“A Lot Of Sitting And No Bidding” In Florida
The Sun Sentinel reports from Florida. “When it comes to single-family homes, better to buy now. But hold off on those condominiums. That’s the word from the University of Florida, which last week released a quarterly study that suggests the housing slump is stabilizing. Meanwhile, existing home sales and prices were down in both Broward and Palm Beach counties in January, the Florida Association of Realtors said this month.”
“UF’s report appears to be ‘a lot of wishful thinking,’ Delray Beach housing analyst David Levin said.”
“‘Just because we have seen a decline in how fast prices are falling doesn’t mean they have stopped falling,’ Levin said. ‘And once we get to the bottom, then what? The bottom might become the new reality.’”
“The new reality in the region’s marshmallow-soft real estate market is that homes in Palm Beach and Broward counties languish for weeks or months without a showing, let alone an offer.”
“So savvy but skittish homeowners are considering an alternative: house-swapping. ‘I can see the attraction,’ said Jon Gelman, a Fort Lauderdale real estate lawyer. ‘Anyone who’s trying to upsize or downsize, there’s a concern: are they going to be able to sell the house they’re in? A lot of insecurity makes it hard to sleep at night.’”
“Ira Shanes, of Boynton Beach is concerned about falling prices. He said his three-bedroom home was appraised two years ago at $419,000; now it’s worth roughly $360,000.”
“‘There are just too many houses on the market right now,’ said Shanes. ‘You just don’t know for sure that your house is going to sell [the traditional way].’”
“There are, of course, potential roadblocks to trading. It’s difficult to arrange if either homeowner owes more on the loan than the house is worth. And getting strangers to agree to swap properties is a bit of a long shot. ‘It definitely is like trying to find a needle in a haystack,’ said Gelman.”
“Wellington agent Jim Corbin said he has worked only three trades in 35 years but acknowledges the market’s recent slide makes the concept worth considering. ‘There are so few buyers out there that anything you can do to find one is a good thing,’ Corbin said. ‘People certainly are being creative these days.’”
The St Petersburg Times. “With 40 homes from 19 builders on display, the Hernando Builders Association is aiming to woo buyers with low interest rates during this year’s Parade of Homes.”
“When considering the record year of 2005, when 4,271 single-family residence building permits were issued by the county, not many builders expect that 2007 will top that.”
“‘What you’ve got to realize is that 2005 was an anomaly,’ said Dudley Hampton Jr., first vice president of the builders association. ‘And it’s one of those years that comes along once or twice in a lifetime as far as real estate and home-building goes.’”
“This year, the potential home buyers that Ed Velasquez has seen come through the two Lexington Homes models in the Villages of Avalon subdivision seem to just want to know what’s out there.”
“‘I’d say that 95 percent of the people I’ve talked already own a home,’ Velasquez said. ‘And while they’re looking to sell first, they’re trying to make plans to figure out what they want.’”
The Herald Tribune. “When speculators stopped grabbing every parcel in sight and inventories of unsold homes began to rise in summer and fall 2005, anxiety crept into the regional psyche.”
“Suddenly, it seemed possible that the laws of gravity still applied and that homes would no longer appreciate at 30 percent per year. Values might even drop.”
“Many Southwest Floridians tried to put that thought out of their minds, preferring to live in denial in the hope that the market would rebound.”
“‘The fundamental thing that drives prices up is greed,’ said Venice real estate broker and foreclosure specialist George Huhn. ‘You start to see articles in which so-and-so gave up a job as a teacher and turned a $60,000 salary into $700,000 a year. Other people start to think they’ve got to get theirs before it’s too late. But in the end, there’s still plenty of real estate. There’s just no one left to sell it to.’”
“‘The news is not good,’ said economist Paul Kasriel. Kasriel points to the enormous financial problems facing sub-prime lenders. ‘Increased foreclosures means more houses will come on the market,’ Kasriel said. ‘But buyers who might have been able to buy those houses with sub-prime mortgages have been taken out of the chain.’”
“‘The lawsuits are already popping out,’ said Kasriel. ‘It’s a shotgun approach where everyone sues everyone else in the hope someone has money.’”
“It is basic supply-and-demand economics, said Don Atwell, an agent in Punta Gorda. ‘When you have all this supply, dropping prices is the only way to jump-start demand.’”
“That does not mean going down in ‘chicken steps — a little reduction here and a little reduction there,’ said agent Barbara Ackerman. ‘If sellers do that, all they’re doing is following the market. What they need to do is stand out like sunflowers in the weeds.’”
“The worry among some market experts is that no matter how much prices are reduced, demand for real estate will not recover until buyers are convinced that the market has bottomed out. ‘No one buys in a down market,’ said Garrick Newman, an agent in Bradenton, pointing to a real estate auction last month where property formerly owned by developer Michael Tringali was offered at the Sarasota-Bradenton Convention Center.”
“‘That summed it all up,’ Newman said. ‘There was a lot of sitting and no bidding. People weren’t looking for deals. They were looking for steals.’”
“Huhn believes that buyers will not get comfortable with real estate again until ‘there is blood in the streets.’ By ‘blood,’ Huhn means more foreclosures, more builders going out of business, more bankers reporting losses, more developers, real estate agents and investors suing one another in an attempt to pass on the blame for their losses.”
