April 2, 2007

“Feeling The Pressure” Of “Florida’s Achilles Heel”

The St Petersburg Times reports from Florida. “Eleanor Andriole likes her new house in Sterling Hill, but she’s not so sure about the neighborhood. Looking down the street from her driveway, she counted half a dozen vacant homes, a couple of rentals and only two other houses occupied by their owners.”

“‘I wish some people would come in and live on this street,’ said Andriole, who bought the house with her son last year. ‘I feel very lonely here.’”

“The situation is similar in most of Hernando County’s newest subdivisions. Builders and developers offered several explanations for the large number of homeowners who have not filed for homestead exemptions in subdivisions like Sterling Hill.”

“But most of the houses, they acknowledged, are homes that builders or investors planned to sell but have not been able to. In some cases, they fell back into the builders’ hands after buyers backed out of their contracts.”

“Jeff Shubrooks, a salesman for Avatar, which currently owns 29 houses in Sterling Hill, limited investors by allowing each buyer to purchase only one home. But some buyers, Shubrooks said, probably purchased houses under the names of relatives or misled sales agents about their intention to live in Sterling Hill.”

“‘The market was crazy then,’ he said, ‘and there were so many speculators.’”

“Builders have slashed prices. Inland Homes, for example, recently advertised a ‘closeout at Sterling Hill,’ cutting prices as much as $55,000 and offering to pay $2,500 in closing costs. Deed restrictions prohibit individual owners from posting ‘for sale’ signs.”

“Kathy Korson lives in South Tampa and bought a house in Sterling Hill a year ago. ‘We’ve had it on the market since March of last year. We’ve had open houses and advertised everywhere. It’s ridiculous,’ said Korson, who said she paid a total of $24,000 in monthly payments for her mortgage, taxes and insurance since last April and is now thinking of selling the house at auction.”

“‘I just don’t know how long I can keep making the payments,’ Korson said.”

“Although most large builders do not list their houses in the MLS used by real estate agents, the MLS is a common measure of demand, and the number of homes listed in Hernando briefly dropped below 800 in mid 2005. The number climbed rapidly through 2006 and in recent months has held steady at about 4,000 homes, with 4,366 last week.”

“Joe Murphy, the conservation chairman for the Hernando Audubon Society, (said) the inevitability of growth is a pervasive myth. ‘We’re always told there’s this wave of growth and there’s nothing we can do about it,’ Murphy said. ‘Once we realize this wave is not coming, we can slow down…we don’t have to rush to build subdivisions as fast as we can.’”

The Herald Tribune. “Martie Lieberman parlayed a few highly successful years as a real estate agent into a handsome real estate portfolio. A licensed Realtor for only four years, Lieberman recalls the advice of her real estate class instructor: ‘If you’re not doing realty investment for yourself, you may be missing opportunities, since who knows your market better than you?’”

“During the ‘crazy years in real estate when everything was so good from 2003 to 2005,’ Lieberman plowed all her commissions into property. Investing about $4 million, she thinks now that she probably bought ‘more than I should have.’”

“Like everyone else now, Lieberman is feeling the pressure from the market slowdown, both in her recently weak realty commissions as well as in her carrying costs as a multiple property owner and landlord.”

“That is what is prompting her to place the Cohen House on the market, but she said she plans to ensure that it winds up in the ‘right hands.’”

The Miami Herald. “Many South Floridians are eating out less and springing for fewer big purchases like a new car or expensive vacation. Economists talk about a new cost-consciousness among consumers who had relied heavily upon their houses for their net worth and are now watching the housing market slow way down.”

“And as the housing market slides, that new consumer psychology is rippling through South Florida’s economy, and is already hurting South Florida’s biggest companies.”

“South Florida companies you wouldn’t automatically associate with housing are also pointing to the real estate slowdown as a big culprit for less robust earnings, in industries as varied as car dealerships, cruise lines and shipping companies.”

“‘We’ve been expecting effects like this for some time,’ said Per Berglund, an economist who tracks Floridam. ‘In a sense, that is Florida’s Achilles Heel, a lot of industries are very closely tied to the state of the U.S. economy.’”

“Consumer confidence among Floridians dropped last month, according to data released by the University of Florida last week. ‘Housing is an increasing problem,’ said survey director Chris McCarty. ‘It’s very clear that people were using their home equity to fuel spending, so I don’t think this should be that much of a surprise,’ said McCarty, who also cited the rampant speculative buying and use of exotic loans.”

“Last year, 16 percent of the new car purchases in Florida were made with home equity loans, said Art Spinella, president of market research firm CNW Research. That compares to 9 percent in 2000.”

“Florida and California have been hurt the most in terms of auto sales, said Spinella, stating that the No. 1 reason for the decline in auto sales in California is its housing market, and that in Florida, it’s ‘in large part’ due to housing.”

“‘There is no way of really knowing, but…I do believe that some of those people who have stretched to buy homes and got very aggressive mortgage financing are people in the income levels we are dealing with,’ Gerry Cahill, Carnival Cruise Lines’s CFO, told analysts.”

“‘It’s not just the subprime issue. There’s a lot of other issues going on in the housing market,’ he added.”

The Christian Science Monitor. “When Patrick Greenish accepted a job offer in Charlotte, N.C., last July, he assumed that his house in Orlando would sell quickly. His new employer offered to let him telecommute for a month until the sale was complete.”

“But when the month ended, the ‘For Sale’ sign remained firmly planted in his front yard. Even so, the company expected him to be working in Charlotte.”

“‘I had to leave everybody at home while the house was still on the market,’ Mr. Greenish says, referring to his wife and two young daughters. ‘It was a bit hard on everybody.’”

“Some potential employees are turning down new jobs or transfers they cannot sell their house or would have to take a heavy loss. And companies that offer relocation benefits are spending more for employees’ moving expenses.”

“‘It’s costing companies an exorbitant amount of money to cover the loss on sale to get an employee moved,’ says Andrew Drescher, a relocation consultant.”

“For months Greenish lived in a rented room in Charlotte, returning home every other weekend. The price on his house continued to drop.”

“‘The profit was just going away,’ Greenish says. ‘We started questioning our decision to move. It was getting harder and harder, the financial issues of living in two places, traveling back and forth, and the general strain on a marriage.’ Greenish and his family took their house off the market, and he was able to return to his former position.”

“For families, the current housing market raises complex questions. ‘It’s not as simple as, ‘Hey, honey, I have a new job, we need to move,’ says Jim Lanzalotto, VP of an outsourcing firm. ‘Now you have to evaluate whether it’s worthwhile to make the change.’”

“He calls the current slump ‘unprecedented’ and ‘nondiscriminatory,’ because it stretches across the country. Previous slumps were more regional, he says.”




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140 Comments »

Comment by Ben Jones
2007-04-02 07:00:03

‘According to the Marion County Community Services Department, the median income for a family of four in our county dropped in 2007 compared to 2006, down to $42,700 from $44,900, a dip of 4.9 percent. With the exception of slight drop in 2003, incomes had been steadily rising since 2000 until this year, county data show.’

‘Florida reproted 124,721 foreclosure filings during the year, a rate of one foreclosure filing for every 59 households - or 1.7 percent of households, says RealtyTrac. In the Tampa Bay area, 18,665 households last year struggled with foreclosure. That’s one in every 61 area households.’

