave!”
I’m just saying it was great fun to watch the BSDs find out their money couldn’t buy respect, even more fun to watch the work go slower the more they barked. BTW, Rumsfeld’s attempt to run the Iraq war like a corporate buyout was a real raging success, NOT!
Ben, Circa what year was the Texas boom/ bust?
As I recall, it started in 1985 and ran through to roughly 1991. Perot bought up half of north Texas in that time.
It occured in different areas for different reasons as well. Dallas and Houston were hammered by the oil bust, Austin chugged along. Houston was starting to come out of it in 1989 (don’t know about Dallas) when Austin started declining due to the tech bust of that period and the decline in state spending. Austin was absolutely clobbered, which is alarming when you consider the run Austin has had with the speculators over the past 5 years. They were saying “everyone wants to live here” in 1987, and 3 years later prices were down 40-50%, and subdivisions up and down Slaughter Lane were ghost towns.
That’s what I’m hearing when I ask about how people ended up holding the property they have. They just keep plowing any money they made into bigger or more projects.
The old double-or-nothing trade.
Also, “Your first loss is your best loss.”
I have a similar quotation, “You always get one last chance to sell.” For tech stocks it was August/September 2000. For housing it’s now, or maybe it’s just passed.
Wow. $300K in income and nothing to show for it. It takes your breath away.
I wonder how her “family of six” feels about her crashing their place? I wonder where her husband is staying?
Wow. $300K in income and nothing to show for it. It takes your breath away.
Max,
I read that entire piece and that is what sticks with me most. How did someone make $300k in 1 year and end up living with their kids? I can just picture their BMW SUV in the driveway.
“It’s an outrage and a perpetration” Jackie Childs
Florida, Alabama, Mississippi, Louisiana and Texas still have tens of thousands of houses with blue roofs. There is opportunity for these construction workers.
Unfortunately, there is no money to pay these workers. When even Trent Lott can’t get State Farm to pay to fix his house, its going to be a while till those blue roofs go away.
Labor and materials costs will be way down if there is no housing mania. You’re right that the very poor won’t have the money to get their roofs fixed, but the middle class and the retired will be able to afford it. Hopefully.
‘These houses are a ticking time bomb depending on how fast the mortgage companies come after me,’ Jodi Roberts said.’
Wow - its going to be just like those commercials on TV -
Lost another home to Ditech!
Hi………….I’m ‘Dolf De Roos.
Are you tired of slaving away at a dead-end job?
Tired of never really getting anywhere?
I can show you how to get rich by only working 3 hours a week.
Let me show you my no-money down plan to riches in real estate.
Start living the life you’ve dreamed of…………….today!!
Well, How’s the dream, babe??
Well, well it looks like the pigeons are coming home to roost-we all knew it would happen,right? Hey we could see the future-no we just are the ones who have a little common sense.
Now these people have to realize that they have a sickness called over priced-itis and there is only one medicine for this disease. It is not waiting, it is not a better agent or better marketing it is not even giving a car away. It is what people?-LOWER YOUR PRICE-IT IS ON. Take your medicine!
From some of these stories, I’m not even sure lowering the price to nearly zero will do it. There are just way too many houses on the market and no one to fill them. Everyone who already has a mortgage can’t sell their current house to buy a cheap one, and most everyone who already owns their house outright has no reason to buy another. Who’s going to buy these? The mythical 1000 people a day moving to Florida?
Exactly, and here is why: “The tax bill alone on that single investment -— $8,900 a year — is draining the Sondheimer’s nest egg.” So when you add insurance to the mix, the total surpasses what most people pay in rent for an entire year.
Speaking of insurance, a report on a local Tampa area television station the other night stated that Citizens Insurance is getting another increase, this time 56%, effective in March. Holy Mother of God! This is going to push many people over the edge for real.
Yeah, I know. When I shared the news with a relative in South FL, she about shat herself. The 65 pct increase is effectively a tripling of her 2005 insurance rates. In 2005 she paid roughly 2k, 2006 it was 4k, 2007 it will be 6k and change.
