Florida “Still In Correction Mode”
The Miami Herald reports from Florida. “The number of homes with ‘For Sale’ signs in South Florida reached new highs in February. At the current sales pace, it would take nearly three years to sell all the condominiums on the market. For single-family houses, it would take almost two years. ‘The market is trying to find itself,’ said Richard Barkett, CEO of the Realtor Association of Greater Fort Lauderdale. ‘We are still in correction mode.’”
“Sluggish sales pushed the number of unsold homes in Miami-Dade and Broward counties up to 69,734. A year ago, it was 37,495. Over the last 12 months, the number of condos for sale grew 81 percent to 21,308 in Miami-Dade and 91 percent in Broward to 22,243 — that’s 36 months’ worth of inventory in Miami-Dade, 31 months in Broward, at the current sales pace.”
“‘Sellers must make adjustments,’ said Gus Rubio, the Miami-Dade head of the biggest residential brokerage in South Florida. ‘If not, you are a seller thinking in yesterday’s world.’”
“Two weeks ago, Bill McGee drove to Circuit City and plunked down $5,000 for a 52-inch flat screen television. McGee said he had already lowered the price for his 2,850-square-foot house from $549,900 to $530,000. ‘It was a tough decision for me because I think it is worth more money,’ said McGee.”
“The Sharp Aquos is now sitting in his home, awaiting anyone who buys his home. ‘I have not got a red bow on it,’ McGee added. ‘But I am going to get one.’”
The Herald Tribune. “Sarasota-Bradenton’s median sales price dropped 9 percent last month when compared with February 2006. Charlotte County-North Port registered an 11 percent drop in prices, taking the market to near the $200,000 threshold.”
“‘They have to put aside unrealistic expectations in order to sell their homes — and they are,’ said real estate agent Joni Adno.”
“A growing number of people are defaulting. Lenders are reacting by tightening their loan standards. That has potentially broad implications for Southwest Florida, with its already bulging inventories of single-family homes: 130 weeks’ worth of homes in the Sarasota MLS alone.”
“The subprime shakeout is bleeding over into the broader home loan market. Lenders are being pressured by investors to take back earlier loans, and that is limiting their ability to offer fresh ones. ‘We were already having inventory issues,’ said Bob DeCecco, Florida regional manager for Opteum Financial Services. ‘This is just adding another layer of complexity because there are less people who can actually qualify to purchase a home, who would like to.’”
“Marta Grande of Commonwealth Mortgage Corp., predicted that the fallout would get worse before it lets up. ‘Say they borrowed 100 percent when they bought the house,’ Grande said. ‘What that in essence has done is made it impossible for them to refinance the house, because their value since when they bought the house has dropped. That is the nightmare, and you are going to see more foreclosures than you are seeing now.’”
The Palm Beach Post. “In Palm Beach County, there were 560 sales of existing single-family homes last month, a 21 percent drop from 707 in February 2006, the Realtors group said. Palm Beach County home prices also continued their slow decline, falling 4 percent to a median of $374,300 from $391,000 in February 2006.”
“Even more worrisome, the inventory of unsold homes from Boca Raton to Hobe Sound climbed to a near-record 23,713 in February, a 33 percent increase from a year ago, according to Illustrated Properties Real Estate.”
“‘With widespread media reports about potential property tax and insurance changes, many buyers are sitting on the fence waiting to see how significant the reforms will be,’ said Mike Pappas, president of The Keyes Co.”
From TC Palm. “Home sales in the Fort Pierce-Port St. Lucie market were off 37 percent in February from the same month in 2006, while median sales price dropped 9 percent.”
“Metrostudys Brad Hunter added that an uptick in foreclosures in the next year could put further ‘downward pressure on prices.’ ‘The next wave of issues we have to deal with is people who bought homes they couldn’t afford,’ Hunter said, adding that sales will likely stabilize before prices do.”
“While Stuart is included in the Fort Pierce-Port St. Lucie data, the Realtors Association of Martin County reports its own figures. There, existing single-family home sales and median home prices both dropped about 19 percent last month compared with February 2006.”
“Realtors Association of Martin County President Jennifer Atkisson-Lovett said because of the rapid increase in home prices the past couple of years, those who have lived in their homes for more than five years, and were not part of the flipper crazy the last two years, still saw sales prices above when they bought.”
“‘A lot of the $330,000 was an over inflation of the last five years, during the boom we were seeing a boom of 45 and 50 percent a year,’ she said. ‘As long as they didn’t buy in the last two to three years should still be fine.’”
