Declines Reflect “Reality-Based Pricing” In Florida
The Sun Herald reports from Florida. “Sales of existing homes dropped 28 percent statewide during the 2006 fourth quarter compared to 2005, according to figures released Thursday by the Florida Association of Realtors. The Punta Gorda area reported a 10 percent drop in median prices, a healthy step toward putting the market back in motion. Punta Gorda’s fourth quarter median price of $209,700 compared with $233,700 during the 2005 period.”
“Local Realtors have coined the term ‘reality-based pricing’ to reflect the decline in prices, which they largely see as a positive development. Simply, if you want to sell your house, cut your price at least to what similar properties have sold for locally.”
“Indeed, ‘I dispute that properties have only come down 10 percent. I think they’ve come down more than that,’ said Bill Dryburgh, president-elect of the local Realtors.”
“‘The agents who are self-motivated and do their homework are making money while the agents who just sit back and wait for someone to call are starving,’ Dryburgh noted.”
“Both of Charlotte County’s neighboring metro areas showed both a substantial drop in sales volume combined with a big drop in median prices. At least through the end of 2006, ‘reality-based pricing’ wasn’t enough to turn prospects into buyers.”
“Median prices in Fort Myers-Cape Coral were down 23 percent, to $256,400. Sarasota-Bradenton was the same story, down 18 percent to $281,500.”
The Bradenton Herald. “Existing home sales in the Bradenton-Sarasota market fell 11 percent in the fourth quarter of 2006 compared to 2005. In addition, there is a greater inventory of homes available for sale now than a year ago, which works to the advantage of buyers, said Ron Cornette, Wagner Realty’s marketing and training director.”
“Those ‘more realistic’ prices might be just what is needed to jump-start the market, said Cornette. ‘The buyer is going to control the pricing,’ said Sue Louis, vice president of Coldwell Banker Residential Real Estate’s Sarasota division.”
From Florida Today. “Sales of single-family homes in Brevard County jumped 20 percent in the final three months of 2006, compared with a year earlier. The median sales price fell 17 percent, dropping to $207,300 from $250,700 in 2005, the Realtors group said.”
“Local condominium sales dropped 35 percent, to 270 in the fourth quarter of 2006 from 414 in 2005, while the median price fell 22 percent, to $171,000 from $219,600.”
“The practice of ‘flipping’ dropped in Florida in the last quarter, compared with the final three months of 2005, HomeSmartReports said. ‘Speculative buying and selling of homes contributes to market volatility and risk, all part of that ‘bubble’ theory people were talking about,’ President Mike Ela said.
The News Journal. “Sales of existing single-family homes in the Volusia and Flagler market dropped about 33 percent for the fourth quarter of 2006, according to FAR.”
“Some people may be holding on to homes because they are afraid to sell them, said Gloria Weimer, president of the New Smyrna Beach Board of Realtors, while they wait for prices similar to those in 2005. ‘They need to be realistic. There are ups and downs throughout the years,’ Weimer said, calling 2005 ‘a fluke.’”
The News Press. “The Florida Realtors released a report saying that Realtor-assisted sales of single-family homes in Lee County fell 23 percent in the fourth quarter, down to $256,400 from $332,000 in the fourth quarter of 2005. Condominiums fared somewhat better: down 14 percent from $300,000 to $258,600.”
The Herald Tribune. “Sellers have been giving ground on home prices, and during the fourth quarter of 2006 it really showed. The median sales price for a home sold in the Sarasota-Bradenton market was down 18 percent from the same time in 2005. That was the second biggest drop in the state behind Fort Myers-Cape Coral, which saw a drop of 23 percent.”
“Condos in the Sarasota-Bradenton market were selling at about half the rate they were in 2005 during the fourth quarter, down 46 percent from the 1,063 in the previous year’s fourth quarter. The median sales price was $230,900, down 24 percent from $304,100.”
“The state’s biggest sales drop was Lakeland-Winter Haven at 56 percent. That community was followed by Tampa-St. Petersburg-Clearwater at 40 percent, Naples-Marco Island at 34 percent, and Orlando and Daytona Beach, both at 33 percent.”
