“Speculators’ Ability To Make Money Has Plummeted”
The Herald Tribune reports from Florida. “Hundreds turned out to a Long Island Marriott Hotel to hear one of several presentations that led many northeastern investors into perhaps the biggest financial catastrophe of their lives. As the historic 2003-05 Florida real estate boom peaked, Seashore Resorts LLC and its agents regaled investors with stories about…the potential for 30 percent annual returns on residential real estate.”
“Seashore pitched ‘100 percent spec investor pre-construction loans’ requiring little or no money down so long as the investor had good credit: a score of 680 or higher. By the time most investors were brought aboard, the music had all but stopped, along with the work on their homes.”
“Scores of investors are now preparing to go to court, saying they were swindled and sucked into a deal where they lost control of their credit lines. They say that Bradenton’s Coast Bank, now wrestling for its own survival, did not adequately supervise the loans, allowing large draws by Construction Compliance Inc, with no proof that work had been done.”
“At first, many deals worked out in the booming Florida housing market of the last several years. Investors watched as friends made killings, and those tales of success drew more friends, family and club members into the fold.”
“George Tannous, a New Jersey resident, and several friends and family put down sums ranging from $2,500 to $7,500. ‘Each investor very quickly had a credit line established at Coast Bank amounting to as much as $300,000 each,’ Tannous said.”
“Joanne Inglese, another New Jersey investor, was told to expect a 10 percent slice of the gross sales price of her home, or about $30,000, for the use of her credit. She has since seen $70,000 drawn from her Coast Bank loan for an uncompleted home, liens from subcontractors who have not been paid by CCI and the prospect of a badly damaged credit rating.”
“Paul Matera and Bob Prisco were big movers of Seashore deals. Prisco and Matera were paid fees of up to $3,000 by each of the 70 investors they brought into the deal, for a total of about $210,000. Matera said he personally invested in two uncompleted CCI homes and some of his family members invested in another two. ‘I invested right alongside everybody else,’ he said.”
“Matera said he ‘feels terrible’ about the problems that have arisen around the deals he sold to investors. But he said he warned everyone whom he brought into the Seashore circle that they should ‘not do this deal, if you can’t carry the house.’”
The Palm Beach Post. “In St. Lucie County, whose phenomenal boom-time growth once prompted a front-page story in The New York Times, new foreclosure filings in January more than quadrupled, RealtyTrac said Tuesday. And some analysts say the worst may not be over.”
“In St. Lucie County, speculators fueled a run-up in home prices, as they did throughout South Florida, analysts say. Consultant Jack McCabe estimates that as many as 50 percent of St. Lucie County buyers were ‘investors buying to flip homes like a share of stock.’”
The Orlando Sentinel. “The quick sale of homes for a fast buck is fading rapidly in Florida and even faster in Central Florida. Sales of homes owned less than six months fell again in the fourth quarter, as flat home values continued to cool the practice of speculative, quick sales known as ‘flipping,’ according to a company that tracks sales and home values.”
“Speculators’ ability to make money on a quick sale has plummeted, Ela said. The company’s analysis of Florida sales found that the number of flippers who lost money on their gambles more than doubled last year, from 10.4 percent in 2005 to 24.4 percent. ‘That’s a big jump,’ said HomeSmartReports President Mike Ela.”
“Of those speculators who lost money on a Florida home sale, the median loss was $23,250 in the most recent quarter, up from about $15,000 a year earlier. ‘They were losing more money every quarter,’ Ela said.”
The Sun Sentinel. “Almost three years ago, Al Vazquez bought a historic fixer-upper next door to him in the Parker Ridge neighborhood of West Palm Beach. He transferred his homestead exemption to the new house, then watched in disbelief as the property taxes on the first home ballooned to $3,500 from $650.”
“Carrying two mortgages, Vazquez recently tried to unload the tiny home off Forest Hill Boulevard to a friend for about $200,000, or about 20 percent below market value. ‘It would have been a steal,’ Vazquez said, ‘but his property taxes would have doubled.’”
“After almost three years of frustration, Vazquez said he can’t wait for the day his home sells. ‘We just want to get rid of it and go on vacation.’”
The St Petersburg Times. “Homeowners aren’t the only ones vulnerable to foreclosure these days.”
“Sun Vista Snell LLC, which paid $41-million last year for a Snell Isle apartment complex and planned to spend another $20-million converting it into condominiums, has been sued by its chief lender for allegedly defaulting on a $34-million loan.”
“Wachovia Investment Holdings LLC claims Sun Vista stopped paying its mortgage in October, just months after obtaining a loan to acquire the 272-unit Snell Isle Club complex on Eden Isle.”
“In a court filing, St. Petersburg-based Sun Vista acknowledged that it stopped making payments but denied defaulting on the loan.”
“The suit could spell financial trouble for principal John Loder, who caught the real estate bug after his family sold the Crabby Bill’s restaurant chain and is involved in several other high-profile real estate projects locally.”
“Wachovia says Loder and architect Stephen Spencer both guaranteed the loan personally; each claimed he was worth at least $20-million.”
“Wachovia’s not the only Sun Vista creditor feeling crabby. Gannaway Builders of Clearwater claims the developer stiffed it for more than $500,000 worth of work, while Gulf Coast Painting and Waterproofing says it’s owed about $38,000.”
The Tampa Tribune. “A Tampa title agency under investigation by state and federal authorities for its role in questionable property transactions has closed. Ocean Title’s sole underwriter, Houston-based Stewart Title Guaranty Co., terminated its relationship with the company in November, two weeks after The Tampa Tribune published a story detailing how the agency handled some of the sales.”