The Sun Sentinel. “Real estate agents across South Florida swear they’re busy. But for the most part, finicky buyers are waiting for prices to keep falling and for property tax relief to trickle down from Tallahassee. ‘We have a lot of buyers sitting on the fence,’ said Mike Kleinrichert, an agent in Wellington. ‘But we’ve got people saying, ‘I’m not going to buy until I know what’s going on.’”
“The number of homes and condos for sale continues to grow in Palm Beach County. The number now stands at 33,587, a 10 percent increase from a year ago, according to the Miami-based Keyes Co. At the current pace, it would take several years to sell those properties.”
“Kelly and Todd Gilmore have tried to sell their three-bedroom home in Boca Raton since early November. He moved to Denver last year to take a new job, and she finally joined him this month when it became clear no sale was imminent.”
“The couple originally listed the home at $599,000 before reducing it to $549,000. This week, they cut it to $519,000. ‘It’s been an emotional experience,’ said Kelly Gilmore. ‘We’re trying to bide our time.’”
The Tampa Tribune. “Sales of previously owned, single-family homes around the northern rim of Tampa Bay declined 32 percent in February compared with a year ago, while the median sales price declined 2 percent to $213,300.”
“‘I think sellers were slow to realize this is a buyer’s market, but now they have begun to deal from that perspective,’ said Carlos Fuentes, president of the Greater Tampa Association of Realtors.”
The St Petersburg Times. “After swimming in gains last year, Florida homeowners continue to sleep with the sharks this year. Homes sales in Tampa-St. Petersburg-Clearwater gave back 32 percent year over year, from 2,957 in 2006 to 2,001 in 2007. Condo sales fell by 43 percent. Only Fort Myers-Cape Coral and Fort Pierce-Port St. Lucie registered bigger declines.”
From Florida Today. “Mark Buhrkoff of Satellite Beach said trying to sell his home has been a disappointment. He said he has been trying to sell the house himself for a year, dropping the asking price from $350,000 to $275,000, but he still is not getting much interest.”
“‘People can’t afford to buy,’ Buhrkoff said. ‘People around here don’t make that much money.’”
“At the current sales pace, it would take nearly three years to sell all the condominiums on the market.”
That’s not a correction; that’s a bust. What’s more, there is more inventory in the pipeline.
“that’s a bust” is a very polite way of putting it.
Florida 2007/2008, meet Florida 1926/1927. Discuss.
And the additional inventory? That’s the added booze after the hangover has already started. People aren’t going to like what they wake up next to in the morning.
Got popcorn?
Neil
so much inventory!!!!!
Humans are very bad at understanding exponential functios (things that double). As here in CA if we had 70%+ int only crap loans that are now unavailable and double the inventory this leaves 30% of previous buyers to absorb twice the listings. This really equals a projected time on market 6 times longer than before. When you add in the fact of no greater fools and negative sheeple sentiment on RE you get a perfect storm for those wishing to sell.
I remember in the early 90’s fairly priced RE would sit for years, only those at fire sale prices (such as courthouse auctions) would sell. It made more sense to rent it out (for a presant value of money that was more than the potential price) than to sell it.
All these 6 months of inventory spewing chumps use # of sales projections from past very hot markets. If they were to put in the real number of future buyers in the coming chilly market (with much tighter financing) that projected inventory would ballon from months to years.
Not to mention the 300-500,000 extra homes the builders are still churning out above new home formations, as if all new home formations buy instead of rent! If you assume that only 1/2 of new formations chose to buy we are literally sitting on a decades worth of inventory.
When you factor in all the boomers with multiple properties dying the coming multi year exponential inventory expansion will reak havic with the future value of homes.
It might make sense to purchase rentals in 3-5 years, but if your looking for appreciation in the price of housing you might have to wait as long as those in Japan had to (10-15 years).
That’s why the old example used in many college classes is so effective.
Would you rather have $100,000 dollars today, or have me give you 1 dollar and then double the amount that I give you every day for a month? Most people jump at the 100K. However, the 1 dollar, doubled for 30 days is millions and millions of dollars (I don’t remember the numbers, feel free to insert them if you feel like doing the calculation).
I think it is a penny doubled evryday for 30 days.
Inflation.
I think your right too, because from the numbers it looks like a dollar doubled every day might work out to billions.
A one-cent payment doubled every day for 30 days would be 2^30-1, or about 1 billion cents (10 million dollars).
Back in my gambling days…
I fantasized about turning a $2.00 blackjack bet into $2048.00.
Never got past $256.00
John Oakhurst, the ex gambler
Isn’t that like saying, “the shit is still in stinking mode”.
Cool.
Cow_tipping.
Just witnesses my first GTMFO moment. House on the market since last July in Westchester, NY. One of the places “that will never go down because its so desirable.”