Comment by Roger H
2007-04-02 07:57:55

1 in every 59 households foreclosed. Being foreclosed on is like becoming common place. Almost like bankruptcy was in the later 90’s. Everyone knows someone that has declared bankruptcy - and soon - we will all know someone that has lost a house.

Comment by chicagobubbleblog
2007-04-02 08:57:20

Yeah, foreclosure no longer carries the “CACHE” it used to.

Comment by pnc
2007-04-02 12:03:31

“Foreclosed” is the new “Divorced”

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Comment by mrktMaven FL
2007-04-02 09:38:36

we will all know someone that has lost a house.

OR two.

Comment by Dan
2007-04-02 16:32:54

Actually, I don’t think so. It’s not: we all know someone who’s lost a house. It’s more like: a few of us know someone who’s lost 30.

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Comment by johndicht
2007-04-02 08:01:08

The ripple effects of this housing bust are going to be very wide. It’s more like a tsunami.

 
Comment by davidcee
2007-04-02 08:29:01

“Anything you buy today will be worth a lot more five years from now.”

Angelo Mozilo, chief executive officer of Countrywide Financial, told CNBC’s “Squawk Box” that Washington shouldn’t take proven loan products off the market in an effort to resolve the sub-prime mortgage crisis.

He said adjustable-rate mortgages and loans made without a downpayment have been used for more than a generation with proven results.

“It’s very important that we put liquidity back in the system,” Mozilo said while co-hosting “Squawk Box.” “It’s important that that the Fed backs off on these guidelines and that people realize hybrids are very good loans.”

He said the Veterans Administration has used no downpayment loans since 1942 and the FHA since 1934.

Some have said the sub-prime lending crisis will turn millions of people out of their homes, creating the worst housing crisis since the 1930s.

“I don’t believe that,” Mozilo said. “If we conduct ourselves properly, if we’re rational as we go through this process and you don’t rush to judgment, we’ll be fine. It’s up to the lenders to do everything they can to keep these people in their homes.”

Mozilo said he believed the mortgage market should be allowed to “self correct” and noted, “Anything you buy today will be worth a lot more five years from now.”

Comment by Michael Fink
2007-04-02 08:37:42

In my eyes, it’s not so much the 0 down loan that’s the problem. Or the hybrid exotic loans. Or offering loans to subprime buyers.

It’s when you put all these things together into one product that you create a truly ugly, awful monster. A 0 down loan, with a stated income, to a borrower with a 550 FICO, and negatively amortizing? That’s just stupidity, you might as well just drop cash from the sky into a drug riddled ghetto, you have about as much likelyhood of being paid back.

Any one of them, taken by itself, is a reasonable product. A zero down loan with extensive income verification/debt to income ratio requirements and high FICO. That’s a reasonable product, and provides a benefit to responsible people. And you can take any of the loan types mentioned above and do the same thing (A loan to a borrower with a poor FICO is fine, couple it with income verification and a significant downpayment, a fully amorizing loan with a fixed rate, and I think you have another very reasonable MTG instrument).

However, to take the “worst” of all these senerios and put them together into one product? That’s just stupiditiy; that product will soon be found to have NO market value at all, potentially regardless of the interest rate returned (and absolutely at the interest rate that was being charged for the past few years).

Comment by phillygal
2007-04-02 08:55:00

However, to take the “worst” of all these scenarios and put them together into one product?

…and apply them to a market where the RE is terribly overpriced. These loans, regardless of whether they’re a reasonable product, may have had a snowball’s chance of working in a non-inflated market.

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Comment by auger-inn
2007-04-02 10:26:31

Bingo! Phillygal

 
 
 
Comment by oxide
2007-04-02 08:50:52

Angelo Mozilo told CNBC’s “Squawk“Squawk Box” that Washington shouldn’t take proven loan products off the market… He said adjustable-rate mortgages and loans made without a downpayment have been used for more than a generation with proven results.

This is the height of misleading the public by not telling the WHOLE truth. Yes, the results are proven because they were used by cash-heavy investors who timed the market, or could afford the spike in payments, or they were used during a time when real estate did mostly go up. Are these exotic products proven for the cash-poor subprimes in a climate of rising interest rates? Yeah, they’re proven to bring down banks.

Nice try, Angelo.

Comment by Eastofwest
2007-04-02 09:02:12

Is it just me ,or is Mozilo right out of central casting as a ‘wise guy’ in good fellas?
http://tinyurl.com/32g9mx

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Comment by Housing Wizard
2007-04-02 09:19:06

No it’s not just you Eastofwest . Mozilo seems to brush over the fraud element with the sub-prime lending and just how much the speculation demand was increased by these loans. People in the real estate industry want a RE rally and that is the only thing that might save alot of these doomed loans .It’s a bunch of BS about getting people into homes and it was all about a big bubble where the industry was making big bucks . For the REIC to act like they were trying to put people into homes is false because they were really sitting people up for a big fall . The run-up in real estate was all about commissions and myths about real estate always going up to sucker greater fool buyers .

 
Comment by REhobbyist
2007-04-02 13:25:18

I’m so ashamed. Countrywide owns my home loan. I feel like I’m paying the mob.

 
 
Comment by JP
2007-04-02 09:12:25

I doubt it matters. The stockholders of the banks have spoken.
The return of 20% down is in the bag.

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Comment by AKRon
2007-04-02 12:15:04

Actually, it is the people who buy the MBS from banks that have spoken. And they said ‘blech!’

 
 
Comment by Fran Chise
2007-04-02 10:02:22

Like having a military that fights the last war.

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Comment by aladinsane
2007-04-02 11:16:25

I think we would have stood up well against the soviet bloc, as they had identifiable uniforms, so we’d know who to shoot at.

Makes a difference.

 
 
Comment by tg
2007-04-02 10:08:50

He is trying to pump up the market while in the meantime shedding his stock options like crazy- I guess he doesn’t think they’ll be “worth a lot more five years from now”.

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Comment by CA Guy
2007-04-02 10:14:10

Not to mention that VA loans aren’t just handed out like candy to anyone that can fog a mirror. From what I’ve heard, the appraisal and approval process for those loans are pretty stringent. The loans that Mozilo’s firm does are rubber stamped by crooked appraisers and shameless loan officers who will do whatever it takes to close the deal. Totally different games, Angelo. His loans are set up for failure due to all the reasons listed above.

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Comment by CA renter
2007-04-02 14:47:00

You are correct in that FHA loans have “higher” requirements. Even so, the default rates on FHA loans are much higher than conventional loans with 20% down and higher income/FICO scores, obviously.

 
Comment by GeorgeSalt
2007-04-02 16:47:28

“From what I’ve heard, the appraisal and approval process for those loans are pretty stringent. ”

I bought my first home with a VA loan in ‘89. I had a couple of offers rejected because the sellers didn’t want to deal with the VA. The VA had stringent standards for appraisals and home inspections. Waive the home inspection? Forget about it!

 
 
 
Comment by SF Mikey
2007-04-02 13:39:30

Sound similar to Ken Lay - Chairman Enron - in 2001 before Enron imploded. He has already sold $140M in CFC stock over the past 14 months. CFC insiders have sold over $600M in CFC stock so we don’t have to feel too sorry of these guys in their golden years.

Mr Mozilo pictures CFC as a modern day Robin Hood who provides much needed liquidity to the poor, disenfranchised, unwashed masses with $1M mortgages.

