“Everything’s Dropped” In Florida
The Daily News reports from Florida. “We hear it every day. Northwest Florida’s housing market is stabilizing, returning to normal, slowing to a more reasonable pace. But what does that really mean? Especially for folks whose ‘For Sale’ signs have started to grow moss?”
“‘If you want to sell your house, you have to lower your price,’ said broker Richard Bell.”
“According to data from the Emerald Coast Association of Realtors, in the fourth quarter of 2006 it would have taken 19.3 months to sell the entire single-family home inventory in the area. It would have taken 54 months to sell all of the condos on the market.”
“‘There are a lot of people who are just walking away,’ Realtor Ray DiTirro said. ‘They do their cash-flow analysis and they say, ‘It’ll cost me less to walk away than to carry this condo.’”
The News Press. “Land is being cleared for a project that will bring 168 homes to San Carlos Park, but it could be a while before the homes are actually built.”
“Real estate agent Joe Batten said it might be difficult for them to drum up sales in the area. Most builders have halted projects in response to a weak housing market. ‘The inventory can’t compete with the resales,’ he said.”
“Batten said Breckenridge is an example of condominiums that aren’t selling well, in spite of their location. ‘Stuff isn’t easy to sell in there,’ he said. ‘Everything’s dropped.’”
“Builders in unincorporated Lee County, Bonita Springs and Fort Myers Beach pulled 318 permits for single-family houses in March, 62 percent less than in March 2006, the county Department of Community Development reported.”
“‘We’re looking at the budget to figure out how much staffing we’ll need for next year. We’re going to monitor it and then see if it bottoms out and see if we can delete some positions,’ said Mary Gibbs, head of community development.”
“Right now, she said, ‘We’re at beginning of 2003 levels.’”
“Michael Reitmann, executive VP of the Lee Building Industry Association, said the flat permitting numbers aren’t surprising in light of recent layoffs by local builders. Underlying the lower numbers, he said, is the huge inventory of homes for sale.”
The St Petersburg Times. “In a part of the county where new developments used to be a dime-a-dozen, another megaproject has now left the scene. Crosswinds Florida will no longer build 500 homes proposed on 280 acres in southeast Dade City.”
“Dade City officials also confirmed that Crosswinds had canceled its contract to purchase the 280 acres from the Larkin family. Reached by telephone, Jon Larkin II said he had no comment and hung up.”
“Across the Tampa Bay area, only one in 20 homes is now finding buyers within a month. Two years ago, half of all homes found buyers in a comparable period.”
“Centex Homes last week slashed half its 300-person work force in Naples. ‘The housing market’s conditions are not as favorable as they have been,’ said Ken Smalling, Centex’s spokesman.”
The Orlando Sentinel. “HSBC Mortgage Services plans to shutter its collections call center in Orlando and eliminate nearly 110 jobs locally, the company said this week. HSBC is the nation’s 10th largest player in the subprime mortgage industry.”
The Herald Tribune. “Foreclosures in Manatee, Sarasota and Charlotte counties have doubled in the last year. The total foreclosures in process, 2,221 this year, compared with 1,106 at this time in 2006, is the clearest symptom to date of Southwest Florida’s painful hangover from the bubbly days of a heady housing market.”
“‘I would not be surprised to see it double again a year from now,’ says Mark Zandi, chief economist for big Wall Street credit rating giant Moodys.com.”
“Of the 2,221 foreclosures in process right now in the three-county region, 317 are in North Port and 402 are in Port Charlotte. Not coincidentally, those communities were a favored playing ground during the boom for investors. It also was the center of activity for a series of failed home builders.”
“As the three-year-long real estate boom wound down, mortgage lenders such as New Century Financial Corp. came up with a bad idea: Instead of tightening lending criteria as the markets became less liquid, they loosened them in order to keep the party rolling.”
“Those decisions are now coming home to roost across the nation. ‘Not only are we going to see massive foreclosures in the market, but as you can see, the subprime lenders are falling out like flies,’ said Priscilla Gratton, a 20-year Sarasota mortgage banking veteran. ‘There are so many mortgage originators out there whose only goal was closing a transaction.’”
“During the past 10 years, New Century underwrote as many as 4,000 loans locally, property records show.”
The Citrus County Chronicle. “A real estate market that boomed in 2004 and 2005, but began to bottom out in 2006, has left a residual effect, hitting homeowners and lending institutions right between the eyes.”
“Mortgage foreclosure filings are much higher than a year ago as people who received home loans during the good times find they cannot make payments after times went bad. Records with the Citrus County Clerk of Court’s office show foreclosure cases had remained steady through much of 2006, but began increasing in October.”
“January 2007 alone saw 90 mortgage foreclosure filings, compared to 23 in the same month a year ago.”
“‘The trend is increasing,’ said Jack Reynolds, senior VP at the Homosassa Springs Bank. ‘With what the economy has done, real estate taxes up significantly, insurances increases up significantly, people can’t afford their mortgage payments.’”
“‘You have seen some of those borrowers barely able to qualify coming into a position, whether because they have adjustable mortgage rates going up or other reasons, unable to afford the payments,’ he said.”
“Another subtler trend has developed in recent months. Of those foreclosures going to public auction, fewer are being bought by outside bidders, meaning lenders are getting the property back themselves.”
“For example, of the eight sales in January 2006, all but one was bought by outside bidders, often land investors. In 11 sales last January, outside bidders landed just three properties.”
“And this: Of 10 sales in March, all 10 returned to the lender, according to county records.”
“‘That doesn’t surprise me at all,’ Reynolds said. ‘It’s just another sign of the market. Folks expect to make a profit on the sale. You saw properties that turned every three months. That isn’t the case now. Those investors aren’t in that market now.’”
‘First Floridian Auto and Home Insurance Co. is in the process of notifying thousands of Floridians that their homeowners policies will not be renewed, the most recent insurer to significantly reduce its business in Florida. Around 40,000 of the 97,000 policyholders covered by First Floridian, a subsidiary of The Travelers Cos. Inc., have been slated to be dropped.’
