“Prices Have Been Tumbling” In Florida
CNN Money reports from Florida. “Jonas Lee’s doing the most critical part of his job: scoping out homes for his investment firm, Redbrick Partners, to add to its growing stable of rental properties. Lee is doing more drive-bys than ever these days. A handful of housing markets, such as southern Florida and certain neighborhoods of Washington, D.C., are wildly overbuilt.”
“Prices are dropping. And developers who raced to build new houses and condos during the boom are likely to soon be begging for buyers. ‘There’s going to be blood in the water,’ Lee says. ‘A big pileup.”
“No region has Lee more bullish than southern Florida where, as Redbrick co-founder Tom Skinner puts it, the near-term fundamentals are ‘out of whack.’ Lee predicts that buying opportunities will begin in early 2007. ‘The next couple of years will be ugly,’ Lee says, optimistically.”
“Lee says developers are offering condos in the region at 20 percent below appraisal value. Redbrick expects the discount to grow to 40 percent because developers lose money every day they own a property.”
From Bloomberg. “Buyers canceled contracts to purchase homes at a record pace in the second half of 2006, swelling builders’ inventories. That means buyers like David and Wendy Butler of Orlando, Florida, are able to purchase an already-completed new home at a discount.”
“The Butlers are purchasing a four-bedroom, 3,700-square-foot house in Orlando built by Ashton Woods USA LLC for $545,000. ‘People were saying the average homes in this neighborhood would be $1 million-plus, but there’s so many homes on the market the prices have been tumbling,’ said David Butler.”
“The high volume of completed homes for sale may result in a later start to the so-called spring-selling season’ because buyers have the option to choose a completed home rather than order one to be built. And, the completed new homes may offer price bargains, said Gary Balanoff, a broker in Oviedo, Florida, 18 miles southeast of Orlando.”
“‘We find that people are canceling contracts because they found a better deal,’ Balanoff said. ‘People figure they can get the same house for $30,000 less.’”
The News Press. “Expect Lee County’s housing prices to stay soft for another 12 to 15 months before the market turns around, consultant Michael Timmerman told the Real Estate Investment Society.”
“‘We will have more sales in 2007, I will guarantee you that,’ said Timmerman, Naples-based managing director for Florida at Hanley Wood, a national company that collects and analyzes data for home builders. ‘But it will come at the sacrifice of price.’”
“A lot of investors who own houses and are trying to get rid of them will likely decide to cut prices deeply after the winter season if they still haven’t been able to sell, he said. ‘They can’t afford to hold it.’”
“Prices have fallen steeply: according to the Florida Association of Realtors, the median price of an existing home sale was $258,600, down 12 percent from a year earlier.”
“Economist Hank Fishkind and Timmerman said the market will be toughest for the mid-range homes that were heavily speculated by investors as prices rose sharply in 2004 and 2005. ‘It’s the standard homes in Cape Coral and Fort Myers that have seen rapid escalation that are the most likely,’ Fishkind said. ‘I think that is the place where we’ll see the most falloff in price.’”
“Timmerman said the sales are weak in the middle — which makes up most of the unsold inventory of 14,000 houses.”
From the Ledger. “Two years ago, Polk’s County’s real estate market was a seller’s dream. Then along came 2006. ‘I think what happened was that we underestimated the number of speculators in the market,’ said Dean Saunders,broker in Lakeland.”
“Speculators, buyers who have no intention of living in a home or keeping a property for a substantial amount of time, purchased property throughout the state, causing a frenzy in both commercial and residential real estate circles.”
“It meant skyrocketing prices and overbuilding of properties. For the market to make a full rebound, home inventories need to be cleared out, experts say. ‘It is all going to be dependant on the absorption rate,’ said Grant Thrall, a professor of geography at University of Florida, referring to the existing home inventories in Polk. ‘There’s not a lot of new construction going on.’”
‘One of the region’s largest heating and cooling businesses has bought a competitor, and the downturn in Southwest Florida’s construction industry played a major role in the deal. With the region’s home-building industry in a slump, Consolidated’s owner decided it was time to sell, Marshall said. ‘The construction market is down, as you know,’ he added.’
‘Sellers are foreclosing on a 141-acre property owned by Jacques Cloutier, the head of one of the region’s oldest and most prolific home builders, J&J Homes.’
‘Once a month volunteers Lou and Ruth Guberman of Sarasota, distribute food to eligible people. ‘At first we had a lot of older people,’ said Ruth Guberman. ‘Now it’s families coming in who have been affected by the housing slump. People who build houses are just out of work.’ ‘
‘Eddy Calero put down roots in South Miami-Dade three years ago, lured by a still reasonable real estate market and the prospect of swapping Kendall’s stop-and-go traffic for a less harried commute through pastoral farmland. But he didn’t count on the sluggish tractors that sometimes clog the only road from his subdivision to the turnpike. Nor did he factor in the dust, which cast a cloud over a nephew’s recent birthday party at a neighborhood park.’
‘Aiming her county-issued Ford sedan north along a rural stretch of road, Boellard slows down to point out a pair of roadside signs: The first announces ‘Hay for Sale.’ The second advertises ‘Custom Built Houses’ coming soon. The full-color poster depicts a Spanish-style manse complete with barrel-tiled turrets. ‘Where else but here are you going to see something like that?’ Boellard said. ‘And I bet as soon as those new people come in, some of them are going to start complaining.’
Already the soup lines are forming in Florida!
Let them eat grits.
Hey! I like grits! Specially with cane syrup.
Roidy
I do, too, but I prefer just salt and butter. The phrase is intended to be a parody of Rousseau’s “Let them eat cake,” attributed to Marie Antoinette.
She never said that. Neither Rousseau. It was just propaganda orchestrated by Maurras and Danton, fine bandits like Benjamin Franklin. Yeah Ben was a bandit in the printing businees like the FED. The father of all bubbles John Law, Louis XV and Ben Franklin.
From Wikipedia:
“Let them eat cake!” (” qu’ils mangent de la brioche.”) — Marie Antoinette [M or A]
* The original quote comes from Jean-Jacques Rousseau’s “Confessions”: “Finally, I recalled the make-shift of a great princess who was told that the peasants had no bread and who replied: ‘Let them eat brioche’. ” (”Je me rappelai le pis-aller d’une grande princesse à qui l’on disait que les paysans n’avaient pas de pain, et qui répondit, qu’ils mangent de la brioche. “). He could not have been speaking of Marie-Antoinette, as she was 10 when he wrote this, and not yet born at the time of the incident. It has been speculated that he was actually referring to Maria Theresa of Spain or various other aristocrats, though no evidence has ever been offered for this; most likely it was his own invention.
That’s why I said “attributed” to Marie Antoinette. Your source clearly is a different one.
Let them eat sugar cane!
THE PLANT. It really tough to chew and irritating for the intestine.
You’re not supposed to swallow the cane. Chew the sweet juice out and spit the intestine-irritating crud onto the granite countertop.
“A lot of investors who own houses and are trying to get rid of them will likely decide to cut prices deeply after the winter season if they still haven’t been able to sell, he said. ‘They can’t afford to hold it.’”
Gee… this will only happen in Florida, California, Arizona, Nevada, DC… Feeding the alligators can get painfull.
That might sting the mortgage companies just a little.
