‘You Pay Less, But It’s Worth More’ In Florida
Newspapers in Florida are asking realtors about the housing market. “Q: We’ve seen the real-estate market in Orlando and Florida cool from last year’s record pace. Is it going to continue to slow?”
“A: Continue to slow? I think what may happen, I don’t think you’ll see a reduction in [intangible] value; let’s put it that way. Value and price are different things. You probably won’t see a reduction in value, but maybe in prices, meaning you can pay less but it’s worth more. Value is how much that particular piece of property is worth to you.”
“Q: We’ve gone from a low existing-home sales inventory last year to a record level right now. Will sellers be forced to slash prices? A: They are [slashing prices]. But let’s look at the builders, and what is going on there. The builders are offering $5,000 to $50,000 in incentives, not off the price but in everything else. And when a buyer sees that, they go to the builder and they get X-amount for this and X-amount for that, the granite countertops and the other upgrades, and they take that in a heartbeat over an existing home.”
“One significant change that could impact the market is the number of homes for sale on the MLS for the Pensacola Bay Area. In February 2005, six months after Hurricane Ivan, there were 1,355 homes for sale in the MLS two-county area. In February of this year, that number had soared to 5,155.”
“Nan Harper, past president of the Association of Realtors, said the local slowdown in sales is more of a ‘blip’ in the market and not a ‘bust,’ she said. Moreover, the high number of homes on the MLS is due, in part, to overpriced waterfront homes not selling and the battles many homeowners are having with their insurance companies.”
“One area of the local market that is experiencing a noticeable slowdown, said Smith, is the condominium market. ‘The higher end condo market may be a little overbuilt,’ he said.”
And a letter to the editor blames the media. “When one wields great power, as you do, it is imperative that they do it responsibly. This is a great public trust that I think that you are not living up to.”
“Reporting on the slump in the Florida home sales and prices and the damage caused by Hurricane Wilma can be informative or destructive. I believe that you are no longer reporting news but creating news by repeatedly hammering away at the negative aspects of living in South Florida. I think that what you are practicing now is irresponsible journalism and being part of the cause of the present real estate slump rather than part of the cure.”
“I’m sure that I speak for many Florida homeowners when I say thank you for doing such a wonderful job in adding to the slump in our housing market.”
“Value and price are different things. You probably won’t see a reduction in value, but maybe in prices, meaning you can pay less but it’s worth more. Value is how much that particular piece of property is worth to you.”
Only a true expert could explain it so eloquently. No wonder the media turns to them to explain these things to us simpletons.
Warren Buffett has got to be laughing with his coffee this morning after reading that moronic blurb on “value.”
what a crock of shit!! 800 sq. ft. is 800 sq. ft. across the board, no one in there right mind is going to see a 300,000 dollar value in that….
I don’t think you’ll see a reduction in [intangible] value; let’s put it that way.
Brilliant! Of course intrinsic value won’t decrease - it remained the same the whole time that prices went off of the charts! That’s the whole problem!
“A: Continue to slow? I think what may happen, I don’t think you’ll see a reduction in [intangible] value; let’s put it that way. Value and price are different things. You probably won’t see a reduction in value, but maybe in prices, meaning you can pay less but it’s worth more. Value is how much that particular piece of property is worth to you.”
The above commentary is one of the least coherent I have ever read. Nonetheless, I would guess that “reductions in tangible value” are on the way:
1) Lost community jobs (construction, Realtors (TM), RE lending, etc.)
2) Declining local tax base
3) Cutbacks in local services (no tax base = tighter budgets)
“Value is how much that particular piece of property is worth to you.”
I think of value as feeling like you are getting an honest deal and not being screwed by the seller. There is no value in hype
Let’s not forget- much of the “value” was based on appreciation. People thought they were buying a cash cow. Take that away, value (and price) will plummet.
The intrinsic value of the home removes all the emotional attachment to it and looks at it as a cold, calculating businessperson. The value of the home is the sum of the discounted cash flows it will generate. While we may quibble on cash flow forecasts, the big factor is the discount rate. Most of the difference any two investors will percieve in the value of an asset relate to their discount rates being different due to both cost of funds and the level of risk percieved. ie if you were buying a home in unleveed N.O. you might invest for a 10 or fewer year return expecting a flood to wipe away your asset between now and then, vs say Arizona where there is a much smaller chance of destruction. If we percieve different levels of risk, it will likely lead to differing required returns and investment levels, but the value of the asset has very little to do with its price or any emotional attachment.
Ben–TOO FUNNY!!!. Take the rest of the day off. This one post should generate 300 comments at least!
I know, lol..I read the first line of Ben’s post “Newspapers in Florida are asking realtors about the housing market.” and thought uh-oh! He could have stopped right there and said GO!!!
“Nan Harper, past president of the Association of Realtors, said the local slowdown in sales is more of a ‘blip’ in the market and not a ‘bust,’ she said. Moreover, the high number of homes on the MLS is due, in part, to overpriced waterfront homes not selling and the battles many homeowners are having with their insurance companies.”
Hurricane Katrina was just an extremely severe summer thunderstorm, and the Indian Ocean Tsunami was just an unusually large wave…
Wow, where do I sign up for some of that mind-altering Kool Aid??? Not only does cause your sentence to become gibberish, but the logic behind the words is way off too. Sign me up!!!
Yes! What classic example of sleazy, doublespeaking propaganda. RE agents have so many ways of creatively lying someone could write a PhD dissertation about it.
