“The Days Of Flipping Are Over” In Florida
The Herald Tribune reports from Florida. “Another Southwest Florida home builder has exited, leaving dozens of customers with unfinished homes and regulators dealing with a third-party contractor who qualified the company’s permits. Sarasota-based Avalon Homes left its offices unfurnished, unlocked and deserted several weeks ago, its former landlord says.”
“Meanwhile, the small builder has 56 open permits with the city of North Port and officials there have been in touch with Venice-based contractor James Leake, who qualified the Avalon homes for permits, to try to get the houses finished.”
“The city has been going to Leake on the issues associated with Avalon’s permits, said Bud Korte, plans division manager for the city of North Port. ‘We have to hold the license holder responsible,’ he said. But Leake said he has been as unsuccessful as Avalon’s customers at reaching Pufta: ‘All the phone numbers I had for him were disconnected.’”
“‘I’m truly stupid,’ Leake said. ‘I am being held responsible for decisions I did not make.’”
“Joe Powell was one of Avalon’s customers. He bought a North Port lot in September 2004, put $16,700 down on the $167,000 house and has since watched his home languish. Powell considers himself ‘one of the lucky.’ There are 50 to 60 other buyers who might not be so far along in extricating themselves from Avalon, he said.”
“The company’s travails could become something more commonplace as 2007 dawns and small players throughout Southwest Florida struggle with a customer base that has evaporated along with the booming real estate market of 2004-05.”
“Several homeowners have filed lawsuits against Avalon Homes. Avalon was one of five proposed home builders in Michael Tringali’s troubled Steeplechase Estates subdivision near Myakka City, recently bought in lieu of foreclosure for $27.2 million by Fort Lauderdale’s BankAtlantic Bancorp.’
The Palm Beach Post. “The housing downturn hit home in starkly human terms Monday when DiVosta Building Corp. said it will lay off nearly half its local workers. ‘We’re trying to match our workforce to the construction pace,’ said Beth Cocchiarella, spokeswoman for DiVosta parent Pulte Homes.”
“In addition to the cuts here, DiVosta laid off 135 workers in Sarasota last month. Industry experts say DiVosta and Pulte are far from the only home builders to cut workers as construction slows. Lennar, Toll Brothers and Centex also have laid off employees, they say, as have smaller companies such as Sunland Homes of Jupiter, which this year cut 20 of its 45 workers.”
“‘All of the major builders are in the process of very large layoffs,’ Jeff Spear, president of the Gold Coast Builders Association said.”
“‘They want to bring the production of homes back in line with true demand,’ said Bradley Hunter, a housing analyst at Metrostudy in Boca Raton. ‘Builders were building at a pace that was matching an artificial demand.’”
“Home prices have fallen from their peak in late 2005, and sales volumes have plunged. Builders started construction of 1,017 homes in Palm Beach County in the third quarter of this year, only half the pace of the July-September period in 2005, Metrostudy said.”
“The DiVosta layoffs contradict a commonly held piece of workplace wisdom: that construction workers are in such short supply in Florida that job security is not a concern.”
From NBC 2. “Thousands of homeowners are losing their property because they can’t afford the mortgage payment. The number of foreclosures is up by almost 1000 in Lee County and the year isn’t over yet. Realtors point out they saw it coming, the market has done a 180 over the past year.”
“Patricia Francioni has three homes for sale. That’s not easy in a buyer’s market. They aren’t investment homes, she and her son have lived in them. Now she wants to sell them all. ‘It’s killing us, can’t sell anything,’ said Francioni.”
“With taxes and insurance on three homes, she’s over-extending her budget. ‘Three times what my husband makes, I paid out this year in taxes, real estate taxes,’ said Francioni.”
“This year alone, almost 2200 homes were forced into foreclosure in Lee County. In 2005, just under 1,300 homes went into foreclosure.”
“Realtors say the housing market has changed. ‘Now it’s leveling off, and all of these people are stuck with these properties. They can’t afford the taxes, they can’t afford the insurance, they’re upside down,’ said (realtor) Dawn Gallet.”
“‘This is something that would have sold right away a year ago, now you’re just holding on, hoping somebody will give you an offer,’ said Francioni.”
“Real estate agents say more foreclosures mean a chance at a great deal. Until the market changes, they say only people buying homes for long-term should invest. The days of flipping are over.”
‘Kelly Abercrombie was sentenced to 15 months in prison and ordered to pay restitution for her role in a mortgage fraud scheme led by Sarasota mortgage broker Todd Kolbe that resulted in $1.8 million in losses for a New Jersey mortgage lender.’
‘U.S. District Court Judge Susan Bucklew said that Abercrombie’s crimes were not minor, and that she deserved more than the six-month sentence she handed down last month to Mary Bolan, a Manatee County real estate agent who also participated in the conspiracy. ‘It was a serious offense,’ Bucklew said to Abercrombie as she delivered her sentence. ‘It involved a lot of money. A lot of money was lost, and you knew about it from square one.’
‘Abercrombie is the fourth person to receive prison time for participating in a crime that involved buying 30 properties in Sarasota and Manatee counties, jacking up the values through sham real estate sales to friends and family members, and then using bogus appraisals to get more than $8 million in loans.’
