“It’s A Buyer’s And A Renter’s Market Now” In Florida
The Journal Constitution reports from Georgia. “Subprime loans helped fuel the housing boom in Atlanta, and now they are feeding fears of a foreclosure epidemic. In the past quarter, 13.5 percent of the nation’s subprime mortgage loans were in default. The rate was higher in Georgia —17.4 percent, according to a report last week by the Mortgage Bankers Association.”
“Filings for mortgage foreclosures rose 67 percent in Georgia in 2006, and the state had the nation’s second-highest rate of foreclosure filings, according to RealtyTrac.”
“David Worley, a metro Atlanta wholesale lending manager, said he has seen similar cycles in his 30 years in the mortgage business, but ‘none quite as severe as this.’ ‘Someone’s going to go in there and offer it,’ he said of the higher-risk loans. ‘If they didn’t offer it, somebody else would be out there selling it.’”
“Borrowers with better credit could benefit from the fallout in the subprime market, said Tyler Wood, president of the Mortgage Bankers Association of Georgia. ‘If you’re a prime mortgage candidate, you will be highly sought after,’ Wood said.”
The Sun Sentinel from Florida. “Speaking at a Futures Industry Association annual conference here, Retired Federal Reserve Chairman Alan Greenspan took questions from an audience of 200-plus members on topics from mortgage troubles to the price of gold.”
“Greenspan was greeted like a rock star, with a video introduction that included the song Money by Pink Floyd. On every table were medallions and money clips bearing his image.”
“A spokeswoman said she could not, by contractual agreement, say how much Greenspan was paid for his appearance, but Fortune magazine recently estimated his speaking fee at $100,000.”
“Greenspan said the problems of the subprime mortgage market had more to do with home prices than easy credit. ‘If we could wave a wand and housing prices go up 10 percent, the subprime mortgage problem would disappear,’ he said.”
“On housing, he said ‘if prices go down from here, I think we’re going to have problems that could spill over to other areas.’ Specifically, he was referring to the subprime mortgage market further affecting other segments of the market and economy.”
The St Petersburg Times. “The bill is coming due on subprime loans. Florida, which accounts for one-tenth of the country’s subprime loans, could face more pain than most. ‘There’s clearly some elements of a crisis,’ said Mark Vitner, Wachovia Corp.’s senior economist.”
The Herald Tribune. “Everybody knows that the region’s residential real estate market lurched, staggered and stumbled through 2006 while attempting to find an elusive balance. But just how bad was it?”
“The quartet of Southwest Florida’s largest and best-financed realty brokerages dropped an average of 43 percent in sales and an average of 47 percent in unit sales. In raw dollars, it was a drop of about $3.5 billion.”
“For all four of the large brokerages, 2006 fell short not only of 2005 but also of 2004.”
“‘The correction in 2006 was very different than previous corrections’ said Joe Hembree, the president of the Sarasota Association of Realtors. The drop-off did not occur, as most do, in a general economic downturn. In fact, it was quite the opposite, he said.”
“It was speculation that fueled the historic sales and price increases and it was ‘at levels that simply are not sustainable in a healthy economy,’ Hembree said.”
“‘Inventory levels remain high, which has continued to create a buyer’s market,’ (broker) Scott Sosso said.”
“Sue Louis, senior VP for Coldwell’s Sarasota Bay division, said her company is seeing an increase of rental properties. ‘Many homeowners are electing to rent their homes, which indicates a trend toward reduced inventory,’ she said.”
From Florida Today. “Struggling to recoup expenses in a weak housing market, real estate speculators are flooding Brevard County with inexpensive rental homes, causing heartache for apartment operators and bargains galore for apartment dwellers looking to upgrade their digs.”
“There were 1,127 homes available for rent this week in the county, according to the MLS. Realtors say that’s more than twice as many as they recall seeing.”
“Sheryl Jones of Century 21 had 60 single-family homes to rent last year. This year? She has 130. ‘It’s a buyer’s and a renter’s market now,’ she said.”
“Although he wishes he didn’t, Ken Myers owns 15 rental homes along the central coast of Florida, including five in Brevard County.”
“Like many home flippers, people who build or buy homes, improve them if need be and then sell them for a profit, Myers made money for three or four years until the new home market softened about a year ago. ‘I was trapped into renting,’ he said.”
“To compete in this market, Myers has to keep rents low, negotiate for less than his monthly costs and even offer the first month free. ‘I’ve got mortgages for $2,700 a month, and I’m renting a 3,000-square-foot (house) for $1,200. I’m upside down,’ Myers said.”
“But he’s determined to stick it out until the new-home market levels out. ‘Your money is still stronger in real estate — if you can outlive the chest pain.’”
“Margie Kemmler in Indialantic hasn’t seen anything like it. ‘I’ve been handling rental properties for 10 years, and I’ve never seen so many new homes available at these prices. I have three-bedroom, two-bath homes on the market for $950, and they’re not renting,’ she said.”
“The situation had Bob Taylor, manager of Pentagon Garden Apartments in Melbourne, rooting around in a closet recently for ‘Now Leasing’ and ‘For Rent’ signs. He said three residents left at the end of January to rent new homes, and he has six notices to vacate, the most he recalls having at once.”
“‘Why rent a two-bedroom apartment for $725 when you can have a whole house with three bedrooms for a little more? It’s kind of rough,’ he said.”
“‘I came here a year ago to a full house and waiting list and now I need a life preserver,’ said Alan Guthrie, manager of the 236-apartment Riviera Terrace Apartments in Palm Bay. He said in January, two tenants moved into homes ‘with rents within $150 of what they pay here.’”
“Cindy Riggin, president of the Space Coast Apartment Association, estimates occupancy rates at apartments in the county average 88 percent now, when last summer they hovered near 100 percent. ‘The market for apartment rentals has taken a nosedive,’ agreed Patricia Davis.”
“Several factors are contributing to the soft housing market. New lending policies, for example. Sue Bergamo with Matrix Lending of Melbourne Beach said until January, even those with poor credit could buy a new home with no money down.”