I think you have to be borderline clinically insane or at least suffering from debilitating Alzhiemer’s for something like that to come out. I wouldn’t wish either diseases on anyone I know. The fact that people like this can function in society is surprising and that they can thrive is outrageous.
I saw that realtor interview in the Orlando Sentinel this morning, very funny stuff. Realtors are in for a public relations crisis, and they are not helping themselves with their bullspeak.
Good time to post my inventory data… 2 Counties over from Pensacola in NWF…
Destin Niceville Crestview Nav.+GB
25-Jun 1124 158 309 1881
25-Jul 1179 173 362 1943
25-Aug 1323 224 445 2050
25-Sep 1445 286 533 2489
25-Oct 1555 298 601 2868
25-Nov 1569 324 640 2943
25-Dec 1541 329 682 3056
25-Jan 1623 366 730 3359
25-Feb 1759 394 839 3726
Percent 56.49% 149.37% 171.52% 98.09%
Sorry about the crappy chart… didnt look that way before submitted…
LMAO! Blame everyone else, except those responsible.
The American people now expect virtually everyone to lie to them. I think the Bush administration leads the pack, followed by every other government institution (the Fed lies are often on this blog). Certainly all industry associations lie regularly, and then the majority of businesses. RE is maybe worse than most, but also a chance they drink, take drugs, or are under some sort of spell.
Blah blah blah blah - just can’t keep politics out of this. Perhaps you can define “is” for me. Just kidding - just drop it here please.
Yes, this administration sets an example as blatant liars and propagandistas…. as does the real estate indusrty/lobby.
Politics are everywhere.
RE bubble = economics = politics
The bubble does not function in a vacuum. Politics (of all sorts) are very much responsible for the housing bubble.
Spoken like a true Californian
If you disagree, please explain…
Saw this online today:
Non-traditional mortgages helped extend a five-year rally in the U.S. housing market by reducing monthly payments and allowing homebuyers to afford ever-pricier houses.
But some economists now worry that as interest rates rise, so will defaults as borrowers may find themselves unable to make payments, also pressuring the banks that offered the mortgages and the investors who hold much of the risk due to their purchases of mortgage-backed securities.
Wow — economists can now see what’s been intuitively obvious to the casual observer for several years. An economist, upon being hit on the forehead with a shovel, begins to worry about pain and lump resulting. Other economists dispute that theory, however, claiming that there’s insufficient data to support this conclusion.
And MBS investors? Buying mortgages originated to people with no documentation and no down payment, for homes purchased at valuations 100% higher than they were 3 years ago — ya think there might be some risk there? It’s like making a loan to your gambling-addicted, unemployed brother-in-law Larry and then counting his $50,000 IOU-on-a-napkin as part of your net worth.
["An economist, upon being hit on the forehead with a shovel, begins to worry about pain and lump resulting. Other economists dispute that theory, however, claiming that there’s insufficient data to support this conclusion."]
This made me laugh!
It has been so obvious to all of us that there was going to be major problems with the kind of lending that was taking place. All a person needed to do was listen to the ads on AM radio for 5 minutes to know we were going to be in deep do-do. I have to believe that the lenders participating in the madness knew it would eventually end badly, but hoped they would make enough money before then that they would just fold up shop and leave others holding the bag. I can’t imagine why “independent” economists (Fed included) have not been screaming about this. All we have gotten is the very occasional, very soft spoken warning from one in a hundred of the people that should be watching out for the health of our financial system & economy.
Or in the case of Alan Greenspan, outright encouragement to run out and get an adjustible-rate loan, followed by some namby-pamby mumbling about “some froth” in the marketplace.
you know, I was aware of greenspan doing that, but until this very moment somehow I didn’t fully appreciate the amazing irresponsibility of that advice.
I disagree that people expect lies from everyone–I think many people trusted their RE agents when they said prices can’t really go down.
But when the chairman of the Fed implies very strongly that you’d be stupid to not go for the lowest payment possible, that you’re going to be (on average) moving in about 5 years anyway, and never mentions much of anything on problematic LV ratios, that’s just gotta feel like sage advice from a real economist to most americans, no?! How could that not be seen as *actively encouraging* a good number of people who might otherwise think twice about facing all that debt and uncertainty to just jump in?! Hey, can’t afford playing this crazy game unless you get a funky loan? Those loans are better deals, really, you’d be stupid not to play that way. wow.
Did Mr Greenspan in fact really imply ‘that you’d be stupid to not go for the lowest payment possible’? I thought he said that people with ARM’s would have paid a significantly lower interest rate over the period in question. This would have enabled borrowers making the same payment to reduce their principal by a fair bit, even in only 5 years.
Of course, I accept that in practice this hasn’t happened, but I would blame high (125% anyone? :)) LTVs rather than adjustable rates for the forthcoming debacle.
Although what Greengas said was stupid at the time, I don’t know how many subprime borrowers really took his advice. Most of them probably don’t know who or what the Fed is or does.
do realtors ever say anything smart ?
1-2% in EU soon less than that here after the MLs opens up for their “wisdom”
The Realtors are worried that in the near future they may be seen by the general public as less trustworthy then used car salesman. That is why they are launching a preemptive strike using advertisement spots to quash any notions of dishonesty.
David
Bubble Meter Blog
“Reporting on the slump in the Florida home sales and prices and the damage caused by Hurricane Wilma can be informative or destructive. I believe that you are no longer reporting news but creating news by repeatedly hammering away at the negative aspects of living in South Florida. I think that what you are practicing now is irresponsible journalism and being part of the cause of the present real estate slump rather than part of the cure.”
