“We All Know What The Solution Is” In Florida
The Tampa Tribune reports from Florida. “Just as the real estate market was starting its downturn in the fall of 2005, Alan Westfall slipped into the investment game. He paid $365,700 for a six-bedroom home in Heritage Isle in north Tampa. He mortgaged the property at 100 percent, painted, installed wood flooring and quickly relisted the home for $425,500.”
“After more than year of price reductions and unsuccessful attempts to sell or rent the house, Westfall is getting anxious. So he has decided to try his luck with an auction. ‘The weight lifted off my shoulders would be tremendous if this home sells,’ Westfall said. ‘I just didn’t expect the market to take a downward turn so quickly.’”
“Westfall is among 50 Florida property owners choosing to gamble big this Saturday. There are single-family homes, condos and vacant land for sale. A record 34,000 homes are listed for sale in Hillsborough and Pinellas counties. Frustrated sellers are increasingly turning for help to the auction block.”
“Some sellers worry they might not get a good price, so none in Jay Bailey’s auction have opted to sell their property ‘absolutely’ to the highest bidder, Bailey said.”
“In December, the developer who purchased an apartment-to-condo conversion complex in Tampa Palms hired J.P. King Auction Co. to sell 100 units at the Grand Hyatt Tampa Bay. Forty units were designated to be sold to the highest bidder, but the developer halted the auction after some units went for less than half of the listed prices.”
“Carl Carter, spokesman for the auction company, said it had hoped for better prices, but the developer was happy to shed some of its condo inventory. ‘They certainly sold at a discounted price, but when nobody’s been selling anything at any price point, it’s good to just make a sale,’ Carter said.”
“One agent eager to sell her client’s home, said she received three phone calls from potential buyers who wanted to preview the home. Lynn Hanratty, a real estate agent in Palm Harbor hopes to sell her client’s home in Clearwater. It has been listed with her for six months.”
“‘I think this is a unique opportunity in this overpopulated market,’ Hanratty said. If the sale is a success, she said, she will pitch auctions to more clients.”
“Marty Higgenbotham of Higgenbotham Auctioneers International in Lakeland said sellers are still having a tough time in today’s market. Three weeks ago, Higgenbotham auctioned 115 Cape Coral and Fort Myers properties. Nearly every property had a contract by the end of the auction. There was $24 million in contracts, Higgenbotham said, but sellers accepted just 15 bids.”
“‘Sellers aren’t willing to accept today’s property value,’ he said, noting that he has seen six real estate booms and busts in his 48-year career. ‘They’ll get over it.’”
The Daytona Beach News Journal. “City officials and residents alike are irate about a developer’s decision to halt construction on a $250 million resort project because of slow condominium sales.”
“A downturn in the real estate market has affected condo sales and forced Centex to stop construction, Centex division president John Lenihan told City Council members at a meeting Tuesday. Lenihan said the local real estate market was ‘hot’ when the project began almost two years ago.”
“‘Now, we don’t have the sales,’ Lenihan said. ‘We are barely staying above water.’”
“Lenihan’s explanation left members of the council and residents fuming Tuesday. Vice Mayor Jon Netts said the golf course now resembles ‘Chernobyl’ because of the company’s sudden decision to delay construction. ‘There’s a wasteland in the middle of our city,’ Netts said.”
“The market for such ‘condotels’ has also cooled in Volusia County, said Ramon Rivera, president and owner of Coldwell Banker Cornerstone Realty in Edgewater. ‘It has softened and primarily because there is just so much of that inventory in the market,’ Rivera said.”
“Centex broke ground on its condominium hotel project in October 2005 and was expected to open it this year. Officials estimated it would bring nearly 300 jobs and generate $70 million in city and county taxes over 20 years.”
“Sixteen months later, a nearly completed eight-story condo unit and parking garage sit on the site surrounded by heavy construction equipment. The golf course is brown and unkempt.”
“Larry Stencel, who lives across the road from the golf course in Carlson Park Estates, said residents want city officials to resolve the matter quickly. ‘This is an embarrassment to the city because they were sold a bill of goods,’ he said.”
The News Press. “A massive inventory of unsold homes in Lee County could bring bad times to both the residential and commercial real estate markets. But real estate agents could help soften the blow by telling sellers to ask more realistic prices for their houses. That’s what two experts told a sold-out audience Tuesday night in downtown Fort Myers.”
“In 32 years in the real estate business, ‘I’ve never seen the impact of residential on commercial like this. There’s a lot of fear,’ said commercial broker Frank D’Alessandro.”
“With 23,000 houses and condos on the market in the county and the number rising, he said, the residential construction market is likely to slow dramatically this year as builders work through a backlog of homes ordered in better times.”
“With 65 percent of industrial space occupied by people such as developers, subcontractors and suppliers for the residential market, D’Alessandro said, the commercial market could be hurt. ‘The bottom line is fewer tenants,’ he said.”
“Talking about the results of falling land prices, residential broker Denny Grimes noted dryly that ‘the work force housing crisis is over’ with houses in Lehigh Acres selling for less than $200,000. But generally, he said, the near future isn’t going to bring boom times for real estate in the county. ‘Don’t expect the tide to start rising this year,’ he said.”
“He did hold out hope that if real estate agents muster the collective will to talk tough to their sellers about prices, the supply of existing homes could be reduced more rapidly. ‘We all know what the solution is, don’t we? It’s called a price reduction,’ he said.”
“Meanwhile, he said, things are bad and getting worse. ‘In spite of what you want to believe,’ Grimes said, ‘we’ve not hit bottom yet’ and won’t until the inventory of existing homes starts to shrink.”
“Grimes got the biggest laugh of the night when he used black humor to make the point that many in the industry find themselves with time on their hands. ‘The good news is I won’t be long-winded, because some of us have to get to our night jobs,’ he said. ‘Note I didn’t say second job.’”
‘Forbes.com said West Palm Beach ‘is still doing well, but the good times might not last because of excess housing supply.’
‘Vendor Lisa Pettus was disappointed with the turnout at this weekend’s Home and Garden Show at the Tampa Convention Center. ‘It was very, very slow compared to what we’re used to.’ In fact, it’s been like this for most of the vendors. Jeremy Gilley was trying to promote his screen enclosure business. He said, ‘This weekend is one of the worst Home Show’s I’ve ever done.’
‘With the state’s economy slowing as the housing boom has eased, general tax collections for November through January were nearly $160 million lower than forecast, House Speaker Marco Rubio told legislators in a memo sent Monday.’
‘In recent years, as Florida’s economy has hummed along, legislators have almost always had more money than in the previous year, and often have been surprised by larger tax collections than they’d budgeted for. When that’s happened, the windfalls have been used to pay for a number of projects that otherwise never would have gotten anything.’