2600 sqft 2 story colonial, no garage. listed for $1,050,000. Lowered in Nov to $999,999 lowered in Jan to $959,999. Today it was lowered to $749,000.
oooffda
A house with no garage in Westchester? I’m shocked, I tell you, shocked!
“The Sharp Aquos is now sitting in his home, awaiting anyone who buys his home. ‘I have not got a red bow on it,’ McGee added. ‘But I am going to get one.’”
ROTFLMAO. That’s priceless and a good measure of unrealistic seller expectations.
Unreal. Should have dropped the price $5,000 because at this rate the plasma television will be technologically obsolete by the time this bozo sells his house.
“The Sharp Aquos is now sitting in his home, awaiting anyone who buys his home. ‘I have not got a red bow on it,’ McGee added. ‘But I am going to get one.’”
Excellent plan! Go get a big red ribbon, tie one end to the chimney, tie the other end into a noose, loop it over your head and jump off the roof! Because, when it comes down to nut-cutting time, you’ve got a better chance of surviving the suicide attempt than you do of selling that half-a-million-dollar albatross before hurricane season starts in two more months!! WOOT!!
If anything a plasma tv witha bow on it would smell like desparation to me and I would be inclined to offer even less.
“The Sharp Aquos is now sitting in his home, awaiting anyone who buys his home. ‘I have not got a red bow on it,’ McGee added. ‘But I am going to get one.’”
Excellent plan! Go get a big red ribbon, tie one end to the chimney, tie the other end into a noose, loop it over your head and jump off the roof! Because, when it comes down to nut-cutting time, you’ve got a better chance of surviving the suicide attempt than you do of selling that half-a-million-dollar albatross before hurricane season starts in two more months!! WOOT!!
Sorry for the double-tap! It just went off in my hand…
If there is one asset depreciating faster than houses it is flat-panel TVs.
wow, great TV. I’ll buy your house for $300K, if you throw in a surround sound system with that flat panel TV! That was such a great stocking stuffer…How did you know?
“Two weeks ago, Bill McGee drove to Circuit City and plunked down $5,000 for a 52-inch flat screen television. McGee said he had already lowered the price for his 2,850-square-foot house from $549,900 to $530,000. ‘It was a tough decision for me because I think it is worth more money,’ said McGee.”
Sorry McGee. The market determines what your house is worth, not you.
“because I think it is worth more money,”
Because everything I own is special. I hate that attitude so f–king much. I hope this guy bleeds.
Let’s pretend the dwindling number of creditworthy buyers give a rat’s ass what you think your house in worth, Bill. Most of us can shop for our own consumer electronics, if we’re so inclined, and the market will soon be awash in such goodies (dirt cheap) as the FBs desperately try to stave off foreclosure. Not to mention, I’m waiting for the sweet new HDTVs to start rolling out of the new 8th-generation factories next year.
Actually, Bill, you might want to get the last of the big old-style CRTs. That way you can save the man-sized cardboard box (accessorized with your pretty red bow) for your next, more mobile phase of life. It should stow neatly inside your shopping cart.
Oh goodie. Now I get to pay property tax for the rest of my life on that stupid TV, which, without a doubt, I will be removing in the next 5 years..
Anyone who take any incentive in FL is a total and utter moron. I would buy a house without paint, without appliances, with absoultely nothing but walls and a floor to try to skirt this crazy property tax system. Anything to record the price lower on the books; because, as all us FL people know, that’s all that matters.
But what are people doing? Exactly the opposite, taking Hummers, trips to Europe and Plasma TVs, and rolling them into the property tax bills. WTF?? Are people really that f-ing stupid?
Yes I assure you that people here in Sarasota where I live are 100% that stupid. Hummers everywhere, at least there were, and granite and stainless for everyone trendy. I was viewed as an outcast because I dared to disagree with the whole refinance thing.
From Florida: “People around here don’t make much money….” Even in California, most don’t make that much money. Well, California incomes maybe above average for most states but still not enough to buy these over-priced stucco crap boxes and California living expenses are way above average. Worse, any new buyers have to pay the full California property tax. Now we have gasoline at $3.30 a gallon. Food prices are way up.
We have said (more or less) goodbye to the toxic loan industry, so it’s going to be a cold day in hell before property in places like Florida and California are within the (fake) financial range of most wanna-be buyers. They are GONE from the picture.
Just to add some icing on the cake, the California and Florida mortgage industry and realtor industry has been run by scam artists for 5 years who arrived in droves from all over to claim a stake in Easy Al Magoo’s loose money policy. That means lots and lots of foreclosures coming down the line. I remember real estate in the 80’s when it died on the vine. Empty, run down foreclosed properties were all over the place and this current mess has the 80’s beaten by a mile. Try 2010 to 2012 before we bottom out.