“Stewart ‘has continued to cooperate with the various investigative agencies,’ Susanne Hawkins, regional claims counsel, said in a statement Wednesday.”
“The Tribune’s story in October detailed 36 area homes sold over seven months by Tampa real estate agent Dawn L. Molen. Her buyers, most from Indiana and in an investment club, consistently paid $50,000 to $70,000 more than the sellers were asking.”
“All the deals were closed by Ocean Title, and the money beyond the seller’s price, an average of $60,000, was paid as an ‘assignment fee’ to third parties associated with Molen.”
“The story prompted investigations by the state attorney general’s office and three other state agencies. Stewart representatives have said the FBI also is investigating. Nina Banister, spokeswoman for the Florida Department of Financial Services, which oversees title agents and agencies, said its investigation is ongoing. ‘It is very active,’ Banister said.”
“Amity Bernhard, an officer of Ocean Title, said the company closed because it could not do business without an underwriter. ‘We haven’t been indicted, but because of the bad publicity … the business I worked so hard to build is now defunct and all my employees have been laid off.’”
‘After alarming buyers with new plans to go rental, a national home builder’s first venture in Manatee County will stay available for purchase. Sales associates at KB Home’s Willowbrook townhome community began informing buyers Monday afternoon of the development’s new fate. Less than 24 hours later, a statement released by the company recanted.’
‘I don’t know whether to be extremely happy or completely confused. I think I’m both,’ Holland said Tuesday evening.’
‘Diane and Bob Goukler are camping in their new condo on the 18th floor of High Point Place and seeing what downtown Fort Myers has to offer on the weekend. The City of Palms has been waiting for folks such as the Gouklers since the April 2003 adoption of the redevelopment blueprint.’
‘Peg Cullen of St. James City and Janice St. Hilaire of Bokeelia, come downtown for the arts or the Florida Repertory Theatre. But not much else. ‘I wish there were more things to bring us here,’ Cullen said. ‘I don’t come down here at all,’ St. Hilaire said.’
This is going to get real ugly.The stories comeing out here just show how much people were involved in this get rich scheme.I am personally surprised how much people gambled on real estate.Things could be worse than I ever thought and I’ve been very bearsish since 2003-2004.I looked at a link from russ winter in bits and bucket that showed REO’s from countrywide in california.Sacramento has the most followed by sandiego from my short glance.I think there were over 600 properties that countrywide is trying to unload in ca alone.
“I think there were over 600 properties that countrywide is trying to unload in ca alone.”
Keep in mind that 1 year ago it was still less than 30. That 600, along with foreclosure numbers for all the major players, seem to be growing ~2-4%/week in CA.
From what I understand we are seeing the fastest rate of increase of foreclosure activity in history. I like amny here am not surprised, since very few who bought in cecent years have sufficient income to cover these huge debts…
GH
I believe you are correct. I believe the current increase is absolutely unprecidented.
Driven by:
1. Cash out “MEWs” in multiple forms.
2. Overbuying (new records in mortgage/income)
3. Higher downstream payments.
Now, I intentionally used the 1920’s/1930’s term for a mortgage that has a payment increase after an initial period. Peruse any 1935 through 1946 literature on the mortgage market (that’s over 30 pages) and they will have a section on the macro economic problems induced when a large portion of mortgages are subject to higher downstream payments as happened in 1930, 1931, and 1932.
You would think we could learn from history.
Let’s see… $1.1 to $1.4 Trillion reset in 2007. A “gentle reset” is like the coworker’s neighbor I already commented on where an extra $600/month went straight to “jingle mail.” (Or as they say at my work, “Just throw the keys on the roof.” In reference to the massive 1990’s aerospace layoffs and what hundreds of people did to excape their morgages.)
But what about all those people on neg-am’s who barely qualified circa 2003 through 2006? Definate FB’s. Greedy FB’s. As so many have noted, its impossible to con an honest man. (P.T. barnum?)
Got popcorn?
Neil
ps
I see this showing up in rents! $600 deposit! (1/3rd rent) One month free! I was going to comit to a really nice complex… but now we’re going to look at another really nice complex where a 1300 ft^2 townhouse is $250/month less with the same ammenities (granit counter tops, crown molding, large kitchen, washer/drier, attached 2 car+ garage, etc.)
These fairly new complexes couldn’t have been built for sale and converted to rentals… not by three different companies withing blocks of each other… Not possible.
And I as the scupulous person that I am would never think of touring all three complexes and seeing what further rate decrease is possible. Not when two of the three advertise the available units and there have been over a dozen that haven’t moved in 6 weeks and over a dozen more units coming onto the market in the next 4 weeks. Noo… not me.
Ok, I’m a nice guy, but when it comes to negotiations… I turn cold and analytical. Saving an extra $200 to $300 a month translates to another $2k to $3k in savings for me. (Notice the rounding down… I’m just being honest with myself.) That will help me very nicely when I buy.
No earlier than Fall 2008.
I’ll still be reading this blog to see if its wise to step into the market then.
Got popcorn?
Neil
Too bad we’ve already bottomed out here in LA. Thanks LA Times:
Home prices remain steady
The Southland median in January is $485,000, defying expectations that it would be lower.
By Annette Haddad, Times Staff Writer
February 15, 2007
Southern California housing prices held steady in January while sales declines slowed, according to data released Wednesday, prompting some experts to suggest that the local real estate downturn may be nearing a bottom.
The region’s median home price last month of $485,000 was in line with the monthly median for the last seven months, and up 5% from a year earlier, according to La Jolla-based research firm DataQuick Information Systems.
Meanwhile, the sales decline of 17% from a year earlier was the smallest since May. And although the 18,121 transactions amounted to the worst January since 1998, the volume was about average for the last two decades, DataQuick statistics showed.