In 2007, her combined taxes and insurance will surpass what she paid annually in 2005 rent and her I/O POA will reset. I could go on and on but I might scare some of the readers.
mrkt, I was just wondering aloud to a friend yesterday what would happen to a homeowner if they gave their bank a jingle and told them they’d be happy to continue paying the mortgage, but they’re just going to have to drop the insurance because they can’t afford it. Take it or leave it. If it is just a single homeowner involved, it’s a no-brainer, the bank would foreclose. And I realize mortgage payments are tied up with insurance and taxes and the bank controls the distribution of the payment, but Florida already has insurance protest groups composed of homeowners, many of them. Pleading with legislators obviously goes nowhere. If banks were faced with mass defaults and foreclosures, that would get some attention. Personally, if I were a banker and a homeowner presented me with that scenario, I’d accept their mortgage payment and not make too much of a fuss about the insurance in today’s climate. I’d rather get paid than have to force foreclosure. Legislators don’t listen to constituents, but they do listen to banks and industry groups (sad, but true). If the above scenario happened en masse, I’d just be willing to bet the insurance problem would get handled in a jiffy.
Agreed. In additon, consider even at 2003 home prices when you add next year’s taxes, insurance, and hoa, many Floridains will not be able to hold on to their homes even with pay option arms. Some are aggressively being priced out of their primary residence. Also consider the fate of speculators with 2 and 3 homes, their taxes and insurance alone could easily equal 20-30k not including interest payments.
The housing massacre is upon us. 2007 will be the year of the ghouls and reapers. Florida as we knew it is toast!
A few days ago I commented that back in the Depression, houses were essentially free, but that no one could afford free.
Sounds like the same thing is starting to happen.
I remember that comment; it was extremely prescient.
I can’t remember if it was Zappa, Captain Beefheart or Firesign Theatre who said “There ain’t no free”.
At the Soundheimer’s age the rule is: First, lose no money!
I got a fever…. and the only prescription is…. lower prices!
Or, some Tami-Flip.
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from the full article -
“The positives are that construction employment — which at 12 percent of total employment is twice the national average — is holding relatively steady. Job growth in the industry has barely declined, strong migration trends are fueling demand for housing, and mortgage rates are low enough to create refinancing activity.”
why is *current* construction employment necessarily such a bug positive?
“‘I was retired and now I’ve had to go back to work. I’ve got to pay all these bills,’ Leonard Sondheimer said of his new job as a mattress salesman. ‘It’s getting sickening.’”
Ah, could retirement be any sweeter. He made his mattress and now has to lie in it.
ROFL.
That one really got me.
So much red meat in these stories.
No sympathy at all for people like this. Greedy bastards are getting what they deserve. It didn’t make them sick to think about ripping the next buyer off.
‘Flip Fl_cked’ is when a flipper gets flipped by the market’s turn.
Up here they just call em “flip flops”….
How can people already settled into retirement be so reckless with their precious life savings as to throw them into something as risky as house-flipping? Young people I can more easily understand. But these retirees apparently have been asleep at the wheel and have learned nothing their entire lives.
Toast asks:
How can people already settled into retirement be so reckless with their precious life savings as to throw them into something as risky as house-flipping? Young people I can more easily understand. But these retirees apparently have been asleep at the wheel and have learned nothing their entire lives.
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Sure thing, my boy, sure thing. Don’t you know these houses go up 15% every year? Where you been?
Well, he should look on the bright side; All of those empty houses will need mattresses fortheir bedrooms and with 1,000 people each day swarming into Florida, their are LOTS of buyers out there to supplement his new career.
me too
More like ” He made his bed and now he has to sell it.”
A mattress salesman. Unfortunately, housing prices ain’t gonna land on no Beauty-Rest.
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‘The valet parkers at hotels were buying (property on speculation) and saying they’re going to flip it, and they’re all getting caught,’ says agent Karen Van Arsdale.”
Another Joe Kennedy moment!
Amen brother
So we’ll have a bunch of bankrupt valets, hair stylists, cabbies…
Expect a change in the BK law.
Those that will feel most of the pain are the “affluent” flippers who had something to lose.