‘After six months of looking at houses, Tom Anderson and Dottie D’Esposito found the ‘perfect one’ for them in Aberdeen, a manufactured housing community. The fact they could get it for about 25 percent less than the original asking price of $199,000 was like icing on the cake.’
‘Triangle Realty agent Janet Khouri, who helped Anderson and D’Esposito find their home here, said the market for manufactured houses closely resembles what’s happening with traditional houses. ‘Prices went up like the rest of the market and now they are coming down,’ said Khouri/’
“Hey ma, pack up the yung ‘uns. I boughts us a dubba-wide down in Floreeda.”
You could read the link and try to learn something about the market instead of showing your bias toward another social stratus.
Sorry, Ben. My years living down South came rushing back to me when I read the article.
Living down South does not make one an idiot. Your bigoted apology–blame in on exposure to dumb Southerners–is even worse than your original comment, and typical of the thinking one encounters among New Yorkers. I grew up in the South, and I’ve never known a single person to fit this cartoon image. And I’ve lived in Georgia, Alabama, and Florida. Illiterate hicks are not native to the region. I did run into many in upstate New York, Ohio, and Indiana.
Does anyone else think that paying 150 thousand for a trailer is preposterous? The things are just tin cans with gitch to cover the horror, and couldn’t cost much to manufacture.
Bull!
I’ve lived in Kentucky, South Carolina, Georgia and Alabama - plenty of cartoon hicks (and racist to boot) to go around.
No more than up North. The most backward, racist people I ever encountered came from New York State, Pennsylvania, and Ohio. Cartoon hicks are the same everywhere, not limited to the South, and I have never personally known any down here. I’ve also never known a Southerner who lived in trailer. The only trailer-dwellers I’ve known moved here from up North.
If you’ve run into hicks in the South, perhaps you should re-think the areas you live in.
A manufactured house is NOT the same thing as a trailer. They can be put anywhere even in the city. The quality is far better than stick built and you can save a lot of money, about 30%.
There are some pretty sweet manafactured homes out there, they even have ones they plop on top of existing buildings in cities as penthouses.
It is surprising to see that you can buy multiple story modulars. The first time I saw that you could get one of those I was amazed. They lock three pieces together. But I’ve been in modular homes down south. I didn’t feel that they were built better than traditional homes. Maybe they are? But is this what you want in hurricane or tornado alley? Cinder block seemed the way to go in Florida when I was down there.
Yes, but the ones in the article are of the crappy variety
(I live in the area and happen to have seen them) and the prices seem outrageous. I have also heard that insurance has gotten dropped completely (bc of the recent hurricane destruction) on some of these communities which would seem to make them almost unmarketable at any price. These so called ‘high-end models are all dented up from golf balls hitting them along the fairway at Crane Lakes. Not my idea of high quality.
Yes, the one in the article is really a glorified trailer, not a futuristic modular construction.
In Florida, the term “manufactured home” almost always refers to a trailer; the term “modular” home refers to something assembled from modular parts. The word “trailer” was replaced because of its negative image.
and tell the insurance man to stick it
Amen. I could tell G’ville was in a bubble (and hence, refused to buy) when I costed out land plus nice new trailer (er, prefab) and found that existing house on land cost twice that, if not more! Ha! Houses depreciate, land appreciates, hello, hello? If the land isn’t worth shit unless it has a house on it, I smell bullsh**.
Well, guess what, came to this blog and others, found out I was right. In fact, later found out from a long-time resident that assessed values tripled in three years. I’m only a bitter renter because Paradigm Properties LLC SUCKS, but I’ll be moving out in August and never renting from them ever again.
Don’t rent from Paradigm. Trimark if you need to be near campus, GREMCO if you’re on a budget. Check out this site called Apt Ratings. They have the 411 on everyone in Gainesville.
During the “SPECIAL” session in Tallahasse in January, it seemed to me that the Insurance Industry was very quite about the legislation that was going thru, concerning the Homeowners Insurance issues…..
Well!!! I think we’re getting the answer….
>>> MORE CANCELLATIONS
Hidden in that story was a blurb about all of the FEMA–New Orleans trailers/mobile homes that will be released to the market. That is a lot of homes, i’ll be real interested to see how that makes a difference in the markets. blurb below.
“The agency reportedly spent $2.7 billion to buy 145,000 mobile homes and camper-trailers after the hurricanes hit the Gulf Coast in 2005. It has 60,000 trailers in storage nationwide, the story said, including several thousand that were never used. The agency paid, on average, about $19,000 for each trailer.
Ayotte said the association has expressed its concern to the federal government. “We have been working with FEMA for awhile.”
The agency has assured industry officials that it does not plan to flood the market with new homes. Instead, the agency plans to sell just the used trailers and do it in stages to lessen the impact on the marketplace.”
“Regulators say they were unaware that First Floridian was reducing customer exposure, but nothing in state law prevents the company from taking such action.”
Not one word about the major re-insurance players pulling out. It would be like Fannie and Freddie deciding to stop buying mortgages from an area. Game over.
Very interesting. One can, of course, insure oneself … if one buys for cash. So this seems to be the equivalent of requiring Florida buyers to put 100% down. I’m watching.
You can buy with 100% down and self insure, but if you need to sell you have to find a buyer with 100% down as well.
Got 10% down?
Or else provide seller financing (and hope a hurricane doesn’t hit until the loan is paid off).
I expect the next major FL hurricane will be catastrophic for the American taxpayer, as another Katrina-style ad hoc bailout to make uninsured Florida homeowners whole will be proposed and implemented in the peak of the crisis.
“We hear it every day. Northwest Florida’s housing market is stabilizing, returning to normal, slowing to a more reasonable pace. But what does that really mean? Especially for folks whose ‘For Sale’ signs have started to grow moss? ‘If you want to sell your house, you have to lower your price,’ said broker Richard Bell.”
Florida price declines have stabilized.
LOL…
The stabilization in price declines allows the market to move that inventory before the yankees go home, the hurricane season, and the 2007-2009 ARM resets. Wait…
The window of opportunity is closing.
“Season” in FL is offically over this weekend.
Now it’s time for the long hot summer of watching your home depreciate, and praying for a hurricane to blow it to oblivian.