“Martin Higgenbotham did everything he could to get people bidding on Michael Tringali’s high-end Sarasota and rural Manatee County properties.”
“In the end, high bids on properties came in at a half or a third of what the real estate sold for at the height of Southwest Florida’s phenomenal boom.”
“The high bid for a 3,300-square-foot luxury home in Tringali’s Portofino on the Bay subdivision off Vamo Road in Sarasota, that might have commanded more than $1 million in the boom, was just $500,000. Bids for undeveloped lots in the same subdivision that sold for $325,000 and up in 2005, came in at $170,000 or less.”
“And finished homes in the Golden Verna Estates subdivision near Myakka City, selling for around $380,000 during the boom, generated bids of no more than $240,000 and most garnered no more than $170,000. ‘That’s low,’ said Barbara Anson, a veteran Realtor in Myakka City. ‘But this is an auction.’”
“The Lakeland organization hired to conduct the sale had hoped to sell 32 of Tringali’s properties, but many, especially the building lots at Portofino on the Bay, didn’t draw any bidders.”
“It will not be clear until Monday night whether bankers, who loaned millions of dollars to Tringali during the boom, will be willing to accept the bids that did come in.”
“Tringali’s 253-acre tract near Myakka City was bought by an unidentified Manatee County rancher for $6,500 per acre. That is is $5,500 less than the $12,000-per-acre price Husani paid for the property in August 2005 and $23,500 less than the $30,000-per-acre price Tringali supposedly paid a week later.”
“If it accepts that price, Coast Bank, which loaned $4.94 million to Tringali in August 2005, would have to take a $3.3 million loss.”
“Though Higgenbotham told his audience that they were missing tremendous opportunities, agent Garrick Newman expects there will be a lot more opportunities for the region’s buyers to get deals at auction. ‘We’ll see a lot more of these.’”
Here is the Florida realtors press release, with price tables linked at the bottom in html and pdf files.
‘Fewer homes are selling in the Tampa Bay area than in any other major metro area in Florida. The Tampa-St. Petersburg-Clearwater area suffered the biggest slump, with a 40 percent drop in the number of single-family existing homes sold in the fourth quarter of 2006.’
‘In nearly every market across Florida, the condo market was gloomy. Daytona Beach was hardest hit in sales volume, with a 67 percent drop. Prices fell 11 percent. The Naples market followed with a 49 percent decrease in sales and a 12 percent drop in prices.’
‘Condo sales in the Bay area mirrored its single-family market with a 40 percent decrease; prices dropped 9 percent to $169,100. The number of condo sales in Fort Lauderdale and Miami fell 30 percent and 28 percent, respectively.’
‘The anger burned slow during a property tax hearing Thursday night at Hillsborough Community College. ‘Please don’t just patch the system,’ implored Linda Hayward of Brooksville. ‘The real problem is local governments have become incredibly greedy and stolen our money.’ Her words brought applause from the more than 200 Tampa Bay area residents attending the hearing.’
‘Soaring home prices are being blamed for a sudden and surprising decline in the number of students entering Florida public schools, a survey of county school superintendents revealed Thursday. Half of the 62 school chiefs polled cited the cost of housing as a major reason why students and their families either left their counties or chose not to move there.’
‘The first signs of the trend surfaced when state analysts wrongly predicted that 48,376 more students would crowd classrooms statewide when doors opened last fall. Instead, only an extra 477 children actually showed up. ‘We missed it big time,’ said Wayne Blanton, executive director of the Florida School Boards Association. ‘Through 2005, we had 10 years in a row of more than 50,000 new students a year. Suddenly, it’s stopped.’
Reality ? What’s that ?
When I think about Florida, I think about MINUS 40. The wheather in july is PLUS 40. Plus 40 minus 40 makes a big ZERO.
OMG Ben these numbers are horrible and spring is still several weeks away. The grim reaper is one stealthy sob; he came early. Panic selling! Panic selling! Panic selling!
Not to worry! The ’solution’ is here….
Got a new post up that will shed some light on how many people can get ‘help’ out of their ’situation’.
