Price Drops “A Function Of The Market” In Florida
The St Petersburg Times reports from Florida. “Bulldozers and cranes are again making noise along Clearwater Beach, as builders work to complete major condominium projects they started years ago when the market was booming. They’re discounting prices for early bird buyers, offering upgrades at cheaper rates and throwing in other incentives.”
“From his newly remodeled sales center, businessman-turned-developer Uday Lele says he’s cutting 20 percent off the price for the first 50 buyers in his massive Enchantment beach development. That’s a hefty discount, he says, for a condo that can cost up to $2-million.” “Also, Lele says, he’ll throw in an extra parking space, another $50,000 to $70,000 savings.”
“Steve McAuliffe, with JMC Communities, says his company is offering pre-construction costs for condos at the Marquesas Ovation in St. Petersburg. The VP of sales and marketing says the first 74 units at Marquesas will cost buyers $70,000 to $200,000 less if they buy now.”
“JMC is also offering pre-construction rates and ‘decorator allowances upwards of $100,000′ for condos at Ovation.”
“This is a far cry from two years ago, when sales were so hot that buyers were flipping units, sometimes a day after buying them. ‘At this point, it’s a function of the market,’ said (developer) Kirit Shah. ‘When the market is soft, some developers discount it further.’”
The Bradenton Herald. “The stories are from homebuyers and investors caught in the failure of Coast Bank and Construction Compliance Inc. home loans in southern Sarasota and northern Charlotte counties. Like the story of a Bradenton man and his partner who were approached by American Mortgage Link to buy investor packages that included the house, lot and mortgage through Coast Bank.”
“Last summer, he received a letter in the mail from one of the subcontractors about nonpayment. He called Coast Bank and told them not to give the developer any more draws on the project. Bank officials assured him that he didn’t need to worry.”
“The next thing the investor realizes is that more money has been handed out by the bank to CCI, despite his warnings. Today, he has a home that is 95 percent complete but has at least four liens filed against it by subcontractors who haven’t been paid by CCI. This month he made a $1,600 interest payment on his unfinished house.”
“‘At the time I thought it was going to be a good deal,’ he said. Today, his three-bedroom, two-bath home sits empty, awaiting completion and a buyer.”
The Herald Tribune. “Just a week before Bradenton-based Coast Financial Holdings revealed $110 million in problem loans involving Construction Compliance Inc., the bank handed the St. Petersburg home builder’s founder $413,100. The loan to Jesse B. Battle III was a second mortgage on an undeveloped residential lot in St. Petersburg.”
“Battle’s $413,100 second mortgage was made against a 6,400-square-foot parcel in St. Petersburg that the home builder bought in April 2005 for $199,500, Pinellas County property records show. Battle originally financed the purchase of the land with a $199,500 loan from Coast. He paid that loan off in early 2006, and replaced it with a $499,950 loan from Coast.”
“On Jan. 12, Coast handed Battle another $413,100, raising his total debt on the property to $913,050, records show. The Pinellas County property appraiser values the property at $185,200.”
“Port Charlotte attorney Glenn Siegel and others representing customers of Coast and Construction Compliance Inc. say that Coast ‘had a fiduciary duty to ensure that work was done before they distributed payments’ to CCI.”
“Coast also could have problems if it chooses to foreclose on properties, said Siegel, who besides homeowners represents subcontractors with $1 million owed to them by CCI.”
“Foreclosure, the bank’s ultimate tool if a borrower stops paying a loan, must be an ‘equitable proceeding.’ If the bank failed to monitor its loan disbursements, foreclosure could be barred, Siegel said.”
“Basically, the borrower could say to the bank: Why should you get my property since your lack of internal controls contributed to the creation of this debt?”
“Meanwhile, other lawyers said it would be difficult for their clients to accept the plan outlined by Coast last week to transform some of the borrower’s construction loans into longer-term mortgages.”
“Port Charlotte attorney Thomas Carrero is representing about 25 investors, many of whom are elderly or retired and not in a position to assume long-term obligations. ‘Some have no choice; they can’t accept a hit like that,’ Carrero said.”
The Sun Sentinel. “Given how slow South Florida’s housing market is, sellers should prepare to make huge concessions on price and commission, lest they want the properties to sit unsold for months, said (realtor) Stephen Bartlett. ‘I think this is going to be the norm from now on,’ Bartlett said.”
