“The Legacy Of The Investor Binge” In Florida
The Sun Sentinel reports from Florida. “Home builder Ara Hovnanian was asked Thursday to rate the housing market on a scale of 1 to 10. ‘Am I allowed to use negative numbers?’ he said, drawing laughs from the crowd of about 400 at a real estate conference in Hollywood.”
“‘We’re in for a fairly ugly correction,’ said Ron Terwilliger, head of Atlanta-based Trammell Crow Residential.”
“David Seiders, chief economist for the National Association of Home Builders, opened the session with a sobering housing outlook that was more pessimistic than the one he delivered at the International Builders Show in Orlando in February.”
“Seiders said there are a record 1.4 million excess vacant housing units for sale nationwide, and the number will grow as homeowners lose their properties to foreclosure. He expects more home and condominium price declines in many areas, including South Florida.”
“‘Some markets will really be in the doldrums for quite a while,’ said Seiders.”
“Because of the subprime crunch, traditional lenders are tightening their standards. ‘The subprime world has really changed the market in for-sale housing,’ said Hovnanian, adding that his company’s two softest areas in Florida are Fort Myers and West Palm Beach. ‘I’m a bull long term on housing. But the short term is not so rosy.’”
“‘I think it’s a confusing time to buy,’ said Bill Donges, CEO of Lane Co., a apartment and condo developer. ‘It’s hard to tell if prices are at the bottom. With all the uncertainty, a lot of people think it might be better to rent for awhile.’”
The Palm Beach Post. “More than 400 building professionals from around the country are attending this week’s National Association of Home Builders conference on multifamily housing entitled ‘Welcome to the Next Step.’”
“But the next step for multifamily housing is really a step back. ‘We will see closings start to decline again,’ said economist David Seiders, addressing Thursday’s crowd about sluggishness and instability in the over-built condo market.”
“‘Sales, prices and inventory will all continue to decline this year,’ Seiders said, delivering a more dour forecast than he has in previous months and years. ‘This is not a recovery,’ he emphasized.”
“‘The impact of the mortgage market mess has not shown up in the housing numbers yet,’ Seiders said. Prices were rising 18 percent a year for several years, Seiders said. ‘We’ve got some more negatives ahead of us.’”
“The really bad word; Seiders called it ‘the big theme,’ is supply, he said. The important issue is not how many houses are in the backlog of unsold inventory, he said. It’s how many vacant houses, which have risen to unprecedented levels, Seiders said.”
“‘We’ve got 1.4 million excess vacant units on the market now,’ Seiders said. ‘That’s a lot. That’s the legacy of the finance-driven investor binge of ‘03. The condo inventory is at record levels.’”
“Vacant for-sale condos are ‘going straight up’ in numbers, he said. ‘That’s the major point. Wow! The ‘overhang’ (unsold units) is very heavy, and that’s not considering units under construction, which are still at near-record numbers.’”
“‘Pricing has a lot further to adjust. The places that have to adjust the most are the ones that rose the most (such as South Florida),’ he said.”
The St Petersburg Times. “Pooja Sharma sympathizes with the developers of Live Oak Preserve. She owns two houses there, plus a third in next-door Meadow Pointe and has felt the slackening demand in home values. ‘The market is very bad,’ she said.”
“Yet as a resident, Sharma would like to see Live Oak finished. ‘Everything should be done as soon as possible, so we won’t have all the trucks and all the dirt,’ she said.”
“Streets just east of Sharma’s are flanked by weeds, not houses. Transeastern Homes, the developer of the 1,600-home Live Oak and the nearby 500-unit townhouse development, obtained only four building permits since last June despite having the two developments only half finished. Nearly 50 earlier permits expired for lack of activity.”
“In a news release last month, the company described ’significant doubt’ that Transeastern, which lost $468-million in the year ending Nov. 30, could continue without restructuring its debt or obtaining an infusion of new money.”
“Meanwhile, TOUSA president Antonio Mon said the company has worked to shrink its inventory of land. ‘During the last six months of 2006, we sold land and abandoned our rights under option contracts,’ he said in the press release. Mon said TOUSA also would limit speculative building and focus on presales.”
“That may explain why Pooja Sharma, in Live Oak, heard from neighbors that Transeastern has begun selling 40-50 lots in a new estate section of Live Oak.”
“But over the last year, selling has been a problem. Realtors reported almost 30 percent fewer residential sales across greater Tampa in January and February, compared to the same period last year.”
“Mike Wright, renting in Live Oak while he tries to sell his prior home in Greensboro, N.C., said he talked to two Transeastern employees who feared they might be laid off within days. When they didn’t return, Wright learned they had lost their jobs, he said.”
“‘Right around the time that we closed was when construction stopped,’ said Eric Cross, who bought a Hammocks townhome last August. ‘Living in a half-built community is a frustration,’ Cross said.”
“‘I heard the prices are going down,’ said Pardeep Kumar. ‘But that’s not related just to Live Oak. I guess that’s normal everywhere.’”
‘ Homeowners in a south Orange County (FL) town-home community are taking their long-running dispute with the home builder Toll Bros. to court, contending that numerous construction defects have not been corrected.’
‘ In Orlando’s central business district, the office-vacancy rate in the first quarter was an even higher 13.2 percent — up from 8.7 percent in the fourth quarter but nearly even with the 13.1 percent in the first quarter of last year. McKeever and Morris said both office and industrial tenants are getting hit by landlords who are finally passing on the expense of rising taxes and insurance premiums. Such ‘pass throughs’ have risen 30 percent to 40 percent in the past year, they said. ‘There’s some sticker shock here,’ McKeever said.’
‘How can Palm Beach County wages be falling in a period of record-low unemployment? Blame the housing hangover. Palm Beach County’s real estate agents, mortgage brokers and closing officers were flush with income in 2005, but the gravy train derailed as home sales ground to a halt in 2006. Also, construction workers collected less overtime as the housing boom ended. The county’s inventory of unsold homes has stacked up as sales have slowed down.’
‘The housing market’s transition is showing up in wages,’ said Sean Snaith, an economist at the University of Central Florida.’
