“The Flip Has Flopped”
The Herald Tribune reports from Florida. “The torrent of unpalatable real estate data is enough to ruin some folks’ holiday appetite. But there might be some good news despite the fact that the Sarasota-Bradenton market led the state in the third quarter with an 11 percent erosion in median sales price.”
“Charlotte, Manatee and Sarasota counties seem, so far, to be bucking a trend of rising foreclosures. The three-county area registered 997 foreclosures during the third quarter. That was an increase of about 32 percent from the second quarter but down 30 percent when compared with the same time last year.”
“But others said that this apparent drop in folks unable to make their mortgage obligations could be just the breath before the dive. Peter Lyddy, a licensed mortgage broker, sees ‘things getting worse before they get better, especially for homeowners with ARMs that are likely to reset at higher rates in the coming year.’”
“Lyddy noted that October’s 430 foreclosures were nearly 17 percent higher than last year’s 368, and that additional increases are possible in a rising interest rate environment.”
The News Press. “Ken Smith’s family should have celebrated Thanksgiving in their new Lehigh home. Instead, Smith, and his wife, Barbara Pandoff’s $185,000 dream home in Lehigh Acres is only a skeleton. It was to be ready by last spring. The couple have paid $63,575 on a home that likely won’t be built. Smith is out money from the sale of real estate, including a four-unit apartment building.”
“They are not alone in their plight. More than 100 people who paid thousands of dollars in down payments for homes that either haven’t been built or haven’t even been started. Builder Richard Leli of Fort Myers-based RL Homes says he’s broke and won’t have the money to finish some 120 projects in various stages of completion or never started.”
“‘It all happened due to several factors, especially mismanagement from my part,’ Leli said from his nearly abandoned office. Leli said he called his customers with a simple message: The money is gone.”
“‘This guy is taking people’s money and running away with it,” said Freddie Alicea, who along with wife is out a $20,000 down payment.”
“Subcontractors Ari Herrera and wife Carrie, say they have wiped out their savings and are owed nearly $80,000 by Leli for work on homes. They have placed liens on Leli property, including a $500,000 house in Naples and two New Jersey properties worth more than $700,000.”
“Leli agreed in 2004 to build Alicea a home for $197,000, Alicea said. Now he’s not even sure he can get his down payment back. Fort Myers attorney Henry Andreasen, who represented the couple, was told by Leli that there was no money for restitution.”
“‘The further along the house is, the more complicated and the worse position the homeowners are in,’ Andreasen said.”
“If the builder doesn’t pay, subcontractors, such as the Herreras, could begin chasing the homeowner, the lawyer said. In Smith’s case, $27,000 in liens have been placed against his unfinished home for money subcontractors say Leli owes them.”
“The couple have little money to pursue Leli legally but are hopeful the state will take up the case. ‘We spent everything on our house,’ Pandoff said.”
From WWAY TV 3 in North Carolina. “First-time homebuyers Cal and Seanna Morgan are looking to buy a house in Wilmington and they are experiencing first-hand the softer real estate market.”
“Cal said, ‘I’ve found that prices have leveled off, instead of going up $10,000 per house every time one sells in the neighborhood. They’ve kind of leveled off. And that’s good for us in a sense that we’re buying, but bad for us in a sense that we’re selling.’”
“‘We’re seeing some builders and developers offer incentives like paying the interest on a property for a year for the buyer. Maybe doing some extras like a plasma TV or appliances, that kind of thing. You are seeing some incentives like that,’ (broker) Jim Wallace said.”
“The reason? To attract buyers. In September of this year the number of homes listed was up 11 percent over the same time last year. But the number of homes sold was down 28 percent. Another tell-tale sign: houses are sitting on the market longer, up 28 percent over last year.”
“As Jim Wallace says, the flip has flopped. ‘There were people buying these houses during the boom period, second homes, that really never intended to stay one night in them. They bought them to put them back on the market six months or a year later to make a profit. Those people are on the sidelines now,’ Wallace said.”