“I’m sure that I speak for many Florida homeowners when I say thank you for doing such a wonderful job in adding to the slump in our housing market.”
HURRICANES HAMMERED FLORIDA’S PARADISICAL HOUSING MARKET INTO CRASHING IN THE 1920S, AND THEY WILL DO SO AGAIN IN THE 2000s!!! SORRY TO HAVE TO DELIVER THE BAD NEWS BY BLOG…
These are the times that try men’s souls. Or at least test the idea of a free press that is reporting the facts….
All I have to say to this guy is “Where were you hiding when the press was giddily reporting the continuously rising housing market?” Did you write letters to the editor a year ago saying, “I don’t like the unbalance view of the real estate market you are reporting. Maybe you should quote from someone other than RE agents and their spokespeople.”
Maybe if the press had reported more on the coming bust a year ago you could have sold your house and not refinanced all your equity out of it and been in a better position to weather the coming hurricane.
I never heard any agents complaining when the media was helping to inflate the bubble. Agents now have to get off their lazy a$$es and work after 5 years of easy money. The days of plopping a sign in the front yard and getting a quick 6% commish are over.
Let the layoffs fly.
The days of plopping a sign in the front yard and getting a quick 6% commish are over.
You said it. Just drive around on a Saturday and count the number of empty flier boxes you see. You’d think that for thirty or forty thousand dollars, they’d at least make sure that there were fliers out on the days that most people are shopping for homes.
All I have to say to this guy is “Where were you hiding when the press was giddily reporting the continuously rising housing market?” Did you write letters to the editor a year ago saying, “I don’t like the unbalance view of the real estate market you are reporting. Maybe you should quote from someone other than RE agents and their spokespeople.”
Although I am not a realtor, I did just that. Last year I sent this to ABC News and the local paper here in Ventura County.
As we watched this Sunday’s ABC Newsmakers segment on California Housing, we were more than a little concerned that both sides of the housing market equation were not being represented. As panelist, ABC invited Jack Kyser, chief economist of the Los Angeles County Economic Development Corporation, John Karevoll, analyst for Dataquick Information Services, Jim Hamilton, President of California Realtors Association, Valerie Hempstead, realtor, Century 21, and Tony Baia, owner/loan consultant, Leading Mortgage.
As the Host posed the question, “Is there a housing Bubble in California”? Mr. Kyser attempted to share that indicators pointed to the market being overvalued in some areas, and there where what is he considered “Bubblettes” throughout the state, or areas in danger of price declines.
However, Mr. Hamilton of California Realtors Associations view seemed to emphasize only that there was a healthy and growing market in housing that is showing no signs of weakening. He did neglect to mention that most of the activity in the market was in the lower-priced homes or condos, as sales of medium and higher end housing has slowed.
If you ask any Realtor, or most Mortgage Representive in this state and across the country about a bubble, they will deny that the potential even exists. In Sunday’s segment, as soon as the idea of a bubble was suggested, Mr. Hamilton responded with a resounding “What Bubble”? This is the theme that has echoed throughout the Real Estate and Lending industry since the speculation began.
Use of other key words like “lack of supply”, “high demand” and “increasing values” on the part of realtors have fueled the fire and instilled fear in many Californian’s and Americans to hurry and buy, or run the risk of being left out.
It’s this kind of propaganda that formed the initial suspect bubble, and has continued to raise the question of its’ growth, and potential bust. It is also the foundation for the lender created, and now commonly used, “Exotic Mortgages” that buyers have been led into. With housing prices quickly outpacing household incomes, less the 15% of the population are able to afford a home.
The percentage of affordability is reduced even further when is comes to conventional 30 year mortgages.
This suggests the need to use more creative financial options (prudent or not), thereby forcing prospective homeowners into utilizing these types of hybrid loans. Interest only, adjustable rate, and option ARMs seem to be the answer to everyone’s problem. Temporarily anyway.
A bubble, by most economic standards, is escalated growth within a normally stable market whereas investors are flocking to participate based on the speculation that the market will continue to grow at the same accelerated pace.
The Real Estate and Mortgage industry have become extremely wealthy over the last few years and are doing all they can to maintain that momentum and market mentality.
The real concern is that many people, especially first time buyers, don’t fully understand the volatility of the loan and its ramifications. Increasing interest rates and the required principle payments after the start-up period could be a disaster waiting to happen.
A couple of close family members recently purchased homes with these types of loan. When I questioned them on the specifics, they both responded with the “ we expect we should have more equity in the house in few years, and we can refinance or sale” statement. This is the bill-of-goods they were sold by the lender and realtor, without really understanding what the refinance might entail.
Although both are intelligent consumers and previous homeowners, neither of them seemed to be acutely aware of the potential downside of the loan because no one ever explained it to them. I don’t think all lenders are disclosing the risks involved with these loans, and how the buyers might prepare themselves for the necessary future adjustments. Buyers are becoming so consumed with qualifying, that once they here they can be approved under these new programs, they are just relieved to know they can get in.
Responding to the question of affordability, both Tony Baia of Leading Mortgage, and Hamilton advocated the use of these new loans explaining there is no lack of funding available, and that people were having little trouble qualifying for the inflated priced homes.
More than half the Californians who purchased a home in the last two years ignored the federal guidelines by allocating more than 30% of their incomes to housing. Some are spending as much as 50-60%. I am not sure how lenders view that as affordable.
Hamilton and Baia neglected to discuss any of these potential hazards or how a shift in the economy could further strain their already stressful situation.