 
 
 
Comment by KirkH
2007-04-02 07:12:32

“A licensed Realtor for only four years, Lieberman recalls the advice of her real estate class instructor: ‘If you’re not doing realty investment for yourself, you may be missing opportunities, since who knows your market better than you?’”

Right. And used care salesmen must be good at rebuilding engines because who else would know cars better?

Economists are notoriously bad at predicting recessions which is really too bad because blatant bubbles are allowed to get so out of hand because the media can’t rely on sound economic advice.

Comment by Crazy G
2007-04-02 07:27:35

Good Advice from the instructor????
It’s like telling a boxing referee to get into the fight, or a football coach to be the quarterback….

Comment by scprofessor
2007-04-02 07:49:01

In the Spring of 2004 I brought a new course to our Curriculum Committee titled “Real Estate Foreclosure: Debtors’ Rights, Creditors’ Remedies.” Members of the Committee scoffed, much like many of my students in other real estate related classes. I have pointed out so many times to disbelievers the cyclic nature of this business but many just didn’t want to hear the warning. They are listening now. I’m teaching one section of the foreclosure class this summer and three sections in the fall. I’m betting I’ll get a ton of requests to add students beyond the class maximums.

Comment by CA renter
2007-04-03 01:57:57

scprof,

You’ve mentioned before the mortgage fraud/investigation business. Are many companies moving into this field? Do mortgage lenders (and other interested parties) have their own internal departments or do you think they’d prefer to contract with an outside agency?

“He who laughs last, laughs best.”

Guess they’ll be calling you “the guru” from now on! ;)

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Comment by Fran Chise
2007-04-02 10:03:59

That caught my eye too, although it’s been noted here on a number of occasions. Fitting punishment to be sure.

 
 
Comment by aladinsane
2007-04-02 07:12:40

468 years ago…

Hernando County’s Namesake was looking for Gold, and his search began in Tampa (how fitting)

There is no Gold in Florida.

Sorry Hernando.

http://www.floridahistory.com/larrys.html

 
Comment by auger-inn
2007-04-02 07:17:35

Something wrong with this blog this morning? I have posted this twice on the “bits” thread with no results.
Anyway, check out Mish’s Mike Morgan report this morning!
http://globaleconomicanalysis.blogspot.com/

 
Comment by aladinsane
2007-04-02 07:24:25

“Sterling Hill”

Sterling Silver= 92.5% Pure Silver.

I’d submit that the residents of said development represent the other 7.5% of the composition…

Which always consists of some cheap filler metal.

 
Comment by Left LA Behind
2007-04-02 07:24:51

“‘The profit was just going away,’ Greenish says. ‘We started questioning our decision to move. .

How am I supposed to have sympathy for this guy? Greed greed greed. If it was such an opportunity in Charlotte, cut your price by 10% related to all other comps. Profit? Be happy you don;t have to record a loss. Something tells me your window of profit fading fast.

Comment by Joe
2007-04-02 09:40:34

I can’t believe this guy had an opportunity to leave Orlando for Charlotte and passed it up.

Comment by jjinla
2007-04-02 10:16:45

I would love to know what his new job paid in relation to his old. Some sellers are so stupid and stubborn that they would rather turn down a job paying $30K more a year than take a $25K hit on their house.

Moron!

Comment by fkurucz
2007-04-02 12:24:39

Reminds me of a monkey trap I saw on a TV nature documentary many years ago. You start with a box (the trap) that has a hole that is small enough for a monkey to squeeze his empty hand through. The you place the bait (a large piece of candy) in side the box. The monkey smells the candy, slips his hand into the box and grabs the candy. Now his fist won’t fit through the hole and he is trapped. The monkey refuses to release the treat even a the monkey hunter approaches and grabs him.

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Comment by snake charmer
2007-04-02 07:27:33

According to the county property appraiser, Ms. Korson owns three houses in Hillsborough County alone. How long can she keep making the payments on the Hernando County residence, which she obviously bought to flip? Not for very long, I bet. I bet some of her other houses are for sale too.

 
Comment by sunshinestate
2007-04-02 07:29:25

“Economists talk about a new cost-consciousness among consumers who had relied heavily upon their houses for their net worth and are now watching the housing market slow way down.”

This is truly the scariest thing about the housing insanity. The downturn in housing is going to have a huge negative ripple effect throughout the economy. The media is finally starting to catch on.

Comment by Neil
2007-04-02 07:39:21

This is truly the scariest thing about the housing insanity. The downturn in housing is going to have a huge negative ripple effect throughout the economy. The media is finally starting to catch on.

Yep… deflationary cycles are very scary. But we’ve malinvested into housing to a scary degree. We’ll have job losses, salary cuts (a la circuit city), and a cut in spending. But its impossible to keep our savings rate negative.

We’re going into a recession led by:
1. Real estate (job losses)
2. Debt fatigue (inability to take on more debt, desire to actually start savings)

Not to mention we’ve lost stability in manufacturing.

Got popcorn?
Neil

Comment by James
2007-04-02 08:41:03

A lot of this is going to shake out in who absorbs the losses.

A good bit will be on the MBS but a substantial amount will hit the lenders. They will get bailed out so us taxpayers will take it in the shorts. Again.

 
 
 
Comment by formerly known as lurker
2007-04-02 07:33:43

I keep hearing how this sub prime mortgage mess is being over blown since it affects such a small percentage of all homeowners. Well, yes, that may be true for home purchases over the last few years but what about all the homeowners who have their homes paid-off or mostly paid-off and wanted some extra cash? That is a number I would like to see published. I know for a fact that many homeowners in my neck of the woods, Ohio and Michigan, took out home equity lines on their fully paid off property and are now losing them because they can not pay the adjusted sub primes and Alt-A loans.

Comment by lineup32
2007-04-02 08:28:25

38% of americans that own SFH owner occupied have a paid of mortgage. Now the % of American equity in their homes is at a all time low. So basically you have a certain number of homeowners who have a free and clear title but we know little about the economic distribution of this group relative to the value of their home. Basically all other homeowners who carry a mortgage have little or no equity, since Americans have added almost 5 trillion in mortgage debt during the past several years.

Comment by jerry from richardson
2007-04-02 10:34:21

Would that record HELOCs? Alot of people took those out to pay off credit cards and spend frivolously.

 
 
 
Comment by phillygal
2007-04-02 07:46:41

A licensed Realtor for only four years, Lieberman recalls the advice of her real estate class instructor: ‘If you’re not doing realty investment for yourself, you may be missing opportunities, since who knows your market better than you?’”

Evidently, a bunch of people on Ben Jones’ blog do.

 
Comment by mikey
2007-04-02 07:47:32

The REIC Flim Flam gang TOLD Katey buying Real Estate Was So Sexy and now she’s getting Screwed !

“Kathy Korson lives in South Tampa and bought a house in Sterling Hill a year ago. ‘We’ve had it on the market since March of last year. We’ve had open houses and advertised everywhere. It’s ridiculous,’ said Korson, who said she paid a total of $24,000 in monthly payments for her mortgage, taxes and insurance since last April and is now thinking of selling the house at auction.”