‘The Burkes watched hurricane and other insurance costs on their Miami Beach house skyrocket from $3,500 a year in 2000 to $17,000 today. ‘I’m leaving everything I’ve known my entire life,’ says Joseph. ‘But if the rest of the country was based on the same out-of-whack economic-fluid levels Miami’s on these days, America would be a Third World banana republic.’
‘If you believe professional public opinion polls, barely two out of 10 Floridians think the state will be a better place to live in five years. Nearly seven out of 10 say it will be about the same or worse.’
‘Throughout the US, home prices have started their descent. The extent of the decline will vary from market to market, but some fall is inevitable in most places. The boom in prices was largely the result of Federal Reserve easy money policy that kept interest rates at abnormally low levels for too long, facilitating speculation, making financing easier and affordable.’
‘That mistake, recently admitted to by the Federal Reserve Bank of Dallas, won’t be repeated, even though the current tight money policy is slowing the economy. Here in Naples, real estate sales are stagnant following the huge run-up in home values in recent years. Prices, however, have not generally declined because there’s a false optimism in the minds of sellers.’
‘Numbers released by the Florida Department of Education last week show another decline in enrollment in Bradford County schools. Statewide, Education Commissioner John L. Winn noted Florida schools have experienced slower growth in enrollment, and this year marks the smallest increase in more than two decades. According to Winn, nearly half of the state’s school districts measured a decline in enrollment this year.’
‘That mistake, recently admitted to by the Federal Reserve Bank of Dallas, won’t be repeated, even though the current tight money policy is slowing the economy.’
The currency markets seem to reflect a view that money is not very tight, and further that the Fed will try to reflate the economy on the first sign of weakness. Everyone seems to know about the “helicopter drop” and “giant printing press” plan, despite the Fed’s best efforts to rattle the saber over inflation concerns.
The US Dollar is crashing which means inflation will spread like a California wildfire. At least the the Fed will manage to save the flippers while turning the country into a Bernanke Republic. Job well done.
His generals may preempt this plan with a coup d’etat in the press.
So if this comes to pass (inflation increases while credit is tightened), the only option I can see for the urban middle class is to move to flyover country, where they can still afford a home on the wage they will earn. Does anyone foresee a flight of population to areas like the Midwest that are currently cratering but do still have a lot more infrastructure leftover from the industrial decades (than the remaining flyover areas)?
I’m a PNW native who lived 18 months in Illinois, close to the Mississippi. I’d fall on my sword before returning. Tornados. Bugs. Humidity. Bugs. Lightning. Bugs. Heat indices in nauseating triple-numbers. Bugs. Flatness forever. Bugs. Wind. Did I mention bugs?
So did you notice the bugs?
Bugs? Lightning ? Wind? Humidity? Flat?
Are you sure you didn’t end up in Florida by mistake?
Sounds like Florida to me. Been here my whole life.
‘I’m leaving everything I’ve known my entire life,’ says Joseph. ‘But if the rest of the country was based on the same out-of-whack economic-fluid levels Miami’s on these days, America would be a Third World banana republic.’
Guess what? America IS a Third World banana republic! The only difference (so far) is that foreigners are still letting us “pay” them with our Monopoly ™ money. Once that ends, which it will, Katy bar the door!
Guess what? America IS a Third World banana republic!
Agreed.
I am amazed at the speed with which it all happened. I wounder if one could look historically and get a perspective on which key events put us on the wrong tracks? Political correctness gone mad? Entitlement programs for everyone? De-regulation of US commerce? Failure to protect our borders? Why the decision to stop educating Americans? Perhaps the massive religious revival? - Maybe all of the above and then pure runnaway greed.
— OR —
Is our economic collapse as inevetible as the USSR? Are we still massively hung over from the cold war? Is the process just taking a whole lot longer?
What I do know, is that I will not be buying in america, and have the good fortune of an EU citizenship, although frankly New Zealand is likely to be the most survivable in the long term future.