SoCalMtgGuy
http://www.housingbubblecasualty.com
I’m meeting people in Miami all the time who are still in denial. If condo sales are “only” down 28 percent right now (why anyone would buy right now is beyond me), just think when the sh@t really hits the fan and people realize how f’d they are.
Anyone from West Palm Beach area? How is the market there? Someone I know lives there. How are the prices there? Is there a website which I can follow to track listings in that area?
Just read this blog for a week or so. There are some very savvy posters living in that area who will be more than happy to educate you.
*wink wink*
The market stinks, and the crime is even worse. If your friend lives there, tell him or her to get out. It’s a no-win over there.
I have lived in WPB since the summer of 1998 and I cannot get out fast enough. The median PBC home was $135K in 2000 and peaked at $421K in 2005. That is a goofy increase. The economy here is service and tourism based which historically doesn’t pay well. The median income in PBC is about $55K, way below what is required for a median home. WPB has been overtaken by speculators, especially in the condo markets. The inventory is sky high and sales are non-existant. Add all of this to the home insurance and tax issues and you have a catastrophe at hand. With all due respect to other areas, Florida might be Ground Zero for the bust. I would not consider buying in WPB until 2010 at the earliest. Hope this helps.
Make it 2015-2020. I brought a house in Cali in 2000 and it had been for sale for the last 10 years (!!!). And this was after a relatively mild downturn in 1988-1996 here…
This bubble is bigger than anything imaginable. Add to that perceived climate change for regions like the Gurf or Florida, which makes insurance company simply bolt away.
Global warming alarmists predicted global warming would cause a record number of hurricanes to hit the Gulf States in 2006. We had zero hurricanes last year. Good call. It reminds me of the ice age alarmists from the 1970’s.
So, how many we had in 2004 and 2005? Nature doesn’t work like a clock the way you are expecting. Let’s wait and see. Next season is coming up, and then the next one, and the next. It only takes a good Andrew or Katrina to create havoc and send Citizen’s insurance premiums soaring to the stratosphere.
Global Warming has nothing to do with it.
NOAA ATTRIBUTES RECENT INCREASE IN HURRICANE ACTIVITY
TO NATURALLY OCCURRING MULTI-DECADAL CLIMATE VARIABILITY
Global warming will increase the number of strong cat4-5 hurricanes NOT the overall numbers. What would have been a 3 becomes a 4 etc.
Costliest U.S. Atlantic hurricanes
Rank Hurricane Season Cost (2005 USD)
1 Katrina 2005 $81.2 billion
2 Andrew 1992 $44.9 billion
3 Wilma 2005 $20.6 billion
4 Charley 2004 $15.4 billion
5 Ivan 2004 $14.6 billion
At the link below, you can review all the 60+ hurricanes or tropical storms that have hit Florida from 1990 to 2006, along with their related costs and detailed information. It’s been a very busy 15 years:
http://tinyurl.com/33w9z7
Thanks. I know my friend has become unusually silent over the last year. Plus he had some hurricane damage to his home and ended up spending something like 50K in repairs. I hope he sells it and moves but when irrationality and pride comes in its hard to make people see the truth.
Don’t forget that W Palm Beach made number 4 of top 10 list in tax burden, ahead of NYC, San Jose, and Boston. Check it out:
http://tinyurl.com/339hw8
No state tax, my arse.
This is federal income tax.
Sure, but that “no state tax” feel good pitch is totally misleading. Add to that SOH, property tax, endless hurricane premiums, electricity, etc.
Tax burden here is NOT that bad. Forget federal taxes like the link. And coupon cutter, You need to know that FPL rates are literraly 1/2 what you pay from ConEd or DTE up north. I think someone likes to complain about EVERYTHING.
Bad Andy, Just because I don’t agree with your misleading and off mark claims about Florida’s market, doesn’t make me a complainer of EVERYTHING. Although, I have provided solid data from more reliable sources that contradicts your unfounded assumptions. Of course, anyone can just disregard strong evidence posted by just saying, “it’s not that bad” or “forget about it”, or make rather simplistic and misleading calculations of cost of living. Anyway, here’s yet more solid evidence that contradicts once again your unfounded claims:
Miami Herald, 02/18/07: “But in 2006, the three largest movers — United Van Lines, Atlas Van Lines and Allied Van Lines — said that for the first time in years, they had moved more people out of the state than in. The tally: 33,907 out, 29,881 in. Also, declining school enrollment in both counties could be a sign that middle-class families are leaving.”
