“The Merry-Go-Round Stops” In Florida
The Daily Business Review reports from Florida. “No one can point to any single reason for Palm Beach County’s drastic downturn in home prices, but real estate players identify a slew of contributing factors.”
“Susie Van Pelt, an agent in North Palm Beach, has a listing for a waterfront condo at Flagler Pointe in West Palm Beach priced $5,000 less than the year-old purchase price. The unit isn’t selling even though the price is $80,000 less than a comparable three-bedroom water-view listing in the same building.”
“With the huge supply of homes on the market, some sellers are in a panic. The people who are forced to sell are the ones dragging down the median price, said (realtor) Kim Stevens in Boynton Beach. Stevens recently sold a Lake Worth home that was appraised at $380,000 but sold for $318,000. Two years ago, she said the home would have sold for more than $400,000.”
“Based on the current market index, Palm Beach County has a 47-month inventory backlog.”
“A surge of new Palm Beach County construction is contributing to the flooded market, Stevens said. After buying land at boom-high prices, investors and builders cannot afford to sit on the sites. ‘We got caught up with a lot of inventory,’ said Bregman, who represents clients who bought up tracts of land during the heyday. ‘When the merry-go-round stops, there is a lot of product out there.’”
The Herald Tribune. “George Fischer’s for-sale sign is one of roughly 7,600 in the Sarasota MLS. That is more than double the 3,700 homes listed for sale in mid-November 2005. Neither figure counts condominiums. That number of condos for sale, too, has more than doubled in the past year.”
“Meanwhile, real estate brokers are having trouble making these puppies play. They are closing on houses at the rate of 73 per week. At that speed, it would take two years to get rid of just today’s inventory.”
“In response, sellers have gradually, painfully lowered their prices, to the point where the median price is nearly back to 2004 levels.”
“Fischer has not even managed to get a lowball offer. ‘It is almost as if there aren’t any true buyers out there, or there is no urgency,’ Fischer laments. ‘Because there is such a glut on the market, people feel they don’t need to make a decision, because the house will always be there.’”
“‘The activity has just died,’ said Peter Magnuson, a Sarasota real estate investor who chairs a local real estate investor club. ‘People have lost money, and they just haven’t realized it yet.’”
“It is people who bought at the peak, like Fischer did in May 2005, who are hurting. Fischer paid $320,000 in May 2005, just as the market was topping out, and then put $30,000 more into the place, for an outlay of $350,000, not counting monthly carrying costs. So even if Fischer gets his asking price, and even without counting any closing costs except the 3 percent commission, he would be in the red on the deal.”
“‘It is going to happen more and more in the next two to five years,’ said Stan Geberer, an economist at a real estate consulting firm. ‘Almost everybody who bought in 2005, if they try to sell in 2006, is going to be upside down.’”
From Florida Today. “A total of 512 housing construction permits were issued countywide in October, according to statistics from the Home Builders & Contractors Association of Brevard. October’s total, which includes single-family homes, condominiums and apartments, was the highest monthly number in Brevard since 554 permits were issued in April. However, it was lowest total for October in five years, the association’s monthly report shows.”
“The median sales price for an existing single-family home in Brevard was $212,400 in October, down from $238,200 a year earlier, according to a report Tuesday from the Florida Association of Realtors.”
“Franck Kaiser, CEO of the association, said builders are trying to sell off their inventories of new homes left over from a flurry of construction, which ended not long after the surge in local housing prices ended last year.”
“In Brevard, home sales have slowed in part because many homeowners have been trying to sell their homes at last year’s higher prices, said (broker) Betty McCluskey. ‘People can’t get over a year ago when they saw their neighbors getting such big numbers’ for their homes, McCluskey said.”
“To stimulate the local housing market, builders and others are hoping to persuade county commissioners to delay a scheduled increase in a county transportation impact fee on each new single-family home. The delay could help the market, said Dave Armstrong, treasurer of the Florida Homebuilders Association and a local home builder.”
“‘Right now, the animal is wounded and we don’t want to kill it,’ Armstrong said about the housing market.”
‘Construction activity continued to decline across the Southeast recently, as cuts to residential building were only partially offset by modest growth in nonresidential development, according to the Federal Reserve’s Beige Book report for October through mid-November.’
‘Waning consumer confidence, competition from other destinations and hurricane fears spell trouble for Florida’s tourist industry, executives of the state’s tourism marketing arm said Wednesday.’