“The market is showing much more resilience than we or anybody thought,” said John Karevoll, DataQuick’s chief analyst. Last year, Karevoll and others forecast that Southland home prices would be lower than year-earlier levels by the start of 2007.
before everyone gets all excited by the lack of crazy mortgage money, check out this email from option one this morning (guess no told the salespeople that they are for sale):
“Good Morning!
Option One is known for our Foreclosure and Bankruptcy niches. Here are some products that have been selling like crazy:
• 100% LTV 11 months out of Foreclosure w/ 600 score.
• No BK Seasoning – 1 day out to 100% LTV w/ 600 score.
• Foreclosure Buy-Outs to 65% LTV
• BK 13 Buy-Outs
…and NO REESTABLISHED TRADES REQUIRED!!!
Not only that, but we can count trades (including the foreclosed property) that were included in the BK as tradelines!
Submit your files online on our Automated Underwriting (***see below). Not signed up for AU yet? What are you waiting for with these great rates?? Click “Go Directly to AU” on the left, select “Need a Log In” and complete your info!!
Did you know Option One re-issues credit from 41 credit vendors!! Eliminate the risk of score changes when other lenders pull their own credit! Let’s close some loans!
***AU will flag foreclosures and usually give an answer, “Option One will consider recent foreclosures on a case-by-case basis.” But, please click “SUBMIT FOR UNDERWRITER REVIEW” anyway!!! We only require 11 months out. Please call me if you have any questions.
soooooooooooo, apparently if you defaulted last year on your mortgage and hit the rocks, it’s still a great time to buy!!!!!
“• 100% LTV 11 months out of Foreclosure w/ 600 score.
• No BK Seasoning – 1 day out to 100% LTV w/ 600 score.
• Foreclosure Buy-Outs to 65% LTV
• BK 13 Buy-Outs “
They must be desperate to keep the Ponzi scheme going, if they stop giving out these crazy loans I bet the whole company will collapse. With these standards I bet your pet dog or your dead aunt could get a lone with these people.
Hope they don’t collapse too far. Option One paying for ads on this website.
Is it possible to hold a 600 credit score after 11 months and a foreclosure?
thats what i was wondering.
Me too.
In short… if you know how to rebuild yes
“…and NO REESTABLISHED TRADES REQUIRED!!!
Not only that, but we can count trades (including the foreclosed property) that were included in the BK as tradelines!”
after i posted that, i reread it. and then i reread it again. what that means is that they will use a utter default (foreclosure) as a valid tradeline and a justification to give this stiff a new mortgage. hr block better get rid of this puppy like quick. i’m floored.
Screw H&R! These people are nothing but scamsters!
May they go down in flames straight to Hell!
“i’m floored”
Don’t be more is coming. My inbox for mortgage offerings reads like the funny papers. It gets funnier and funnier by the day. They are starting to feed on themselves now.
Do they have popcorn?
“Scores of investors are now preparing to go to court, saying they were swindled and sucked into a deal where they lost control of their credit lines. They say that Bradenton’s Coast Bank, now wrestling for its own survival, did not adequately supervise the loans, allowing large draws by Construction Compliance Inc, with no proof that work had been done.”
How many more times this year are we going to hear these stories?? Unbelievable!!
I look back at my many trips to the Carribean from Cali via Miami the past 4 years and seeing all these Massive “luxury” condos for sale in the AA magazine. Even then i thought to myself, ” who is going to buy all of these?” Now I know exactly who did. lol
Carribean = Caribbean I always misspell that word.:-)
she’s claiming she didn’t know about the fraud ?
“Amity Bernhard, an officer of Ocean Title, said the company closed because it could not do business without an underwriter. ‘We haven’t been indicted,
We haven’t been indicted,….
yet.
AP
Housing Sales Fall in 40 States in 4Q
Thursday February 15, 11:25 am ET
By Martin Crutsinger, AP Economics Writer
Housing Sales Fall in 40 States in Fourth Quarter
WASHINGTON (AP) — The slump in housing deepened in the final three months of last year with sales falling in 40 states and median home prices declining in nearly half of the metropolitan areas surveyed, a real estate trade group reported Thursday.
http://biz.yahoo.com/ap/070215/housing_slump.html?.v=4
who are the 10 winners ?
corn and gas states
Hope this story is in your next thread Ben.
To the flippers: (channeling Cartman)- “hmm, I love licking your tears up, they taste so good, hmm!”
Hopefully the idea of making a fortune for no work and little risk gets destroyed at least for a couple generations. Here’s something to chew on, if making a fortune is that easy, then everyone could do it. In this craziness, many tried and discovered that making a fortune without work means you have to take great risk and when too many people get involved, the resources (i.e. first time home buyers) become scarce and the flippers discover the downside of risk.
“Hopefully the idea of making a fortune for no work and little risk gets destroyed at least for a couple generations”
So true. About 10 years ago, when I was in graduate school, I attended this workshop (I saw the infomercial late one night) about some guy (can’t remember his name Mendez or Martinez?) who told us we could all make a fortune on tax leins. For the first twenty minutes I was all excited. Then I realized to myself that if it was soooo easy to make big bucks of tax leined homes, others with more capital, more intelligence, more drive, would be making those same dollars. I stayed until the end, but was one of the few that did not fork over the near $1,000 (I think it was $850 or so) for the VHS tapes that gave specific info.
” realized to myself that if it was soooo easy to make big bucks of tax leined homes, others with more capital, more intelligence, more drive, would be making those same dollars”
This should be lesson one in every high school. People with “get rich quick” schemes, logically, would NEVER share that information if it really worked. How do you know this is a fact?