“‘Now, we’re more particular and a home must be owned for at least three months before it can be put on the market again,’ she said. Some lending agencies require a year.”
“And flippers often compete with home construction firms for buyers. Myers said he had a home for sale in a development where the builder offered the same home for $100,000 less.”
“Franck Kaiser of the Home Builders and Contractors Association of Brevard County blames flippers for artificially increasing the price of homes, causing overpricing and oversupply. ‘Homes are still not selling because people think home costs are going lower still,’ he said.”
“(Broker) Michael Pruitt in Melbourne considers the sluggish new home market temporary. ‘By mid-year, I think, it’ll balance out. It’s simple economics of supply and demand. We have oversupply. But it’s much better here than in South Florida.’”
No worries in Florida:
“South Florida,” he said, ”is working off of a totally new economic model than any of us have ever experienced in the past” according to a realtor who predicted that a land shortage will support higher prices indefinitely.”
- New York Times, Trading Places: Real Estate Instead of Dot-Coms, 3/25/05
“(Broker) Michael Pruitt in Melbourne considers the sluggish new home market temporary. ‘By mid-year, I think, it’ll balance out. It’s simple economics of supply and demand. We have oversupply. But it’s much better here than in South Florida.’”
“But it’s much better here than in South Florida.’”
Is this the new mantra of the housing bust? It’s much better here than in…
Yes. After all, South Florida’s housing market is better than Haiti’s.
Not by much. There are few housing markets worse than South Florida, such as Iraq, Sudan or Myanmar.
what’s the point of living in N FL -weather scks
might as well be in NC or SC
Pruitt Realty has been around for over 30 years in that area and has seen a lot of booms/busts. I think his estimate of it being over mid-year is too optimistic though.
One of my two favorite quotes. The other was from San Francisco
as reported in the Wall Street Journal and IMHO was the top of the Market. June 20, 2005
“So before accepting the most-attractive bid, she threw in an extra condition: If you want to buy my house, you have to feed the squirrels….”
http://tinyurl.com/2gp292
Love this quote, I never get sick of it. Definitely is the signature line for the euphoria stage of this bubble.
It seems like March has been the watershed moment for the breakdown we all saw coming. Momentum is gaining and I think we’re closing in on the panic stage of the cycle. I’ve watched the relationship between loose lending and out of control prices with fascination and how each brought on each other and will kill each other.
This morning I thought of why prices finally did stall and are now falling. It’s obvious that it wouldn’t go on forever, but my theory is that prices increased so high that even the most exotic of mortgages couldn’t solve the affordability problem. Even a teaser rate and a option arm payment was too much for the first time buyer. So the prices stalled.
With stalling prices the FBs couldn’t refinance to a more advantageous loan, i.e. they still couldn’t afford it. This led to NODs and foreclosures thus slaughtering the lenders (this is the stage we’re at right now). The future steps left to be played out is the total closing off of financing options besides conventional options (30 year-fixed) which dries up first time buyers for the inflated prices. This leads to even more supply as the demand is gone where only the best prices will find a rare buyer. Without the first time home buyer the move-up buyers become more scarce because there is no first time buyer at the bottom of the pyramid.
Looks like a 50% cut is a conservative estimate.
Good analysis. I won’t put a number on the “cut,” except to say that, just as we were all utterly shocked at how high prices went, we, all of us, are going to be equally shocked at how low they eventually go.
I’d guess we’re going to see 50-year fixed mortgages. They’ll allow these subprime buyers to convert to one of those, thereby (theoretically) averting a bunch of foreclosures. And the 50-year option and its lower payments will open the door to more buyers, thereby propping up prices. I don’t agree with it, but there was talk of this even before the looming meltdown.
I have to think that is pretty much a given out of the possible Hail Mary options they have stop the pain.
Um, the ones who take out those 50-year mortgages are nailed into their house-coffins, since they will owe so much principal at such outlandish prices that they will never, ever be able to sell.
The problem (elucidated elsewhere, best on SoCalMtgGuy’s blog) is that many people can’t afford a 50 yr fixed. A NegAm loan has a lower monthly payment even than a 50 yr fixed.
Thus, 50 yr fixed will ONLY help those people who want somewhat low locked in payments. But it’s not that helpful in the long run. (look it up on a mortgage calculator)
they’ll help, but not much.
Hard to say, the payments on a 50-year are not much lower than a 30. These people can’t even get into a 30. Not only that, but the interest rate is normally higher on a longer long than a shorter long. At some point it’s just not doable. If these people can’t get with the program of a time tested 30-year loan at true interest rate, then nothing will save them.
50 years wouldn’t do much. An IO loan is effectively infinite maturity and most people couldn’t pay those.
50 year loan might be 10% cheaper than a 30 year fixed at 6%.
That’s for sure. At 6.25% interest, a 350K mortage is $1907 at 50 years and $2155 at 30 years. Certainly not a good option.
I would be OK with banks refinancing FB’s into these to avert forclosures. It would mitigate some damage without punishing responsible taxpayers, but these mortgages should be heavily discouraged from being used to prop up new sales.
There is a solution: lifetime neg-am mortgages, preferably with no payments at all. Then every property will be equally “affordable”!
Amazingly, we haven’t even hit the two-year anniversary of that comment.
‘Coast Bank posted a net loss Thursday of $17.3 million for 2006, much of it from residential loans marketed nationwide that were placed in jeopardy by a failed builder. As a result, the bank said it will limit future home loans to the local market.’
‘In its filing, the bank identified another $87 million in outstanding balances on residential construction loans made to investment borrowers. While those loans are in good standing, Coast Bank set aside $7 million of the $21 million loan-loss reserve to cover any future defaults, citing the characteristics of the loans and the current real estate condition in Florida as reasons for concern.’
This is scary. How many more smaller banks made these kind of loans?
Just like Countrywide saying they only have exposure to 6-7% of subprime loans.
What’s bizarre is that their stock is *up* today on extremely low volume (10k today vs. 181k average). Might trading have been stopped mid-day or something? There’s no announcement if so. Might this be what happens if no one wants to buy a company’s stock - it just gets stuck at an artificially-high level?