People who build houses are just out of work.’ ‘ this is the sad part of a bubble.
I have no pity for flippers, but people who simply chased work… They I can feel sorry for. Sadly, its a population that is going to grow quickly all over the nation.
Neil
But home prices will only go down if the economy sours!
IMO, we have too many resources tied up in the RE business. There are other things that can be built besides houses.
Sure, but all those “other things” are outsourced. Let’s face it, without housing production, were just left with a consumption society. Quite bleak, wouldn’t you say?
In what way is housing not part of the “consumption society”? Houses don’t produce anything, and they depreciate and require maintenance just like anything else.
The underlying land might appreciate, but this is only a function of what the market will bear - putting a house on it is not a inherently productive in the way that, say, an oil pump or a farm is.
“Sure, but all those “other things” are outsourced.”
we’re at record exports. we’ll all know that our manufacturing sector is in decline, but we still make some stuff. it’s not all been outsourced.
Debt is our number one export.
I believe JOBS is our number one export…
Not true. For every middle class 60k/yr job we export gets replaced with 3 jobs at Walmart with a combined wage of $10/hr.
But the Walmart guys are selling stuff made in China by workers who feel lucky if they’re getting $10/12 hour day.
Well your export of debt seems to work wonderfully!
The rest of the universe is soo stupid! Stupid arabs, stupid russians, stupid africans, stupid south americans, stupid europeans, stupid asiatics, stupid canadians ! Stupid stupid stupid!
Hey do you sell some franchises on how to get in this business of infinite credit Captain Credit ? Where do I send my request for a franchise ? The FED ?
I would like to buy one. STUPID FOREIGNERS ULTRA STUPID FOREIGNERS!
Just think of the Chineses as our slaves.
Yup and you can’t export houses unlike steel, cars, washing machines etc. What now boys and girls? Data?
Exactly.
I always wanted a little place in FLA to get away from these N.E. winters, but this years warm winter makes me say why. I know it won’t last but the prices are falling fast in the sunshine state. I was going to buy a snowblower this year but again why.
Hey, with the way the ice-caps are melting, you may want to start thinking of investing in Greenland. The polar bears should be extinct by then, so no worries.
1970’s = Global Cooling…we’re all going to freeze to death!
2000’s = Global Warming…we’re going to die because everything melts.
2030’s = Global Moderation…we’ll all be fine.
1968= Ehrlich’s Population Bomb…..we’re all going to starve.
No weaker economies will starve. The quality of life in developed nations will decline. Their will be continued pressure on animal and plant life. There will be greater danger of war over less space for people to live and fewer recources.
I’d say he was early but eventually correct.
Like it has in Japan……?
“I’d say he was early but eventually correct.”
I believe Malthus had priority on that subject. So far both he and Ehrlich appear to be wrong, but as readers on this blog know, bubbles can last much longer than one would guess…
http://en.wikipedia.org/wiki/Thomas_Malthus
Have to agree, it’s our arrogance that it hasn’t happened yet…We have mostly over fished most oceans, and paved over more farmland than in history. To say we are fine is to not acknowledge history…One blight on our mono-culture grain: ,corn, wheat, soybean, would cause starvation in a huge population globally…
….Ok back to biz….
See Jim Stacks’ chart lately? it was a mirror until recently..where to next?
http://investech.com/
We could be forming a head and shoulders pattern on this chart. If it does I guess we all know which way it will break.
Ehrlich was another idiot who played the “static analysis” game. Truly an idiot.
“Redbrick expects the discount to grow to 40 percent because developers lose money every day they own a property.”
So do they have cash flow at a 40% discount ?
They go into that in the article:
‘Lee and Skinner use a simple formula to calculate the overall return, or yield, of a rental property: rent divided by two divided by price. Lee says small landlords often overestimate rental income because they underestimate costs like maintenance, management and vacancies.’
This formula works out to about 120 times one months rent (to match T-Bills at 5%). The price-to-rent multiple is still far, far above that in DC, which they are characterizing as “wildly overbuilt.” If these guys are right, it is going to get very ugly indeed.
So ugly, I should probably consider a firearm. Nah, maybe just a bigger dog.
Gee, I have been using 120 x rent for years. Nice to see confirmation that I wasn’t the only goofy bastard using that as my measurement.
You have houses listed for $400,000-$500,000+ on the MLS willing to rent for $2000-$2500 a month . As they say in Chinese, “Sumtin vewy fishy here.”
In coastal Calif, you get houses that list for $700K to $900K renting for the same $2000 to $2500 a month. How that for negative cash flow?
and in Dallas you get people trying to get 2200/mo rent for a house that would sell for 250K max. Of course they’re not getting it . . .
Similar in Philly. New 400K condos owners trying to get $1400/month rent.
I love how the RE bulls still think that this isn’t a national bubble.
ditto for Seattle area
Its scary how national it is…
How many jobs will be lost in 2007? Since much of this boom was done by contractors… when will it show up in unemployment statistics?
Cest la vie.
Got popcorn?
Neil
So ugly, I should probably consider a firearm. Nah, maybe just a bigger dog.
I’ve got both.
Shhh, don’t let this formula get out. If every wannabe real estate investor starts using this formula(or any formula which calulates a profitable rate of return) then I won’t be able to get top dollar for my 4-family… which I bought using a formula similar to this.
If foolish investors start to realize that appreciation in investment properties is not a long-term viable method of investing and negative cash-flow is not the norm, well needless to say there won’t be a Greater Fool for me to sell out to.
Just kidding, I’m not selling anytime soon. I enjoy paying almost nothing to live and work in Massachusetts, banking more money a month than many people take home. I can’t wait for the eventual meltdown of all the GF’s and FB’s who live in $500K+ homes, pretending they can actually afford that kind of lifestyle. Of course, I could just be jealous…
The south shore of Tampa has about two years of inventory on hand. Nothing is selling. You can rent a 4/2/2 for less then a grand.
Yard sales are everywhere. I rent a home that was built in 2001 for 114k and sold in 06 for 204k. Many vacant homes are starting to look neglected.
People advertise properties here in SWFL as investments and show their should rent for numbers generally 20-25% higher than what they would actually rent for. There are just so many brand new homes for rent at 1000 a month its amazing. With about 450 of that going for Tax and ins per month that only leaves 550 to service debt and everything else. Most of these properties were sold between 200,000 and 300,000. Looks like the state should have put up alot more “please dont feed the alligators signs”
How can you have a 2 year inventory on hand when nothing is selling??? Another meaningless figure. If nothing is selling, every listing will just sit forever.
I am waiting for the ripple effect to reach NE FL. Once the Naples / Miami markets soften up and get less expensive, then the prices begin to unwind further up the coast. I believe it will be the exact opposite of how the numbers were inflated during the bubble. gordo nyc
Agreed Gordo. What is the point of paying 300 - 400k to live in NE FL when you can buy in Central or South FL for less?
I aplogize for the off topic post but, does anyone recommend a certain cell phone+service provider deal? Circumstances just dictated that i am now in the market for 2 phones.
