“The Music In The Residential Market Has Stopped”
The Sun News reports from South Carolina. “The Grand Strand housing market is showing its first sign of quarter-over-quarter price declines. ‘The condo market will see continued price declines that is going to get worse,’ said Al Parish, economist at Charleston Southern University.”
“Skyrocketing insurance premiums have hit the condo market harder than the single-family market, Parish said. He cited up to 100 percent increases in single-family premiums and up to 700 percent increases in condos. Another factor, folks who bought a home they couldn’t afford on an interest-only loan to sell because of rising mortgage payments. Growing inventory is also adding to price declines.”
“Nationally, many areas that saw high speculative activity are seeing the quarter-over-quarter median price declines, said Mark Vitner, an economist at Wachovia in Charlotte, N.C. ‘A lot of folks that were buying homes never intended to close on them. A lot of folks are offering those homes for sale in the resale market,’ Vitner said.”
“Brunswick County posted a year-over-year median price decline for resale single-family homes, but experts say the drop is due to builders building more lower-end homes than last year. The median price dropped 23 percent to $200,000 from $260,000 for resale single-family homes.”
“(Broker) David Sandifer said motivated sellers are cutting prices in certain parts of the county, and he expects a buyer’s market for the next three months.”
“Several builders in the N.C. 211 corridor have lowered prices between $20,000 and $50,000 to move inventory, said Cathy Six, new homes director for Coldwell Banker Sloane in Sunset Beach, N.C. In Georgetown, new condos saw the quarter-over-quarter drop, from $143,900 to $117,900.”
“One developer is hoping to transform downtown Myrtle Beach by tearing down unused buildings and selling upscale lofts. Large-scale single family developments are also adding their own live/work town centers, like Centex Homes at RiverGrand in Little River. And local developers will soon build the same concept at Woodsong in Shallotte, N.C., and another loft-style project at Sunset Quarters in Sunset Beach, N.C.”
“‘Our downtown area is not like Chicago where you have a lot of executive people looking to live to be close to work. It’s pretty bleak down there,’ said Tom Maeser, president of the Fortune Academy of Real Estate. ‘What I’ve found is that buyers…will look around at what’s there now and that’s a hard sell.’ At $600,000, buyers could choose oceanfront condos instead of downtown living, Maeser said.”
“Robin Roberts, developer and architect of Palmetto Lofts, knows it could be a hard sell for downtown Myrtle Beach, a district that has been going downhill for years. ‘If you build it, they will come,’ he maintained.”
The Palm Beach Post from Florida. “The music in the residential real estate market has stopped, but the players still are changing seats. Developers with unbuilt projects are weighing whether to sell, sit on or find some other use for their dirt.”
“Rodolfo Gonzalez is an owner of three prime condo sites in West Palm Beach, but Gonzalez said he is selling one site and may redo another into an office/retail complex.”
“In downtown West Palm Beach alone, (realtor) Kenneth Close said, the real estate slowdown has led to the cancellation of 1,000 new condo units. About 450 condo units are still available for sale, Close said.”
“Gonzalez isn’t alone in trying to navigate today’s fickle market. The developer of the Eighty Point West condo planned for North Flagler Drive is in the same boat. Officially, the sales center for the luxury waterfront condo remains open. But since sales have dried up, developer Cliff Preminger said he will delay the start of construction indefinitely.”
“Building into a falling market is not an option. ‘Real estate is no field of dreams. We don’t build it and hope people will come,’ Preminger said.”
‘Meet Jo Anne Casen, for the last five years a public school teacher in Palm Beach County. In July, she bought a house for $299,000.Last year, this house was assessed at $117,000. But with the sale this year, the county reassessed the place at $264,000. And her homestead status, which protected her from sharp tax hikes on her old property, no longer applied.’
‘The taxes immediately vaulted from $1,999 to $5,100. ‘That’s 21/2 paychecks.’ Casen says. Thanks in part to the unexpected added costs of her new home, Casen is having trouble making ends meet. So she works a little extra at school. Also, she’s taken in a roommate. And then there’s her second job.’
‘I wish I could say Casen’s situation was unique. Unfortunately, it’s not. Home-buyers are routinely being pole-axed with whopping property-tax increases, thanks to the record runup in real-estate prices that only recently came to a halt. Thousands more residents are reluctant to move to new homes, fearing they’ll receive just the kind of property-tax jolt that Casen got. It’s the biggest issue in the state,’ says County Clerk Sharon Bock.’