When asked about people’s old-fashioned idea of paying off their mortgage in 30 years, Baia responded by saying “those ideas were outdated since most people move after about (7) year’s in a residence”. While this may be true, there are a lot of future retirees who will count on not having a mortgage payment when that time comes, as many will be on fixed incomes.
Perhaps more investigative reporting should be done on these loans and the lending practices of the individuals presenting them.
However, the concerns that over shadow the situations of individual households are the ones that may impact the economy of California and/or the nation as a whole.
A whole new generation (my children and yours) will be completely priced out of the market and the dream of owning a home, subsequently affecting the future economy. We have already considered moving our business out of California because we feel the pressure of having to increase employee salaries for them to even have a chance to purchase a home. Manufacturing businesses will be at the head of an Exodus as they find themselves unable to either keep key employees, or maintain profitability based on increased costs associated with larger salaries.
Ms. Hempstead of Century 21 even made the comment (I think inadvertently) that many people were moving out of California because of affordability reasons. The comment was quickly smoothed over my Mr. Hamilton
This of course effects businesses in the state and will further threaten the strength of the economy that is being viewed as catalyst for this market.
Many economists paint a much bleaker picture and suggest major downturns in the housing market and the economy as a result of what is happening. Americans have increased their debt dramatically over the last few years through housing costs and home equity loans. They fear that when it comes time to pay, many will be unable to.
Foreclosures and bankruptcies may become commonplace and destroy Americans quality of life.
Whether or not there is a bubble that will burst still remains to be seen. However, I think a more thorough representation of all the facts and possibilities are critical in order for everyone involved to make calculated decisions as they risk their futures on one of the biggest investment they will ever make.
Extremely concerned native
Great read…thanks
That sort of homedebtor whining is harmless, as long as it doesn’t get translated into legislative action that socializes the losses onto taxpayers (since the lenders who enabled this mess aren’t going to volunteer to pick up the tab). Keeping an eye out for such legislation could make for a useful blog.
BANG! BANG! BANG!
(they’re trying to shoot the messenger)
“Reporting on the slump in the Florida home sales and prices and the damage caused by Hurricane Wilma can be informative or destructive. I believe that you are no longer reporting news but creating news by repeatedly hammering away at the negative aspects of living in South Florida. I think that what you are practicing now is irresponsible journalism and being part of the cause of the present real estate slump rather than part of the cure.”
Apparently the author of the letter, George, only wants well-spun good news from his trusted media sources. Reality is all too much for him.
“I’m sure that I speak for many Florida homeowners when I say thank you for doing such a wonderful job in adding to the slump in our housing market.”
Never mind the fundamentals, George. The media is now only starting to report what we have all known for quite a while. Sorry to hear that you are now just realizing that your $hitbox built in a hurricane-drawing swamp is not quite worth what you thought it was.
But hey, that’s the price for living in “paradise”… Right…
Haha I had to laugh when I read that letter from “George.” Boohoo the media is actually reporting it like it is…
Public records gathered from the PBC tax assessor online show that there is someone by the same name as the author of this letter who owns a home in Delray Beach (same town as listed author) whose home was assessed at $192k (when built in 2002.)
A quick zillow.com search shows said house as being “valued” now at $372k. If this is in fact our friend, I don’t feel one bit sorry for him and his paper gains. Does he honestly expect legitimate 100% appreciation in less than 4 years?
George should well know what his shitbox is “really” worth, probably around what he paid for it a few years ago…the $175K, not the new $500K that he thinks he deserves now. The lower prices are what allowed owners to pay for the other expenses of living in South Florida…hurricane damage, high insurance, high utilities, etc. Just because the greater fools have run the prices up over the last couple years doesn’t make his home actually worth more.
Ya know . . . I have a message for the person whining to the newspaper about negative coverage . . .
Hey dude (or dude-ette, whatever the case may be) I didn’t see you complaining when the media was running stories that drove prices UP, now did I? It’s fine for the media to influence the market so long as it goes your way and supports your world view and profligate spending habits, have I got that right?
You want the media now to continue to lie so that you can offload your overpriced crackerbox onto some unsupecting fool, have I got that right too?
Well though shit. The onus is on you now to do the right thing whatever that is. Doz paper profits did look sweet, didn’t they, but they’re gone now and we’ll see how much common sense you have if you want to capture any of the gain at all.
value in this country is the lowest it’s been since 1776
Amen!
once they get past the little issues: hurricanes and insurance affordability everything will be fine again.
(Value and price are different things.)
They should have pointed that out during the bubble, when prices were higher than value.
They still are.
I just want to bring up the idea of value. The real estate people really don’t get it. Let’s see what the reigning champion of value investing has to say about value.
“Warren Buffett descends from the Benjamin Graham school of value investing. Value investors look for securities with prices that are unjustifiably low based on their intrinsic worth. When discussing stocks, determining intrinsic value can be a bit tricky as there is no universally accepted way to obtain this figure. Most often intrinsic worth is estimated by analyzing a company’s fundamentals. Like bargain hunters, value investors seek products that are beneficial and of high quality but underpriced. In other words, the value investor searches for stocks that he or she believes are undervalued by the market. Like the bargain hunter, the value investor tries to find those items that are valuable but not recognized as such by the majority of other buyers.
