“A Huge Speculative Mountain Of Inventory” In Florida
The News Press reports from Florida. “Expect Lee County’s residential real estate market to stay in the doldrums for another three years, Orlando-based economist Hank Fishkind told (a) Conference in Fort Myers. As Florida’s housing bubble deflates, he said, ‘the shape of the bottom will be different’ for each metropolitan area.”
“Lee County likely will not see any significant further decreases in prices but will ‘bump along the bottom’ following this year’s decline in home values, Fishkind said. ‘I think it’s going to be more L-shaped than U-shaped here.’”
“The problem, he said, is the county’s huge inventory of unsold homes: about 14,000 houses, roughly five times what it was two years ago.”
The Naples News. “‘We’ll only have inventory because we don’t have the right price,’ Fishkind said. said. ‘Everything will sell at a price.’”
“At the peak of the real estate boom in Lee County, 20,000 residential units were under construction but there was demand for only 10,000, Fishkind said. Sales of existing homes in Lee County peaked around 4,500 homes per month in August 2005. During August 2006, 1,500 existing homes were sold in Lee, he said.”
“‘There was a huge speculative mountain of inventory generated,’ Fishkind said. ‘It will take until 2009 to work that inventory off.’”
“Condominium prices, however, are in for a decline, he said. ‘Resale on condos is going down, down, down,’ Fishkind said.”
The Herald Tribune. “In the year before Neil Mohamed Husani engineered an eyebrow-raising deal to build a $125 million condominium tower opposite the Sarasota Quay, he became a master of flipping properties to partners at greatly inflated values.”
“Just five years ago, Husani was so strapped for cash that he wrote bad checks, a crime he pleaded guilty to in circuit court in Manatee in 2002. The next year, he was placed on two years’ probation after pleading guilty to stealing $14,000 in furniture from a vendor.”
“For months, Southwest Florida’s real estate community has been asking how Neil Mohamad Husani and his former partner, Michael Tringali, were able to buy properties for one price, get them appraised for more than twice as much a day or so later, and then use the high values to get whopping loans from area banks.”
“Now that some of those loans are going bad, the new question on their minds is how one of the lenders, Fort Lauderdale-based BankAtlantic Bancorp, was able to get a property it bought from him appraised at a similarly high value and avoid taking losses that could besmirch its balance sheet.”
“Rather than foreclosing, one of BankAltantic’s subsidiaries bought Tringali’s 1,143-acre property near Myakka City for $27.2 million, Manatee County court records show. Alan Levan, BankAtlantic’s CEO, has said that the property was recently appraised again at about $28 million.”
“Local real estate experts say that the recent $28 million appraisal is not realistic. ‘How can that be a legitimate number?’ asked Barbara Anson, an agent who has been selling land in the Myakka City area for 30 years. ‘The legal and market value must be around $17 or $18 million. That’s what it’s worth.’”
“‘At some point bank regulators will not allow the bank to keep property on its books at $27.9 million if it does not appraise out,’ said analyst Richard X. Bove. ‘When it is forced to mark the property to market, it will take a hit.’”
“Analysts and market watchers suggested that BankAtlantic might have bought Tringali’s property through a subsidiary to avoid damage to its balance sheet. ‘They don’t want to look like idiots,’ said George Huhn, who runs a Venice-based company that buys troubled loans from area banks. ‘They’re searching for a way out of this mess that doesn’t involve taking a loss against earnings.’”
“But the biggest problem with the deal is the appraisal that BankAtlantic received on Tringali’s former property, said veteran Sarasota appraiser Richard Bass. ‘When something is sold three times in a year and the value more than doubles, you have to go ‘whoa’. What was done to enhance the value of the property to make the value go up?’”
‘Southwest Florida’s real estate community has been asking how Neil Mohamad Husani and his former partner, Michael Tringali, were able to buy properties for one price, get them appraised for more than twice as much a day or so later, and then use the high values to get whopping loans from area banks.’