A friend calls New Zealand: Imagine Ireland running into Costa Rica running into Switzerland running into Norway…
I’ve been to New Zealand 9 or 10 times, since 1981 and quite frankly, it’d be the best place to sit out whatever’s coming our way, for a number of reasons…
1.Friendliest people in the world.
2. Splendid isolation.
3. The only “guest workers” tend to be 1st worlders, with skills that are needed, no deadweight allowed to immigrate.
4. Crime is negligable. (a handgun murder of a 23 year old woman in Wellington a few years ago, was front page news in the national paper for 4 days, running during one of our visits)
5. Farming & ranching are a way of life. Self sufficient people, are perhaps the most important ingredient in a given nation’s survivability.
6. Amazing scenery throughout the country. (i’m partial to the South Island)
7. No handguns. (if the proverbial you know what hits the fan, and our society breaks down, guess who’s gonna rule the roost?, whomever is best armed, sad to say, due to the amazing amount of guns in our country)
8. A breadbasket country, capable of producing many multiples of food, vs population. (4 million people, 75 million sheep)
“4 million people, 75 million sheep”
Whoa, mama, the guys are holding a strong hand there.
…My vote goes to all the Chicago boys…. from Friedman to Rumsfeld, et al. Friedman is lionized for his alleged brilliance…with his theories now having been taught to more than a generation of gullible econ majors and fledgling MBA’s. There is no discourse any longer on balancing the intrusions of government and those of industry. Industry has won. Friedman’s “the single priority of a corporation is to maximize earnings”, coupled with his “rid business of all regulation and it will police itself” has gifted us with the train wreck we’re watching.
Like the trucker says to his partner in the old joke, as they head inescapably from a head-on, “Wake up….You ain’t never seen no wreck like this.”
Where did the phrase Katy bar the door come from? It sounds like it might have come from a western movie or something like that. It is a very popular cultural phrase. I just started wondering about this when I read it.
‘When Lide Married Him’
by James Whitcomb Riley’s
When Lide married him - w’y, she had to jes dee-fy
The whole poppilation! - But she never bat’ an eye!
Her parents begged, and threatened - she must give him up - that he
Wuz jes “a common drunkard!” - And he wuz, appearantly.
Swore they’d chase him off the place
Ef he ever showed his face
Long after she’d eloped with him and married him fer shore!
When Lide married him, it wuz “Katy, bar the door!”
The depth of education and cultural experience among Ben’s bloggers is one of the many characteristics that, to me, set it apart from all others. As in, it’s not as if this were a Juilliard blog.
-
Google is your friend.
I like drinking beer while shooting rats down at the county landfill with my cronies. Is that a favored Juilliard pasttime?
‘Katy bar the door’, was a phrase that Dick Lane, on channel 5 & 9 in LA used when announcing roller derby, the jalopy derby, or wrestling. Can anyone forget Baron Leone?
Ah,
The roller derby, always the L.A. Thunderbirds against the N.Y. Bombers, although both teams lived in El Monte, probably.
Yes Dick Lane and of course his great “Whoa Nellie,” as the LA T-Birds always came from behind on the last jam to win.
‘We spent everything on our house,’
That is the problem.
How about this quote:
For Alicea and Rios, however, it’s about more than money.
The couple face a hearing Dec. 23 to determine whether losing their home also could cost them their children.
Their adoption of two babies in Philadelphia is contingent upon their moving to a new home in Florida, Alicea said.
Leli agreed in 2004 to build Alicea a home for $197,000, Alicea said. Now he’s not even sure he can get his down payment back.
“Charlotte, Manatee and Sarasota counties seem, so far, to be bucking a trend of rising foreclosures. The three-county area registered 997 foreclosures during the third quarter. That was an increase of about 32 percent from the second quarter but down 30 percent when compared with the same time last year.”