‘Bucklew also dismissed George’s argument that Abercrombie should not have to repay any of the $1.78 million in losses. Abercrombie read a statement in which she apologized to the court for her crimes and to her friends and family for the embarrassment she caused them. As to why she forged signatures, Abercrombie said, ‘Kolbe had a way of explaining things and you’d buy into it. Somehow, it should not have made sense, but it did.’
Maybe in prison this idiot will assume responsibility for her actions.
These people make me so freaking mad.
Why is repayment of the amount stolen even a question? The fact that perps are not held financially responsible (garnish wages, seize assets, etc.) for damages is just another reason why there is such an overwhelming amount of fraud.
I couldn’t agree more!
I agree too, but in a sense, this is small beer. Way too small. I’ve been looking at all of this and was rather spooked reading yesterday’s California thread, in which Housing Wizard and mrincomestream were in agreement that fixed rate mortgages might go the way of dinosaur after all this craziness shakes out. That was enough to almost make me lose my breakfast.
So it got me wondering about the grinding down of the “little guy” (which for the most part is us) by the financiers and how, much as I am not fond of lawyers, there is a heck of a potential here to pit lawyers against financiers by means of vast class action lawsuits. In a sense, Florida as well as other locales have been torn apart by speculation and greed. Quality of life has been reduced wholesale. In a war between financiers and attorneys, my money’s on attorneys every time. Wish some attorneys would just step up to the plate and act on behalf of citizens of various locales whose lives have been injured by all this insanity. Go right to the root, the financiers, not their middlemen like the poor schmuck above now going to prison. Way too small. Think much, much bigger. It’s the only way to rein in the greedy f**ks. I know, some might say that only lawyers benefit. In terms of short term cash, yes. But if a group of attorneys were smart enough to leave something on the table, such as a future financial climate favorable to working folks, I’d say they earned their money.
The real criminal here is the county for allowing the permits to be issued for the building of houses. In the Riverview area there are brand new 3/2 renting for 900.00 per month. The only catch is you cannot get out of the subdivision in the morning because it require a left hand turn on 301 which at that time of the day is impossible. BTW a signal will be installed in 2009 due to budget constraints.
posted ” ‘Kelly Abercrombie was sentenced to 15 months in prison and ordered to pay restitution for her role in a mortgage fraud scheme led by Sarasota mortgage broker Todd Kolbe that resulted in $1.8 million in losses for a New Jersey mortgage lender.’
Well two more Republicans that can not vote. One small step for a man, one gint leap for mankinddddddddddd………..
Greed and fraud are not limited to the Republicans! Did you see the report on Primetime that republicans give more to charity than the democrats. I know many a Democrat that live very greedy, posh lifestyles! Whose to say these dumbasses weren’t Democrats. Americans, whether Republican or Democratic, don’t want to earn their money the old fashioned way, by working hard.
think raines can come up w the restitution check ?
BTW today’s inflation reports mention 1974 and 1980= wow
Yes, they are saying inflation in november was the highest in 30 years!! I guess when you let the dollar collapse against international currencies and print money like mad, you get that result.
Anyone else see that major oil producers are moving money into euro’s. If helicopter Ben thinks that he can stave off deflation just by dropping money from the proverbial helicopter, then he would have effectively destroyed the U.S.
Didn’t seem like they’ve been printing money like mad this year compared to recent ones, at least based on M1 and M2. And when you compare the US with other developed countries, it seems not totally out of line. (Check the back pages of The Economist for the numbers.) That said, it was worrisome that M3 “disappeared” recently, and the growth in M1 and M2 is always a bit of an eyebrow-raiser when it goes on and on and on.
Why producer inflation would all of a sudden lurch upward so quickly is interesting, given oil and building supplies moderating recently, but more interesting is, as pointed out above, the references in the press to those previous and notably bad years. Yikes!
As always, though, note the rise but give it another couple of months to see if this is an anomaly. Yeah, I know, but we can always hope.
There are two sites that state they have rebuilt M3. They are as follows:
http://www.shadowstats.com/cgi-bin/sgs/data
and here:
http://www.nowandfutures.com/key_stats.html
The sites show an increase in credit for 2006 at roughly 9%. Inflationary depression here we come.
“Didn’t seem like they’ve been printing money like mad this year compared to recent ones, at least based on M1 and M2.”
How about M3? Do you have a reading on M3?
My sense is that inflation is at the highest level it has seen since the 70’s for sure.
B.. b… but… When you take into account the hedonics, what inflation? You can buy an iPod these days for $250, and one of those would have cost you $2,000,000 in 1974, right?
And if you have a sweet iPod and an Xbox, too, who needs to eat?
http://www.mises.org/story/1873
The housing downturn hit home in starkly human terms Monday when DiVosta Building Corp. said it will lay off nearly half its local workers.
Ouch… DiVosta is huge in Palm Beach. Their communities really are part of what has been shaping the development in Palm Beach county… a 50% layoff says something…
“The DiVosta layoffs contradict a commonly held piece of workplace wisdom: that construction workers are in such short supply in Florida that job security is not a concern.”
Welcome to the downside of a bubble. Remember railroads in 1780? We went from 10% of the population working on them to 3% pretty quickly. Housing? Should be at 5%, we’re currently employing (IIRC) close to 10% of the population building them. Anyone else think that 3% might be a reasonable number?
Good luck selling a pickup truck for 3 years. Good luck getting anything for that DeWalt power tool.
And the “days of flipping” still aren’t over in Florida. Somewhere someone is stupid enough to believe the NAR and buy. I have not doubt about that. But until all the flips are sold, we’re still in flipper days.