Exactly the same game as the S&L debacle, except we didn’t hear about it until after the collapse. Related links:
‘A Cape Coral Police school resource officer was arrested Thursday in connection with a real-estate scheme that bilked investors of $30 million. Alex Gonzalo, a seven-year veteran with the Cape police who allegedly threatened to ‘blow away’ witnesses, is charged with conspiracy to commit money laundering in the scheme in which unsuspecting investors were approved for hefty loans and were left holding mortgages on houses when Gonzalo’s alleged partners didn’t sell the properties as promised, according to a federal affidavit.’
‘While Pinellas County Tax Collector Diane Nelson was predicting some relief for tax and insurance-battered homeowners, a Belleair Bluffs Realtor announced that he was launching a grassroots effort to challenge government spending at all levels. He cited one case in Belleair in which an individual purchased a $550,000 home taxed at $2,800 and replaced it with a $2.4 million structure with a $43,000 tax bill.’
‘Real estate giant WCI Communities Inc. and the Florida Chamber of Commerce both think a second home in the Sunshine State is a great idea for nearly everyone. Together they have created an unusually eye-catching marketing tool to stimulate the concept.’
‘Another card in the file is from ‘Biff Buckstein, Extreme Athlete and Splitter,’ who writes about his ‘killer condo’ and Florida’s ‘tasty waves.’
‘Biff, who clearly is not in Southwest Florida, also informs his pals that ‘I totally PARTY at night.’ A ‘footnote’ from the editors of the brochure points out that Biff’s parents also live in the condo and that Biff ’sleeps till noon each day.’
I seem to recall that the Atlantic Ocean was a body of saltwater. Not the sort of ocean that generates “tasty” waves. But then, I’m not as wise as Biff.
Why is it exactly I should be outraged at a $43K tax bill on a 2.4 million dollar house ? Don’t build mansions and expect the rest of us pay your taxes for you.
Splitter Biff brags, “I totally have this whole complex to myself, man!”
“I can totally grow some killer herb in a vacant unit…oh wait, someone already planted a crop there.” - Biff
The Dell dude’s gotta unit next door.
“I totally have this whole complex to myself, man!”
Lots of empty spec condos.
The whole complex or the hole complex ?
wait, so that’s not a *current* mugshot of Husani?
Ben,
Articles like this are starting to get at the meat of the problem real quick. This is a big, big turning point and things are going to get ugly fast.
Yeah, but I don’t like hearing about huge valuations flipping more than once in a day. That’s too close to the Texas meltdown. It shows how lax things have been. And it’s not like these guys had any money either.
Does anyone know if this bank is FDIC?
Pretty sure they are. A guy I know has CDs in that bank.
Every bank is regulated by the FDIC. They may not be their primary regulator but the FDIC regulates every bank because of FDIC deposit insurance.
Only banks that choose to be in the FDIC system, State banks are exempt.
BankAtlantic will be swallowed up in a consolidation wave soon. You can bet on it. Either that, or they’ll be pulled under by some tasty waves of foreclosures.
“…tasty waves of foreclosures.”
lol.
“The problem, he said, is the county’s huge inventory of unsold homes: about 14,000 houses, roughly five times what it was two years ago.”
You anit seen nuthin yet. Wait till ’spring’…
the day after the super bowl will be SUPER INVENTORY day
like 06
“‘At some point bank regulators will not allow the bank to keep property on its books at $27.9 million if it does not appraise out,’ said analyst Richard X. Bove. ‘When it is forced to mark the property to market, it will take a hit.’”
Now this kind of activity is what will put an end to the “banks won’t give properties away” garbage. Bring it on.
“Analysts and market watchers suggested that BankAtlantic might have bought Tringali’s property through a subsidiary to avoid damage to its balance sheet. ‘They don’t want to look like idiots,’ said George Huhn, who runs a Venice-based company that buys troubled loans from area banks. ‘They’re searching for a way out of this mess that doesn’t involve taking a loss against earnings.’”
It kind of reminded me of Japan’s past banking problems.
TC, you’re so right about that - they won’t have a say in the matter. Sold from underneath their feet (hahaha!)
“Analysts and market watchers suggested that BankAtlantic might have bought Tringali’s property through a subsidiary to avoid damage to its balance sheet. ‘They don’t want to look like idiots,’”
Too late, and you won’t avoid the loss either.