Weird.
On housing, he said ‘if prices go down from here, I think we’re going to have problems that could spill over to other areas.’ Specifically, he was referring to the subprime mortgage market further affecting other segments of the market and economy.”
I felt more comfortable when Greenspan didn’t agree with us.
Yeah, Greenspan. That rock star.
“A spokeswoman said she could not, by contractual agreement, say how much Greenspan was paid for his appearance, but Fortune magazine recently estimated his speaking fee at $100,000.”
“Greenspan said the problems of the subprime mortgage market had more to do with home prices than easy credit. ‘If we could wave a wand and housing prices go up 10 percent, the subprime mortgage problem would disappear,’ he said.”
Greenspan more and more strikes me as a senile old guy with an irrational need for public fawning. These quotes suggest that he is not only a little bit of a $$ slut (he must have plenty of cash already), but an idiot (at least of some variety). To say the problems would have been fixed if housing continued to go up 10% is both simple to the point of meaningless and a fantasy. In essence he is saying: “If we could find a way to prop up housing with perpetual ten percent gains people could always use that source of money to bail themselves out.” Yeah, well if the tooth fairy dropped $1000 bucks on your pillow every night you wouldn’t have to work. Take another toke on your pipe bud.
And this from the guy who said, as 30-year fixed rates dipped to 5.5%, “Americans would do well to explore the savings provided by adjustable rate mortgages…” or something like that.
The good news is, Greenspan will be robbed of that which he wants most - to be thought a “Great Man” in the eyes of history. Historians are going to have to figure out that he was the one, single person who could have acted to prevent this debacle. He chose to do nothing.
Yup. His picture will go right alongside John Law’s in the encyclopedia entry under “How currency devaluation can bring a great nation to its knees.”
Speaking of which, can anyone explain why mortgage rates have been falling over the last month? Seems counterintuitive. Maybe it’s because fewer people with credit problems are being offered any rate at all?
Speaking of which, can anyone explain why mortgage rates have been falling over the last month? Seems counterintuitive. Maybe it’s because fewer people with credit problems are being offered any rate at all?
It’s because of “flight to safety”.
All the investors have been reminded that stocks are risky. Thus, many of them are taking their cash and parking it in the bond market, including 10 year treasuries. As they do this, the Treasury Yield and other Bond Yields lower, and mortgage rates are tied to these. (not all, some are tied to LIBOR as example)
Thus, the flight to safety is lowering mortgage rates indirectly
You would think the default levels and regulatory tightening would be pushing mortgage rates higher, even more forcefully than the “flight to quality” is forcing them lower. Even the 1-year ARM is going down.
I guess the spread between the 10 year treasury and mortgage rates is staying firm, despite all the trouble in the mortgage industry?
“If we could wave a wand a home prices go up 10 percent, the subprime problem would disappear”
I can’t believe Greenspan made this comment. It is utterly ridiculous. If prices went up 10%, the subprime problem would NOT disappear, it would simply be put off for another 9-12 months at which time someone would have to wave that “magic wand” again, and make prices go up another 10%.
In fact, isn’t that what’s been happening? The REIC kept waving their magic wands over and over, which made the subprime problem (which has been with us for quite some time) not present itself as a problem. But now that housing prices have levelled and started going down, the problem has presented itself. It is now unavoidable…
(‘Why rent a two-bedroom apartment for $725 when you can have a whole house with three bedrooms for a little more? It’s kind of rough’)
Bitter renters have patience. In the short run, when people stopped buying, you got higher rents and empty-for-sale units. Florida will go down faster and farther, but eventually housing units will follow households back to the rental sector, limiting rent gains.
“Greenspan was greeted like a rock star, with a video introduction that included the song Money by Pink Floyd. On every table were medallions and money clips bearing his image.”
What a revolting and undignified sight.
I thought the same thing. I now need a new keyboad as my current one is covered in vomit.
Is there a way to short the human race?
ROFL!
I suspect a few deities have puts in place.
Shiva, the destroyer, is the ultimate short seller.
A-greed.
Doesn’t anyone at that conference read the news? The economy is heading into the tank and they throw this guy a $100K? (Then again, I have never understood why groups pay these kind of fees for that.)
Because they can charge the attendees at these things out the wazoo for the privilege of hearing these pearls of wisdom. These traders conventions are a real ripoff and boondoggle.
Alan GreedSpan!
I need all the money I can get so I speak.
Each of them must have paid $500 to see this jerk-off. Unbelievable. They would have made out better paying $250 a pop to see Pink FLoyd Unplugged. What a bunch of fools.
Does anyone here in the Florida thread remember a company in Ft. Lauderdale back in the early 80s called “International Gold Bullion Exchange”, or IGBE? What a tale that was, I was there when the whole fiasco went down, I knew a couple of underlings who worked there. Basically, a couple of thug brothers from Jersey who sold gold jewelry got together with some friends and started selling gold through a boiler room operation. Big Ponzi scheme, but the money just poured in. They hired all their friends and family members of their friends. These guys were every bit as bad as today’s mortgage brokers, maybe even worse. Just thugs in suits. They would have these “guys only” parties where they’d drink and the first person who passed out would have a circle of guys relieving themselves on them. They started spinning off subsidiaries, like a video production company and a design company, etc. Ft. Lauderdale lionized them and gave them the keys to the city, no less. Then things came crashing down and the “gold” in the vaults that they showed to visitors turned out to be blocks of wood painted gold. What a scam! The two brothers who started the whole thing ended up going to jail, I think one of them even died in jail. Don’t know what happened to the other one. Alderdice, I think their name was. It wasn’t so much what they did that got me going, but how the city of Ft. Lauderdale fell all over itself honoring the company. Everyone thinks Enron was so bad, but I swear, IGBE was the model for Enron.
Palmetto:
You just gave some of the best advice ever on here, in regards to owning physical precious metal.
Do the right thing and please own it outright, no middlemen are needed. Just get a safe deposit box.
I remember IGBE very well. They were a ponzi scheme that sold krs, cmls, etc. for like $10.00 an ounce cheaper than anybody else and it worked like a charm as long as gold kept going down in value, but once gold spiked up, their game fell apart rather quickly.