The spring selling season in FL ends today; hope everyone got what they were asking for!
Michael Fink…
That is not a small detail to consider… the “season” is almost over. Just for the record, usually snow-birds keep coming down Until early May… But that’s a trivial definition change.
But with it being a warm year, I’ll grant that the season has only days left on it.
Without that influx of people… Its going to be a long hot muggy summer in Florida. Florida, as a state, is in a league only shared by Michigan (for totally different economic reasons too).
Got popcorn?
Neil
Yes, apparently the loss of property tax revenue will screw up the budget predictions in states like California, Florida, Nevada and Arizona. I thought it was interesting that the Florida governor and legislature plan to pursue property tax relief despite that fact. They are watching defections to the Carolinas, and feel that in the long run the state will benefit by encouraging people to stay in Florida, despite the short-term loss of revenue. How can they do it, cutting property taxes without state income tax? Do they have a high sales tax rate?
> Do they have a high sales tax rate?
They will.
As a matter of fact, one of the proposals is to eliminate property taxes and institute a 1 - 2.5% sales tax (on top of the 6-7% we are already paying). Don’t let them fool you into thinking Floridians are going to get tax relief. They are just trying to shift the tax burden and keep the $$ rolling in.
“The descent into a depression has stabilized. Everthing is uniformly crashing. No more nasty surprises for investors. It’s a bull market!”
‘For Sale’ signs have started to grow moss
(For those who never leave the city: Moss grows on the north side of trees in the forest.)
David Lereah says that with a little bleach you can make your sign look new enough to add a ‘newly listed’ banner to it and nobody will be able to tell. DL realtor tip #416
And with a little paint, you can turn your “For Sale” sign into a “For Rent” sign.
In our forests, moss grows on both sides of the trees. Therefore if you need to know where north is, you had best just ask Bigfoot.
“HSBC Mortgage Services plans to shutter its collections call center in Orlando and eliminate nearly 110 jobs locally, the company said this week. HSBC is the nation’s 10th largest player in the subprime mortgage industry.”
This just means HSBC is throwing in the towell I guess? Maybe it is too expensive to higher workers in FL. Time to ship those jobs off to India and China.
Good luck collecting when half the people won’t be able to understand the collect callers anyway.
This portion of the article struck me odd. Aren’t they going to need more collectors in the years to come? It didn’t say they were outsourcing them, just eliminating them. I would think collections will be a growth industry in years to come.
Maybe they’ve accepted that their debtors aren’t able to pay and aren’t going to pay. No need to keep throwing good money after bad.
Maybe they’re just going to foreclose at the first chance they get and sub contract the auction to PRAA, “The Repo Man”.
Technical question. Implode-o-meter lists HSBC as 2nd largest subprime lender, today’s post says 10th. I can think of all sorts of possible reasons for the discrepancy; does anyone here know the actual reason?
“‘There are a lot of people who are just walking away,’ Realtor Ray DiTirro said. ‘They do their cash-flow analysis and they say, ‘It’ll cost me less to walk away than to carry this condo.’”
I guess BK is still cheaper than paying the Mortgage Payments, HOA, Taxes, Prop Insurance, the Hummer payment, Credit Cards, and all the bills to heat and cool that sucker.
They will go to Counseling, to which the counselor will say, there is no way we can work this out, which is the case for about 86% of all BK cases. SO what did the BK law do besides prolong BK?
SO what did the BK law do besides prolong BK?…………………….
It Made sure that Lawyers had MORE INCOME to cover their student loans…thats about what i can figure…Since so many new average lawyers now are probaly making LESS then you are.
It looks like a lot of people are going to bail from the market rather than be bailed. Governments are too slow to bail.
The image is too absurd. 600 members of Congress huddled on the deck of the Titanic all politely arguing about whether to start bailing out the water. Who should do it, where to do it, where the buckets should come from.. some are drawing up plans to punish the iceberg.
All the while the bow lurches upward, chairs sliding across the deck, people jumping off and swimming for the lifeboats. The FED conferring on the most precise phraseology to describe the iceberg, etc, etc.
600 members of Congress huddled on the deck of the Titanic, I think your image is fantastic, Glub-Glub.
Actually the new BK law prolonged a possible 3-5 year period of paying some of the money back, while having MotherGovernment tell you how much you can spend on what out of your salary. Indentured servitude (modern version of slavery). It’ll serve ‘em right, greedy bastards, give em some time to think about their dumb mistakes in the past.
Got diversified assets and debt to equity ratio under 1:1?
A friend of mine who was a Mortgage broker down in Cape Coral is now doing Landscaping instead. He said the market is DEAD.
Landscaping? Is that a code word for “Staging Consultant”?
Right, my cousin the FL investor-flipper has suddenly morphed into an inspector. His company tries to drum up inspection business even where no transaction is in the offing. “Get your house inspected so you can find out what needs repair.” - like that. Hey, maybe it makes sense if nobody can get insurance!
AZ — How you holding up in this environment?
I think AZ is a hard money lender. He’s got paper that produces a nice stream of income. Figure he’s okay!
*She’s* okay, BM.
Florida certainly doesn’t need a big hurricane season this year as IT IS ALREADY a major disaster area.
As much as I don’t want one, I think what FL needs is exactly another hurricane.
One more “Wilma” type hurricane would be the end for most of these flippers, they would go so much futher underwater that they would hand the keys over. Also, it would further reduce the demand (for about a year or so, seems to take that long for people in the rest of the country to forget about hurricanes again).
A hurricane would be the one event that I think could get us our quick correction (just rip the band aid off, rather then peel it one hair at a time!). Much like 1929, the RE collapse might be sparked by the same outside event once again.
I don’t think so. A hurricane will destroy property. What remains livable will be pricey because demand will likely be high. And, a hurricane will give an excuse for a real estate bailout, prolonging unaffordability because no bailout is going to raise wages. SO, I think that anyone hoping for a return to sane housing prices should be hoping and praying for a nice dry hurricane season. At least, that’s my take now–I welcome responses, though.
IAT
I think a hurricane would clear out all the excess capacity very qucikly….