01 to 06 will be “the age of shoddy” for homes, like late in the Civil War
1890’s homes tend to be large, garish, and rickety (especially compared to 1880’s homes). Must have been bubbly then, too.
However, unlike the Victorians, I don’t think this latest crop of pressboard junk will still be standing 80 years later for yuppies to purchase as fixer-uppers.
Nah, it will be fine. Builders finally recognized that a house in Florida lasts about 3-5 years before a hurricane takes it out to sea.
The only issue is that homeowners didn’t realize they were paying twice as much as they used to and now they have a disposable house.
“taking their long-running dispute with the home builder Toll Bros. to court, contending that numerous construction defects have not been corrected.”
This is going to be a huge issue in Florida over the next five years, IMHO. Construction defects will be a nightmare for homeowners in PUDs and condos. This is only the tip of the iceberg. It will add insult to the injury of declining values.
“‘I think it’s a confusing time to buy,’
Brokerage Downgrade:
Time2Buy downgraded to ConfusingTime2Buy
Ha. It’s about the least confusing time EVER regarding whether one should buy in the first place.
What’s so damm confusing about “Don’t”?
Buying a home before it is built is risky business.
I agree, Mr. Vincent. I can’t understand why people would buy a pig in a poke, especially now, with the threat of losing deposits to failed builders and developers, on top of the defective construction issues and declining values. I’d never just hand over money to a builder in the hope that the home would be built. If this practice stops, then pre-sales grind to a halt and banks won’t finance new building. Which is just fine with me.
Oh I don’t know. I’m sort of happy to see building continue, which will crush prices more definitively than any other mechanism I can think of.
Yeah, but I still wouldn’t buy a pig in a poke. You can’t trust most of these builders anymore.
We moved to Florida and have been renting for over a year and are considering building as we feel we can have better control over the quality rather than a home built over the last several years. The builders are offering huge incentives. Are there any conditions which you might build if you wanted to have a home? Like the article said “It’s a confusing time to buy”. We don’t want to put the money up as we’re afraid we might lose it. Maybe we should just buy a resale pre 2001!
Resale pre 2000 is a good idea.
If you’re going to build, just wait. Land prices will drop, material prices are already dropping, and contractors will be competing against each other.
Most homebuilders are sharks. If you do go that route in the near future, here’s three EZ tips:
1. don’t do your financing through them
2. get your own inspector in there before you even offer any earnest money, and
3. if you like the place, drive the hardest bargain of your life.
If any homebuilder objects to you bringing in your own inspector or financing, here’s a simple four letter word to remember: W-A-L-K
When is it going to show up in those applying for unemployment bene’s?
How much money has been set aside by Florida to pay for all this without raising taxes or cutting state gov salaries?
Unemployment benefits come out of a fund run by the state, but the state doesn’t put a dime into it. Employers pay into it, and if Florida was to have a lower than normal tax rate for those employers, the employers would also be paying into a federal fund to make up the difference. That’s going to be where any shortfalls come from.
And once that’s emptied, well, I guess we’ll start hearing about another bailout.
OK, SF already has property tax issues, an insurance crisis, hurricane fears, and a troubling increase in violent crime. Now it looks like there are permanent water problems:
http://www.sun-sentinel.com/news/local/southflorida/sfl-pwater13apr13,0,390124.story?coll=sfla-home-headlines
” Water restrictions get tougher today, and they could move from a temporary, drought-induced hassle to a permanent, year-round responsibility.”
” Water restrictions get tougher today, and they could move from a temporary, drought-induced hassle to a permanent, year-round responsibility.”
This is simply to prevent the kind of restrictions that they’re imposing now from having to be imposed again. Conservation year round will keep a shortage from happening.
Yep. Here in North Dallas, the lakes are officially above the Stage 3 line, but we’re still under Stage 3 restrictions because municipalities know that a return to normal would just result in having to impose restrictions again later this year. And last year we just barely escaped going to Stage 4, which eliminates pretty much all outside water usage.
“the lakes are officially above the Stage 3 line, but we’re still under Stage 3 restrictions.”
And if they maintained stage 2 restrictions year round, what would be the possibility of getting back to state 3 again? Pretty slim. That’s why they want to make restrictions mandatory year round.
The snowbirds put a strain on our system every winter which just happens to be when we get the least amount of rain.
“We need to change the culture,” said Michael Collins, who serves on the district governing board. “The free water and the unending supply is over.”
This is absolutely ridiculous. Us folks up in the Great Lakes region have near limitless access to fresh water and yet we’ve always paid the real cost for our water. Free water? You’ve got to be kidding me! No wonder people waste it!
Water in Chicago (the city) is based entirely on property tax. No direct incentive to conserve exists.
I thought that I caught something on the news yesterday saying that due to lack of a rainy season that Santa Cruz is starting restrictions on water use. Ah, the unknown factor ‘the weather’. How long do those farmers have before the corn has to hit the ground in the mid-west? Hurricanes in the south-west? Heat in the west? Where else is water going to run short?
Most recent drought severity index from NOAA
Much of the great plains and midwest are a bit wetter than normal. Corn futures on CBOT are going up ever so slightly on concern that warmer and drier conditions are needed so farmers can get all the corn planted.
Pooja and Kumar own too many white castles…
uh… you mean white elephants
buddhaman! LOL! How has your move to Pasco worked out? Have you been able to make an adjustment to Florida? Not the best of times to do it, but let’s hope things get better.
Palmetto,
It’s really worked out well for us so far - regardless of all the moaning on these pages, life is much better and less expensive here than in New York (Although that may not be so on the east coast of Fla. & the main reason we chose the west coast). It’s a different and quieter way of life than the Big Apple to be sure, but we’re glad we made the move. My blood pressure & stress level are the lowest they’ve been in ten years and my daughter loves having a park-like backyard rather than having to walk ten blocks to an overcrowded concrete playground in Brooklyn
Interesting thread for me because our builder, Ryland, has slowed way down in the sales also, but they are currently finishing out the infrastructure of the development like others here have opined about. They appear to be doing the right things considering the down market. The homes they are selling, they are filling in the few empty lots left in the first phases, so that each phase is not littered with unbuilt lots. That said, it will take them a long time to build out this whole place. Fortunately, Ryland seems to be in a stronger financial position than most of the big builders & hopefully can weather the bad times.