Back in the day (I feel so old) we had a coin dealer teletype network and as the story broke and investigations ensued, news came out that their safe was full of chopped 2×4 pieces of wood, spraypainted gold and for months afterward on the teletype, we’d kid each other and give buy/sell quotes on said wood.
One of about 1/2 a dozen instances of this happening, that i’m aware of~
When somebody stores your metal for you they have 100% possession of your goods. You have a piece of paper that says that the precious metal that they have 100% control of, is yours.
BAD DEAL
alad, I didn’t expect anyone to really remember that one. It was an even juicier tale if you were in Ft. Lauderdale. One of the great South Florida scam stories of all time and I got to see much of it unfold on the ground, as did other boomer Ft. Lauderdale residents. The target market was gullible retirees. Many of da boyz and girlz who worked there were former car mechanics, runners, two bit hustlers, sales clerks, nail techicians and hair stylists. All of a sudden they had job titles and money the likes of which they had never seen and had no idea what to do with. Some would just dress up, go to work and sit behind a desk and chat with friends on the phone. When you asked what they did for the company, they would say “I’m the ___________” and give you a job title, but had no idea what they were supposed to do. They had fancy cars and pricey waterfront property, all sorts of drugs, wild parties, you name it. Anything you can dream of in terms of small-time excess.
Yep, it was a cautionary tale. Keep your hands on your wallet and if you buy precious metals, take delivery.
I could write a book about the scams, when it comes to precious metals…
Almost all related to companies that “hold” your metal, for you.
In honor of the ex fed:
Money, do it Greenspan’s way
after your fed job, $100k is ok
Money, it’ll buy you gas
Grab that cash with both hands and talk about the housing crash
New Mc Mansion, perhaps a condo, four star daydream
Think i’ll buy me an Airstream
awesome- better than the david gilmour and roger waters shows i saw in nyc last year
bravo bravo
It’s ridiculously easy to take any old song from the 60’s or 70’s and work the housing bubble into it.
Almost too easy.
I’m amazed that no one has mentioned that “Subprime Mortgage Meltdown” would work very well to the tune of “19th Nervous Breakdown”!
I would have played Pink Floyd’s ‘Pig’ song:
http://www.lyricsfreak.com/p/pink+floyd/pigs_10206122.html
Greenspan…… spokeman for the “private” federal reserve banks made all good profits for themselves but maybe this is coming to a end unless of course you are on the speaking tours of which there are few and in a short while even their choice words will fall on deaf ears. Not many will want to hear from the mistral Greenspan much longer.
Hey, Alan! Leave those kids alone!
lmao
‘If we could wave a wand and housing prices go up 10 percent, the subprime mortgage problem would disappear,’ he said.”
Right, and if we could wave a wand for housing prices to continue to go up forever (because housing never goes down, and they’re not making any more land), completely divorced from the fundamentals, we could all be rich and retire, just selling houses back and forth to one another.
‘If we could wave a wand and housing prices go up 10 percent, the subprime mortgage problem would disappear,’ he said.”
I’m glad to see you haven’t changed, AG. As has always been, you believe in inflating your problems away, and you got America thinking it can go on indefinately.
sorry..”indefinitely”….we’ve had some touchy spelling cops patrolling the blog lately.
I’d love to wave a magic wand and suddenly make what Greenspan says irrelevant.
I don’t know what is going on with me lately, but I am more pissed at what is going on than ever before. I’m having a hard time joking about it anymore. I want these buyers and lenders to be reduced to chattel. I want Greenspan to be put in stocks to be abused mercilessly by the formerly, and hopefully once again, great citizens of this country. I think I need to stop reading…..
santacruz, I’ve been feeling the same way. And I have a feeling we are not alone. One of my sibs had to calm me down and suggested maybe I should just turn my attention elsewhere for a while.
You are not alone. Wall Street and Main Street are going through the same emotions. It’s called the revulsion phase. The jig is up.
LMAO! Thanks, mrktMaven! Now I have personal experience with the revulsion phase, that’s exactly right! You actually really made my day. I feel much better, I am not kidding. Revulsion! LMAO! That’s what it is!
If we could wave a magic wand and hedonically remove the increase from inflation data (oh, wait).
..and make the M-3 report go away…(oh wait)
Hey AL -
If we could only have housing prices go up 1000% all my money problems would be solved as well.
If we could wave a wand and make my paycheck go up 1000%, all my problems would disappear too.
Here is a magic wand for you Alan
http://www.amazon.com/Vibratex-HV-250R-Hitachi-Magic-Massager/dp/B00005M1WE
As a friend of mine once said about a waitress who was tall but rather unattractive,
“If she were cute, she could be a model.”
If trees grew to the sky, then we would not have a subprime crisis.
“And flippers often compete with home construction firms for buyers. Myers said he had a home for sale in a development where the builder offered the same home for $100,000 less.”
Never bring a knife to a gun fight.
especially a falling knife
Myers made money for three or four years until the new home market softened about a year ago. ‘I was trapped into renting,’ he said.”
I was trapped! There I was nibbling on the largest piece of cheese ever and than all of a sudden SNAP and I was trapped I tell ya!
LOL! Good one!
‘If we could wave a wand and housing prices go up 10 percent, the subprime mortgage problem would disappear’
And if home prices go down, the problems gets worse.
This is what most people don’t get. Supply and demand. Home prices went up because there was a lot of demand that outstripped supply. But this demand was at least 30% speculative, or simply phantom, non-existent demand.
Now that people are realizing that the runup in prices was because of a FALSE demand, the prices will go down to whatever the market will bear.
And the idiot that bought 15 homes? He’s one that skewed that demand curve, as the REIT ‘assumed’ that he was 15 people wanting a home.
I predict that the housing supply is so large, that there are not enough people in the US to fill them up.
You’re exactly right. Even if every illegal squatted, we’d never fill them.
“And the idiot that bought 15 homes? He’s one that skewed that demand curve, as the REIT ‘assumed’ that he was 15 people wanting a home.”