From Florida Today:
December 2, 2006
Housing market not so bad off …
The study, done every three months by the Office of Federal Housing Enterprise Oversight, found the value of homes in Brevard County rose 9.67 percent from the third quarter of 2005 to the third quarter of 2006. Whole article here
http://www.floridatoday.com/apps/pbcs.dll/article?AID=2006612020312
This may be damage control hoping to get some of the realtor advertising back. I can think of no other reason to print such BS. I can give you examples of prices down 33% in the same period in which they’re claiming an increase of 9.6%.
Does that mean that GFs get to realize a 42.6% (=33%+9.6%) loss the minute they sign a purchase contract?
it’s a simple matter to calculate the new tax rate when you buy a house. And these people are teaching are kids. Hopefully not math..lol
She used to apparently.
“She has switched from teaching math to careers at Polo Place Middle School in Wellington.”
yo professor AL
you ain’t got much grammar
She earns $37,338 a year, School District records show.
How can someone with 37k salary buy a 300k house!!!
And how long do you think she will want to own this paycheck eating monster? She may want to sell it for $350,000 when the market returns in the spring of ‘07, don’t you think? That way she can take her $50,000 in equity and by an affordable condo somewhere. Wow, this spring bounce in market values is going to work out just great…..
I donno, but I am going to buy a 1.5 million dollar home today. My debt/income ratio will be better then this ladies; and I can do nothing but build equity. The more you owe, the richer you are. Its the new paradigm, get with it.
Seriously, 10X salary for a home? That’s psychotic. I cannot believe that someone would allow this loan to go though (actually, I can believe it, and I am just sad for the state of our lending instutations).
Carrying costs on 300K home? 2,750-3K a month. Take home salary with 37K job? $1,111.87 bi-weekly.
Ugh, I might be stupid; but I just see no way for that to work at all.
hey MF,
What is the normal X salary supposed to be for a home? 3? 4?
historically, a good heuristic was no more than 3 X annual salary.
And even for 3 to work, it assumed that you ate Ramen every night and drive a beater car.
actually, the best ratio is no more than 28% gross salary on a 30 yr fixed mortgage with 20% down.
My rule of thumb is 3 x annual salary for house price. And, after putting 20% down, mortgage amount s/b ~ 2.5 x annual salary. Thus, no ramen should be required.
Email sent to:
hgoodman@sun-sentinel.com
Subject: Cart / Horse
Nice article, but the problem is not one of high tax assessments as much as it is one of people buying more house than they can afford. High tax assessments are just a symptom of the problem. Why was Ms. Casin - who maks $37,388 a year - never asked why she thought she could afford a $300,000 house?
Tradtional economic rules of thumb tell you your mortgage should be no more than 25-30% of your income. A conservative companion rule of thumb says that every $10,000 of house value is going to cost you $100 a month to completely service. That is mortgage, taxes, insurance, and maintenance.
So, using time tested rules, Ms. Casen’s $300,000 house is going to cost her $3000 a month to service. Yet we find that 25% of her monthy pay is only $778.91.
Something doesn’t add up there. Maybe you should go back and make sure Ms. Casen isn’t teaching math.
Great email. Hope the reporter replies!
She has switched from teaching math to careers at Polo Place Middle School in Wellington.
I went right past that paragraph. She is math teacher. Unbelievable.
Heh.. Roommates and a 2nd job, of course..
I’d love for someone to preach to me how subservient renting is from this position.
“One developer is hoping to transform downtown Myrtle Beach by tearing down unused buildings and selling upscale lofts.”
Upscale lofts in downtown Myrtle Beach? WTF? This is crazy. Myrtle Beach is redneck paradise. From what I saw there are no high-paying jobs outside of tourism. Now some dopey builders want to think that Myrtle Beach is Soho or Tribeca. Myrtle Beach is so over-built that traffic is a nightmare on the strip already. Try to get anywhere during the summer. It took an hour and a half for me to get out of Myrtle Beach on a Friday afternoon 3 years ago.
The world has gone mad. Of course, the Carolinas are now “getting ready for the transplants”. Just as Florida and Arizona were getting ready for all of the Baby Boomers. This is going to end badly.
I was in Myrtle Beach several years ago. Nothing but strip joints, tattoo parlors, and fortune tellers. All the golf resorts are totally self-contained, so the money that goes there, stays there. None goes to the local economy. “Red-neck paradise” - I agree.