Warren Buffett takes this value investing approach to another level. Many value investors aren’t supporters of the efficient market hypothesis, but they do trust that the market will eventually start to favor those quality stocks that were, for a time, undervalued. Buffett, however, doesn’t think in these terms. He isn’t concerned with the supply and demand intricacies of the stock market. In fact, he’s not really concerned with the activities of the stock market at all. This is the implication of this paraphrase of his famous quote : “In the short term the market is a popularity contest; in the long term it is a weighing machine.”(see What Is Warren Buffett’s Investing Style?) ”
So, just the idea that the market is strong means that there is NO value in it. I would love to see these real estate agents do an evaluation of the fundamentals. Can’t you see it now?
“OK. Let’s see. You can purchase this house for $400,000. We can finance that with no money down for you. The monthly payments on your I/O ARM Option would be only $1,500 per month. You can rent it for $1,600 per month. That is a great cash flow….. Did I mention the granite countertops?”
Please notice that the RE spokesperson in the article actually mentioned the granite countertops as an example of value!
Are granite countertops now a fundamental in real estate investing?
I forgot to reference the above article on Buffet: http://64.233.179.104/search?q=cache:GNeyy7xLxsoJ:www.investopedia.com/articles/01/071801.asp+warren+buffet+quote+value&hl=en&gl=us&ct=clnk&cd=5
Speaking of Granite….we will be buying a house next year and my wife is specifically examining any alternative countertop material to granite. It has been used so much in the last couple years (low to mid-level homes using HELOC’s for their new granite etc.) that in 4-5 years granite will be completely passe (yuch…look honey “granite”,…so late 90’s, early 2000’s).
I would love to know what they smoke down there in Florida.
According to market technician Bob Prechter, an investor’s notion of value can go “poof!” in a flash of aggregated neurons.
Huh? So, those people that purchased a home in December at the median price of $421,000 in Palm Beach still have ‘value’ even though the median prices is now $393,000 ?
Explain that one to the bank, mortgage company, tax collector, or potential buyer. Real estate “value” is nothing more than what the market perceives it to be- determined by market forces of supply and demand.
According to this snake oil salesman, there is never a bad time to buy real estate. Tell the people that took 10 years to break even when they bought in the late 80’s.
Value as defined in economics is only a small subcategory of value in general, as defined in value theory or in the science of value.
In general, the value of something is how much a product or service is worth to someone relative to other things (often measured in money).
In neoclassical economics, the value of an object or service is often seen as nothing but the price it would bring in an open and competitive market. This is determined primarily by the demand for the object relative to supply. Other economists often simply equate the value of a commodity with its price, whether the market is competitive or not.
Hey Einstein, read a book next time before you say something stupid.
Denial, denial, denial….
These clowns loved it when the media hyped the real estate market. Now that the shoe’s on the other foot, they hate the media. Grow up!
Ahhhh, I get it. This Realtor is from Jamaica-mon. No wonder she’s so tough to understand. Obviously substituting ganga for oatmeal has its consequences.
I think she’s NAR senior management material with that hard-charging think-on-your-feet logic and that ability to generate such eloquent fact based responses to hard-hitting questions. Future President of the NAR?
Good one Ben. LMFAO!!!!!!!!!
Talk about putting lipstick on a pig in Pensacola…
Locally, February 2006 sales are down slightly over the same period last year.
Smith said there were 489 sales of residential homes in February last year, compared to 409 sales last month.
One significant change that could impact the market is the number of homes for sale on the Multiple Listing Service for the Pensacola Bay Area.
In February 2005, six months after Hurricane Ivan, there were 1,355 homes for sale in the MLS two-county area. In February of this year, that number had soared to 5,155.
DEMAND (SALES) = down 16% YOY
SUPPLY (INVENTORY) = up 280% YOY
Yep, looks like sales truly are “down slightly” and this is a recipe for a nice soft landing. Nothing to worry about. What a joke!
Mike in FL,
Do you reside in the Pensacola area? Would be nice to hear your thoughts about the NW FL area if so…
No … I’m a SE Floridian — Palm Beach County. They had to break out the lipstick, the rouge, the blush … the whole nine yards to explain away the stats were seeing down here. If memory serves, January sales were down 39% YOY while inventory exploded. By my tracking of my zip code, for-sale inventory is now up 217% YOY. Yet another “soft landing” recipe.
I spent summer of ‘04 in West Palm Beach for a intership at Pratt & Whitney… Fun place down there…
Inventory in my area has gone from 2500 in October of ‘04 to 9250 at the beginning of Feb… Talk about inventory up!
Sounds like major plastic surgery to me!
“Value is how much that particular piece of property is worth to you.”
Even by his own definition of value we are left with the property being only worth what you pay for it! Either that or the selling agent sucks because they are leaving value on the table (or granite countertop). You should sue them for not capturing that value!
GET THIS…. AN AGENT ACTUALLY JUST RAISED THE PRICE OF A HOME… MLS 2424367 IN SCOTTSDALE, AZ… THIS WAS 475K JUST LAST WEEK, NOW THEY WANT $488,500
WTF ARE THEY SMOKING… HOMES IN THIS HOOD 18mos AGO WERE GOING FOR 275-310K
i have the same thing happining in my block. a house that has been listed for 6 months listed at 185,000 was just relisted for 203,000. its in the preforclosure list and is going to auction in 2 months. it is one year old and was rented for 6 months and now in the listing they are claming new carpet. when they evicted the renters they had a dumpster full of trash and carpet, so much for flipping here in kingman. its getting to be a buyers market without buyers.
I have noticed this too. A townhome I was watching keeps going up and down in price by 10k. They are just trying to stick it to you.