Why would they bother trolling for a grand here and there, why bother with all the cost and work of a seminar?
Does anyone really think that, outside of their parents, MAYBE their siblings (and possibly, their very closests friends) there are kind hearted people who want to make others, instantly and effortlessly rich?
The single best thing the goverment could do is to pound it into people that these schemes are, logically, impossible.
Here’s something to chew on, if making a fortune is that easy, then everyone could do it.
Conversely, if anyone can do something with little effort, it’s either worth little or nothing (i.e., there’s no scarcity).
I think it has more to do with a combination of people intuitively realizing that the economy/markets are not entirely rational. They don’t need a Phd in behavioral econ. to see that the efficient market hypotheses is wrong.
The problem is, acknowledging that there are opportunities out there that other people don’t see is only part of the problem. You have to know your own limitations which, despite knowing perfectly well other people screw up there is a psychological process that people view themselves as immunized against failure through the process of getting instruction from the “expert.”
I’m sure there are people who make money on tax liens . They probably had other captialization before starting out and didn’t come to it from a learn while you earn type taped seminar.
Theres probably a good paper to be written comparing seminar participation to lottery participation.
If 10 percent of seminar participants succeed, and you spend $500 on lottery tickets each year, wouldn’t it make more sense to buy into a seminar that has a higher expected return?
“This information confirms 2006 was the year of contraction and hopefully the fourth quarter was the bottom,” Lereah said. “When we get the figures for this spring, I expect to see a discernible improvement in both sales and prices.”
hopefully 4qtr was the bottom? this guy is such a jerk
keep those fingers crossed david
What does being an economist entail? Analysis of hard stats, mathematical models, historical trends and coming up with a prediction? Or does it require the grasping at straws, considering only the best case scenario based on unascertainable facts (e.g. the rich baby boomers have ALL this money), and coming up with a prediction that is based on wishful thinking and cheerleading?
Judging by Lereah, I’m beginning to think that almost any inobjective person who lacks any critical thinking skills can become an economist.
This david lereah is a total liar and biggest bullsh@tter I have ever seen.What else is the guy going to say? He is just trying to add some credibility to his bogus agenda.Every week he is calling a bottom, crying wolf too much is not good in this situation.Do not trust the data they are spewing out.Do your own research and follow the numbers.
Does anyone else suspect David Lereah is “Baghdad Bob” in disguise?
“The American’s are nowhere near Baghdad.”
The NAR put a fantasy spin on the numbers. But the AP reporter put the most bearish numbers up front — the sales not the price. And Lereah was at the bottom of the article.
They say that Bradenton’s Coast Bank, now wrestling for its own survival, did not adequately supervise the loans, allowing large draws by Construction Compliance Inc, with no proof that work had been done.”
hehehe…cheap f*cks didn’t want to spring for a $75.00 construction compliance inspection by their appraiser.
VP of construction lending should be hung by the yardarm.
HD;…Progress inspections for draws are standard practice here…..Gotta believe there is some fraud here ??
SCDave-
You’d be surprised at how absolutely totally incompetant the staffing can be at lending operations.
Hordes of HS educated little girls overworked and underpaid, overseen by legions of do-nothing mid-level staffers.
Left hand hasn’t a clue what the right is doing.
The construction compliance report oversight could be fraud, or it could be that the little drone in charge of ordering the reports got laid off or quit, and the idiot supervisor never checked on the status of the inspections.
Seen it more than once in my career.
As a resident of Florida, I have absolutely zero sympathy for speculators gobbling preconstruction property and driving prices beyond the reach of working families. May they drown in the gallows of greed, deception, and debt.
You mixed a nice metaphor there. But I get your point and I agree about making it hard for regular folks to buy.
Hey, I am starting to believe that any moron can be a VP of any bank.
or president of the great USA.
“Carrying two mortgages, Vazquez recently tried to unload the tiny home off Forest Hill Boulevard to a friend for about $200,000, or about 20 percent below market value. ‘It would have been a steal,’ Vazquez said, ‘but his property taxes would have doubled.”
I don’t care how “historic” that neighborhood is, it’s worth $120K. $200K is no steal! If he really wants it off his hands, try lowering asking to $120K and watch it fly. CRAZY!
Vazquez recently tried to unload the tiny home off Forest Hill Boulevard to a
friendbagholder for about $200,000, or about 20 percent below market value.There. Fixed that.
Fixed!
Off topic, but here’s an article about the widespread shoddy construction that has been done over the last few years.
http://biz.yahoo.com/hmoney/070214/021307_construction_moneymag.html
That’s a pretty good reason to avoid new homes. Does anyone know about how long it takes (on the average) for the weight of a house to settle?
I’ve heard that nearly all major structural problems related to settling should be detectable within 6-8 years. If your house makes it past that point with no apparent issues, you should be in good shape.
Oh, you’ll know quiker than that. As soon as doors do not close properly, or conversely, close by themselves, stucco splits, cracked tiles and interior paint cracks. 6 months-2 years…you’ll know.
When new houses are built around here (eastern Bavaria), they usually don’t get their stucco for about two years after the completion of construction for that very reason.
They’re built from pretty hefty (but ugly) clay bricks, so you can definitely live in it once the windows are put in.
Germans fully intend for their expensive little houses to last long enough to be inherited.
What Pulte said:
“Structurally her home is as sound as any other home we’ve built in the city,” says Todd Lipschutz, Pulte’s division president in Kansas City. “We will make the necessary repairs.”
Uh…yeah. Her home is as sound as any they’ve built in the city.
Things that make you go…hmmmmm.