‘State economists already reduced the estimate for how much money would be coming in for the 2007-2008 fiscal year by more than $450 million back in November. ‘Since that time, we have had three months of actual collections,’ Rubio said. ‘The downward trend in these collections suggests that the forecast may need to be reduced even further.’
‘The largest decline has been in sales tax collections, suggesting an overall decline in the economy, although much of the slowdown is attributed to fewer houses being built.’
‘It seemed at first that everybody got at least the promise of something good in the wake of the state’s new property insurance law. But what of the state’s 1.3-million condo residents? While condo owners can expect a year of relief, the sticker shock remains. ‘By law, we have to maintain the condo property,’ Landmark’s Niarhos said. But insurance takes a bigger and bigger bite out of what might have gone to operating expenses.’
‘If we keep getting hit like this,’ he said, ‘more and more people around here will be looking to North Carolina.’
No! No! Not Carolina. It’s awful here. Please stay away!
If I remember your posting history, it is not like you are native.
My family has been bitching about the “invasion” for decades.
That probably came out meaner than I meant it.
It wasn’t meant as an attack on you.
It is just that I have seen so much environmental damage in NC over the past two decades from housing development, that I have almost become numb to it now.
s’funny … the Carolinas still looked empty from I-95 when I drove through two years ago
would be a shame if it got ‘built out’ like Jersey, though … I mean, somebody needs to grow wood pulp, and let’s not even mention the stench
HA! Now you can deal with ‘em. Lemme tell ya how to prepare:
1. Get your traffic lights synchronized. These people won’t wait for anything. If their attention spans were longer they would stay in a region more than two years.
2. Better build a gym. These people consider this part of civilization, even if they never go to it.
3. Open a BMW or Hummer dealership. They like to feel rich, even if they have to lease.
4. Start a rap radio station. Need I say more?
5. Ease your gun laws so they can have concealed-carry permits without much hassle.
6. Print materials in Spanish and English
Assume that any one of them will ignore whatever traffic laws you have; they don’t apply to them.
Touche, everyone.
We are indeed recent transplants here (mid-2005) and yes, that list of 6 things “to do” is right on target. Unfortunately.
There’s a home and garden show coming here to DC in a couple weeks. I usually go to browse and daydream, but now I can guage whether the homeowners around here still have Heloc money to spare. I hope it’s not dead like the Tampa show. I don’t want desperate contractors pouncing on me, a lowly hi-rise resident who can’t even put a molly nut in the wall.
Speaking of home and garden shows, I was at the Tucson edition last October. I was volunteering at a local nonprofit organization’s booth, which got quite few visitors.
But across the aisle were a couple of booths that were dead for the whole afternoon. Those booths housed companies selling window treatments and replacement windows. Their lack of traffic told me that the HELOC gravy train had truly come to and end.
Annuals up 6, perennials down 5, biennials unchanged at the close.
“Hi Bill, hi Martha! You folks selling too?”
“There was $24 million in contracts, Higgenbotham said, but sellers accepted just 15 bids.”
Sellers: “Hey, we’re not givin’ it away!!!! We would have taken 10% less, but some of these offers were ridicules and down right insulting! Our neighbor got this price last year!” Hey Morons, something is worth onlt wha
I love the word insulting when it comes to any business transaction. How could an offer be insulting? Unless the guy offers you 50 cent to have sex with your wife. Kinda gives you and idea of her “market value” Maybe she needs to drop about 100 lbs off that booty and shave her mustache.
Maybe these “Sellers” need to get serious about selling and drop 100K off the price and take the fast train to reality
At any rate, example after example shows that for the most part, most sellers are incredibly, at this late date still in denial. I’ll wager 6 to 12 months from now, a lot of those rejected offers will look mighty good.
Why would you put your house up for auction? Because the other ways you’ve tried to sell it have not yielded results!!!!! What do these guys expect now?
Life stinks when you’re stupid. John Wayne
He paid $365,700 for a six-bedroom home in Heritage Isle in north Tampa. He mortgaged the property at 100 percent, painted, installed wood flooring and quickly relisted the home for $425,500.”
This I don’t understand. You risk $375K to make 30K?
No, just his credit! (note, it is 100% financing)…
if you set aside the credit thing for a while, it is infinite amount of profit, even if the profit is $1 (/0)!!!! 100% financing is the major culprit for the current bubble.. People got the idea of “nothing-to-lose”….
Kn
I understand the no-risk argument but 30K isn’t even worth the credit rating headache he’s going to have. If I’m rolling 375K sized dice there better be 100K on the table.
I agree. We all have to remember that the current crop of “investors” has no clue about positive cash flow or fundamentals in terms of pricing , etc. I have mentioned before that I actually know plenty of people in Las Vegas, for example, who purchased $500k to $600k homes to flip. When I cautioned them against this by stating that I doubt a GF would come along who could afford the bump in price, I was told “it is different now…”. You know, the new paradigm b.s. So there are tons of foolish people who are in this predicament. I understand the r.e. game, but if you dont know what you are doing, it is my contention that you need to stay in the below $100,000 market. Then if you crash and burn, there are still plenty of buyers to take the thing off your hands. There is a limited supply of qualified buyers for stuff over $250K, and once the underwriting guidelines come back to normal, you will see everything over $400,000 basically implode with haircuts of at least 50% - that’s everywhere. This is because incomes don’t justify the pricing. Again, for those in SoCal coastal areas, this is everywhere. I dont know FLorida r.e., but after almost 20 years in various areas of r.e. (appraising, review appraising, mortgage, worked for KB Homes), I can tell you that SoCal is in trouble. It will be a bloodbath in most of South OC, Inland Empire, Bay Area, etc.
And you will see that there were many idiots like this guy that will be bk when all is said and done.
Chrisusc, You should visit south Florida. It’s beyond belief how bad things will get there. At least IE won’t have the property tax and insurance problems.
You’re right, rex, Florida could turn out worse than California. Insurance is a nightmare here; people are already finding that they can’t move out because they can’t sell. Building codes (even the “tougher” post-Andrew variety) are a joke. Your best bet in my area are 90 year old bald cypress shacks… trouble is, they’re shacks. I’d have trouble sleeping at night with something newer, what with termites, heavy rains, and the occasional GRU (electric and gas) “accident”.
The whole Florida economy is based on scamming the new guy. Question: what happens when the new guys stop coming?
I think 425K was not his original target. He might have to lower the price due to tough market, it is not enough though.
Yes. Because there was no risk. It was chucked out the window. Think Elmer Fudd being lured off a cliff by bugs bunny, and for a moment just before he falls, turning into a “sucker”.