That’s because this is their break even point. As time goes on, the break even point continues to go up. Well if they don’t price to sell then they will lose their shirts.
ah, I didn’t think of that. there have been some homes in the Ann Arbor MI market where the price has gone up after it was listed, taken off, then relisted. I thought it was part of the collusion-al “spring market” whereby everything goes up in price just because the crocuses are growing up out of the dirt.
The realtors told me about this, they say this is as reliable as the sunrise, so I better get in soon or prices will just keep going up!
cheers!
This value thing is going to be the next fight. It is a holding action on the part of the RE industry. I have seen many, many, many listings in craigslist saying stuff like: Offering Price: $300k Value: $330k.
This BS needs to be called what it is: BS.
A house is only worth what the next damn fool is willing to pay for it.
“Offering Price: $300k Value: $330k.”
Hmm.. Funny how this seems to only work in one direction. Could you imagine the thousands of listings across the country over the past few years if this worked in reverse? “Offering price: $549,000 Value: $189,000″
It would be very hilarious if someone ambitious would send all these comments to the reporter who interviewed Ms. “blip not bust”….I’m sure the reporter would love some ammo to refute her blathering about how irresponsible journalists are.
“Value is how much that particular piece of property is worth to you.”
I guess that value to me is at least 40% below current asking prices.
Perhaps I can buy now, then go return to the bank and tell them that I only value the property at 60% of the sale price, and ask them to adjust my mortgage balance accordingly.
The NAR is popluted by pure numpties.
popluted = populated. Oops. I still do not qualify as a “numpty”.
http://tinyurl.com/eqmdt
“Best time to buy a home might be now”
“While prices aren’t rising as fast as
they were during the past five years,
homes aren’t losing value, either, experts
say. That means prospective buyers should
not hold out hoping for a price plunge.
“I learned when I was very young that he
who hesitates is lost,” said Michael Cannon,
managing director of Miami-based Integra
Realty Resources. “If you wait for the bargain,
the bargain may not be there.”"
Speaks for itself…
I learned a different lesson when I was young:
Fools rush in where wise men fear to tread
That’s EXACTLY what’s been transpiring over the past 2-3 years. The mortgage complex has been shaking the tree to locate the greater fools, and they did a wonderful job of getting them to line up to spend $$$$ that wasn’t theirs. WHose $$$$$ was it? We don’t know those details and won’t for a couple of years. The derivative market is woven through the fabric of most 401k plans, that’s for certain.
Hey, by that definition, property values can continue rising at 20% a year while prices fall by the same. In three years we should be able to buy a nice house worth twice as much for half as much as today!
Just think realtors will be listing houses this beauty is valued at over $1mil but for you $250K
David Bach was on TV (Early Show) plugging his book, Buy Real Estate, and giving an example of rent for $1500 and home purchase for $200,000. THat wouldn’t work in places like SF, NYC, etc, where can you find a home for $200K? He will address the housing bubble tomorrow. See what $HIT is said.
“You probably won’t see a reduction in value, but maybe in prices, meaning you can pay less but it’s worth more.”
That is by far the best quote I’ve heard since, “I voted for it before I voted against it.”
Hey Mike in fl,
Did you see the quote from local realtor Richard Bass? funny stuff… he said essentially that declining prices equals ’slow appreciation’.
I am tracking zip codes from WPB down to Boca and the # of listings has doubled in 6 months.
The reporters published that guys letter to make him sound like a moron. He moron, you said prices weren’t going down.
He says, “it was the media’s fault!”
What a conspiracy theorist.
Have any of you in San Diego seen this Realtor commercial that’s been airing a lot lately?
Here is the transcript:
Hi, I’m Matt Battiata. When you take advantage of my guaranteed Sale Program. Your home is guaranteed to sell in under 60 days, at your price or I’ll buy it myself. And the best part is, it’s 100% risk free. If you’re not happy with my service, fire me and pay nothing. Granted, I think you’ll BE happy, because I sell more homes than any other agent in North San Diego County. I’m not bragging, I’m applying for a job!
They say you can see the commercial on their website here http://www.noriskorobligation.com/ but the link on the website to the commercial didn’t work for me.
Here is the guarantee from the website:
Guaranteed Sale Program
We will give you a guaranteed written offer on your home up front and in writing. This will give you the assurance that if your home does not sell in time to buy your next one, we will buy it at the up front agreed upon price. We think you’ll agree, shopping for homes is just more fun, when you know your home is already sold.
Or their trade-up program:
“Trade-Up”
This program increases the number of potential buyers for your home. If a buyer would like to “Trade-Up” to your home, we guarantee that their current home will sell in under 60 days, or we’ll buy it ourselves!
Since I never take anything a Realtor says at face value, could someone please comment on what is in play here? And how common is this marketing strategy? Even if they give a guaranteed written offer to the client that the realtor sets as reflective of market conditions rather than the “fantasy price” so prevalent these days by sellers, in a down market that may not be enough for a sale AT THAT PRICE.
As we have seen, the market seemed to change very quickly. They don’t say they’ll make up the difference if it sells lower than the guaranteed price but rather buy it at the up front agreed upon price. If they lowball the price a bit to make sure it sells, they aren’t doing themselves or their clients any favors either.
I’m con-foosed.
It sounds like real guts on the agent’s part:
They have to estimate at a price which the seller will be able to get. If they lowball too much, the seller will walk away, if they go too high, they can get in trouble.
It makes sense to do during the appreciation-phase of a bubble, but could get the RE agent into deep DEEP manure if prices continue to drop.