“Some are still in denial, but the prevailing emotion is moving toward fear, Huhn said. ‘The F-word is definitely creeping in. If we were whistling past the graveyard a couple of months ago, we definitely know there are a lot of dead bodies buried in there now.’”
From Florida Today. “A wave of home mortgage foreclosures is sweeping across Brevard County, signaling a disastrous end to the local housing boom for those who could lose their homes. More than 200 local mortgages have been foreclosed on in each of the last four months, and thousands more are in danger of being foreclosed, records show.”
“Many of the foreclosures and homes vulnerable to foreclosure are in Palm Bay and Viera — two areas of Brevard County that have had the highest volumes of new-home construction in recent years.”
“In Brevard County, there were 982 foreclosures from November through February, more than double the 377 foreclosures during the same four-month period a year earlier, according to data provided by Brevard County Clerk of Courts Scott Ellis. The figures include some commercial foreclosures, but the vast majority are residential.”
“In addition, there are more than 5,600 local properties where the owners are at least two months behind in mortgage payments, according to RealtyTrac.com.”
“‘We’re starting to see the beginning of the increase in foreclosures now,’ said Gene Collins, the former president of the Melbourne Area Association of Realtors and a Realtor who has handled foreclosure sales for banks and others.”
“If there is a marked downturn in the economy, ‘this could be seen as the tip of the iceberg,’ said David Brown, professor at the University of Florida’s Department of Finance, Insurance and Real Estate.”
“”We’ve adapted to what I call ‘The Easy Society,’ in that we made it easy for people to get into houses with submarginal credit. Since they had submarginal credit, that puts them in the sub-prime category, ripe for a product like the exotic mortgage or the junk loan, or optional adjustable-rate mortgage,’ said Steve Srein, founder of People’s First Financial Services of Melbourne.”
“‘The problem today is that the people were pushed into loans they really couldn’t afford,’ Srein said. ‘The real estate people and the mortgage brokers are saying the borrowers knew what they were doing. But, really, it’s the optional (adjustable-rate mortgages) that are the big culprit behind the whole problem.’”
“‘If your habit is spending on lavish trips or spending on clothes, you need to cap the spending to keep your house. It’s the wants versus the needs,’ Srein said. The other factor is that, in recent years, housing prices have soared in Florida overall, Srein said, ‘and the salaries have not.’”
“What is worrisome about the rise in foreclosures is that it’s not tied to a general downturn in the economy, David Brown said.”
“‘You’re getting a high level of defaults that are not associated with an economic downturn, people losing their jobs, things like that,’ he said. ‘It’s probably troubling that there are these large number of defaults in this kind of environment.’”
From the SPT link:
‘Despite a slow first quarter, Hampton said he thinks 2007 will shape up to be on par with the normal rate of building. During January and February of this year, the County Planning Department issued 227 permits for single-family residences. In 2006, 2,787 were issued.’
So the building continues.
“So the building continues”
That’s what builders do, if they don’t build then they are out of business. So they will keep on building as long as they get loans or credit or the workers and supplies keep showing up on the basis of promises of money.
So I guess when we see 1/2 finished housing developments all over the confines of bubblicious amerika, we’ll know the moolah has run out?
Or as they say in the redneck states:
“Let’s not get er done”
Carleton Sheets will become the new Pets.com puppet.
I hope they use his real head for the puppet. It’s already hollowed out.
“I hope they use his real head for the puppet. It’s already hollowed out.”
And I’ll show you how to buy all the pet supplies from our bankrupt .bust company with no money down.
It kills me when he has morons on his infomercials who say stupid s**t like “I bought a house and walked from the closing with $10,000!!!”
Hey, idiot, you now OWE that $10,000!!!!
Sadly, this presages even more infomercials about buying distressed housing for rock-bottom prices in a few years. The big twist will be pooling your money with fellow investors instead of taking out a lot of financing. It will be value and cashflow over leverage (which is good) — and r.e. types will swoop in to manage and package the properties and partnerships at a high rate (which will suck).
I’d better start my book on this “revolutionary new practice” soon. Is “Cashington Richquick” too subtle a pen-rename to use? Or maybe “Rich Cashington III” is the way to go.
It’s “git” not “get”
Spoken like a true Yankee
Besides, it is one word.
Recently, I learned that the market is not overbuilt. (for those of you who missed this weekends gems)
“After tracking the downtown market for 18 months, Palm Beach broker Pamela Hoffpauer, concluded, ‘West Palm Beach is not overbuilt, it’s undersold.
My car’s gas tank is not over-empty, it’s under-full.
My shoes aren’t too small my feet are too big?
Pam is not really dumb, it’s just that everyones else is so darn smart!
She better be REAL hot if she’s gonna be that stupid!
http://chicagobubbleblog.blogspot.com/
Or real tough!
Ken, since you brought it up, I was thinkin’ the same thing.
She’s not…
http://www.palmbeachdailynews.com/news/content/society/cpp2.html
…she just LOOKS like a real estate agent.
http://chicagobubbleblog.blogspot.com/
Fat chicks don’t over-eat. They just don’t diet enough.
..seriously, Pam’s comment just about says it all.
In fact it answers every question about the market:
-Why are sales down? it’s not overbuilt, it’s undersold.
-Why is inventory up? it’s not overbuilt, it’s undersold.