The extra $70K was for “paint”.
“I’ve gotta get out of this deal without losing money or my wife’s gonna keeeel me!”
There’s not even 70K there.
$365,700 + 10K in paint, floor, time, carry costs = $375,700
He was originally asking $425,500. IF he got that, 20K of the $49,800 would go to commish.
So he was shooting for $29,800?
Better risk / reward to borrow the money and put it in CD’s.
Don’t forget taxes.
I was trying to keep the math simple but you’re right. This guy was flipping so he had a pick up line cause he wasn’t making any money. I know a lot of contractors who do the same sort of thing. A lot of activity and checks being written but nothing to show for it at year’s end.
“Don’t forget taxes.”
or monthly interest, insurance, lawn maintenence…
After 12 months, he’s in the hole even at the original asking price.
This bozo is in tremendous trouble. According to the county property appraiser website, he made two other purchases in the summer of 2005: a $231,000 house in Lithia, and a $290,000 place in Brandon. The house featured in the Tribune article is in Tampa Palms and sold for $191,800 in September 2002, to give you an idea of what it might fetch.
The article notes that the Tampa auction, called the “All In Mega Auction,” is going to take place at the Seminole Hard Rock Casino. It will be broadcast online. The fact that the auction is named after a poker maneuver and is occuring at a gambling establishment should tell all and sundry everything they need to know about the wisdom of participating.
More good reporting by Shannon Behnken. You go girl! The truth will set us free.
Sure, Makes complete sense, when you put no money down, pay no closing costs and pay the “introductory rate if 1.2% on your ARM”
What really sucks is now dickweed now really OWES the $375. Gee, he didn’t see that coming.
This brings to light the problem with most people. Stupidity. No understanding of their contract (english and math), the fact that “what goes up must come down” (physics), to much of something for sale brings down price (economics), taxes (government), previous crashes (history). They don’t have the term “CRASH course” by accident! Rant off, for now. lol
Make that CRA$H Cour$e.
“Westfall is among 50 Florida property owners choosing to gamble big this Saturday. There are single-family homes, condos and vacant land for sale. A record 34,000 homes are listed for sale in Hillsborough and Pinellas counties. Frustrated sellers are increasingly turning for help to the auction block. Some sellers worry they might not get a good price, so none in Jay Bailey’s auction have opted to sell their property ‘absolutely’ to the highest bidder, Bailey said.”
By likening an auction to gambling, where he might ‘roll lucky’ and sell his home to some GF who just ‘happened’ to be bidding up the auction price like a drunken sailor, Westfall is showing his ignorance about how auctions work. In fact, the price one gets at an auction is generally lower than what you would expect by selling through an MLS process with a list price, as auction buyers must be compensated with a ‘risk discount’ for stepping up to the plate and buying with little time to carefully reconsider their decisions, the person willing to pay the most for any particular home may not be in attendance, and auction buyers are themselves often knowledgable flippers who have to shade their bids below what they believe the home will later sell for to an end user.
auctions generally produce premium prices for most things
bidders lose their heads and forget about the buyers premium they have to pay
why would RE be different ?
“why would RE be different ?”
Most bidders would not have needed to line up financing to overbid by 100% during the beanie baby bubble ($20 instead of the $10 fair market value). Given that only a small share of the population can pay cash for real estate valued at $200K on up, in most cases, one would need to have a lender willing to finance the “Winner’s curse premium.”
In a down market in real estate, it *is* different. Buyers going the normal, no-auction route have the luxury of taking their time in the market, inspecting houses, chipping down the asking price, and taking weeks or longer to make sure everything in the process is right.
At an auction, there is less time to do such things, and there is less confidence in the house itself. This gets built into the price. In fact, the sale might not even go through at all in a reserve auction, which these sellers are doing because they don’t want to be “unlucky” and sell their house too low. All in all, cautious, moneyed buyers will offer less at an auction for this reason. And cautious buyers (and people looking for a dirt-low price) are what seem to be showing up.
That said, in a hot, hot market like what I saw in Australia where house auctions were common, the frenzy of pre-approved, desperate buyers DOES cause the price to get bid higher and higher. Unfortunately for the Florida sellers, that psychology is not present in today’s Florida market.
” the frenzy of pre-approved, desperate buyers”
And again, I suggest this crowd is ‘priced out’ when the lending industry is reverting en masse to traditional underwriting standards.
“This gets built into the price.”
We are on the same page. I referred to this as a ‘risk discount’ in my post above.
Good point above, Stucco! What I saw in Australia where auctions were common in hot market times was that people would have the financing arranged prior to the auction. Inspections as well. Basically, that meant a lot of legwork and expense for EVERY person there, since they never seemed to collaborate with their competing bidders.
But in Florida these days, is this really an option? Will banks pre-approve the mortgage? Or is it like GetStucco says, where only cash buyers are able to really take part? That certainly limits the pool of buyers.
I imagine that there is probably a 10% up-front payment to be made upon winning the auction, and that is held for ‘x’ number of days while the rest of financing is arranged. If financing is NOT arranged by that point, the 10% is forfeited. Yet even with this more liberal method, how many buyers in Florida have 10% up front in cash/certified cheque to risk on a house auction? Not many.
There is one additional premium that might need to get priced into these FL auctions — call it the “falling knife premium,” as the trend is not your friend.
Should have said “additional discount” (sellers need to shade their reservation prices lower to cover the buyer’s risk of catching a falling knife…)
“Some sellers worry they might not get a good price, so none in Jay Bailey’s auction have opted to sell their property ‘absolutely’ to the highest bidder, Bailey said.”
Just for the record, these are not actually auctions, they have a reserve price. These are just a groupd of sellers entertaining offers on their homes, without being required to accept - just like listing but not having to do open houses and wait weeks for offers.
An auction is where the thing being auctioned is sold to the highest bidder. I submit that a reserve auction is really no auction at all.
I agree, but how many of these flippers could cover their loans after a real auction? This may be their last gasp.
“… not actually auctions …”
Actually they have a name: ‘reserve price auctions.’
http://pages.ebay.com/help/sell/reserve.html
These fake ‘reserve’ auctions will go by the wayside as soon as buyers realize that desperate or greedy sellers never had intentions of accepting the highest bid and the buyers realize that nobody wants to buy their overpriced house at two year old stupid high prices.
It soon will be viewed by everybody involved as the ridiculous waste of time that it is. I mean c’mon, out of 115 bidded properties only 15 went through!
Exactly!
Thats sound par for the course. There was a big Auction Extravaganza about a month ago here in Vero Beach. Out of 66 properties, only 6 sold.