Comment by mikey
2007-04-02 07:50:29

Ooops…Sorry about that Kathy. I need MORE coffee…and popcorn

 
Comment by robzter
2007-04-02 09:02:24

She bought the house a year ago, and has been trying to sell it since March 2006? How much time went by between when she bought it and put it back on the market, 15 minutes?

 
 
Comment by palmetto
2007-04-02 07:49:14

“Jeff Shubrooks, a salesman for Avatar, which currently owns 29 houses in Sterling Hill, limited investors by allowing each buyer to purchase only one home. But some buyers, Shubrooks said, probably purchased houses under the names of relatives or misled sales agents about their intention to live in Sterling Hill.”

I’m calling BS on this guy. He’s actually making one of those half-assed confessions. In other words, the CYA stated policy was “one home to a buyer”. But the “wink-wink, nod-nod” policy was using relatives and “misleading” sales agents. Just like OJ, “If They Did It, Here’s How It Happened”.

 
Comment by sunshinestate
2007-04-02 07:57:01

I haven’t seen this posted yet. From the Daily Business Review (Miami). It’s subscription only, so I’m reprinting it in full. As expected by those on this blog, the drop in prices is much deeper than the RE industry has admitted so far.

Condos
Vultures circle as sellers cut asking prices

March 29, 2007 By: Oscar Pedro Musibay
Peter Zalewski

In yet another sign that the residential market has yet to hit bottom, an area real estate firm has found that listing prices in Miami-Dade and Broward counties are plunging.

The survey found that the asking prices of properties — even in some of Miami-Dade and Broward’s most desirable neighborhoods — have seen an average drop of 21 percent, or $235,808, according to the data collected by Condo Vultures Realty.

The biggest surprise is that condos in affluent Fisher Island and Miami Beach are not insulated from the downturn — as some brokers and real estate analysts insist, said Condo Vultures Realty owner Peter Zalewski, a former Daily Business Review reporter.

The survey found prices down 27 percent in North Bay Village, 24 percent in Miami and 24 percent in Hallandale Beach.

But the average drop in what had been thought of as “insulated communities” also has been high, with asking prices of Miami Beach and Key Biscayne properties down 21 percent, Coral Gables 20 percent and exclusive Fisher Island 13 percent.

The survey found large price drops at condos including the Setai, Bath House and Acqua on Miami Beach.

Single-family homes, which have been seen as better investments than condos, may not be. El Portal prices are down 42 percent, Dania Beach 27 percent, Miami Shores 20 percent, Miami’s Coconut Grove 18 percent and South Miami 17 percent.

Market variables are working in favor of bargain-hunting buyers and against a quick recovery. The housing inventory is growing, home-builders are grappling with canceled orders and buyer hesitation, and the disappearance of subprime loans is keeping borderline borrowers out of the market.

And nobody is certain when the market will hit bottom. Lennar chief executive officer Stuart Miller offered no prediction Tuesday on when the cycle will end.

“I feel as uncertain about what’s coming around the corner as perhaps others do,” Miller said after the company announced a 73 percent drop in first-quarter profit.

Construction starts in the quarter were 15 percent below the company’s year-end projection — a short timeframe for such a sizable miscalculation.

Bonita Springs-based WCI Communities, which builds single-family homes and condos throughout Florida, said it ended an “extremely challenging” 2006 with a $9 million profit after posting a $65 million fourth-quarter loss. Billionaire Carl Icahn is pursuing a takeover of WCI.

Real estate consultant Lewis Goodkin of Goodkin Consulting is looking for recovery far down the road.

He expects the single-family market to show signs of improvement by the first quarter of next year, but a recession could throw market dynamics out of whack.

“Nobody should get real excited over a comeback over the next 18 months,” he said.

Zalewski’s database, which he uses to target the most vulnerable sellers, tracks discounted properties on the market for at least 100 days with an asking price decline of at least $100,000 or 10 percent.

Prime targets include a Coconut Grove house listed in October 2005 for $1.4 million that listed for $699,000 last November.

Zalewski’s survey also found an alarming number of condos that fit his criteria in the South of Fifth Street area of Miami Beach. He found 74 such condos with an average 16 percent drop in list price, or about $233,000 less.

That could spell trouble for developers who have projects planned or under construction in the neighborhood that many have said is immune to the downturn. Among them, Related Group is building Apogee there, with penthouses priced for as much as $15 million.

Developers are already seeing a spike in the number of buyers trying to get out of contracts. If prices continue to slide, they could be faced with droves of customers cancelling contracts.

Mike Pappas, the top executive at the Keyes Co., has seen prices drop steadily and expects the decline to continue. He estimates 70 percent to 80 percent of homes sold in the last four months have seen a price reduction — in stark contrast to the good times when buyers were bidding up prices and some homes had multiple backup contracts.

“Two years ago sellers would put up a price, and the market would take it,” Pappas said. “Sellers are now trying to figure out what the market is.”

But he insists the price drops don’t tell the whole story.

Housing values doubled from 2000 to 2005 when the standard timeframe for that kind of appreciation is 15 years. Homeowners who bought early will have an equity cushion as values shrink.

For example, the asking price for a Venetian Islands home on East Dilido Drive in Miami Beach dropped 48 percent in eight months, to $2.59 million in January from $4.98 million last May, according the survey.

The owner bought the house for $380,000 in 1990.

Sales in relation to volume peaked in February 2005 and have shrunk since.

Prices kept going up despite the inventory growth, which means buyers who have made their purchases since then have the most to lose, Pappas said.

He sees signs that the down cycle may have stabilized. South Florida’s housing inventory leveled off in January and February, and contract activity picked up simultaneously.

Keyes had a 25 percent increase in homes under contract from the first two months of the year, but that’s still down 15 percent from the same time in 2006, Pappas said.

He also sees the seeds of a recovery in housing rentals, which are up 20 percent from last year. As home prices fall and rents climb, the recovery cycle builds momentum. Eventually, renters will see buying as a better option as long as mortgage rates remain low.

But new construction will keep adding inventory.

“What throws off the whole market is all the units that are going to be hitting the market,” Zalewski said. “You just drive up I-95 to Fort Lauderdale and look over your shoulder, and you can see all the condos going up.”

Zalewski acknowledges playing hardball. He targets condo units whose owners have cut their asking price at least 20 percent and then works to lower the price another 20 percent.

If he gets one seller to close, it can undercut prices in the whole building, creating a downward spiral and more potential targets.

His dark humor about the nature of his work extends to the closing table, where he plans to give gift certificates to sellers for haircuts, slang for a business loss.

Zalewski’s buyers are generally men in their 30s and 40s attuned to opportunities in a downturn and a ruthless desire to take advantage of sellers seen as uneducated and unlucky.

The sellers “were smart, but the market turned too quickly,” he said.

Comment by packman
2007-04-02 08:14:09

“Housing values doubled from 2000 to 2005 when the standard timeframe for that kind of appreciation is 15 years. Homeowners who bought early will have an equity cushion as values shrink.”

The problem is housing prices didn’t stop going up in 2005 - between Q1 2000 and Q4 2006, and they’ve way more than just doubled - housing values actually have almost tripled:

Miami HPI Q1 2000 121.74

Miami HPI Q1 2005 241.67
Miami HPI Q4 2005 296.66

Miami HPI Q4 2006 342.06

Miami is going to be sunk.