‘A two-word summary: danger ahead,’ said Barry Pitegoff , vice president of research for Visit Florida, at a gathering of tourism business officials at the Saddlebrook Resort. ‘If you look … at the number of visitors, we’re in a slightly precarious situation.’ The number of visitors earning less than the national median income appears to be declining. One reason: sharply higher prices for rooms on the beach as pricey condos replace small mom and pop hotels.’
‘How do we plan to measure if we’re pricing ourselves out of the market?’ asked Danielle Courtenay of the Orlando/Orange County Convention & Visitors Bureau.’
When we visited FL a couple of years ago we rented a place on the beach (Treasure Island) for a pretty reasonable rate. The place had aging carpet, creaky wicker furniture and a rusty refridgerator. We were happy with the price and the place suited our needs. My family income is way above median, but there’s no way I’m going to spend enough to rent a new beach condo. We can stay inland and drive to the beach if prices go up too much.
When they doze those older places they’re wasting capital that someone worked hard to raise. It is pretty silly to raze a place that has profitable cash flow to put up something that’s going to lose money.
Yes, my wife and I used to stay at the Fargo Motel on Treasure Island which was a kitchy, sixtyish ground level pink hotel. In the back was the beach and you could run down the beach, swim or just relax. It used to be about $350 per week but now it is gone. We just stay with relatives now and drive to the beach.
I live on Treasure Island. One of the strangest things is the county tax assessor’s (Pinellas) ability to tax at “best-possible-land-use”.
You can look it up. It means these smaller motels are literally taxed at the rate they would be taxed IF they tore down the motel and built condos or whatever else the county deemed the best use of the property…
The Treasure Island city council was happy that their net loss of motel rooms was only like 17% (compared to 30% or more for other beach communities).
I couldn’t believe they were happy about that. We’re not as bad as the rest doesn’t seem like a reason to be happy to me…
stayed at the gallery one in fort lauderdale a few weeks ago. aging hotel on the wrong side of the intracoastal coverted to a condotel. they were asking $500k plus for a hotel room with a kitchenette. the windows rattled from the traffic along sunrise blvd and the lobby/elevators were under construction. couldn’t fathom who would plunk down half a million dollars for a hotel room that wasn’t even on the beach.
“The number of visitors earning less than the national median income appears to be declining. One reason: sharply higher prices for rooms on the beach as pricey condos replace small mom and pop hotels.’
‘How do we plan to measure if we’re pricing ourselves out of the market?’ asked Danielle Courtenay of the Orlando/Orange County Convention & Visitors Bureau.’”
Everyone got the same great idea to chase the high end market at the same time. This strategy was adopted by Pensacola also which has resulted in the elimination of many low to mid market accomadations on the beach.
When a hurricane hits and destroys the 2 star beach hotel the owner gets the insurance money and builds a four star hotel in its place. I have never seen someone on P’cola Beach rebuild a two star hotel.
I am actually in favor of this activity. I am certain that at the end of the day future tourists will get a four star hotel for a two star price once the madness ends.
“Stevens recently sold a Lake Worth home that was appraised at $380,000 but sold for $318,000. Two years ago, she said the home would have sold for more than $400,000.”
Yeah, and 2 years before THAT it would have sold for $190,000…
and in two more years it will sell for $160k.
OT - But casey on CNBC being portrayed as a victim. When an unemployed web designer says “financing was the easiest part” in buying multiple homes, why doesn’t anybody ask why?
He is sure working this whole deal isn’t he? Probably make a bunch of money for be a total horses @ss.He is one of many who got caught in the greed and that is why we have winners and losers in society.
He was on CNBC? You can’t be serious!
Yeah, the Realty Check feature with the airhead CA blonde crying about how he can’t afford to fix his properties up.
This must be the top secret strategy he had for finding a sucker to lend him 50K. If someone will do that, I have lost all hope for the future of mankind.
Great post TxChcick. Im laughing out loud so hard right now. You are so funny.
I told you guys when you first brought up Casey that he would soon be on TV and then would be laughing his @ss off all the way to the bank.
wahoo,
I’m surprised at you! Jane Wells may be as plastic as any Barbie Doll (TM) but she is anything but an airhead!
Uh, actually you may be right. my bad
Din I couldn’t think of a word for Barbie Doll Wannabe.
He has to be on his last legs. I hope they follow up with him on Skid Row
Sounds like he’s the next Donald to me. He’ll probably be rolling in financing offers from greedy VC funds in two weeks. Bonner & Wiggin claim that capitalism is broken in this country, I believe them.