There is a new auction being scheduled, but the auction company is soliciting owners that “are aware of current market conditions.”
Up here if you do a “reserve” auction you have to pay the highest bidder a not insignificant amount of cash if you don’t accept their offer.
The big auction houses are fully aware that few people are dumb enough to go through an open house (when you auction a house up here, you have an open house so potential bidders can check the place out), get a cashiers check for a minimum amount (required to be allowed to bid) and then spend your time and effort to win an auction if the seller can simply say no and walk away.
I guess the question becomes - they’ve had no lending standards in years, do they have any auction standards?
“Out of 66 properties, only 6 sold.”
Like MLS sellers who have already had their homes on the market for over 365 days with no nibbles, these auction sellers are setting their reservation prices unrealistically high compared to current market values.
Auction fever has caught on here in St George. However, if you read the small print you see that the price is “subject to approval by seller”.
Off subject: I checked out a few of the “Parade of Homes” houses a couple of days ago including the $6.3 million dollar “beauty”. It is located in an area called “the Ledges”, a gated community with a golf course. Nice house, beautiful views, built on a small lot. It might be worth $1.5 max.
What I found interesting was seeing the house in that same developement from last years POH’s. The buzz was that Oprah or Robin Williams was going to buy it, funny. It was listed at $4.8 million and I was told by someone taking tickets at the door last year that it was sold. I guess it wasn’t as it is still sitting empty.
Auctions produce premium prices for things that are rare and well-to-do people want to own.
“Frustrated sellers are increasingly turning for help to the auction block. ”
I guess that is going to put those house staging businesses out of business.
The idea of getting out with enough to cover your costs is becoming passe, it is not going to happen. Those that are able to accept it and handle the difference financially are those that will get out by the hair in their chinny chinny chins. Other will just loose everything.
Local Mortgage shill tries to argue that the average buyer with a median income is not priced out of the local market by reasoning that the average buyer can still buy a house. He just fails to mention that they can only afford the bottom 5% of all houses on the market right now. He also thinks we think its Casey Serins fault.
http://slcrealestate.blogspot.com/
“House prices haven’t gone up because of low rates, or flippers or Casey Serin. They’ve gone up because of population increases and a persistent demand for homes. This chart shows the median prices in the U.S. since 1975.”
Bwahahahahahaha!!!!!!! What has this guy been smoking? Population increases have been flat to negative in many parts of California, yet house values have shot to the moon. The persistent demand is due to people like Casey Serin, looking to make a fast buck. Turning housing into an investment through easy access to money is behind all of this garbage.
In my central Fla city, Ocala:
2003 Median houshold income: 33,300
2003 Median price of a house: 91,000, or 2.73 times median
2006 Median income 35,900
2006 Median price of a house: 167,800, or 4.67 times median.
The median income can by “a” house but it can’t buy the median houses….with out ARMS, Stated Income, etc. Meaning it can’t hold on to the median house.
The market will reach equilibrium when the median income can buy the median house, (meaning houses will be prices at 2.5 to 3 times median income) and it cost 10 to 15% less to rent that it does to buy.
So either our median income has to increase from 35,900 to 61,000, REAL QUICK or RE prices have to come down.
my old man has his place at 750k down from 1.1 mil
2004 pricing w pool and dock
the final solution
2004 pricing still too high IMO
Way to high. 2004 was absolutely nuts - You have to look all the way back to 2000 or earlier. There is a tiny percentage of our population wealthy enough to afford a $750K home
Too high. Will he take 350K? Call me
He’ll be taking 300 before it’s over. Insurance and taxes alone would CRUSH any buyer.
Maybe one of us rich retired government workers will buy it. When he gets the price down to 3-4 times our income, that is.
Here are some numbers to go with that: $750k / 2.5 = $300k / year
To retire being able to rely on that would take around $6 million, maybe less with interest rates running high?
That would be nice, but not likely in this retired gov guy’s future. Although there there is always the possibility of a powerball win. Ha!
“nobody’s been selling anything at any price point”
That’s the biggest risk. Eventually the “real” value of property will become known after the deadbeats and flippers get shaken out, and people will be confident to buy. A new floor will get established, and off we go into the next cycle.
But what is happening is that the whole process of buy and sell is freezing up. That’s why there will be a swing below reversion-to- the-mean, and an almighty crash.
If you don’t own a house now, you might be saying “good, the sooner the better.”
The problem is all the Mortgage-backed securities out there that will crash as well possibly corrupting the entire financial system.
This looks like a train wreck that’s going to happen real quick now.
We predicted a repeat of 1926 in Florida… and we’re seeing it. Yes, its going to have secondary consequences… but there is no avoiding that.
What you didn’t mention in your scenario is the rapid loss of jobs that will impact all sectors of the economy (government, retail, its already spanked the automotive sector, and travel).
Prepare for the worst recession of your life.
“With 65 percent of industrial space occupied by people such as developers, subcontractors and suppliers for the residential market, D’Alessandro said, the commercial market could be hurt. ‘The bottom line is fewer tenants,’ he said.”
And the answer to “commercial construction will save the industry” is…
nyet.
Got popcorn?
Neil
and REITs screem higher ?
Like this?
Housing `Hangover’ Kills Jobs as Spending Wanes; More Cuts Loom
By Kathleen M. Howley
Feb. 21 (Bloomberg) — Denise Hamilton was earning the biggest salary of her life painting and packing refrigerator parts until Collis Inc. decided to shut its Evansville, Indiana, factory and she was fired.
Hamilton, 36, lost her $11.20-per-hour job last month because Collis’s main customer, Whirlpool Corp., the world’s largest appliance maker, cut production after a drop in home sales reduced demand for new refrigerators, washing machines and dishwashers. Whirlpool fired 500 workers at its Evansville plant and Collis fired 160, including Hamilton.
“Working for Collis was the best job of my life,” said Hamilton, a mother of two who lives on the outskirts of Evansville. “Money is going to be tight.”
New and existing home sales dropped almost 10 percent last year, depressing demand for products from copper pipes to kitchen sinks and resulting in the loss of about 100,000 jobs in the U.S. Housing-related unemployment probably will increase in 2007, according to the Joint Center for Housing Studies at Harvard University in Cambridge, Massachusetts.
Even if the housing market improves in the second half of 2007, as the National Association of Realtors predicts, sales of furniture and construction supplies will stagnate, said Amal Bendimerad, a research analyst at the Harvard center. Housing and related industries account for about 23 percent of the economy, according to the center.
“Appliance manufacturers and other suppliers are already feeling the heat, but they may not feel the full impact until the end of 2007,” Bendimerad said. “There’s typically a lag of as much as a year.”