How can they be “bucking the trend” if the number of foreclosures is up 32 percent in one quarter? According to the rule of 72, the recent rate of increase in foreclosures represents a doubling in the number about every 72/32 = 2.25 quarters = 6.75 months. It sounds more like they are “setting the trend.”
P.S. YOY comparisons are somewhat meaningful shortly after a market has made a 180 degree change of direction, as illustrated by this case in point.
“meaningless”, not “meaningful” (need more caffeine!)
Also, this time last year was when the old bankruptcy laws were changed. I believe in Florida your primary residence was held immune during bankruptcy…
The equity in the primary residence was exempt no matter how much it is. Same in TX. I don’t think that’s changed but they’ve made it so that you have to have owned the house for a designated period of time prior to filing chapter 7 in order to gain this benefit. IOW, no more dumping all your money into a residence to avoid creditors and then filing the next day. People used to actually do that.
yes they did
Gotta love the Rule of 72…
A few years ago, when property was increasing in value at 15 - 20% per year, I tried explaining to people that prices would double very quickly at that rate and that falling interest rates and exotic financing might/could/would allow the first doubling. I went on to say that I didn’t think a second doubling could happen (abscent zero interest rate or some other wild anomaly). All I heard back was, “wealth effect”, “increases in income”, “generational transfer of wealth”, “new paradigm”, “land shortage”, etc….
Well, it appears the days of reckoning are here…
Well, this is the same story as the dotcom bubble. Interestingly, the bears really feared a melt down in the economy - middle class folks who lost their entire retirement savings to stock crashes were expected to become homeless vagrants. It didn’t come to pass last time around. I’m left wondering if that might occur as this bubble unwinds.
Thanks Stucco,
Since I live here, I was hoping you or one of the regulars would post an interpretation of what this actually meant. Thanks.
GS — good catch.
OT… Good read.
http://www.smirkingchimp.com/thread/3204
Good find.
I also suspect that the vast gathering of police powers under the NeoCons is in anticipation of economic chaos as much as in anticipation of political chaos.
Only 180 million guns stand between retributional freedom and total world debt slavery.
That’s why everyone should load up with guns and bullets. When Wall Street sends the Feds out to grab your property, who will protect it?
Don’t forget kitty litter, too.
“Leli agreed in 2004 to build Alicea a home for $197,000, Alicea said. Now he’s not even sure he can get his down payment back. Fort Myers attorney Henry Andreasen, who represented the couple, was told by Leli that there was no money for restitution. ‘The further along the house is, the more complicated and the worse position the homeowners are in,’ Andreasen said. If the builder doesn’t pay, subcontractors, such as the Herreras, could begin chasing the homeowner, the lawyer said. In Smith’s case, $27,000 in liens have been placed against his unfinished home for money subcontractors say Leli owes them.”
With a growing risk that a builder will go belly-up before completing a new home under contract, plus a record number of completed new homes on the market threatening to depress future spot prices, what kind of implicit risk premium are buyers who are signing new home construction contracts paying these days?
A new constrution buyer has to have a great buyer’s attny and make sure their deposits are protected, at a minimum. Also, all checks should be written to the sub-contractors not the general contractor. This helps ensure that the subs get paid. Other-wise, the GC may “mis-manage” the money. Borrow from Peter to pay Paul..then everyone ends up with a sore Peter…
At the other end of the spectrum, buyer’s are taking on a huge risk of lower future prices, failure on the developers part to complete construction, failure for the property to appraise, and on, and on, and on..
So..the risk premium should turn into a “risk discount”..hey Mr. Builder,”you want me to roll the dice on your fancy new construction, then you have to reward me for taking on the risk.”
“risk discount”…
Pen — Thanks for your excellent post! I think the risk discount may have already showed up — aren’t new home sales prices already off by more than 10% YOY, even before factoring in the value of $50K-$100K in sales incentives?
“aren’t new home sales prices already off by more than 10% YOY, even before factoring in the value of $50K-$100K in sales incentives?”