 
Comment by Anonymous
2007-04-02 12:54:40

“the asking price for a Venetian Islands home on East Dilido Drive in Miami Beach dropped 48 percent in eight months”

What an unfortunate name for a street. Seems appropriate for the folks who bought there last year though.

 
Comment by passthebubbly
2007-04-02 17:05:27

Ladies and gentlemen, the 50% price drops are here!

I’ll repeat my forecast: Three years from now Miami will be a forest of 40-story concrete skeletons.

 
Comment by postman
2007-04-03 07:39:56

the downturn has just began. that is the problem in south florida. everyone wants every little cent off of their property. but every month they pay out more and the end is near. they will have to let go at a 50% or more cut. and really, they are still making money. if you buy a home at 380,000 and you make even 2 mil? be happy and sell, sell, sell. or live on the street one day. greed is going to eat people alive when things settle.

 
 
Comment by Jasper
2007-04-02 07:57:22

Neil,

Devils advocate here. Figured maybe someone should stand at the other pulpit. Agreed. Housing prices will go down. That one is difficult for anyone except a RE Agent to see. Deflationary pricing trends in RE tend to be difficult to shake off.

Recession ? Hmmm. Id like to think not. Dropping prices in RE and job losses does not have to trigger a recession. Manufacturing has been going down for decades, even in the booming 80s and 90s. With the deflating dollar, the rising Yuan, baby boomers hitting their run for the post and the rising China/India middle class, i would argue it could all add up to a perfect storm for a wonderful economic run. Along the way, all this excess equity will be chasing stocks instead of housing and commodities which both have built up excessess capacity in the past few years.

One never knows with these things……but it wouldnt suprise me to see economic / stock market boom times and RE sucking rust.

J

Comment by cynicalgirl
2007-04-02 08:35:21

“Recession ? Hmmm. Id like to think not. Dropping prices in RE and job losses does not have to trigger a recession. Manufacturing has been going down for decades, even in the booming 80s and 90s.”

I disagree. Job losses will extend to construction trades, banks, along with furniture and appliances. Don’t forget, the consumer market has been propped up by people who are carrying excessive credit card debt and then paying it off with HELOCs.

Comment by Neil
2007-04-02 09:30:08

I have to agree with cynicalgirl. Right now CR’s blog shows a predicted job loss in construction and manufacturing of 125,000 jobs/month (IIRC). Add to that job losses that have already occurred in Detroit, etc.

Housing just employs too great of a fraction of the work base to not cause a recession. Normally it does take two sectors going down to have a recession.

Right now we will have banking, home construction, and manufacturing all contracting due to real estate. Yes, aerospace manufacturing is doing very well. But did you read about all the coming (or complete) layoffs at appliance manufacturers, lumber mills, etc.? Due to the Warren act payments or union negotiated benefits, very few of these people have gone without a paycheck… yet. Hence, they are not yet on the unemployment rolls. But they are locked out. Soon they will run out of company benefits and will join the statistics. Not to mention the realtors ™, mortgage brokers, and construction contractors who will be without work but as “independent contractors” shall not qualify for payments and thus will not register in the statistics.

Look at airline travel. Its down. That is a coincident indicator of a recession. In other words, we’re already in the recession. Its getting worse. The government just hasn’t told the sheeple yet.

Got popcorn?
Neil

Comment by AKRon
2007-04-02 14:16:31

“Manufacturing has been going down for decades, even in the booming 80s and 90s. With the deflating dollar, the rising Yuan, baby boomers hitting their run for the post and the rising China/India middle class, i would argue it could all add up to a perfect storm for a wonderful economic run.”

Oh, yeah. That sounds peachy. So, we will import more and more stuff, at higher prices (because of devaluation). So the standard of living of almost everyone in the US will drop. But at least we won’t be in a recession. Which means the public will have to take out and shoot all the economists and politicians, and replace them with people who worry about something that matters, instead of whether or not we are in a ‘recession’.

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Comment by snake charmer
2007-04-02 08:41:52

I read something last month asserting that only one-third of baby boomers were financially secure. Rather than saying that the boomers will hit their run for the post, I think the more appropriate analogy is that the boomers will be tied to the whipping post.

Comment by Neil
2007-04-02 09:34:40

Its not just the boomers. Its only going to take one month without paychecks for most people to go off the financial cliff. The avalanche has started. Its going to be ugly.

But this had one of my cousins chortling with glee even though he just bought a home. Why? He’s in a sector of insurance that is counter-cyclical (their highest profits/fastest business growth occur during recessions). So he’ll have the income to offset any equity losses. :)

When people in the counter-cyclical business have bright eyes on the business opportunities… you know the recession has effectively started.

Got popcorn?
Neil

 
 
Comment by jag
2007-04-02 09:05:42

If there hadn’t been MASSIVE equity withdrawl AND MASSIVE subprime lending during the last five years MAYBE there would not be a recession. However, its hard to see how consumer spending will not be impacted by the shrinking access to loans (of all types).
In my opinion, those that have leveraged themselves the most recently are the same people who have driven consumer spending recently, at the margin. These spenders are going to be tapped, one way or another. They won’t be able to heloc anymore (as will ever fewer people in general as housing prices decline) and spending, at the margin, will decline. How much it declines will be interesting to see but it seems impossible that consumer spending can sustain its recent vibrancy.

The economy is (apparently) at what most economists view as “full employment” levels ie less than 5% unemployed. Yet income growth hasn’t been all that dramatic recently (at least compared to similar economic circumstances).

Without significant income growth, employment growth or lending expansion the question then becomes where will increase spending come from?

With housing prices declining, any “wealth effect” spending will decline as well. Sadly, we are at a peak in an economic cycle that has been driven by a feeble underpinning of an “investment” frenzy in housing.

Housing “investment” is not only going away it is undergoing a severe reversal. Even if you assume this is not a big deal, the next logical economic question is “what will replace housing as a economic engine (at the margin)?

Unfortunately, I can’t see one. If anybody knows of a business or technological breakthrough coming along, I’d love to hear about it because be a bear consigns one to protecting assets, not profiting from productive investments.

Comment by Jasper
2007-04-02 10:27:34

Thank you all for the discussion. I’ve been hearing about the gloom and doom of the US economy for years now. RE was the one “bright spot”.

I dunno. It is just one of those ’spidey sense’ things. I never bought .com stock, or any for that matter until 2002. I sold my house in San Diego in late 2003.

Being contrarian has been a good bet. This blog has been spot on for the RE market. Finding someone to prognosticate glad tidings about the US economy is like trying to find someone to predict winning the war in Iraq.

I dont disagree with the construction job ripple effect, or the home spending influence in the economy. I just do believe that there is money without having the bet on disaster. Some industries will benefit from China (i.e. semiconductors, fiber optics, areospace, pez dispensers)

One thing for sure RE is spent for the next decade. Just looking for what’s next…….

J

Comment by Jasper
2007-04-02 10:33:51

should read: i do believe there is money - to be made- without having to be on disaster

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Comment by oxide
2007-04-02 10:47:54

There might be a small surge in renewable energy. Most of the technology is there; most of the work is in upscaling and implementation. Nobody wants to put up that kind of capital because they’re still fixated on the Enron/Jack Welch model of quarterly profit. One of these days Wall Street is going to go back to infrastructure and fundamentals instead of push money around.

Comment by fkurucz
2007-04-02 12:32:58

We passed a mandatory renewable energy bill here in Colorado last year. I forget the numbers, but it mandates a certain percentage of energy used in the state to come from renewable resources (like wind) by a ceratin year.