Its almost the holidays. Its almost time for the market to go into its Thanksgiving to superbowl slumber. Gee… those payments for three holding months won’t do anything to the flippers… nope.
Neil
I’ve been predicting a populist attempt to roll back the bankruptcy laws for over a year now and with the GOP booted out of power, I expect it soon.
Me, too, but with Citicorp being Senator Clinton’s main constituent, I wonder how successful it will be.
Why should they roll back the bankruptcy laws to protect irresponsible people? I say they need to bring back debtors prisons. Making it easier to file bankruptcy will only encourage people to be irresponsible.
Fair enuf, Jerry. Just so long as the corporations, officers, directors and management operate under the same rules and aren’t allowed bailouts at taxpayer expense. Would do my heart a lot of good to see old Neilsie Bush in a debtors’ prison, then maybe this bubble would not have occurred.
And you can’t put a corporation in prison. Which is why corporations exist in the first place - to shield the owners from liability.
If I conducted my life as some of these corporations do, I’d have been crisped in an electric chair long ago.
i’m expecting huge outcry for nanny-statism taxpayer funded bailouts. “We cant afford our homes, we are losing them!”
Personal responsibility went out the window for Americans in the 90’s. We now are fully entrenched in the OJ Simpson “If i did it” lifestyle.
“The slowdown in the housing market is already greater than anyone had expected and it could get a lot worse before it gets better, he said.”
This is the tip of the iceberg, pal. By the way, it’s going to get a lot worse, and it’s not a greater slowdown than what folks on this board have been predicting for years. When the soup kitchens open up, than we’ve hit rock bottom.
rudekarl said, “When the soup kitchens open up, than we’ve hit rock bottom. ”
There you go karl. Now this is a good bottom indicator.
Typical of speculative runs, the last bet wipes out even huge previous gains
Agreed. I’ve discussed this before, but every RE Flipper “investor” dork I’ve ever met was taking their huge windfall profits, sucking off a fair amount to live on, and then plowing back all the rest into even more leveraged speculative buys.
many more regular folk sold and then bought in the same area: another way overpriced home.
very very few people actually sold out at or near the top and then moved to lower COL area or rented etc…
this is one of those games with almost NO winners… just a bunch of losers. regular families priced out of the market, speculators burned in leverage, builders burned in building to fast to wrong demographics, employees burned by the coming storm, and so on.
And as in all manias, plenty of money in the hands of the puppeteers like Mozillo and Toll while the nincompoopia burn.
Right, this has all been a big money-making game to those folk as they destroy the economy. This stuff is coming in from all over the country now.
Exactly. Some may have felt I was a little over the top with my rants about hedge funds, but that’s the point I was making about destroying the economy. I have no beef with folks like txchick trading the market. They’ve put in their time contributing to the economy and paid their dues learning the ins and outs of the market. They’ve earned their money and they do whatever they have to do to stay ahead of the damage caused by the major gamers. It’s the misery caused by the shyster financial parasites I object to.
If it makes you feel any better, I trade 70% to the short side in all markets. It’s cost me a lot of money over the years but I refuse to be a monkey with a buy key.
Hey, txchick, a few weeks back when I was having a dust-up with old hedgefundANALyst, I sure hope you didn’t get the impression I was dissing you. Hell, I wish I had your knowledge and expertise. Personally, I think anyone who trades the market these days after taking some infomercial course is an idiot. It takes years to acquire the knowledge and expertise, it takes nerves of steel and a willingness to take personal responsibility. And even then you can lose some. I trade in a different market about which I know something, but the financial markets are mostly Greek to me, so I don’t go near them. I know enough to know that I don’t know. The old days of picking out a group of good companies with good products and services, buying and holding for the long run, are gone. People used to be able to invest that way and come out ahead, but not any longer, in most cases.
Ben Jones said, “This stuff is coming in from all over the country now.”
Too true and too funny. LOL.
Right, this has all been a big money-making game to those folk as they destroy the economy. This stuff is coming in from all over the country now
In Atlanta, my realtor friends are constantly telling me how slow it was and the 3rd quarter was a meltdown.