Tell that to Senator Dodd.
I am absolutely shocked that those words came from Greenspan’s mouth. So he waives a magic wand and the subprime mortgage problem disappears for another couple of years. Then what? Does he keep waiving the wand again and again to make the problem disappear again and again! It is frightening to think that this same man had control over the finances of the biggest economy on this planet for about 20 years. Please remember this next Thanksgiving.
He’s been waiving for 20 years. No reason to stop now.
put it away alan, no one wants to see your “wand”
lol
LMAO!
Greenspan is the worst kind of person. I think the housing troubles he created for middle class people are reasons why anarchists and other skeptics of world banks come out in droves at G7 meetings.
The easy credit and huge increases in M3 didn’t really help the average person at all. The money was lent to these people who are now slaves to their mortgage and property tax. The winners as usual, are the big banks. Lower wages due to illegal immigration and world trade make it even harder.
Now the chickens are coming home to roost. Greenspan was touting these exotic mortgage products (in particular ARMS) well after it should have been obvious to him the upcoming problems. Now the carnage in subprime which many of us on this site have been predicting for years.
Greenspan should be on trial, not giving speeches for rediculous amounts of money.
Anyone who has read Greenspan’s essay on gold just has to shake his head. Was he just a total sell-out? Did he “convert”? Or is this part of a bizarre plan to get the U.S. back on the gold standard by first imploding the entire economy?
Greenspan found Keynesian hope in the form of, “In the long run, we are all dead.” The man is a walking corpse. In this way, he doesn’t have to look to the future, he only has to redefine the past.
The last, if my suspicions are correct. Read Atlas Shrugged, specifically the role played by Francisco D’Anconia.
“‘Why rent a two-bedroom apartment for $725 when you can have a whole house with three bedrooms for a little more? It’s kind of rough,’ he said.”
“‘I came here a year ago to a full house and waiting list and now I need a life preserver,’ said Alan Guthrie, manager of the 236-apartment Riviera Terrace Apartments in Palm Bay. He said in January, two tenants moved into homes ‘with rents within $150 of what they pay here.’”
Now, if only the same thing will happen in LA in the next 6 months, just in time for me to move
I was thinking about this. Seems unlikely in the city proper cause not enough new stock was built. IE would be a good candidate.
‘Homes are still not selling because people think home costs are going lower still,’ he said.
They is right.
““Subprime loans helped fuel the housing boom in Atlanta, and now they are feeding fears of a foreclosure epidemic. In the past quarter, 13.5 percent of the nation’s subprime mortgage loans were in default.”
Does anyone have the statistics for CA and FL? As I recall both CA and FL are still below the national average. Imagine the pain in the financial sector when foreclosures in those two states blow through the national average.
We are all screwed (TM)
LOL™
and they soon will blow through it
As I recall, there was a horriffic real estate crash in Florida in the late 1920s, just before the Great Depression set in.
Indeed. Here’s a link to the University of Virginia’s version of what happened. Click on the chapter entitled, “Home Sweet Florida” and enjoy the “deja vu all over again.”
http://xroads.virginia.edu/~hyper/Allen/Contents.html
In 1926.
A big hurricane was the “exogenous event” that triggered the collapse.
I wander what straw will break the camel’s back this time?
La Nina.
the new “exogenous event”
plain old fashion greed and stupidity
Earthquake. It’s been a while since the West Coast has had a real disaster apart from Malibu’s perennial problems with fire and flood.
http://xroads.virginia.edu/~hyper/Allen/Contents.html
Click on the chapter entitled, “Home Sweet Florida.” A great read from the U of Virginia.
“As I recall, there was a horriffic real estate crash in Florida in the late 1920s, just before the Great Depression set in.”
It was limited to certain areas of Miami and South Florida due to extreme speculation. As a whole between 1925 and 1935 (the worst of it) Florida GAINED population and real estate prices continued to go up. The “crash” of 1926 was in this period.
You are not correct. Florida prices declined from 1926-1934. They were starting a small recovery into 1935. Population did go up, but population increases will not and did not stop the debt default and deflation.
Greenspan will go down as the worst Federal Reserve Chairman when judged by history.
i use to go on the palm beach post blog and those crazed real estate cheerleaders, like maxmoose and easy. i am glad to find out some real information here. it is unreal in south florida. everyone still believe that people are making real money. there is so much blood on the streets, it is unreal. has anyone actual seen the “new” miami skyline. you will say, “oh my god”. and, so many people down here have subprime loans, whole communities will flip, especially working class areas. many homes in the worse neighborhoods went for 200,000 and people who earn 20,000 to 40,000. many people was asleep in math class when they were young.
“Everyone still believes that people are making real money”.
You nailed it postman. That is going to be the biggest shocker to everyone when they find out it was only ultra-loose lending, NOT high incomes, that led to the sky high prices. For now, a lot of people still believe it had to do with high incomes.
They’ll catch on pretty quick now, what with the loan problems being exposed. And it will shock them.
I tried to tell a friend today who’s been “meaning to sell” a home in Seattle all year that if he’s serious about selling he better get that puppy on the market pronto because lending is tightening. And the price WILL go down when standards are brought back.
He resisted the idea that that could affect him (thinks everyone in Seattle must be rich, except him of course, since he could never afford that house at the current price, lol).
After about 20 minutes he finally had an “aha!” moment. It IS shocking to realize that so many people bought houses they could not really afford. A mania at it’s finest.
“Greenspan said the problems of the subprime mortgage market had more to do with home prices than easy credit. ‘If we could wave a wand and housing prices go up 10 percent, the subprime mortgage problem would disappear,’ he said.”
The problem is that the high prices were caused in large part by easy credit, which in turn led to problems with subprime mortgages. Also, I fail to see how a 10% increase in house values will help. Sure the banks could recover their losses or debtore could go further into debt, but what happens in two to three years when prices are down 30 - 60% in areas such as California, where the size of loans are all supersized. IMO this whole mess was engineered by Greenspan who realized our economy is no longer stable and had to try ever more drastic measures to pump it up.