- Why can’t most people sell? it’s not overbuilt, it’s undersold.
(your question here) it’s not overbuilt, it’s undersold.
What is the absolute dumbest thing you could say about the RE market? it’s not overbuilt, it’s undersold.
And child molestation is gross-generational love. What crap. Everyone knows what it is lady. The only people stupid enough to buy that crap is your fellow realtors at a luncheon.
The lending doesn’t seem to be letting up either. A large FL lender is pushing garbage loans even today.
Can one of the brokers here explain this to me? This bank only offers YSPs (broker kickbacks) on it’s most toxic of loans. Does this mean they are trying to push these loans more than the others? Or is there some other explanation?
Loan Type YSP Kickback ($500k loan)
Non-owner occupied, > 70% LTV 1.00 $5000
Non-owner occupied,
Here’s the full list, it got cut off
Loan Type YSP Bribe Amount to Broker (on $500k loan)
——— —- ————————————–
Non-owner occupied, over 70% LTV 1.00 $5000
Non-owner occupied, under 70% LTV 0.50 $2500
NINA (no income, no asset liar-loan) 0.75 $3750
No Ratio 0.50 $2500
YSPs are in fact broker kickbacks. They’re easier to explain away on the HUD form than other fees.
Got my first ‘inside’ look at the subprime industry post up… Actual photos of rate sheets and hand outs. See for yourself what was really driving the bubble.
SoCalMtgGuy
http://www.housingbubblecasualty.com
“Matress Money“…that’s special.
The fact that they used MS WordArt with the cheesy globe border would be the first red flag if I were a potential FB.
Effin’ A, go to Kinko’s and get them to design a flyer. It costs all of $35.
A lot of builders are working on deals that were made last year. As long as the bank does not drop out they have cash flow.
They’re just hoping the market picks up when their done and the bank doesn’t cut the funding.
Sweeeet! A lot more choices.
Indeed Ben as I was out this weekend in several subs and found that the building continues but at a much much slower pace. I would classify it as subsistence bulding to keep the doors open.
Same in rural NY… Starter Castles beginning to occupy pastureland.
Too soon old, too late smart.
Pass the popcorn, Neil
munch munch munch.
I wonder how many of these new divisions will become slums and how many will repossessed and sold cheap to become really nice communities? If they don’t get owners into them… they will fall apart.
I feel like a bit guilt, like watching prisoners in a demolition derby to the death. But then I realize the crimes that were committed… (fraud, inducing panic buying, fake counter bids). We collectively deserve this.
Got popcorn?
Neil
Heard the other day at dinner about plans for a 175ish home development to be started in Spring Hill Fl. Heard this from an aquantance that works as a HVAC sub. He is happy to hear this as he has had very little work this year. Don’t know if it is true for sure, and he has not been given any official word. If no one is buying the houses that you just finished in 2006 why build more? oh well.
“‘You’re getting a high level of defaults that are not associated with an economic downturn, people losing their jobs, things like that,’ he said. ‘It’s probably troubling that there are these large number of defaults in this kind of environment.’”
Yep, just think how ugly it’s gonna get when the environment contains lots of job loss.
People losing their jobs and homes. Pretty soon, you’ve got a real downturn.
ROTFLMAO….
Considering the quality, security, and level of compensation associated with so many of the jobs created in recent times - the situation is doubly dangerous. Can an economy so heavily based on personal consumption and services weather what lies ahead without serious dislocations? Maybe the gov’t will create WPA-style coffee houses to employ all the laid off baristas?
Coffee is for closers!
They could always nationalize Starbucks.
Anybody remember a cheesy movie from the late 70’s called “Americathon”?
John Ritter was prez, in the future and the premise was that our country was broke and a ginormous national telethon would save us from ourselves…
Where is John Ritter when you need him?
Oh, yea. Dead.
Maybe that guy Simon from American Idol can host it? (As a side point, he’s not even American and he is Hosting A.I.) Hmmm…the plot sickens.
Maybe, just maybe we’ll learn our lesson this time and Govt. and private business will learn from this and we will emerge a stronger more vibrant America!!!…..NOT.
I’ll trade you my McMansion for your McMasion!!!!
It’s a deal! Now all I need is for you to bring $50,000 to the closing table and we’ll be all set.
“It’s a deal! Now all I need is for you to bring $50,000 to the closing table and we’ll be all set.”
I’ll trade my house and $50K for one of the McMansions. The problem lies in the fact that I don’t live in a McMansion. You see, I didn’t overbuy my house. I didn’t get a liar’s loan with 0 down. I bought in my price range for less than the cost of rent. Imagine that!!
My GF accepted a contract on her townhome this weekend. The buyer was desperate for the property as he had closed on another townhome in the same development, but the deal fell through because the FB seller was severely behind on his mortgage payments, the lender wouldn’t accept a short sale, and the FB didn’t have the $$ to bring to the closing to buy himself out of his misery. Guess where that FB’s house is going to end up next?
Yup, Palm Beach County *is* special!
“Some are still in denial, but the prevailing emotion is moving toward fear, Huhn said. ‘The F-word is definitely creeping in. If we were whistling past the graveyard a couple of months ago, we definitely know there are a lot of dead bodies buried in there now.’”
Nice! That Herald Tribune article is chock full o’ great comments! Every seller should be strapped to a chair and forced to read it.