There are definitely plenty of stuck flippers here (probably abt 30 out of 300 homes built), most of the investor homes have been sitting for over a year unsold & I recently documented 2 sales for 20-30K less than the flippers paid, which, after taxes & mortgage payments for a year means they probably lost 30-40K each. So the market is definitely shaking out in Pasco. Still, nothing near going below the $100 sq. foot price we bargained the builder down to, so we are ok (therein is the problem for the flippers - builder can and will sell for less, so they are screwed)
I always enjoyed your comments as well as Chip & Lizziebeth’s.
Great report, buddhaman. Glad you made the move and that you and your family are adjusting well. I know from your posts how hard you worked to make this happen.
Thanks - much appreciated.
Too funny! I haven’t visited the housing bubble blog in forever! We were very close to buying and chickened out at the last second. Wanted to see the latest and greatest on the housing bubble blog! Glad you are enjoying your new home! You got an awesome price!
We are getting antsy to have our own home! I think the market could be worse here in Bradenton than Pasco. Every house we look at is owned by someone who has at least two houses, some as many as five. Problem is, prices still aren’t coming down to where they should be. The builders are offering great incentives though. Who knows, maybe we’ll join the wonderful world of homeownership again. Thanks for the kind comments!
Hey LizzieBeth! - good to hear from the “old” (last year!) florida crew!
From what I hear, south of Tampa is far deader than north. Not to be a prickly New Yorker
, but my own observations have led me to the same belief that many native floridians have told me… that there is NO real economy south of Tampa, except RE & Tourism. So the big run up in prices there, which was far greater than in Pasco, will have a longer, further unwind.
Wait until you find something that won’t make you feel nervous about signing the papers for (as you know, my comfort zone was $100 sq. ft., new construction w/everything I wanted) and keep a year or 2 expenses in the bank. If the market goes south from that type of price point, I feel the whole economy would be in the pooper and you need to have ready cash.
Maybe one day we can get some Tampa bubble-bloggers together for a margarita somewhere and watch the sunset on the Gulf of Mexico (my favorite free entertainment
As someone who travels the southern regions of Florida quite a bit, lemme tell you:
1. There is no economy whatsoever south of Tampa and west of Miami. It’s a never-ending sea of strip malls and cookie-cutter snowbird homes. I couldn’t ever see vacationing next to a Circuit City, but I guess if you live in London anything warm will do.
2. Tampa is an economic disaster waiting to happen. Roads there are seriously underdeveloped for the traffic they carry, and drivers are bringing their New Yawk attitudes to the roadways there. It’s not the Redneck Riviera anymore. There’s some light industry, but you’ll never collect a pension from any of these companies. They’re trying to turn it into “mini-Miami” with all their new condo building downtown, but that will be a colossal failure, too, as we have all noted here. The result will be a lot more pawn shops, strip clubs and payday check cashing stores.
3. Orlando is the diseased heart of Florida supported by a single thin artery known as Interstate 4. It would take a quintuple bypass to clear the cholesterol of this place. You would probably be safer on a bungee cord.
And that’s what central and southwest Florida is like. And remember, NOW IS THE PERFECT TIME TO BUY!
Regarding the Live Oak Preserve article by the St. Petersburg Times. Most municipalities require a developer to post a fiscal bond (or cash deposit) before a construction plan is approved. The bond ensures that the roads, water lines, detention pond and other infrastructure will be built to proper engineering standards.
So, a developer cannot just walk away from a 1/2 built subdivision. If the developer defaults, the bond company or the municipality will finish the job. Logic follows that if you’re going to build the roads, regrade the land, install waterlines etc…, at that point, you may as well build houses and sell them. It’s like putting frosting on after you’ve baked a cake. Worst case scenario, you can always build a 3-2 and sell it under a federal affordable housing program.
The point of all of this is that even if builders go broke - there’s more inventory coming down the pipeline.
“The point of all of this is that even if builders go broke - there’s more inventory coming down the pipeline.”
Testify, Roger! I see building STILL going on, right next to stalled developments here in South Shore Tampa Bay area. I don’t know who they think they are going to sell to.
Yes - the builders have to finish out the subdivision phase (at a minimum) - if the builder doesn’t they end up defaulting on their surety bond and it ruins their credit. There is no way a builder like KB Homes wants to loose their future lines of credit. A smaller builder skip town - but then, the bond company gets to pick up the pieces.
Well, after being crucified in the court of public opinion (or HBB opinion) yesterday, I was waiting for the FL thread today so that I can defend my views on SOH.
Yes, I understand that those who have the breaks are reluctant to give them up. And that’s exactly what the systems consequence was; it gets us all to argue with each other, instead of unifying and arguing with the taxing authorities.
Here is a great explanation of the ACTUAL consequenses of SOH:
http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20050921/NEWS/509210645/-1/SPECIAL09
And yes, just to answer the one question, I did used to work for a local govt in S. FL. My distain from SOH comes from that experience, yes. But not because we were being “choked” by SOH. The opposite was the case; I saw what the govt leaders really think of SOH. I would often pose the question; “Property values are going up 40% YOY, why aren’t we cutting the mill rates”. And the answer was always “Because we don’t have to”. The majority of the people who can vote are protected; they don’t give a rats azz what we do with this money. SOH helps INFLATE the tax burden; and has allowed some of the most outragous govt spending ever (on a local level anyway) to take place in FL.
I understand that those with the protection don’t want to lose it. However, it is necessary to heal our broken tax/political system down here; it really is. What we need is a cap on REVENUE growth to the municipalites, not a cap on the amount of tax that homeowner X has to send in. Values (well, selling prices anyway) are up 2-3X in Palm Beach over where they were 5 years ago. The mill rate should be 1/2 to 1/3rd what it was. Instead it’s down about .0X percent (I don’t know the exact number; it’s exactly enough to prevent those with SOH from having to pay more YOY, and is figured pretty much directly off that number).
And, how about we do without with the personal attacks today. If you want SOH, and think it deserves to stay, justify it. I will disclose, I do have an adgenda. I don’t own a home today in FL, and would like to own one eventually. So, a tax system that places the burden on the newest buyers is; in my situation, a bad thing.