One told me September was slower than January which is typically her slowest month. Inventory is through the roof as far as condos go, and resales are just dead. What’s odd is, up and down P’tree you see nothing but condos going up everywhere. I smell more auctions like the one we had at Chastain the other day.
The sheer number of homes in this country owned by speculators is what is going to expedite the collapse of prices. Here in Seattle, there are many investors from CA, soccer moms who bought a 2nd and 3rd homes after reading “Rich Flipper, Poor Renter”, and many RE agents who bought multiple homes.
Basically every and any dwelling was seen as an investment and snatched up thereby strangling supply and driving up prices. Combine that with toxic loans, no-qual loans, flipper TV shows, and a self-fueling “mania”, everyone was getting in on the action and waiting to become a millionaire.
Now, the reverse will happen.
These articles can’t be written fast enough. We need more and more of them so that the sheople will accidently see them and say
“huh, wow those people lost $100,000 on a house! hey wait, that’s not far from my house!”
then the speculative fever will really halt… and common “knowledge” will be that housing is a great place to live, and a lousy investment.
Agreed. Papers like the Post need to yell from the roof-tops so this ends as quickly as possible. The guy who bought the $250k house for $450k no doubt expects to sell it for $550k! Meanwhile the builder can put them up for less than half that.
But who wants to live in a “brand new” house? They want to live in a “used” house. The scratched floors and soiled carpets add character and value to the home. You can share in all the treasured memories of the family that just got foreclosed. Those new homes being offered by the builders just don’t have the charm that the houses that have been beat to $hit for 2 or 3 years seem to have. You have to pay a premium for “my house”. So the story goes.
Its just like stone washed used jeans with holes in them are more expensive than non broken in new blue jeans!!
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i like this -
Jupiter resident John Icart closed in August on a three-bedroom, 2,176-square-foot house at 896 Fleming Way. He fell in love with the big kitchen, Jacuzzi bathtub, huge master closet and the preserve area visible from the yard.
The price: $245,000. That’s $165,000 less than what Daniel and Claudette Henry paid for the same model house.
“I offered them something I didn’t think they would take, and they took it,” Icart said.
“‘At that time, they were hyping that they were sold out, or were selling out, and that they only had two lots available,’ Daniel [GF] Henry said.”
Ah ha ha… ROTFLMAO..
Anybody in Florida “falling in love” with a view can’t possibly have lived here very long. As all natives and long-time transplants have come to know, it’s just a matter of time before any Florida view is obscured by something common or tasteless. Then even his $245,000 will seem like a bad deal.
Exactly, snake charmer, you’ve nailed it. It always gives me a chuckle to see property advertised as “waterfront” when it is on a retention pond or drainage ditch.
That drives me nuts too, especially the smelly ponds.
LOL, mrktmaven, that’s what “retention” ponds are, smelly sewage or septic overflows.
Ohhh…that’s why they say no swimming or fishing. Yukk…and builders charge a premium! Double Yukk and spit, spit, spit… You’d think they’d charge a premium to keep you away from those smelly disgusting ponds.
LOL, they say “No Fishing” because they don’t want people to see the sort of fish that comes out of those ponds. I’ve seen them, deformed catfish. Very creepy.
“It always gives me a chuckle to see property advertised as “waterfront” when it is on a retention pond or drainage ditch. ”
Yea, that’s laughable, but what’s even more mind-bending is the “waterview” sales, where some moron pays a premium for the temporary “view”. Your condo is across the street from the beach, so you get a “waterview” until they property owner builds a new condo right in front of yours.
So much for your ‘waterview’.
“I offered them something I didn’t think they would take, and they took it,” Icart said.
Did this man catch a falling knife or was his deal so good that he avoided a potentially falling knife?
Well, he’s set the comps now. Why would anyone pay more in this kind of market?
Passthebubbly - one comp does not a market make. Try to get any one of his new neighbors (who bought for $410,000) to sell for $265,000 and each and every single one of them would tell you to get lost. (including, i would guess, regular posters on this board who might find themselves in possession of such a house).
Prices will be very sticky on the way down, and people would rather stay in their houses than have to actually take a loss on the sale of the house.
I thought this might be interesting to some. The state of the southern CA economy is good, but who can afford to live here?