I don’t know what plan I’m on (wife set it up), but we have Cingular and the plan seems at least as good if not better than almost everyone we know. Free calls all weekend, after 7 pm on weeknights, free calls to each other. We never use up all the minutes and it runs about $80/mo for the two. Compared to friends, we get more “free” time and more total minutes for the same price they are paying.
do not use sprint! the service at least in these parts is god awful
Yes, I have heard many people complain about Sprint as well. Of course, if it was up to me, we would all get rid of these damn cell phones. Just one more thing to worry about/stress you out, and one more bill to pay. Looking into the future I shudder when I think of all the tech crap we will all need to carry around just in order to keep our jobs.
You clearly don’t have daughters. Since they are always able to contact us with any problems on the road (they all drive) its the best insurance policy on earth.
Knowing they always have a chance to get help, quickly, anywhere, is one of the best gifts of technology I’ve ever received.
Jag, when your parents’ sisters (your aunts) were growing up, they didn’t have cell phones. Ask them how they survived.
Cell phones, blackberries, etc. have enslaved those who embrace them. Now your boss can get roughly 14 hours of work from you each day, and pay you for just eight.
We’ve had Sprint for at least 5 years and have had pretty good service, and the prices aren’t too bad for the family plan. As for the signal strength, of course it depends on where you live, but we get a reasonable signal even “out in the weeds” where we live on weekends.
At the dentist’s office yesterday, I noticed that a recent issue of Consumer Reports (Jan 07, I think) compared popular national cell phone plans. I would check out their website and buy a one month subscription (if you can do that) or trek down to your local library or bookstore (although the Feb 2007 issue is already probably on bookstore shelves). I didn’t read the article, though.
“‘People were saying the average homes in this neighborhood would be $1 million-plus,..”
Who was saying this? Your realtor? Other fools that bought in at a higher price last year and are trying to convince themselves it will all be okay eventually? Since this debacle is only getting started, this buyer has grossly over paid, regardless of what others are telling him.
I’m with you CA Guy. When I read that I thought, “What were they thinking?” I have friends in Orlando that have lived there for over 20 years and they tell me that housing prices are absolutely STUPID. I don’t know what neighborhood the Butlers live in, but I agree that they have grossly over paid. They are just trying to make themselves feel better by buying the “neighborhood would be $1 million-plus” story.
BayQT~
BayQT: I have never been to FL, but from everything I have read here it appears that they have lost everything that was appealing. Of course they still have their natural wonders like the beach and ocean, but as far as quality of life? High housing costs, high taxes, high insurance, etc. That is what annoys me so much about this bubble. While everyone is jumping for joy about how much their house is “worth”, they are too blind to see the eventual negative outcomes that follow.
From what I recall, you are in the east bay/tri-valley? What are you predicting for its eventual outcome? I am honestly perplexed as to who will buy all the units still under construction there. I think we’ll see a good smack down before this is over.
it appears that they have lost everything that was appealing.
So True. I have lived here my whole adult life after growing up in NY. Why? Because in NY it was so expensive to buy a home and Florida was so cheap. Also there was a small town feel that I liked. Traffic has piled up, housing has shot up and as far as alll those new jobs being created. Ha. Within the past year they opened up a wal-mart, lowes and home depot within 2 miles of my home. Wonder how many of those “new jobs” could support a family and a 2000 a month mortgage.
Exactly and now a lot of companies are moving or planning to move out of Florida.
Even though you have never been here, you summed it up exactly. I expect this state to start exporting people en masse during coming years.
But the upside is, if people leave and others stay away, there’s an outside chance we could return to the way it used to be, or close to it. Of course, we’d have to get a good bulldozer derby going to handle all the empty RE. Whew! There could be some real termite food lying around shortly.
I am waiting for the next big oil country crisis sending oil through the roof, and people in FLA not able to afford A/C (or rolling blackouts from fuel shortages). That will be the only thing to return Florida back to an earlier state. People I meet here are always shocked to hear that I grew up in a house without A/C, and say they could be here without it.
CA guy
You make an interesting point. Going on the assumption that one doesn’t want to live in the boonies, it was once possible to move someplace in the US where you were not financially strangled by high taxes, insurance, etc. I am/was seriously thinking of moving out of California because, even though I don’t need the money, I’m sick of paying out for the privilege of living here. It was once a privilege (30 years ago) but that’s now changed. Drastically. California is over-populated, over-polluted, in debt to the gills and the state is continually slipping it’s hand into my wallet.
Of course, the cost of owning in California is totally ridiculous and the cost of renting is climbing. Between the fed tax and the state tax and the sales tax, I feel like I’m being financially sucker punched every year.
So - where is there a place in the US where someone who has a healthy bank account, a healthy portfolio (and worked hard to get both) and prefers city living, or at least living in a place where you don’t have to drive 30 miles to get to a supermarket, hospital or even a movie house, go to live?
I’m getting up there in age (near 70) so I don’t think I could take cold weather and having spent 40 years in the UK, wet weather doesn’t appeal either.
Because the US is such an amazing country geographically speaking, the answer once was (possibly but I don’t know from experience) Florida. It seems a lot of old farts once retired there because of the weather but from what I read on this blog, it’s now over-populated and the real estate taxes (even though one doesn’t pay state taxes) is pretty high. Added to that, it appears the insurance companies are reaming Floridians a new a**hole because of the hurricane problems.
I’ve always owned property until a few years ago but my feelings are that, even if I was a few years younger, owning property is NOT the way to go at the moment. It seems to me that government (both Federal and State) have realized that if they can get as many people as possible to OWN a house, even though they own nothing until it’s paid for, they have a stable cash cow to financially milk on a “As Needed” basis. And, of course, this boom via free money which I think was Federal Government sponsored on purpose, is linked to future Social Security benefits (or lack of) and property owners having to take out a reverse mortgage to pay for expensive drugs and expensive operations as they move into their later years. Of course ‘means testing’ is already planned. Social Security CANNOT afford to pay all of these costs as people live longer with the serious health issues which go along with living longer and obesity which is an epidemic in the US.
Might be interesting if Ben dedicated a section to suggestions as to where, in the USA, it was still nice to live without getting f*cked by taxes and insurance and where renting (or owning) was still reasonably priced. Taking into consideration location, weather, facilities, etc.
Wow, great statement, Mike. Sounds like we are looking for the same locale, although I am close to 40 years your junior. It is an interesting topic, and I think palmetto has a valid point. Once this federally sponsored bubble is finished imploding, once attrative areas may again have a window of opportunity for folks like us. I don’t know about the boomers, but when I start hitting retirement age I want to be reducing expenses. And I cannot fathom the concept of living in snow, so I would be limited in mobility. You are correct, we have so many problems looming ahead, and no one wants to address them objectively. I don’t really know where I’m going with this, so I will just wrap up by saying I hope this implosion finally makes people and government wake up to reality.
Great, heartfelt post, Mike. And good answer, CA guy. I think there will be a window of opportunity once the smoke clears. I once thought CA was desirbable, but with the Governator’s recent pronouncement of “free health care for everyone”, I think CA is pretty close to toast, because there ain’t no free and the Governator intends to gift illegal aliens (who are already getting free health care anyway). As to Florida, there are a couple of places left, believe it or not, where the insurance companies aren’t administering a reaming and taxes are low. Palatka, Putnam County on the St. John’s river is one of them. I’m going up there shortly to check it out. There was a group of people who fled South Florida ahead of the bust who find it quite comfortable and amazingly inexpensive. A little backward, maybe, but not too bad. I’ve also heard the Carolinas are affordable and temperate. Forget Georgia, is what I’ve recently heard, but I’m not sure of that.