I agree. Unless there is some kind of demand side miracle, all this talk about nearing a bottom is just wishful thinking. In fact, the evidence indicates demand will erode even further as a result of governmental and regulatory policy changes.
I remember real estate in the 80’s when it died on the vine. Empty, run down foreclosed properties were all over the place and this current mess has the 80’s beaten by a mile. Try 2010 to 2012 before we bottom out.
Does anyone have any date on the months of inventory that we had for the last big decline in RE? How much did the median decline in these markets and how much inventory did it take to put some pressure on pricing?
Thanks.
Neil, pass the butta
“‘A lot of the $330,000 was an over inflation of the last five years, during the boom we were seeing a boom of 45 and 50 percent a year,’ she said. ‘As long as they didn’t buy in the last two to three years should still be fine.’”
—————————————————————-
as long as they didn’t HELOC. what are the chances of that?
The reporter cut off their interviewee.
It was supposed to say:
“As long as they didn’t buy in the last two to three years should still be fine and aren’t stupid enough to buy in the next two to three years.”
It has barely started the correction. This correction doesn’t have any velocity yet. But Fall… it will have some velocity.
Sigh… a friend and hubby just bought a new place. They need to sell an investment in a gentrifying neighborhood to close the deal. (They bought on a beach in a country with really interesting mortgage rates… so it must be a cash deal.) That will be interesting… There old property is on the market. I wish them luck, but fear for them.
Cest la vie.
Got popcorn?
Neil
This correction doesn’t have any velocity yet. But Fall… it will have some velocity
I agree, “fall 2007″ has a very fitting name.
“‘They have to put aside unrealistic expectations in order to sell their homes — and they are,’ said real estate agent Joni Adno.”
Realtor’s in Sarasota-Bradenton keep saying this but it’s far from the truth. The majority of houses are listed WAY to high and they sit stagnant. The huge amount of people that bought in the last 2 years cannot sell without taking a loss and they refuse to lower their price. I guess that explains the HUGE spike in pre-foreclosure’s here….
“The huge amount of people that bought in the last 2 years cannot sell without taking a loss….”
Perhaps, as a result, foreclosures will lead actual sales transactions.
In Florida, California, Michigan, Las Vegas, and…
Its in the bag!
Got popcorn?
Neil
I was tlking to a friend today. The friend had conversations with a West Coast lawyer, who said he had been contacted by a Dallas banking organization to handle over 1000 foreclosures they had.
Lawyer charges $2000 a pop..lets see??? $2,000,000 lawyers fee??
“… contacted by a Dallas banking organization to handle over 1000 forclosures they had.”
Bank’s quarterly statements will be coming out soon. Wonder if there is a connection …
Florida’s condo market is crashing! There is simply no other way to describe it. The spinmeisters can spin all they want but it’s difficult to deny or bury these numbers. It’s official.
I agree the spinmeisters are still doing their thing but I feel the MSM as an institution finally turned on the REIC several months ago and with each passing week the chorus is growing louder and louder that RE (especially in Florida) is fckd. For the MSM the bust will probably be better than the boom…don’t forget tragedy sells better than success..
“We got the bubbleheaded bleach-blonde, comes on at 5
She can tell you about the plane crash with a gleam in her eye
It’s interesting when people die, give us dirty laundry”
I love that song!
Cheers — Dirty Laundry:
http://www.youtube.com/watch?v=RSRjRIQ_WO0
Every time that song comes on my Zen, I crank it and imagine the MSM reporting on the mortgage/housing crash!
Look… Its either cower in fear or Schadenfreude at this point.
Got popcorn?
Neil
I heard a sub-prime broker singing it this way:
I make my living off the buyer’s blues
Just loan them money, they’ll pay their dues
People don’t know what they lose, they love dirty money
Well, I could’ve been an Realtor, but I wound up here
I just have to look good, and I try not to sneer
Let me whisper in your ear, take my dirty money
Kick ‘em when they’re up, kick ‘em when they’re down
Kick ‘em when they’re up, kick ‘em when they’re down
Kick ‘em when they’re up, kick ‘em when they’re down
Kick ‘em when they’re up, kick ‘em all around
We got the bubbleheaded blog-bears, with all their jive
They can tell you about the price crash with a gleam in their eyes
It’s interesting when buyers lie, take my dirty money
Can we film the prosecution? Is the well dry yet?
