The ‘Crowd Control Problem Is Over’ In Florida
Some housing bubble reports from Florida. “Florida’s biggest private landowner, the St. Joe Co., has at least ‘a couple of generations of supply’ in raw land to sell and develop, much of it near the coast, company executives said Wednesday in Orlando during an investors conference. Much of the company’s 838,000 acres are within 10 miles of the Gulf of Mexico and will become more valuable in time, and the company can be patient, St. Joe President Kevin Twomey said.”
“‘We are in this for the long term,’ Twomey said. ‘If we don’t sell today, we will sell tomorrow.’”
“But St. Joe’s relatively optimistic outlook and prediction that baby boomers will keep boosting housing and second-home sales was not uniformly shared by analysts at Raymond James. It noted the rapid increase in home prices the past two years, record inventory levels in recent months, slowly rising interest rates, and pressure on the market as a result of speculators who rushed in but are now adding to the sales supply as they exit.”
“‘The economy and the housing market are now entangled in a very delicate and circular relationship, whereby they are both dependent upon each other for stability,’ Raymond James analysts said in the report. ‘A disorderly slowdown in the housing market could lead to some destabilization of the economy, given the consumer’s reliance on home equity over the past several years to drive strong spending. At the same time, the housing market needs the economy to remain fairly stable in order to turn the current slowdown into a soft landing and avoid an all-out crash.’”
“During the third annual Luxury Living Showcase, developers sat down to discuss the future of real estate in the Manatee-Sarasota area. ‘There’s not a bubble anywhere that I see,’ said Al Piazza.”
“Piazza, who has helped develop properties in Miami and is developing a project in downtown Sarasota, said he doesn’t see any bursting bubble. ‘We saw investors disappear and the crowd control problem is over, but now we are selling to real buyers,’ Piazza said.”
“‘When the market was so hot, people would buy anything just to have their dream, their place in the sun,’ said (broker) Michael Saunders. ‘We think we have an adjusting market and things are just fine,’ Saunders said.”
“‘It is a more measured inventory and a normalization compared to where we were just six months ago,’ she said. ‘When we hear about people reducing prices because they won’t sell, it is probably because they were too high in the first place. It’s time to get real.’”
same old spewage coming from those that stand tp lose the most in a down market.
what’s happening with the japan interest rate situation? i’ve seen what looks like conflicting articles in the news services today.
Sounds like they are staying at 0% for now, but with an option to start raising it soon? (This was a change from the “keep it at 0%” stance that they had before this?)
Dunnoh, for something so potentially important (carry trade, etc.), I can’t find much about it.
Speaking of sewage, here’s another reason for prices to drop on the SW coast of FL: A Report on Red Tide from the Naples News. Add this to the hurricane factor and watch out.
http://tinyurl.com/lbze8
Keeping it at 0% for now, but will raise it slowly as conditions dictate.
“During the third annual Luxury Living Showcase, developers sat down to discuss the future of real estate in the Manatee-Sarasota area. ‘There’s not a bubble anywhere that I see,’ said Al Piazza.”
Wasn’t there an article recently that showed the Sarasota area had 15 months supply of inventroy? That sure looks like a bubble to me. Once again the RE industry is either stupid or in denial. Probably both.
“Piazza, who has helped develop properties in Miami and is developing a project in downtown Sarasota, said he doesn’t see any bursting bubble. ‘We saw investors disappear and the crowd control problem is over, but now we are selling to real buyers,’ Piazza said.”
Investors are who sent the prices soaring (along with suicide financing) you jack-ass. As we have seen over the past few months, nobody is buying since the investors left. Hence, it was the investors who made up the bulk of the market. Nobody will need to build any new units as there are plenty available judging by the inventory numbers and I suspect more inventory is on the way.
Average Jill and Joe retiree from up North can’t afford to retire to Florida in any style at current bubble prices…the developers and speculators have overpriced this large market segment out of the pool of buyers.
Realty Times Outlook - Lereah’s Rolling Boom Comes True - Mar 09, 2006, 12:00 am PST
http://tinyurl.com/m9vll
“At Realty Times, we don’t believe the housing boom is over, but it may be slowing in your area. Now is an excellent time to choose a home with inventories offering you more of a selection than you’ve been able to have in nearly a decade. If you are planning to buy and hold for the long term, you’ll be fine. In fact NAR agrees with projections that housing will reach near-record sales this year.”
Remember, folks, buy, buy, BUY!!!!
Going through craigslist.org for Orlando, I found this from a realtor trying to sell a home. This home “BACK ON THE MARKET…COME SEE TODAY…MAKE US AN OFFER”
This house has come back on the market. The seller is EXTREMELY motivated. We want to get it sold THIS WEEKEND….so call us. We’re working today and in the area. Come and make us an attractive offer so we can lift the seller’s spirits!