When I worked at AT&T they fired the CEO and gave him ~$24 Million to leave. The system is beyond broken, it’s insane.
Casey should not be given a voice at all in the media because he needs to go to jail for his crimes . He already got cash back from sellers on some of those properties he bought and he lied on all his loans .
This Casey is trying to play the victim when he already got the money out of his up-side -down properties .This greedy punk crook is given a voice ,without even the right message sent out .
The only thing I want to see is a headline the day Casey is arrested for fraud .
2 words: Book deal.
“…he lied on all his loans.”
Wiz — that Is what I keep thinking about — this kid has gone public about his apparent frauds, and yet no authority seems to be interested in pursuing it. Amazing and frustrating. In a few years, when people are astonished at the MBS losses in their pension accounts, they should be reminded that this was going on quite publicly and yet no action was taken. To me, the story is almost like a fraudster’s training course.
Did anyone on the CNBC show ask him if he signed anything with false statements or representations in it?
Right Chip . The only thing that I can think of is the lenders are waiting to see how high the loss is on his properties to determine how big the dollar loss is for pleading purposes in filing a crime case .
Now, now boys and girls .. you know what’s going to happen to Casey don’t you? He will be picked up for a reality show about how he was victimized to the point of becoming homeless in America. Pooooor baby will become even more famous, make money and gain sympathy. Think of all the millions of American flippers and FB’s who can identify with poor ol’ Casey. This show is going to be hot! Bet it attracts lots of sponsorship such as NAR and Toll Brothers.
I can only hope he/they attract the IRS for the phoney no-doc loans they signed (where you get to state your income).
txchick57,
Jane Wells also mentioned that Casey got plenty of helpful advice on his blog (along w/ a lot of hate). I saw to it that astrid and yourself were given proper credit over on patrick.net! The working title for his book I understand is “How to go Broke in Real Estate”.
All that aside it’s STILL not the dumbest quote of the day! The Boynton Beach realtor above noting that “It’s all the people that are forced to sell dragging the median prices down!” takes the cake for me!
Well jeez lady did it occur to you during the boom that your buyers were coming in on shoestring financing? Oh, I guess realtors don’t stop to consider that when they’re making big fat stacks!
Who’s Astrid?
Oh! *astrid is a regular poster over @ patrick.net (Bay Area blog) that taunted poor Casey so mercilessly that I believe she called his manhood into question. Others were not so kind.
Oh, I did that too. I told him to off himself on YouTube, charge $50 as a pay per view, and let his wife buy herself a real man with the money.
Holy crap! That is BEYOND funny!
(I feel bad now - laughing it up here in the office)
The only message that should be given by the media about Casey is how messed up the lending is these days if a punk like Casey can finance 8 properties , inflate appraisals so he can get cash from the sellers etc. etc. . Do you see the media questioning lending practices and inflated appraisals ?
Casey is a example of what is going on on a massive scale in this Country . The press does not want to ask the right questions . I sick of these people that play the victim .
I see a six figure motivational speaker in the making.
Maven, you took the words right outta my mouth. I can just see him up on the stage with The Roberts. As in, Robert Allen and Robert Kiyosaki
I find it funny that a crook looks for advice .Crooks don’t look for advice ,they look for marks . If this creep Casey gets a book deal ,what is he going to teach people ….How to play the victim after you rip people/lenders off .
He’s not looking for advice. He’s playing the idiots out there trolling for someone to give him money. He already knows exactly what he wants to do. It’s very manipulative. The little twerp is a sociopath.
You gotta admit the little weasel has a pretty bad hand but is playing his cards well. Seems like a new wave marketing genius to me.
All these gambler speculators greedy liars are going to try to play the victim card when the time comes .
i can’t help it if all these people didn’t win on their investment . People do crazy things in a mania ,but it’s all about get rich quick . These weren’t people looking for a nice home to live in within their means .
Everytime I read these articles, it just validates we are still at the early “Denial” stage of the market. Buyers just cannot accept that they are not going to make a profit out of real estate. Welcome to the business of trading an illiquid asset.
When I look back at this, I am just amazed that inflation is viewed as devil to be fought against at all costs except in house prices where a blind eye was turned. That may be becuase of the jigged inflation formula that uses “rent equivalents” and because housing it is source of money velocity/ tax base.
Houstanstan,
I’ve wrestled w/that one as well. As much as it pains me to say it Rich Dad may have had a point there. RK kept saying that he didn’t understand where the inflation figures were showing tame inflation when housing prices had tripled over the last 8 years. (Oh, along with his bank account for selling books and tapes). So as long long as you don’t need to drive, eat or have a roof over your head inflation is pretty tame?