Would like a bowlful of loathing to go along with your steamy cup o’ fear, dear sir?
As any fan of horror movies can tell you, it’s not the dead ones. It’s the ‘not quite as dead as you’d hoped’ that cause the problems.
“If there is a marked downturn in the economy, ‘this could be seen as the tip of the iceberg,’ said David Brown, professor at the University of Florida’s Department of Finance, Insurance and Real Estate.”
“What is worrisome about the rise in foreclosures is that it’s not tied to a general downturn in the economy, David Brown said.”
I swear to god, they come back from Gainesville stupider than when they left.
Yes, the economy is still cranking out $10 per hour jobs at a record pace.
That is good, since it takes several $10 an hour jobs to survive on, so there needs to be plenty to go around.
I just got done reading some report trying to claim illegals don’t push down wages for Americans, since Americans won’t do the work they do.
Hmmm, they used to do these jobs (for better pay of course)
The whole mess is a race to the bottom…
I see average amerikans and meskins/central amerikan immigrants as passing ships in the night…
Both earn around the same, one is on the down escalator, the other, going up.
We’ll pretend like this isn’t happening~
What companies are not getting is that all the low wage workers they use to replace higher paid workers cannot buy their products, because there’s no money left. So now you have displaced workers not buying and low wage workers not buying. Who are they going to sell their products to? Duh!!
professors get to keep thier jobs
no matter
In private universities, why would you care?
That is true for a tiny number of professors, those who get tenure. And tenure is *extremely* difficult to get these days. You see a lot of tenured professors only because they got tenure before the colleges started hiring more no-benefits no-job-security part-time faculty and cutting than tenure-track faculty. And those older tenured guys (and they are mostly guys) cannot be forced out. Universities are no different these days from any other business WRT job security, diminishing wages and benefits, etc.
I are a graduate of University of Florida and I can tell u there is no profound wisdom in those halls. It is a shill for business from one end to the other dependent upon contributions for survival.
Bring Thornberg over and see what he has to say. Then I will believe it.
“Those who can’t, teach” Marx (either Karl or Groucho, I can’t remember which)
A person graduates high school, goes to college, gets a job as a professor. This person has never left school. What the f**k do they know about the real world?
Ever wonder why when a dictator takes over a country he shoots the college profs and students first? Is it because he is threaghtened by their superior knowledge and intellect? No, it’s because they are so damn annoying and detached from reality.
Yes, those titans of “can do” in the financial real world did a bang up job.
LOL!- And as someone that has spent a good part of my life in college towns (although, unfortunately, not working for any), that isn’t the only social disease they have.
That post, Ben, could be a term paper on the Florida Housing Bubble of 2002-2006. It belongs on every homeowner’s refrigerator. Thank you for the great compilation.
I have a question - how many investment properties (condos or single family homes) were bought using the option ARM product. As many people know, there have been a lot of investments in condos in Florida. However, one of the key problems in this area is that you cannot rent for what you need to cover a mortgage - even assuming 20% down. I am wondering if anyone knows how many of these rentals (which would normally be underwater in terms of cash flow) are being temporary subsidized by the option ARM product.
Where I live, it’s obvious. THEY ALL ARE! Everyone who is trying to sell where I am is trying to sell at 2005 prices. Most of the sellers are foreigners, so you can’t tell me they put down the requisite 20% in the hopes of getting that 20% back later. They stayed up late one night, drank a little Carleton Kool-Aid, called their friends and they all jumped in head-first.
Their units sit for months and months without a budge in pricing. Now what idiot stands on a street corner trying to sell lemonade for $10 a glass on a hot day and wonders aloud why it’s not selling?
I have a friend whom lives in Eagle Co (next to Vail). He is renting a brand new $600K house for $2000/month. It’s way over priced for what a person would expect to get.
The house is owned by an “investment group”. I wondered how this investment group was able to maintain liquidity. My friend pointed out that there are similar investment groups all over the Vail / Eagle County region (and even in the entire Colorado mountain area) buying places with the option ARM loans. They are banking on rapid appreciation to offset their cash flow losses. The local population is totally priced out of the market and even traditional second home buyers are thinning in numbers b/c prices are so high.
In a few years, there’s going to be hell to pay.
years ?
why wait, there’s trouble now
Who the hell buys investment property with a variable loan? Even if you make profit at first you could find yourself underwater for years… No, don’t answer. Nobody reading this blog would be stupid enough to do this, but what sort of putz is taking in other people’s money to make this sort of investment? These investment groups are run by thieves, and the investors must be first rate fools.
Tulk, I think the term “investor” is used to casually. I always thought investors made money, by knowing their market and implementing a well thought out strategy.
Nowdays, an investor goes to a meeting, gives a stranger a lot of money after hearing an hour long speech, of which he only remembers the phrase “you can make a lot of money”.
As far as the ARM thing, it’s not a bad investment tool, if your flipping houses in a growing market.
BUT, the real investor figures worst case scenario and factors what the damage will be IF he holds the property until the ARM adjusts and can he still make a return.
When I flip houses, I use either a line of credit or my own cash. After I buy the house, if I’m going to hold it for a year and rent it, or option it, I will convert the property to a portfolio loan. As recent as 2002 I did get several investment properties financed using ARMs. It worked out well.