BayQT~
“Structurally her home is as sound as any other home we’ve built in the city,” says Todd Lipschutz, Pulte’s division president in Kansas City.”
Probably true. But the problem is, none of them are sound. That is what you get when you hire illegal unskilled labor. I really have a problem with these builders because of this. Through their use of this cheap and ILLEGAL labor, they were able to make margins above and beyond what has ever been seen before. Though their costs were cut significantly, this savings went straight into their pockets, instead of the consumers. And now, the homebuyer is stuck with all of the problems. This shoddy construction is a crime in more ways than one. Why is this allowed to continue? The government can raid a few meatpacking plants, but turns a blind eye on the industry employing the lions share of these illegals? This stuff just boils my blood. I am so disgusted with the federal and state governments on this matter. You can’t blame the illegals, their behavior is encouraged and rewarded. Back in the early nineties, there used to be raids on the hotel/casinos in NV rounding up the illegal labor, and levying fines. Somehow, that all went away. It’s all about the dollar. Stab anyone and everyone you can in the back, as long as you get yours. Despicable.
“But the problem is, none of them are sound.”
Exactly my point, BBear.
BayQT~
Builders always use the lowest price subcontractor. I once worked for a subsidiary of the NAHB, and heard our president (who was a former NAHB president) say that to an audience.
If the sub who uses illegals comes in with a lower bid, that’s who the builder will use. There’s no other consideration.
No interest in quality? Does anyone have to know anything about plumbing, electric wiring, pouring a foundation? Are the homebuilders immune from lawsuits, or are their pockets so deep they can wait out any buyer with a shoddy house who attempts a lawsuit?
They just file bankruptcy, after running off with the company money, before the lawsuits can be finished.
Builders licenses are often in the name of the builder personally. They bankrupt the company, set up a new one, “work” for the new one, bankrupt that and the cycle goes on forever….
Don’t forget that if the amnesty for those million of illegal construction workers goes thru, right during the housing bust, those illegals unemployed within the construction sector will be eligible for welfare at the taxpayer’s expense.
Another thing, if Bank of America will be issuing credit cards to illegals, wouldn’t that facilitate ICE’s job in locating them? All ICE has to do is ask Bank of America for the illegals addresses on file. I must be living in a twilight zone.
anyone have the industrial production number minus utilities ?
bad
This Florida story has got to be some kind of sick joke?
Do I understand this correctly? “Investors” actually opened credit lines and gave someone else the spending authority? How is this any different from just handing your checkbook over to somebody you met in a seminar?
Sad. Just sad.
Yeah … the description sounded a lot like the Nigerian 419 scam. Could they really be that dumb?
It was a scam by a investment company and a Construction Co./builder/Realtors so the builder didn’t have to meet the normal requirement for a big project .Apparently Coast Bank paid the builder big draws but the builder didn’t pay the sub-contractors and many investors didn’t even get any buiding done on their lots .The other kicker is that Coast Bank open up a credit line for the investors for 300k ,rather than your normal requirement for a down payment on a constrution loan on a individual lot . The investors were told that their exposure would be about 10k and they would make 30k to 40k in a short time which wasn’t true .Also the investment company and realtors took a big chunk off the top (which was paid out of the investors credit lines from Coast Bank ).
IMHO this was just one more way that crooks were trying to avoid normal lending requirements on new construction as well as getting money while not producing .
Toast- noun
1. Sliced bread that has been browned by dry heat.
2. The state of Florida real estate, including all recent buyers and “investors.”
HEY BILL!!! I’m a recent recent buyer. I’ve told the story 100 times before, but my house was sold at one heck of a haircut. I put 20% down and we waited and waited until we found a seller who was paying 2 mortgages for a year. A house that would have sold for $289K at the peak of the bubble was sold to us at $221,500. That’s what houses in the neighborhood were selling for in 2001 at the end of the year and the first quarter of 2002.
Not all recent buyers are screwed. Just 99.995%
avg home in south fla went up 150% from 2001….check your numbers//
No need to check my numbers. I have the Palm Beach County property tax appraisers office. It lists all of the sale prices. All similar homes built at the same time. here are some sales:
November 2005: $307,000
June 2005: $327,000
July 2005: $342,000!!!
August 2005: $345,000!!!
June 2005: $340,000
May 2005: $325,000
June 2005: $290,000
May 2004: $256,000
October 2003: $233,000
December 2002: $229,000
February 2002: $211,000
December 2001: $214,000
March 2001: $201,000
January 2001: $199,750
These aren’t the same property, but the same builder and the same model. Am I missing something or has someone gotten out their “jump to conclusions” mat? $199K to $345K is 75% which is common in the communities built in the late 90’s in Palm Beach County. They were offered by the builder in the $150’s.
the other 0.005% are only half screwed
LMAO! I LOVE THIS BLOG!!
You got a 25% discount from peak. No deal yet.
“You got a 25% discount from peak. No deal yet.”
Upon further research, I got a 35% discount from peak. I paid a 12% premium from 2001. I paid a 40% premium from new in 1998. At 3% per year, My price in Dec of 06 should have been $208,700. At 5% I should have paid $236,400. A normal market will yield between 3 and 5%. Do you want to tell me that I’m not within that?
Working from a % discount from peek, or a % discount from new is subjective, and quite frankly reeks of trying to convince yourself that you are a “real financial genius”. Be happy with what you bought and where you live.
3% to 5% is a general term for the market as a hole and as much as we like to joke about it, real estate is local.
Can you rent it for the holding cost? That is what counts, otherwise be happy for the intangibles of not being beholding to the almighty landlord.
Some houses will discount 50%, some 20%, some not at all because the owners don’t need to sell. I am happy to see that some are already discounting 35% because that shows their are more to come.