Very good point, but while I can’t speak for other areas on the country, I think the local conditions here in MA aren’t quite there yet. I still think that MA has a way to go. We have quite a stalemate going on here. Builders are reducing their prices (somewhat), but the buyers (move-up buyers) still haven’t capitulated. Because virtually all of the new contruction here is way over the avg/median price (SFs are $600k and up, good condos are $400k and up, one doesn’t want to go near the condos below $350k, trust me on this one), virtually only move-up buyers can go to new construction. Problem is, they still want/need to get $500k for their smaller cape, ranch, split/tri level or garrison, before they can move-up to the 4bed/2.5 bath, 2 car garage box-on-box colonial. I suspect, that the winner in this stale-mate will be “on the fence” buyers who are socking away their cash and staying debt free, unless the move-up buyer wakes up and smells the french roast, triple-latte with skim cup of coffee and capitulates. I don’t think the latter is going to happen anytime soon. Northeasterners tend to be stubborn and are convinced that their homes are unique and “desirable”.
Penn-
Anybody contemplating a home “move-up” in MAZZ has got to be brain-dead.
It’s total war as to which constituency is gonna get stuck payin’ future bills.
Losers at the moment seem to be the rich elderly on the northshore.
“I suspect, that the winner in this stale-mate will be “on the fence” buyers who are socking away their cash and staying debt free”
Once again we go back to our history to draw a parallel to what is now happening. In Sept. 1939 the Nazis attacked and conquered Poland. They had finished the conquest by the end of October. The British and French had declared war on Germany. The world awaited a return to the trenches and a repeat of the scenes of the Somme and Verdun. Instead, nothing happened.
All winter the world awaited the great battles. But nothing took place but some wringing of hands. Soon the situation was dubbed “The Phony War” or “The Sitzkrieg”. Those that had appeased Germany earlier said, “you see? We told you their aims of destruction were limited.”
In May the under prepared French and British were steamrolled. In the winter interlude they had done little to improve their position and their ability to defend their homes. They staked their hopes on the myth of the “impenetrable Ardennes”. The Germans on the other hand, viewed the Ardennes as the easiest route with which to steamroll their foolish opponent.
Instead of saving their pennies and getting their balance sheets in order, I’m guessing today’s future foreclosed homeowners were spending the previous few days camped out at Best Buy, Walmart and Macy’s. They were dying to spend all of the money they didn’t even have while the forces against them were preparing the Grand Offensive. I expect May 2007 to rival May 1940 in the sheer scope of destruction for the unprepared.
Only time will tell as we sit through the second great Sitzkrieg in history. Will the Maginot Line of, “the Fed is sure to lower interest rates in the next 6 months” be enough to protect these dopes? My guess is, “no”.
Superb analogy. Just great.
excellent, just excellent.
Stucco,
I wonder if new buyers that are having homes built could take out some kind of insurance policy to limit their risk if the builder goes belly up. KInd of like buying insurance before you fly on a plane, but a bit longer to cover the period of construction.
insurance policy to limit their risk? Someone at our Turkeyday Dinner mentioned “bonding”, an insurance policy to guarantee completion of a remodel on a house.
Wonder if it is available when purchasing from a builder?
I believe what you guys are talking about is generally referred to as a Performance Bond. Very common in real property construction.
That’s correct, P & P Bonds may become the norm for residential construction, if things keep on the way the are.
Stucco;…As you well know, in good times people ingnore the risk…Now that the crap is hitting the fan, everyone wants to say you shouldaa done this….One simple way a owner can protect themselves from any Sub-contractor placing a lein on their property is to “Both” file with the county recorder and post on the site a “Notice Of Non-Responsibility” PRIOR TO ANY work that has commenced on the property…This would include dropping of ANY material on the site…Its technical, but bullet proof if you do it correctly….
” Instead, Smith, and his wife, Barbara Pandoff’s $185,000 dream home in Lehigh Acres is only a skeleton.”