That’s good, maybe then we can get back to Fannie / Freddie underwriting guidelines.
That’s good, maybe then we can get back to Fannie / Freddie underwriting guidelines.
Exactly, but only after us taxpayers pay directly or indirectly for the recent insanity. Who’s watching these guys, anyway?
http://www.palmbeachpost.com/politics/content/state/epaper/2007/02/21/m1a_RUBIO_0221.html
“Plan would erase tax on homesteads, hike state sales tax”
“TALLAHASSEE — State House Speaker Marco Rubio is expected to unveil a plan this morning to eliminate property taxes for Florida homesteads in exchange for a sales tax increase, several lawmakers said Tuesday.
Under the plan, property taxes would still be collected on second homes and businesses, but House lawmakers said a cap on government revenues would roll back those taxes by 20 percent.”
Yeah, raise the sales tax and cripple the working class to save the wealthy, who can afford to travel to their “other homes” to buy things. Smart move, Rubio!
I wonder if he’s feeling anything else when he’s reaching around in those developers’ pockets?
Plan would erase tax on homesteads, hike state sales tax”
I love this mentality. Ever notice politicians are always talking about differnet ways to tax people, or to more evenly distribute the tax burden?
You hardly ever hear them talk about the real problem which is SPENDING. If you bring the spending in line with where it should be the tax issue will take care of itself.
yeah … problem … all those new people coming into the state over the decades need services: schools, roads, sewers
If developers weren’t so good at externalizing costs onto municipalities, I guess local governments wouldn’t take such a hit. But they are, and they do, so that’s life.
Yeah, I saw that article this morning. So even though I chose not to over-extend myself and continue to rent, I would have to subsidize some sheeple a$$hole who bought more house than he/she could afford (and was dumb enough to do so without calculating what the taxes would be). As far as I remember, there was no complaining about property taxes in Florida before prices got out of control.
I’ve been really patient throughout this bubble and had planned to wait it out before buying a house. But if this law goes through, I am so out of Florida. And it’s not that paying 9% sales tax instead of 7% would break me. It’s the principle of the whole thing.
They did this in Michigan a while back. The property tax is creeping back up and the sales tax is still there.
Oh. Don’t forget. The income tax went down 0.2%.
“The property tax is creeping back up and the sales tax is still there”
You bet your ass it is and if the FEDs ever come up with a “new” system of raising revenue without COMPLETELY abolishing the old one then this is what will happen federally as well.
The dolts running this country as well as city/county gov’ts are bankrupting it, so hide your wallet anytime you hear of “reform” because they are too stupid to understand how to fix it and that isn’t their intention in any case.
Marco Rubio could unveil 100 topless Hooters chicks in Tallahasee and personally promise to hand deliver one to the home of every man in florida over 18 and this bill would never get passed.
Hey Marco, why dont you spend some time trying to figure out how to spend less of my money instead of more creative ways to steal it.
jtcc;
…are you serious about the Hooters thing? Lets rethink…………I’m in.
C’mon we’re talking about Hooter’s girls. face it we are going th all get multiple f**ks, one of them might as well be the good kind.
Never believe that any tax will be “erased.” It NEVER happens.
Interesting article on MSN.com this morning; your real tax rate is about 40%, no matter income level.
http://articles.moneycentral.msn.com/Taxes/Advice/YourRealTaxRate40.aspx
If they also pass a law saying they have to include tax in stated price (a la Europe) I say bring it on!
I have fairly low income (well, earned income, anyway) but I’m a cheap bastard. Plus, no tax on grocery items (vs restaurant tax) means I’ll have a kick in the butt to make more meals at home. Healthy.
Don’t worry about the poor–10% sales tax will magically grow the black market economy … more young people with jobs (and I’m not just talking about dealing pot).
Sure, it’s regressive, but FL has no income tax and took away the tax on unearned income, so, really, it’s not like we weren’t at this point already. Should be a good case study for those VAT worshippers. Florida’s always trying silly experiments that other states shun.
I’ll be cooking some popcorn.
In Australia too!!
I still remember how startled I was when on holidays in North America in early 2001, and I went into a store and bought a single item (a bottle of soft drink) which was marked at 99 cents. The clerk told me to pay $1:16, and when he gave me the docket it had the drink price and about 4 tax items.
In Australia the marked price in the store is what you pay at the checkout.
Told ya’. Taxpayers will pay for it.
Weather prediction formula:
High Pressure ridge of ARM resets moving in +
Rising Tide of defaults +
Unseasonably interest rate temperatures +
A deluge of inventory +
Melting demand +
= Perfect Storm
“High Pressure ridge of ARM resets moving in”
It looks more like a tropical depression — lowest barometric pressure on record, in fact…
http://www.stormgasm.com/10.18.05.Wilma/Wilma.htm
Has anyone forgotten about the word HURRICANE?? We still have those here. One more good shot should about do it.
“Has anyone forgotten about the word HURRICANE?? We still have those here. One more good shot should about do it. ”
I disagree. If there is a major hurricane, the displacement of residents will bring higher values as people look to replace what was lost and people move in to rebuild.
I disagree with your disagreement.
1) another hurricaine will disenfranchise yet another wave of new immigrants to SoFL. they will have had enough.
2) another hurricaine will raise insurance rates so high that the average joe won’t be able to afford insurance. You think they’re screaming bloody murder about insurance rates now, just wait and see what happens if another Andrew hits this year, even though last year was “easy”
“I disagree with your disagreement.”
Can I ask you then why 2004 and 2005 were the biggest years of the bubble?
I would argue that sentiment is the difference…
My reasoning comes from the realtor speak in the paper that was witnessed over the last 3 years in NW FL…
During the boom of 2003, 2004, and into 2005 the hurricanes were used as reasoning for Real Estate to continue to inflate (reduced supply, bargains to be had, etc)…
With the downward side of the bubble the paper started quoting realtors as saying that the more recent hurricanes were reason for the downward trend of the RE market (this time it was used as an excuse)…
All along it has been perception in FL wether back in ‘03,’04, RE always goes up… or not in ‘06,’07 RE is no longer the sure fire way to riches…
Just like any mania I believe perception (and of course easy money) have more to do with the market than any other factors…
I’m in the 2009 recovery camp. I simply believe a hurricane could potentially bring that recovery sooner. Hurricanes have been around forever. People still choose to live here.