Oh, a 50% cut in home production only brings construction down to the absorption rate. Builders will have to cut again to bring construction down below absorption eventually to let the market sop up the surplus.
I loved living in Florida when I did… but man, its so toast.
California and Florida will result in so much debt being defaulted on we’re about ready to enter a brave new credit market. How many billions in debt are the builders servicing between those two states? How many billions of loans are out to flippers? FB’s?
I cannot wait to see United van lines moving survey in January. I’m not betting on Florida being a growth state…
Neil
Instead of going to Home Depot to buy tools, I’m going to start visiting pawn shops.
So you like buying stolen property on the cheap, huh?
I don’t believe pawn shops have good deals. e-bay.
Or maybe black and Decker will dump Dewalt tools for cash flow? Why buy used if new becomes cheap?
I do feel for the workers who are being displaced. Cest la vie.
2007 is a bad year to buy a home, but should be a great year to pick up power tools! (New and used.)
Neil
Neil,
We uh, kind of cross posted there? I’ll have to admit to never actually having bought anything from ebay. More and more it’s kind of becoming “advertising”. I’m not even that enthused about Craigslist any more either. C/L has become an absolute haven for con/scam artists and even the RE posts have gone from “Save money by bidding on this exclusive home before it gets listed by a realtwhore” to “Make money on distressed home sales” without any development towards true negotiation.
Neil,
I seem to have lost a post there but let’s not under estimate the impact of a boom gone bust on ebay as well as Craigslist. Both used to “must see” web sites for me on almost a daily basis. Now? Who really cares. Criagslist’s RE posts have become a waste of time. Since it’s free sellers were free to plaster up their “wishing price” and in ways further distorted perceptions. Many of the RE listed on ebay is either timeshares or an acre in Parhump, NV of “prime developable land” for $1.6 mil? I swear, the same listing for the last 18 months. DOA (much to the delight of the REIC).
DinOR,
I agree, looking for RE on e-bay is a waste of time. But power tools? no problem. I saved 60% on shoes recently.
Sometimes one finds a bargain on craigslist, but lately I used more organized renting sites due to their filters. Actually, I never bought anything on craigslist… e-bay? Sure.
But its not yet time. Inventory needs to build.
Neil
lots sales on ebay are kind of interesting- autions are real -RE listings and subsidized sales prices are BS
Oh I think it’s just an expression. Besides pawn shops can be just as if not more expensive than buying new! Yes believe it or not. I still check ‘em out once in awhile but mostly on the off hand chance you’ll find a vintage Fender guitar and an owner that *isn’t* an authority. Ebay killed the pawnshops. Anything of collectible value (and a lot of things that aren’t) found their way to “auction”. There will be a lot of good values to be had in 07 (kind of like buying a generator after Y2K).
I used to work at a pawn shop and it wasn’t ebay that killed the vintage instrument market. It’s the big vintage instrument conventions in Texas that started the ball rolling. Whenever we would get anything of value we’d just store it away for the confrence that came up once every year. At the show buyers pay cash and they know exactly what they want. This was about 10 years ago so maybe things have changed.
Also regading buying power tools at pawn shops. That’s actually a good idea. I’m sure a certain percentage are stolen but more times than not the people getting loans are average people that just need a little cash to get them by. Often times construction workers would turn in their tools on thursday just to get a loan for spending money that night. Then they would pay it off on Friday when their employers paid them.
Pawn shops aren’t bad they provide loans to people that can’t get a conventional loan. And the loan is backed by something of equal or greater value. Most of pawn shop customers are blue color types, single mothers, construction workers, etc. These people aren’t looking for a hand out they’re looking for a way to buy food for the kids or make ends meet when times get tough.
Compare that to the A$$holes that scam mortgage companies completely aware the buyers they are bringing in have no way to pay off the No Doc, I/O, No Down house loan they set up. Jerkoffs know that if they have to take the loan back they’ll just close shop pushing the costs to American taxpayers.
Damned straight. One of our bigger local pawnshops here in No. Va. had a 1970’s-era Gibson Les Paul Deluxe guitar that was sort of a beater, and the asking price was probably at least $500 more than most knowledgeable folks would pay. When I called him on it, the proprietor admitted that he knew the price was too high but that he was sure some sucker would pay it. Haven’t been back there since then.
Pawn shops used to be a good place to buy guitars, but eBay totally killed that off, unless you’re looking for some POS that would be tough to sell on eBay.
Next time offer the guy $300. The owner knows how much he paid for the guitar. If the amount paid is around $100 they’ll take your money. If not usually they’ll tell you the lowest amount they can take.
Maybe the owner made a bad loan on the guitar and is just trying to make his costs back. (He might also be a greedy bastard)
Try buying from your local police auction. I got a 1/2 inch Milwaukee drill for $12 many, many moons ago. Still kicks butt!
“I’m going to start visiting pawn shops. ”
and yard sales.
You wouldn’t believe what people give away in some neighborhoods.
You’re right. Yard sales, if you have the time, are lots better for getting deals. I’ve gotten some astounding deals at those sales, as well as giving some astounding deals at my own, just to “get that junk out of the house”.
eBay is half taken over by commercial enterprises, but you can find what you want in a very short time compared to yard sales, where you can spend all morning and find lots of deals and even come home with a bunch of things but not what you might have gone out looking for.