“But the biggest problem with the deal is the appraisal that BankAtlantic received on Tringali’s former property, said veteran Sarasota appraiser Richard Bass. ‘When something is sold three times in a year and the value more than doubles, you have to go ‘whoa’.”
Dude, you’re gettin’ a cell!
Wasn’t it creating subsidiaries to take losses that got Enron in trouble? At least to a layman’s first approximation understanding.
LMAO - Keep it coming!
It is a pretty scary statistic released by the Mortgage Bankers Association that the percentage of mortgage payments that were 30 or more days past due for all loans tracked jumped to 4.67 percent in the July-to-September quarter. Considering that the total mortgage market is $10 trillion, at least $467 billion dollars in loans are in danger of default. How much longer can this circus continue?
http://www.azcentral.com/business/articles/1213late-mortgage13-ON.html
What is not clear here if 4.67% of $10 trillion is at risk or 4.67% of mortgages are at risk. The latter maybe more $’s if it accounts for mortages that tend to come from higher priced areas.
“Lee County likely will not see any significant further decreases in prices but will ‘bump along the bottom’ following this year’s decline in home values, Fishkind said. ‘I think it’s going to be more L-shaped than U-shaped here.’”
“The problem, he said, is the county’s huge inventory of unsold homes: about 14,000 houses, roughly five times what it was two years ago.”
Let me get this straight, the inventory is 5x what it was 2 years ago and we won’t see any significant declines? Thanks for clearing that up for me Hank, for a minute I thought the market was in real trouble. How can an economist not know anything about economics? This is ECON 101 on basic supply and demand. Hell, they cover this on the first day of class. I should know, I was there. I went to pick up my syllabus (and scan the class for hot sorority girls). Sadly, none of this is surprising anymore.
tell my old man- list 1.1 mill
offer 650k
thats a haircut folks
Did he sell?
Flat — what did he pay, and when? And what did a close comp sell for and when?
Per a 2003 study:
Lehigh Acres has about 135,000 platted lots and about 121,000 of them are still vacant; owners of 26,000 haven’t been paying the taxes on them and owners of about 35 lots a yearoffer to donate them to the county just to get rid of them.
notorious is hilarious
Anyone know how I can get vacant lot comps for 33993.
i just got back from the bahamas and even down in turks and caicos they had three empty condo towers just collecting dust. the boom goes all the way down there. no end to it.
That sounds like the makings of a condo-tel. I’d think vulture capital is circling over that one.
Does this statement seem reasonable?
“as lower energy and car prices offset increases in costs for homeownership and medical care, the Labor Department reported Friday.”
lol…I don’t think the two sides of the equation are anything close to equal? Car prices and energy balancing out home prices and medical care….lawl.
Sure it does…in the world of ‘just tell me how much my monthly payment is’. The basis of the payment is irrelavant, so a drop in the monthly payment on a consumable (like ring-tone downloads, I guess) offsets a rise in the payment due on a $500,000 neg.am loan. It’s all good, see?
From the WSJ via Yahoo:
First time buyers are sniffing around again in FLA, but existing homeowners are toast. For what it’s worth:
http://biz.yahoo.com/weekend/firsttimehome_1.html
Can you say “sucker rally”?
Bagholder propaganda.
‘Ol Ruth might be a grizzled old-timer, else the copysetter (or current word for that) is — when is the last time a major rag uses (Fla for Florida? Reminds me of Penna and all the other antiques.
Other than a 4 or 6 year degree is there much of a difference from what spews from an Economist or a palm/taro card reader?
Nope!! There a few economists that provide subastance to their viewpoints. Shiller and Roubini come to mind. Not everyone is going to agree with every economist or analyst and that is fine. Listening to differing viewpoints is healthy. However, if you are going to state a view or opinion have the ability quantify it with data. Lereah spouts off stuff and has nothing subsantial to back it up with. Wishful thinking is not hard data.
There are a couple thoughtful unbiased economists reading and posting on this blog daily. They are not all paid shills of the REIC.