But I don’t think ARM’s are meant for investment loans. Hey. I ain’t looking a gift horse in the mouth as it saved a ton of interest, but just like the guy buying his 5th house and saying it’s his primary residence so he can get 30 year fixed, i don’t think ARMs for investment are Kosher.
I don’t think you’re going to see a lot of investment ARMs in the future. We’re going back to 20% down, 20 year Amortization and 1 to 2 points over the 30 yr fixed.
A man approaches a little match girl to buy a box of matches. “How much?” he asks. “Ten thousand dollars,” she replies. “Good heavens!” he exclaims. “You won’t sell many boxes at that price.”
“That’s okay,” says the little match girl. “I only need to sell one.”
That only works where there isn’t thousands of others selling matches right next to them.
” But in the end, there’s still plenty of real estate. There’s just no one left to sell it to.”
This kinda sums it up!
Butchered the cash cow; now they wonder why it will not moo!
Hey mister, I’ll trade you my skate key, three aggies and my Hopalong Cassidy lunch box for your house.
“You got a deal kid.”
Heck, that Hopalong Cassidy lunch box is worth REAL money on the collectible market. Probably more than the house, lol.
I was in the Florida Keys in Feb. Every house is for sale! Really. My wife and I were on one street in Summerland Key (lower keys) and counted 34 for sale signs! All in the 1 - 2 mil range. And if the house is not for sale they are trying to rent it for $5,000 - $8,000 a month. Of course down there they think every millionaire in the world is going to buy in the Florida Keys :-}
Hell who doesn’t wan’t to live in the keys. One more hurricane and we will be able to afford it.
I was in the Palm Beach area this weekend. The Palm Beach Gazette had a real estate section that was the size of a small phone book. I saw lot’s of for sale signs when I drove around. Spent the weekend with the folks in Jupiter, FL and shared some stories. Last year 12 properties on the market in their gated community, all sell without broker by listing at clubhouse. This year 25 properties for sale, most listed with brokers, and last weekend nobody showed at the open houses.
Every other house is for sale here in Key West now, some condos have decreased their listing price by over 100k in the past 6 months
When I was in Key West, I heard the number was 1100 homes for sale. That seemed like a large amount for a small island!
““‘Just because we have seen a decline in how fast prices are falling doesn’t mean they have stopped falling,’ Levin said. ‘And once we get to the bottom, then what? The bottom might become the new reality.’”
He should say ‘The bottom might become the new reality - FOR A LONG TIME TO COME.’”
Shares of New Century were halted early Monday with news pending. Opening in the shares was delayed after a New Century regulatory filing earlier Monday outlined the subprime mortgage lender’s liquidity crunch.
An upfront about reality mortgage broker in Houston told me last Thursday that NEW had filed for bankruptcy, and that he had made 60k on shorts.
Check out this Sarasota Tribune article.
http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20070312/BUSINESS/703120465/1439
The house was listed for $10 Mil and sold for $7.3 Mil. There are 274 homes in Sarasota MLS with an asking (wishing?) price above $3 Mil.
“There are 274 homes in Sarasota MLS with an asking (wishing?) price above $3 Mil. ”
Hey! I’m sold! They have a nicer dog track in Sarasota than we do here in West Palm.
Ok, the next big money maker in the building
industry….the McMansion conversion….
take a 6000 sq. ft.house and convert the thing
into little apartments…though a small fridge and
a microwave in the bathroom and you have
a kitchen, wiht all those high ceilings you could even wedge in a loft or two…….. any takers??
They already did that to a bridge in San Diego.
Cities like Syracuse, NY, and Pittsfield, MA and much of Boston have blocks and blocks of the 1920s version of the McMansion all carved up into little one-bedroom apartments, all remodeled in the 1930s and 1940s, with a few remaining ones being done in the 1970s. They tend to have really crappy jury-rigged kitchens and bathrooms.
Same thing in Pittsburgh. I had some good friends who lived in those carved up mansions. Some of them were still quite nice.
West Philly, same deal.
I rode in a long-distance cycling event in rural east Pasco yesterday, and there is a lot of farm and ranchland up for sale, more than I’ve ever seen. Most humorous was the sleepy hamlet of Trilby, where half of the houses in one small cul-de-sac displayed realtor or FSBO signs.
The trip to and from Dade City on I-75 had the usual monster billboard displays of the Tuscan-style “good life” that awaits all willing to fatally compromise their financial futures on McMansion purchases. I swear there are now more real estate signs than those that beckon for purposes of adult entertainment, which is Florida’s traditional highway solicitation.
You mean there are more realty signs than those for Yeehaw? Count the real estate signs and win a prize. (This one is #4.)
And of course, if you are living the Tuscan-Style “good life”, you’ll need faux window shutters on your bit of stuck-o pride and joy
” you’ll need faux window shutters”
On the bright side, those faux window shutters make good hurricane projectiles!!! Is that a missle? Nope! Just a faux shutter.
I like Trilby, except for its proximity to Lacoochee. Now there’s one scary place.
Went to visit inlaws in Wesley Chapel (a couple of weeks ago) and drove to Clearwater one day. I thought I’d take pictures along the way of real estate signs, development etc. since I had a lot of free memory on the camera. Before we got to the beach I ran the battery out on the camera.