“…trying to convince yourself that you are a “real financial genius…”
I’m not trying to convince myself of anything. I bought a house to live in and waited more than a year and a half to do so. I don’t like people slamming ownership just to slam it. I also don’t like being told to check my numbers. I did that for a year and a half. Once it made sense and fit the budget I bought. I would never recommend that someone buy a house just to call themselves an “owner.” I also advocate $0 in credit card debt, $0 in student loans, and 20% available down before anyone purchases a home at any price.
Andy,
You don’t have to convince these people here of anything. Most are spectators in the game of life and are perma bears. Pay no attention to the naysayers on this board. Some will post with some good insight on occasion, but most I suspect are just scared.
I’m happy for you brother. Enjoy your new home and have a marguerita.
“You don’t have to convince these people here of anything”
and
“Once it made sense and fit the budget I bought.”
yep, thats what i meant just didn’t come out right.
Can I rent it for what I bought it for? The answer there is absolutely. P&I/T&I is $1577. Houses this size rent in the $1650 - $1700 range.
“In a court filing, St. Petersburg-based Sun Vista acknowledged that it stopped making payments but denied defaulting on the loan.”
Ummm, isn’t this kinda, sorta the same thing?
Must be one of those newfangled don’t-have-to-pay-back loans.
I just can’t stand flippers, along with all the people that preyed on them . The flippers drove the prices up by their faulty demand and the whole world ,including lenders ,went along with this stupid investment scheme . The lenders didn’t even care if the property cash flowed on the rental (flip) or not .Lenders have to make RE loans as if they will be holding those notes for years ,(not 6 months ).
I have never seen so many home/condo buyers need to sell so quickly after they purchase . This RE mania really got out of hand . When I saw that a lender gave a 26 year old ,who was broke ,a 500k loan on FLIP THAT HOUSE ,I knew we were in big trouble .
It is the old “You broke the contract first” ploy…Standard procedure when you are getting sued. There is a big difference between proving that someone that lent you money owes you anything at all and proving that you didn’t pay. Creative writing classes aren’t part of law school course work, but is quickly learned.
OK, whatever. Here’s your notice of foreclosure. The sheriff will be by shortly to escort you off the property.
Here’s an interesting article from WSJ: http://tinyurl.com/2anel2
Must be a subscriber.
great greenspan reassures …..
http://www.bloomberg.com/apps/news?pid=20601082&sid=aYmkpWpqx91s&refer=canada
God. Now I feel better. I was worried.
Yeah, that was a close one.
Just die already.
Greenspan is the worst kind of filth. I am glad that Ron Paul is introducing legislation to eliminate the Federal Reserve.
Good for him. It will be interesting to see if it gets anywhere at all.
It won’t. Too many people make too much (real) money off of running the printing presses.
I just returned from a trip to Florida. I live in CA, and yes, the bubble’s bad here, but NOT like Florida.
Frankly, even after having read this blog for months, I was still surprised by what I saw in FL. There are a LOT (as in, poopload) of properties for sale in central and north-central FL (the areas I visited). St. Pete, Clearwater, Tampa, Ocala, Gainesville, you just can’t get away from the towns with very large numbers of houses for sale. Many of them, I might add, FSBO.
Radios are filled with homebuilder ads (I think more than half of the ones I heard were HBs). Highway billboards were largely homebuilder ads. But I saw no one buying.
Empty lots are for sale all over the place, even in the middle of nowhere. Ever heard of Umatilla? Saratoga Springs? Well let me tell you there’s a lot of land for sale there!
i started following the housing bubble about 2 years back because i couldnt believe the amount of building i saw in central florida. i kept asking myself “but, who the hell would want to live in claremont”
A new law in florida has just passed and it states that if youwn property anywhere in the state you must have a for sale sign on it. Luckily almost everyone was in compliance before the law passed.
LOL
Clermont used to be a very pretty area. But the only type of people who would want to live there were retirees who wanted peace and quiet (versus anything to do) and who weren’t likely to need an ambulance.
Couple of years ago we looked around in Montverde — same idea as old Clermont — and couldn’t imagine how people who work daily in Orlando would want to commute that far.
Financial whizzes from other states are buying those white elephants, while the sky is the limit regarding future insurance premiums due to hurricane uncertain cycle. May I remind everyone that W. Palm Beach and Naples made top 10 in tax burdens, ahead of Boston, NYC, Newark, San Jose. You can check it here:
http://money.cnn.com/2007/02/12/pf/taxes/fed_tax_burden_top10/index.htm?postversion=2007021413
Furthermore, Baptist Health South Florida, the region’s largest private employer, has decided that it needs to start providing affordable housing to attract workers.
The five-hospital system is considering building units on two large tracts it already owns in West Kendall and Homestead — and/or purchasing distressed properties that have gone into bankruptcy.
The housing issue has become critical for Baptist Health and many other employers in South Florida, who are having a difficult time hiring or retaining workers in an area where housing and insurance costs have become a stunning burden on the typical family’s budget.
I rest my case.
The hospital is one of the higher paying places to work in florida.
Baptist Health is not alone. Universities in high cost areas often fund part of the purchase price of homes for faculty on a “shared appreciation” mortgages where they get a portion of appreciation on sale. I wonder if they have shared depreciation mortgages?
It is true pretty much everywhere else in the state too. Florida is the center of the irrational exuberance universe.
Yes, Umatilla. But, no local would buy there. As someone whose lived here all his life told me. “Rather get a root canal rather than buy land in Umatilla.” So, it wasn’t the locals.
Sorta’ like Bithlo.