With over 100 years of family history in Florida, I can say from multiple experiences that Bad Andy is correct. There may be disinfranchisement and insurance increases, but those are long term problems that take years to play out. We are just really starting to those fall outs from the 2004 storms. But immediately after the storm, there are many homes destroyed, and inventory disappears. In Polk county, homes that sold for $110k in July of 2004 were selling for $180k in October, after Charley, Francis, and Jeanne, due to non-existant availability. The same thing happened back in the ’60s after Donna came through. There is also a huge influx of money in the local market for all the repairs that spurs a mini-economic boom. Every contractor has work out their ears for months after a storm, and there is all of the external (insurance and FEMA) money pouring into the local economy.
It’s kind of like eating candy on an emply stomach. The sugar high is quick and strong, but the burn off is ugly. The disemfranchisement and insurance costs will eventually contribute to the correction, but in the short term, a big storm would be a huge gain for the flippers trying to unload now.
“I simply believe a hurricane could potentially bring that recovery sooner.”
They sure helped bring about a FL recovery in 1926 — NOT!
http://en.wikipedia.org/wiki/1926_Miami_Hurricane
Hurricaines have been around forever. And longtime Floridians know this. so I agree with you, and doubt it will affect the migration of the longtimers
But Midwesterners and Northeasterners did not really know about hurricaines.
I have a lot of friends/family members that just learned about Hurricaines after Katrina. Suddenly it was on the national register.
Also:
in the past FL was a LOW COST area. So insurance was relatively cheap, even after the ‘caines, because the cost basis of the homes were cheap. Also, a lot of the homes were single level homes.
Now:
1) homes are downright expensive. Thus expensive to insure. thus a rise in insurance rates is more painful than prior
2) a lot of the new construction is CONDOS. when they get hit, they get hit hard. Not only does insurance rates go up, HOA assessments go up.
3) a lot more construction is closer to the water. Bigger damage.
so it is “different” this time if another big ‘caine hits, because:
1) it will make FL less desirable as a place to move to
2) the homes cost so much now
3) the mix of housing types is different, shifted to highrise condos and closer to the water.
4) there are other big time retirement havens in people’s minds now, that weren’t there before. Such as the Carolinas, Georgia, Arizona, New Mexico, the gulf coast, Texas.
“They sure helped bring about a FL recovery in 1926 — NOT!”
Apples and oranges. The article you refer to clearly states that the great depression started in South FL right after the hurricane slowing recovery efforts.
What happened in Homestead after 1992? A little nothing town of 15,000 now has over 44,000 residents. That’s an increase of 39% over the 2000 census. So much for running scared!
Bad Andy:
it’s all about affordability.
The biggest differenct from past to present for FL is price.
FL is simply not affordable. Another hurricaine will not make it more affordable! It will make it LESS so!
Sure, it might knock down some houses/condos, and make some units cost more for a while as people struggle to find housing, but can it really raise prices that high?
Seriously? I mean, how much more can Floridians pay?
If another big hurricaine hits, perhaps housing will become more expensive short term.
But then more people will simply give up and move elsewhere that is cheaper.
it’s already happening, without hurricaines.
“Seriously? I mean, how much more can Floridians pay?”
Good question. As part of my DBA program, I looked at cost of living in general in major metro areas. I also compared median incomes. S. Fl is in the top 25% as far as that goes, but there are markets that are much more expensive. LA county has a median home price of $500K compared to a median income of $51K. Property taxes and personal income taxes are through the roof. They have earthquakes. There hasn’t been a mass exodus from LA.
The median price would need to be in the neighborhood of $450 or $500K with property taxes just as they are now and insurance even more expensive and harder to find before we saw any kind of mass exodus. Even at $500K with property taxes at $8K per year and insurance at $5K per year, many will find a way to pay. You won’t see a MASS exodus but rather several small declines in population.
“What happened in Homestead after 1992?”
Totally irrelevent to 2007.
“What happened in Homestead after 1992?”
Totally irrelevent to 2007
You just tried to compare 1926 to 2007 and you want to tell me that 1992 to 2007 is irrelevent? Come on! Are you serious?
FL Population 1920: 968,470
1930: 1,468,211
1940: 1,897,415
Glad that 1926 storm drove everybody away!
Andy,
you just compared SoFL to LA as to why there will not be a mass exodus.
I find this funny, because I fully intend LA to fall big time too!!!! In fact, the only markets that might be saved are those where people can actually afford their homes! (hint, not LA or SoFL)
Why not say that you expect Pamela Anderson to have a fulfilling life, just like fellow ex-Playmate Anna Nicole Smith!
Going with your LA comparison though: LA and SoFL are two very different markets. LA has almost ALWAYS been expensive, and is considered a “premium market”. Kind of like LA, NYC, and Boston. SoFL is not.
SoFL has traditionally been cheap. That was its biggest draw. (and warm weather)
So the big difference is that LA is an expensive market that got too expensive, so it will become less expensive.
SoFl was a cheap market that got too expensive, and thus it too will become more affordable.
An Earthquake is very different than a Hurricaine. the last major LA earthquake (over 7.0) was in the 1850’s. the last semi major one was the Northridge quake in 1994 I think, but the damage was so much less to personal homeowners than are these hurricaines.
thus, due to the infrequency, people tend not to remember earthquakes much. But the increased hurricaine pattern of the last few years is very much noted.
If the prior few ‘caine’s hadn’t of happened, I would agree with you.
But if yet another major quake hits Florida now, while insurance companies are already pulling out by the droves, then SoFl will become uninsurable.
I would say the same thing about LA, if it had 4 major earthquakes in just a few years time period.
Los Angeles is not a good comparasion as they are also in a bubble. A few years ago, the median price was in the 200’s, now it’s in the 500’s.
Also, earthquake insurance is subsidized by the state (Calif.) and is MUCH cheaper than windstorm insurance. Also, it is not required. Earthquakes occus much more infequently than hurricanes, and historically hurricanes are much more costly (look at the top 10 most costly U.S. disasters, hurricanes rival the list).
“SoFL has traditionally been cheap. That was its biggest draw. (and warm weather)”
Maybe so in the 1970’s and 1980’s when it was a retirement haven. When you look at population trends, in the late 90’s and beyond is when the 20 somethings and 30 somethings started bringing themselves to South FL for the climate and the low unemployment. In fact people under 40 moving in outnumbered those over 65 8 to 1 from 1999 to 2005.
Duh, above should say
“if another major HURRICAINE hits Florida now”
although it would be funny if an earthquake it South Florida. Or a Blizzard. Or a landslide from all those hills in SoFL.
Once lending standards tighten (which they are already), it is not going to be possible for an average 20 or 30 year old to purchase a 400k home less a 200k with condo fees. I don’t see how current prices would be able to sustain current levels whether the main draw is young people or seniors.
I can tell you that there is a lot of frustration building among the 20 somethings in South Florida regarding the home prices. Many are talking about leaving… Yes, they will be replaced but I don’t think they will be replaced by people that will be able to afford the high prices.