If you are willing to purchase an older home that was built with the Florida weather in mind, you can also cut down on your energy costs. There’s also some great springs in the northern part of Florida, which are great for cooling off and can also be a great water source if the s**t really hits the fan in the USofA.
I’ll get in trouble for this but……
Try Austin, TX - you can buy a nice 4 bedroom house for about $250K. The drive times are very reasonable (very little real traffic) and if you want to get out of town, you have the hill country just west. There is a ton of great stuff to do in town: over 20 miles of connected running trails, rowing on town lake, great culture, etc… I could go on and on but you may as well visit. The property taxes are murder but there is no state income tax. The summers (May 15th - Sept 15) are boiling hot but you don’t have to shovel heat.
The only negative thing is that you’re from CA. Right now, Californians are like Okies in the Grapes of Wrath: a large group of people swarming the place and running it into the ground.
My friend is moving from CA to Austin. He is selling his home here. I guess Dell has a plant there. I should move also.
We live in east Texas. The summers are hot, of course, but there isn’t any state income tax and for some reason our particular region doesn’t have the ridiculous property taxes that are apparently common in some other parts of the state. A little over 1% of the house value per year for school, county, and hospital taxes, most of it for schools (which we haven’t and won’t use, but that’s the way it goes). And the house prices haven’t gone up that much in the last 8 years since we have lived there, as far as I can tell.
Unfortunately, if you are interested in cultural activities other than the county fair and the like, you’re out of luck. But it is only 75 miles to Dallas, for what that’s worth.
BayQT, while I agree with most of the points on this blog, I have to defend blanket anti-Florida statements like yours. Perhaps what you say is true for new residents or part timers, but for my family that has been here for a while, things are fine. Our homeowners insurance has probably gone up 50% in the past few years, but our mortgage payment and taxes are the same. I’m still not paying state income taxes. I have to send my kids to private school because my local elementary school is crappy, but it was crappy 10 years ago before the bubble. Traffic, at least in Southeast Palm Beach county, is nothing compared to other places we’ve lived like Northern Virginia, New Jersey, and Boston. I can be at the beach in 10 minutes by car or bicycle. Most of us full-timers still love it here. For my friends, we couldn’t imagine living anywhere else. We don’t care if our house values go up or down, as long as it stays warm and sunny (it does), the ocean stays blue-green and warm (it does), and there’s about 20 great things going on every weekend (there is).
“Perhaps what you say is true for new residents or part timers, but for my family that has been here for a while, things are fine.”
The exact same can be said for CA. My family has been here a long time, some came as early as the late 1880s. Things are great for my parents and older generations, but this bubble has really been a negative for the generations that follow, whether natives or not. Now, unless you are REALLY well paid, anyone under the age of 40 is going to have to do one of two things if they want a home of their own: take on a suicide loan, or move to a crappy location that is probably an hour from work and any decent culture. It is not a positive trend, long term.
Also, I don’t think either of us were trying to bash FL, in fact I have always thought it is a place I would like to move to. I enjoy just about anywhere that has warm breezes and nice water.
Sorry, guess I’m sensitive because so many here assume we must all be living 50 miles from nowhere, surrounded by empty houses, being attacked by huge bugs, unable to eat because our home expenses are so high. We live in a beautiful 20 year old neighborhood where 99% of the homes are occupied by nice families. My mortgage, taxes and insurance are still less than 20% of our income, and that’s the case for almost all of my friends. Yeah, we’re worried that our kids will not be able to affod to live near us, but that’s a long way off. We don’t know how or why people were paying the prices they did, and hope they go down. Most of the projects started here that seemed illogical, like condos in crappy locations for $500K, have been scrapped, so things seem to be getting better.
Thank you CA Guy. SFC, don’t get it confused. I wasn’t making a blanket statement, just repeating what my friends in *Orlando* mentioned maybe a year ago. It does seem as if you are a wee bit too sensitive,and there are always exceptions to every rule. Plus, while you and your family may be fine, there are many, many people there (as in other parts of the country) who are not. I don’t think I need to explain why these people are not *ok*. No bashing here, just the facts as they have been presented in articles, anecdotes, etc.
Take a deep breath, ratchet it down a little…we’re not out to get you or Florida. The facts of the bubble speaks for itself.
BayQT~
Yes, I am in the Tri-Valley (Dublin) area and I’ve been watching changes occurring just like clockwork. There are new units going up right at the Dublin BART station (Elan by D. R. Horton) that I started a spreadsheet on in Feb. ‘06, and they’ve so far taken a $100k hit on several of their models. Townhouses on Central Pkwy that, in 2002, were going for $400k+ (ridiculous even THEN) rose to $670k+….now they are at $509k. That price has not budged for several months and I’m sure it’s because it would absolutely KILL the owner to admit that the POS is not worth that in this market.
A conversion at Amador Valley Blvd off Doherty (formerly Cross Creek, now Village Park or something like that) started at $440k in April ‘05, quickly rose to the high $500s ($560/570k), now the quick “zestimate” is showing at $383k).
I have a LOT more info that are real eye-openers but it’s all at home (I’m at work now). I’ll have to post on another day. But you get the drift. My prediction based on my local observations is that there are going to be a LOT of unhappy people around here before the fat lady sings. 2007 will be bad.
BayQT~
This type of thinking really shows that most people assume there are many more people doing much better than them. I remember when I first started looking at prices and thinking “WTF, who’s earning this kind of money”, and then realizing I’m in the top 10% after looking at census figures for income etc, it was pretty obvious this whole thing was just a cheap credit bubble.
“The Butlers are purchasing a four-bedroom, 3,700-square-foot house in Orlando built by Ashton Woods USA LLC for $545,000.”
Can someone tell me who in the hell needs 3700ft2????
right on. To me 1500 sq feet seems big and I have a wife and kid. People are too obsessed with filling huge amounts of space with junk. You don’t have to build a mini-world on your property.
Right on, NH. For a family of 3-4, I would not want more than 15-1600 sf. More to clean, more to heat/cool as pointed out below, more crap to buy. And we continually see middle class couples buying these places. It is absolutely insane.
The folks who think they need a media room, wine cellar, a kitchen that you can feed a football team in (with huge offensive line), a great room and a 3- car garage for the Hummer and boat.
Wait until they have to heat/air condition that place.
Yeah…that’s the ticket. (sarcasm off)
BayQT~
Given how poorly Michigan and Ohio State did in the bowl games, I’m not sure that the huge offensive line is a good idea. The speed of the USC and Florida defenses put those Big Ten behemoths to shame.
depends on how big your grow operation is, they raided two in my area. Mcmansions on 5 acre lots, bought by koreons.
3700sq ft for a large (and i mean overweight) family
they may need all that space to fit their overinflated ego’s and
sense of entitlement under one roof
i would hate to pay that ac/heat bill
Can someone tell me who in the hell needs 3700ft2????
1850 square feet per level. For a 4-bedroom house, it sounds modest in size for our area.
I love a big house, and depending where you live and how smartly it’s built, it doesn’t have to be expensive to heat and cool. We have a large extended family over on holidays, and on a daily basis we use our large kitchen for cooking and doing laundry. I do most cooking from scratch, and like to garden and bring things in for canning.
italics off.