You know the boys in the backroom got a running bet
Tell the sucker not to sweat, take my dirty money
You don’t really need to find out what’s going on
You don’t really want to know just how far it’s gone
Just leave well enough alone, take my dirty money
Kick ‘em when they’re up, kick ‘em when they’re down
Kick ‘em when they’re up, kick ‘em when they’re down
Kick ‘em when they’re up, kick ‘em when they’re down
Kick ‘em when they’re stiff, kick ‘em all around
Dirty little secrets, dirty little lies
We got our dirty little fingers in everybody’s pie
Love to cut you down to size, we love dirty money
We can do the innuendo, we can dance and sing
When it’s said and done, we haven’t told you a thing
We all know that crap is king, take my dirty money
===
The PB Post is such a cheerleader on trying to ignore reality on this that it is hard to stomach. You wonder if they ever drive around. All you have to do is to look at the ever increasing numbers of signs “For sale/for lease” to know where this is going.
“Kelly and Todd Gilmore have tried to sell their three-bedroom home in Boca Raton since early November. He moved to Denver last year to take a new job, and she finally joined him this month when it became clear no sale was imminent.”
“The couple originally listed the home at $599,000 before reducing it to $549,000. This week, they cut it to $519,000. ‘It’s been an emotional experience,’ said Kelly Gilmore. ‘We’re trying to bide our time.’”
They bought in 2001 for $208,000.
Cut the price you stupid, greedy bastards!
I’m sure they don’t want to feel like they’re just “giving it away.”
:)
Kelly may not give it away but she’s gonna be giving “it” up pretty soon if she doesn’t cut the price and sell the house.
Let those bastards keep carrying it. Property Tax, Insurance, Aging, and Depreciating Prices will continually eat away at any gains they were hoping for.
Gilmore’s refinanced it in 2004….owe $235,000, as of then
They want to bogey with some money…That’s just the Boca way, dontyaknow!!!!
They bought in 2001 for $208,000.
And every month they wait cuts another 5% off what they’ll sell it for.
They boogied with the HELOC, time to pay the band.
Got popcorn?
Neil
“Cut the price you stupid, greedy bastards!”
AMEN! Testify!
What do you want to bet the wife is calling the shots on this one? I could be wrong, but I just have a funny feeling. Well, Miss Kelly, here’s some news for ya. It’s going to be a cold day in hell before you ever see $519,000 for that house again.
“It’s been an emotional experience”. LOL! Poor Todd. I’ll bet it’s been an emotional experience for him, too. Especially when Kelly showed up empty-handed.
Kelly’s name was “”HENDERSON”, before it was Gilmore
Todd is just along for the ride [of his life]….
Keep’on hump’n Todd…. You’re come’on boy..soon enuf!!!
Todd, dude, we have to talk. Seriously, dude.
The Gilmores [again], had been paying approx $4000/taxes, with homestead and SOH…Property valued @ $413K…Taxes would be over $9000/yr for the new owner….maybe $10K taxes at >$500K sales price..
Didn’t the Gilmores just admit in the local paper that this is no longer they’re primary residence and consequently they have forfeited their SOH exemption. The property appraiser values their house at $414K, more than double what they are taxed on now. If anyone is paying attention at the county tax office that should be another $4K plus in taxes this year.
What a couple of jerks. I’m so sick of this sort of behavior. I imagine they’ll need to take a check to closing?
“The couple originally listed the home at $599,000 before reducing it to $549,000. This week, they cut it to $519,000. ‘It’s been an emotional experience,’ said Kelly Gilmore. ‘We’re trying to bide our time.’”
“They bought in 2001 for $208,000.”
A wonderful example of the greed which is real estate today. I love to see these j@ck@$$e$ burn through cash by carrying two mortgages while waiting for a buyer who doesn’t exist.
And the Boca Community Hospital is in their backyard…..
“A growing number of people are defaulting. Lenders are reacting by tightening their loan standards.”
I like how that works.
“‘People can’t afford to buy,’ Buhrkoff said. ‘People around here don’t make that much money.’”
Fire David Learah and make this guy cheif economist of the NAR.
It’s refreshing to read this coming from a seller. I think the winds of change are starting to blow.
“Two weeks ago, Bill McGee drove to Circuit City and plunked down $5,000 for a 52-inch flat screen television. McGee said he had already lowered the price for his 2,850-square-foot house from $549,900 to $530,000. ‘It was a tough decision for me because I think it is worth more money,’ said McGee.”
“The Sharp Aquos is now sitting in his home, awaiting anyone who buys his home. ‘I have not got a red bow on it,’ McGee added. ‘But I am going to get one.’”
This guy’s just plain stupid. He is throwing good money after bad. He literally just threw that money away. I don’t know anyone who would buy a house because of a free television. And, how can someone look at these “incentives” and not see them baked into the selling price? And furthermore if I, as a buyer, am going to be paying for the incentive, I want to have the opportunity to choose what it is. It irks me to hear of these idiot builders throwing in some POS PT Cruiser. First of all, I don’t want to finance a car for 30 years. And secondly, if I did, it aint gonna be no stinkin’ PT Cruiser! Nuff said.