The 20 and 30 year olds are the ones who CAN afford the $400K homes. They are at the top of the median income figure. They’ll just now need to know that they need a down payment and full disclosure.
I agree that affordability is a big issue. Look at Palm Beach County and some others that have noted big, unexpected declines in school enrollment. Home prices are going to have to come WAY down to make Florida attractive again.
Under standard mortgages guidelines, you would need to make over 100K/year to be able to afford a 400K home.
What average 20 something makes over 100K even if you combine two incomes it still isn’t enough.
I’m 26 years old, I have a decent job compared to most of my friends. I made around 38K last year. I consider myself about the average 20 something here in Palm Beach… Tell me how can I afford a 400K home.. even if I combined my income with another person, it still would not be enough to qualify me for a 400K loan. Also, we would be paying about 8K in taxes/year and 5K in insurance.
The speculation in Florida is worse than Austin TX (a hot high tech town) was in the mid 1980s. It was speculation and over supply at too high price that drive Austin down 20%-50% by 1990. That in a declining interest rate environment and only modestly tightening credit standards.
Many parts of Florida will see 30%-60% housing price deflation by 2010. Only areas that will take less deflation will be properties that are very desirable and scarce and no more can be built any where near the desireable location.
The weather will be a blip on the screen…even a Cat 5 hurricane…compared to the fallout from over speculation and lending tightening.
“The weather will be a blip on the screen…even a Cat 5 hurricane…compared to the fallout from over speculation and lending tightening.”
I agree. In fact, the weather was probably a blip (although possibly a synchronizing signal) in 1926 FL. The important similarity between then and now is the level of debt-fueled speculative euphoria. It sunk the market in 1926, and is doing so again presently.
Quirk;
Hurricanes are an economic stimulus. In actuality, most insurance companies pay off as agreed and most homeowners rebuild.
The media just talks up the small percentage of homeowners who either don’t have any coverage or don’t have enough coverage.
And no, I am not an insurance salesman. Don’t take this as a defense of the insurance industry, but during the 04/05 storms, in my area there was some damage, but most of it got fixed and insurance paid up.
Bad Andy, Let me guess, DBA from FAU or Nova, correct?
Anyone here ever listen to a Ted C. Jones speech? He is a SVP-Chief Economist for Stewart Title (also a member of NAR’s Research Committee for 2007) Very entertaining guy - saw him last night.
However, he is FOS on many counts! A few quotes “there is no national housing bubble” “time bomb loans are to blame” “we have a 5.5 month supply in Northern Colorado (Seller’s market) and sellers need to lower prices”
He identified the problems with current “investors” and also thinks 30 yr mortgage rates will rise by 75 bp by July and up to 7% at year end.
Unfortunately I had to leave early and didn’t get to hear the end - my assumption is it went something like this, “We are at the bottom, Never a better time to invest in real estate, blah, blah, blah”
Coupla thoughts: Interest rates going up, sellers need to lower prices, time bomb lending being curtailed, interest rate resets at 1.5 trillion (average increase of 200 bp), foreclosures mounting, historically high inventory levels = no national bubble??? WTF
This guy is smart, but won’t or can’t put it all together??
FL is sure different this time
1989-1995 prices crept up
this time they may beat bostin and NE to the bottom
Yeah, it is kinda shocking that prices in Florida will tank worse than New England, but those bankers shaw nuff knew what they were doing when they financed those million-dollar McMansion developments, right?
Who won the race to the bottom in 1925?
http://en.wikipedia.org/wiki/Florida_land_boom_of_the_1920s
Walked through a development today of 150 mcmansions built in 2005-2006. It’s in davie, FL. A friend lives there. I asked her how she liked her new home? She said, “I love all the space, but don’t have many neighbors.” Mostly speculators bought these homes at a 1m+. There are 5 houses right next to each other up for sale along with many others. I can’t imagine what’s going to happen. These homes are over 4200SF and are on a builder’s acre. They have a clubhouse and tennis court to maintain. Even if they got were reduced 50% off the asking, they would still go for 750k, not to mention the cost of maintaining them (the power bill alone). Either there are a lot of wealthy people in SF or people have just lost there minds.
Your friend is going to lose her house to HOA fees.
Ignorant question on my part: are HOA fees tax deductible?
My friend used to live in my development. She sold high and bought her first house in the sister development for $650k. She sold hers for $1.7m and puchased a much larger one for $1.3. While her taxes and HOA are probably outrageous, she seems to be able to afford it. HOA are not tax deductible. The neighborhood looks beautiful. Whether or not it stays that way, I have no idea.
Can you imagine the person that bought her house in Davie for $1.7, how much money they’ve lost? Ouch.
They haven’t lost anything yet. There’s a lot of inventory, but I haven’t seen any major price drops. I do see some $100k haircuts. I don’t know if people are so in over their heads that they can’t cut the price way down or if there just in denial. I am patiently waiting to see what is going to happen.
40-50% off in 2010…more if they keep building more…
They’re done building. What would it take 3 years for the price to be cut in half. There is already a glut of them on the market for over 3 months. Several are empty. If they are bought by investors, how long can they hang on to them?
rolling foreclosures as the price drops…this year - the zero to 10% down people, particularly ARMs reseting. Next year 10% DP fixed that need to sell. 2009, the 20% downpayment people will walk if they have to sell and so forth.
“Sixteen months later, a nearly completed eight-story condo unit and parking garage sit on the site surrounded by heavy construction equipment. The golf course is brown and unkempt.”
While I personally dislike the use of the tactic, this seems like a perfect opportunity for a city to use Kelo-style eminent domain to take the proprerty for cheap, and give it to another developer at a price that will pencil out. Basically, I just want the inventory piled on the fire.
Except now it’s illegal according to Florida law, I believe.
There goes the assumption you can hedge housing downturn risk buying in golf course communities. You pay a lifestyle premium and still get nailed.
I’m surprised they didn’t make the developer post a bond large enough to ensure completion? I thought that was SOP with city gov’t?
The eminent domain thing is either against the law or soon will be. I know the State Legislature voted it in.
I’m sure their are lein holders, banks, investors etc. The thing is probably tied up in court.
The sad thing is that this is only the beginning of all kinds of half built prolects frozen in time. A lot of these things will deteriorate in Fla’s humidity, so while the parties fight it out , the property literally rots to the point where it’’s worth less than a vacant lot, because now you have to clear it off. Concrete structures obviously withstand the elements better than wood and drywall.
We are going to discover all kinds of differant ways we never dreamed of to lose money.