Arwen U., I’m with you on this one. I am a long term bubble believer and agree with most issues on this blog except this one (it’s come up before). I want a big house! Minimum 3200 ft2, 3 car garage…Why:
- a bedroom for each kid (1 boy, 1 girl), + the Master
- a bath for each of the above bedrooms
- a guest room
- a game room (for the above kids)
- a study (for ME)
- a big kitchen needed to cook and entertain the people hanging out in my family room & living/billards room)
- two of the garage stalls for cars, the other is needed for my workshop & storage area
- I want an exercise area somewhere.
I can always downsize in the future, but my wife wants the big house when we are old to encourage frequent visits from kids & grandkids. My planned house HAS been downsized recently. My wife had me nix the media room I was hoping for, she said it was a waste of money and not needed!
The house I sold in 2005 comprised just short of 4000 sq.ft.
(that includes the 1 1/2 car garage).
No media room, but we did have a little wine cellar to accommodate some family members who make their own wine. Our extended family also made good use of the two kitchens. (Italian - lots of homemade pasta and bread going on!)
The house was situated on two acres, so we weren’t cheek-to-jowl with neighboring homes.
Granted, it was a lot of house to maintain, and my next residence will be smaller. But I do miss all that ground. And the different critters that used to populate the back yard. From time to time we even had the big herons (blue and white) hang out at the pond in the back.
It’s probably safe to say that the readers of this blog derive more out of a home-owning experience than merely keeping up with the Joneses, and in so doing, HELOC’ing oneself into oblivion.
I’ve got my house picked out, but it’s meant to accommodate more than one family.
http://www.houseplans.com/plan_details.asp?id=17400&st=13
That’s a good one, Arwen!
Maybe I don’t need to buy a new home after all…could I rent out one of your garages?
I saw an awesome house like that — speculator-owned — that I figured I might be able to buy if prices fell by half. But I would never be able to afford the utilities or housekeeping. Or the grand parties. Or a new car, ever.
Reminds me of the current, funny “Up to my eyeballs in debt” TV commercial by a lender.
Yeah, and with a 125% loan to value ARM you can hav a moat put in. I guess the keep is where you go in 2 - 5 years after you’re loan resets.
In Florida, square footage is often listed as “living” versus “under air”. “Living” square footage can include anything, like the garage and the porch.
Anybody have any thoughts on the Atlanta area market?
if you’re white you have limited access 11 to 2 on the outer belt dial
- kindy tricky
i’m in Atlanta, inside the perimeter. There was actually an article in today’s wall street journal about condo and commercial building in the city. Now, it’s hard to come across data, but anectdotally it is apparent to me that true apples to apples prices are down 5-10% from 05. And the trend, like most markets, is getting worse, with lots of properties on the market. In my opinion, that inventory is overly tilted towards condo’s and mcmansions.
The suburbs of Washington DC like Leesburg going into Charlestown,WV, Martinsburg, WV, Emittyburg, MD would be bleeding soon. Builders are still fooling people in these areas with prices in the range between $600K to $400K depending on the area. And on top of these prices they are charging extra for options. There is a very big oversupply, say for example Martinsburg area has all big builders like TOLL, Centex, HOvnanian etc and some small ones like Ryan, Dan Ryan, Drees etc. and all have hundreds of houses to be built. TOLL is planning to build 900 houses and I’m not sure who is buying them. They don’t have even a single house build yet but they have sold a lot on paper.
I nearly drove off the road when approaching the DC area northbound on 95 (I think). I’ve never in my life seen so many new stucco boxes….. It seemed like there were thousands and it went on for miles and miles. And I noticed that there were no indications of them being occupied.
Stucco in the DC area? Wow, I’ve never seen that, except in a few cases where it’s been slapped on older wooden townhouses on Capitol Hill or Old Town (probably done in the 50’s or 60’s?), and maybe on a few houses of that vintage in Falls Church or North Arlington.
Anyone have any intel where exactly these little slices of Florida/Cali are going up in the DC exurbs?
ehhh… stucco box used metaphorically.
OK, I get it.
For me - the analogue I see to the stucco box in the DC area is the new townhouse development — sometimes admittedly nice looking and even good sized brick townhouses — but with tiny or zero yards (where the parking is instead) and no basements (but 4 stories high).
Garage front townhouses (with a measly one car garage) look lousy — the ones with garage in the rear have, of course, no back yard — and you’re probably not allowed to grill on any small back porch you might have above that driveway, garage.
I live in a built in 1824 townhouse - with a 60 foot deep backyard, a basement, and street parking. It’s a hell of an effort to keep it up, but at least it’s got some personality.
no stucco here
try s of orlando- looks like a mirage
My last stucco (over block) house was in the ’70s. While looking for a new (read: lower-tax) home outside Florida, I was surprised to learn about a product/process called dryvit (sp?). Apparently it is a fake stucco and if not sealed perfectly can cause all sorts of problems with trapped moisture and ensuing rot. Though real estate agents are routinely bashed here, ours saved us from considering one such house that, otherwise, would have been very appealing. Not sure why real stucco is such a problem to use, so would assume the dryvit is cheaper to produce or easier to apply.
e Leesburg going into Charlestown,WV, Martinsburg, WV, Emittyburg, MD would be bleeding soon. Builders are still fooling people in these areas with prices in the range between $600K to $400K depending on the area.
Are people really still buying at those prices? OK, probably so. Leesburg is overrun with townhouses spreading like a fungus over the landscape. Out towards Charlestown are some really awful looking, half-thought small development, with big (cheap=looking) houses plunked seeming at random in a field! I was driving through there last month and just horrified that there would actually be buyers for some of those sad boxes next to the highway.
Emittyburg, MD — I take it you mean Emmitsburg. What’s going on up there? Seems too far to really boom, but then again… I’d have thought that about Charlestown as well.
As some new developments start going up this spring, I’ll be very interested to see how prices are looking compared to new-home prices last year. A friend of mine is looking in Frederick County, and he has high hopes that things will be cheaper. I’m not so sure yet. I told him he might have to wait till a third of the place is done, and none have sold, before he can get good discounts.
Then again, in Hagerstown… more on that debacle in another post… nice schadenfreude anecdote coming, promise!
The justification builders are giving is that DC prices are still high and a lot of people buy in WV and commute to DC. There is an oversupply of fools who cannot wait another six months to see if DC would have similar prices and that 80miles of commute with traffic on 270 and 495. I saw one community near Martinsburg which has 70% of the residents commuting to DC. And builders take advantage of this situation by not telling the truth. A buyer can get a decent 4000sq. feet house here in close to $450K whereas in DC it would be double the price. Local people in WV do not make as much money and once the buyer traffic from DC is stopped, these houses would just sit forever.
Charlestown is selling SFHs in the range of 600K to 700K. WHat stupid fools who work in IT are buying. I don’t want to single out the people but you understand when I say IT. They still work in Ashburn or Leesburg. Emmitsburg, MD has a lot of new townhomes and SFHs in the price range of 450K to 600K. Now I know why 270 is blocked even after reaching Frederick.
Many people don’t have a very high standard for their lifestyle. They think, living on top of each other, with no parking for themselves, guests, and parking for party friends, is just fine. They don’t mind paying top dollar for this lifestyle. I, on the other hand, see the real value of a dollar spent. I would not waste my money to live like that.