Is this the same “Lehigh Acres” that Eric Estrada is “representing” on late night TV?
You caught on to that one did ya?
Roidy
BWHAH
Look at the website http://www.lehighland.com . It has “SOLD OUT” everywhere.
Yep, anyone who bought was “sold out”.
I believe the Lehigh Acres refered to is located in Fort Myers Florida.
“As Jim Wallace says, the flip has flopped. ‘There were people buying these houses during the boom period, second homes, that really never intended to stay one night in them. They bought them to put them back on the market six months or a year later to make a profit. Those people are on the sidelines now,’ Wallace said.”
The most important question for the would-be buyer is the current status of the “second homes people bought during the boom with no intent to stay one night in them.” Are these flop houses still on the sidelines, as many of the desperate flippers hold out hope for David Lereah’s suggested return to high rates of home price inflation starting again in 2007, or have they already been added to the inventory pyre?
Oh, we ain’t seen nothing yet. The seasonal inventory decline in my area (Sacramento) has been a lot shallower than last year, and the major house builders haven’t slowed their onslaught of new inventory. We’ve seen cases where a new builder is undercutting every resale house within 10 square miles by price. Literally hundreds of resale houses taken out of contention.
Next year will be a bloodbath.
Good thing the Terminator is nearby to keep the bloodbath from going too far…
Well, I’m sure that since Sac is the capital of California, the government won’t let anything bad happen here. The capital of a bankrupt state leading said state in foreclosures? I mean, how would that look?
it would and will look a lot like reality
No problem; we’ll just float and vote a “homeowner salvation bond”.
We love bonds.
LOL…
builder is undercutting every resale house within 10 square miles by price. Literally hundreds of resale houses taken out of contention..
When The Elephants Dance, The Mice Get Trampled…..
In a few years, admitting to owning a second home will not be a status-climbing phase. It will be more like admitting that you still own WorldCom or Beanie Babies.
Mozo - LOL.
Those 60 inch “Incentive” Plasma TV’s are Great for watching their Lives go down the Tubes on the 5 o’clock RE News..until the power company soff the Electricity.
Oh well, at least they can take a SWIM in their yet to be built “Incentive” Swimming Pools… when they FIND their Contractors !
Mikey, I think you are severely underestimating the value of the incentive swimming pool.
In the future, these pools will be great place for sleeping on rafts, for doing laundry and bathing, while the “tenants paying the bills” live “inside the house”. Also, in the end the pools will provide a great place for drowning one’s self, completing the job of the tidal wave of debt.
You can live in your pool, but you can’t swim in your house!
Lively wit tonight!
You assume pool owners can afford the water bill to fill and run their pool. If you keep the pool empty and tarp it over, VOILA, instant huge storage room!
“”We spent everything on our house,” Pandoff said. “We are going to terminate him but on our own terms.” ”
Oh Oh, builder Leli might be smart to start carrying some iron and watching his backside. Will this be the start of a Builders Boothill?
i thought the exact same thing….i would be a bit frightened if i had stolen somebody’s life savings and they said “I will terminate you on my own terms”
Anyone else noticing the almost maudlin humor in the press now about this popping bubble?? “torrent of unpalatable real estate data” is not a quote you could have found 8 months ago!
The worm has really turned.
“The worm has really turned.”
That is what is really scaring me. Everybody and his brother agrees on something. Being the contrarian that I am, this might be the bottom of the bubble even thou everything I research and believe tells me the housing market is bad. But when everybody agrees, including the Main Street Press, I am wary???
We paid a visit to a couple this morning; wife in said couple is an old friend of my wife’s. We got on the subject of California housing, and the husband of my wife’s friend suggested that we take our time about getting into the purchase market. He thought prices would drop by more than 10% thanks to all the high risk loans that are driving the market. I just smiled and listened — it seems the blog education efforts are having very widespread effects!
I understand you. We live on this little island in the blogosphere, and we all agree with one another. Then MSM comes around to our point of view (some of the time), and we wonder if we are really crazy. One fact you can count on is that a lot of ARMs will reset; time will tell the consequence.