“But real estate agents could help soften the blow by telling sellers to ask more realistic prices for their houses. That’s what two experts told a sold-out audience Tuesday night in downtown Fort Myers.”
I guess that makes us experts too. If you can, lower the friggin price!
Here’s an interesting realtor blog:
http://activerain.com/blogsview/47609/Have-Buyers-Been-Playing
And a realtor in Hawaii submitted the following in the comment section:
“I agree there are more and more bad buyers out there.”
I’m telling everyone right now, if you get labeled a “bad buyer”, it’s the kiss of death and you’ll get banned.
I thought I’d heard it all.
wow. just….wow.
I first read that as mad buyer, like when you realize that both agents lied to you about the house.
In 2005 the sale price was on average 97% of the asking price. It was a sellers market. Now a little over a year later, it seems the rash of incoming offers is in the 82%-89% range of asking price.
And next year it will be 70% - 75% of asking.
The following year it will be 60% - 65%…
What a bimbo. Bad plastic surgery, too.
No important or informative commentary in this World has ever originated from St. Cloud, FL. That claim to fame is in tact after reading that blog.
“Bad plastic surgery, too.”
You aren’t kidding. What was she thinking?
People any offer is an offer. In a market with an eleven month inventory of homes if you are able to snag a buyer who is willing to make an offer…
“snag” - there’s that word again.
I believe I am reluctant to participate in any transaction in which one of the parties’ objective is to “snag” me.
Watch out…..because if the “snag” you, they’ll “shag” you….as Austin Powers puts it. I’m waiting for a realtor to say “Let’s go snag and shag a buyer”. The other realtor says “There’s a difference?” LOL
Maybe that’s why they are pole fixated?
She has this at the end of that article -
Also read: Offers are like Sticking your Tongue to a Frozen Pole
I don’t know about you lady, but I never stuck my tongue to anybody’s frozen pole. What a freak.
…I’d loved to get “snagged” by a hot chick, but not a realtor/home seller.
My favorite reality-denying post on that blog is from the realtor who wrote “if these buyers that are playing “Monopoly” aren’t careful, they may end up playing “Sorry” while the other buyers are playing “Candy Land.”
People like this need to learn, ASAP, that fear is no longer a motivation to buy–buying right now is the source of fear. Looking at Alan Westfall, I’d say he was playing “Chutes and Ladders” and he hit that really big slide right near the end.
I’m telling everyone right now, if you get labeled a “bad buyer”, it’s the kiss of death and you’ll get banned.
Haha, that’s great!
What a masochist. She’s making jack squat in commissions and is now begging for an antitrust lawsuit.
Hear ye, hear ye! All Florida buyers!
This so-called “auction” is run by people stuck head-first in a pile of denial and is a WASTE OF YOUR TIME!
This has been a public service announcement from the Council of People Annoyed by Bogus Auctions with Unpublished Reserve Wishing Prices where Nothing Sells.
did you see this in sarasota florida?
http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20070221/BUSINESS/702210545/1060/SNN
Rotsa ruck with that one. Another developer effing up an otherwise nice place, when he defaults in the middle of the project. Sheesh.
Shit, I wonder if University Corners (Univ & 13th) in Gainesville will get built. They finally bought out the Starbucks and were supposed to demolish it. They demolished a lot of buildings and ran a lot of long-time tenants out (including Maui Teriyaki–I will not forgive you!) but now we have an empty lot and the hope that enough rich boomer Gator grads will want to live in Gainesville (after two national championships) AND have the money to do so … oops.
Even the mayor questioned whether the project would be built–two months ago, before the major fireworks in subprime and before the ’sorry superbowl season’ began.
Meanwhile, there are signs up for a NEW set of spec condos, The Palms, on lovely 2nd avenue, right next to Common Grounds, a venue for indy bands. (Noise, activity, goths from Tampa smoking on your front lawn.) Luxury condos, of course … and barely two blocks away from Porters neighborhood, bedroom community to robbers and crack ho’s.
Also, the Lofts took forever to sell out and I don’t think they have tenants for every unit … and it’s the friggin’ Lofts. C’mon, you’re too far from campus to be ‘walk to campus’ and there are only so many professionals in town–where’s the demand?
I’ve got my eye on the Commerce Bldg (still empty!! omg!) condos… I’m looking for a FRBO deal. They’re in the middle of building more units. Yes… overbuild … keep going … hahahaha.
“Shaking off concerns about the sluggish housing market, a Sarasota development team is planning a $25 million mix of condominiums and retail space just north of downtown.”
Honesty, I sat motionless satring at the screen for probaly 5 minutes rereading this opening line from the article.
For once, I have no comment….except:
Life stinks when you’re stupid. John Wayne
“the commercial market could be hurt”
For several months I’ve been noting that the back rooms of the Coldwell Banker office in Morro Bay (CA) are for rent. Think it’s been about three months since I first noticed. They are still for rent. Only a few hundred dollars a month … but no takers.
There is so much empty commercial space in Gainesville, FL it’s not funny.
I’m beginning to wonder if the theory about depreciation eliminating the property taxes isn’t true.
What I do know is that the city has spent mucho bux$ in property tax rebates to develop certain parts of the city, and not just downtown. In fact, they were quite favorable to sprawl as on 53rd Ave–WTFBBQ? This is a tiny county road, why would you want commercial development there?
Oh yeah, that’s right: the entire city commission dabbles in RE. According to this guy I talked to last month, most G’ville politicians strike it rich in RE after leaving office … how coincidental.
Same with Ocala, Orlando and most of Fla.
Commercial is usually not whacked quite as bad as Residential in a downturn. There is some fallout.
The real funny thing is some “savvy” flippers jumped into commercial from residential when they saw residential opportunities declining. They now own a commercial office building they bought for 1.7 mil. If you figure you want an ROI of, say 10%, you would have had to pay 750K for the building. Oh. yea. They are trying to flip it for 2.1 mil. It’s not a breakeven at that 1.7 mil.
Actually, because of vacancies they have serious neg cash flow. I offered 600K. They laughed nervously…and asked for my card. I told them hurry up and decide. Next month I’ll be at 500K
I was waiting for some of those real smart real estate geniuses to discover commercial. You think you can lose your a** on residential (you can) try commercial. Comm RE is a whole different world.
But what the heck, if you over you head 1 mil or 10 mil, what’s the difference? It’s like dropping two atomic bombs on the same city. After the first one, the second one can’t really do much damage.
Life stinks when you’re stupid. John Wayne
gator,
how’s the residential in Gville now? i’ve been following it since i left several years ago. i may move back if reversion to 2001 prices? is this possible? plausible? nice town, but sick expensive right now–and not exactly the highest paying area.