Here on the ground in Polk County:
As I have posted before, we have an UNREAL amount of inventory and the blood is in the water here in this agri-community. We are 75 miles from the beach but that didn’t stop the specuvestors from coming in and bidding up housing so high that the median $ 33,000 / year salary can’t pay the prices without a Twisted ARM.
My sister had a modest 3/2 2200 sq. ft. in a good neighborhood in Winter Haven that she sold for $ 93,000 in 2000. According to the tax records this house has been bought and sold 4 times since and is now on the market as a FSBO Rent / Buy / Owner Finance / Whatever for $ 280,000…
Decent housing is now at about a 7X multiple of the median household income. And I do mean decent….not a “crack shack by the railroad track”….Crack Shacks are goin for $ 80,000 and up and believe me you wouldn’t let your dog sleep in there…many were bought at Tax Sales and given a quickie roof/ paint job and put back out on the market to help fund the retirement some out of state flipper.
We have trailers and manufactured houses on the MLS for $ 100K +. Un friggin’ real. I had never heard of or seen a $ 100K trailer until recently.
There are some people down here who are gonna get burned at the stake…not in 2009 or 2008 but in 2007…
Bandit RE signs scream desperation at EVERY major intersection in the county. Hand pencilled and flopping in the wind, they offer all sorts of arrangements in order to dump homes on the next Greater Fool.
We are completely saturated with houses here in Polk County. The Lakeland Ledger has barely scratched the surface of the problem and most locals don’t feel that The Ledger is reporting the depth of this situation or the certain, oncoming disaster.
I am renting and finally have enough money to start buying some of the cast-away toys that I am seeing on the lawns of the “HELOC’ed to the hilt” and “Broken ARM’ed borrowers”….check out the Orlando and Tampa Craigslist…there are some GREAT deals just starting to pop up on boats, big trucks and Harleys…I have been looking for a boat for the last two years and right now I am seeing more desperate toy sellers than I have EVER seen in my 25yrs living here..I am keepin’ my powder dry and will prolly pull the trigger on a nice center console in April or May after the taxes are overdue.
This Crash is developing and the avalanche is just starting to roll -
You mean the boomers really aren’t coming?
A 1000 a day were going to Florida they said a 1000 a day.
I think this many ARE coming to Florida every year, as evidenced by the massive overpopulation of Tampa, which didn’t exist ten years ago. It’s just that the people coming are young, pretentious, pushy Yuppies and Yuppie wannabes. They’ve swarmed over South Tampa and turned it into a nightmare. We probably have more lawyers in South Tampa than in most genuinely large cities: something like eighty or ninety pages worth in the Yellow pages. All I can figure is that they represent crime syndicates and drug lords, and corporate crooks of all kinds; oh, yes, at the sixty or seventy tousand locals arrested every year in hideous Tampa. And the number of doctors is equally astounding. Plastic surgery facilities seem to be popping up everywhere.
These look-at-me types all drive luxury cars (many leased), and pay fortunes for nothing houses that they pretend are elegant, eat at the same restaurants, go to the Bucs’ games faithfully, look alike, dress alike, work-out endlessly (because, after all, everyone is looking at them), and walk around talking loudly on cell phones about their big deals. An apartment complex near me put out brochures (home-printed) claiming to be upscale and trendy, and immediatly filled up, then instantly converted to condos (which evidently was the plan all along and a way to get around the building codes concerning new condos). In Hyde Park, three bedroom houses and townhouses rent for three or four thousand a month (or more) and there is no end to the people lining up to grab them. I don’t see any evidence of a housing crash in South Tampa, though there are lots of townhouses and condos for sale. Prices are still in outer space, and more are being built. I just passed a site advertising coming “luxury” townhouses starting in the low 800s, and this was on a crummy street with lots of traffic. They’re still going up everywhere, and the signs in front of these horrible developments always say “only one left,” or “50% sold,” or some such. When you see the people who are buying them, they’re all in the 20s or earth 30s, and they don’t look like they’re hurting or struggling.
Your posts on the south Tampa scene and its population of posers are, as always, extremely entertaining. Did you read the one about the clowns arrested at Whiskey Park on New Year’s Eve? One guy actually said “I make $300,000 and they’re going to tell me I’m resisting arrest?”
http://www.stpetersburgtimes.com/2007/01/02/Tampabay/Out_of_jail__arrestee.shtml
One thing I’ve noticed in the last two or three years is that the traffic has noticeably worsened on Bayshore, MacDill, and Westshore. The intersection of Kennedy and South Dale Mabry at 5:00 p.m. on a weekday now approximates Los Angeles. It goes without saying that the new buildings–townhouses and hideous McMansions–add nothing to the area.
No, I missed the New Year’s idiocy. These people are simply beyond belief. The Sweetbay on Swann never ceases to amaze me, as all the self-defined beautiful people love to strut there in the smallest outfits possible, regardless of the weather–especially if they’ve just come from one of the many area gyms and gotten all pumped up. Have you noticed that nearly all the men in Hyde Park shave their legs to accentuate the muscles, even if they don’t have any discernable muscles?
The traffic is amazing, isn’t it? And this is Tampa, not Los Angeles, but the locals seem to think it’s as good or better than Beverly Hills. I hear them bragging, “I live in SOUTH Tampa,” and I always want to burst out laughing.
LOL !
I can’t tell you the arguements that I have engaged myself in down here over the notion that “The Boomers Are Coming” and are gonna pay everybody 3X what they paid for their house.
Right now is “premium boomer visiting time” and I can tell you that from the morning commute to work that out-of-state traffic is way down as compared to previous seasons…and I mean WAY DOWN…..seems like The Snowbirds have kept their nests “up nawth” this year…
The desperation in the air is palpable. And it’s not “just me” who feels that way. I was talking with several co-workers yesterday and they shared the same observations.
All we need is the slightest exogenous event to start The Crash…we are at a definite tipping point in this country.
I hope that increasing the Minimum Wage doesn’t contribute much; but I am afraid that it will.
I think babyboomers are going to have/want to keep working much longer than previous generations, and there won’t be a large migration.
In the early days of this New Year, we got an Official Pronouncement from our governor. (Okay, she was making a speech.) In it, she said that the baby boomers will be coming to AZ for retirement. En masse. So, take that, Florida. They’ll be coming here. Neener-neener.
A higher minimum wage will simply put some poor minority kid out of work, hardly the stuff of economic depression (but for the poor kid).
“…out-of-state traffic is way down as compared to previous seasons…and I mean WAY DOWN…”
Les — I am seeing the same thing in central Florida, particularly at or near the beach. What baffles me is that it seems like there are significantly fewer winter renters, who virtually all are boomers or older. But I can’t figure out why this is so, since winter rents, at least on our east coast, are not higher than in the past. Not complaining, of course, as the traffic is better than in past winters. But it’s odd.
“I am seeing the same thing in central Florida, particularly at or near the beach.”
Where the heck is there a beach in central Florida? Leesburg? Haines City? Sebring?
No, actually, the empty-nesters are moving to downtown Cleveland.
http://www.cleveland.com/plaindealer/stories/index.ssf?/base/business/116807597834530.xml&coll=2
” Nationwide, developers worried about the volatility of residential real estate are shying away from for-sale housing projects.