Big biz opposed it of course, and I can’t see why. The cost difference between wind generated electricity and the standard stuff has dropped to less than a penny per kWh. If we do end up with carbon taxes shoved down our throats it could end up being more cost effective.

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Comment by Penina
2007-04-02 07:58:17

Full page ad in the Sarasota Herald/Tribune today:
“How to make money from foreclosures”

The stuff is really starting to hit the fan here. I haven’t heard any noise from the realtors for weeks in the media. Very unusual. The time2buy campaign has all but died. I suspect they wasted a lot of money on that one. Oooohhh well.

Comment by mad_tiger
2007-04-02 08:04:32

“The time2buy campaign has all but died. I suspect they wasted a lot of money on that one.”

I believe the NAR spent $40 million on that ad campaign. As the NAR likes to say about buying a house, “It was such a good investment.”

Comment by pressboardbox
2007-04-02 08:53:02

What?! the Time2Buy campaign has failed?? Oh my god!! What is it Time2Do now?????

 
Comment by Fran Chise
2007-04-02 10:09:42

$40M in advertising is a spit in the bucket (or in this case, into the wind). Pizza companies regularly spend hundreds of mills in those “2Fer” deals.

 
 
Comment by CincyDad
2007-04-02 09:19:26

The Time2Buy campaign is strengthening in the Cincinnati area. I just started really seeing commercials a few weeks ago, and they are on constantly now.

Comment by phillygal
2007-04-02 09:29:47

I have seen them also. (PHL market). They clearly are targeting the female half of the couple, or single women by themselves. The ones in my market are all about the GREAT CHOICE of inventory, and it’s a BUYER’s MARKET…what do yours say?

Comment by fkurucz
2007-04-02 12:34:30

I don’t think we have on in Colorado.

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Comment by Mike a.k.a/Sage
2007-04-02 19:41:20

There are so many choices now, it’ll take me years to look through them all.

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Comment by txchick57
Comment by palmetto
2007-04-02 08:01:08

Yep, just read that. What took them so long?

Comment by txchick57
2007-04-02 08:10:32

Probably had to get their post-petition financing negotiated, figure out what leases to reject, etc. I say that on the assumption that they are not liquidating but will be reborn in some fashion.

Comment by mad_tiger
2007-04-02 08:17:48

“…they are not liquidating but will be reborn in some fashion.”

So it’s still possible for NEW common stockholders to get something? What’s amazing about doomed stocks is how long they trade on the Pink Sheets. Even after a restructuring where the court says shareholders get zip, zero, nada, worthless stocks of bankrupt companies will continue to trade weeks later. There’s always someone who thinks “Gee, XYZ company is trading at $0.25, what a bargain. It can’t go any lower.”

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Comment by txchick57
2007-04-02 08:21:20

No. The stock will be cancelled and new stock issued under a chapter 11 plan. That doesn’t mean you can’t buy it when it reopens at 5 cents and sell it at 10 cents before it stops trading in a few months. I did that with Worldcom. Bought 100,000 shares in one block from an Island seller at 6c and sold it at 20c.

 
Comment by mad_tiger
2007-04-02 08:41:29

txchick, have you ever invested in distressed debt? It would be a good fit with your bankruptcy law and trading experience.

 
Comment by txchick57
2007-04-02 08:56:51

Oh, yes, a time or two ;)

It’s one of my specialities.

 
 
 
 
Comment by palmetto
2007-04-02 08:04:21

And another thing that pisses me off royally is that when corporations BK, usually no fallout for individual managers, owners, directors, etc. They can always walk away.

However, under the new BK laws for individuals, people can be hung with debts forever. No relief. I think individuals ought to have at least the same advantages under the law that corps do.

Comment by txchick57
2007-04-02 08:24:26

lol, have you ever tried to negotiate post-petition financing with GE Capital?

Comment by Fran Chise
2007-04-02 10:12:09

Spot on!

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Comment by garcap
2007-04-02 08:36:41

owners get wiped out in BK…I would call that pretty serious fall out.

Comment by palmetto
2007-04-02 09:03:12

I’m talking about exposure to the debts of the corporation. Individual shareholders or owners are usually not personally responsible for these, right?

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Comment by txchick57
2007-04-02 09:53:34

Heh heh heh. That depends. Plus they can be sued by creditors or the trustee/receiver, if there is one, for all manner of malfeasance and mismanagement, etc. They rarely just skate out with no hassle.

 
Comment by garcap
2007-04-02 10:25:55

palmetto- no, shareholders are not personally responsible for these debts, but why would they be? Why not ask the lenders to personally cover the exposure of the shareholders???

 
Comment by AKRon
2007-04-02 14:22:48

“palmetto- no, shareholders are not personally responsible for these debts, but why would they be?”

Well, for one thing, the directors of a company have fiduciary duty to maximize the wealth of the shareholders, even if it means ‘going for broke’ with toxic loans (for stockholders AND the CEOs who cashed out before the crash, the toxic frenzy was highly profitable). Smack down the stockholders good and hard, and in the future the companies will have a fiduciary duty not to wreck the economy. In my dreams, I would force former stockholders to buy back MBS :)

 
Comment by garcap
2007-04-02 18:11:04

directors are not necessarily owners…and who wrecked the economy? what are you talking about?

 
 
 
 
 
Comment by Jasper
2007-04-02 08:02:45

sorry, meant to say “excess liquidity” not equity.

And job losses are limited to the construction sector.

A weakening dollar makes American goods / stocks cheap and American business is poised quite well in China / India……waddayathink

That’d be worth some popcorn as well yeah ?

 
Comment by irmaron
2007-04-02 08:05:40

“For families, the current housing market raises complex questions. ‘It’s not as simple as, ‘Hey, honey, I have a new job, we need to move,’ says Jim Lanzalotto, VP of an outsourcing firm. ‘Now you have to evaluate whether it’s worthwhile to make the change.’”

Easy decision to make when you are a renter!

Comment by yogurt
2007-04-02 08:20:32

Exactly. Another reason why the “ownership society” is bad economics - it limits labor mobility. The market should determine the % of owners versus renters.

 
Comment by ByeByeFL
2007-04-02 08:22:05

Exactly,- Golden Advice.

I escaped S.FL last November to take a position at another company.
If I hadn’t been renting…..

 
 
Comment by charliegator
2007-04-02 08:07:34

I went to Publix yesterday (Food store chain here in Florida) with my large jar of coins which I have to empty about once a year. They have a machine which will count it up for you for a service charge of eight percent. Anyway, the machine jams up while it’s processing my coins. The clerks had to remove some bags of coins and replace them with empty ones.

They asked me what was going on with the coins. It seems like they have had to empty the machine several times a day for the past several weeks. Looks like a leading indicator to me!

I’ve also been hearing comments from Apartment Managers about students doubling up in the bedrooms. Most students in the past have paid for individual bedrooms, usually around $500 to $600 per month, depending upon bathroom arrangements. And this is in Gainesville, which has not yet shown the slowdown observed elsewhere in the State. Looks like money is getting tight!

Go Gators!

Comment by aladinsane
2007-04-02 08:11:36

Charlie, you good V.C. (visability connector)

 
Comment by packman
2007-04-02 08:18:19

He he - never thought of the “CoinStar index”. Wonder if anyone’s tracking that one?