Read about One of his listing… too funny
.
I’ll go out on a limb and guess the up-front agreed upon price is 15-20% under the asking price. I’ve actually heard a very similar ad here in Portland, so this must be a new nationwide tactic. The realtors probably learned it from at some cheesy conference or something.
I thought of that but he clearly says:
Your home is guaranteed to sell in under 60 days, at your price or I’ll buy it myself.
I suspect “your price” here means “the up front agreed upon price” quoted elsewhere in the ad., and could well be under a normal asking price.
The offer does mean you can go looking for your next house with the knowledge you won’t get caught paying two mortgages, but presumably you’re going to get pushed hard into the “trade-up” program so he can get more commission.
I would also check, despite the “fire me and pay nothing” comment, that he is not getting an enforceable option to buy.
it doesn’t say…..Your home is guaranteed to sell in under 60 days, at your price or I’ll buy it myself (at your price)
LOL…I love the headline: Realtor: Home values in Florida to remain solid
I guess they will!
I’m actually hoping for hurricanes. Reason?
New building will slow. And i think over-building is a massive problem in FLorida… and hurricanes will push it all back at least 6-12 months.
Thoughtless comments like these are why some accuse us of being goulish.
The market will take care of itself in due time; wholesale destruction and death are not required.
I agree. I live in Florida and am responsible for many animals. Hurricanes are not funny. They create misery. And they encourage developers, who rush in to rebuild. Already Punta Gorda is sprouting a new, bigger crop of million dollars houses on the waterfront. Developers have also flocked to New Orleans, despite the fact that it is literally sinking, and cannot last out this century.
http://pesn.com/2005/09/23/9600175_Rebuild_Energy_Systems_Not_NewOrleans/
You may have to type this in, but it’s worth the effort.
Craigslist post for Hampton Roads.
http://norfolk.craigslist.org/rfs/139732258.html
Sorry…
“You probably won’t see a reduction in value, but maybe in prices…”
———————————————————————————-
No one will be able to outdo this quote.
Rainman,
You forgot this one from that realtor in San Diego:
Buyer Money Back Guarantee
Someone PLEASE find out about this gimmick.
I love what this realtor has done - a very effective seller.
http://s92552267.onlinehome.us/albums/MsgBoard/Poplar2.jpg
http://s92552267.onlinehome.us/albums/MsgBoard/Poplar1.jpg
http://s92552267.onlinehome.us/albums/MsgBoard/Poplar3.jpg
http://s92552267.onlinehome.us/albums/MsgBoard/Poplar3_001.jpg
View the pics in the order listed above. Some of these pics are in 1650×1080 so you may need to click the little box that appears in the lower right corner to see them clearly. Also can’t figure out how to use the HTML code for a link to show properly so I just pasted it in.
They’ve been trying to sell that for a LONG time, haven’t they? I remember when you posted that some time ago…
Hurry, this one won’t last! LOL!!!
I read her statement three times and I still don’t understand it. I have a word for this language: R-Ebonics!
Darn it!!! cant get a loan, this bubble talk is ruining me from taking your equity, damn u
I think I have a clue how the realtors can say “you pay less, but it’s worth more”!
Here’s an excerpt from a Realtor’s ‘market condition evaluation’ of Phoenix, where the inventory has increased by something like an order of magnitude or two over the last months?
I checked those market evals on Realtytimes to see how Ann Arbor is looking in the springtime according to the ‘experts’, and saw that it was still just under a 2 on the 1-to-5 point buyers—sellers scale, and a 2.5 on the price trend scale. Feeling that this was just wrong, I thought I’d see whether the fumes were as intoxicating over in Phoenix spinzone, and saw this from an area real estate company, run by Thomas and Nancy Inserra:
it’s dated 3/7/06
————————————-
Currently, there is very strong buyer demand for homes priced from $350,000 to $950,000 throughout the entire Phoenix metro area, resulting in appreciation rates ranging from 20% to 50% per year. Some of our clients are more focused on finding those areas that are appreciating the fastest, while other clients are more focused on finding the best school districts.
Our sister company (Pinnacle Peak Appraisal) has just been awarded a 5-year contract which requires they photograph, inspect, and appraise over 1 million homes in this area. That means we and our customers will be able to access a photograph and the official appraised value of virtually every home in the Phoenix and Scottsdale metro areas in seconds, rather than waiting a week for an official appraisal to be obtained.
This data will help ensure that buyers do not overpay for a home, and that sellers obtain a fair price. It will also allow buyers to view a photograph of all the nearby homes in the neighborhood. This service and detailed information is not available from any other firm, and we will begin offering this service in 2006
——————————————–
so, the appraisers and the real estate cos. are ’sisters’! that way, you can have the fab deal as a buyer of paying less but having the appraiser tell you that its worth far more! and, conversely, if you’re a seller,their sister companies will assure you get no less than appraised value! It’s win win in Phoenix!
And of 31 realtor evals in the past month or two, it is a completely 2.5 neutral market overall buyer/seller-comparative advantage and pricewise (isn’t it interesting how those are separate scales?)
So, that made me feel less worried about my local area. They’re *all* inhaling deeply on realtytimes!
I like the name of the sister appraisal co. “Pinnacle Peak”…
very high indeed…
cheers!