And a Wachovia Bank report on the 2007 housing market concluded that Florida’s population growth “decelerated sharply during 2006, despite a still red hot job market and record low unemployment.” (low paying jobs in construction, hospitality industry, housing speculation related)
“The biggest beneficiaries, the report continued, are Georgia and the Carolinas, where home prices remain relatively low. For example, Atlanta came in lower than the national average for cost of living, according to Moody’s Economy.com latest data for 2005. But South Florida came in more than 16 percent above the average — higher than New York or Los Angeles.”
If economists at Moodys concluded, after a research, that cost of living in Florida is higher than New York and Los Angeles, how can you possibly defend that cost of living in W.Palm Beach is lower than those smaller cities you keep comparing to up north? Does it make any sense whatsoever?
In a word; dead.
Rents are routinely 1/2 to 1/3rd purchase costs. As you move into the higher end market (600K-1M dollar homes) you can find homes at 1/4 to 1/5th the carrying costs.
Insurance is a diasaster. Nuff said.
We have a nutty RE tax system down here that taxes you on the purchase price of the home for the rest of your life. This is causing the market to go into total upheavel; people selling a home (where they are paying 2K a year in taxes) are finding it difficult to sell to someone when they will have to pay 10K a year in taxes.
Government budgets are 2-3X where they were 5 years ago, and yet they do nothing to alleviate the tax problem.
Oh, and in WPB, in particular, you have a city run by some…. Well, watch the news. Let’s just say the developers have some reach to the highest levels of govt in PB.
Now the positives.
It’s warm.
The women here are the most incredibly stunning, shallow and fake people you will ever meet (this is a generalization, of course).
Traffic is horrible.
Crime is not much better.
Jobs don’t pay close to the 125-150K you need to carry the median home here.
You will see a Ferrari or Lambo every single day you leave your home.
PB Gardens has a mall that is pretty cool. They sell stuff in there that you will see nowhere else in the world (75K for a briefcase?, for example).
Did I mention the warm and the women?
That about sums up PB, imho.
Oh, we have a good party scene here too. It is very, very expensive, and you will have a hard time finding a full bar (because they are all so expensive, and there are so many of them).
Honestly, if you’re in the age range from 25-55, and you want to have a good time (and have a good job/have a lot of money) this is a great place to be! If your anything below upper middle class, this is a horrible place to live. And be ready to meet the most shallow people you have ever met in your lives. I love it, other’s hate it. Just be ready for it.
Good summary Mike. I enjoy it here for many reasons. Crime is a mess in some areas, but no worse than what I’m used to. I came from Detroit, so here the news is actually quite tame.
Jobs are plentiful, but if you’re looking for those HUGE pay jobs, FORGET IT! We have a lot of service and banking jobs. The pay is very high compared to what you make in the rest of the country to do the same thing, but still not enough to cover the cost of living for many.
If you’re a multiple income family, the tax breaks living in FL will balance it out a little bit for you. MI has a 3.9% personal income tax. That adds up in a hurry when you have 2 people earning $55K per year. People complain about the property taxes, but in MI we had SOH and the tax rate was similar.
I wouldn’t gripe nearly as much as some here. Bottom line is if you can’t afford it or don’t want to…LEAVE!!!
” Bottom line is if you can’t afford it or don’t want to…LEAVE!!! ”
AMEN, Brothah!
From Smartmoney: “So you’re married, and your spouse is considering going to work for the first time or returning after a hiatus. Think twice. Unless the primary reason is to pursue professional interests or experience the various other non-monetary joys of employment, it may not pay to work.
After higher taxes and work-related expenses, two salaries probably won’t give you anywhere near the cash flow you are anticipating. Throw in the loss of free time and the inevitable stress on family life, and it may not make sense for your honey to put on a suit. Here’s why:
http://tinyurl.com/2yljhc
Try the handy calculator at the site to check if two incomes make sense.