But not in downtown Cleveland. There, realty firms can’t buy and dig up land fast enough. “
Check out yacht brokers, they have a lot here in Ft Lauderdale you can get fantastic deals, (the minimum price is fiction btw) they sell repossessed boats from 14-150 ft. and watching thier inventory numbers might be a good excercise.. mmmm
That reminds me of an OT anecdote — when I was young — 1960s, college freshman — my best friend and I put in a bid for a 1920s yacht, about 80 feet, owned by what was, at the time, the Sanford Naval Academy. It had been built for the DuPonts, we were told. We had outrageous ideas about what we could do with it — never mind that it was listing badly at its slip, didn’t know if the diesel engines ran, etc. It was Monaco and the Riviera, to a college kid. Fortunately, our bid was turned down by whomever owned the boat — I think it was an insurance company. My daddy would have strung me up had we bought that albatross.
I think I was 20 at the time. Kids not much older than that have incurred a lot of liability in the housing bubble. Imagine how long it will take them to pay off their mistakes. Glad I didn’t have to.
Take a look at the Tampa Craiglist for homes for sale. Realitors/builders offering up to $60K cashback on condo’s, FB’s advertising $50K off of 2005 costs, owner financing, lease options and of course every type of toxic loan known to man. If there was ANY question that 2007 is going to be painfull for the sunshine state just look at what the first 10 days of the year looks like. When the FB’s are using words like desperate in their listings this early in the “correction” it may be an indication that the stuff is just starting to hit the fan.
Right on Les Pendes! I am observing the same things you listed in your post here in NE FL. Did I mention Bob is selling his boat to pay taxes? He will probably need to sell the SUV next.
How much of the speculation in Polk was coming from residents of the UK? I read somewhere that the Four Corners area was particularly popular, which I can’t understand unless you are addicted to Orlando theme parks.
MOST of the properties up in Four Corners belong to British speculators. There are literally THOUSANDS of houses for sale/short term-long term rental, etc. THOUSANDS ! The Brits are jumping ship here in Florida as I type..
Also, they went and built thousands of homes for the Latino Migration over in Poinciana. They have only a single two-lane road into this monstrous development off US98 with ONLY one red light controlling mass traffic movement at the intersection.
I work with a Puerto Rican lady who bought there and she says if you don’t time it right it can take 45 minutes to get out of the developments and onto I-4 just a few miles away.
Both Four Corners and Poinciana have SEVERE infrastructure problems with roads, water, etc.
Greed built this bubble and Greed will bring it down.
Proud to say that I managed to talk a UK resident out of buying a Florida property last year. He was a successful businessman, but not a clue about the FL market. I guess when you live in Londonium, everywhere else seems like a bargain.
“Two years ago, Polk’s County’s real estate market was a seller’s dream. Then along came 2006. ‘I think what happened was that we underestimated the number of speculators in the market,’ said Dean Saunders,broker in Lakeland.”
ROTFLMAO — No kidding Sherlock. That is what we’ve been harping about on this blog for some time now but you realtors keep arguing the fundamentals are exceptionally positive.
When you have buyers who are buying multiple homes at once, how can you NOT deduce that they are speculating? When builders are holding lotteries for crying out loud, how can you believe this is not a speculation driven mania? Basically, this guy is admitting one of three things: either he doesn’t know his market, he is a bald faced liar, or he is dumber than sh!t.
Maven — just yesterday I was thinking that Ben’s blog seems like the old TV show, “Early Edition.” Unbelievable how long it takes people to figure out what we already learned/exchanged here.
I think, the microwaves from cell phones , have reduced peoples IQ.
“Lee is doing more drive-bys than ever these days.”
Drive-by flipping could prove deadly when prices are tumbling.
I got the impression that his company was interested in turning these into rentals. But with taxes and insurance what they are in Florida, they would have to buy at REALLY low prices to make it worth their while.
Good point. For that matter, I expect a lot more flippers to soon become accidental renters when they figure out they can’t sell at a profit.
well it is official
BRINY BREEZES — The residents of this seaside town voted to sell their slice of paradise to a Boca Raton developer for $510 million Wednesday morning.
I think this means south florida has jumped the shark, I also doubt the deal will go all the way through.. we shall see.
i heard about that, each “trailer” owner will get over 1mil
and there was even a debate about this? these stupid idiots can take that cash buy a new place on the cheap and play the slots for the rest of their lives
yes, but there were people who still voted no, significant number actually, I predict lawsuits, followed by an announcement fromt he developer about changing markets force a difficult decision, blah blah blah…
but the headline reads ‘$510 Billion.’
Never gonna happen. The deal will never get done. They waited way, way too long.
Agreed, Quirk. The carrying costs on that will bury this project. If they had struck this deal 5 years ago, then it might be different. My guess is this price took a long time to negotiate, so it is most likely WAY, WAY over anything feasible at this point in the game. I’m sure the buyer can back out if anything goes wrong with the development planning and approvals.
I know this area very well. The people that live North and South of there along the ocean are mind-bogglingly rich, living in homes on the ocean the size of the White House. There’s no way to get construction equipment to Briny Breazes without going past their homes. These people are fighting tooth-and-nail to prevent a TWO-FOOT WIDE BIKE PATH ON STATE-OWNED land past their homes. They can afford to hire entire law firms to fight this indefinitely with pocket change. There’s no way it’s going to happen.
According to CNN, the trailer trash won’t see any money till ‘09, so it’ll never happen.
The developer has to be blind or stupid to stick with the deal this late in the game. I’m not sure what the specifics of the deal are, but the trailer owners don’t have to move out for two years. My guess is that by then the project will be cancelled and nobody will see a dime.
The developers are thinking they will complete their condos in 2010, at the bottom of the market and will be heading north by then.
“Prices have fallen steeply: according to the Florida Association of Realtors, the median price of an existing home sale was $258,600, down 12 percent from a year earlier.”
Let’s hear it for “sticky on the way down” to a “soft landing”!
The lenders and builders were suppose to limit investor speculation in any given tract ,but thanks to sub-prime lenders that policy went out the window. I can’t express enough how this sub-prime lending created the excess inventory ghost town tract situations with stressed unqualified buyers like we have today .
I know people don’t like it when I talk about old time lending but this many investors would never be allowed in one track in prior cycles for the very reason that it would create a unstable market .
People let their investment properties go first when they run into trouble and that is why lenders use to require greater down payments and higher rates for the risk, plus lenders would back off from projects that had to many investors. The bank I worked for had to have a 75 to 80% true owner occupied ratio to investors .
Now we find out in Florida that it was likely that over 50% of the total purchases in that state were speculators from 2004-2006 .
Don’t get me wrong because we need investors in every market ,otherwise people would not have rentals to rent .But, if the % gets to high on speculation purchases ,especially if these are short term investors ,the market isn’t stable . Couple this high % of flippers with the fact that alot of them didn’t qualify , while they put low down payments ,while all need to sell at the same time ,and you got a disaster .
All these flippers and payment stressed sub-prime borrowers have to be replace by qualified real end-user buyers . How low do prices have to go to get those end-user qualified kind of buyers back in the market again buying up all the inventory ?