And i’ll bet lots of those who lose their homes will say “I’m outta here”
Most people think that way, i struggle here in NYC because all my family is within 40 miles of here….though i am really sick of the NON Job market here, they still get 200+ resumes for each job posted in CL…..and the Prez say unemployment is low….what a moron.
I’d probably move back to Charleston SC which really changed after hurricane Hugo, lots more northeners, and a more educated upscale mentality sunk in.
Uh. Clearing out excess capacity by a hurricane is supposed to lower prices?
IAT
YES if the morons leave and not come back to “buy” a home at any price.
Probably lots of “homeownaz” will take the insurance money and pay off their mortgage and leave, i seriously doubt this time there will be a lot of rebuilding.
“I’d probably move back to Charleston SC which really changed after hurricane Hugo, lots more northeners, and a more educated upscale mentality sunk in.”
Here we go again; dumb Southerners till Yankees came in and saved them from their ignorance. This really galls me. Charleston has ALWAYS been upscale and elegant; it was that way before the Civil War. Maybe a hurricane will hit New York, so the Southerners can poor in and teach the locals manners, including how to bathe, chew with their mouths closed, brush their teeth, wash their hands after using the bathroom, and bite their tongues before uttering blather based on local forlklore and bigotry. They could also teach them how to speak English.
“I’d probably move back to Charleston SC which really changed after hurricane Hugo, lots more northeners, and a more educated upscale mentality sunk in.”
Oh yeah, I’m really experiencing the “upscale mentality” of Northeasterners who have helped to turn parts of the state into an over-priced cesspool. Yessir, how about that Northeasterner carpetbagger gov who really improved Florida’s educational system? The condos here in Fla are full of these busybody, self-righteous northern meatheads. These are the ones who also complain about SOH, etc. I was born in New York and raised in New England. You could call me a carpetbagger, too, but I came to Florida to escape the smug, invasive, rude corporate attitudes of the Northeast.
“pour in,” forgive the typo.
No it was TRUE……….how would like to get turned down from jobs because you are SOBER? Seriously I lost out on so many DJ gigs because they wanted to pay with drugs or free drinks, and i wanted CASH.
Then being turned down for even retail jobs, becuase the owners drunken bruddah in law was being tossed in jail if he dodnt make child support payments…..Charleston was a redneck city, very little except the market and old sections downtown were upscale.
but Hugo changed that….for the better.
Reminds me of the story of the couple that was driving around in a rural area and stopped at a farmhouse where a farmer was sitting on his porch enjoying the late afternoon breeze. The couple asked the farmer how he liked living in the area. Instead of answering, the farmer asked them how they liked it where they were from. They said they didn’t like it and were looking for somewhere else to live. “You don’t like it where you’re from?” he asked. “No, we don’t,” said the wife. “Well,” said the farmer, “then you won’t like it here.”
Hi Palmetto,
Thanks for standing up. My family, originally from New Orleans and Atlanta, does not include a single redneck, even by marriage. All of my grandparents went to university or college, and this includes my grandmothers in an age when very few women went to college. I was not raised around illiterate people, and my parents would have thrashed me had I ever used the forbidden “N” word–a word I find many Yankees have no trouble spouting at every opportunity.
My Southern family was infinitely more educated and cultured than most of the Northern slobs who have overrun the South with their vulgarity, crudeness, and general trashiness. Spitting in the streets? Discussing bodily functions in public? Burping and worse in stores and restaurants? Flossing teeth in front of strangers? These, and other shocking behaviors, which seem to be perfectly normal to many Northerners, are incomprehensible to the Southern born. We don’t even admit to bodily functions, much less find them thrilling enough to talk about.
Unfortunately, Southerners get blamed for the stupidy and hillbilly accents of displaced Yankees, especially from the Midwest. My gorgeous New Orleans grandmother had one of the beautiful, cultured voices you could imagine, and it was not out of the norm in the Garden District, where she lived. In fact, I’ve heard more beautiful accents among the educated of New Orleans and Charleston than anywhere else in the country. I notice nobody talks about drawls of Northern belles, or the lyrical speech of home-grown New Jersey girls.
If the South is so horrible and backward, why do these people who despise it keep moving here? Or to put it another way, if New York and New Jersey are so much better, why don’t they stay there and leave us alone?
You may be originally from New York, but you’re obviously a Southerner at heart. Welcome.
I love the posts of NYcityboy but I really really wish a super hurricane would hit New York dead center just once and see how New York City deals with that. I guess it is possible that a hurricane could hit New York. Has anyone here ever heard of this happening even if it was in the 1700s or 1800s?
In the early 1800’s, the slave trade made Charleston the richest city in the U.S. The elite didn’t have to work, and few even chose to become truly educated. The Civil War and the end of slavery devastated Charleston society and the Charleston economy. Yet an attitude prevailed there for a very long time that is summed up in a statement still remembered by Charlestonites: “I’d rather be dead in Charleston than alive in Columbia or rich in Greenville.”
IAT,
I agree, if we get a devestating hurricane (massive property destruction) I think you’re right, we will see a temp bounce in prices, as people will need someplace to live.
I am thinking more a Wilma kind of hurricane. No power for 1-2 weeks, no gas, minor damage to homes (just enough to be really annoying, cracked windows, ripped off tiles, etc), no street signs for 6 months.
That’s the kind of hurricane I think would cause the most damage down here (for housing prices), and also what I feel is most likely (a Cat 1-2). The flippers would spend much time and money and be unable to even think about selling for 2-3 months after the hurricane. I just think it would put the nail in the colfin for many a caught flipper.
I agree, if we got a Cat 4-5 that really destroyed some inventory, it might cause a temp bubble. However, that would quickly be revesed when insurance rates double-quadrupled to make up for the shortfall.
I see. Yeah, that makes sense to me. Guess a key variable is the time frame and also the extent of the damage.
I hope it doesn’t come to this, though–some will literally die in the process. Like you, I would prefer sanity return without the hurricane.
IAT
while we’re at it…let’s pray for a magnitude 9.0 along the San Andreas and a few nuclear hits from Al Queda to make houses go up in price.
i’v lived in Florida for 25 years now and Im 42 years old. Florida has been having hurricanes forever. All of a sudden everyone is saying one more hurricane and financial disaster will be upon Florida.