I live in Tampa and everyday as I take my son to school 5 miles from where we live I count the
for sale signs…today…24
One time I drove up South MacDill from the air force base to Kennedy Boulevard and counted 60. That probably was a severe undercount, because (a) whenever I reached a cross street I only had time to look in one direction and (b) I only could see a couple of blocks down the street when I did this.
Uh-oh! It’s another contestant in Count the For Sale Signs! I haven’t played the game in Tucson lately, but I think it’s time to start again. Beachgirl, you’re on!
Live in Pinellas County and this weekend the for sale signs for the “spring season” have gone up with a vengance. signs out on most corners and some have several signs. Also there are more and more huge banners trying to sell condos. I never even heard of a sign twirler before comming on this blog and had never ever seen one down here now I can say I have seen several. All selling……condos.
There is actually a name for these folks (the sign twirlers): Human directionals.
http://www.vdare.com/sailer/051218_labor.htm
They only get my attention if they are good looking and naked. Not many fit that definition.
OT is it me ?
I guess everything in the store will be worth $1.30 now
http://finance.yahoo.com/q?s=DG
the next bubble is LBO / aka private equity
Private equity buyouts are wonderful. The money changers get to eat the loses during the next recession.
In the Tampa Tribune this weekend, an ad for Standard Pacific Homes states it will pay your
insurance and property taxes for up to two years
when you buy a home from them……in the fine print it states that you must use their lender
and they will reimburse you for the tax and ins.
bills….(if they are still around) Isn’t this a
sub-prime like loan in a different wrapper???
what’s the NPV on that
man, I wouldn’t bet on any of them being around long
If your habit is spending on lavish trips or spending on clothes, you need to cap the spending to keep your house.
Tell the hot chicks at least they can apply to be an anchor on Naked News.
and they will reimburse you for the tax and ins.
bills….(IF they are still around)…the big IF!!!
also, “in the fine print it states that you must use their lender”. They’re getting a kickback, not illegal or unethical, IF it’s disclosed, which it was and IF the kickback is in a legal format. Can’t be a commission on the mort unless the bulder is a lic mort broker, which he could very well be.
The whole ad smacks of desperation. The gaurantee is only as good as the gaurantor and in this case the gaurantor sounds shakey.
As a general comment, as has been said on this blog many times, builders are getting creamed. There are a few smart ones, but these guys don’t look like they’re in the smart group.
Here is a house in a very upscale golf course development in Sarasota, called the Founders Club. I have no idea what the seller paid for it, but the developer was asking in the mid 1 millions and up for these a year ago. Nice gated community, guarded, a real air of “release the hounds” when you go into it. The country club itself is private and expensive to join (membership is not included in the sale of this place). They actually have caddies for the members, no tee times, limited numbers of people on the course…..anyway, enough digression….
Anyway, have a look at the pics of this house, then tell me if you think I should bid and what is the maximum price to pay. I am looking at this strictly as an investment to flip, or possibly (probably) rent out for 1-2 years then sell.
http://www.decarosouth.com/foundersclubauction.html
There’s links to more pics from there.
BTW, this development will have about 250 homes. At the moment, the MLS shows about 30 homes on the market (starting at 1.3 million) and another 30 lots (starting just below 400K), plus the developer is still selling an indeterminate number of homesites. So anywhere from 25% to maybe 40% of the entire development is available for purchase. I think that once someone buys a lot from the developer, they need to start building within 18 months, and that probably extends to anyone who buys a resale lot.
BTW, someone from the auction company told me this seller lives in the FC and has maybe 2-3 houses he built on spec and “needs to start lightening up and has chosen to use the auction mechanism to make the process more efficient”.
So let me have your opinions - buy or no, and if so, how much. I already have a number in mind, but just want to see what everyone here thinks of this idea.
Cheers / M78
OK, I figure 200k to bid. BUT…first find the carrying costs of the 200k. Let’s say 20k/year. Then subtract association fees. Take a guess at 10k/year. That’s 10k/year left to service the purchase debt. Now, using my 10% interest, I get back 100k. Tell the seller 100k.
Why? First, the association fees will drag the value of the property down. Second, you need to figure the carrying cost on the entire purchase, not just what you borrow from the bank. For example, I am making 5% on my cash. If I spent that on a house, I need to charge the house interest.
Keep in mind that the house may NEVER sell again. This looks like a crazy risky investment. You may do better at the racetrack.
Jeff
Mariner;
Nice Music on the site, by the way.
Long Islands suggestion of 200K sounds reasonable.
Myself, I would never suggest a price on a house/area I knew nothing about, but 200K would most likely be a steal. The website is a dog and pony show. nothing of substance there.
They obviously aren’t selling many homes so the developer probably already is in trouble.
If you can find a straight shooting realtor in the area, get some real info on that developement and the surroundings.
There are a lot of landmines here, the HOA being one. Someone’s got to pay big dues for the amenities. Plus you have taxes, insurance, maintenance etc. Look into the structure of the HOA in detail.
The developement is not built out yet. What’s likely to happen, in this market, is the developer goes tits up and you have a nice house with a huge field behind you, muddy when it rains, dusty when it dries, until the weeds take over, with a big legal issue over who pays what to whom for what…ect
At that point, who maintains the club house, golf course, who pays the caddies, etc.
Ck out the developer, who is responsible for what, do more homework.
On the surface it looks like a train wreck.
Any RE deal is good, given enough time. At 55 I don’t think I will live long enough to see this one built out.