“Jobs are plentiful” in Florida:
Miami Herald: “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.
”People want out because they can’t afford to live here. We need to do something,” said Baptist Health Chief Executive Brian Keeley, boss of more than 11,000 workers at Baptist, South Miami, Homestead and Doctors hospitals in South Dade, as well as Mariners in the Florida Keys.”
Thanks Mike. Most definitely not a place for the person with a small wallet. What are the taxes like in WPB area? I live in Fairfax, VA and it is something like $0.0085 for every thousand dollars of the last sale price and insurance is like $480 per year for a median home priced at around 350K. Regarding the women
I would agree when I remember my trips to Miami.
“$0.0085 for every thousand dollars of the last sale price ”
So you’re saying a 350,000 home costs $2.98 per year? I think you meant to say .85% which would be $2,987. A 350K home in Palm Beach County would run $6221. Property insurance assuming the home is newer is $3000.
You’ll register your car for $40 per year and pay $0 in personal income tax. Average January high temperature in Fairfax, VA is 41 and in July is 87.
In West Palm Beach the average January high temperature is 75 and in July is 90. That extra 3 degrees is just horrible. LMAO
W. Palm Beach made number 4 of top 10 list in tax burden, ahead of NYC, San Jose, and Boston. Your way of calculating tax burden is too simplistic. Also, don’t fall for the no state tax b.s. You can check the entire list and proper method of calculating the tax burden here:
http://tinyurl.com/339hw8
Federal Individual Income Tax Burden: Highest-Paying Major Metro Areas showing Avg. Tax Liability/Return and Taxes as % of AGI:
1. Stamford/Norwalk, CT $41,496 22.0%
2. Naples, FL $16,849 17.4%
3. San Francisco, CA $14,279 16.0%
4. West Palm Beach/Boca Raton, FL $11,014 15.1%
5. Danbury, CT $12,324 15.0%
6. Boston, MA $10,698 14.7%
7. New York, NY $9,602 14.7%
8. Bergen/Passaic, NJ $10,339 14.4%
9. Newark, NJ $10,146 14.4%
10. San Jose, CA $11,726 14.2%
Plus, the sky is the limit for insurance premiums when you have a very uncertain hurricane cycle, which NOBODY knows how long will last or how costly it will be.
“W. Palm Beach made number 4 of top 10 list in tax burden, ahead of NYC, San Jose, and Boston. Your way of calculating tax burden is too simplistic.”
NO! This is federal taxes! Are you crazy? Like I said, if you don’t like it don’t live there. I put together a VERY detailed cost of living analysis for my US economy class for my DBA. Truth be told, S. Florida is in the top 25% of major metro areas, but the top 25% is all quite similar when you look at everything as equal. Detroit, MI to West Palm Beach, FL is $2,400 less expensive yearly. Think about that before spouting off simplicity.
You don’t add federal tax burden on calculation of cost of living now? BTW, I’ve lived in Los Angeles, NYC, and the last 15 years in Florida. Also, I have degrees in Business Adm., General Business and minor in Economics, as well as business owner for the same amount of years in the state. When did you move to Florida?
IMHO, the women in Miami are much hotter than in WPB or FL. That is, if you like the Latinas.
Someone please explain to me why Michael Tringali isn’t in jail?
Absurd.
The market stinks, and the crime is even worse. If your friend lives there, tell him or her to get out. It’s a no-win over there.
Because banks were complicit. If he had gone in with a gun and stole the money he’d be in jail. But he simply encouraged them to agree that giving him money was a good idea.
and these YOY declines inlcude the post Wilma time frame last year, (which was the main reason they claimed for the “softening” the first quarter of 2006)
Local Realtors have coined the term ‘reality-based pricing’ to reflect the decline in prices, which they largely see as a positive development.
It’s a Good Thing that people are losing lots of money on Real Estate.
As opposed to “faith-based pricing” ?
“And reality has a well-known liberal bias.”