This conflict of interest with Pinnacle peaked my interest, mainly because it seems like an impossible claim to appraise 1 million homes by a single company (that would be something like 547 home appraisals every day, including weekends, for 5 straight years). Thomas Inserra’s web site “myazdream.com” is really bush league. An exact cut and paste from his site reads “Specialization - We are experienced helping buyers and sellers in all price ranges in the entire Phoenix, Scottsdale, Mesa and surrounding areas. Our headquarters in north Scottsdale specializes in representing clients with homes over valued over $500,000.” Note, his grammar is so bad that he actually is advertising that he represents homes “over valued”. He also claims to have conducted $60 BILLION in real estate transactions. Do the math on this claim…it is impossible (works out to be something like 175,000 homes with an avereage sales price of $350K). This guy would be investigated and in jail if he worked in most any other industry, however in Real Estate he can boldly lay claim to his title as REALTOR! He is also proud to boast his MBA from PHOENIX Univerity (diploma mill).
Ah, the MBA from Phoenix University, that’s great! I guess that distinctive diploma has more cache in AZ! There’s some sort of office for them down the road from me…it’s that on-line pop-up ad place right…get it.
If he doesn’t really have access to special appraisals though, isn’t there some generic lying-as-a-business-person law to catch him with? I mean, if you’re a realtor, are you specially *exempt* from misrepresenting yourself and your services? Sorry, I’m just ignorant about business practice law…
I’m thinking of the judge in that case related on another thread by “mrincomestream” and the ethics issues he and rainman18 were ‘discussing’…
judge says “sir, is this common in real estate practice?”
(refering to lying about a special connection to a collusional affiliate in the appraisal business who has a fictional contract to record details on a million homes)
Mr Inserra: “yes, it happens all the time”
Judge: “okay then; case dismissed”
cheers!
What a bold-faced lie. I did a quick check of Purdue University offerings….THEY DO NOT OFFER A COURSE IN ORGANIZATIONAL MANAGEMENT.
On to the next lie….more than 2,000 hours of post-graduate work in Real-Estate 2,000 HOURS IN REAL ESTATE ?????? 2,000 HOURS ????? WHERE IN THE HELL COULD YOU AMASS 2,000 CREDIT HOURS IN ANY COURSE OF STUDY ???? I KNOW OF SOME SMALL COLLEGES THAT WOULDN’T OFFER 2,000 HOURS ACROSS ALL THEIR DEGREE PROGRAMS !!!!
How can people publish these sort of lies….and better yet, who in the hell would be gullible enoght to believe this crock o’ shit ???
/rant over
d’oh! I meant Phoenix is 2.9 on buyer/seller market scale (it’s 1 to 5) and 3.1 on price trend, as averaged over the 31 experts.
and ann arbor is looking sorta sluggish even according to its 12 experts with a 1.8 on buyer–>seller scale and a DON’T-PANIC 2.6 on the price trend scale.
I wonder if Florida has many of these joint realtor-appraiser offices too?
I am watching this housing market downturn and the related spin with great amusement. Real estate agents and folks who have a vested interest in keeping up the illusion of a robust housing market are hoping that this is a blip and not a crash. LOL.
Some observations from the Miami area….
1. The Grovenor Condo in Coconut Grove which is almost completed….was supposed to have $1Million+ condos…i am seeing 2 bedroom ocean view condos going for 750K (asking price).
2. Saw a condo near Coco Walk in coconut grove with a “reduced” price. First and only sign I have seen that has the word “reduced” in Coconut Grove.
3. Am seeing lot of ads for 2 bedroom bay view condos in downtown Miami area being advertised in the $500K range…that is the asking price….I am sure they will sell for the $400K range.
4. A few town houses in Coconut Grove have been for sale for the past 5-6 months….still for sale. Asking price is too high. Owners are stubborn and wont reduce the asking price. I see people checking out these houses, but no buyers.
5. Flamingo Apts in South Beach just did a condo conversion. There will be 1000 condos coming on line in the near future. They have a staged approach where a subset of condos will go for sale so as to not saturate the market. Askign price for condos is very reasonable for south beach…maybe my estimate of “reasonable” has been skewed by the outrageous prices. I make a comment that at 2.56, gas is cheap…..it is not cheap, but I remember when it was 3.45 for a few days after a hurricane.
6. A few large condo complexes are nearing completion in downtown Miami. I havent had time to browse the asking prices for those condos, but friends have been saying that substantial discounts are being offered.
7. One build I know just traded his porsche Cayanne for a Ford F150.
What is everyone’s prediction (time frame) for D day in regards to the housing market and the economy?
For sarcastic humor, I set up an email housingbubblesobstory@yahoo.com we can send emails to the FBs and congratulate them for making the blog. pswd is popping I am sure to get some nasty replies back
okay, this may sound weird, but I’ve gotten caught up on this pinnacle peak appraisal thing. I don’t know jack about what appraisers are *supposed* to do, but when I looked up Pinnacle Peak Appraisals of Scottsdale, I got a link to a company called “Zaio” out of Calgary Canada.
They possibly *can* do like 400 “appraisals” a day, because what they are doing is merely photographing the exterior of a house, and then putting it on a vast database hooking it to assessors data and recent-sales data. This seems freaky to me, but what do I know…
check it out!
http://www.zaio.com/AboutUs/FAQ.asp
cheers…
so, it seems that Mr. Inserra may be only bending the truth with his claims about his ’sister’ company Pinnacle Peak appraisals, and using words like ‘won a contract’ to mean ‘bought the rights to ‘appraise’ the phoenix zone’ of Zaio’s scheme.
They’re selling this along with proprietary software apparently, and so Mr Inserra’s clients would indeed get access to this ‘product’.
How can you include the value of granite countertops this way?!