My real agenda is to get people to wake up, realize what has been happening with these massive tax increases, and prevent this from happening again. I support capping; but the current implementation is so unfair as to border on unconstitutuional. This is like putting a 10% income tax increase on everyone who immigrates to the US. You think that would stand supreme court muster? Well, that’s exactly what SOH does, just on immigrants to FL, not to the US. Cap the amount that everyone has to pay; and now you have my support.
The fear is palatiable down here, BTW, in both people I deal with in homebuilding and in govt. The “tax reform” that is being promised from the capital is terrifying those most directly in the bubble zones (they could lose 30% of their revenue in one stroke of the pen, with protections to keep them from ever getting it back).
Is there any way to financially play this? Can you buy “puts” on govt agencies? I am being serious; we are definately going to see govt agencies become insolvent (much like Prop 13 caused in CA). Is there any way to take this side of the bet?
” SOH helps INFLATE the tax burden; and has allowed some of the most outragous govt spending ever (on a local level anyway) to take place in FL.”
Mike, even without SOH with the huge YOY gains in value spending would have been insane. They simply would have hedged the appraisals on existing homeowner’s. States that don’t have SOH or anything like it have that going on without exception.
The problem is we have no spending caps in place. The government (especially in Palm Beach County) has become the largest employer in the county and the biggest spender. Caps are what we need to push for…not the repeal of SOH.
I agree we need to push for caps. But, in the same sense, we also need to repeal SOH at the same time. Tax everyone on full value, and then adjust the mill rate to keep the taxes constant (or reduce them 2001 levels, which is really where, imho, they should be). I am fully in support of a plan that controls the tax burden. However, SOH does not do that; not one iota. It just controls the tax burden for those that can vote; and allows increases with impunity on those that cannot.
I would support, without hesitation, a plan that caps spending and distrubutes the taxes in an equitable manner. I also am fine with an increased homestead exemption for residents. My goal is a fair and controlled tax for everyone; not just those lucky enough to buy 5 years ago.
“I would support, without hesitation, a plan that caps spending and distrubutes the taxes in an equitable manner.”
Well good luck with that one. We’re asking politicians to police themselves. With less money, they won’t be able to bring their friends in on no bid deals with large kickbacks.
“Well good luck with that one. We’re asking politicians to police themselves. With less money, they won’t be able to bring their friends in on no bid deals with large kickbacks.”
LMAO! Testify!
Well, I realize it’s not what they WANT to do. You know, I don’t really want a mid-level car, I want a Lambo. But, at the same time, there are economic realities to deal with here. I think that many people would support this kind of system, especially if we put it in with a slow phase out of the individual caps.
It’s a finacial necessity, it really is.
Oh, and BTW, did everyone realize that SOH also limits the mill rate (to 3% of value)? I did not realize that was part of the amendment. We are already at 2%, if values 1/2 and they jack the rate to 3%, we are still making out better.
Mike, I think you have to understand the political realities. You are correct in your thinking however it will never happen. It is that simple. It takes a constitutional amendment, so what you are asking for is more than 50% of Floridians to vote themselves a tax hike. Most snowbirds don’t vote (Yes I know some do illegally but not enough to change the outcome). So you can jump up and down and be right but it isn’t going to change. By the way did you see the senate plan? Florida is toast for multiple reasons 1. Insurance 2. Property Tax 3. Hurricane fatigue 4. Rampant violent crime 5. Huge illegal immigrant population 6. Water crisis 7. Declining population 8. Economy based on growth and tourism 9. Wages too low support high living costs. 10. Heloc living 11. Subprime
I reluctantly agree. My only hope is that a portablity plan gets passed; a constitutional challange is raised, and the entire thing gets thrown out because the whole system is based on “Taxation without representation”.
Honestly, although people beat this issue all day long (myself definately included), this is going to fix itself. Prices are going to fall until the full payment for the property is equivenlent to the rental of that property. Does not matter is 80% of that payment is insurance/taxes. It will get to that point one way or the other. It would be nice to see a fair tax burden; but without it, the prices will fall faster and harder then they would otherwise.
“because the whole system is based on “Taxation without representation”.
I’m calling BS on this. Florida residents themselves voted for SOH. If that isn’t representative taxation, I don’t know what is.
“It would be nice to see a fair tax burden;”
Fair to whom? Builders? Speculators? Second home owners?
We’ve already seen what they’ve accomplished in Florida.
“the prices will fall faster and harder then they would otherwise.”
Good. That’s exactly what I’m waiting for and the main reason I’m on this blog.
FL residents are not the only people who pay the tax. And the tax is higher on those who cannot vote (because they are not residents). That’s why it’s a taxation w/o representation issue. It’s like asking FL residents if they think we should tax people in GA for property. SURE!
But the people in GA don’t have a vote, because they don’t live here.
Fair to whom? Well, fair to all would be great. But, let’s start with an easy one. Fair to all homeowners in FL. Speculators, builders, second home owners, all of them. If you own a home in FL, you deserve the same taxation system as people who are residents here.
I am not trying to prevent the housing collapse in FL. However, a system like SOH is kind of outside of the housing collapse, this is going to be a problem for us residents from now until it is finally fixed. I do think we agree on one point. Let the values collapse, and then the tax issue will fix itself. My biggest fear is a stupid bailout from the tax burden that will further damage our housing market 10 years from today.
Either insitute caps on the govt, or leave it alone. The crazy (replace prop tax for sales tax) initiatives? All they will do is blow some air back in a bubble that badly needs to deflate.
“FL residents are not the only people who pay the tax. And the tax is higher on those who cannot vote (because they are not residents). That’s why it’s a taxation w/o representation issue. It’s like asking FL residents if they think we should tax people in GA for property. SURE! But the people in GA don’t have a vote, because they don’t live here.”
WTF? Makes no sense to me. Lessee now, I just recently went up to stay a while in Connecticut and I paid the sales tax there on anything I bought, but didn’t complain that I wasn’t “represented”, because I wasn’t a resident of the state. Legal residents of any state should be the ones to decide the policy for their state. If people don’t like it, don’t be here. Same goes for the US as a whole, BTW.