Also I would like to stress that the Builders of America didn’t help the situation with their connection with “special sub-prime lenders”, that knowingly put a high % of speculators in tracts knowing very well they weren’t real owner-occupied buyers .Also many CC’&R’s on tracts limit investor buying yet the builders and their crooked lenders ignored the policies while regular buyers got trapped in the ghost towns never knowing their flipper neighbors .
Yea - but how do you really know who is an investor vs. a home buyer? In Austin, you can just pretend to be a home buyer moving from CA and buy an investment property on a stardard FHA loan (2.75% down). Sure it’s illegal but everone is doing it right now.
How can a lender tell the owner occupied places from investment properties on a typical subdivision or area of town?
It’s called good underwriting . It’s usually pretty clear when someone is a investor .For instance ,if borrower has a job in California and they didn’t get a job transfer and they want to keep their more expensive home in Ca. …this might be a investor for a Florida purchase .
If the borrowers just purchased a 500 k house one year ago and now they want to buy a 250K condo ,this might be a investor if they don’t have their main residence on the market ,,,this might be a investor .
If a borrower is buying in another State from which they work…this might be a investor . If a borrower has 4 other properties …this might be a investor .
If a borrower just took out a equity loan from their personal residence to purchase another property rather than sell it …this might be a investor .
You get my point ,and than the underwriter has to at that point screen the deal more from there ,but there is tall-tale sign up front .
Does anyone have any thoughts on or know of any Blogs related to the Palm Springs, CA area?
Um, who in their right mind is going to speculate when a region is “wildly overbuilt?” That’s like saying, “I’m going to go out and buy all the Yugos on the lot even though the reason they’re there is that nobody’s buying them.” Redbrick Partners will someday be red-faced as the knife falls and falls.
” How low do prices have to go to get those end-user qualified kind of buyers back in the market again buying up all the inventory ?”
For people like me who could buy tomorrow, it means dividing the current prices by a factor of three just to pique my interest. And then my shopping list will click in with location of property, tax assessments on the property, when was the house built, who built the house, what services does the community offer, what does it cost to heat and cool the house, what might the community look like in the next 10 to 20 yrs, etc. Not in the running will be anything over 2200 sq. ft., no two story, no condo, no gated community with HOA fees, nothing far away from supermarkets, gas stations, shopping, etc where you have to drive 10 to 20 miles and the price per sq. ft. is the same as living closer in. I could keep the list going but when I buy again I plan on staying at least 10 years or more so unless I get what I want I’ll just rent from the interest on the sale of my last house.
Guidelines that every housing buyer should empower themselves with.
The Briny Breezes Deal Went “CRASH” one Day Before the Vote the Developer Backed out. Of Course You Probably won’t read about that. The Media is really working overtime trying to Keep the “POSITIVE” Dream Stories in the News so these Crazy Speculators will keep Buying Because they think Florida is Going to Rebound ( in 2 Months !)and have a Repeat Performance of the 2004 to 2006 Years and they will Make Millions Again!
Central Florida is the Worst. ( Marion County Especially. ) For 2 Years Everytime You picked up a Paper , it Was ” Marion County Real estate Through the Roof!” Front Page ads and Stories. ” We’re all going to be rich!” Everybody’s Moving here! The Baby Boomers are Coming! There’s no more land!”
Then Now, when Things Turned. SILENCE………………..Then Now a couple of months later They Start with the Positive Spins.
They Say We’re Different . We’ve bucked the trend. YOY prices they say are 8% positive . Only I’ve Followed the Real Estate here Religiously as I sold my Place in 05 to move here and said No Way. You See, I lived here in the 80’s when the last Boom hit and Crashed. Land Values here have Dropped as much as 60% in some areas in one Year. House Prices have Dropped 10 to 20% but someone has spun the Numbers because…….
Magically houses that sold last year , magically sold for less then they originally thought? So Miraculously they have Increased again!
Some How the $6000 in closing Costs paid by the Seller, $10,000 cash back at Closing, Marble Counter Tops and Upgraded Tile Floors Don’t get Figured in Either. Oh and don’t forget about the Free Pool and New Car!
IMAGINE THAT!
Kind of Like ,Inflation is Low if You Don’t Count Housing, Groceries, Utilities, Gas , Property Taxes OR ANYTHING ELSE YOU NEED TO LIVE!
Developments that were Started in the 60’s still weren’t full in the 80’s. Some sat complety empty for 20 Years! Miles and Miles of Empty Roads. not one House was sold!
One Development Has been here since the 60’s and is about 5% full. Thousands of empty lots sold to “Speculator’s and Investors in the 60’s and 80’s. In 2003 to 2005 they sold again. Never built on just sold. About every 20 Years it happens. Boom, Bust . Then after 20 Years the New crop of ” Retirees’ are all going to Move to Florida . Rates’ Fall, land’s cheap a few people start to buy and then The Developers and Speculators
start their Buy it Now before it’s all gone speel and get a New bunch
of Suckers to Invest in Florida GOLD.
Then ,the Developers Overbuild, The Speculators land won’t Sell, it crashes. prices Fall, You can’t give Real estate away. Everyone finds some other “Gold to Chase” then in 20 Years a New Generation it all starts again.
Anyone who enven thinks of Investing in any Florida real estate right Now should be very careful and very sharp. Anyone who believes the BS that Florida is running out of Land needs to look on google earth. Zoon in on any city, then find I-75 or any major Highway or interstate. Then start to pan out from the major Highways and look at
” All the Bare Ground! ” It’s everyhere! If everyone in the US moves to Florida You could not build it out in 100 years!
How about this. Marion county Florida. The Fastest Growing County in the US in the 80’s. Yet, I can Show You Developments started in the 60’s
with thousands of empty lot’s and only 5% full ! One Development started in the 80’s and not one Home was Built till 2000.
The Problem is People will believe anything if they Read about in the Paper. Foreigners are buying Property they No nothing about because someone convinced them Florida Real Estate always goes up.
They are buying the same ground some other Sucker bought 20 years ago hoping to get rich then couldn’t give it away.
And the Cycle continues.
People really need to start doing their own Diligent research and Stop Believing anything the Government, Main Stream Media , or NAR Reports. These are only Sales Pitches by People that want their Money.
My late father always said,”Believe nothing you read, and half of what you see.”
In the building I live in North bay Village Fl are over 60 units for sale. After very slow sales, 3 units are now pending and I am sure one is committing mortgage fraud. The unit 1103 has been for sale since July 2006. It went from 400k to 380k to 339k in November. A month later to be precise on Dec 8 it went up with exactly 100k to 439k and 10 days later on Dec 18 it is pending sale for 439K.
I am 100% certain this is fraud and I want to report this. Anyone knows how to go about doing this?
Make an offer for 539k with 200K back at closing. If they give it to you, take the cash to a bank in the Camen Island’s and forget about it.
Also, no unit on that floor with that view has ever been sold for that price! The pent house is for sale at 350K with the exact same view!
In conjunction with the ‘White Collar Crime’ department, the FBI investigates mortgage fraud, which often involves many professionals working in collusion: bank loan officers, realtors, appraisers, accountants, and mortgage brokers. All of these profit through various commissions, fictitious sales and fees – often on loans that aren’t genuine.
To report mortgage fraud with the FBI, contact the Field Division listed under each state.
Thanks! I’ll do that! I don’t like to be a whistle blower but these people are directly repsonsible for prices going up they way they have and I have had enough!