As far as I can tell there are no high paying jobs inside of tourism either. I assume real estate was lucrative for the last couple of years, but that’s clearly over.
“Skyrocketing insurance premiums have hit the condo market harder than the single-family market, Parish said.”
Interesting how the lag effect of the horrific 2005 hurricane season is helping to take down the SE real estate market through higher insurance premiums, even though this year’s Atlantic hurricane damage tally was $0. This reminds me of the oil companies’ favorite scam: Adjust gasoline prices up instaneously at the moment of a perceived supply disruption, then let the prices fall ever so gradually once supply is perceived to have returned to normal levels.
I am not entirely convinced it is a scam (oil). Would the instant price increase anticipate future disruptions and scarcity so that current consumption reflects it? The risk premium in oil can be volatile, but it is quite true that oil companies find this quite convenient from time to time.
Hurricane damage is real and expensive! Now that most people are priced out of beach areas, the American public doesn’t want to subsidize luxury home insurance for those lucky enough to live there. Part of the reason coastal areas are so built up and prices are so high is that residents are not paying the real cost of living there. Californians don’t expect subsidized earthquake insurance and they don’t get it (of course CA homes aren’t cheap either). Those that do purchase earthquake insurance (maybe 25% of residents) pay high premiums and high deductibles.
North Carolina got absolutely clobbered by hurricane Floyd with 20 inches of rain in 1999. It took years to drag away all the flooded cars. Insurance problems have been quieter here than FLA, but we definately have similar risk.
“‘A lot of folks that were buying homes never intended to close on them. A lot of folks are offering those homes for sale in the resale market,’ Vitner said.”
Buh buh I thought the investers had all left the market already?
“The music in the residential real estate market has stopped, but the players still are changing seats.”
Didn’t anybody tell tham that as of Oct ‘05 the rules changed and now those with the fewest seats win? That’s those of us with extra seats made it so easy for them to take more than one.
Let’s take a closer look at the Palm Beach article referrenced above:
“But Lopez said partners remain bullish on Palm Beach County.
Kenneth Close of Worth Realty in West Palm Beach thinks he knows why.
In downtown West Palm Beach alone, Close said, the real estate slowdown has led to the cancellation of 1,000 new condo units, greatly reducing the competition for future buyers. Although about 450 condo units are still available for sale, “absorbing 450 is easier than 1,450. That loss is going to help our market tremendously,” Close said.”
Amazing! When all of the condos were going to be built, that was considered a good sign. Now, the cancelling of condos is a good sign. I guess that means it’s always a good time to build condos in West Palm Beach! And the madness continues:
“And that is the reason why the owner of the Poinsettia Club Apartments on North Flagler Drive plans to boost the property’s $26.6 million asking price to $28 million.
Last year, Donnil Kenney bought the apartment complex for $7 million, with plans to hold it as an investment property. Then big offers started rolling in. Although they disappeared when the market tanked, “I’ve gotten a couple of calls from people who had offers before and want to get back together,” Kenney said.
Now Kenney has officially listed the 3-acre waterfront parcel for sale as the perfect spot for a high-rise condo. He’s so keen on the idea, he plans to start the rezoning process himself, before he even has a buyer.
Even in the midst of the worst real estate downturn in recent times, there is always room for optimism.”
I love the last line. At least the person who wrote the article seems to “get it”.
ROTFL
Sometimes reporters are directed to write an artile with a certain tone and certain information favorable to an advertiser. But that line on optimism… priceless.
Last night, while over at the future in laws, they had a show going on NBC where some economics host (Susan? Sally?) was advising a couple to rent after moving into a new area. Don’t buy (due to the transaction costs) until you know the area. Love it!
This market hasn’t even yet begun to slow…
Neil
““Brunswick County posted a year-over-year median price decline for resale single-family homes, but experts say the drop is due to builders building more lower-end homes than last year.”
Why would the fact that the builders are building more lower end homes in the new home market change the median in the resale market?
“Pay no attention to the man behind the curtain.”
Move along, nothing to see here.
That question is just way to logical. If the person who said that comment were to have to answer that question, I can only assume that their head would tilt to the left, then the right, and then just explode in a fit of logic.
I thought the Carolinas were bulletproof? What with all the monied Californians moving there with their wallets bulging with equity cash.