I never tell anyone to buy or to sell. Personally, I wouldn’t touch it. IMHO. I could be wrong.
Are you experienced at RE investing? Remember this: A house that was for sale for 1.2 mil and did not sell, is not necessarily a bargain at 800K. They may have knocked 400k off the price, but it obviously wasn’t worth 1.2 mil or they would have sold it. Anything is only worth what someone will pay. It doesn’t look like there is a lot of takers here.
IMHO, this is a bad time to get into the flipping game. The market hasn’t settled yet. Know one knows where it’s going.
The only answer i can give you as an experienced RE investor is “I don’t know”.
Tks everyone for the replies. I’m thinking this would be a pretty good buy (bargain) at anything under a million - mind you, I wouldn’t pay close to that figure but I do think it will take more than the prices suggested in the various responses to get this property.
Some specifics - I’m making a rough estimate of about $18K/year in operating expenses (mainly taxes, insurance and HOA fees). This place should be able to generate a net rental of $3000/month ($36K/year), which leaves $18K/year or $1500/month to pay a mortgage. This would service a loan roughly $250K. I’m confident in these numbers - I own a very similar home nearby that I rent out and my operating expenses and rental are coming in at roughly that level.
The play here is a spec buy. FED up mentioned the assessment and the last sale - probably the assessment info is not current because this house is probably just completed and the assessment and last sale is based on the price of the lot the house is on - the price of $497,600 is in line with what the developer was selling the lots for in early 2005. So I’m going to assume that $497,600 is the price of the land only. I’m going to guess that the building costs are $200/ square foot, so the seller’s costs all in are probably up around 1.3 million. This also happens to be the same price as the lowest priced house on the resale market in that development right now. I fully agree that that price is way too high to pay.
LongIslandLost - good points, especially regarding needing to pay interest to yourself on any equity that you put in. I usually just worry about covering the cash flow, which works fine for an investment where most of the profit comes from appreciation. But in the present environment the income has to cover all costs because it is quite possible that you have to hold the property for longer than you anticipate.
Army - using your calculation, I came up with a mortgage of about $150K, which is a much smaller loan than what I calculated above.
Mike M - a few comments for you - First - yes, lovely music. It’s an orchestral arrangement of a piano piece by Robert Shumann - Traumerei (Dreaming), from his Kinderszenen.
I think the developer has sold a large percentage of the homesites there - probably 75 or 80%. We looked about a year ago and they didn’t have much available, but they might not have opened all of it up, and they might have had some people walk. Anyway, the developer hasn’t sold out yet, and probably won’t for quite a while.
I do know the area fairly well, and I know a few realtors in Sarasota (too many, actually). The country club is separate from the HOA - sorry, guess I didn’t make that clear. You don’t have to join the CC if you own a home in there, likewise, you can become a member of the CC without owning a home. Anyway, they’re separate entities, it’s not bundled, and the HOA dues do not support the CC.
As far as the development itself goes, the streets are all in, the golf course is completed (it’s been operating for several months), the clubhouse is done. I’m not quite sure on the setup between the developer and the builders, but basically he has 5 or 6 high end builders. You have to break ground within 18 months of closing on your lot, working with any of his builders. So I don’t know if the houses are being built with the developer’s money or the builder’s money - but there has been a substantial amount of building already, so I think that the risk of developer problems is not big. However your comments are valid and I’ll keep them in mind.
Agree fully with your comments about past pricing versus value today. FYG, I recall somewhere hearing that this particular house was on the market for just under 2 million, but no takers. If he gets half of that I’d be very surprised.
Mike, also appreciate your earlier comments (I saw them somewhere but I can’t find them now) about using this blog to make money. My working thesis is that we are approaching the time for finding some bargains. Every tide turns. We are only at the beginning of the downturn, but somewhere there will be an opportunity. It’s entirely possible that the auction will be attended more by sitters than bidders - like the Tringali auction a couple weeks back - and that this house ends up being sold for substantially less than a million. I’d certainly be willing to throw out an opening bid of $200K or thereabouts - I’d be absolutely shocked if I ended up wearing it at that price, but who knows - with the current R/E market “emotions” are, anything’s possible.
Again, tks to all who responded.
The Sarasota county appraiser has it assessed at $497,600 and it says the last sale was Feb. ‘05. This seems like a flip that has flopped.
What will it rent for per month? Conservatively.
Take that and mulitply it by .80 for vacancy cushion.
Take that and multiply it by .80 again for cash flow and maintenance.
This is the monthly mortgage payment (PI) + Taxes + Insurance + HOA that you should pay with a 20% down and 30 year fixed loan.
Calculate mortgage balance this will support. Divide by 0.80. This is your offer.
Sounds like you are determined to get rich quick with the minimal amount of effort.
My best advice is go ahead and bid $1,000,000 for it, and get what ever toxic IO ARM 2/28 loan product that may still be available. This will teach you the lesson that nobody could possibly explain to you in words.
Got 10% down?
“Sounds like you are determined to get rich quick with the minimal amount of effort.”
What’s wrong with that ??
“My best advice is go ahead and bid $1,000,000 for it, and get what ever toxic IO ARM 2/28 loan product that may still be available. This will teach you the lesson that nobody could possibly explain to you in words.”