As for Craigslist, I’ve bought lots of stuff off of there from private sellers: Fridges, audio equipment, PC’s, home furnishings. Not a bad way to go as long as you close the deal face-to-face. That does NOT apply, though, to real estate sales on Craigslist, which has been taken over by commercial interests, and the Craigslist Community of “flaggers” can’t seem to keep up with the flood of what is practically just spam that overwhelms that section.
Note on garage sales: My first thought is that financially struggling owners might have some great deals on offer come springtime, but then again, I find that the best deals come from people “moving up” to the new fridge/whatever and just want the old one out, not from people who really need the money. Actually, as mortgage payment pain increases, I expect that people won’t be buying new toys and pushing their used ones out the door cheaply. Darn.
True story about yard sales: I found a U.S. Forest Service issue sleeping bag for FIVE BUCKS this past weekend. It’s the green bag that the smokejumpers use, and it’s warm. In fact, it’s warmer than my venerable old down bag.
So, a toast to all of the yard-salers on this board!
Arizona Slim posts ” So, a toast to all of the yard-salers on this board!”
Thank you! I am a pro, I do it for a living. I stick to movies and music…. vhs, dvds and cds some records and books. I resell on line and twice a week at a local swapmeet. Ton’s of fun!
I find that the time/value ratio for yard sales isn’t worth it. And, frankly, the wife and I already have too much useless household crap as it is…we need to be holding yard sales, not going to them.
It’s no longer a flippers market according to Florida Realtors. It’s a buy and hold and hold and hold market.
I still peruse CraigsList. I have never bought anything, but I think it is instructive to read the real estate posts there. Also, the listings for quality cars, BMW, MERZ, LEXUS etc…
It gives one a good feel for the level of anxiety on the seller’s part.
dukes,
Ditto here. And there in lies the problem. Since it’s totally free sellers can “troll” for market sentiment too! When we have to fork over hard earned after tax dollars to advertise we expect a return for that investment! When it’s free? Hell shoot for the moon!
A Dead-Buyers market is what we have now! All the buyers have already bought, for fear of being priced out forever, which is why we now have about a 70% home ownership rate. There are no buyers left to buy, hence; A Dead-Buyers market.
Perhaps, after the previous buyers recover from their foreclosures in about 7 years, there will be buyers again. Until then, It’s A Dead-Buyers market.
I’m wonder how many illegals will move back as jobs become more scarce. That will impact strugling economies too.
That lost comment was supposed to be in response to the following well written post by Neil
“The DiVosta layoffs contradict a commonly held piece of workplace wisdom: that construction workers are in such short supply in Florida that job security is not a concern.”
Welcome to the downside of a bubble. Remember railroads in 1780? We went from 10% of the population working on them to 3% pretty quickly. Housing? Should be at 5%, we’re currently employing (IIRC) close to 10% of the population building them. Anyone else think that 3% might be a reasonable number?”
Thank you for the compliment.
Right now our economy is like 1929 where most people think its doing ok, but the bottom quartile of the economic structure are suffering. Today that quartile is illegals. Back in 1929 it was the inhabitants of the worst slums in the city. It was so bad in 1929 that there was typoid in Chicago. Today? Porbably just immigration. Like in the 1930’s, the balance of immigration to/from the US could tip to from.
Neil
“Like in the 1930’s, the balance of immigration to/from the US could tip to from.”
If you are talking about illegal immigration, then I’m all for it. BTW, here in South Shore Tampa Bay, illegals are not suffering. In this immediate area (not further east) they have better housing than most working poor citizens of the US, free medical care through the local clinics (I pay sliding scale in the same clinics, the care is better than what I got through a crappy HMO), charities that compete to cater to them and a police department that puts on outreach events that include free haircuts. From the sublime to the ridiculous. However, as construction jobs dry up, there could be problems, because word on the street is that many have no intention to go back to the agricultural employment that brought them here. Instead, some are already leaving for factory work in states north of here, preferring that to the ag work.
I disagree. I live in South Tampa. Today I had a delivery from a Mexican driving a van crammed with his family (wife and children), all in rags. The little ones were helping with the deliveries. The whole family looked like it was starving. I will not tell you the name of the huge company involved (painted on the side of the van, no less), but it made me sick. How American companies can exploit the poor in order to save a buck is beyond me. It actually looked to me the entire family was living in the van; I saw them eating their “lunch,” and it was bread “sandwiches.” I’ve long been a critic of illegal immigration, but what are starving Mexicans supposed to do? Our government HELPS the corrupt Mexican government, instead of overthrowing it to save the people.
Today I count my blessings and remove my name from numbersusa.com’s mailing list.
I said in my IMMEDIATE area, which is at least an hour away across the bay from where you are. I am very familiar with how illegal immigrants are treated around here, they are very much a part of the community, but how that came about is too long to get into. I am sorry about the family that delivered to you. I trust you reported the company to the proper authorities for exploitation and that you gave them some food. You should also be aware that such a situation as you were witness to is against the law and that sometimes, it is not what it seems.
Carrie Ann -
Interesting question. Does anyone have a guess about what percentage of illegals work in construction? Not that they wouldn’t be more flexible/adaptable to another occupation than the average American. -
I dont remember 1790, but the first steam locomotive was not built until 1801 by Richard Trevithick. If 10% of the US population was employed in the railroad industry in 1790 then its no surprise that most of them were made redundant.
http://en.wikipedia.org/wiki/Richard_Trevithick#The_Puffing_Devil
housing units still ok- I don’t care where prices go - but w/o production and sales everyone gets sacked
I live in Central Florida and just had two of the “smarter” people I work with just buy new places. (one a condo downtown and another a huge house) People are still buying. I just don’t get it.