The monied Californios bumped into a turf rumble with the retiring boomers flocking in. Waiting in the wings to take on the winner are the go-birds moving North from Florida.
The interior cities in NC are seeing decent appreciation now. There was very little change 2000-2003 when manufacturing was taking a big hit.
But we have spots with insane prices, such as the condomania in uptown Charlotte and in Carolina Beach.
Does anyone have any comments about the market in Asheville NC? We are teachers looking for our first house, looking for something @ 3X our gross, the question we have is should we jump now for 1000 sq feet or wait for a drop.
Our agent keeps telling us how different Asheville is, no way Asheville will do anything but go up. I see prices around here have doubled in 6 years, income sure hasn’t doubled tho.
So, is Asheville different?
And by the way, give the math teacher a break, we all make bad decisions, sometimes even when our analytic brain knows it’s bad we do it anyway. She is in real trouble and snarking doesn’t help anyone…
Matt
“Tom Maeser, president of the Fortune Academy of Real Estate.”
Possible name change: Unfortunate Academy of Real Estate.
“(Broker) David Sandifer said motivated sellers are cutting prices in certain parts of the county, and he expects a buyer’s market for the next three months.”
Sounds about right. A few weeks after the Supperbowl things are really gonna pick up.
roflow super bowl was the mantra last year !
Something tells me the Super Bowl is going to be a blowout for the Bears this year.
“(Broker) David Sandifer said motivated sellers are cutting prices in certain parts of the county, and he expects a buyer’s market for the next three months.”
“Idiots” market for 3 months till the super bowl is over. Then the pain begins in earnest.
“Idiots” market for 3 months till the super bowl is over. Then the pain begins in earnest.
yep… but for 3 months after that we’ll have the morons market… then the bottom drops out. I agree with your pain assesment, but by end of 2Q2007, the charade is off…
Neil
“Robin Roberts, developer and architect of Palmetto Lofts: ‘If you build it, they will come,’ he maintained.”
vs.
Developer Cliff Preminger: “ We don’t build it and hope people will come,”
Hahahahaha! Nice set-up, Ben.
Music? Queue the funeral march song.
One of the reasons to own a small home is property taxes. When taxes go up, yours will go up proportionately. You can let the folks with really big houses do all of the complaining about property taxes for you as you are living well within your means and can easily afford the tax hike while your neighbors will work to lower them. Or at least lower the rate of growth.
Our property taxes have doubled in the last five years. But we have a small place and our place has been paid off since the late 1990s. I may
get a little annoyed at rising property taxes but it goes to pay for stuff
that the rest of the town voted for. Now they get to see what the bill
looks like. Conspicuous consumption happens in town government too.
Not just smaller property taxes, smaller fire insurance payments, smaller title insurance at the closing, smaller points and fees at the closing.
Lower maintenance cost, lower utility bills, less “space” to clean.
Why can’t more people see the virtue in a smaller home? I’ve never owned a house larger than 1400 SF (out of five).
“Rodolfo Gonzalez is an owner of three prime condo sites in West Palm Beach, but Gonzalez said he is selling one site and may redo another into an office/retail complex.”
Didn’t realize that it is so easy to build a commercial building on land that is zoned residential. I’d have thought the locals would have something to say about that.
Just bribe the right people and there’s no such thing as zoning.
NH taxpayers on the hook for pensions
f you think your property tax bill was high this time around, wait until next year.
As communities across the state prepare their budgets for the coming fiscal year, they are facing significant rate increases in employer contributions to the New Hampshire Retirement System.
http://www.unionleader.com/pda-article.aspx?articleId=1dddd627-a5a3-430e-b0d0-ad381f618a37
Looks like noone’s safe from the property tax monster in its various forms.
“Meet Jo Anne Casen. She’s 52, a single mother, a champion bridge player, and for the last five years a public school teacher in Palm Beach County. She has switched from teaching math to careers at Polo Place Middle School in Wellington. She brings a dizzying history from the real world — a resume that includes, by her account, driving a cab, selling and storing furs, repairing windshields and designing kitchens. She’s worked as a travel agent and in the off-shore gambling industry. She’s known success. She’s known debt.
And after all that, she’s decided that teaching is the work she loves.
“Now I’m doing what I like,” she says. “I want to make a difference.”
According to Palm Beach County Property Appraiser, the math teacher’s taxes are $5376.