— Stephen Colbert
Why do Florida Realtors hate America?!?
colbert is a genius, his interview with lance armstrong the other day was great.
the reality is, realtors realize they have to sell homes to make money.
I guess it’s the end of REAL-I-TOR based pricing.
This reaction isn’t actually so strange. When “wishing prices” weren’t coming down, nothing was selling and real estate agents weren’t making any money. 90% of 0 is still 0.
There’s a book by a Southeastern Realtor called “Buyers Are Liars (And Sellers Are Too)”. It’s a very entertaining look at the business of buying and selling residential properties. The author expresses a lot of frustration at homeowners who think their house is worth way more than comps and will reject “insulting” offers, only to end up stuck on the market for months (or worse). Halfway through the book he begins referring to buyer and seller as “greedledee” and “greedledum” and negotiation as “greedling” in reference to the propensity for buyers to try to exploit a seller’s financial situation and the propensity for FSBO’s to overestimate the value of their property.
(Rationally, a FSBO should price slightly below a Realtor sold house, as the FSBO and buyer split the commission savings, but it’s not uncommon for FSBO’s to price up to 10% above market rate. Maybe with the internet that will change and Realtors will be cut out. Here’s hoping!)
Anyway, the book is a quick read (I picked it up at the library) and I highly recommend it. Of course, he does defend his trade (oops, internet just made you obsolete) but it’s worth it for insight into the emotions and unrealistic assumptions of house-buying. For example, he calls buyers “liars” because of the tendency of buyers to claim they want one kind of house when they actually want (and buy) a completely different kind.
Just think of how much this will benefit consumers earning low wages.
A must read
http://www.itulip.com/forums/showthread.php?t=958
I can’t wait to buy avis and other truly unigue co’s taken private lately
wow they rent cars !
I think the $170,000 price is probably what people in that area can afford.
“Higgenbotham told his audience that they were missing tremendous opportunities…”
… to go broke.
‘There are ups and downs throughout the years,’ Weimer said, calling 2005 ‘a fluke.’
I think I need to have my eyes checked. I thought I read that Florida was a new economic model that would sustain ridiculously high prices forever, now I find out it was a ‘fluke’. It’s comforting that hidsight is still 20/20 though.
Time to drag out that Wall Street Journal quote again…
Come on, somebody get the quote out. I know one of us has it!
“Indeed, ‘I dispute that properties have only come down 10 percent. I think they’ve come down more than that,’ said Bill Dryburgh, president-elect of the local Realtors.”
Luke… LUKE! Come over to the Dark Side- we’ve got cookies and kool aid…
‘They need to be realistic. There are ups and downs throughout the years,’ Weimer said, calling 2005 ‘a fluke.’”
A ‘fluke’?!? I thought it was a ‘new paradigm’!! What happened to the ‘totally different economic model’?!?
Buuuuulllllssssshitttttt !!!! based economics. Have you noticed how all is soo funny? Fannie Mae is going up while sub prime lenders are all going bust and institutions like HSBC are taking horrendous loss provisions. No problemo. The faarrt at the FED says that everything is just going fine fine fine. Like in Irak.
No, no, no. You misunderstood. Not new “paradigm”. New “pair of dimes”, which is all you’ll be left with after investing in Florida real estate.
only a pair of dimes left? great, will that be enough for the speculators to drop a dime to the Feds on their business partner?
New “pair of dimes”. LOL.
Thanks for the soda coming out of the nose experience.
“Median prices in Fort Myers-Cape Coral were down 23 percent, to $256,400. Sarasota-Bradenton was the same story, down 18 percent to $281,500.”
Soft landing?!? Hmmm…
And another MINUS 20% left.
Living here in cape coal I am having a hard time with the numbers ad here is why. There is 150,000 people in this city. If you say 2 in a household that would be 75,000 households. There is 7,600 houses on condos on the mls.That is 1 for every 10 households.
The same fuzzy math: seventy percent of Americans live paycheck to paycheck, yet 65% of them own homes. That American dream sure pays off, doesn’t it?
Cause and affect…….
Ooops…..”effect”
“‘Speculative buying and selling of homes contributes to market volatility and risk, all part of that ‘bubble’ theory people were talking about,’ President Mike Ela said.”