Bobby Mac
Your post about two of the smarter people you know recently buying new homes reminded me of an assumption I’d had about recent sales.
I was thinking a certain proportion of recent buyers were happy that home prices dropped to w/in their personal affordability range without being aware of the overall trend or its impact to their long term finances.
From what I’ve seen it’s not so much the affordability range, but what you can get for your money. 18 months ago, people I know in Phoenix who can comfortably afford a place up to maybe $300K had a choice between a crack shack in town or a 2500 sf mini McMansion in Queen Creek (or even further out). Now you can get a well remodeled 1700 sf house in town for the same price. And plenty to choose from.
“Now it’s leveling off, and all of these people are stuck with these properties”
leveling off? well, I guess compared to that one area that had a 44% decline, things are leveling off.
“Realtors say the housing market has changed. ‘Now it’s leveling off…”
Translation from ‘realtor’ to ‘english’: leveling off = dropping like a motherf-er
pressboardbox,
Yeah kind of like saying, I got in a fight and hit the guy in the knee real hard w/my face.
“Thousands of homeowners are losing their property because they can’t afford the mortgage payment. The number of foreclosures is up by almost 1000 in Lee County and the year isn’t over yet. Realtors point out they saw it coming, the market has done a 180 over the past year.”
Yes, the Realtors saw it coming. Of course the housing market will turn around in the 1st quarter of 2007 just like the NAR said last week.
jim,
Yeah, uh realtors “saw it coming” AFTER they found the last greater fool that is. More and more I’m leaning toward the peak of the market having been much earlier than consensus of OCT 2005. That may be true for stalwarts like the Bay Area but for markets like SD, LV, PHX and much of FL it was more likely some time in 2004 and yes you heard it here first…..2003! As in (anyone that bought after that is under water?
Realtors make money on the churn. Putting people in homes they connot afford serves their self interests. Just means they can sell it again in 2 years instead of 9. That’s 3-4 times the comission off the same house. It is this period of reduced sales activity that is killing realtors and by my calculations we could be at a 4 million annual rate by next fall (6 million now).
Patricia Francioni has three homes for sale. That’s not easy in a buyer’s market. They aren’t investment homes, she and her son have lived in them.
Help me out here…how do 2 people live in 3 houses? Not investment homes my a@%.
eastcoaster,
So true. That struck me odd as well. Now I could see having one home in NY, one in ME and a winter home in FL but 3 homes all in the same county? Weird. Sorry to be a bummer during the holidays but this is simply more 24 mo. cap gains exemption the “All in the Family” version! With little or NO out of pocket expense these two were fully intending on walking away w/big fat stacks and ZERO tax liability. Sorry. Why else?
There not specuvestments. Right…
You have to admire the journalist’s wry sense of humor
Road Patterns:
It is time to discuss “road patterns”. For the last thirty years if you flew over parts of Florida you could spot entire sprawling neighborhoods that had been built complete with roads, curbs, sidewalks, etc. - everything but the houses. These road patterns were built back in the ’70s and require a very special set of circumstances to fall into place in order to evolve. The developers at the time had no idea that they were just building roads, they thought with much certainty that they were going to sell lots of houses. That never happened.
You know, usually I read the comments before posting (and I am almost sure someone else picked up on this), but:
“Patricia Francioni has three homes for sale. That’s not easy in a buyer’s market. They aren’t investment homes, she and her son have lived in them. Now she wants to sell them all. ‘It’s killing us, can’t sell anything,’ said Francioni.”
“With taxes and insurance on three homes, she’s over-extending her budget. ‘Three times what my husband makes, I paid out this year in taxes, real estate taxes,’ said Francioni.”
This person is a fu**ing moron. Not investment homes? WTF??!? First off, why did you need 3 houses in the same state? Then, why in the hell do you need to sell 3 houses at the same time? Finally, what does your husband make in a year?
This quote is making my head spin. This lady gets idiot of the year award for all these comments. I am going to go stick my head in the microwave for a little while to see if this makes more sense after 10 minutes on “deep fry”.
What a putz.
Michael Fink,
Please! No! (It won’t help!)
This is actually a pretty common practice believe it or not. It’s a lot easier to stand up to the scrutiny of an audit when all 3 or 4 or 5 homes are within driving distance od each other. Trying to say your summer home in Maine was a “primary residence” would be kind of tough when your W-2 says you’re employed full time in FL! General rule of thumb? Whichever house we’re selling? Yeah, that’s our primary residence. Since they’re all under water and with foreclosure a more likely scenario than skirt-ing cap gains she can talk about it to the media (otherwise it’s hush-hush).
Actually Michael it makes perfect sense. With “pick a payment” loans and a reasonably cooperative tenant this could have been pulled off without a hitch. (Except for that damn bubble bursting). Just tell your renter things work out a lot easier for all parties concerned if you just keep the utilities in YOUR name! (You know, just for simplicity sake). If he balks just say WTH, I’LL pay the damn electric…..O.K? One for you, one for your son and “straw renter” occupies third. Why the 3rd home you ask? As a “mother/son tag team” they don’t qualify for the married couple exemption of 500k. See? Now the math works out perfectly and everybody’s happy!
