“Has Real Estate Really Gone Down That Much?”
The Keys News reports from Florida. “It took nearly an hour, but only a few minutes were needed Saturday for auctioneers to sell four residential properties and three commercial buildings. With less than 100 attendees at the auction, those in chairs seemed outnumbered by the agents moving around the room trying to generate bids.”
“A 2,000-square-foot home on Terry Lane sold for $800,000 and a 1,400-square-foot Terry Lane home sold for $500,000. In both cases, the bids were closed without any action from the crowd. Because of this, two similar properties on Terry Lane weren’t offered up for auction.”
“‘We didn’t feel like we were near where we could be, it was a disappointment,’ auction founder Ben Anderson said.”
“‘Has real estate really gone down that much?’ auctioneer Chris Camp asked after no one bid on a Third Street triplex that started out and sold for $600,000. ‘Yes,’ someone in the crowd retorted.”
“Anderson attributes buyers’ hesitation to the concern that the market hasn’t yet bottomed out. ‘It’s a buyers market and everything is shifting and changing,’ Anderson said, adding that buyers have ‘gotten off the bus.’”
“‘They’re going to walk around the block before they get back on,’ he said.”
The Montgomery Advertiser. “Colonial BancGroup Inc. has lent $6.4 billion for construction projects, five times the average for banks nationwide. Colonial lends money mostly to local homebuilders well known to loan officers, according to analyst Robert S. Patten.”
“Since 2000, Colonial has bought six Florida banks with assets of $3.5 billion. A seventh acquisition of a $1 billion-asset bank is pending. Many of the deals looked wise at the time because Florida’s economy was sizzling and home values were soaring.”
“Today, a Florida real estate bank must deal with plummeting sales and a growing list of abandoned projects, giving credence to the experts who told the Wall Street Journal that the state ‘is undergoing one of its worst housing recessions ever.’”
“‘Given that Colonial sees itself as primarily a real estate bank, they’re vulnerable,’ said Richard X. Bove, of specialty investment bank Punk Ziegel & Co.”
“Bove said the damage to banks with extensive Florida franchises has yet to show up in their financials. ‘Wait till next quarter,’ Bove said. ‘It’s not just Colonial. A lot of banks are going to have trouble. They’re all in a difficult environment right now.’”
The Sun Sentinel. “If home ownership is the American dream, the scene that plays out every week in Room 385 of the Broward County Courthouse is the American nightmare. ‘Case No. 06-19776,’ intoned the auctioneer, a foreclosure clerk named Barbara Pendergrass.”
“Near the back, Earl Lawrence leafed through his thick black binder and looked up the property, a small townhouse in Tamarac. Bought for $65,500 in September 2000, a foreclosure judgment for debts totaling $188,000 last December.”
“‘They borrowed themselves right out of a home,’ said Lawrence, of Hollywood, a real estate investor who has been coming to the public auctions for 25 years.”
“There were no bids on the Tamarac townhouse Thursday, apart from the minimum $100 that the foreclosing bank made to formally seize the property.”
“The real estate market has become so uncertain, and the debts racked up on these properties so high, even the vultures aren’t nibbling. ‘Would you buy a property for $420,000 if you could only sell it for $400,000?’ said Adnan Kabbara of Weston, a developer and contractor who has bought homes at auction for four years.”
“Properties that would have attracted a bidding war a year or two ago, when the real estate market was soaring, now stay with the lenders. The banks sell them through major national real estate firms, more frequently at a loss.”
“‘The party’s over,’ said Lawrence.”
“With more loans and homes skidding off the rails, the crowd in Room 385 isn’t going to thin anytime soon. As the auctioneer worked through the stack of folders on Thursday, investor John Derynda groaned that he should have brought lunch.”
“‘Two months from now,’ he said, ‘it’s only going to be worse.’”
“A few years ago, condo-hotels practically sold themselves. With real estate prices marching upward, the idea of owning a condo unit on the beach and covering some of the expenses through hotel rental payments seemed irresistible.”
“‘We weren’t salespeople, we were order takers,’ recalled Joel Greene, president of North Miami-based Condo Hotel Center.”
“Today, the market has sobered up. Condos aren’t selling and condo-hotels are caught in the same downdraft. In West Palm Beach, plans for The Harrick, a 138-unit condo-hotel at Lakeview Avenue and South Dixie Highway are on hold. ‘We’re redesigning it as a hotel,’ said developer David Gostfand. ‘The condo market is a little quiet at the moment.’”