That’s how people got into so much trouble. They walked into the lender’s office and said “Supersize my loan please.”
“Greenspan said ..‘If we could wave a wand and housing prices go up 10 percent, the subprime mortgage problem would disappear,’
Or, Greenspent could have could waved a wand and promoted wage inflation…that would have had the same effect.
‘Your money is still stronger in real estate — if you can outlive the chest pain.’
Got to one the best quotes i heard lately… Sorry pal but I think your saving a year off your life for every 6 months your in pain.
Your going to have gray hairs far earlier than me. I laugh at your pain and I will live longer because I laugh and live stress free.
ops that should read “Shaving a year off your life”
The chest pain this knucklehead feels now is going to soon become a massive coronary.
Some incidental observations from here in Central Florida:
We are just a couple of weeks from income taxes coming due and I am starting to see bunch of boats, Harleys, jetskis and hog 4X4 trucks for sale…..and I mean MANY ! They are EVERYWHERE. Probably 1 out of every 15 lawns down here has a large toy for sale on it.
I have lived here over 20 years and have never seen anything like what I have been seeing the last 2-3 months.
I took the dive last week and bought myself a NICE 1990 Aquasport 20′ Osprey with a 150 Merc and decent trailer for $ 4250.00 - GREAT DEAL !! Awesome condition for this 17 year old TANK of a boat. Anyhow, I purchased it from……..drum roll…….a “beautiful” couple. He : Car salesman. She : Realtor(tm).:) …..Anyhow, I got an excellent deal on a CLASSIC fishing boat.
The couple that I bought from were in a credit wrench; and it showed. In fact, he had recently bought another boat ( a 2003 25′ SeaPro ~ $ 30,000) to enjoy with his Trophy Wife but was trying to sell it as well……anyway, when we did a sea trial on my boat he seemed nervous and was eating Tums the whole time…nice guy but you could sense something was bothering him…
I got nosey and checked the county court records where they lived ( public info ! ) and saw where they had cash-out refied their 4500 sqft home 3 TIMES since 2002. Unfreakinbelievable.
Their little story is just a sample of the many similiar stories that are happening all around down here. It seems like during the last 5-6 years people suddenly grew a sense of “self-entitlement” and the Easy Credit fueled their delusions of grandeur.
I make an above median income, I rent, and I hold titles in hand to everything I own. I probably have more in my investment, savings and checking accounts than 80% of the sheeple who got caught up in the frenzy and deluded themselves into thinking that they could “afford” 4,500 sqft lakefront homes in gated communities.
I will pounce upon a nice, modest home down here when the time is right. I’ll probably make a 20% down payment when the prices come down to where I can by a nice home for 3X my annual income.
Until then, I’ll just keep buying other sheeple’s toys for pennies on the dollar while they slowly get pounded to a fine dust by their debt obligations.
Next up: A nice used Harley. I’ve always wanted one; I have the cash in hand, and I deserve it !!!!
Don’t even think about buying anything new, of substance, for awhile.
The bonus round is coming up.
We’ll be able to pick and choose @ pennies on the dollar.
Give me contact data. My brother the doctor has 2 in his garage. His [trophy] wife HAD TO HAVE IT and then found out that they weigh a lot and can be hard to handle if you are 110 lbs. Imagine that!
Imagined. The more you read this blog the more you see that we have a nation made up of schooled idiots. This extends to the corporate and government levels too. I read the book Fiasco about Iraq and if half of that is true you see that we are led by fools. At the corporate level, the company I work for was taken over by a prestigious firm that employed ‘the best and brightest managers’. Well, under that groups management our business declined 50%. We were then sold off at a big loss to them. Apparently, we didn’t get their business model eventhough we were a leader in our industry for 40 years prior their buyout. Man, am I skeptical. Maybe it is just time making things look better, but don’t recall it being quite this way 20 years ago.
I’ve noticed the same thing in the Gainesville area. Mostly used boats and cars. I picked up a boattrader sales magazine last weekend (North florida issue), it was almost an inch thick. The cycletrader issue sitting next to it was even thicker! I’m going to keep my eye out for a late model pathfinder 2000V, after all it’s spring redfish time.
soon renters world will become squatters world
and beyond thunderDome if you can cut grass,paint and FEED THE SQUIRELS
‘delusions of grandeur’
That sounds like a good title for a housing bubble book.
“Jeez kid I’m away for a little while and everybody starts having delusions of grandeur.” The actor who played Indiana Jones said that in another movie
My specuvestor buddy (the one with 2 properties looking for a turd) said earlier today that he and his wife did this thing all wrong. He was just reading the specuvestments should have been cash flow positive from day one. He later added it’s not entirely his fault because his dad never thought him how to manage money nevermind my shouting from the sidelines.
Please tell me you are kidding about “being cash flow” positive.
Here is yet the 1,000,000th example of why personal finance courses should be REQUIRED in high school and college. I have never understood why acadamia thinks classes like Art Appreciation or Ancient Literature are even remotely as important as Personal Finance.
support Junior Achievement
“Here is yet the 1,000,000th example of why personal finance courses should be REQUIRED in high school and college.”
Sing it, Brothah! Testify! I’m always sadly amused when I see kids struggling with algebra and geometry, because their teachers don’t seem to get that the kids didn’t even understand basic arithmetic before they were passed onto to higher mathematics.
I remember when “new math” came out, perhaps other boomers do. A complete idiot travesty. If someone wanted to deliberately design a subject to make people disgusted with numbers and numerical concepts, they couldn’t have done better than “new math”. It was the beginning of dumbing down American schools. My parents couldn’t get it, so they couldn’t help me with the homework. However, my parents could at least balance a checkbook. Took me years to learn how to balance, I was so traumatized by “new math”.
You know, I don’t understand this. At my public high school in Podunk Indiana, you were required to pass a personal finance class to graduate (they called the class economics, I guess it really was microeconomics on the smallest scale possible).
Is this not normal?
We were required to pass other perhaps not-so-common classes to graduate too - like 2 semesters of swimming. Ok, it made sense because we were located near a huge lake in which 5-10 people (almost always tourists) drowned each summer because of rip currents.