Being a nice guy, I think I will make an attractive offer to lift the poor seller’s spirits. LMAO
that reminds me of an ad I saw in the classified in Ann Arbor…
I don’t recall if it was in the jobs section (which I have never seen so sparse, despite reports from the local press that all is okay here…amazing really. There used to be 10 pages of local want ads, now there’s a skinny couple pages..) or in the *real estate* but it was a story like this: “My brother-in-law has an MBA and is sitting at home depressed. If he doesn’t get work soon he will have to sell the house. Please, if you’re an exec reading this and can give him a 40K/year job, call his wife at…”
We’re also getting some realtors actually say “will accept all offers”, particularly some of the ones who price really high. It’s interesting…like, we know this is a ridiculous price, but just in case you realize that, don’t be afraid to offer as much as say, 10% under it!
cheers…
oops, by “accept” above of course I meant “present all offers”! Until very recently it was common knowledge here that if you don’t offer within 5% of asking the offer won’t even be presented…isn’t that illegal or something?
cheers!
I’m in central FL (metro Orlando) and I personally know of three houses that sold for $30k less than list price, and we’re talking $180k-$250k homes. The ONLY people who will completely deny the very existance of a housing bubble down here are the realtors. Their attitude is almost universally, “People will always want to buy houses in FL because it’s FL.” Well, at least that’s what they say publicly…
Real buyers? Down here in Florida, from talking to sales reps from home builders and others inside the industry new home developements often took hundreds of calls from investors looking to buy 3-4 homes in each developement. Over the summer investors hired realtors to pretty much go door to door looking for people to sell their homes… Those days are gone.
Speculators and investors replaced entry level buyers through out the state up until a few months ago. Now we have some very real problems:
- Entry level buyers are priced out
- Speculator buying slowed significantly and now they are trying to sell
- Move up buyers can’t “move-up” because they can’t sell their starter home.
- Financing standards have tightened dramatically causing contracts to fall through, especially in new homes.
- Investors are cancelling contracts for new homes because the prices have been flat, they realized they would be better off loosing the couple thousand they put down than loose their shirts trying to sell in a down market.
- Inventories are piling up to record levels.
OT-Where can I get historical and current house for-sale listings by month and by county? I’m interested in looking at changes in the total number for sale, not tracking an individual house that is for sale.
TIA
The for-sale inventory would have to come out of mls for most of FL, since ziprealty only covers the Miami area. Ben Engebreth’s blog has some of the major markets though: http://www.benengebreth.org/housingtracker/
You can find sold information from 1994 to present here: http://media.living.net/statistics/statisticsfull.htm
Cant reach record highs with excess inventory and higher interest rates . Not in the cards . How can realtors say statements like that . How self serving can you get . When that doesnt work the Realtors will turn on the sellers and try to get them to panic sell just so they can make a living for another year . All statement from realtors should be discounted as “sales puff” or self-serving .
Amen.
Realtors remind me of Amway people trying to sell you on a dream… they seem to be more interested in telling you how much property has apreciated rather than how the home fits you and your needs.
I think prices will have to drop down to the point where the average buyer can afford to pay on a long-term basis. The current prices are basically for short-term speculators who expect to get out before their interest resets. Most recent buyers simply can’t afford to handle the payments on a long-term basis. When buyers realize that they’ll be stuck for 10-20 years, will they still be willing to buy at these high prices? My answer is “NO”. Anyone disagree?
I would be surprised if this wasn’t the correction year in all housing markets . The reason why 2005 was so big was because people were getting in before the interest rate hike they heard was coming . This made inventory go down and prices hike up . Greatest economic principal is supply and demand
True… But i think even more people were getting in just because prices kept going up up up so they wanted to load up homes and condos to flip for a quick profit.
Especially the baby boomers, seems like they were out buying properties as that sure fire last bet to try and make as much as possible so they can afford to retire.
I hope these links still work!
Selling Condos? “The DJ’s Got To Be Really Good”
Looking For A Condo? Grab A Sleeping Bag
OT- Since Monday, we’ve had had two clients get up and walk out and another client cry during signing paperwork at closing this week–and it’s only Thursday. That’s never happened since we’ve been in business. The issue was apparently regarding how much monthly payments actually ended up being. These were all refinances. One was a refi-refugee (we’ve closed their prior refi only a short time back).
The $1500 in gross revenue gone, poof. And we still have to pay staff to do these transcations, whether or not they close. Here it is May when traditionally things start to get a bit busier and here we are having deals fall through. Hopefully an aberation.
Did you mean March?
remember this lunacy?
February 3, 2005
TURF
Condo Fever Turns Buyers Into Early Birds
By MOTOKO RICH
NGELINA UMANSKY, a 39-year-old spa owner from San Francisco, was visiting a friend in Miami two weeks ago when she heard about a new condo development downtown. Hoping to find a vacation home, but worried that others were interested, too, Ms. Umansky arrived at the sales office at 8 a.m. the day after seeing some model units.