From the OC Register - Commuter Economy: Unaffordable housing, a problem for employers, may send new jobs elsewhere.
“Everybody in Orange County talks about the high cost of housing. But what does it mean for the economy– and your day-to-day spending?
The inability of many Orange County workers to buy a home here could hurt the economy in a number of ways: slowing local job growth, pushing up the price of services and eventually causing some employers to leave or expand elsewhere, economists say.
The Orange County Business Council, the primary advocacy group for businesses in the county, says increasing the supply of housing is one of its top priorities.
“The biggest issue is that we just haven’t built enough new units … for the number of jobs that we’ve been creating in Orange County,” said Wallace Walrod, the council’s vice president of research and communications. “That’s why we have so many employees working in Orange County and living in the Inland Empire.”
http://www.ocregister.com/ocregister/money/homepage/article_1357861.php
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So you see, we need to build more houses and condos here in the OC!
Problem is, people are leaving SoCal in droves. I checked on the Penske truck rental site and found that if I wanted to move Dec 22nd, to Phoenix, AZ.
- 16 ft truck $827
- 26 ft truck $1304
Now, if I decided to move into CA from the same spot:
- 16 ft truck $152
- 26 ft truck $269
Quite a difference, Yes? I would say that the truck rental companies show a significant trend that people are moving out of SoCal and everyone in the SW United States can expect the migration.
In 1992, moving companies would literally pay you to move a truck back to CA.
The Times has this cool interactive price map.
‘Orlando Regional Realtor Association members closed on 1,792 sales during October in their core market, down 24 percent from October 2005, when the market was still red hot, the trade group reported Friday. The number of homes for sale rose by 1,005 to 21,324 — nearly a year’s worth of houses at the recent sales pace. East Orange County homeowner Mike Nuccio, nervously sitting on his unsold house with a job transfer looming, fears that aggressive new-home marketers with their discount deals are taking the air out of the area’s existing-home sales.’
‘Nuccio’s Waterford Lakes home has been on the market for about six weeks without a single call, even though he has cut the asking price for the four-bedroom, two-bath home from $324,900 to $315,000. ‘How do you compete with new-home incentives?’ said Nuccio. ‘I need to move.’ He said one Realtor recommended he throw in a plasma-screen television as a sales incentive, to mimic the tactics of the home builders. ‘If I could afford a plasma-screen TV, I would hang it on my wall,’ he said. Nuccio fears he may have to cut his asking price even more.’
‘Despite a slowdown in construction of new homes, builders in Volusia and Flagler counties are continuing to buy land so they can be ready for the next housing boom. Will developers continue to propose more new projects? ‘There have been some decline in (building) permits for individual homes, but the applications for subdividing land and site plan reviews have not slowed down,’ Disher said. ‘We’re still seeing subdivision (applications) coming in at a regular pace,’ Tyner said.’
The builders have to keep building, or their out of business. They’ll agressively compete with existing home sellers for buyers. The builders have to monetize the assets they have, to pay the bills and provide cash flow for survival. They’ll keep stepping down the prices to stay ahead of the existing home sellers. We’ve already seen information indicating that land prices have fallen dramatically in florida, making it possible for builders to continue to build cheaper. The speculators can’t beat the big builders at their own game.
…builders in Volusia and Flagler counties are continuing to buy land so they can be ready for the next housing boom.
Who knows what they’re thinking? You could make more buying T-bills with that money than buying land. Unless it’s all on borrowed money, in which case the bank and the builder are also on borrowed time…
Homebuilders will keep building ? Take a look at the earning of some of the major builders. Centex 3rdQ earnings down 72%, Hovnanian’s CEO has stated that they will take a LOSS is the 4thQ of this year, Beazer down 54% for the 3rdQ, the drops in earnings goes on & on. I will make a bet that by the 2ndQ of ‘07 all the HB will be losing money. The discounting game will stop or they will be BK.
I not saying there won’t be BK’s. I’m saying that the builders will try to keep the game going as long as they can, hoping and wishing while they continue to add new inventory. With all the excess inventory build in the last few years, I expect new construction starts will fall well below 1999 levels, revenues will disapear and land values will be written down. I expect book values to drop, removing the current floor in the stocks. The builders are in survival mode and it’s going to crush the existing home sellers.