I don’t understand this because when Miami was hit in 92 or 93 and every other hurricane before 2 years ago nobody was talking like this. Hurricanes are as natural to florida as lightning bugs are to Indiana summers. We’ve always had em and we always will. Some years more, some years less. I don’t hear everyone saying lets leave Louisiana if one more hits.
“Of the 2,221 foreclosures in process right now in the three-county region, 317 are in North Port and 402 are in Port Charlotte. Not coincidentally, those communities were a favored playing ground during the boom for investors. It also was the center of activity for a series of failed home builders.”
I will tell you right now. There is not SH*T in Northport. Only out of state idiots would invest there.
“Another subtler trend has developed in recent months. Of those foreclosures going to public auction, fewer are being bought by outside bidders, meaning lenders are getting the property back themselves.”
Does this mean the Bank gets to pay lower taxes etc because they bought it cheaper from themselves while they hold onto it?
“Does this mean the Bank gets to pay lower taxes etc because they bought it cheaper from themselves while they hold onto it?”
Not sure about Florida taxes, but around here the property tax rates are dictated by local government, not by the selling price.
If that’s the case in Florida too, then banks are paying high taxes on depreciating assets. They pay taxes on previously appraised prices… perhaps reappraised at or near the top of the market.
Banks will be stuck with unrealistically high taxes unless they sell those properties, or government lowers property tax rates, or unless there’s a flurry of reappraisal to lower prices. The latter two options are distant… government is usually unwilling to give up revenue streams, so reappraisals to lower tax revenue would seem unlikely, particularly because government overspends just like everyone else.
The longer that banks hold those properties on their books, the less those properties are worth to the banks. Then the question arises, “Hang the price… how fast can we sell it?”
Reporting season for Florida Community Banks will be fascinating to say the least
I have puts on Bank Atlantic (BBX) and Colonial Bank (CNB). They are have moved in the money and I am buying more CNB puts, since it looks like a head and shoulders top.
What about Millennium Bank and Alarion Bank? They look pretty f*cked from where I sit.
M&S Bank isn’t looking too good either.
I have another scenario to share with HBB. I haven’t read this one before and it’s happening to someone I know: They knew they were going to default so they proactively contacted their lender. They asked for a short sale and the lender said not until 90 days past due. So they stopped paying, are hoarding cash for a rental, and waiting for foreclosure.
On the way down, three months makes quite a difference. Especially the last three months. So, right now, in Florida, there are people who can’t even chase the market down.
They sit and wait.
They presumably hope that the lender and/or authorities will take the line of least resistance and won’t really go after them, since I would suggest this ‘tactic’ is straight out fraud.
I see what you’re saying, and in re-reading my post I’m not sure I made my point, so here it is: Not every FB is clueless. These people are in over their head and they know it. They know it’s crashing and they wanted to sell now. They also know that they’re upside down.
I’m not particularly concerned about the legal ramifications for them. Here’s my point: if there is a short sale stampede, the crowd may be stopped at the gates and told to wait three months. You see what I’m saying? This accelerates the trend.
Assuming you’re correct, things will get downright frightening for the lender. They’ll have a 90 day window into the future. Imagine knowing what’s coming down the pipeline while you tell an even larger number of FB’s “Ok, and now you have to wait 90 days…”.
I absolutely see what you’re saying, and I agree with you.
I just have this feeling that some of the ’smart’ FB’s might not consider what they are doing ‘crime’, and would be shocked and amazed if all of a sudden their BK case morphs into a criminal hearing.
Your FB friends are doing what’s in their best interest. Their behavior is not uncommon. On the other hand, the lender is probably receiving a lot of short sales request…
Another haircut in my community.
Sold Sept 05 - 408K
Sold Mar 07 - 375K
Anyone want to hazard a guess on how much money was actually lost on that flip (it sat unrented the entire time)? Looks like we are falling into 05 prices; wake me up when we get to 03-02.
http://www.co.palm-beach.fl.us/papa/aspx/web/detail_info.aspx?p_entity=52424125120000430&geonav=Y&styp=general&owner=&city=-1&zip=&method=address&cidx=-1&sdiv=&sdivnam=&stno=&pdir=&st=duchess&strnm=&sufx=&ptdir=&cty=&rng=&twp=&sct=&blk=&lot=&book=&page=&tangid=&condo=&condoname=&use=&usnam=&sloc=&prd=&pedir=&podir=&famt=&tamt=&fsqft=&tsqft=&srt1=&srt2=&srt3=&stpage=0&adlfilter
Nice find. Let’s see. Assuming he financed 100% at 6%, his mortgage payments were $ 2,451.50 a month. His tax was $604.67 per month and his insurance was about $250 a month. So, assuming no HOA, he was paying approximately $3300 a month. He did this for 18 months for a total of $59,400. He lost another $34,000 on the sale without considering closing costs, realtor’s commission, maintenance, and repairs. So, he lost at least $93,000 on this flip!
I bet we won’t see these type of deals on “Flip this House.”
“Does this mean the Bank gets to pay lower taxes etc because they bought it cheaper from themselves while they hold onto it?”
I thought banks were not in the business of owning property? Looks like they are trying to protect the high prices as long as possible, as to avoid other homeowners from going BK.
Perhaps they’ll keep the high prices and we all rent from the bank.
It makes sense banks like any other business will do what ever they can to maximize profits - If that means holding onto houses and they can then they will. I predict that in time there will be too many and the shareholders will start to see losses on the homes being held, which will prompt a sell-off “to mitigate further losses”
I read that the banks report their non-performing assets once a year, on Jan 31. They carry them at book vakue, and it helps them borrow Fed Funds. What you see going back to the banks today, won’t really start to hurt them until 2008. That’s when the Banks start folding.
I don’t understand why banks are so negative on foreclosure. They can just hire a property management firm to take care of the house, rent it if they want. Especially if the borrower had any significant equity, it’s profitable.
These days that real estate is worth more than your typical borrower.