“Matera said he ‘feels terrible’ about the problems that have arisen around the deals he sold to investors. But he said he warned everyone whom he brought into the Seashore circle that they should ‘not do this deal, if you can’t carry the house.’”
*Wink wink….nudge nudge*…Riiiiiiiigghhtt
OT, the “liar loan” of the rental market?:
As Rents Soar, Tenants Battle Apartment Qualifications
“His case would seem the perfect example of the growing imposition of the “40 times rule,” as it is commonly known, for rental apartments in Manhattan and parts of Brooklyn. In addition to undergoing credit and background checks, most hopeful tenants must prove to their landlords or brokers that they draw an income of around 40 times their monthly rent. Newcomers to the city are sometimes taken aback by the procedural rigors, but most willingly submit. They have no choice; with microscopic vacancy rates, it’s a lessor’s market….
“There is one loophole in the system: Some tenants claim brokers do not actually apply the rule as strictly as it would first seem.
“They don’t care,” a financial software programmer who rents a two-bedroom in the West Village, Nick Ganju, said. Mr. Ganju said he remembers when he had to adhere to the 40 times rule. He said he viewed brokers as willing negotiators because “they want to help you get them their fee.”
“[H]e maintained his view that brokers, in general, could be lenient. “It’s actually in their interest to help you get into the apartment,” he said. “They’ll do the credit check and they’ll try to help you make your credit look better.
“The rule itself, born out of the mortgage lending requirement that a recipient spend no more than 30% of his or her income on housing, breaks no law.”
So it’s not just buyers who can’t afford their homes.
It seems harder to rent than to borrow $800K these days. Liar’s loans are still available at 100% LTV.
The “system” wants you to buy a house and become a slave to a mortgage and real estate taxes.
The “system” wants you to have the biggest house possible because it will make you also a slave to Home Depot and big box stores, and plumbers, and all the maintenance needed once the shoddily built place starts to fall apart.
The “system” wants you to have a house in the suburbs so you become slave to the car and promote the “car habitat” with all its entails of pork spending for freeways and job security for car insurance companies, oil companies and the military…
Being a renter negates all of this…. laws will be enacted to make it hard very soon, and if it fails, codes and zoning regulations will step in to always create artificial rentals shortages.
One last thing - the “system” wants you to live in a McMansion and drive a McSUV so you can grow your a$$ as big as possible and become an income stream for the pharmaceutical industry to treat your symptoms of totally preventable disease.
Admirable and accurate assessment…..Bravo.
More good news:
http://biz.yahoo.com/ap/070215/housing_slump.html?.v=7
Speculator’s ability to make money and also ability to actually live in the thing:
http://money.cnn.com/2007/02/13/magazines/moneymag/construction.moneymag/index.htm?postversion=2007021413?cnn=yes
I don’t see the problem, she now has herself a duplex!
A long, long time ago I sold used cars. This reminds me of the 50/50 warranty we provided, which was - after you paid and drove off the lot, if your car split in two, you owned both halves.
I was confirming a sale this morning and spoke to a gal in the sales office. Apparently the guy just closing on this loan contracted for it in 2004. The dumbass shows some appreciation as a result even now but it pointed out that the builders are still filling two year old deals.
My guess is the old backlog is about done so watch out below.
Trump Tower Tampa
there was a local news report on the “stalled” Trump Tower in Tampa
(thats a shocker who would want to live in crummy downtown tampa)
seems as if trump may be pulling out but other “investors” will come in
hmmmm i wonder
also there is a new tower going up in st. pete florida called ovation the news reported said that 40% is sold
again hmmmm
Scams, scams, everywhere there’s scams.
Buy this, don’t buy that, don’t you want my scam?
This morning I watched an information on buying properties free and clear for only hundreds of dollars of back taxes. The guy claims to have purchased thousands of homes this way, 47 in the past 90 days, and they showed pictures of beautiful homes that where purchased for less than $1,000 with no mortgage. The cost is $40 plus S&H, and there is a 30 day money back guarantee except for the S&H. I wonder what the non-refundable S&H costs?
In south central kentucky there are high school dropouts and felony convicts selling “oil investments” in $25,000 increments. Their sales pitch is always emphasized two ways: how they know the family that is behind these investments are such impeccably Holy Christians; and how their lifestyles have changed dramatically since they started selling these things. When you ask questions all you get are vague answers. You have no way of knowing if they are drilling or uncapping former wells or operating O&G pipelines or what.
In fact, your $25,000 is mostly dissolved into nothing as a short list of people take their share in fees and commissions. If I wanted to invest $25 g’s in energy there are many, many legitimate O&G businesses trading in the NYSE.
Here is some interesting info on a promoter of energy investments:
http://tinyurl.com/3dalst
Here is a link to what an owner of Toyota/Lexus Honda/Acura dealerships has been up to recently:
http://tinyurl.com/27jkez
and also:
http://tinyurl.com/2f7996
So many gullible people in this world. I want to lose weight so I diet and exercise; but others want to believe that success is just around the corner with no effort whatsoever, all you have to do is simpy buy a bottle of pills for $49.95.
It makes me cringe everytime I see a for sale sign on a house. The 6% scam. They have almost everybody believing their lives can only be validated through home debtorship.
people sentenced to hard time for multiple weed offenses — and yet so many folks like this get away with fines — or are never caught in the first place.
thanks for sharing — I’m always morbidly curious to hear about the scam du jour.
Record home price slump
Fourth quarter report from Realtors shows largest price drop on record as markets with price declines now outpace those with gains.
By Chris Isidore, CNNMoney.com senior writer
February 15 2007: 2:31 PM EST
NEW YORK (CNNMoney.com) — The slump in home prices was both deeper and more widespread than ever in the fourth quarter, according to a trade group report Thursday.