Comment by Rich
2007-04-02 10:34:17

interesting investment angle. is this a public company?

Comment by aladinsane
2007-04-02 10:54:47

They and the oil biz are the only business entities i’m aware of that charge in tenths of Cents…

I think Coinstar is 8.9%

Your gas price is always .9% on the end.

When gasoline was 27.9 Cents a Gallon, it had huge psychological value, as being 27 Cents, those 2 digits being the bigger numbers.

Not unlike say, Spinal Tap’s amps, that went to 11. Just in reverse though.

One Better, Sort of.

The “Tap” for the unitiated:

http://en.wikipedia.org/wiki/This_Is_Spinal_Tap

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Comment by dougie944
2007-04-02 10:39:12

Go Gators!

 
Comment by Brian in Chicago
2007-04-02 12:16:14

I never understood those coin counters at the grocery store. My bank has their “industrial strength” counting machine sitting in the lobby for anyone to use. Dump your coins in, gather the Canadian ones it rejects, and take the printout to the desk for dollar bills. Zero service fee, and they don’t check to see if you have an account before handing you the cash.

Perhaps my bank is a relic. It’s probably going to be sold off to BoA or Wells Fargo as a casualty in the ABN AMRO/Barclays merger over in Europe-land. Ugh.

Comment by spacepest
2007-04-03 00:42:18

Hmm, my bank doesn’t have that.

And I just use my Coinstar money to buy junk food at the same grocery store that I’m cashing the change at. Yes, I know I lose a percentage of the money to Coinstar for the privlidge of counting it. But then again, I’m not paying my rent with Coinstar change too, so 10cents per dollar (or whatever it is) really doesn’t bother me that much.
Its been awhile since I’ve done the Coinstar change thing though. I’ve never had the machine fill up with coins while I”m using it though…in fact, I was usually the only person in the store who was using the machine!

Comment by CA renter
2007-04-03 02:29:16

Our bank (WaMu) made a rule about converting coins. They won’t take them anymore. Don’t think you can even deposit them, either.

Not sure if this is still in place (happened about 3+ years ago), but inconvenient (and should be illegal!!!).

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Comment by mikey
2007-04-02 08:13:07

It appears that the NAR “seeding” of 40 Million Dollars of Propaganda money into the REIC Fields of Dreams has done little to produce that legendary bumper crop of blooming “Next Bigger Fools and Fber’s” this Spring.

His realtywhores are facing a long, hard Drought.

Must be Global Warming David

Comment by packman
2007-04-02 08:45:31

Problem is that after you seed, you need to apply water for the seeds to take rook. However all the water (sub-prime mortgages) dried up and is gone!

Comment by packman
2007-04-02 08:46:11

rook=root

 
 
 
Comment by irmaron
2007-04-02 08:14:36

“‘The profit was just going away,’ Greenish says. ‘We started questioning our decision to move. It was getting harder and harder, the financial issues of living in two places, traveling back and forth, and the general strain on a marriage.’

So Mr. Greenish, did you move just for the money or did quality of life also become a part of your initial decision to move from FL to NC? If it were money and quality of life why didn’t you just price you house for a quick sale and get on with your life? Now you are back in your old job and still in a house of declining value hoping that you won’t have to sell in the future at a loss and hoping that the decrease in the subprime and housing market won’t affect your employment. Oh, but wait, what about those FL property taxes and hurricane season just around the corner!

 
Comment by Reluctant Relocator
2007-04-02 08:16:21

Profit is only realized when something is sold … There’s been too much easy cash out ReFIs and HELOCs …

My condo in Southwest DC (by the new ballpark) is on the market because I’m moving. My condo is down 15% from its high in 11/05.

Fortunately my cost basis is pretty low but I am still sweating that it will sell at all.

 
Comment by aladinsane
2007-04-02 08:23:36

“A man only learns in two ways, one by reading, and the other by association with smarter people.”

Will Rogers

Comment by 85249 is Toast
2007-04-02 09:17:29

Luckily, this blog satisfies both criteria.

 
 
Comment by mikey
2007-04-02 08:34:49

Did anyone see that Dateline ? story about that Florida Broker/Crook and his G/Fs that were hustling loans and credit on houses he didn’t own from Tampa to South Carolina and last night ?
Gutsy little Crook forged and submitted a loan against a property he didn’t own with his “name” as …

C. Montgomery Burns… ha ha ha

http://www.forbes.com/lists/2005/fictional/05.html

Comment by Gatorfan
2007-04-02 09:15:08

Here’s the link: http://www.msnbc.msn.com/id/17905678/

What really sucks is the part that says, “Alison rented a home, forged a deed, and then just as Cox told her he’d done again and again, filed phony paperwork to get three real mortgage loans borrowing nearly $400,000 against a property she didn’t even own.”

That property was a friend of mine’s property in Alpharetta, GA. It was his primary residence until he got married. After getting married, he moved in with his new wife and decided to rent out the home that he had paid off rather than selling it. The woman in the story showed up one day and signed the lease for after he checked her credit (flawless credit because she was using a fake identity). Within three months, she had taken out $400k on the property, which my buddy had paid off.

It took him two years and thousands of dollars in legal fees to get this mess straightened out. The mortgage companies and the credit reporting services stonewalled him the whole way, despite the assistance of the Secret Service, the FBI, and the publicity surrounding the case. This type of scam could happen to anyone.

 
 
Comment by hd74man
2007-04-02 09:02:40

Martie Lieberman parlayed a few highly successful years as a real estate agent into a handsome real estate portfolio. A licensed Realtor for only four years, Lieberman recalls the advice of her real estate class instructor: ‘If you’re not doing realty investment for yourself, you may be missing opportunities, since who knows your market better than you?’”

I saw scores of these freshly minted RE agents with their “rental portfolio’s” take it right up the wazoo in the bust of ‘90/’91.

Gotta luv those Section 8 tenants.

See ya in foreclosure court, Martie.

 
Comment by mikey
2007-04-02 09:20:38

Real Estate Agent Picked as new Maytag Repairman…For Real !

http://news.yahoo.com/s/ap/20070402/ap_en_tv/maytag_repairman

How appropriate

 
Comment by Eastofwest
2007-04-02 09:22:26

Ot, but I find it interesting how many big money players got out without panicking the herd..ala, Sam Zell, Buffett, Barbara Corcoran, Toll Bros’ etc etc…..

 
Comment by DenverKen
2007-04-02 09:24:11

I found this rather astounding…finance that new car for 30 years!

“Last year, 16 percent of the new car purchases in Florida were made with home equity loans, said Art Spinella, president of market research firm CNW Research. That compares to 9 percent in 2000.”

of course, maybe it makes sense…when they default on the house loan they still have a paid for car

Comment by John Law
2007-04-02 10:06:04

damn, didn’t think of that.

Comment by Fran Chise
2007-04-02 10:16:32

That’s because they didn’t have automobiles when you were around.

Comment by DC in LBV
2007-04-02 12:00:05

Makes living out of your car easier when you have a paid-off, big, shiny Escalade with entertainment center…

(just don’t mail in the wrong keys)

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Comment by technovelist
2007-04-02 15:29:07

All together now: “You can live in your car, but you can’t drive your house!”