Just more of the non-existent/non factor cap gains issue. I’m sure it didn’t influence their decision to buy 3 homes in the least.
How is the hell can you have 3 primary residences? I hope this lady was doing exactly what you said; then she can go to jail/pay penelties for tax evasion as well. The only thing is, I do understand it, SOH is SO unfair down here right now, more power to her if she was able to skirt the taxes. However, to complain about it now, and actually say they were not investments.. Well, that just takes balls.
(hope that’s not too off color for the blog, if so, sorry Ben!).
Michael Fink,
Well as your aware you only have to show it as a “primary” for any 2 of the last 5 years! They don’t even need to be consecutive! Since they’re not a married couple they had to add an extra “shell” to the game to get the same bang for the buck. Believe me I’m no fan of cap gains but through the exemption we’ve actually encouraged flipping and made it a legitimate occupation (sort of). I’m not a seminar junkie but I’ll bet if you go to one of the RE specuvesting ones cap gain exempt. is a BIG PART of their presentation. And these two sound like they attended one!
Michael and D — that’s exactly what I thought — no sympathy for this greedy woman, because she is a speculator just like all the others. The only way the math works, as you noted, is that they occupied (or pretended to) one house for two years as their principal residence and claimed homestead and received “save our homes” tax rise protection. Then they bought and moved into home #2 (I’ll bet in the adjacent county) and did the same thing. Meanwhile, home #1 either remained vacant, still getting that save our homes protection, or was quietly rented out. Home #3 — who knows? She has a son, so he likely was the straw owner. Maybe her son found a roommate for house #1 and then let the roommate have sole occupancy.
Michael — I wish you had time to play “Paladin” on this one. The opportunity for them to be cheating one or more counties on taxes is so high, it would be great for someone to trace the deals and occupants, interview the neighbors, nail it if it’s fraudulent and get th story right back into “NBC 2″ as a follow-up story.
Francioni, Patricia
213 SE 6th St,
Cape Coral, FL 33990-1538
01/05/2005: $355,000
03/01/1995: $30,000
2006 Property Tax $6,323
Francioni, Patricia
2258 Cape Heather Cir,
Cape Coral, FL 33991-3545
(239) 282-8242
Can’t find data for this address,
but everything else on the street
has a construction date of 2005.
So at least two of her houses were purchased in 2005.
Rollover flash map of the South. Part of CNNfns 100 biggest markets. Moody’s/Fiserv
http://money.cnn.com/popups/2006/fortune/invguide_realestate/2.html
Miami projecting a -4.9% price decline in 2007 and worse -7.5% decline in 2008.
Ft Lauderdale -4.3% 2007 -4.3% 2008
Sarasota -4.8% 2007 -0.8% 2008
W. Palm Beach -3.7% 2007 -1.1% 2008
Orlando -2.1% 2007 -3.8% 2008
Tampa/St. pete -1.9% 2007 -2.8% 2008
Jacksonville +1.7% 2007 -1% 2008
Those WPB numbers are WAY off. I would guess, to sell right now, your probably already down 10-15%, perhaps more depending on the area. I have seen 100K off of 600K homes pretty frequently, and they are not selling at 500K either. Also, I would argue with the Orlando numbers, I travel there pretty often and 10% off is all over the place. Median may not have dramtically changed, but if you want to sell today, your definately down 10-20% in both of these markets.
my old man got a bid of 650k on a 1.1 mill house ona bay access canal
Michael,
In regards to Palm Beach County, I think we are about 20-25% off peak prices. Hell, the median is down 13% from the peak. We also have a tiny supply issue that is roughly 42 months that will swell upagain next spring. Wait until Citizens hikes their insurance rates 56% on March 1st. If that happens, it will be GAME OVER in Florida.
And whats going to happen to insurance in south florida if we get a so-called 100 year storm.
Notorious,
I would agree with your assesment of the situation here. It’s honestly, in the market we have in PB right now, difficult to figure out what is going on. You have identical units in condo buildings, both for sale with a 25% spread in the asking price. The market has fallen so quickly and hard here, people just don’t know how to price anything. It’s kind of like the wild west if your looking at anything home related right now.
Perfect example, the home I just moved into (renting) is in a very large development (Evergrene, you probably know it). I am just below 2K a month on rent. The house across the street is for sale for 625 (yeah, right), or rent for 2700 a month. Same model, I can throw a rock from mine to his. That’s a huge pricing disparity (in the rent price). I have seen my unit going for as little as 1800 a month (closer to the tracks though), and as high as 3K a month. Again, it seems there is just no formula for pricing these things right now.
Maybe in a year, I will put in a bid on this home for 1/2 the asking price, just to show the owner what I (who lives here) thinks its really worth.
That should be fun. And the thing that really burns my landlords ass is that I can easily qualify to buy this home. WHY NOT BUY??? Because, unlike you, I am not that stupid.
Oh, and easily qualify does NOT mean I think I can afford it. I actually can, but no way I want to pay 5-6K a month to live here. That’s nuts.
Sounds like he is asking a wishing price. He’ll wish he took the 650k a year from now if he doesn’t get agressive on the pricing.
Comment by flatffplan: “my old man got a bid of 650k on a 1.1 mill house on a bay access canal”
I wouldn’t have expected a long-time poster like flatffplan to fall into that trap. It’s not a 1.1mil house. It’s a 650K house. It may be a 500K house by spring.