Does anyone believe Zillow’s numbers? I just checked and the Sarasota house we sold in May of 2005 (the peak, apparently), is now valued on Zillow at less than 2% below what we sold it for.
Gosh, could we have sold too low? Maybe 80% gross appreciation in 3 years wasn’t enough!
I don’t. The Orlando and Daytona Beach “zestimates” seem to be on the high side. And I’m basing that on a comparison of the Zillow estimates vs. asking prices of houses that have been listed on the MLS for many, many months.
The Zillow “zestimate” on my humble Tucson abode is WAY high.
I should also add that for many of these houses Zillow shows significant increases in value over the past year, which of course is laughable.
I think zillow may be way off in FL. I was involved in the sale of an estate home for a family member. The house was in Melbourne, 3br, 2ba, 1985, everything still original 1985. The house closed in mid-Feb 2006 for $215K. I contacted the realtor a few weeks ago to ask how things were going there, and she wrote back that the house we sold would now sell for $70K less, if you could find a buyer. She said nothing was selling. The zillow price on the property is now at $212K, according to the realtor it would be more like $150K if sold today.
Zillow is a joke! Some of the prices aren’t even close
Thats right ,Zillow is a joke . Zillow doesn’t look at new listings . If a area is dead right now and sales have not taken place than Zillow is going by the last sales that are outdated .
Also ,Zillow goes with a sq. footage approach to determine value which is not a market approach appraisal .
Zillow is still 10% high in my hood in spite of recent sales reflecting a drop . Also Zillow has no way of including the bogus cash-backs and incentives taking place in the market .
Numbers in Seattle seem way off. Neighbor just sold their house for $425K, Zillow still thinks it is worth $485K, or ~15% error.
“South Florida,” he said, ”is working off of a totally new economic model than any of us have ever experienced in the past” according to a realtor who predicted that a land shortage will support higher prices indefinitely.”
- New York Times, Trading Places: Real Estate Instead of Dot-Coms, 3/25/05
C&C,
Any idea who made that idiotic statement? I think he was in Miami. I’d like to give him a call and ask if he still stands behind his statement.
Yup. It’s this guy, and he is from Miami. Here’s what he had to say yesterday (cited in Ben’s blog report on Florida yesterday).
“Ronald Shuffield, president of Esslinger Wooten Maxwell, contends that people who buy now may still see prices go down in 2007, as the market digests the enormous number of homes for sale.
Thanks!! I missed his comments yesterday.
Ron Shuffield
shuffield@ewm.com
He is getting an email. If he replys, I post it. This is going to be fun.
Sorry……replies.
I think you guys will find this hilarious. It’s actually still on the web site of Esslinger Wooten.
http://www.ewm.com/company/articles/
It is almost as if there aren’t any true buyers out there, or there is no urgency,’ Fischer laments. ‘Because there is such a glut on the market, people feel they don’t need to make a decision, because the house will always be there.’”
WHat a great statement. I think people did make a decision now. They are NOT going to buy your overpriced Mc$hitbox and YOUR price. They will await the storm out and pick it up later after you, Mr. Fischer, are way past hung out to dry.
Exactly. The suckers already bought; RE already strip-mined the stupid money and stole demand from the future - there’s few idiots with easy credit left.
“To stimulate the local housing market, builders and others are hoping to persuade county commissioners to delay a scheduled increase in a county transportation impact fee on each new single-family home. The delay could help the market, said Dave Armstrong, treasurer of the Florida Homebuilders Association and a local home builder.”
“‘Right now, the animal is wounded and we don’t want to kill it,’ Armstrong said about the housing market.”
Mr. Armstrong, how is delaying this tax going to save the market? I am sure this dollar amount is peanuts compared to whatever price fall is going to occur. Of course, an additional tax won’t help the FBers now.
“Mr. Armstrong, how is delaying this tax going to save the market?”
It won’t but its probably hoped that delaying it will allow the builders to sucker in a few more people to buy the houses so that they and not the builder will get stuck with them. They probably will delay the fees so that they get the bill just when their Option ARM resets but the builder won’t care since they got their money. Its all about who gets stuck with the hot potato.
The Sentinel Express (a free version of the Orlando Sentinel) ran an article the other day saying housing values in Orlando and other parts of FL were UP 19% YOY. This based on Zillow.com data, according to the article. Haw!
I wounder how Zillow.com feels about being the laughing stock of house pricing? They seem to be getting a bad reputation.