Prices slumped 2.7 percent in the fourth quarter compared to the fourth quarter of a year earlier, according to the report from the National Association of Realtors. That’s the biggest year-over-year drop on record, and follows a 1.0 percent year-over-year decline in the third quarter.
In addition, 73 metropolitan areas reported a decline in the fourth quarter, compared to a year earlier. That outpaced the 71 that saw a gain. It was both a record number and percentage of markets showing a decline in the group’s quarterly report. Five markets saw prices unchanged.
That decline was a far more widespread than the third quarter, when only 45 markets reported drops and 102 saw gains, or the second quarter when only 26 saw a year-over-year slump in prices. The national median price was still showing a year-over-year gain in the second quarter.
The most recent median prices are down even more - 3.4 percent, since hitting record highs in the second quarter. Almost three-quarters of the markets reported on by the group saw declines in median prices over the last six months, with eight reporting double-digit declines.
Vacation markets, where investor-buyers had driven up prices during the building boom of 2005, were particularly hard hit.
The Sarasota-Bradenton-Venice, Fl., market saw the biggest year-over-year decline in the fourth quarter, with prices plunging 18 percent.
When looking at the change between the fourth quarter and the second-quarter peak, Palm Bay-Melbourne-Titusville, Fl., market saw the biggest drop, with median prices plunging 19.5 percent.
But the weakness in prices wasn’t restricted to those kinds of vacation markets. Springfield, Illinois reported a 16.2 percent drop in the fourth quarter compared to the third quarter, the biggest decline during that time frame, along with a 10.4 percent decline compared to a year earlier.
Still the trade group statement said it believed that the worst was over for the drop in prices.
“Examination of data within the quarter shows home prices stabilizing toward the end,” said a statement from David Lereah, the Realtors’ chief economist. “When we get the figures for this spring, I expect to see a discernable improvement in both sales and prices.”
Part of the decline in prices was due to the drop in sales pace. Total existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate of 6.24 million units in the fourth quarter, down 10.1 percent from a 6.94 million-unit level in the fourth quarter of 2005.
And the slower pace of sales, coupled with investor-buyers from 2005 trying to sell homes and condos they had bought, created a glut of homes on the market, according to other real estate readings, which also fed into the decline in home prices.
Realtors President Pat Vredevoogd Combs, a Grand Rapids, Mich. Realtor, admitted the group doesn’t expect to see a big gain in 2007 statistics.
“Right now, buyers are responding to seller pricing and incentives, and there’s a bit of a pent-up demand as a result of buyer hesitation during the second half of 2006,” she said in the group’s statement. “We’re not looking for big changes, but a gradual rise in sales and home prices is projected - that will be good for the overall housing market and related industries.”
She said that since most home owners stay in a home six years on average, a look at five-year price gains shows most homeowners are doing OK despite the recent weakness. The median five-year price gain is 41.8 percent, according to the group’s figures.
The nation’s leading home builders have all reported declining prices for new homes, which are not captured in this report. KB Home (Charts) reported a net loss of $49.6 million, or 64 cents per share, for the fiscal fourth quarter ended Nov. 30, earlier this week. Other leading builders reporting weakness in prices include Lennar (Charts), Pulte Home (Charts), Centex (Charts), D.R. Horton (Charts) and Toll Brothers (Charts).
The most expensive market in the latest report was San Jose-Sunnyvale-Santa Clara, Calif., where the median home price $760,000. That was up $20,000, or 2.7 percent from a year earlier, but down $19,000, or 2.4 percent, from the third quarter and off $35,000, or 4.4 percent, from the second-quarter peak.
The cheapest market was Elmira, N.Y., where the median price was $78,400. That was off 0.5 percent from a year earlier, and down 16.2 percent from the third quarter, which is when prices there peaked.
Despite the record weakness, there were some markets that showed strong price gains. The best was Atlantic City, N.J., where the median price was $339,800, up 25.9 percent compared to a year earlier.
““Examination of data within the quarter shows home prices stabilizing toward the end,” said a statement from David Lereah, the Realtors’ chief economist. “When we get the figures for this spring, I expect to see a discernable improvement in both sales and prices.””
Someone, please, impeach this disinformation agent and master of deception (to fools)! Man, this guy should take Tony Snow’s job at the White House or work for Fox News.
Sad, more bad news for homedebtors in foreclosure or with late payments, as well as real estate agents + mortgage brokers going back to blue-collar jobs:
“You can be denied or required to pay more for property, auto and other insurance because of your credit history, your education and even whether you’re a blue-collar or white-collar worker.
Just as the insurance industry uses supercomputers to model hurricanes, similar technology is being used to model people, assigning them a score for insurability.”
Yep, they are coming for your wallet!
I’ve had my eye on a unit in the building I rent in. Listing since April last year, rate has been going down to 279K, no takers. Same listing agent has another property in same bld also 279K ( different owners). This property has been for sale since Nov of 2004! and wen from 240K to 350K in august of 2005, to now 279K. Yesterday I looked on MLS and the realtor increased both asking prices to 425K!!! These units have no or hardly any view and the ones that hav been sold with better views have sold for 280K. This reeks of fraud, I sent him an email asking him why the rate went up so much and how he thought they would sell now esp as there are 67 units for sale on MLS only… He freaked out in his reply , demanding to know who I am. I am keeping an eye on it and should they go to PSale for 425 or close, I will report to FBI. Strangely enough even though we all know this is going on , the city ( Miami) does not seem to give a hoot. So many people are doing this and, believe me, these units are worth maybe 250K at the current market and will never ever sell for over 300K. I don’t get it, this will hurt all of us and the crooks get away with the money.