It’s not necessarily a $650K house, unless there are no other offers, and the seller accepts the $650K offer. I can easily put in a lowball $150K offer on a mansion that’s been sitting on the market unsold for 6 months listed at $5 Million. My lowball offer does not convert the $5Million listed house into a $150K house.
All hpusing busts start to look the same. The comps disapear and buyers disapear. Sellers find less reason to sell and banks run like hell ( bankers at least with remaining deposits head for points south)
We sold our house in Lantana, Fl. in Sept 06 at a drop in neighborhood “comps” of 15% (from July 05)..they were not happy to see us lowering our house multiple times..took 6 months to get a buyer..but after reading this Blog since the spring of 06, I just kept hammering my husband with price decreases, didnt want to follow the bust all the way to the bottom. He relented and although we didnt make the money my husband wanted we still made a profit. There are currently two homes in the same development that are still for sale (longer than 6 months) with no price drops. I know from our realtor that one of the sellers took his home off the market for one month to “refinance” before relisting with her again….
Flown — you brought up a point that might have been noted in another thread, but I didn’t see it: with regard to the observation that there has been a recent small but noticeable decrease in active listings, without a corresponding increase in pendings or sales, most of us thought it reflects discouraged buyers who will wait out the holidays and re-list in the Spring. That probably is true, but I didn’t think about the fact that many if not most lenders will not give you new HELOC credit if your home is currently actively listed. If that is also true for re-financing a first or second mortgage, it could account for a big part of the (relatively small) decrease in listings.
I find it maddeningly difficult to see where prices are in Palm Beach County, especially West Palm Beach. Prices for identical units can vary dramatically, and even in the neighborhoods with no “master plan”, prices for comperables also are all over the map.
Take, for instance, Trulia’s “heat map” for West Palm Beach: http://tinyurl.com/v5ws4 . The numbers are incoherent. But they are only based on reported sales. My guess is that the lack of volume leads to a “law of large/small numbers” problem.
For instance, this “data” shows that El Cid (nice neighborhood right on the intercoastal) has gained 55% YOY. One block across the street, Flamingo Park is reported to have dropped 88% YOY. I just can’t believe either or those numbers.
This is just one example of the connumdrum of attempting to understand this market.
Vultures are circling over Florida.
But Maven, those buzzards are needed here in Arizona! We have plenty of work for them to do right here.
No wonder we’ve had a shortage of Buzzards here in California. That’s why real estate prices haven’t moved.
Neil
A vulture buyer just bailed on a 30 home wholesale deal with a homebuilder in Sacramento. There was no way to confidently value the homes, due to all the mortgage fraud, incentive kickbacks, and eminent foreclosures. Plus, there is no confidence in maintaining the integrity of the neighborhood, as all the FB’s are inexperienced landlords and take any tenant that can fog a mirror. The newest Section 8 housing now comes with 3-car garages, jetted tubs in the master bath and granite counters in the kitchen. Seriously, enter Section 8 on Craigs List for Sacramento. The vulture buyers could not see a realistic bottom to the market, so they walked from the deal.
Yikes. Thanks for the info and your vigalence on mortgage fraud Paladin.
Neil
Hey I thought the FL ’save our homes’ law (prop 13 for FL) was supposed to save homes?
I believe it only applies to primary residence though. That clause is killing the specuvestor/landlords right now if FL with the tax increases.
Landlords in CA are so lucky to be paying 1977 taxes on thier portfolio of homes. I suppose that is helping to keep rents low in CA on the older homes…
Don’t misinterpret Prop 13 here in CA…the base tax starts at 1.01% of the purchase price and goes up from there. The only homeowners paying property taxes based on 1977 values are those that bought their homes in 1977.
Ah, I was wondering why my rent hasn’t gone up since I moved in 4 years ago. It was a deal then too!
Yes you are right but that is a larger number of people than you might think. The amazing thing is the businesses which pay 1977 prop tax. I think I read that the Capitol Records building owners pay less property tax than someone buying a typical house today in Los Angeles.
At least the govt doesnt get the $.
Certainly it’s a reason people won’t sell in California. If you sell and trade up the new property taxes would be a killer. In my case the tax woud jump $700/month just to buy the same house again.
Rex — in Florida, the multiple often is 4 or 5 times, or more.
The people who do not sell because of tax reasons, also, do not become future buyers. Market activity is permanently reduced, and the buyer pool lowered. A dieing market is the result.
Tinfoil — the lack of tax “protection” for non-primary residences in Florida is not causing rents to rise. Real (as opposed to wishing) rents reflect what is in the average tenant’s wallet, not what the landlord “needs” to get.
Next they are going to tell us that a woman and her son only need one residence. Everyone knows they need at least three! come on people!
What will “HeliBen” (can I trademark that?) do now that he might have to raise rates and put his boot in the throat of the RE market?