David, I wonder if they’re not trying to engineer a good-sized dead cat bounce for spring ‘07. If all the press coverage is about how the market is tanking, they may yet sucker some holdouts into becoming GFs. It is, after all, a ‘buyer’s market’.
It’s possible that I’m too cynical WRT the MSM. Wait, it’s the MSM, never mind.
“If all the press coverage is about how the market is tanking, they may yet sucker some holdouts into becoming GFs.”
But free money is increasingly difficult to come by. GFs may be stupid enough to buy, but nonetheless unable to get loans…
“As Jim Wallace says, the flip has flopped. ‘There were people buying these houses during the boom period, second homes, that really never intended to stay one night in them. They bought them to put them back on the market six months or a year later to make a profit. Those people are on the sidelines now,’ Wallace said.”
Excuse me, Mr. Wallace, these people are NOT on the sidelines. They are now sitting on a serious negative cash flow payment for an “investment” house they can not unload. I am sure they did not account for this when they took out the loan to purchase the property. At best, they are waiting for the proverbial spring bounce that will never come. They will realize in mid-2007 that they can not carry the house anymore, they can not rent it out for the the payment, and they can not sell it for anything close to their purchase price. Please redirect your clients to Casey Serin’s blog to educate themselves on what awaits them.
I was just thinking the same thing. They’re not on the “sidelines”, they’re out by the woodshed getting reamed in the a$$.
Ric — good point — there are a lot of Marjorie Greedners out there with alligators that are eating then toe-by-toe. Couldn’t happen to a slimier bunch of market-screwers gone screwed.
Regarding the last paragraph that flipping has flopped, it resonates with me in the riverfront development in Wilmington Delawhere. Flippers are getting their just desserts and good riddance to them. I did not realize how flipping caused my new build to be sold for an inflated, unrealistic price. I was not familiar with the local market I bought into when I took a new job. Coming from DC to Wilmington Delawhere I looked at the price as being a steal. Only after I was forced to change jobs abruptly and unexpectedly move did I find out how the price point was why too high for the area. I slashed the price to the bone, got it sold & got the heck out. It sold for 350k after paying 385k a little over a year prior. At the height of the mania units like mine, interior street side units for a riverfront developement, were going for 425k. Street side end units were going for 450k and riverside units were all 500k plus. All these prices were 100-200k more that the initial developer asking prices. The parasite flippers are still out there listing units like mine for 370k - 425k. A 425k unit is right next door to mine, vacant & never occupied. Other occupant owners bought at the height of the land rush frenzy are unsidedown by 60k+ now due to the artificial appreciation caused by all the flipping. Flippers who’ve given up and others who’ve had forced sales like me are not taking away what greedy flippers artifically created and profited from. Current owners will be vulnerable for at least a decade if they are forced to move like me and w/o any relocation benefits. Do not get me started on all the misrepresentations the sales agents for the develpor made, lets just say the plan has gone from a luxury riverfront development to an unlivable luxury ghetto town home project due to city inability to control crime and developer bait & switch that has left urban blight as a neighbor for at least a decade. Hence criminals, gangs, and ironically the homeless will be their neighbors for a very long time. I am out, I am alive & back to a civilized, safe first world area well worth the 65k in total losses I suffered.
Joe — good anecdote. Thanks. Glad you got out with minimal damage.
Hey Joe, said now
Where you gonna run to now?
Leli said he called his customers with a simple message: The money is gone.”
Yeah, gone to an offshore banking account in the Cayman Islands.
Lots of garbage washing ashore as the bubble tide recedes.
That’s it hd74man . Who is this guy trying to kid .
Smith, a registered nurse at HealthPark Children’s Hospital, is out money from the sale of real estate, including a four-unit apartment building.
He brought in two contractors to look at finishing his 2,428-square-foot, three-bedroom home. One contractor wanted nothing to do with it. The other said another $165,000 would be needed to finish the job.