Um, Mike, it wasn’t a “theory”.
Gravity is a theory too.
The median sales price for a home sold in the Sarasota-Bradenton market was down 18 percent from the same time in 2005. That was the second biggest drop in the state behind Fort Myers-Cape Coral, which saw a drop of 23 percent.”
What spin. If the stock market were down 18% or 23%, the pundits would be talking about a CRASH.
Now in the bear market in stocks from 2000 to 2002, if you waited until the tech stocks were off 25% and you bought in, you would still be under water today and a very long way from break even.
Jackie, if the mortgage fits, you must acquit.
Somebody mentioned SRS fund on here the other day to short HBs. I canna find anything about it much. Bad idea? Good idea? Buy? Sell? Hold? Run away?
Old news…sorry if it’s been posted already
Downey savings suffers in mortgage market
The tough mortgage market is causing troubles for Downey Financial of Newport Beach.
In the latest report on its financial condition, the parent company of Downey Savings says:
• Borrowers are having more trouble making their payments. As of Jan. 31, mortgages where monthly payments have stopped (plus any other “non-performing assets”) represent 0.78 percent of the bank’s total assets. That’s more than three times the level a year earlier.
• The pace of new mortgages is down to $152 million for one- to four-family homes. That’s down from a range of $509 million to $585 million in the first three months of 2006.
• The bank is improving its “interest rate spread” – the difference between what it pays to borrow money and what it charges to lend. The spread was 3.06 percent in January, up from 2.67 percent a year earlier.
Downey shares closed Tuesday at $69.95, down 7 percent in the past three months but up 12 percent from a year ago.
From the field folks. Just returned from a 2 day adventure surveying properties for a lender.
Their question was, ” are sellers realistically basing asking prices of the following properties we are foreclosing on?” Answer: Hell no!
You see the lenders are depending upon the realism of a bunch of tanking asshats who borrowed 100% of the purchase price of an overpriced POS.
I had one guy chase me down to find out what I was doing and I told him. He said, ” Well I think I am ok since I bought a year and half ago and I feel safe.” What did you pay for your house I asked?
I paid $389,000 he said with a smile. Well my friend, I said, the developer is offering your house and a bunch of concessions for $299,000 now. He says, “yes, but they have to come up with some money for a downpayment which I did not have to do.
Holy sheet….he thought he had them as he had no money in his house. 80% of the homes are carrying 100% paper with no down in the market here.
We ain’t seen nuthin yet.
lol…what a clown…
“I didn’t put any money down”. He’s thinking he hasn’t lost any money. Monthly payments were rent.
“[declined] 1 percent in Miami, to $370,400 from $375,900, as the number of homes sold declined 3 percent, to 1,828 homes from 1,878 homes. For the third quarter, the median sales price was $377,700, on 2,137 homes sold”
It is frustrating, since Miami so far seems immune from the noticeable price declines in the neighbouring areas. In the desirable districts (Pinecrest, Coral Gables) the inventory is high, but the sales are still strong, and many buyers are perfectly willing to pay 2005 prices.
I have a secure job in CG (university tenure, does not get any more secure than that) and can afford to pay ~700k cash for the house, but 700k buys squat at the current prices, and so far sellers have no reason to accept lowball offers, given very modest price declines from the peak.
I wonder why Miami is different from FL or WPB? Foreign money?
ubaldus, I lived in the Miami/Ft. Lauderdale area from 1979 to 2000. It has change so drastically in a few short years and I am glad I moved. Miami is to Florida as New York City is to New York State. For better or for worse, Miami has become something of an international crossroads city, and although it is heresy to say this on this board, I think you will see exactly what you are seeing now, strong prices in desirable areas. I expect Miami to follow pricing patterns similar to New York, barring a Katrina event and even then… Yes, I think international money has a LOT to do with it. As parts of New York State outside of the Big Apple tank, so will parts of Florida outside of Miami tank, as has been reported above.
I like living in Miami - much prefer it to NYC/ NJ, which was my second alternative.