You know… it’s interesting to see so many parts of the country ALREADY back to 2004 levels and still falling with no end in sight. yet at the same time, places like SF are just sitting there, with a teeny reduction. What will become ever more apparent to people in California will be the fact that in a few years or less, unless we get Florida syndrome, homes in CA will essentially be 4-5 times as pricey as anywhere else, which unless you’re totally blind will in itself make people wake up and see a touch of reality.
Frankly, I wouldn’t mind seeing about 10 million priced-out California residents head for greener eastern pastures. One of the long-standing threats within the eternal California water wars is that either Northern California sends water south, or Southern California will send people north. Maybe the housing bubble will in the long run will take some pressure off, as all roads lead to the South.
I also think that one reason SF will come down slower is because you had more true owner-occupy purchases in SF than in the more speculation markets like Arizona ,Florida ,and now Texas.
two words: Proposition 13
“No one can point to any single reason for Palm Beach County’s drastic downturn in home prices, but real estate players identify a slew of contributing factors.”
Here is a reason, genius. THE PRICES ARE TOO DAMN HIGH!
Good, I was going to comment on exactly this quote (any single reason for PBC’s downturn) - the one single anecdote that sticks in my mind from my Florida trip a few weeks back was the 6 or 7 houses for sale on deepwater frontage at The Soundings (admittedly a few miles north of PBC border), all priced in the $950K range, and the one for rent at $2200/mo. Who in their right mind would pay 36 times the annual rent, for the privilege of being responsible for property tax, ins, maintenance, etc.
This is exactly the same situation that I have here in San Francisco. The house that I “rent” for $2,100/mo would sell for $900k - 1M. This is freaking insanity but real estate only goes up!
No one??? Everyone here could!!!
Never fails… if someone has the answer but they just don’t want to hear it then they claim no one has it.
“Susie Van Pelt, an agent in North Palm Beach, has a listing for a waterfront condo at Flagler Pointe in West Palm Beach priced $5,000 less than the year-old purchase price. The unit isn’t selling even though the price is $80,000 less than a comparable three-bedroom water-view listing in the same building.”
At least this woman can tap into the psychiatric services provided by her sister Lucy. And at $.05 a session she might have enough commission money left to afford the lengthy treatment to get over the trauma she’s experienced.
Ha Ha Ha Ha Ha. Good one.
“The people who are forced to sell are the ones dragging down the median price, said (realtor) Kim Stevens in Boynton Beach.”
Yes the sheeple who are selling at market determined prices are destroying the comps and the people who are not selling are keeping the inventory at historical levels. Damned if they do and damned if they don’t.
“The people who are forced to sell are the ones dragging down the median price, said (realtor) Kim Stevens in Boynton Beach.”
Loved this quote, too! How about smart enough to sell, motivated enough to sell, leaving the rest as bag holders.
Just wait ’til next year, when more people are “forced to sell” with $1 Trillion in ARMs resetting.
“Meanwhile, real estate brokers are having trouble making these puppies play. They are closing on houses at the rate of 73 per week. At that speed, it would take two years to get rid of just today’s inventory.”
As I noted before Florida is going to be the only area hammered even harder than California. Two years of inventory?!? Four in Palm Beach… The NRT had better reformed and soon for Florida.
Its toast. While normally I don’t believe in government intervention, there just isn’t any other way to clean up the titles quickly enough to get this market back to rational prices.
Of course that means that homeowners aren’t going to be able to sell their properties…
Cest la vie. We’re already too far along to save Florida from a crash. (Sigh… I like the state, but WTF with the prices!) Its time to keep it from becoming like 1926. (Trust me, you want credit to tighten, not to have the system shut down completely a la great depression.)
Neil
Bring it on! Let the greedy dumb bastards go down in flames. Many Floridians suspended disbelief; as a result, they deserve what’s coming down the pike. It’s the only way to jar them back to reality.
The problem is too many of the overpriced homes were purchased by non-Foridians.
Right on DC! It wasn’t the Floridians that were the specuvestors! Investors from California, New York, United Kingdom…bought properties without even seeing them! I’m watching one property (land only) that some guy from California bought. He paid $375k. Trying to sell for one million! Ha! Problem is, many Floridians started buying into the hype towards the end of the bubble! They are now stuck with HELOC’s and investment properties. Others quit decent jobs to get into the real estate, appraising and mortgages! Now they’re really screwed! Most of us Floridians do not deserve what is coming! We are now stuck with the mess that all these Out of State specuvestors,builders and developers made!