Comment by passthebubbly
2007-04-02 17:14:15

hey, that’s my line :) you can use it, tho.

 
 
 
Comment by arroyogrande
2007-04-02 09:27:07

“That is what is prompting her to place the Cohen House on the market, but she said she plans to ensure that it winds up in the ‘right hands.’”

Will she require that any potential owners feed the squirrels?

 
Comment by bubbleglum
2007-04-02 09:30:31

“That is what is prompting her to place the Cohen House on the market, but she said she plans to ensure that it winds up in the ‘right hands.’”

Right hands? Sorry, hotlips, but it’s much too late to find an idiot who’ll buy your doomed investment AND feed your squirrels.

Comment by bubbleglum
2007-04-02 09:33:56

Oh well, great minds think alike, right?

 
 
Comment by John Law
2007-04-02 10:30:30

(“During the ‘crazy years in real estate when everything was so good from 2003 to 2005,’ Lieberman plowed all her commissions into property. Investing about $4 million, she thinks now that she probably bought ‘more than I should have.’”)

can you imagine making and losing millions of dollars and trying to tell someone who makes $30,000/year how you lost it all?

Comment by bob
2007-04-02 10:44:11

The $4M were the downpayments - or were they the total of all the mortgages.

Comment by sleepless_near_seattle
2007-04-02 11:32:03

I’m curious about that as well. They say she “invested” $4M but you always hear about “million dollar” real estate portfolios, with no mention of what the mortgaged amount is.

If I had $4M to invest, I could live off 5% per year VERY comfortably. If she really invested all of this in RE, she’s one crazy loon.

Comment by fkurucz
2007-04-02 12:40:25

Did you read about the guy in Idaho who won over a hundred million in Powerball. He hired financial advisors to invest his money so that he could someday be a billionaire!

http://money.cnn.com/2007/02/20/magazines/fortune/lottery_winnings.fortune/index.htm

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Comment by SKB
2007-04-02 15:33:22

That story made me feel so happy and proud of this guy. I have gotten so sick and tired of reading all of the stories of the people that won and blew the money. This kid has a great head on his shoulders. I really hope he reaches his goal and I love the part about his giving away his newer car to his nephew and buying an older one for himself.

SKB

 
 
 
 
 
Comment by garcap
2007-04-02 10:31:44

“right hands” will be the bank.

 
Comment by Grant
2007-04-02 12:10:26

“Some potential employees are turning down new jobs or transfers they cannot sell their house or would have to take a heavy loss. And companies that offer relocation benefits are spending more for employees’ moving expenses.”

I for one would be glad if the mindless move-every-three-years mentality would disappear from corporate America. It’s inherently wasteful and, I think, corrosive to our society in that a lot of people have no roots, no ties to their community. When I lived in Chandler, AZ I had a neighbor named Drew who worked for IBM. He had a nice house, his wife had a lot of friends, his kids were established in their schools. Then one day he is told by the company executives that if he wants to move any further up in the company that he has to move to Arkansas, which he did. He was going to do essentially the same job in Arkansas, so it wasn’t a promotion per-se.

Comment by Bill in Carolina
2007-04-02 12:39:59

IBM stands for “I’m Being Moved.”

 
Comment by fkurucz
2007-04-02 12:43:34

This is starting to go away as it costs a lot of money to relocate employees and companies don’t want to pay for it anymore.

 
Comment by fkurucz
2007-04-02 12:45:21

I also love the “take a lateral to position yourself for a promotion”. In other words, take a big risk, relocate your family (possibly on your own dime) but no promotion nor raise.

Comment by passthebubbly
2007-04-02 17:21:12

At that point I’d be sending resumes out. They’re telling you flay out you have no potential in your current position; why would you believe you’d have any if you stayed with the company but lived somewhere else?

 
 
 
Comment by Incredulous
2007-04-02 12:34:31

“He calls the current slump ‘unprecedented’ and ‘nondiscriminatory,’ because it stretches across the country. Previous slumps were more regional, he says.”

Should someone alert the NAR? Isn’t this the exact opposite of what they’ve been claiming?

 
Comment by Bill in Carolina
2007-04-02 12:41:29

The start of hurricane season is now just two months away. I wonder if Florida will get lucky again this year like they did in 2005.

 
Comment by Bill in Carolina
2007-04-02 12:41:48

Oops, I meant 2006.

Comment by Incredulous
2007-04-02 12:59:55

I live in Florida, and we did not get lucky in 2006. Hurricanes are not frequent events in Florida, even in the panhandle, where they better-known. In fact, they were so rare until a few years ago, most Floridians outside the panhandle NEVER worried about them. I think the hurricane years of 2004 and 2005 were abnormal, extremely so.

Comment by technovelist
2007-04-02 15:31:23

Hurricanes are not frequent events in Florida?

Quick, tell the insurance companies, so they can lower the rates!

Comment by Incredulous
2007-04-02 18:27:46

The insurance companies don’t care, but yes, hurricanes are not frequent events in Florida. All the newcomers who have built on beaches are ostensibly the reason for the insurance crisis, or part of the reason; the other is that insurance companies are greedy beyond imagination. They never pay out of their own money; they simply increase everybody’s premiums to cover payouts. I’ve lived in Tampa most of my life, and have not experienced a single direct hurricane hit. When Andrew hit Miami, my car insurance premiums went way up, and when I complained, my insurance agent explained the increase was due to Andrew. Insurance companies are the wealthiest companies in America and own most of the commercial real estate, so no matter what they say, they are raking in money.

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Comment by SMathis
2007-04-03 05:00:47

Depends what you consider “frequent”…

1995: Hurricanes Erin and Opal hit Vero Beach, Ft. Walton Beach, and Pensacola, doing $700 million and $3 billion worth of damage, respectively.

1996: Hurricanes Bertha, Fran, and Lilli don’t make landfall in FL, but do adversely affect the weather.

1998: Hurricane Earl hits Panama City, causing $70 million worth of damage. Hurricane Georges messes with the Keys then swings around and hits the panhandle, doing more than $300 million worth of damage.

1999: Hurricanes Dennis and Floyd don’t make landfall, but do significant damage. Hurricane Irene hits Key West and also causes heavy rain as far north as Palm Beach County, causing flooding and electrocuting five people; the damage is estimated at $800 million.

2000-2003: Lots of tropical storms, but no hurricanes make landfall in Florida. People who’ve moved to Florida since 1999 think, “Gee, what’s all this about Florida having hurricanes? Seems quiet enough to me!”

2004: The quiet ends with Hurricanes

Charley
Frances
Ivan
Jeanne

All four of these hurricanes are absolutely devastating, causing many billions of dollars worth of damage. “At least it’s over!” people think. “Next year couldn’t possibly be as bad!”

2005: Hurricanes

Dennis
Katrina
Wilma

do plenty of damage, particularly Wilma, which at $20 billion worth of damage is the third-costliest tropical cyclone in US history.

2006: No hurricanes.

Hurricanes are a fact of life in Florida. Floridians who “never worry” about them have their heads in the sand. Especially when you consider that NONE of these hurricanes that hit in the ’90s or ’00’s were category 5, and there are only TWO north/south roads to evacuate Florida’s population of 18 million. When a category 5 hits Florida, it will be a disaster on a par with Katrina hitting Louisiana, and everyone will look around confusedly and wonder how this could’ve happened.

 
 
 
 
 
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