As I said in another post, there are 50 states in the US. If the tax structure in Florida bothers you that much, maybe another state with a different tax structure would be better for you. From your posts, I know you enjoy the pursuit of attractive tail here in Fla, but that’s also available in other states as well. You don’t have to give that up.
Comment by Michael Fink
2007-04-13 07:57:10
FL residents are not the only people who pay the tax. And the tax is higher on those who cannot vote (because they are not residents). That’s why it’s a taxation w/o representation issue”
So what you’re saying is you want representation without citizenship, or residence status in this case? That’s like saying it’s OK for the UN to tell the US how to run it’s government, or for the US to tell China how to do things. No? Just trying to clarify.
The difference is that the residents of Connecticut also have the pay the same sales tax. There is no unfair system, they pass a tax that they all have to pay; if you go there, you pay just like they do.
Now, imagine the same situation; where, if you show your CT (is that the right state code?) drivers license, you pay less or no sales tax.
That’s the FL situation.
I agree that the legal residents should make the laws, however, in this case, the residents have made a law that should not be allowed to stand in it’s current form. I suppose we could make a law that every plane that touches down in FL has to pay a $100/per person “FL touchdown tax” as well. We could, I suppose, put a “Welcome to FL, please pay the entrance tax to the right” fee in as well. I suppose we could also leave the union and stop paying income taxes to the fed. We could try to do lots of things to reduce/eliminate our tax burden. However, how about starting with the easy one; control the spending and distribute the tax in an equitable way (whatever that may be).
I suppose we could all just move to Africa and stop complaining about the US housing bubble as well. FL is my home, and I love it here. I would like to see good things for the state, and see us prosper and take steps to make us a first tier place for businesses and tourists alike.
I realize we disagree on the tax issue; and that’s fine. The blog is to air opinions. However, don’t become one of the “FL bigiots” that I meet everyday down here (if you don’t like it; LEAVE). Guess what; if you were not lucky enough to purchase before the massive run-up, you, much like me, would have a very big problem with paying 2-4X the tax your neighbor does for exactly the same services.
What kills me is that everyone thinks this is only an additional tax burden being passed on to snowbirds and foreigners, but that is not the case. I am 35 years old and I have lived all of my life in FL, but I’ve only recently married and settled down. When I was young and single I liked to move around a lot so it was always prudent to rent. Now that I am considering buying (more likely in a couple of years when prices are more reasonable) it is very likely that I will be taxed double or triple what my neighbors pay. This isn’t passing the burden on to snowbirds, it’s passing it on to future generations. How can anyone defend this system? Don’t many of those that now enjoy the SOH break intend to have children and grandchildren that they would like to live in the same area?
At least if there was a similar federal tax exemption for citizens everyone that was born and raised in the US would qualify. I have had it at this point. If they make SOH portable I am leaving the state. I have enjoyed FL’s cheap public higher education system which got me my degree and CPA, but it looks like I am going to have to use it elsewhere. I’m sure there will be a dozen immigrants to take over my apartment when I go. I hope this works out well for the SOH SOB’s.
John,
Pretty much the same situation I am in. I moved here a few years ago, but was not ready to buy a home until the bubble was WAY too far along to even consider it.
SOH is (among other things) an intergenerational transfer of wealth, much like social security. And yes, people always talk about the snowbirds without thinking about people who move here for a job/employment, or people who are born here and just happened to be born at the wrong time and are now expected to subsizide their neighbors taxes because of a timing issue.
Most of the people who defend SOH are just blinded by greed. However, for the most part, the people on this blog defend it on the basis that taxes never will go down, and at least someone should be protected (all of us getting killed by taxes does not make it better for anyone). I disagree; I feel that taxes are more a “number” that must be hit one way or another. If we tax equally, it’s easier for everyone to make the number (many hands make light work). However, where I agree is that the tax burden we currently face is nuts; and should have been rolled back many times in the past few years as values exploded (and, in my opinion, this did not happen because of SOH).
SOH is, imho, indefensible. But as you can see, others feel differently. We all agree, however, that taxes are out of control and need to be rolled back through some mechanism.
And yes, long time residents need to go tell their kids “thank you” for paying their tax burden (assuming they were able to afford to live here at all).
SOH has the affect of a cartel. Cartel’s are able to manage price for long periods of time. Unfortunately they create huge imbalances. In the case of Florida SOH has the affect of punishing young people presently attempting to buy a home. SOH has reached the point that the brief run up in price levels is not able to stay up due to the realization of new buyers at the beating they will take in taxes.
SOH as a cartel encouraged price rises since it tended to descourage existing owners to sell….they would have to pay more in tax if they sell and rebuy. Brokers sales information showed the existing owner’s taxes not what the poor buyer would pay. This delayed recognition of the problem. Speculators seeking to take advantage of the joint 2 year $500,000. tax free gain would buy a house to sell at higher prices. Most property taxes got reset after 18 months giving these people cover to speculate at the lower tax rates.
Now the excess of the cartel (SOH) will help a violent correction in prices.
The law was stupid and unfair. If you are able to understand that social security as it has evolved is grossly unfair to our children and grandchildren then you need to get over your selfish interest and understand that SOH was a mistake.
The market does not care what we think. It is going to punish realestate and some of the excesses in SOH will get cleaned up. I know that I can buy just about anything here in Naples but will rent. I can not imagine buying a $4 million house and paying $50,000. a year in future taxes from some old couple that pay $8,000.
I think you are all wrong. The minute you buy a house in Florida and apply for homestead exemption, your tax rate is set, until you sell the house. It can only go up three percent a year. You are getting the same benefit as people who bought twenty years earlier at much lower prices. The fact that they we ahead in the line is irrelevant. You, too, will be ahead in the line to those behind you, who will be screaming at you, etcetera, etcetera. SOH works the same for everyone who lives here. My father’s house, which he bought forty years ago, is supposedly worth a fortune, but it wasn’t when he bought it. Should he be paying taxes on an artificial value created by flippers and investors, and stupid people paying three or four times too much for junky houses because they got zero down liar loans? SOH allows him to keep his house, instead of having to sell it to some obnoxious pretentious yuppie couple from New York. Even with SOH, his taxes are horrendous, and many, many times what they were when he bought his house.