Yup. That $5k could have bought him Roman Noodles for life.
FB McGee probably plunked down his credit card or used HELOC $, and is now accruing interest. Course in the end its just one more creditor in his BK filing. This just gets better and better, and to think all of this entertainment is free, with real humans acting out their roles at no charge to us. If I didn’t know how greedy and egotistical these morons are based on their behaving as if they won the lottery (think maids and gardners in Escalades with shiny spinning hubs) I’d feel sorry for em.
Got diversified assets?
you can buy that TV for $2,800 all day long. He can’t buy that right either
3 of my neighbors are selling their house and it seems like the market value of houses (not condos) is a few percent down from when the last house sold in Nov 2005. So things are not too bad in the coconut grove area.
As far as condos, it is going to hurt. I was over at the Hyatt in downtown miami (next to miami river) and I could see about 9 massive high rises in various stages of construction. Even if they were cheap, the infrastructure to support all these people in one place does not exist.
>>>>>it seems like the market value of houses (not condos) is a few percent down from when the last house sold in Nov 2005. So things are not too bad in the coconut grove area.
What I meant to say in reply to miamitounhouseowner’s post is that statement sounds like a bunch of cr*p to me as I know prices have been dropping like a rock, at least the ones that are actually selling, not wishing prices.
florida watcher…i am basing my numbers on the offers my neighbors have received. The drop is less than 3% from late 2005 (when the last house in my block sold) i.e 3% below the ACTUAL selling price from late 2005.
Also, regarding me being full of c*rp, we will see who if full of it when the actual sale happens and you will be able to see for yourself what the drop is.
The main issue is that the “selling” price is not the same thing as “sold” price and the “sold” price has to be examined taken into account incentives, cashback financing, etc. in order to come to some conclusion about the real price in the market.
There is just too much fraud in this market in general and South Florida in particular to accept “selling” prices as evidence of anything.
miamitownhouseowner reply;
I understand what you are saying about the “”OFFER”"…
Somewhere between, there is $$ MONEY $$$, that is going to be financed…5 will get you 10, that they won’t get it with the new rules..what you’re talking about was last year…new year; new rules
I think the only thing that will save the FL housing market is the elimination of property tax (for a 2.5 % sales tax). In the short term, that will increase house sales as there are sooooo many people who are not buying due to the outrageous property taxes they have to pay (compared to those who have homestead exemptions and have owned the same house for 5 years or more).
In the long term, the elimination of property tax will hurt as the tax burden will be shifted more to the middle and lower income people. Cutting county budgets will mean layoffs. Even if housing is cheap, if you dont have a job, you cant buy a house.
How about lowering the price? Lower it to a level where a 30-year-fixed-amortized amount is equivalent to the monthly tax bill.
Just like to add to your thought about lowering prices that would also allow for people who actually live and work in that area to be able to afford a home with the average income and wages for that area.
Goverment knows housing will crash, so they want to move tax revenue to sales tax where is permanent; when prices drop so will tax revenue, so they want to bank on todays people ‘desparation’ so they can up-sales tax hence keeping a higher tax revenue. So its more of a shelter what they are looking for, not significantly lower anything… they CAN lower prop tax, by law, it doesnt matter where it comes from be it higher prop. value or higher % of tax, its considered the same, its considered an increase… so if they didnt want an increase they could have just freeze appraisals of something along those lines.
The elimination or lowering of the property tax is not going to save the Florida housing market short term or long term. That’s wishful thinking. Property tax is not why the Florida real estate market has imploded.
McGee said he had already lowered the price for his 2,850-square-foot house from $549,900 to $530,000. ‘It was a tough decision for me because I think it is worth more money,’ said McGee.”
What is not mentioned in the article is McGee bought the house according to Broward Property Apprasier, http://www.bcpa.net, in 2004 for about $360,000! Thats what kills me about these articles in the newspaper that they never mention what price the house was previously sold at. That would kind of show how greedy and unrealistic these sellers are.
Is it greed or is the house HELOC’d to the max so they owe more on the home than initial purchase price, you know the money for all those Cadillac Escalades has to come from somewhere.
The idiots actually think the house is worth whatever they got into it.
When in Danger or in Doubt,
Run in Circles,
Scream and Shout,
“Help!.. I’m completely surrounded by Alligators and Really I Need a new a 52-inch flat screen TV “
“The couple originally listed the home at $599,000 before reducing it to $549,000. This week, they cut it to $519,000. ‘It’s been an emotional experience,’ said Kelly Gilmore. ‘We’re trying to bide our time.’”