It seems to me that the prices in Miami may go down a little in the next 12-18 months or so, say 7-10% down. At least I hope so, because the inventory is still going up even in the desirable aread. So, I will wait till this fall or next spring before starting to make offers.
Of course, if they make SOH portable, then the prices in CG or Pinecrest will probably spike, since many empty-nesters there are sitting on $1.5m homes (for which they paid 300k at most), and would like to move to $1.2m condo, but cannot do because of SOH tax break.
The trolls get easier and easier to spot don’t they?
you troll radar is way off
You’re playing hockey with a warped puck.
troll alert
definitely a troll!
I have a friend who worked for that same university for over 20 years, has a house in one of those “great selling “areas and was forced to move to a northern state for another job. That house in the great area has had two contracts, been dropped over 65k in price from 350k and yet it still sits with a sign out front.
yeah buddy, life is great in Myamuh!
what exactly “great area” in Miami can possibly have a house listed at 350k? gimme a break, anything at this price is way out there either far west, or inside the ghetto.
Or maybe it’s a 1bd condo?
Miami has 30,000 condos, or so, on the market right now. Sells 3,000 per year. What is that, A TEN YEAR SUPPLY?
Left-coast stuff…
O.C. is going vertical with at least 30 towers
http://tinyurl.com/yvp8rc
Personally, I kind of like the high rise glass architecture, but that is irrelevant. The real question is: just who is going to buy all those condos? 30 towers? WTF are they thinking? This is not the preferred living arrangement for the vast majority of Americans. Talk about a cluster fu*k of an idea.
I agree, they are nice structures but I have no idea how all that inventory will be absorbed…especially at those prices…and much of the “urban” infrastructure has yet to be developed…I guess we will see…
I read an article Wednesday about a luxury condo tower going up in the town of Flower Mound, TX. With so much land available, why would someone pay $400K to live in a cramped condo in a little town? I can understand if it was in downtown Dallas, Houston or Austin - but Lubbock and Flower Mound?
Another article released said that Credit profiles will not stabilize until 2008. Sub-Prime Lenders are going to be out of business in droves. Has anyone seen so many big caualties so early in the cycle?
People who got sub-prime loans months or years ago will not be able to get another mortgage. Lending standards and risk have changed. They are going to be boxed out.
The NYTimes had an article about a good portion of NYC homes that are vacant. Yes, the dollar is week and foreigners were trying to ride the speculation bubble as well. These were not second homes…they were investments.
This is going to be a wicked 07. The FED and the media are playing big brother…this is not a soft landing. It is a strong correction that is just starting and is going to take months or years to stabilize.
Sick of everyone reading one news blurb and saying “the housing market is getting better.” It’s a joke. This is another bubble created by government and the average joe is going to end up getting screwed. Sure, lenders might set guidelines but it is the FED which has been allowing cheap money to slush around our economy as the saving rates turn negative and the deficit goes through the roof. Who is going to pay for Iraq & Iran…why you and me that’s who.
Time to move to Mexico. That is next real estate bubble.
This is off topic. Check out this advertisement from the top realtor company in Kansas City. Chance to win a $1000 home depot gift card at any open house. Four drawings between Feb 22 and March 15. LOL. Panic or hunger? Anyone? (I find it interesting that Home depot is helping out in this endeavor.) LOL
http://reecenicholsimages.fnistools.com/images/uploads//RECos/9000002/ContentFiles/landingpage.pdf
Methinks that Home Depot’s trying to get customers any way it can. Been in one of their stores recently? Traffic is WAY down.
Service is way down, too. Shelves are stocked less, and are in disarray. Have to spend a lot of time to find anyone who works in a given department. The only cash registers reliably open are self-serve. The theft alarms go off within seconds everytime we exit (not due to us) and there is never a response. I thought about investing in the company, but Lowe’s blows them away now in terms of better cleanliness, less noise, and better customer service. Sad to see.
‘Speculative buying and selling of homes contributes to market volatility and risk, all part of that ‘bubble’ theory people were talking about,’ President Mike Ela said.
Oh we’re STILL talking about it, Mike, because the real implosion hasn’t even begun. Nice try, though.