Just imagine how many of the homeowners in these areas don’t understand fully the idea of comps and how they relate to appraisals and lending. If they owned a long time or bought with a high down-payment, they didn’t care about the appraisal and wouldn’t have had a need to learn or figure out that it can bite them on the way dawn, assuming an honest appraiser is involved with the next transaction.
’sold to another buyer for $250,000 in late October. That buyer flipped the home three days later, reselling it for $425,000, records show.’
Why would the builder sell a house for $175,000 below market price. If the house re-sold in three days for $425K. What is a “select investor” in this instance? What is Lennar up to?
They need cash flow and a quick market exit. These guys take a global view: they’re probably doing the same thing on hundreds of houses across the county. +/- $200K is nothing to them compared to the millions they lose every month on unsold inventory.
They dumped the thing as fast as they could and got out of Dodge. What does that tell you about their attitude?
Max,
Could you explain to me how they lose millions on unsold inventory please? Thanks. That would help me to have a more complete understanding of why and how builders can do the +/- 200K thing.
It seems like a funny deal to me . Anyway ,who are the lenders that made a loan on a house that has a prior sale that low ?
Florida went up 39% average in 2005 in large part due to these “buy high” speculators that drove up the prices in Florida . The lenders should never of supported that high of a increase in that short of a time . You even had retired people taking on these risks .
The greedy flippers drove up the prices and now they are crying .I don’t care if they lose their shirts . What I care about is the effect they will have on everyone else .This mania was the most absurd run-up I have every seen and the lenders/industry could of slowed it down .
I’m guessing that this house got sold to The Scarecrow. The buyer had to be made of straw, don’t you think?
Yep ,one of those scarecrows . Watch the house go into default ,would serve the lender right for not caring about the history of the property .
Paying money on interest for loans from banks to build the homes while the opportunity to lock in prices at higher levels is dropping quickly.
And, I am supposed to feel sorry for these Florida nimrods because…….?
They and their ilk have spread like a plague over the country, raising prices and driving the locals out, just they would not have to work for a living and could just “Invest & Spend”, and feel superior to the great unwashed who did not have the smarts to “invest”.
Well, now it appears that the times are changing, and we are supposed to feel sorry for these upwardly mobile Nuevo-Yuppies who have gambled and lost. I am sick of it!
You Lazy, No-Good,Smarter-than-Thou, fat cats got caught when the music stopped. Work for a living, Da**it! Why the He!! is that so hard?
Stop looking for the “Get Out of Jail Free” card and work!
Arggghhh!
(rant off)
At least they’re not asking for government handouts (yet). When that 50-year-old guy “hurts” his back and goes on disability, you and I will pay.
Like your rant ThunderEater ,it’s exactly the way I feel about it .
The regular buyers who bought into these tracts will be taken down by the flippers . These tracts will be ghost towns for a long time and the condo projects even have more flippers .
My dad and his wife bought a condo in Estero that they live in from October-April. They bought it in 2001. He told me last week that there are For Sale signs everywhere. Since they bought in 2001 they should be OK.
But.
Last spring they put their very nice summer house on Lake Winnipesaukee (in his wife’s family for generations) on the market and bought a condo in Laconia. They are getting too old to handle the maintenance themselves. They still haven’t sold the house, and are now paying for two condos, plus the maintenance on a big old lakefront house in Meredith.
I questioned him on this decision, but since the house is from her family’s side, I didn’t push too much. I like that old lake house. I have fond memories of it from when I was a kid. To me, it would have made more sense to simply hire a maintenance guy to take care of the place during the winter and spring since the house has been paid off for 100 years or so, rather than buying a new overpriced condo.
I agree with you, Lou. I’ve seen this happen over and over, the move from the nice old paid off house into a condo. Older people are getting sold a bill of goods about their ability to handle things, some are much more capable than they think they are. In some ways, I think this business of “we can’t handle the maintenance” is blown up way out of proportion. A maintenance man can be cheaper than association dues in many cases and he won’t bitch about the old car or truck parked in the driveway or fine you for painting the doorway a different color than the neighbor.