“Many sellers have tried to attract the attention of agents in this soft market by offering large commissions, bonuses, cruises and other perks. Some agents share those perks with their clients. But Debbie Anderson in Coral Springs and other agents say they doubt 10 percent commissions will become more common. ‘Sellers need to be giving incentives to buyers, not their agents,’ Anderson said.”
Still having site problems this AM. We are working on it
Honey, there goes the Comps!
Holly cow, Miami is the ground zero!
I have never seen a city posting over 100,000 properties for sale, and this is still Winter. LOL!
You can check out various cities data at this good site:
http://www.housingtracker.net/askingprices/Florida/Miami-FortLauderdale-MiamiBeach/
It’s a CRASH !!!
Small nitpick:
I believe the first nuke hit Palm Beach county.
Got popcorn?
Neil
No. Teheran.
and if you add the FSBO’s… but no Suzanne and her ilk have explained/researched this “it is different here, the snowbirds will save us etc.” There is still a chorus of people singing the “it was not a bubble” anthem…
Regarding Bens post about Banks verses Borrowers .
IMHO there is a implied liability that Lenders are suppose to make prudent loans in a prudent manner that only support solid appraisal values .
With Lenders agents actually engaging in helping borrowers commit fraud or avoid requirements ,or giving borrowers the illusion that they qualify and they can always refinance out of a adjustable loan ,the lenders have made themselves vunerable to attack legally .
It’s hard to find any “clean hands ” in the housing mania .
Note to Attorney’s out there.
If a CEO told us our stock or Fund would go up and up 16% a year no problem and we lost money year after year I’d want an attorney like real fast.
Can you spell LAY, Watson, NAR and CAR?
One can only wonder how much money NAR is sitting on.
Frankly, for all the finger-pointing at the FB’ers who took out suicide loans, I reserve most of my contempt for the finance folks who put them into those loans. I have little sympathy for anyone stupid enough to loan large sums of their money to a marginal borrower. I won’t cry if they go belly-up as result of choosing to throw good money at bad risks. After all, _they_ are the ones who are supposed to be the professionals in matters of finance, not the borrowers.
At the very least, let them share the pain. Any lender who jiggered a mortgage application to qualify the borrower should be on the hook for at least half of the borrower’s bad debt, since they at least colluded with the buyer in order to get the loan through.
How about prison time for mortgage fraud?
You would have to double the number of prisons in the US !
Attorney’s with their lizard shoes will fight it out now. Let the fun begin. Love it.
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Did you see the quote by Mizzolo - 40-50 subprimes are going down per day. He must mean retail outlets and not wholesale. There are only a 100 or so wholesale outlets…
Coast Bank needs to be taken over now. What is this crap, giving almost $1 million in loans on a postage stamp peice of prime swamp land? This one will end with quite a few perp walks.
The Herald Tribune. “Just a week before Bradenton-based Coast Financial Holdings revealed $110 million in problem loans involving Construction Compliance Inc., the bank handed the St. Petersburg home builder’s founder $413,100. The loan to Jesse B. Battle III was a second mortgage on an undeveloped residential lot in St. Petersburg.”
“Battle’s $413,100 second mortgage was made against a 6,400-square-foot parcel in St. Petersburg that the home builder bought in April 2005 for $199,500, Pinellas County property records show. Battle originally financed the purchase of the land with a $199,500 loan from Coast. He paid that loan off in early 2006, and replaced it with a $499,950 loan from Coast.”
“On Jan. 12, Coast handed Battle another $413,100, raising his total debt on the property to $913,050, records show. The Pinellas County property appraiser values the property at $185,200.”
“
AshlandRenter,
Fear and GReed drive markets.
The logic is to use both to try and force someone’s hand in the buying process.
I’m reducing now by $50,000……you can get a great deal (greed).
But, if you don’t buy right away, the deal will be lost (fear).
It probably won’t work, but it’s not a bad strategy. It’s like all the builders offering “THIS WEEKEND ONLY” sales. Buy now or lose.
Why won’t this newspaper just man up and call a spade a spade: Battle (and perhaps this bank) were committing FRAUD. They need to stop tap dancing around these issues.
From NMN:
Mozilo: 40-50 B&C Firms a Day Going Bust
Countrywide chief executive Angelo Mozilo estimates that 40 to 50 subprime firms are going out of business each day, a trend that likely will continue all year.