Take away SOH, and what will happen? Will the taxes on new, overpriced houses suddenly drop as more money flows into the state treasury? No, they won’t. The state will simply spend the new money, on top of the old, and the only thing that will change is that hundreds of thousands of people who’ve lived here their whole lives, or most of their lives, will be forced to sell to developers, posers, and greedy Yankees who want their properties. I said it yesterday, but it bears repeating: These people are no different from the carpetbaggers of old; they want something for little or nothing at someone else’s expense. If you don’t like the stupid taxes, don’t buy outrageously priced properties, or fight to get the tax rates reduced. My sister pays fifty thousand (50,000) dollars a year for property tax on a house with a very small yard, and she doesn’t complain, because she researched the taxes before buying. I can’t afford this, but I would never think of spending two million dollars for a house in Tampa, the ugliest city on Earth. There are lots of states other than Florida. The fact that Michael wants to come here to party and chase silicone breasts, and act like a retarded college student has nothing to do with Florida taxes, and everything to do with selfishness, and astoundingly bad taste. Guess what? They have silicone in Canada, too, and it doesn’t turn rancid quite as fast as in South Florida.
If this reads like a personal attack, perhaps one should not blab so much about ones personal proclivities. I happen to find it revolting that New Yorkers have come here and trashed the place up to make feel like home, destroyed every square inch beach for gaudy condos, inflicted sickening New York food on the natives, and dragged everyone down with their incredibly bad manners, arrogance, and immeasurable vulgarity. So, yes, I’m a bit biased in the argument.
So you’re saying it’s okay if I get screwed on property taxes for a while because I’m going to get the chance to do it to someone else down the road. Isn’t this the same idiotic, Ponzi scheme logic that created this housing bubble?
Again, you have railed against greedy Yankees without acknowledging that SOH effects first time home buying native Floridians now and for generations to come. Since you can’t reasonably defend SOH you decide to personally attack another poster. Why don’t you just admit that you are a greedy hypocrite who visits a housing bubble blog to complain about those who have gamed the system at the expense of others, while at the same time you benefit from and defend an unjust law?
The fact that you keep harping on something I said about the attractive women in FL, and the good entertainment scene tells me that you, in fact, have no good argument to stand on and must resort to personal attacks.
The fact that you think I want to “chase tail” all over S. FL in no way invalidates (or has anything to do with) the unfair tax system that we have. The only reason that conversation has ever come up is because S. FL is great place to be young; it’s really becoming an area for 25-50 year old people. And is becoming less and less a place for people to retire. I am very happy about it (and I can understand, and sympathize that not everyone is happy about the changes) and moved here for this kind of environment.
And yes John, SOH is another ponzi scheme, abiet one that actually has SOME postive effect (unlike the housing bubble, which in general, just screwed almost everyone). However, just because there were some winners from SOH does not make it a good law, and the alternatives (that some people fail to even consider because of their hate for snowbirds/NYers or their desire to f**k other people over) are MUCH better and would serve to actually control this insane spending.
I didn’t make the chase tail crack, but you’re still wrong about SOH. It isn’t a Ponzi scheme; its protection for residents against falsely inflated property values, exactly what we’ve experienced for the past seven years. And New Yorkers, primarily, are the ones who inflated them. Go to Naples, Sarasota, or Tampa and see who lives in all the ghastly McMansions on the water, and in all the tacky highrise condos. Nine out of ten are pretentious New Yorkers, showing off for the folks back home, while disdaining the locals as beneath them.
Incidentally, who cares if a bunch of 25 year olds think they can take over Florida? The hubris would be funny, if the fools weren’t so revolting. MTV living isn’t cute when those feigning the lifestyle are over the age of 18. Then, it’s just embarrassing.
You still haven’t explained how getting rid of SOH would help your or anyone else in lowering your taxes. I think you suffer from the Misery loves Company syndrome; you just want everyone to be as pissed off as you are. Your tax rate is based on the cost of your house, just as everyone else’s is. If you pay ten times as much, your get taxed ten times as much. It’s very simple. Where is the injustice in this? And again, how will getting rid of SOH lower your taxes? I CAN defend my position, and I’m not greedy at all; quite the opposite. I’m also not a hypocrite, and have no desire to f— anyone over, ever. But, I am appalled at the Yankees who have overrun this state like coakroaches, and tried to turn it into New York 2, and New Jersey 2, and Ohio 2. If those places are so wonderful, why do they leave?
When in Rome do as the Romans. The Ugly American, so reviled in Europe, is called the Ugly Yankee in Florida, and reviled for the same reasons. Colonialism hasn’t been fashionable for a hundred years, but somebody forgot to tell Yankees, who think every state belongs to them to do with whatever they like. I bet you would have chatised Native American tribes for not accepting, graciously, their trampling by “pioneers” from the Northeast. Most of these invaders were in their 20s, too.
The minute you buy a house in Florida and apply for homestead exemption, your tax rate is set, until you sell the house. It can only go up three percent a year. You are getting the same benefit as people who bought twenty years earlier at much lower prices. The fact that they we ahead in the line is irrelevant. You, too, will be ahead in the line to those behind you, who will be screaming at you, etcetera, etcetera.
You have just given the perfect definition of a Ponzi scheme. And the SOH Ponzi scheme only works when prices keep going up. And that’s all over.
You want to keep your taxes from going up, Floridans? Elect governments that spend less money. You have finally run out of new buyers to rob. SOH is just going to accelerate the RE collapse in Florida which will wipe out the net worth of all homeowners.
” 6. Water crisis”
Such bull. Stop with the water crisis. I’m from Michigan where in dry summers they would give us “restricitions.” I can tell you one thing…Michigan’s not running out of water anytime soon and neither is Florida.
Yes I am sure you are right about Michigan however there is something called salt water intrusion. If the fresh water table goes to low saltwater intrudes and the well is unusable. So you can have water everywhere but not enough to drink!
Desalination plants.
“Desalination plants.”