Anyway, I would think that states should be requiring personal finance classes in high school.
What makes you think that would help? Sex ed classes haven’t helped curb unwanted preg’s nor spread of sexual diseases? And here in CA where most of the subprime borrowers are hispanic, what good would it do when most don’t even complete HS?
“Please tell me you are kidding about “being cash flow” positive.”
No, I am not kidding. Moreover, he is a highly educated engineer and part time RE investor. He goes to all the seminars and has a lot of Books, CDs, DVDs, and Mentors. That’s why I say to people it takes a lot of effort and Casey Serin like coursework to make these kinds of malivestments.
I was required to take numerous courses in Economics by ther University of Michigan in order to receive my engineering degree there. They have been more valuable than all my engineering courses combined.
A highly educated engineer is usually a pretty smart person, knows a lot of math and other subjects. But most don’t care (or understand) WHY exactly a certain formula defines a characteristic. It just works. Ask an engineer to do a task, and they will do so brilliantly, because thousands of years of mathematicians, chemists, physicists, astronomers, etc have learned why things behave the way they do and “dumbed” it down to formulas that go over the head of the average person. IE - engineers are smart people.
What we have here are formulas telling us that if we do X, we earn Y. And there’s lots of proof to back it up. So the engineer is satisfied with this formula. He fails to realize that the proof is faulty. But it works, and the engineers makes plenty of money. Until is stops working. And now they’re confused, upset, disappointed that they could be so dumb.
It reminds me of my early college days, when I was an engineering student. I took some extremely difficult math and physics classes that populated with physics students and engineering students. For exams, the professors always allowed an 8.5×11 crib sheet so you could write out all the formulas you thought you needed. A lot of the time they didn’t care if you brought your book or notes - it didn’t matter to them, if you didn’t already know what you were doing you weren’t going to finish in time, book or not. Us engineering students were always amazed - the physics guys never brought anything with them! Turns out they learned WHY a formula applies to a certain problem and how such a formula came to exist. They memorized a couple simple formulas and then just derived the appropriate formula for an exam problem. And always finished in half the allotted time.
An academic physicist would probably ask why this get rich quick scheme works and hit at it until he figures out that it’s built on a farse. But the engineer sees that it works. Does a few calculations to “prove” that it works. And that’s it.
It’s often difficult to acknowledge that the stupid one in the room is the one in the mirror, not everyone else. Survival of the fittest doesn’t work here because these people keep breeding (”his dad never taught him how to manage money”)
Don’t forget, some of the areas with the most ‘educated’ populations i.e. (San Fran, Seatte, etc) are the ones with the biggest bubbles. It isn’t about education - it’s about greed.
Typical uneducated investor; buy now ask questions later.. moronz..
“He was just reading the specuvestments should have been cash flow positive from day one.”
What? Great, now you tell me!
ROTFLOL! You say he’s a highly educated engineer. Really makes me believe that my college degree was a waste of time if our schools are turning out this dense of a product. WTF!
Here in Tampa I have yet to see houses renting for a rate that would induce me to leave my apartment. Judging by what’s shown on realtor websites, some of the asking rents are almost as funny as home prices–they appear to be a product of the owner’s need to cover the mortgage/insurance/taxes and of the realtor’s need to make money when nothing is selling. I mean, $3,000 per month for a 2/2 in south Tampa is a joke.
I’m in Tampa, too, and I’ve noticed the same thing. The only “break” in rents that we’ve gotten down here is when the condo-conversions came to a screeching halt and all of a sudden “condos” became apartments again, opening up rental supply.
Speaking of condo conversions, I couldn’t help but laught the other day when I was driving up to Cirtus Park Mall and noticed that Citrus Falls apartments (who last year decided to go condo) are now back to apartments again and has a big sign out front that said “apartments available immediately” or something along those lines. Pure greed & stupidity. I hope they take a bath on their rents.
Here in my town in Southeast FL, I live in a single-family home neighborhood that abuts a residential complex. It opened a couple years ago as a rental facility. Then it tried to go condo … for about a month or two. Then all of a sudden, bam! The new condo sign/old apartment sign was revised … again … to advertise the re-version to rentals. Finally, beginning a few weeks ago, I started seeing a man wearing a signboard on the street corner. It advertises the fact the company is offering a months’ free rent to potential tenants.
My take: A weakening/loosening rental market is the next major story we’re all going to be reading about. Heck, it’s already happening, according to industry surveys. Some stats can be found here:
http://tinyurl.com/35vyxg
Like a mudslide in Cal. Looks fine for years, but then, all hell breaks loose.
Bargain ‘em down. They’ll listen.
They have to.
Another frustrated Tampa Bay area renter here! And I can testify to the truth of what you are saying. Hillsborough County (Tampa Bay) is WAY out of line on rents. I’m seeing the exact same crap being advertised on Craigslist that I saw during the summer. You can find a decently priced place, but it takes months of searching. I had found one and was very happy there, thought I had it made in the shade, only to have a real turd of a neighbor set fire to the building (fourplex). I’m in temporary digs and searching, searching.
Oddly, Pinellas County has decently priced rentals. But I don’t want to live there because, well, it’s Pinellas County, where the roads are so weird you can’t get there from here. Gridlock city. Pinellas is also in the forefront of the “third worldization” of the US, with its tent city for the homeless, growing by leaps and bounds. Broke my heart to hear nearby residents tell sad tales of finding plops on their front doorstep, courtesy of tent city residents.
This is why I avoid Pinellas County at all costs. If I didn’t have to trek over there for school, I wouldn’t even bother. And the tent city deal is just unbelievable. Since when did non-tax paying burdens on society get precedence over upstanding citizens? OK, that comment might have been harsh, but COME ON!!
I regarding Hillsborough County, I think sellers / FBs are still in denial here. I have a co-worker who bought a 3/2 1600sf in Dec 2005 in New Tampa. She is now trying to sell (on her own, of course) and refuses to come down on her price. (She’s asking about 300K, I think). She has had several offers, all WAY below asking. She won’t budge and says she’ll wait it out until the market turns. But, she wants to move up in house (stupid again, but whatever), so now she’s talking about renting it…. for $2000 / month. Idiot.