That tells you what is happening to the volume of sub prime loans being written, because the standards have been raised, the rates are going up and people have enough houses already ! Who needs to buy another one ! Also, the equity increases are over, so no way to refinance to get your next paycheck.
All of this is tremendously bearish for the housing market.
When does the spring selling season begin ?
Now this is goofy — Ashland,Oregon : A house that’s been on the market since last fall now has reduced it’s price from $449,000 to $399,000 for “two-weeks only” and after that the listing claims that the price will go back up! Not quite sure I get the logic here.
Sorry, the link didn’t make it. Here it is:
http://www.johnlscott.com/PropertyDetail.aspx?GroupID=37687091&ListingID=29325561&Sort=256
AshlandRenter,
Fear and GReed drive markets.
The logic is to use both to try and force someone’s hand in the buying process.
I’m reducing now by $50,000……you can get a great deal (greed).
But, if you don’t buy right away, the deal will be lost (fear).
It probably won’t work, but it’s not a bad strategy. It’s like all the builders offering “THIS WEEKEND ONLY” sales. Buy now or lose.
The genius couldn’t even spell “Ashland” correctly. That is funny.
I will offer $199k for 1 week only, after that it’s $169k. Take it or leave it.
I love the picture of the giant tree that could fall on the house at any minute.
You realize he will get hundreds of emails from the denizens of this blog giving him a hard time…….I wonder how long he’ll keep the gimmick going.
Yeah, that tree is SCARY.
Yeah, the “Tree of the Year” meets “Roof of the Year”…
“Also, Lele says, he’ll throw in an extra parking space, another $50,000 to $70,000 savings.”
a freakin’ parking spot costs $70,000? and people actually PAY THAT? the world has gone upside down.
No - it’s just easy for him to say that before he’s actually made any sales. He’s throwing out huge numbers, so when he lowers prices and throws in incentives, idiots will think they’re getting a “great deal” — from the $2 mil supposed asking price, to the alleged big discounts to early buyers, to the 50-70K parking places — he’s just throwing out big wishing numbers and hoping for suckers.
The other Florida developer may be doing something similar — offering $70-100k “decorating allowances” — which I assume means that he’ll throw in some kitchen or bath upgrades (probably $10-20k worth in actual “cost” to builder).
It’s funny — I just KNOW these condos will be worth nowhere near their asking prices if these guys are throwing this discount language around so easily.
Like the story of a Bradenton man and his partner who were approached by American Mortgage Link to buy investor packages that included the house, lot and mortgage through Coast Bank.”
Flipper kit. Sans “For Sale” sign. Unless they happen to know a Realtor.
100,000 houses up dor sale? Wow. It’s worst that a plane crashing in the World Trade Center. Talk about a mega crash coming ! No it has already arrived !
100,000 houses you could lodge the whole of Helsinki Finland or Québec City in it! Wow! Wow! Wow! and rewow! These numbers are hallucinating. It’s a crash.
It is not going to be pretty. Woe to those that don’t have houses built with metal grid gates covering windows and doors when the s#t hits the fan. We are talking about serious criminal element having to do what they have to do in oder to make the bills. And no, it will not be fun for anyone.
There are nearly 1000 ( one thousand ) houses on the MLS for my town, Winter Haven, population 31,419. I am not kidding you.
Population Data : http://www.winterhavenfl.com/winter_haven_info/demographics
MLS: http://webapps2.planetrealtor.com/idx/pkg_IDX.pr_IDXSearch?sStateID=FL&sRealtorID=1005951&sUserType=F&sSearchStateID=FL&sSearchSource=X
CRAZY. It’s crazy and will bust in a bad way.
The streets of Central Florida are pregnant with fear. There are over 700 houses for sale today listed in our small Winter Haven paper:
http://classifieds.polkonline.com/classifieds-bin/classifieds
Miami may herald the “Big Bust” but rampant greed-based speculation has contaminated every Florida market in its’ own rotten way.
LOOK OUT BELOW !!!
“Basically, the borrower could say to the bank: Why should you get my property since your lack of internal controls contributed to the creation of this debt?”
Lots of lenders are going to be in a cold, cold sweat if this defense holds up in court.
The lenders should be put in a prison with Alan Grenspan.
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My wife and I were in Sarasota from the 19th to the 26th of January, staying at a condo on Siesta Key. Here’s what we found.
Tourism seemed about normal. If there’s any fall-off, it’s pretty insignificant. Restaurants were mostly crowded, shops were busy, and traffic on U.S. 41 was very heavy.