About 50 other buyers were already in line. Two hours later, a sales agent summoned her and said she had four minutes to decide which unit to buy. She acted fast, offering $350,000 for a two-bedroom, two-bathroom unit.
Holy crap! I’m so glad I waited to buy!
“Al Piazza”…. He sounds like a slob. I bet he looks like one too. Pigs get slaughtered.
For the desperate seller in Florida. I made a generous offer of $100, site unseen. I sure they will be insulted by my offer. Oh, well, my sarcastic humor side. I also congratulated them for being named on Ben’s blog. Hope to hear about them in belly up court.
Please let us know if they even reply. Will they say, “Did you mean $100K?” heh.
“Much of the company’s 838,000 acres are within 10 miles of the Gulf of Mexico and will become more valuable in time, and the company can be patient, St. Joe President Kevin Twomey said.”
Maybe some of you are too young to remember what happened here in CA in the 70’s. My college roomates dad had bought 40 acres of meadow land at Lake Tahoe. He planned to develope it after retirement but the year before he retired a law was passed preventing the building on meadow land and he held 40 acres of near worthless land. Something tells me with increased hurricane activity that you won’t be able to get insurance on any properties within 10 miles of the coast.
Salinasron: Reckon you don’t know how things work here down here in Florida… See unlike you damn hippies out in California, round these parts we let big business and developers run this state… St Joe being one of the big influences has had this land for generations they will do as they please with it.
Califonia is has a very diverse economy (at one point the GDP of California was one of the largest in the world, bigger than most European, Asian, and probably all African economies combined) and is very pro-envirnmental there.
Florida is a little different… our economy is based on tourism, real estate & aggriculture. Especially in the Panhandle where St Joe holds the most land… We Floridians refer to that part of the state as “The Redneck Riveria”.
Gee, thanks for the update. Never was a Hippie though I was in attendance at UCBerkeley in 1960’s. Grew up a desert rat (mojave desert) and ‘free love thing’ just didn’t work. I’ll have to put ““The Redneck Riveria” in my memory bank along with one’s like ‘Nashville West” for Bakersfield, CA.
Joe will be do okay in the long run. They’ve got very low carrying costs on their land. And the insurance market will figure out a way to continue to cover coastal properties because a 10 mile Atlantic buffer for hurricane reasons wouldn’t just cover Miami and Houston, but also New York City and Boston. I just can’t see anyone wanting to abandon the NYC area even though they’ve taken far worse hurricane damage than Tampa has over the past 100 years. (The Long Island Express of 1938)
People talk about New Orleans, Florida, and the Outer Banks of North Carolina like they’re the only hurricane threat spots. Truth is, if you live within 15 miles of the Atlantic coast from Brownsville, Texas to the Maine/Canada border, you live in a hurricane hazard area. Even Nova Scotia takes occasional hurricane damage from high latitude storms.
My rule of thumb has always been the harder the sell the less value there actually is. In other words, IF homes were not grossly overvalued, the NAR and their ilk would not have to attempt on a daily basis to justify the value.
Take any asset and think for a second about that. If it were truly a bargain, it would sell itself without any hype. The ‘market” knows the value of an item and prices it appropriately relative to the supply and demand. No amount of sales hype changes that. In specific, prices of homes appreciated because of the easy money creaqted by the fed- not because of what any realtor or the NAR said. It is going to come down for the same reason- rates are rising and thus the supply is ballooning. The rest is noise to be filtered out.
yes, but the “noise” on which this craziness has been predicated happens to resonate with serious psychological issues humans tend to have. That’s why this has been so awful. It’s not quite like the ‘asset’ bubble of techstocks. you might have been feeling stupid not to jump on the latest sillyvalley darling or the nasdaq index back then, but it didn’t quite entail the fear and dread and failure vs. success scene that’s been built up, with lots of manipulation from the vested interested, around home-buying. This isn’t just selling beach vs mountain or granite vs corian, this is marketing visions of stability, freedom, security, by selling huge debts, anxiety, social comparison. Even large swathes of the ‘investors’ took the plunge based on fear, I’m guessing, convinced by the salesmen and commercials and bookwriters that they need to fund their retirements because they’ll be screwed if they don’t. Young people sold on the idea that if they don’t buy *now* they’ll never be secure. It’s not like this was a ‘debate’ on values or on risks over payoffs. Tons of people I’m sure jumped in thinking it was ridiculous to assume that prices could keep appreciating like this…that affordability would come into play. But they were actively convinced not to worry by people affiliated with the NAR. Surely, many of the people who will get screwed the worst would not have been able to play unless money was easy. Unless money was easy the NAR could not have told so many people that whatever the price is, just pay it, hop in to this pool of foolishness, and starting gettin’ rich. Or, depending on the ears in question, get in now…you might worry about the water levels, but it’ll only get deeper as time goes by, trust me.