“I regarding Hillsborough County, I think sellers / FBs are still in denial here.”
Testify, Mystry, testify! Pinellas is a much more mature RE market than Hillsborough, so it was already pretty much all built out and much of the speculation turned to Hillsborough, where there was huge tracts of land and lots of development/new construction going on. Hillsborough is suffering from the “have to get” syndrome. I’ve had people tell me they “have to get” such and such an amount for sale or for rent. Seriously, some jerk will insist on getting $1200 for rent and let the place sit for a year, when they could rent for $900 right off the bat and at least get some cash flow. That’s the mindset in Hillsborough.
its typical in south florida when it comes to rents. dont worry, they’re get desperate or lose their home. i say by the end of this year, rents will fall. it is the law of averages. what rises, shall fall.
Palmetto, there is a 1400sq ft house at 5313 Black Pine Dr. (Country Run Subdivision) south of Gunn Hwy, just east of Anderson Road for rent. This house was built in 1984 for $65K. last sale was in Aug. 2004 for $156K. Called the owner and he wants $1200 rent.
http://www.atimes.com/atimes/Global_Economy/IC17Dj01.html
Hmm, this is probably why we have so many foreclosures in Georgia:
1) Many, many illegal immigrants.
2)Q: Are illegal immigrants allowed to obtain a mortgage using an ITIN?
A: Currently, yes. But newly proposed federal legislation would put the brakes on the growing trend of providing home loans to mortgage applicants using an individual taxpayer identification number (ITIN) instead of a Social Security number. ITINs are normally issued by the Internal Revenue Service to help immigrant workers who don’t qualify for a Social Security number to report their income and pay federal taxes.
An increasing number of banks and other lenders have been offering home mortgages to undocumented immigrants using ITINs. The proposed bill, introduced by Rep. John Doolittle, would amend the Truth in Lending Act to make ITIN mortgage lendingillegal.
“Many, many illegal immigrants.”
Many of who migrated out of Florida when they got priced out here. I kid you not. Especially the ones who can’t get any more construction work and don’t want to go back to the fields. Georgia’s factory work is a good alternative.
I moved up to Atlanta last November from S.Florida. We had a fair amount of immigrants (maybe illegal) in S. Florida. But the number in Georgia is far greater… As a matter of fact, I can’t believe how many.
I would bet that most of the foreclosure in Florida are flippers/specuvestors/etc. But not in Georgia.. Probably subprime loads to undocumented immigrants. I guess one could check this by looking at the dollar value of the houses under foreclosure.
Something funny….. I was in the elevator in the parking garage on my way home yesterday. There were two people looking very beaten up in the elevator with me. They are both bankers in our real estate lending department. The conversation ensued as follows:
Man: I just don’t understand what her problem is!
Woman: She’s going to realize how stupid she is being.
Man: I have to save this sale. I”ll do anything it takes at this point.
Woman: Well just keep telling her the market is going to turn by summer. Tell her it’s just a slow time of year and that by June it will be too late because school will be out and everyone will be buying. If she doesn’t get in on it now, it’s going to cost her. Tell her interest rates aren’t getting any lower.
I just laughed to myself. They couldn’t quite figure out why I was smirking. Idiots.
Something else interesting…. My desk is next to a guy who works in our commercial real estate lending department. They are really putting the brakes on lending to real estate developers. Last year, all I heard from his cube was “approved”. Now, all I hear is “well, with the way the market is for the foreseeable future, they’re not a good credit risk”. They have conference calls every week with developers trying to appeal the credit decisions. So far, I don’t think they have overturned any of their denials this year.
Oh right it’s a buyers market alright - they just have to find enough idiots and fools with real money down and good credit who think 5% to 10% off peak 2005/06 (super-bubble) prices - is some big bargain
Good luck with that. I’m sure there are plenty of idiots who think 10% off peak is a once in a lifetime bargain. They’ll have real down payment money to buy with too - just as soon as they can unload their “investment” properties.
How far could it go? 2002 prices look pretty good to me.
I’m thinking 2000 prices, on account of the tax and insurance situation.
In 2002 Canal stilt houses in the Keys cost in low to mid 200s, Canal lots with Trailers were a little over 100k.
“Sure, it’s hot here and the pitchforks hurt, but you should see the guys down on the ninth circle. Oh man, are those losers in trouble!” — Realtor, Eighth Circle of Dante’s Inferno
‘ “The subprime lending is relatively more important in Atlanta than in the rest of the country,” said Mark Vitner, senior economist with Wachovia Securities. “It could have a little more of an impact in Atlanta.”
Still, Vitner and others say Atlanta’s relatively healthy economy could protect the region from serious economic impact. Atlanta has seen population growth and steady job creation. While home prices have climbed, the increases did not hit the double-digit pace of hotter markets. There hasn’t been the “bubble” in the housing market here that worries the industry and economists in other regions.’
The fact that home prices did not hit double-digit increases across the board (yes, there are some areas in Atlanta it did in the past few years), will not change the fact that the subprime lending will deflate the Atlanta housing market across the board. People from all income levels in all neighborhoods took out subprime and Alt-A loans. When these loans reset, most people won’t have the money on hand to handle the increased mortgage payments and will be squeezed into foreclosure. So, the number of houses on the market and in foreclosure rises. Meanwhile, lending standards are tightening so there are less qualified buyers in the market. The laws of supply and demand will determine the real ‘value’ of a home based on those buyers who are qualified to get a loan and what they are willing to pay.
Some one was talking about good places to rent…Try Palm Coast, Fl..Saw an add in Daytona news paper, which said investors alert!!!
4 Bdrm, 3 bath Home for sale, for $425K, “”"CURRENTLY RENTED FOR $825/MO….”"” Scads of houses for rent in the $700-800/mo rent…
The guy who did the math, for investors alert, must have flunked.
Using the formula for landlords setting rent, I think it’s 1:100/th of property value per month rent…eg. s/b $4250/mo…not $825/mo