“About 1,250 condo-hotel units have been opened in the past two years in Broward and Palm Beach counties, with another 2,500 units approved or under construction. That’s a small number compared with the 15,500 units proposed for Orlando or the 32,800 going up in Las Vegas.”
“Condo-hotel units that sold for $650 a square foot in the late 1990s are offered at $1,200 to $1,400 a square foot now. ‘The big question is with all these projects coming along at one time, are there enough luxury buyers?’ said (consultant) Jack McCabe.”
“Some developers concede that buyers must get a low price per square foot to have any hope of a return on their investment. Jim Clarke plans to begin construction on Clarkes Hotel, a 92-unit condo hotel in downtown West Palm Beach, within 60 days. ‘We’re virtually sold out, but our prices are low,’ said Clarke, who estimated an average unit costs $375,000.”
“Clarke cites a rule of thumb among hotel developers that to be profitable rooms should rent for a tenth of 1 percent of their building cost. If a buyer acquires a unit for $500,000, that translates to room rates of $500 a night.”
“‘That’s kind of hard to sustain down here,’ Clarke said.”
‘Cypress lost about 70 students this year, and the school is projected to shrink to 748 students for 2007-08. The school is not alone. Nearly every high and middle school in the southern part of the Lee County School District is shrinking.’
‘Hundreds of students in the south zone are being redirected to fill South Fort Myers High and Lexington Middle, both of which opened in 2005, Smith said. That was right around the time the housing market in south Lee County was at its peak, pricing many middle-class families out of the market.’
‘Property tax collections in Southwest Florida increased more than three times the rate of growth and inflation over the past four years. Revenue from taxes rose 154 percent in Charlotte County, 80 percent in Manatee and 67 percent in Sarasota. That’s far more than the 21 percent Florida counties needed, on average, to keep pace with growth and inflation.’
‘So, where did the money go? A Herald-Tribune examination of county government spending over the past four years shows that much of it went toward buildings and services related to the region’s continuing development. Russ Olsen, a Holmes Beach resident, is among critics convinced that government officials have spent because they can, not because they must.’
‘The bean counters in government determine they can increase taxes (revenue) by double digits without raising the rate,’ Olsen said.’
“‘Hundreds of students in the south zone are being redirected to fill South Fort Myers High and Lexington Middle, both of which opened in 2005, Smith said. That was right around the time the housing market in south Lee County was at its peak, pricing many middle-class families out of the market.’”
Countless families have run away from the overheated, overpriced housing markets throughout this country. It’s one of the many troubling trends which were ignored by the ignorant, self serving politicians of this once great land. This thing could have been nipped in the bud three or four years ago, and the damages mitigated. Instead, they chose to let the predatory lenders, brokers, realtors, and fraudsters wring out every last dollar before acknowledging the situation. That elected officials like Senators Dodd, and Clinton, as well as individuals the Reverend are just now speaking up, shows how inept they truly are. The whole US government needs one giant enema.
That’s right–those corrupt politicians are just trying to get at the head of the parade, now that they see one has formed. If they held office during this Ponzi scheme they’re at fault. Period.
can only hope these people cashed out and started renting…
I liked this line from the SW FLA property tax piece:
‘”We have not been spending like drunken sailors like they say we are,” said Manatee County Commissioner Jane von Hahmann.’
Wanna bet? Read the article.
This same issue is going hit Cali like a ton of bricks - it’s just going to take a little longer.
Snatch blade of house from hand, Grasshoper
But master, is it wise to snatch house in falling market?
Coinfucious is never certain
“Study nature, love nature, stay close to nature. It will never fail you.”
Frank Lloyd Wright
“‘The party’s over,’ said Lawrence.”
Yep. Unfortunately, now the layoffs start. Notice I said start. Since this is a Florida thread, I’ll concentrate there. Construction, Realtors ™ , mortgage brokers… laid off in huge numbers. Not to mention the reader that noted US used car prices are being pushed down by the sudden surplus of used cars coming out of Florida. Its a bad time to sell any of the cars that were hot by HELOC money…
Got popcorn?
Neil
I’m patiently waiting for a used Porsche Turbo–preferably 2004 cabriolet in a bitchin’ color combination.
1971 gto convertible with a 400 or better.
I just keep watching the BMW and Mercedes count go up on ebay. After watching for awhile, I get a kick out of how many cars get bid up to what appears to be close to the reserve price, only to fall short and the auction ends with no sale. Now I just look for the “true” no reserve auctions. Not the ones where some jerk off says “no reserve” and puts in a high initial bid (they show up as nil bids). Interesting that most bidders just ignore those.