People can’t really filter out easily that kind of noise…it’s not human nature.
how sad this all is really…
Very good post Shel — it has been psychological manipulation rather than rational thought — it builds on itself and I’m quite sure the RE agents and the appraisers and other hangers on have ‘bought’ into the psychosis and to large measure ‘believe’ the bumph they are spouting.
This comment is dead on. The whole debacle isn’t predicated on what drove the tech stock boom (pure greed mixed with stupidity), it plays instead into deep seated psychological fears of homelessness and instability that everyone faces as they get older. This real estate bubble is manipulation and abuse of the worst kind.
“This real estate bubble is manipulation and abuse of the worst kind.”
Yes, the self-inflicted kind.
yep, sure, you gotta sign the mortgage paperwork your own self, even these days. You gotta sign the sales agreement and decide on an offer-price your own self, it’s true. But I just don’t see how anyone can deny that the system has been waaaay gamed lately to ‘help’ people make very bad decisions, and takes advantage of very visceral and deep-seated human reactions and emotions.
Hot real estate prices extend to rural land
St. Joe was one of my best short sells last year. 23 points plus on the downside. Any rally and I’d love to whack it again.
Yeah, isn’t St. Joe down almost a third since last summer? Maybe they’ll go under entirely–couldn’t happen to a more deserving company.
OT, but it’s worthwhile: Spokane, WA Property Taxes
“Thursday, March 9, 2006
Letters to the editor
Property taxes out of control
Yikes! I just got my property tax bill. A few months ago my property was re-appraised upwardly by 30 percent. When I called the assessor’s office, I was told not to be too concerned since all property was being re-appraised and the actual tax increase would probably be much less than 30 percent.
Well, the numbers are in and my property tax went up 25 percent, a huge increase! Nor is there any end in sight.
As property values go up, so will the assessed values and the taxes. However, unless the property owner sells, they do not realize any gain from the increase in their home value but they will have to pay increased property taxes each year.
This system can literally price fixed-income (retired) people right out of their homes. The same thing happened in California a number of years ago and they solved it with Proposition 13, which limited the amount a homeowner’s taxes could increase until the property actually changed ownership. The pressure for similar legislation should be building in Washington.
In the meantime, I will be voting no on any measure that would impact my property taxes unfavorably.”
Douglas Peter
Spokane
Warren Buffet wrote an interesting response to Prop 13, suggesting to Schwarzenegger (sp?) that he should eliminate it. He pointed out that he paid less tax on his $4.5M+ home in Malibu than his $600k home in Omaha. The young and dumb pay for the old and wealthy in California.
What a mess. Well, not a mess if you bought in 10+ years ago. Great idea on paper and for the few who bought in and held. Question is, who now pays for all the local services?
Yeah, but most of us poor California slobs like it. I’m a recent (4 years ago) property owner, and I’m all for it. I look at it as I’m paying for stability. So what if the couple down the street is paying a much lower property tax than me; I knew what I was getting into when I bought. I think a lot of other people in other states feel the same way.
Amen to that! It’s like being upset that your neighbor bought their house for $42,000 in 1970. Different times, different incomes. What they pay/paid isn’t my concern. If I buy a house now, **I** am agreeing to pay that tax bill. And I know the cost in advance, which is what makes Prop 13 so great. You KNOW what you’re getting into. Nobody else can force me to do it.
Removal of Property 13 would surely damage Californians. It’s a complicated issue. I’m not sure how I feel about it and how my grandma and parents would afford it.
People in states with no State Income tax can’t have it both ways. The public bills have to be paid somehow.
I live in FL and I personally know of 3 homes that sold for > $30k under list price. These are $150k-$250k homes, too.
oops sorry for the double post.
what area of Florida are you in?
Finally, someone talks about the elephant in the room that all the other experts are so assidiously ignoring. And the last sentence makes it clear precisely why there will be no soft landing.
Excellent comment BETAMAX . I dont mean to sound like a hippie but we are all tied into this even if we didnt feed the housing frenzy .
Better to hope for a soft landing than a hard landing with desires to pick up real estate at 1970 prices .
The 40 mile (or so) stretch of Florida State Road 20 between Perry and St. Marks (due South of Tallahassee), is owned by St. Joe. On my last trip on Fl 20, I noticed for mile after mile, Arvida ( the real estate arm of St Joe),had signs offering this flat piney woods land for sale. I have no idea who would buy land there in the middle of nowhere — the small town of Perry on the East and Tallahassee 60 miles to the NW. I quess the greater fool theory applies.
Out of staters who don’t realize what a racist inbred hellhole Perry is would be my guess.