Residential construction is indeed dead. We golfed on a course in Heritage Harbor and viewed a couple of other in-progress neighborhoods as well. In no case was there any evidence of ongoing work- no earth movers and no subcontractor trucks. We saw no T-cranes downtown either.
Builder ads in the weekend newspaper were offering some pretty significant discounts. A Centex ad for a villa community in Venice said “Save up to $110K” on homes that elsewhere in the ad were priced “from the low 200s.” A Windemere Homes ad offered completed homes averaging about 20% off. Lennar had one showing the “Was” price at $443K and the “Now” price at $318K. Those are some pretty significant reductions.
However, the builder who built our house was offering a model that we recall selling for something over $300K in 2002. His “regular” price for that model is now $626K, but he’s discounting it to $530K. It seems to me that many new home prices are still way too high.
The “Homes & Land” magazine had very few “reduced” listings. I guess they want to make it seem like a normal market. The newspaper classifieds for single-family homes had a sprinkling of ads with terms like “reduced,” “make offer,” and “motivated seller.” The percentage of such listings in the condo/townhouse section was higher, but still under 10% in the columns I sampled.
An interesting pattern emerged as we drove through existing neighborhoods: The older the ‘hood, the fewer the For Sale signs. Our old community was built out over a period of several decades. One section that was completed in the mid 90s had two sign among its 125 homes, for a rate of less than 2%. Our section, completed in 2003, had 18 signs for its 308 homes, a 6% rate. A section in an adjacent community that was completed in 2005 had a 13% rate (15 signs for 117 homes) and its adjacent, uncompleted section had 28 signs for 168 homes. That’s 17%, or one in every six homes! Ten signs were in front of finished but unsold homes being offered by the builders. There was no current construction whatsoever. In each case, I believe my count of signs is accurate, but my count of total homes may be a bit off.
Other older neighborhoods we drove through showed the same low percentage of For Sale signs. We did not visit any condo communities, so I have no feel for how good or bad that market is. Articles posted here by Ben indicate it’s pretty bad. The condo building we stayed at had realtor lock-boxes on 10 of the 50 units. That’s 20 percent.
We only saw two or three desperate ads posted on telephone poles the whole week we were there. I must admit that I expected to see a lot more of them.
It appears that many home sellers are still in denial, or have HELOCed their homes to the hilt and can’t accept less. We grabbed info sheets from many of the For Sale signs in our old section. The prices for homes with the same number of bedrooms and baths, and about the same number of square feet, varied over a range of 40%! The distribution was very bimodal (two peaks), with basically nothing in between. Good luck to those high-priced sellers!
My conclusion is that there’s still a lot of air to be let out of the Florida housing bubble.
Bill in Carolina you are right on target. Lots of room for prices to still drop. They went up 40% and now sellers think that is the new value of their properties. They have a rude awakening as buyers sit tight and watch the prices come back down to the fundamentals wherein a family can work in the area and buy a home on their salaries. gordo
That makes a lot of sense. People in older neighborhoods like where they are — don’t want to bother moving and don’t want a re-asessed property value and tax bill.
The newer neighborhoods will be full of flippers and people who bought exotic mortgages.
Just returned from a trip to Bradenton. Brought the local rage with me — I believe there is an ad for 7% CDs — “Ameri-”something — will check tomorrow to see if there is a link to Coast Bank. I like great CD interest as much as any other non-FB, but to think you will get 7% short-term today is fawlty brainwork. Next year, maybe.
Decorator allowances of $100,000. Shit, I only paid $93,000 for my 3 bedroom Cape with a Florida room, finished basement and two car detached garage 10 years ago. WTF is going on anymore? This is insane that anyone would think that that kind of coin is normal for just putting some accessories in a friggin’ condo.
Decorator allowances of $100,000. Shit, I only paid $93,000 for my 3 bedroom Cape with a Florida room, finished basement and two car detached garage 10 years ago. WTF is going on anymore? This is insane that anyone would think that that kind of coin is normal for just putting some accessories in a friggin’ condo.
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But Debbie Anderson in Coral Springs and other agents say they doubt 10 percent commissions will become more common. ‘Sellers need to be giving incentives to buyers, not their agents,’ Anderson said.”
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How did this particular lunacy ever get started??
I think, the Florida cancer will spreed to the rest of the country, before the year is out.