Here’s the thing, Kelly: I’m biding my time, too, only I’m not feeding two mortages on two depreciating assets. Who will outlast who?
As am I, and paying less then 15% of my HH income to rent.
As you said Sammy, who will outlast who. I have nothing but time, and am sitting in a 1/2M dollar home with a 2 year lease with no price increases for the entire lease period. Yes, I definately think I can, and will wait until late 2008 before I even look again; and likely will reup my lease until 2009 (perhaps for less then I am paying now, the market for rent is falling like a rock, especially on the McMansions).
I like my chances of “waiting this out” much better then yours.
Mike, I’m renting too. Plan to stay put until next Spring at the earliest, unless my CA-based “investor” landlord sells my current place out from under me rather than renewing the lease in May like I’m hoping he will.
I rent as well….with no intent to buy. Here in Chicago (Ravenswood - a nice neighborhood), my rent is $725/month. Two bedrooms, 1,050-sq-.ft. My rent is less than what each of my friend pay in monthly property tax. Plus, I don’t pay water or trash pickup, nor do I spent money on maintenance. Or DO the maintenance.
No bubble in Chicago? Hah. Do the math.
Yet condo towers continue to sprout all over, especially near the river. And there’s still a multi-flat conversion on every city block.
I agree that Fall 2007 could get very rough. I guess then will be the time to seek a reduction in my rent. $700/mo. sounds reasonable. I’m a great tenant.
Re: “Here’s the thing, Kelly: I’m biding my time, too, only I’m not feeding two mortages on two depreciating assets. Who will outlast who?”
You forget that having to pay a mortgage means that what Kelly has is an obligation, not an asset. So, she’s feeding two mortgages on two depreciating obligations. She’s paying $$ to further her losses. She’s epitomizes what happens to greedy idiots: big losses.
“…those who have lived in their homes for more than five years, and were not part of the flipper crazy the last two years, still saw sales prices above when they bought.”
Now THAT’S a statement. And from a RE board president. He’s basically accepted reversion to the mean. Only those who live in a home they bought prior to 2002 will be reasonably able to gain anything at all on the sale of the property.
Me, I still go for 1998 prices.
Hey, Chip! I love the statement about 1998 prices, that’s what I’m thinking. I just wonder how long it is going to take. I’m thinking after the fall, we’ll start seeing the real fast crash. Inevitable.
‘98 prices are what I’m looking for too. They doubled in ‘97 so anyone who bought before then and did not do the irresposible HELOC thing will still be making out fine.
It *is* fun to hear these pronouncements in the media about prices going back to 2002/01 levels. Happens much more frequently now.
Hard to believe that people would still be buying after hearing stuff like that. Seems not only do they not read the more in-depth financial news, they don’t even read the local papers.
Bill Fleckenstein said a while back that the market may freeze. It looks that way in Pinellas County. As long as people who bought for a short term gain can keep making payments, the standoff may continue. The problem will be at loan reset time. Once that happens, there could be a huge wave of REO’s flooding the market, and the dynamics might change drastically. There is a reason people relied on rent multipliers for pricing for so long.
I whipped out my calculator at suppertime tonight and ran some numbers for my wife, using the traditional 2.5x -to- 3.0x earnings ratio for a “normal” mortgage and relating those to the bought-for and wishing prices of the flippers all around us. Her jaw dropped, even though we’ve talked bubble and crash prices every day for a couple of years now. Seems like, in these parts, dread is beginning to turn to fear. Fear will turn to panic. And we’ll be off to the races.
RJ reply; I subsribe to Fleckenstein also…I picked up a good chart off iTulip.com the other day, that dipicks ‘exactly’ the timing sequence of ‘all’ these resets…Chart was by credit susisse, and showed two humps..1 st was 3-19 mos for sub-prime; rest was out to 60 mos for various other options….PEAK subprime was approx. this November….Things are at a standstill here in Daytona…LONGWAY DOWN FROM HERE!!!!
“Two weeks ago, Bill McGee drove to Circuit City and plunked down $5,000 for a 52-inch flat screen television. McGee said he had already lowered the price for his 2,850-square-foot house from $549,900 to $530,000. ‘It was a tough decision for me because I think it is worth more money,’ said McGee.”
That TV is worth less now. Those new models are going to crush the price he paid for this one.
Good investment… NOT!
Top 20 reasons home prices will come down in South Florida over the next few years
1) Home prices are overvalued by at least 30% to 40%
Large inventory of unsold existing homes on the market for many, many months
2) The cost of housing has grown faster than local wages, meaning the average household income cannot realistically support the total monthly payment. Therefore, the pool of potential buyers shrinks.