“No other construction company would build us a house like the one we want for less than $350,000,” Smith said.
in 6 months those contractors will be dying for the opportunity to finish their house. The trick is carrying an unfinished house till the contractors are starving.
With all of this bad news and the stock market hitting news highs, I am convinced that hyperinflation is around the corner. The money supply has doubled in the past 7 years. It will double again by next fall in a futile attempt to “save” the economy from recession. Europe and Asia are ready to dump the dollar. Berkshire Hathaway increased their foreign currency investments from 11% to 19%. Warren Buffett, George Soros and Bill Gates are moving their billions overseas. The writing is on the wall. The Fed will lower rates and Treasury will crank up the printing presses like never before. People saving in US Dollars will be royally screwed. Hard assets and foreign currency will rule the day. The Wall Street hucksters should be dragged out into the streets and dealt with
Hyperinflation seems like a sure-fire way for the Fed to throw dollar hegemony out the window. Thus I don’t believe that is the plan.
Jerry — with respect, I think that either deflation or stagflation is what is in store for us. Leviathan must sell its debt overseas, albeit at increasing rates as the dollar dips. That augers for stagflation, though I personally favor plain-and-simple deflation.
‘The Burkes watched hurricane and other insurance costs on their Miami Beach house skyrocket from $3,500 a year in 2000 to $17,000 today.”
—————————————————————————–
Yep. And who is the largest writer of P&C reinsurance coverage? Berkshire Hathaway. 2006 3rd Quarter profit up 480%. My largest position by far. I have been telling you guys for a long time that Berkshire is the anti-bubble. The only insurer with the balance sheet strength to write unlimited amounts of coverage (and the pricing discipline to have made a profit in 2005 despite Katrina/Rita). Sitting on $40 billion cash for when this whole thing shakes out.
We had a few posts about Bershire insuring a few hotels in South Florida last Spring. Many thought Buffet was off his rocker however I am on the HBB record of saying it was an excellent move and typical Buffet.
We had a few posts about Bershire insuring a few hotels in South Florida last Spring. Many thought Buffet was off his rocker however I am on the HBB record of saying it was an excellent move and typical Buffet.
We had a few posts about Berkshire insuring a few hotels in South Florida last Spring. Many thought Buffet was off his rocker however I am on the HBB record of saying it was an excellent move and typical Buffet. One of the few good calls I have made over the past year I might add.
Sorry about the double post. I am having problems with my browser/server today.
I am looking forward to watching the Governator steer the Goodship CaliforiaPop down the windy river of bubbleland and easy money gone south, and leaving a hugh swath of bankrupt and destitute constituents all the way from Eureka (or Cresent City) in the north to San Diego in the south. Bring on the storms for CA.
>From WWAY TV 3 in North Carolina. “First-time homebuyers Cal and Seanna Morgan are looking to buy a house in Wilmington and they are experiencing first-hand the softer real estate market.”
“Cal said, ‘I’ve found that prices have leveled off, instead of going up $10,000 per house every time one sells in the neighborhood. They’ve kind of leveled off. And that’s good for us in a sense that we’re buying, but bad for us in a sense that we’re selling.’”
how can they be first-time buyers if they’re selling???????
Each week we get probably 40 listing calls from investors inquiring on how to either sell the home they wish to close on, asking what the true value of the home is, or how can they get out of their contract. The real problem with the Flip Boom was the wrong investors were in there to begin with. Flippers need to be prepared to buy and hold if the market adjusts, and too many didn’t think about that. Now it’s a blood bath for investors competing with builders. It is a good time for buyers right now, and long-term investors who are buy and hold.
Flipping has always been gravy money, but not the true path to wealth, although it has been the true path to debt and failure for the uneducated investors. Actually, there were some educated ones that got caught up in this as well, so maybe that’s not entirely fair.
I’m really interested in seeing how the new congress gets us out of this one