Expensive, but effective. As I said, we’re not going to see any “crisis” as a result of simple restrictions. Remember all the hype about Y2K? It’s the same way with water in Florida. It’s over reported right now. Most people know we’re not going to run out. The ones who listen to the media are stocking up on bottled water to fill their toilets and shower with.
Water can be overrated @ times…
W.C. Fields and I, are of that persuasion~
Testify, Bad Andy! The southern half of Florida is the area having problems with water, because of overbuilding and lousy infrastructure and pollution.
Interesting story about water in Florida. Florida has more freshwater springs than any other state (except maybe Arkansas, not sure). Anyway, the Hillsborough River gets low every once in a while and Tampa gets all freaked out because that’s where the water comes from. What people won’t confront is that Crystal Springs, just over the line in Pasco County, is in fact the headwaters of the Hillsborough River. And whaddya know? Back in 2000 the owner of the land where Crystal Springs is located, leased the springs to Nestle Waters Inc. (French company), which practically pumps it dry to sell bottled water all over the world. But nobody can prove this, because they have high fences all around the property now, when it used to be a family swimming hole. Instead of confronting what the truth is, and taking the land by eminent domain, Swiftmud (the South Florida Water Management District) builds reservoirs and a failed de-sal plant. Too late for eminent domain now. Now that the land owner leased to Nestle, this cost would be exorbitant.
“and a failed de-sal plant.”
Tried to take the cheap way out. Fact is, desalinated water costs about 4 times more to deliver. To think that you’d ever get that cost to just above even money is silly. I pay about $25 per month in water here in Palm Beach County. We’re not super light users either. In Michigan, I paid about $40 per month in the winter and $80 in the summer. Maybe people would use less if it cost more.
How long until someone gets the bright idea that the Federal Govt. needs to spend even more money to buy up undeveloped and agricultural land all over Florida to save the Everglades — and thus help stabilize Florida real estate a little bit.
Just wait for it. I’m not saying it’ll fly — but you know someone’s going to propose it.
you left out global warming/rising ocean levels
I am sorry you got flamed, as a newer Florida resident I am still in two minds about SOH, but I do think the original structure had a lot of unintended consequences and won’t be easy to fix,at least some the dialog here has been the clearest I have seen on the issue. The one comment I can make, is the services I have seen here are significantly better than most of the places I have lived and I don’t think scaling back a few things would be too difficult.
“I don’t think scaling back a few things would be too difficult. ”
ROTFL!
Where are you from? Have you seen the local governments here?
Hey, I didn’t say they WOULD, but I can live with fewer trash pickups etc… I have NEVER seen a local govt say, no thank you, we have enough.. at least with the shrinking student population we won’t have the “but the poor children” garbage, because anytime time revenue cuts are discussed you always here about the poor children and firefighters..
“but I can live with fewer trash pickups”
Twice a week is the greatest thing ever! I love having just 1 or 2 bags at the most to take out. I wouldn’t want to go back to once a week.
The school districts can live without a color copier in every hallway and in teacher planning and in the office. That’s one place where spending can be CUT without hurting the teachers or the students.
If the average citizen saw the kind of waste in the school districts, they would be outraged. Don’t blame the teachers. While $40K is a lot for a 9 month job, the cost of living is crazy in South Florida.
well education reform needs a whole new blog… don’t get me started.
Heh, wait a handful of years, tax revenues are going to crash. Then it won’t be “Twice a week pickup”, it’ll be “Borrow a pickup” to take your trash to the dump on the weekend.
“it’ll be ‘Borrow a pickup’ to take your trash to the dump on the weekend.”
Being fromt the land of declining revenue (MI), that won’t happen…even worst case.
Here’s a good education reform blog.
I believe that the central deleterious issue with respect to SOH is that it encourages market volatility. That is, its cetnral goal - to provide stability for current owners - was only myopically true.
Current owners were indeed spared massive tax-hikes (assuming, of course, that there was no changing the milage rate along the way). This makes it easier to hang on to homes in a time of rapid appreciation, even if that appreciation was only on paper. But it does so at the expense of the future. That is, the security that SOH beneficiaries cull now is drawn from the security that they would otherwise have in the future.
There was simply no economic price to pay for increasing values of homes. For the “price” would be paid by your greater fool (”GF”, for you newbies) upon the sale of your home. Provided that the numbers still added up for the new GF’s, the system worked. But we have arrived at a point where the tax shelter sheltered the current owners so much, and future buyers so little, that it became economically imprudent to buy - precicely because of SOH.
While this is hardly the whole picture (i.e., insurance), I think that SOH managed to give owners security at the expense of imprisoning them. It saved them money, while also being a contributing factor to future slumps.
There are reasons for the spending increases, but not good ones.
All those cash cow seniors who went down to FLA and didn’t require services are now heading for nursing homes. Some get shipped back when their money is gone, some stay.
Flordia has not been big enough for long enough that it now has lots of retired public employees. Pensions are underfunded everywhere, more so after the tech bust, and other retiree benefits are never pre-funded.
The cost of the frail elderly not taken care of by their families (and how many will bother post age of divorce) and the pension/retiree benefits crisis have hit or will hit everywhere. The latter is hitting private companies as well. Both were major contributors to NYC’s insolvency in the 1970s.
The difference is Florida is trying to get buy paying for all this without a state income tax. In NYC we have a state income tax AND a local income tax and we don’t exactly get a lot of public services. Welcome to reality.
“The difference is Florida is trying to get buy paying for all this without a state income tax. In NYC we have a state income tax AND a local income tax and we don’t exactly get a lot of public services. Welcome to reality.”
There are 50 states in the USA. Florida is just one of them. If people are discontent with the tax structure in Florida, I highly recommend they move to a state that has a tax structure more to their liking.
Many moons ago, I lived on the Connecticut side of the NY/Conn border, before Connecticut had a state income tax. We used to laugh when we crossed over into NY, because the smooth Connecticut roads morphed into the rutted, crumbling roads of NYC. The quality of the services seems to erode as taxes increase.
Bingo!
“There are 50 states in the USA . . .recommend they move to a state that has a tax structure more to their liking.”
I’m a native. My family has lived here since the 1920s and I so agree with you.