This article shows the problem with trying to buy a distressed property at a bargain price — they are usually so highly mortgaged that the bank ends up taking them back. The only chance then at getting a reduced price is at the REO stage.
Agreed, lainvestorgirl, I would think REO is a much better way to go. I’ve never done it, but as I understand it, going REO gives a person a better chance of protecting themselves from potential title problems.
I’m thinking just listening to REO Speedwagon and doing nothing, for awhile…
Might be the best laid plan
I heard it from a friend…
http://www.youtube.com/watch?v=fkzeZb2E62U
Thanks…
Needed that.
” I’m thinking just listening to REO Speedwagon and doing nothing, for awhile… ”
Nice choice Aladin, ‘Ridin’ the storm out ‘ one of their top hits……
Once the property is bank owned the 2nd is toast. REOs in my neighborhood are usually listed about 20% less than what is owed and there are usually multiple price reductions before they finally sell.
My understanding is that the foreclosure auctions are best left to the pro/vultures who have the $$$ to risk that occasional house they buy will have chainsawed roof joists and concrete poured down the drains along with tax and contractor liens.
Can anyone comment on whether the properties sold actually changed hands or if some other trickery was employed?
I hope these dolts eventually figure out that auctions don’t work with “wishing” reserve pricing (or other trickery like fake bidders).
auger-inn, I’m wondering the same thing. Did these properties “sell” at their starting bids because there were shills in the audience to get the bidding started?
And then no real buyers to carry the prices forward?
In other words, will these properties not really change hands?
I wonder if there is anyone on this board who can find out later down the line if the properties actually transfer into new ownership.
——————————————————————-
“A 2,000-square-foot home on Terry Lane sold for $800,000 and a 1,400-square-foot Terry Lane home sold for $500,000. In both cases, the bids were closed without any action from the crowd. Because of this, two similar properties on Terry Lane weren’t offered up for auction.”
I’m with you guys. One bidder on each property then pulling the other two properties…very suspicious.
I noticed that the auctioneer is from Destin, Florida. I will be in the area for a couple of weeks in April and again in June. If any auctions are scheduled during the time I’m around I will check them out and give the blog a report…with pics! I will also check with people I know in Destin if the auctions are on the up and up. Its a very small town…
From my perspective…
Auctioneers are closely related to Peacocks and like the strangely beautiful bird, they like to strut their stuff to an approving audience.
If I was the auctioneer at this particular auction, I couldn’t get out of the room quick enough.
It’s embarasing to allow 100 people see you fail miserably at your job.
And what’s with, “…those in chairs seemed outnumbered by the agents moving around the room trying to generate bids.”
Obviously failing in their job as well. It would appear they need to get some kneepads for use in the next auction.
Perhaps someone can e-mail the reporter responsible for the article and have it checked into. I bet the reporter never realized how rigged something like this could be to keep comps artificially high (outrageously high), and that the reporting of such dubious sales may have been exactly what the sellers were counting on, even though the article appears to be a negative.
I went to a couple of open houses yesterday up in Eureka, Ca…and once again, was stunned by the number of people attending. Most were obviously still looking, but the fact that the interest is still strongly there is was disconcerting.
MLS inventory has dropped again to 530…about the lowest since November, 2005, and well below the 792 last August. Although prices have slipped 5-10% as best as I can tell, people seem convinced that now is a great time to buy due to the combination of (slightly) lower prices and low mortgage rates.
The lady flipper across the house held an open house and I told her, flat out, that her place was way overpriced given homes behind her were the same price but were larger and offered far more land. She said that she’s waiting for the “right person (i.e., fool) to come along, and she built the property primarily for a retired couple moving up from down south. That is the funny thing, everyone here has their hopes attached to some dumba$$ equity locust flying out of LA or Santa Rosa to unknowingly pay ridiculous prices to get their property to move. I also told her about the housing market crash in Sacramento, Fresno, and San Diego…to which she responded “prices are going down there? Well, that isn’t here…everyone wants to move here!”
People continue to believe what they want to believe.
Eureka is very weird! I normally go up to the Smith River for fishing in Jan-Feb and everytime I just wonder who and what all these folks could be doing up in Eureka. It has become a dumping ground for Bay area folks to move the past few years but just a guess on my part and only a guess is that quite a bit of the sales since 2000 have been investor driven. One thing to keep in mind that these high home prices is a World Wide its not just Calif anymore that is off the charts.