What gets me is how are the “distributed” loans, the loans that were packaged as bonds and sold, going to be dealt with? Does each holder of those bonds have a say in the disposition of the property? How does that work?
I don’t understand why banks are so negative on foreclosure. They can just hire a property management firm to take care of the house, rent it if they want. Especially if the borrower had any significant equity, it’s profitable.
Properites with significant equity do not go into foreclosure. They can be sold, borrowed against etc. By the time a lender gets a property back, there is generally a lot more debt owed than the current market value. This is why there were very few foreclosures during the time property prices were on the rise. Now the lender is left holding a depreciating asset, with a rental return generally half the mortgage payment. Not a good thing for lenders.
…or taxpayers.
One of the correct things done during the S&L “crisis” was to force the institutions to get rid of their worthless assets. Now we let them hang on, hang on, hang on… That’s why Japan had such a mess.
Let’s just address the problem (overpriced houses, and way too many houses) and be done with it. Let the prices fall…
Rhode Island Bob reply;
NO, the bank will not pay lower taxes…BECAUSE..it is NOT an ‘arms length transaction’….. The future buyer will pay, lower taxes, because it is an arms length transaction
From the Palm Beach Post:
And in the Senate, which has moved most cautiously, the view has started to gain a consensus that Florida is not suffering a property tax system problem as much as it is an unprecedented three-year run-up in real estate values. And that problem, some senators believe, will tend to correct itself, particularly as values decrease in those areas that saw the highest increases.
Even Haridopolos, who earlier in his legislative career frequently railed against most taxes, said lawmakers had a responsibility to understand the long-term consequences of whatever they do.
“This is why we’re being diligent,” he said. “Some of the problem might be alleviated by the - I wouldn’t say the bursting of the (real estate) bubble, but a letting of the air out of the bubble.”
Of course the problem is really RE values. That said, SOH should still go away, as it is grossly unfair (and needs a consitutional challange BADLY!) . However, it was refreshing to hear this from the lawmakers.
I said many times, they are just going to kick around the property tax and insurance issues until the property price has fallen to the point where it’s no longer a problem… That is.. Unless you bought in the last 4 years!
http://www.palmbeachpost.com/news/content/state/epaper/2007/04/08/m1a_TAX_MAIN_0408.html#yourpost
I saw that this a.m. and thought wow senate is pretty smart. It will kill prices as snowbirds will dump and run!
You just answered a question I asked earlier, Michael. I was under the impression from the morning paper that they were actually serious about lowering property taxes in Florida. Silly me!
“Another subtler trend has developed in recent months. Of those foreclosures going to public auction, fewer are being bought by outside bidders, meaning lenders are getting the property back themselves.”
This is signifcant. the market has clearly moved below what is owed on these properties. Thus the bank ends up with them. The pressure to “fire sale” these properties should become intense by the end of the year. Add to this the coming ARM resets, and we have years of falling prices and stagnation in sales, ahead. It’s going to be an ugly self feeding cycle down. No one put a gun to these lenders heads to make these loans, they were more than willing to take the risk on these borrowers. Now the lenders can choke on the properties.
But, what about companies like American Home Mortgage? They hold a huge portfolio of mortgages and they are a REIT. They do not have any regulatory pressure to sell (like a bank). If their lenders will let them (and the lenders may have to if they want to avoid or defer the haircut), AHM can hold/rent the properties and slowly lose money for decades instead of going bankrupt. I bet the same applies for a hedge fund, the Chinese government, and your local pension fund.
This might be true if the foreclosure crisis remains contained and prices remain fairly high. Keep in mind however that if a lender purchases a property and sells a loan they make a bundle and the investors are happy. If they rent at 1/2 the mortgage for many years, they are losing a lot of money, paying taxes, responsible for maintenance, insurance etc (ok, they may self insure so they have a big advantage there as long as there are no hurricanes) and the share holders will be most unhappy. In time, I would predict there are just too many properties in this state, and they end up on the block to sell at market value.
AMH’s model is to bundle mortgages and sell them as mortgage securities. Their problem is that the market value of the mortgage securities, specifically Alt A securities, took a big hit in March. Panic over AMH’s warming should quickly spread to other Alt A lenders, resulting in an accellerated tightening of credit. Lenders don’t want to keep to mortgages, much less do they want to own houses that are declining in value. They make money by spending as little time as possible making and/or selling a loan and are not set up to manage RE.
Took a trip from Clearwater Beach down to Naples yesterday. The last time I saw that many For Sale - Reduced signs was back in the early 90’s when you would drive up and down Gulf Blvd. and every other home was for sale. I’ve been a happy renter of a previously overvalued $700k gulf front condo for $1075/mo for the past 2 years, including everything except electricity. The the out-of-state owners have no homestead exemption and pay over $12k a year in re taxes, plus a $400 condo monthly condo fee! Further, they’re not raising my rent because of the glut of condos on the market that are sitting empty. I love being in the driver’s seat.
Yes. I live in Madeira Beach and I swear you could not walk down my street without banging into five or six for sale signs. Signs that have been there over a year. Considering depreciation (formerly appreciation)as well as insurance, your’re renting at quite a discount.
Yay HappyLaurie! You are smart, and are enjoying the beautiful Florida Gulf coast. I love to visit there in the winter.
Sounds like that owner made a brilliant investment!!
What a great business mind. Let’s see……the ROI is -800%??
Of course, I’m assuming they bought it for about half the current “value”………HAAHAHHAHAHAHA!
Long time reader first time poster. Just have to make a Florida comment because I live here. The Legislative Branch of the Florida Government is talking about totally doing away with property taxes and replacing that ‘State Income Stream’ with a 2.5% sales tax increase. Reminds me of the “Far Tax” touted by Neal Boortz. Anyway, the Florida property insurance has tripled and property taxes have also ballooned along with the “RE Bubble”.
Now, if you have been in the same house for a long, long time (pre- bubble), your taxes are frozen in time at the rates of the year that you purchased, so some people (not fliptards, just regular homeowners) dare not move up, or even downsize because their property tax could increase 300%. They are trapped.