I think this business of “we can’t handle the maintenance” is blown up way out of proportion. A maintenance man can be cheaper than association dues in many cases and he won’t bitch about the old car or truck parked in the driveway or fine you for painting the doorway a different color than the neighbor.
My parents got caught up in this trap. They bought into an area with an HOA for common lawn maint. The dues have increased over 500% in the time they’ve lived there. My dad jokes about the lawn guy driving a nicer truck and working less than he does, and he’s retired.
Where is it?
The house? In Meredith, about halfway down the bay towards Weirs Beach.
I enjoy the riding up there every June for the rally. It’s got to be a nightmare for the locals though. Nothing like 300,000 bikers crammed into a small lake resort town.
I agree, a lot of NH is nice. Those winters and property taxes are brutal though.
The sad thing is there’s no Undo command for what they did. Condos anywhere are pretty fungible, but you can’t get a lake house like that back.
Lou– funny you should mention the Lake-
Tripped across this listing yesterday:
http://realestate.yahoo.com/New_Hampshire/Melvin_Village/Homes_for_sale/94f9704029f67e1fcc92838f468fabe0
Looks like a beautiful place, and didn’t seem to be out of line, price wise.
And listed here, at $295k http://nh.craigslist.org/rfs/232980106.html
Of course, it’s also up for auction here:
http://www.bid4assets.com/auction/index.cfm?auctionid=283865
at a $195k min.
Looks like someone’s in a bit of a hurry to get rid of this, what with the lovely NH winter about to arrive.
Mebbe I been in SoCal too long, but for 2,700 sqft, looks pretty damned nice.
That does look like a nice place. Maybe he got sick of buying cordwood.
Here in Bradenton, FL I’ve been checking out some of the supply for sale and it’s amazing when you look at the disparity in asking prices. In a nice neighborhood only about 2-3 years old there are about 6 of the same model for sale (2100sq ft) and all were bought for around $240k in 2004. One person is trying to pull a double asking $480k yet the same exact house 100 yards away is up for sale at $330k!! Similar lot and everything!! The 3 other similar houses range up to $380k. The lowest priced house is still sitting so that shows the market is much lower than that. This is in a very nice, “desireable” area too. What a mess this is going to be…
My wife and I had been looking at Martin’s Crossing because PBC was too expensive. I was hesitant because it was a long drive from our jobs in North PBC. But the prices were much better than North PBC.
However, I took my wise old dad to see it. He immediately said “don’t even consider it”, because the place was a ghost town, there were huge puddles on the road after a very light rain, and like everywhere else they were too cramped for the price. It just didn’t look finished. Glad I listened to good old dad.
But I agree that the $250K is suspicious for that 5 bed house.
Does anyone know if that $250k sale was to a related party? I can see a builder selling the property to a sub for a very discounted price in order to settle some outstanding debts.
I can understand why older people want to move to a smaller place and be with a punch of people in their peer group . Some of these 55 and older tracts have so many activities for the older crowd that they are having alot of fun .
I also think they should be building cheaper trailer type 55 and older tracts for the older people also . During this boom they torn down alot of those cheaper projects that served a need for the lower income people .
Housing Wizard, I can understand it, too. I’m not far from Sun City Center, developed in the 1960s in what used to be the middle of nowhere south of Tampa. The people there are great, enjoy the many activities and the company of their peers. Most are happy that there’s a limit on the time that younger family members can visit. They have a great lifestyle, as far as I can see. I was just saying that there are two sides to this issue and that some older folks who are in basically good mental and physical condition who reluctantly buy into the “we’re getting old and can’t handle things” as a result of pressure from family members and market forces. The “market forces”, particulary, like to push condos and medical care. Some older folks might prefer the family home to the so called “active senior lifestyle”.
Sure I agree with you . Nice to have different options for the
older people .Would be nice to have different options for the younger people to.
I keep hearing comments from home owners like “Can’t they do something?” No, I don’t have a clue who “they” are. What can be done? Nothing?