“Clarke cites a rule of thumb among hotel developers that to be profitable rooms should rent for a tenth of 1 percent of their building cost. If a buyer acquires a unit for $500,000, that translates to room rates of $500 a night.”
OK, so let’s… do.. the math… If it sells… for…
Bwahahahaha!
$500 a night? Cheeeeez Louiiiiize! The only time I’ve rented a condotel was in Maui, and we paid only $150/night (two years ago). Right next to the ocean! It was 2 bed/2 bath with a back yard, and lots of room, for cryinoutloud. (we paid $1000 for a week)
Agreed…we paid $1500 for a REALLY nice Kauai condo (three bedrooms, right on the water, two lanais). The unit downstairs is for sale…for a cool one million bucks on the nose.
That would equal a horrible return on investment for the owner when you factor that it is rented probably only half to two thirds of the time and factoring in maintenance. The salt air eats the crud out those buildings.
The linked-to article is dated 4/1. Any chance this is an April Fool’s quote, or is that an actual rule of thumb?
The vacation rental rates on Pensacola Beach have gone insane since hurricane Ivan. Pre Ivan I rented a nice two bedroom low rise condo (more like a townhouse really) on the sound for $875 a week. The same condos are asking $1,500 per week per a quick internet search. The price is amazing considering the beach is still screwed up from the hurricane with construction going on up and down the beach. Nothing like hearing a buzz saw while on vacation to turn a man into a raving lunatic.
Last season we skipped down the coast to Fort Walton Beach/Destin and rented Gulfside at pretty good prices. Probably do the same this year. Pensacola Beach is a complete rip off these days.
A lot of the price jump may have to do with Hurricane Katrina and New Orleans. Thousands of poor displaced New Orleans residents are now being put up in “luxury” beachfront condos in the panhandle and elsewhere at phenomenal cost. When the federal government tried to tell them the party was over a month or so ago, a federal judge stepped in and said the government has to continue paying their rent. I think the condo owners/speculators are simply milking the situation for every cent they can get, at taxpayers’ expense (the only way they can pay or partially pay their mortgages and taxes). On the bright side, when these section-eight people do move out, if they ever do, the places will probably be wrecked.
Here in Tampa/St. Petersburg, the U.S. Government pays ridiculously high rents for military people, so apartment landlords hike their prices accordingly.
Funny how the bidding on the two that ’sold’ was off-limits to the bidders there, yet they instantly set the market value for the two similar units that WERE available for bidding. What a mousetrap - luckily none of the bidders went for the cheese…
It wouldn’t surprise me if the two that ’sold’ would be back up for auction the next time, with some excuse about the sale falling through. Back to the drawing board, you crooks!
“A 2,000-square-foot home on Terry Lane sold for $800,000 and a 1,400-square-foot Terry Lane home sold for $500,000. In both cases, the bids were closed without any action from the crowd.”
This reads like a waste of sales and marketing energy. At this point in the downturn, auctioneers should be able to screen serious sellers from speculative sellers, no?
“Bove said the damage to banks with extensive Florida franchises has yet to show up in their financials. ‘Wait till next quarter,’ Bove said….”
Yup! Also known as the other shoe…
“As the auctioneer worked through the stack of folders on Thursday, investor John Derynda groaned that he should have brought lunch.”
LOL. There is no free lunch at these auctions.
“Condo-hotel units that sold for $650 a square foot in the late 1990s are offered at $1,200 to $1,400 a square foot now. ‘The big question is with all these projects coming along at one time, are there enough luxury buyers?’ said (consultant) Jack McCabe.”
I think what he really meant to say is: are there enough Greater Fools still out there?
Another example for “luxury” used as a synonym for “prepare to get screwed”.
Come to think of it, I’m a luxury buyer. I have the luxury of waiting to buy when prices become reasonable.
$1,200-$1,400/ft!!!!!!!!!!
HAHAHHAHAHHAHAH!!!!
$650/ft!!!!!
LMAO & FU!!!!!
This shit sounds more expensive than quality Manhatten stock.
Good F’in luck with that shit!
Who the hell is dumb enough to plop down $650/ft for a damn apartment!!!
I will tell ya, these condos (at any price) are never a bargain. The only time they sell is at the top (to the stupid) and bottom (to renters) of the markets. When we cycle into any other time these condos are crap!!! Allways have been, allways will be.