Neil,
Why dont I want it to be a great depression here in Florida? Speak for yourself. I live here and I’m very tired of all the big hat no cattle, hoity toity people, who have tried to be someone they are not just to keep up with the joneses.
I have done what the long time posters here recommend and I’m all ready for this financial Florida Hurricane.
I say bring it on.
When the financial floodwaters finally recede, years from now, Florida will be better off by being cleansed of the big hat no cattle people.
Captain your observations are not restricted to Florida unfortunately. Its a national malady and we need a coast to coast cure.
Captain Jack,
The NRT coming in to prevent a depression actually helps you by cleansing out the system fast! You should like that.
But the NRT needs to come in to keep it from becoming a national problem.
You do realize a depression means the middle class cannot borrow any money? The banking system shuts down. If you have enough saved up to buy a home cash, you’re fine… But a complete shutdown of the banking system means jobs in Florida just disapear. If you have a business a depression means you’re sitting there wondering why none of your customers will pay you.
Trust me, none of us want a depression.
Neil
I understand how captain jack feels, but I agree, a depression would be misery. Hopefully, we can just have another Resolution Trust, tighten the credit, up the interest rates and that should cleanse things plenty.
“Fischer has not even managed to get a lowball offer. ‘It is almost as if there aren’t any true buyers out there, or there is no urgency,’ Fischer laments.”
Your ‘it’ bud. That’s what it means to be the Greatest Fool.
Ha ha, if you don’t know who the moron is, it’s you.
The reason these idiots don’t even get a lowball offer is that the list price, err the “wishing price”, is completely off the charts for a cash buyer.
First get the list price down about 25-35% then I can come in with my lowball offer. Until then its not worth my time.
Regarding the Sarasota example — the “twice as many listings” (7,600 now vs. 3,700 in Oct. 05) is even more brutal when you step back and think about the decreasing number of speculators — either fresh ones or “veteran” ones — who will be active in the market. There may be some actual savvy speculators/investors who will swoop on some select great deals using cash or picking up the rare cash-flow positive deal — but this is really the exception to the rule. Any speculator/investor who is paying attention is loath to get in. And the supply of new, just-read-the-book or took-the-seminar or my-brother-in-law-is-showing-me-how speculators/flippers/investors has to be slowing.
Surely there are some genuine homebuyers who will find a deal they like and a house they can afford — but won’t they be offset by the folks who fear the tax/insurance climate in Florida right now?
Long story short — the doubled inventory is even worse than it looks in a market that is shedding potential buyers of all stripes. Yikes.
Yes, and that inventory doesn’t even include FSBO’s, auctions and REOs. Bring it on!
Any of the Floridians out there have any info on the situation in Naples? Despite my advice, some friends “invested” there recently hoping to make a killing. Not hearing much from them lately and wondered what the local market was doing?
Try this but tell them to have a few drinks first.
http://www.naplesinsider.com/CurrentReport.htm
His $ per sq.ft. trend lines are 12%, 15% and 18%. One would almost think he considers the 12% line to be the pessimistic or more natural one. I wonder how soon he’ll add 10%, 8%, 6% and lower.
haha
did you see the graphic on the left side of the frame?
It was some kind of primate with its hands over its ears and a shocked look on its face…the caption: High Priced Seller
I’m in Naples and have been following things pretty closely for the last year. Very few properties are moving and virtually everyone in RE and homeowners are in complete denial.
I have a couple of anecdotes:
I spoke to one of my neighbors the other day who is has been trying to sell her condo for at least a year. At the height of the bubble her place may have sold for $350-$375. She just fired her last realtor who wasn’t getting the job done at her asking price of $350,000. She just hired a new realtor who promised to get it sold within 4 months at her asking price. HOA is almost $300/month. Good luck.
I used to rent a condo just across the drive from her ($1395 for a 3/3 1700SF) my landlord, who is actually a little more realistic, is about to put her place on the market for around $300,000 — which is still over priced. Neither of these places have any views of anything but a driveway and parking lot.
I have seen many reduced listings on condos that were once prices at $350-$400k at the height of the mania down to $299k. Still nothing is really moving.
Over Thanksgiving weekend, my wife got into an argument with one of our friend’s mother. She is a realtor with a top firm in Town. She’s been in the business for many years and hasn’t sold a thing in at least 9 months. She is on the verge of getting the boot, but continued to argue with my wife about the market. I got pulled into the conversation and all hell broke loose.