Florida Government spending has gone up over 80% in the last three years, (under Gov. Bush) which is unsustainable. So, how to cut property taxes with that kind of Gov. spending is a real challange for the Law Makers here. We shall see what the Law Makers come up with, but no matter what it is not gonna be pretty.
BTW, Walt Disney Worlds Property Taxes have increase 5% per year and Mine, with homestead exemption has gone from $700.00 a year on a 2 br 1 ba SFH, to $1,850.00 on a 1br 1 ba condo within 18 months.
That’s fair.
You are talking about the House plan it is already dead in the water. Read PB Post about Senate plan.
I never thought it had a chance either, unless they exempted Orlando. This tax would have done as much damage to tourism as the foreigner murders 20 years ago - people will not show up to get fleeced, and Disney knows it.
“people will not show up to get fleeced,”
Really? If that’s the case, how come we had a bubble in Florida?
Real estate is different. The bubbles are created by people thinking that they can make easy money - the price meant nothing to them as long as it was zero down and appreciation was hot and heavy.
No one shows up to get fleeced. But it is a lot tougher to convince someone that paying 10% sales tax is great deal that will make them rich. Just check the few places in the country where toll roads and freeways run parallel (some in TX). One guess as to where all of the traffic is.
Huh? You pay more for less at Disney these days. Other parks are a much better value.
Don’t confuse the Disney of the Sixties with the Disney of today.
What is the difference in the Disney of the 60’s and todays
Disney.
Operation Dumbo Price Drop in FL.
I think all the loan blow-ups will be affecting everyone who relies on annuities, these include retirement funds, divorce settlements, lawsuit settlements, lottery winners, you name it, hell even moneymarket funds should be in trouble. The money changing crooks in the temple are writing annuity contracts, which are based on the maximum income streams from CDO’s; they seem to think the yields on these have the full faith and commitment from our government.
People do not yet comprehend where the insurance annuity payments for retirement and death benefits really come from.
Should I dump my AFLAC coverage? Hmm, actually I NEED the disability insurance in my current job, although in my next job I probably won’t.
Save extra, drop the disability, pick up that insurance again in a decade when things are stable again?
I need disability insurance as long as I’m driving for a living, though. No choice on that.
any FL properites orcounties NOT OFF 25% from peak ?
I know Lee is
Just signed a 1 yr lease this week on a brand new failed flip in Bradenton. Nice to be able to move out the 1000 sq/ft apartment into a 2500 sq/ft house for only $150 more per month. Hopefully they will keep making payments on the I/O loan they have…..
SCARY…….how much deposit did you geive them………consider it LOST….
You need to make plans for the foreclosure, they wont repiar anything, and you can withold rent or deposit it with the court, and at trial ask the judge to deduct your security and any repairs from the rent you and pay the difference on the spot.
This is the biggest problem a renter has in these flips…
“deposit it with the court”
? how would that work?
I also rent and am a landlord in Florida. Here, the laws are in favor of the tenant.
1. Send your landlord a Seven Day Demand for repairs in person at their place of business. You have to do this in Florida. Google for a sample form.
2. If your landlord does not fix the problem, go to the county clerk of the courts with your demand and your rent and ask them where to file with the court. You can then pay your rent to the court and they will hold it and force your landlord to repair the problems. The landlord will also have to pay the court fees.
If a landlord witholds your rent in Florida for no good reason you can file a claim in small claims court where you will win and the landlord will have to pay you back, pay your legal fees, and pay the court fees. You will win without question because the Florida tenant landlord laws heavily favor the tenant. You also do not have to move in the event of selling the property or foreclosure unless it is written into the lease. I have run into all three of these situations in Florida (sale, foreclosure and non-return of rent) and the courts consider it their duty to side with the tenant.
OH ps figure TRIPLE the electric you were paying for the apartment…i hope you budgeted for it…
Also read the meter daily or weekly you Could have an unsealed vent blowing hundreds of dollars of cold air under the house a month……lots of shoddy construction out there
“‘The guy’s house is worth maybe $12,000,’
Staggering to most of us $12K is pocket change………
800sq ft does that include both floors?
oops posted in the wrong one.
Peter T brought up a point on yesterday’s discussion of potential bailouts which seems worth revisiting. (It also helps me keep my blood pressure under control to vent on this subject.)
“… some in congress seem to be eager to make FHA into a federal subprime lender, doing away with its traditional underwriting and downpayments of 3%.”
100 percent lending to people with a bad credit history worked so fantastically well in the private lending sector that now some Congressfolk want to offer the same deals by dropping downpayment requirements on a federally (taxpayer) insured lending program??? If you think the pending Fannie Mae day of reckoning is scary, just wait until when and if Congress pushes through these changes in FHA lending requirements.
Credit-Friendly FHA Loans Surge in Popularity as Sub Prime Market Dries Up
Download this press release as an Adobe PDF document.
Katz Mortgage Team, http://www.KatzMortgageTeam.net, of Amtrust Mortgage Corporation, has announced that due to recently increased credit restrictions in the sub prime market, FHA mortgages have surged in popularity.
BTW, 100% financed FHA loans are already available (under the guise of a “gifted” downpayment). If the blue state candidates succeed in raising the $363,000 cap on FHA loan size, I will seriously consider downsizing to a lower paying profession in order to qualify for the taxpayer-guaranteed reflation of the bubble.
———————————————————————————
Atlanta, GA (PRWeb) April 2, 2007 — Katz Mortgage Team, http://www.KatzMortgageTeam.net, of Amtrust Mortgage Corporation, has announced they are now offering new FHA loans for borrowers with less-than-perfect credit. These home loans have been updated with new higher loan limits up to $544,000 depending on the county; however, most metropolitan counties have a limit between $200,000 and $300,000. Also, with down payment assistance, they can now offer 100% financing.
http://www.emediawire.com/releases/2007/4/emw515860.htm
I’m speechless. Who is Peter T.?
So now every American is going to be subsidizing FBs whom we KNOW FOR SURE will be defaulting on their loans?
Where is the politician/newscaster that will step up to the plate on this subject?
Sure hope SOH isn’t changed to an increase in the sales tax.
That just hurts business and what’s left of the good stable local people.
We also have too many investors around here period.