There was another article about homes that were foreclosed in Cleveland. In it said that people were stealing copper wiring, kitchen cabinets, etc. Who is then going to buy this house? Are there enough investors to buy all of these houses and then fix them up? I don’t think so. I can see many houses owned by banks just sitting there year after year in many places.
Common theme during all busts. I can’t tell you how many gutted homes there were in the mid 90’s. I mean gutted!!! Wiriing, fixtures, electrical panels, plugs, doors, hinges, etc.. everything gone. The only people capable of taking these on were the otherwise unemployed contractors.
Also, keep an eye out for the coming arson. you will see more fires in an upcoming two year period than in the last 10 years combined.
Love this set of article summaries - reality and math are setting in now, at least in this region. I am guessing that as a whole it will take until the end of 2007 for the REO driven sales to re-set the comps and firmly establish the downward bias on prices. The sellers seem to be ready (most of them) to ride ths one all the way into the ground.
http://www.youtube.com/watch?v=0f6wrXXv8Zw
Ugh, gross. Youtube sinking to new lows.
Very funny - they must have been folks upside down in their houses to give them up! HeHe.
In West Palm Beach, plans for The Harrick, a 138-unit condo-hotel at Lakeview Avenue and South Dixie Highway are on hold.
From the east coast
To the west coast
Down the Dixie Highway
Back home…
This is fuuuuuuuuu**ed country
“There were no bids on the Tamarac townhouse Thursday, apart from the minimum $100 that the foreclosing bank made to formally seize the property.”
BTW, what’s up with this? What if I had bid $200, would the bank have gotten into a bidding war with me? What if I had taken it up to several grand, assuming I had the cash to buy on the spot? I presume the house has the typical liens and unpaid utilities on it, but I can’t imagine them being for more than the fair market value of the house, as long as that FMV is at least upper five figures.
The longtime investor dude was there and didn’t bid, so clearly it’s not a case where one can buy a house for $200. That actually does happen in places like Pittsburgh, but not here. So what am I missing?
Yes, if you had started to bid, the bank most likely would have bid up to their final judgment amount (mortgage amount remaining plus various fees), and then they would drop out. No point in the bank bidding more than they have to, because they have to pay for doc stamps (transfer fee) based on the sales price.
It sounds weird to me too.
My guess is that the bid must include paying off the note.
Paul
Ladies and Gentlemen,
Please raise your seats and tables to their upright positions and place your heads BETWEEN your knees. We seem to have a small technical malfunction onboard US Fight Heloc 999 but I assure you that nothing can go wrong…nothing can go wrong…nothing can go wr……
‘The big question is with all these projects coming along at one time, are there enough luxury buyers?’ said (consultant) Jack McCabe.”
No.
“There were no bids on the Tamarac townhouse Thursday, apart from the minimum $100 that the foreclosing bank made to formally seize the property.”
So why isn’t the current owner showing up at the auction to bid $200? Or somebody else for that matter?
It would cause the bank a major headache because they would need to start sinking money into a property just to foreclose. And the first few souls to try this would catch the bank employee off-guard.
Jeesh, first the subprime meltdown and now pet food is poisoned. What is an FB to do?
Yeah, I wonder how many FB’s got poisoned?
Yeah…it just isn’t a FBer’s Thanksgiving without ramen and meow mix
Was in the Keys in Feb. EVERYTHING is for sale and WAY overpriced. Hundreds of homes on every Key, lots of them a $Mil plus.
Everyone down there seems to think the Keys will just be for Millionaires and Europeans with lots of Euros.
Good luck with that, the Keys are nice, but it ain’t the Hamptons or St. Tropez!
Another place where “it’s different here.” Yeah, it’s different everywhere.
So much of the housing in the Keys is within earshot of busy Route A1A. I stayed in a cottage in Islamorada a couple months ago: nice view of the bay and had it’s own small marina. But never felt like I had excaped the rat race due to the sound of constant traffic on the A1A!
I just want to extend my deepest thanks to all of you who helped me see the light a year ago when we started getting our house ready to sell. We just closed on it and walked away a little over even. We went back to renting for less than half of what our mortgage was in a very nice brand new condo. We now have money to save and go see our familes. Houses in our ‘hood aren’t selling we got extremly lucky our house sold in less than 2 months and close in less than 30 days with a cash buyer. Thank you Ben and thank you God. People are still drinking the Kool Aid in Tampa. They all expect a spring bounce and values to head back up by the end of the year.