We kept saying that it just doesn’t make sense for us to buy right now, especially since we don’t know if we’ll remain in the area more than a year or two. OH NOOOO! Naples is DIFFERENT! According to her we needed to buy something and we are simply throwing our money away on rent. Prices are going to pick up where they left off once all of the snowbirds get back in Jan and Feb.
Once the shouting was over, we agreed to disagree and all was well. I told my wife later that night to never, EVER get into a discussion about Naples real estate with either a homeowner or Realtor we know again. It’s just too emotional.
Dammit, would you just buy a house and stop arguing with the experts …….
“Prices are going to pick up where they left off once all of the snowbirds get back in Jan and Feb.”
LOL. At the beaches here in central Florida, at least, the snowbirds who do not arrive until January are the very cheapest or poorest of the lot. They never buy anything, from what I can tell. It is the 5-6 month snowbirds who used to be the regular buyers, but now they see that renting is relatively, and sometimes literally, cheaper than ever relative to buying.
This article about the Naples market appeared in USA Today last week:
Naples wealth gap
in naples, the rich folks may have to self serve at all services locations. can you image the horror!!!
pumping your own gas, mcdonalds buffet and self checkout at all department stores.
Naples 2008
When supply keeps doubling and demand keeps halving, doesn’t that ultimately create sometime of black hole scenario where time folds on itself and brings things back to 1972 prices?
I’m praying for 1972 prices. That should be great fun.
The apparent bottom of the inventory drop in recent months has been hit, and it leaves a huge base for the spring build. Even on this blog, we will be amazed at the months-of-sales figures by May ‘07. I really wouldn’t hazzard an estimate - any estimate could be low.
Mish has the latest Mike Morgan interview up on his site:
http://globaleconomicanalysis.blogspot.com/
The post’s title is “catch 22″ and it is “an attempt to look at things from the perspective of the homebuilder rather than the home buyer.”
That’s some catch, that catch-22.
Chip, I wrote a comment earlier, but I was thinking of you when I wrote it. I was the one who sold a house in Melbourne to close an estate. You wrote me many months ago that the house would be worth $150K in your words “when this was all over.” According to the realtor I used, the price already has fallen from $215K to she believes it would now only sell for $150K “if you could find a buyer” (her words). What is your prediction from here? Do you see prices stabilizing or continuing down, if down, how far?
Hi, Marylander. I suppose that the 30% drop you describe is all I expected in general for the area. I’m very happy for you that you got out when you did. I know some pretty glum speculators there and in Palm Bay who did not. As for the “from here?” part, I think that prices in Melbourne will fall back to what they were in about 1999. That would be the 1997 level plus most of the long-term normal increase. The big change that affects Florida more than most states is the double-whammy of rocketing insurance rates for coastal areas combined with the surprise of big-time property taxes. Even if prices revert to 1999-2000 levels, which presumably would make them salable in large numbers, the insurance hit works against affordability because, in the end, total monthly cash outlay is the number every one of us (except some of those rich folks in PB and Naples) focuses upon. There is the further problem of unrestrained local government expansion and spending, which will generate tax millage increases as valuations drop. Florida is in a bad way, IMO, and the new governor will have his hands full trying to sort this out. On the brighter side, California seems to have muddled through even worse problems.
Chip, The only reason this home was sold at a good time was because of the timing of the death of the owner. There was no speculation or flipping involved in this sale. I think prices are going down around us here in MD, but I don’t have a good grasp of what is happening. The neighborhood I live in is a mish-mash of lot and home sizes, so it is not easy to get a comparison like it is in an planned development. But, we are very happy with the schools here, and have 6 more years of public school until our youngest will finish high school…we plan to stay put in our home and ride out the storm.
Good post. Once again, a 40-year mortgage term is mentioned as part of a program to ensnare those last few who may become FB’s. At 7.5% rate (I picked arbitrarily), the 1st month’s principal contribution is only on the order of 10% of the 30-year amortizing payment. Those who can’t pay that 10% are already in I/O loans. (I O, I O, so off to work I go.) Who is going to be snagged by the invention of some tiny half-step between these two choices?
There is going to be another RE segment on CNBC, during Power Lunch (12 -2), to feature the aspect of foreclosures in the current market.
BTW, anyone know why the homebuilders are up today? Haven’t really been paying attention this morning. Also a nice move in USG, would like to know why.
Very nice move yesterday in natural resourse funds - looking at $68-70 crude by 1/07. Maybe a 10/12% upside. Nice.
Do the numbers.