Now, a few panels up:
’sold to another buyer for $250,000 in late October. That buyer flipped the home three days later, reselling it for $425,000, records show.’
“Why would the builder sell a house for $175,000 below market price. If the house re-sold in three days for $425K. What is a “select investor” in this instance? What is Lennar up to?”
This really sounds like a scam or kick-back. Something is very wrong here as in arrest, court, fines, and jail.
Roidy
You got my vote. I smell a rat. This is in Florida, right? Maybe the subsequent “flip” was a at a puffed-up price? That’s how they launder drug money, I think. Makes bags full of cash “legitimate.”
“This is in Florida, right?”
Oh, boy, DC_Too, why do I have the sinking feeling that even though the housing bubble has affected all states one way or another, Florida will forever be associated with the really over-the-top aspects of the bubble/bust?
“I know how it feels to be poor,” Jodi Roberts said as she contemplated her combined $15,000 monthly house payments.”
Now, for a moment of silence as we bury the “wealth effect”.
GREAT comment, Jannifl! RIP, wealth effect.
She’s wearing the shackles of debt.
Long live the ‘neg-eq’ effect!
“I know how it feels to be poor,” Jodi Roberts said as she contemplated her combined $15,000 monthly house payments.”
Wait until you are living in your car and doing garbage dives for food..then you’ll know what it’s like to be “poor”
It’s worse than that, Jodi. Poor means having no money. You’re broke and deep in debt as well. Poor & screwed — that’s you, babe!
“….as she contemplated her combined $15,000 monthly house payments.”
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Yikes! That’s gotta be painful and I’m assuming this doesn’t even cover the insurance and maintenance.
It doesn’t occur to these greedy ‘real estate seminar jackass’ Donald Trump wanabees that they will be laughed out of court:
Were you sold a Puffed Overinflated Home Value by a Developer
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Apply to: hous-234418800@craigslist.org
Date: 2006-11-13, 7:34PM EST
We’re looking for other folks that were “puffed” on a home purchase that was supposed to appreciate to a value to cover the downpayment and never even came close. Also, told it would rent for about the mortgage value and will never rent for near that. We are seeking a competent attorney that can help represent others like us to come out with some fair amicable solution with these developers.
Can anyone can help us prevent a financial disaster? Any good advice is appreciated!
Thank you greatly.
http://fortmyers.craigslist.org/rfs/234418800.html
I hate to tell these folks, but “caveat emptor” is the overriding rule in Florida real estate. Did the developer put his boasts in writing? Didja do your own research? I guess they are hoping for a class action, but I’m not sure it would hold up.
My thought is that someone taught these flippers how to get 15 properties at once ,all owner occupied loans with o down payment .
Could it be the real estate seminars ?
“Jupiter resident John Icart closed in August on a three-bedroom, 2,176-square-foot house at 896 Fleming Way. The price: $245,000. That’s $165,000 less than what Daniel and Claudette Henry paid for the same model house.”
I bet the Henrys won’t be inviting John Icart to their back-yard barbeques.
I’ve got to pass this along. It’s the copy from a realtor’s ad in this weekend’s Palm Beach Post. It reads as follows (wierd sentence structure, funky punctuation, and stream-of-consciousness style and all):
“REALiTY FOR BUYERS
You’ve been holding off…
You didn’t have a compelling reason to purchase IMMEDIATELY…
Because you’ve read all about the cooling of the market.
But, you are in the real estate driver’s seat.
Just don’t wait too long…
How do you know what’s too long?
By working with a real estate agent who has studied the market and knows what prices were 2 years ago…what they were a year ago…what they were 6 months ago.
The price correction that’s happening was predictable and arguably necessary.
And now there really ARE many homes that are well-priced, valued correctly (even bargains), and are SELLING! But only an agent who has worked a given market for years and years knows how to identify the values and is able to expertly provide advice concerning the right time to buy.
Make certain you don’t wait too long. You don’t want someone else to snatch up your perfect property now that it’s PRICED RIGHT!
I’d be pleased to be your REALiTY agent and put my market knowledge to work for you.”
__________________________
Well, at least the realtor admits that the market is cooling.