You’re coming off a bit snippy (or at best, condescending). I certainly realize this market stinks, and that there’s some risk in stepping up and buying at this point, but that’s when you get a chance to pick up an asset for a bargain price. My target price is not close to a million, I’m familiar with the local market and I know what I should be able to rent this out for and what the expenses should be. Don’t condemn me out of hand for considering a risk that doesn’t suit you - it’s bad form.
M78
Don’t go to a housing bear website and expect positive responses - it’s bad form
Hey, you asked people for their advice here. Then when they give it you want to whine? If you dont wan’t peoples advice just do what you want and don’t ask.
“Hey, you asked people for their advice here. Then when they give it you want to whine?”
You are mistaken. tcm_guy’s response wasn’t advice. In addition, the tone was somewhat hostile, and I felt justified in calling him on that. I realize this place is a bear’s den and that many here think it’s stupid to contemplate purchasing anything, at least in SW Florida. There’s more than a few here though who recognize that at some point there is going to be a great opportunity to buy back in. I simply wanted to guage where this particular opportunity falls out, especially amongst people that might be waiting to buy. The housing market may deteriorate further, and it may stay depressed for quite a while, but at some point it gets low enough to buy. I’m trying to guage when, that’s all.
Snippy comments detract from the collegiality of forums like this, and I called someone on it. What’s whiney about that ??
M78
“In Brevard County, there were 982 foreclosures from November through February, more than double the 377 foreclosures during the same four-month period a year earlier, according to data provided by Brevard County Clerk of Courts Scott Ellis. The figures include some commercial foreclosures, but the vast majority are residential.”
“In addition, there are more than 5,600 local properties where the owners are at least two months behind in mortgage payments, according to RealtyTrac.com.”
Let’s say that the mean house value in Brevard is $240,000. Also, say 90% of those 5600 houses go into foreclosure. This will be about $1.3 billion dollars MINIMUM. This is in one county in Florida. Now, assume that the problems are in the “more house that they could afford” category. Estimate $350,000 per house. This gives about $2 Billion dollars in one county alone.
Now, assume there are approximately 24 counties per state, there are 50 states, each county has a $100,000,000 problem on average (this point is debatable), this gives a $120,000,000,000.00 problem nationwide. That is a $120 Billion MINIMUM. Will this collapse the home mortgage industry? If it is of the same magnitude as the S&L crisis, yes unless there was a bailout. Adjusted dollars of the S&L crisis would be $200 Billion. This is the same ball park as the current problem.
This could be a lot worse, and it is certainly bad enough. My question is: is it?
Roidy
Roidy;
Who knows?
IMHO, it is a bad scene and worse case could cause a serious recession but probably will cause a mild one and those upside down in their houses, subprime lenders, those directly in the building industry and the home mort industry will take a hit of unknown porportions. Most likely they will get creamed.
It’s hard to judge from previous RE downturns because this one was caused by forces internal to the RE mkt. Usually, the RE market is effected by external forces, inflation, gas crunch, ect.
This one was caused primarily by irresponsible lending. So logically those most responsible will get creamed first and worst.
The S&L thing is a good example and yes I think we will have a lending crises at least as bad as that and if you recall it wasn’t all that bad, for the average person.
A segment of the population will get creamed, most people may or may not feel a bump.
For example, If you bought your house in 1999, 30 yr fixed you don’t have a RE problem. You have an affordable place to live. If you’re a Roofer, you may loose your job. Than its a problem. If you’re an X-Ray tech, you won’t even notice it.
During this building boom, a lot of people were employed ie roofers, framers ect. Where did these people come from? There were a lot of illegals, but most people will go back to what they were doing before. We’ll be back to 2001 or so levels.
Basically, IMHO, no one really knows, but I don’t expect a worldwide depression. Although, like I said, I don’t think anyone knows.
But look at life in general. There are the doom sayers and the “all is well” crowd. The real situation usually lies somewhere in the middle.
It’s hard to judge from previous RE downturns because this one was caused by forces internal to the RE mkt.
Ahhh, but therein lies the flaw in your argument. The housing bubble is merely one manifestation of a larger worldwide currency & credit/debt bubble. Unfortunately for most, the bursting of the housing bubble will result in a chain reaction bursting of all the other bubbles. At this point a *severe* recession is the best we can hope for.
Comment by Mike M
2007-03-12 06:50:49
My shoes aren’t too small my feet are too big?
Pam is not really dumb, it’s just that everyones else is so darn smart!
Haw! Hilarious! I liked the ‘head puppet,’ since ‘it’s already hollowed out’. too.
It’s nice to be appreciated. Thanks.
An option ARM is not bad if you use it right. You still have to be able to afford the mortgage for a 30 year fixed. Let’s say the mortagage for a 30 year fixed is $2500/mo, and your 7/1 option ARM is $1400/mo in the beginning. You can invest $1100/mo into the stock market or something else, and your insulated against any sudden changes in payments. The concept is that investing the money will grow it faster than putting it into home equity. At the end of the 7 years you will have more equity than if you had gone 30 year fixed, if you then dump all your earned money back into the house. You will get a double bonus if the house appreciates as well. The problem is that most people who got the option ARM spent that $1100/mo on cars/trips/clothes or didn’t have it to begin with. I think it’s going to take a recession in order for the market to tank quickly, otherwise it will be a long slow deflation.