What exactly are the qualifications of a bonafide economist anyway? Sometimes it’s just a wolf in sheep’s clothing and the herd just follows.
Fishkind is a hired gun and turns with the wind. He will say anything gievn the right amount of cash. Hell, he wrote half the feasibility studies these dumbass bankers relied upon. Check his speeches over time and you will find he was espousing, there ain’t no bubble. Bump along the bottom!!!!!!!!!! WTF? Yeah and it will take two years to get where, a hole in the bottom?
So, let me see. Massive inventory and no one buying at these prices. A “guess” statement that prices will not drop but instead it will be an L shape instead of a U shape and another “guess” that it will take 3 years with prices bumping along the bottom. What am I missing here. If it takes 3 years and this massive inventory isn’t cleared and it will ONLY get cleared by big price drops (or it would be selling NOW) who will be paying for the upkeep of these empty properties over those years? I also assume that property damage insurance will have to be kept up.
In the late 1980’s and well in the 90’s, I watched some empty houses over several months in Studio City, ca. as the foreclosures kicked in (and this bust is going to make that bust look like a picnic.) It was not a pretty sight to see the damage that neglect can do. A few weeks without watering the lawn and clearing litter makes a SF dwelling look like sh*t. Then there’s the added damage done by vandals or thieves who break in under cover of darkness to steal fixtures, door handles, kitchen equipment, copper plumbing, etc. Security patrols rarely catch these thieves.
So, that leaves two choices. #1. Three years of property being empty or #2. Being sold at bargain basement prices (which thus contradicts the L and U shape theory with minimum price drops). That’s begs the question: Who is going to absorb the substantial maintainance costs until all this overpriced crap is cleared?
True. If maintainance costs on an occupied house run what, 5% a year, the depreciation costs on an unoccupied house must run 2-3 times that easily. Say 10 to 15%? The banks selling these boxes quickly is all the more relevant.
I know of a foreclosure where the borrowers took the stairs with them before they were kicked out, along with the appliances etc.
Many foreclosures are trashed . The sort of borrower is pi–ed off that they are being thrown out .Same thing can happen on a rental eviction .
I talked to a guy from the power company recently. He said the new thing in Phoenix is for the copper theives to go to a commercial building on the weekend, cut into an electrical conduit, tie the wire to a truck bumper and pull out a few hundred feet of copper wire to sell as scrap. Business owner comes in Monday morning and nothing works.
There have always been desert rats doing this kind of thing in Arizona, but now they are doing it in the center of town.
Sure. The REO condo I bought in 1994 was not only missing its stove, but also about 1/3 of the sheet vinyl from the kitchen floor where the previous “owners” had ripped out the stove. Luckily, retiling a kitchen floor is a job that even an un-handy middle-aged female can cope with.
I can explain that, and it is a beauty. Who maintains these places throught the L curve? LOL Most homes in Florida which were constructed in the BOOM are located in PUD”s or Planned Unit Developments”. This empowers the homeowners to police themselves to a point. The county and city have limited power therein. So, if homeowner ‘A’ decides to hell with the lawn and all other maintenance he is warned of the issue and given 10 days to clear up the issue.
Homeowner ‘A’ living in england blows off the association. (and they do) The association then takes over maintenance and liens the property. Homeowner ‘A’ cannot sell without clearing the lien.
Now it gets ugly. In many pud’s here the majority of owners are absentee and overseas. The mortgages and notes are domestic.
Mr. Brit has no intention of following through on his deal so foreclosure is the next step. In the meantime the association is racking up the bills for the property every week. They will go right to the closing of the unit in foreclosure which should take from 1 -2 years as the owner is not an American citizen. Oh yeah.
Now the crusher. The association does a budget analysis for the coming year and has to price in the “alien house”. Whoa we are short on money. They then raise the assessments on all the homeowners thru the roof. A riot ensues and the association then sues all of the lenders who hold paper on the units and files lis pendin’s on all properties which locks them into another court having jurisdiction and not the original system for foreclosure. Now we have two courts claiming jurisdiction over the same property but for different causes.
Neither can act without the solicitation of the others rights and priveleges being considered. Hearings take place. On and on it goes. Petitions are filed as nauseum.