Anyone who bought a house for example $550,000 with the intent to rent it out is totally screwed. Assume and this is a big assumption that they put 20% down and got a 6% interest only loan.
Yearly interest payments $33,000
Estimated Taxes $11,000
Insurance $ 4,000
HOA $ 3,000
Total $51,000 or $4,250 per month
They will never get that in rent and if they are lucky they will have negative cashflow of around $20,000 to $25,000 per year and now the house is only worth $400,000 and they can’t refi because the loan to value is 112.5%. Plus I am willing to bet that this imaginary fool has 95 to 100 percent finance so his carry cost are probably more.
South Florida is going to be a blood bath.
Where did you get $33,000 a year?It would be more like $38,000 a year for $530,000 loan @ 6%. I think you forgot interest deduction…they would effectively only pay ~70% of that interest, so the yearly payments would be ($38,000 * .7) = $26000. I think you also forgot upkeep which would be about 1%, or at least $5000 a year. So, the final figure becomes more like $49,000 a year…which is pretty close to your guess.
Oh, you said interest only….my bad, that would be around $33,000 a year.
“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.”
Something does not compute here. What happened to the $310K? Even after taxes, they should have some money somewhere. And they turned down an offer only $10K under a $185K presumed cost, in a declining market? No sympathy here, Jodi and Jeff.
I think it was the $250,000 they donated to Jerry’s Kids that pushed them over the edge. If only they weren’t so generous.
Oh well, that’s $310K minus taxes, and then, minus the down payments on the other 88 houses for which she wasn’t lucky enough to get 100% financing.
What happened to the $310K? Most likely those “gains from flipping investment homes” were never actually realized. Otherwise you’d just write a check for the balance of the $185K and be done with it.
Don’t forget the fuel bill for his new Hummer & her new Escalade.
It only proves what lenders use to know, that when you buy a place with no cash down you will let it go easy ,if you get in trouble .
I guess the couple wants to keep the 310K and hold out for the 10k on the house sale . How do you spell greedy . These are the same kind of people that want the lenders to short sale them so they don’t have a deficiency judgement so they can keep their prior gains . I don’t know about the rest of you but I want the lender to go after the 310K and not give these gamblers a short sale .
Wiz — good point. I agree. Grates on me that these people can keep it when they win (which is fair) but skate when they lose (which isn’t).
“Anybody who bought in 2005 is going to be underwater.” Ummm, no. Anyone who bought after 2001 will eventually be underwater.
BTW, anyone who is foolish enough to listen to the crap on CNBC Business Entertainment Tonite (and takes what the reporter shills say seriously) and who still thinks the US stock market is not manipulated, take a look at the cheerleader shills (analysts) coming out and pushing builders stocks today. The latest being Bank of America which is putting out a “buy” signals on builders. Take a look at Ryland and Beazer and D.H Horton. All up big time today. The US stockmarket is the greatest Ponzi Scheme in the world but I’m not complaining because I trade both ways. I just feel sorry for the flag wavers who never seem to get it.
You sank that nail with one hit.
““Susie Van Pelt, an agent in North Palm Beach, has a listing for a waterfront condo at Flagler Pointe in West Palm Beach priced $5,000 less than the year-old purchase price. The unit isn’t selling even though the price is $80,000 less than a comparable three-bedroom water-view listing in the same building.””
The above comparison is not even newsworthy. What does it matter to me if the wishing price is $80,000 or $500,000 less than another comparable LISTING? If the article said the present list price is $80,000 less than a comparable unit which sold last week or say a month ago then we are talking information. Complete nonsense.
2005 - weren’t realtors saying it was a great time to buy then too.
Oh yea, if you were holding it for 50 years then you’ll be OK, as long as the house dont get hit by a hurricane … yea.
Now is a great time to buy if you intend to never sell it. After all you do need a place to run from when hurricanes come dont you. if you dont have a house, what will you board up and evacuate and have the tree fall on and split.
Cool.
Cow_tipping.
“With the huge supply of homes on the market, some sellers are in a panic. The people who are forced to sell are the ones dragging down the median price, said (realtor) Kim Stevens in Boynton Beach.
Or put another way, the soon-to-be impaled knife catchers who are buying now - fools! - are the only thing propping up the median price.
It’s a good thing nobody can “point to any single reason” for the housing burst. Otherwise some smart aleck might start a blog about it, with hundreds of posts heckling in unison.
There was an article in the Sentinel Express (free version of Orlando Sentinel) saying prices were UP 19% YOY. This based on Zillow.com data. Haw!