I paid rent for way too long while my generation was deprived of credit. 1978 - 1990……
I say screw the investors and the high taxes they pay due to recent purchases or multiple properties that are not their primary residence.
They should bleed to financial ruin.
I’ve lived here for 37 years and it hasn’t been easy but now I own a home and all I’ve ever wanted was a little stability and to quit giving away my paycheck.
Long live Save Our Homes…. Thanks Florida!
Yep, I could have sold my home in ‘05 and bought a more expensive home too. So why should they change the rules now because of a bunch of whiners who don’t know how to manage their money or had pie in the sky expectations at somebody elses cost?
They shouldn’t, PERIOD!
I wonder whether the banks in Florida continue with the windstorm insurance on an REO. If we have a hurricane, who will put up the shutters on these empty homes. For me with a 2-story, the aluminum shutters are my biggest hurricane nightmare. Of course, no one at the banks will think of this until the day before one hits. They don’t have this exposure in other markets such as Colorado. If I were Countrywide, I would be looking to dump at whatever price heading into the season given the recent storm predictions.
Yep my house in Naples has x 4 in appraised value since we bought it in ‘96
\
The taxes aren’t bad due to SOH.
I have a 1/4 ac building lot in Lehigh Acres that I bought in 1986 for $1,000 (taxes were $50.) and since then they extended Daniels road out almost right to my lot, opening up easy access to I-75, SW Regional airport, FGCU, Teco Arena and stores galore.
I’m 12 miles easy drive from FGCU now.
So all through ‘05 I received mail offers on the lot up to $60,000 and was told they were actually going for $70,000.
6 offers per week was normal.
Then the offers became fewer and for less and now the occasional offers are only for $10,000 - 13,000.
Tax man says it’s worth $42,000 and taxes are $685 I think. No SOH Homestead exemption on that of course.
The only reason I held onto it is because I have a 19 year old son that may need an affordable place to raise a family someday.
He’s at FGCU now.
I have a business in Naples and this season has been the worst since I began 15 years ago…
I may even start advertising but I think I’ll wait for the recent (borrowed into business) startups to go under first.
Why price war with destitutes.
Time is against them.
I wasn’t aware how banks worked and that people borrowed for investments.
This easy CREDIT has sure messed this area up..
Talk about being infiltrated by foreigners.
Foreign countries must be educating their people about our CREDIT system better than the U.S educates it’s own.
I knew about the online appraiser sites and had started to follow property sales details around here and could see people making $70,000 in 2 months on a house that they never moved into or improved.. Leaving somebody else with the debt.
I was doing some searches on the net and happened along this site quite awhile ago and must say that the opinions around here seem more accurate and prescient than what I hear on the news.
I know of $10.00 per hour hicspanic laborers that have borrowed their living expenses on our real estate for several years now and I know they won’t be happy when they are kicked out onto the street… i.e cut off of the free money…
THEY don’t seem to get the SOH for some reason… I just wonder how they will like their $6,000 tax bill this year as their property depreciated 13% heheh. No mercy imo
but it should only be for those who are truly needy. In fact, raise it for those who are truly needy and can it for everyone else. Why in the world are my neighbors entitled to tax relief? If they can afford a $600k to $1.2 million unit in my building and drive a Lexus or Cadillac, why should the state be subsidizing their re taxes? I know of several who filed for homestead exemption, yet they are not here year round. They still maintain their old homes out-of-state and fly back here so they can show proof that they were here the required time. They buy an old beater and get Florida tags. They get a landline limited phone so that they’re listed. They claim Florida residency so that they don’t have to pay state income tax. This whole exemption scheme is being scammed by thousands who can more than afford to pay - and now they want even more relief.
Exactly. Give the millionaires in PB and Miami Beach no property taxes, and make it up with higher sales tax and higher property tax on rental properties. This would help maintain current elevated housing prices while raising rent. At the same time whine about the lack of affordable housing and spend more taxes on building it. Is it idiocy, or influence buying by the rich. Does it matter?
Some news from Tampa. My source mentioned to me that she has seen a huge jump in the number of people looking to refi out debt. Most are so far underwater there is no hope. Lots of realtors who have multiple house who are moving equity around to save their butt. She can’t really do much for them and the attitude is no big deal I’ll just declare bankruptcy. When did that become like Yahtzy. My parents regarded it as a huge embarrasment for the whole family now it’s no big deal. Lots of stuff for sale here has gone to rent with no takers. They want too much and will not compromise. Every corner on Hillsborough Ave is loaded with for sale signs most with price reduced. Lots of shops have gone under recently and quite a number of going out of business sales. The tiny strip malls are going first. The the owner shop I help at part time has mentioned other tenants struggleing and some going under. Lots of the smaller home improvement/ma and pa furniture stores are going under. It’s not pronounced just yet, but if you drive around here it’s slowly happening. Also loads of condo are going back to rentals and now even commercials with prices slashed 50K on condo’s. Oh and hurricane season starts soon. I love it here I just wish they wouldn’t build on every piece of land. We don’t need 3 walmarts and targets etc within a 5 mile area or a gas station every 1/8 of a mile. Sorry to rant when I moved to Tampa 5 years ago it was still ok now it’s just really getting ugly.
I see the same thing…for sale signs on every corner….. desperate realtors putting up Open House signs on Easter Sunday. There were 4 open house signs yesterday on the corner of Linebaugh & Countryway…. they were for the same 4 houses that these realtors have been trying to offload for the last 6 months. Noone is looking because they won’t lower the d@mn price. I don’t think Westchase has “gotten it” yet. Even if they lower the price, who wants to pay $200+ per month is HOA fees?! What could an HOA possibly provide that costs $200+ a month?? It’s not like these homes have any yards to take care of… I’ve noticed a lot of HOA’s have started including basic cable in their fee… I think I would just rather get my own cable. What a scam.
I too, live in a small north Tampa community of
105 homes. Since we moved here 2001, there has always been at least 3 houses for sale at any given time,now today there are 6 for sale.
Many of the homes were built in 1999-2001 for
$350,000 $450,000, but now they want $599,000 - $850,000. No one even looking.