The updated, twisted version Friedman’s printing press theory seems to be undergoing a severe test. Let’s see what the creator of the printing press theory had to say on the subject:
“In making the case for a monetary rule, Friedman advocated a paper-money standard rather than the gold standard, arguing that this would save on the resource costs of digging the metal out of the ground just to store it away in bank vaults. But in the years after he received the Nobel Prize he had second thoughts about his monetary rule and the gold standard. In a series of articles in the 1980s Friedman stated that Public Choice theory had convinced it will never be in the long-run interest of governments or their monetary authorities to follow the type of rule he proposed, since the temptation to abuse the printing press for political reasons would always be too strong. He therefore concluded that, given the actual history of Federal Reserve policy in the twentieth century, remaining on the gold standard would have been far less costly for America than the Fed-created inflations and recessions.”
http://www.fee.org/in_brief/default.asp?id=929
There is a guy on Mish’s blog that has been going by the name “HeliBen” for a while.
Anybody short HOV? Good on you if you are!!!!!!!
Housing Nowhere Near a Bottom
12/19/2006 10:17 AM EST
The FOMC tells us that residential construction will shave 1% from GDP, and recently in a joint press release with the Treasury and FDIC the stress in construction will likely spread to commercial real estate. The pipeline of loan commitments for residential construction has to be cleared and that’s why Housing Starts must rise. Permits at lowest levels since December 1997 shows the true condition of the housing market.
Residential Construction and Development Loans rose 5.3% sequentially in the third quarter to $542 billion. YOY residential construction loans are up 29.5% with new home sales down 33%. Increasing housing starts are required to clean out the pipeline.
Position: Housing may bottom in 2009
I’m short TOL
Good job! TOL is a horrible gang of thugs.
“Increasing housing starts are required to clean out the pipeline.”
The pipeline is already clogged with a glut of new and used homes that won’t sell at any price near the wishing prices where they are listed. But go ahead and build away — we need more ghost McMansion tract home developments out in the desert.
That’s not what he’s saying.
Please explain what he is saying then.
Can someone explain to me why “Increasing housing starts are required to clean out the pipeline”?
If, as a housing contactor, I obtain loans to build and develop property; I am obligated to 1) build the property in the tim,e line I specified with the lending institution and 2) complete the work. This is the Lenders “loan Pipeline” how much money is being loaned out, at what times - interest rates etc. The builder is better off building than defaulting on his terms of construction. He can always get another construction loan even if the project goes belly up so long as he abided by the original contract terms.
Basically it is use the money or lose it. From a builders viewpoint: might as well use it, if it is a soft landing everything will be OK and if you are going to go under might as well be for 60 million as 40 million.
Are you from Oz?
what are your charts telling you about TOL? Watching the vertical ‘recovery’ in todays action re HBs…
It’s not overly bearish. Lower high so far on the daily short term. It will get really interesting if and when it breaks back into the mid twenties.
Hasn’t the North Port area been through this before? Wasn’t that where GDC (General Development Corp.) sold tons of lots sight unseen to unsuspecting buyers who didn’t know that there weren’t even roads or utilities to those lots? When was that, back in the 70s? Seems like the same thing happening again, sort of, only bigger and better, with roads this time, but unfinished homes. I knew a fellow who worked for GDC back in the day, he was basically a good guy and it haunted him for the rest of his life what his company did.
Avalon’s owner and manager, 62-year-old Joseph W. Pufta of Sarasota
“Pufta”? C’mon, that can’t be his real name. I guarantee you this guy’s got the deposit money in Switzerland and a new home in Costa Rica.
“Until the market changes, they say only people buying homes for long-term should invest.”
We just need more of these statements. With quick & guaranteed appreciation over, how many people will be willing to mortgage themselves to the gills to own a house?? Who will wait for 5, 7, 10 years for their “investment” to pan out? Who can afford that?
Who can even afford the property taxes in florida? There can be no long term investors when the state will force you out.
Good question!
When you figure it takes 5 months of my rent in this home to just pay the TAXES on the place (and that’s being generous, its probably more like 6), and another month of rent eaten by HOA. I have no idea what insurance is, but I am sure its nuts. So, to answer your question, I have NO idea who can afford this crap.
Even more interesting, what is going to happen when people revolt against these taxes? Even without people complaning, the dropping prices are going to dramatically impact the revenue to local/state govt. Are they going to increase the millage rate? Where are they going to get the money to pay for all their excess of the past few years?
In Brandon I rent a 2001 built 1700 sq ft 3/2 with hardwoods for 1150.00 per month. This home was bought by an investor in 6/06 for 203,000.00. I could buy it but that would cost 2k per month. I will rent it for a year and see what happens.
“Even without people complaning, the dropping prices are going to dramatically impact the revenue to local/state govt. Are they going to increase the millage rate? Where are they going to get the money to pay for all their excess of the past few years?”
Michael –that is the #1 reason I am leaving my beloved native state of Florida, once I find or can build a place at the right price. The Florida economy is taking a hit from our interference in other countries’ affairs, via a drop in tourism, and local government will take far too long to realize and correct for their overcommitment of tax revenues based on prices that would rise forever. So the millage will increase. Politicians will be thrown out. The next tranche will either lower costs (and thereby services) or keep taxes high and get thrown out. There are not enough miles left on my odometer to see Florida return to affordability — from an average-income retiree’s point of view.
“Patricia Francioni has three homes for sale. That’s not easy in a buyer’s market. They aren’t investment homes, she and her son have lived in them. Now she wants to sell them all. ‘It’s killing us, can’t sell anything,’ said Francioni.”
Advice to Mrs Franconi: The 3 houses would sell if you lowered your price!!!!
I see that the Orlando murder rate has tripled YOY — that should help prices.
http://tinyurl.com/ycen3f
Looks like there may be a bubble in criminal justice services in the making…