In the end the house is foreclosed and now must be repaired to bring it to market condition. 2 years out.
The homeowners association went broke last year and homes throughout the project are losing value monthly.
The lender tries to unload the property in it’s current condition to no avail. The regulators come in and say, “dump it” or else.
$40 cents on the dollar is the final number and all else washes away.
The homeowner is eating crumpets. The homeowners in the association are upside down in a big way due to the plummeting values in the neighborhood. The bank is losing stockholders as it is running negative and tumbling. Hearings are taking place in Washington….and the lawyers are making all the money. Damn I wish I had finshed my JD!
PUDs and HOAs are a curse, IMHO. Some work out OK, but in this current environment, it is exactly as you say, dimedropped. Been there, although not quite to that extreme degree. My one experience with PUD showed me exactly what can happen when you have a criminal owning one of the units (family inheritance). And a criminal who works the system and somehow got legal representation.
Mmm. Crumpets sound tasty and a welcome break from all the popcorn I’ve been munching while watching this slo-mo disaster movie progress.
Dimedropped — “Now the crusher. The association does a budget analysis for the coming year and has to price in the “alien house”. Whoa we are short on money. They then raise the assessments on all the homeowners thru the roof.”
Imagine how this can affect pricey Florida condos. The old ones tend to be very stable due to long-term owners, but many of the big new ones could be up S-creek.
Mike — you hit on some very good points. An anecdote: there is a nice, upscale neighborhood on the northern edge of metro Orlando called Lake Forest. I’d guess there are 200 or so homes in the subdivision. One large one apparently was involved in the buy-reappraise high-flip to a shill scam or something similar –whatever it was, it was crooked. So the lender-owned place sits vacant for years. Grass looked awful, mold on the exterior walls. The catch is that the subdivision has only one gated entrance and a 24/7 guard. So the house very likely will not be vandalized — giving the horrified indignant neighbors no valid reason to call the cops. And the lender isn’t going to sink a dime into it. I’d guess they won’t even pay the expensive HOA fees, because they don’t care about another lien.
Coming soon to another ritzy ‘hood near you?
Chip — Where exactly in Orlando is Lake Forest? Thanks!
It is in Sanford, right off 46, maybe 1.5 miles West of I-4
“Lee County likely will not see any significant further decreases in prices but will ‘bump along the bottom’ following this year’s decline in home values, Fishkind said.
—————————————————————————–
Another brilliant prediction by an Economist! Fishbrain must be related to Gary Watts.
Asshat Fishbrain
How their can be all that inventory when 2k people are moving to sunny florida every week as well as all the wealthy boomers i read about
go figure
Thats about the same amount of old people that die here every day opening up another condo spot
I live in lee county. I am thinking of starting a tv show called lose that house. It will document how savy investors order a pre construction spec home wait until its built and than sell it for 40K less than they paid for it. Unfortunatly nobody wants even at that discount. They could show all the fun stuff like the fights at home, and the draining of equity from their own pesonal residence to try and make all this work. Now they have 2 upside down properties. Any one want to send an audition tape. There must be thousands out there that fit this profile.
If you can make it a comedy I think it’ll work………
“Pay My Mortgage”
Have a phone in poll and whichever upside down homeowner gets the most votes gets their debts paid. You can call it “American Forclosure”.
I think everyone misunderstood his comments. I think this market is going to be exactly like an “L” . If you look at it closely, you’ll see a quick drop straight down a high cliff, then a long, flat ride at the bottom.
Any one in on starting the lee county based reality show “Lose That House”
If you’ll broaden it to include undeveloped properties, you could call the guy who bought my Cape Coral property about a year ago.
About 300 feet down the street, another property — almost exactly the same — was just on the market for $95,000, less than half what my old property sold for a year ago. It sold a couple of weeks ago for $75,000.
While this has been going on, my old property has been back on the market. The new owner wants $239,000.
the new owner is in deep denial and deep doody. All the lots that sold last year for $100,000 plus wont see those levels for another 20 years. In july 2005 I considered building my dream home and all I heard was you better get your lot now we are running out of land. Luckily I didnt do it