3) Property taxes are doubling and tripling from one year to the next without reason, increasing the monthly expenses
4) Insurance premiums are going up every year and even more so after an active hurricane season, also increasing monthly expenses
5) Home owner association fees are steadily climbing to maintain aging communities
6) There is an oversupply of new condos and townhouses that have not yet been sold
7) First time homebuyers are priced out of the market, so there are fewer buyers overall
9) Many investors and speculators have long pulled out of the real estate market
10) Sooner or later interest rates will rise, putting mortgages out of reach from the average buyer
11) Many people with adjustable rate mortgages are having trouble with their monthly responsibility
12) The foreclosure rate has been rising steadily over the past several months
13) Many people are deciding to move out of the state to find cheaper housing and cost of living, so there will be fewer buyers
14) The implosion of the sub-prime mortgage market will make it harder to get a loan approved
15) Prime-mortgage industry is requiring better credit scores and larger down payments (10% to 20%)
16) The psychology of the market has changed, so sellers need time to realize that their prices are too high.
17) We are currently in a buyers market, so sellers need to be realistic and flexible with there asking prices
18) Currently, renting a house is at least 50% cheaper on a monthly bases than buying a house in the short term (1 to 2 years)
19) Many sellers have a lot of paper equity built into their asking prices and can still make a generous profit in a short amount of time (under 5 years), even with a drastic price reduction.
20) The real estate market (like the stock market) has a history of cyclical gains and losses, in the long run, prices will balance out to whatever the market will bare
Message to Buyers:
There is an old expression in real estate, “There will always be a greater fool to come along and buy your house at a higher price”. The message to buyers is, don’t be the greater fool. Let’s wake up Broward County! Take a step back, look at the big picture and start making wiser real estate decisions.
Unless your household income has doubled or tripled in the last five years, affording a home in Broward County has become very difficult. You can fool yourself into thinking you can take on a huge mortgage by using creative financing tricks, but the main thing is affording that monthly financial commitment. If your income and budget cannot provide you with enough money to cover your mortgage payment, taxes, insurance and association fees each month, then you cannot realistically afford a home. As a rule, pay no more than 2 to 3 times your gross annual income. Any more than that and you run the risk of becoming financially strained and possibly losing your home. A home is place to be happy and enjoy your family. Yet millions of Americans have put themselves into debt prison. Do not bid on overpriced properties! Sellers need time to realize that their prices are too high. Bottom line is pay no more then 7 to 10 times fair market annual rent. Also, get educated by searching the online tax records (www.bcpa.net) and find out the sales history of a home even before looking at the asking price.
In summary, wait until prices come back down to earth before buying. Please do not believe the lie that renting is throwing your money away. We all have to live somewhere, right? However, if you add up the monthly cost of a mortgage, taxes, insurance and association fees, right now renting is at least 50% cheaper than buying. Owning a home should be everyone’s goal, but don’t rush in. Hang on a few years, save your money, watch the prices come down and then make a purchase that makes long-term financial sense.
Message to Sellers:
First off, there is no reason for you to panic. The appreciation you have seen on your property is a paper gain. This paper gain does not impact your financial situation until you actually accept an offer and sell your home. When talking about appreciation and home values, it is important to remember the figures represent an estimate of wealth. If you make your mortgage payments on time and then sell in 5 years, the value of your home will only matter when you actually sell at the tenth year. The value in years 2, 3 or 4 is more or less irrelevant. As long as you are able to meet your monthly repayment obligation, there is no reason to panic just because your home is losing some value.
On May 4, 2006, Federal Reserve Board Governor Susan Blies stated that “Housing has really sort of peaked”. This follows on the heels of the new Fed Chairman Ben Bernanke saying that he was concerned that the “softening” of the real estate market would hurt the economy. And former Fed Chairman Alan Greenspan previously described the real estate market as “frothy”. All of these top financial experts agree that there is already a realistic decline in the market, so clearly there is a need to know the reasons behind this change.
Top reasons that the real estate market has changed:
• Interest rates are rising - foreclosures are up 72%!
• First time homebuyers are priced out of the market.
• Investors who bought real estate too late to flip them, are now dumping their properties on the market.
• Buyers are afraid of the housing bubble bursting - the mania over real estate is over!
Bottom line is that even if you sell your home for 30% to 40% less than your asking price, you will still make a generous profit in a short amount of time. Do not be surprised or even insulted when a buyer makes you a low offer, because this is still better than facing foreclosure or bankruptcy if you cannot make your mortgage payments.
Rubbish. Burn, baby!
The hell with popcorn, we need marshmellows.