Kay, I moved to Florida in 1980 to escape the smug, fatuous corporate attitudes of the Northeast and to enjoy a laid back, low cost lifestyle. I’m here because I like Florida and I don’t want to see it made over into a third rate Newyawkifornia. I am SOOOO weary of carpetbaggers from other parts of the country and even other countries (illegals) telling Floridians how it should be done, or how it is done better where they are from. To them I say “Piss off and go back to whatever hole you crawled out of and leave us alone”. These relocated a**hats have ruined so much of Florida, including its election system.
Having spent a lot of time in Fla over the last 2 years and finally moving from NYC 6 months ago - I can say I have had an education in the prejudices that occur on both sides of the fence. I’ve had to examine my own prejudices as well and learn to re-evaluate them, especially before speaking (or Posting!) them.
I myself thought Fla was backwoods when I was in my teens & college years and could never have imagined moving here. But marriage & starting a family changed my tune. I thought NYC was the be all and end all of the universe (& it still is, as far as entertainment goes, but that has limited attraction to me now) When I became savvy enough to realize that my life was being taxed away to support an enormous, self-propagating welfare state, I started planning my way out. Fortunately (& ironically), the bubble came along just in time to inflate the value of my apartment enough that I was able to sell it and basically trade it for a nice sized house near my wife’s family in Tampa area.
I had friends who were horrified when I told them what I was doing (Florida ??? echh!! I’d rather die) But it’s funny because when I visited a couple of the same friends last month in NY, they spent the whole time b*tching about their taxes in Long Island and the cold winter and everything else - and none of them utilize the arts or restaurants (the best part of NY) much anymore anyway. SO many of them are paying $3000-$5000 in PITI to live in mediocre, run down homes with an hour plus commutes to NYC. No way was I going to sentence myself to that life.
For myself, I notice more and more how grey everything is in NY in contrast to the vivid greens of Pasco County. For a kid raised in a concrete world, I am pretty content theses days just sitting on my porch looking out at the trees all winter.
On the flip side, I hear many Floridians make blanket pronouncements about us New Yawkahs. Granted, we can be an obnoxious bunch - probably the closer to manhattan & the more liberal, the more so (in my opinion - they all have grave concerns but never, ever want anything in their backyards). But even though we can be verrrrry righteous and NY centered, there are plenty of us who are quite adaptable and willing to blend.
buddhaman, I was born in NYC and lived in Peter Cooper Village (Stuyvesant Town) the first four years of my life. Very sad to see that wonderful apartment complex sold out to the REIC. Lived in suburban NY until college, then in Connecticut and Mass until I came here. Never looked back. During this bubble, I have had moments of wanting to return to New England, but then I come to my senses. I’ve learned to embrace Florida, even with its faults. As one of those Northeasterners who has been adaptable and willing to blend, welcome! Looks like you are well on your way to becoming a Floridian. Some of us transplants become even more Floridian than some of the natives, if that’s possible.
Also I know what you mean about the vivid greens. One of the amazing things about Florida is the contrast of the green against the blue sky. This is definitely a colorful state and it really is never boring. I recommend checking out the artwork of the Florida Highwaymen painters and the books of Carl Hiassen.
Hey Bud, I think we had the New York talk many months ago. The difference between you and the obnoxious New Yorker is that you have embraced Florida. I have many friends that love it here and aren’t obnoxious NYers. It’s those that move here and bitch about everything they don’t have here, that are annoying! I’m with the “if you don’t like it here, go home” crowd.
For myself, I notice more and more how grey everything is in NY in contrast to the vivid greens of Pasco County. For a kid raised in a concrete world, I am pretty content theses days just sitting on my porch looking out at the trees all winter.
Orchids grow on trees in SoFla. I love that.
Like Jimmy Buffett says, Changes in Lattitude, Changes in Attitude.
“Many moons ago, I lived on the Connecticut side of the NY/Conn border, before Connecticut had a state income tax. We used to laugh when we crossed over into NY, because the smooth Connecticut roads morphed into the rutted, crumbling roads of NYC. The quality of the services seems to erode as taxes increase.”
I lived there then, too. Remember driving north to CT from NYC through the never-ending construction site that was the Cross Bronx, the Major Deeghan, the Cross County, and the Hutchinson River (I may have them out of order; it’s been a while since I’ve driven this route)? Suddenly you’d hit a stretch of well-paved road and find yourself driving under a canopy of lush graceful green trees. The temperature would drop about 10 degrees as you crossed the border from NY on to the historic Merritt Parkway and you’d breath a sigh of relief because you were almost home at last–in Connecticut.
biCoastal, I have the same memories of that drive. Thanks for reminding me. The Merritt Parkway was a wonderland in the spring and summer. Back then, anyway.
Guys (& gals) - there really is nothing quite like a drive up through New England in the fall - amazing fiery colors.
Fla. colors are such a different vibe, very rich & soothing.
The following may sound stereotypical, but it is true for me: I am a guitar player and I love to sit out on my porch - in NY I was always playing some fast speedy stuff (could only play outside a couple months a year - rush rush!) - in Fla. I can let those slow blues echo through the woods all night, all year long - love that!
Whew, a long read. Sorry Mike that you felt “crucified” in the court of HBB yesterday (I missed it). I think SOH is an absurd meddling, just like Prop 13, distorting the market. Saw Schwarzenegger on Charlie Rose’s show last night, talking about a whole bunch of presumably expensive initiatives. He may have balanced the CA budget last time. Hard to see how this will happen again any time soon. My reaction is, it would never make any sense to acknowledge a CA residency. Going to PA in a couple of weeks.
“This is like putting a 10% income tax increase on everyone who immigrates to the US. You think that would stand supreme court muster? Well, that’s exactly what SOH does, just on immigrants to FL, not to the US. Cap the amount that everyone has to pay; and now you have my support.”
I love SOH even more now that you have point this out. If it keeps the New Yorkers and the New Jersyians from moving here I’m all for that. Plus those poor homebuilders you mention might just have to go rape someone elses state. Long Live SOH.
Mike, you and I are so alone in our clear-headed logic that there is no sense arguing with dummies anymore. (Yeah, folks, consider this a personal attack.)
When you protect people from paying their fair share, they simply will opt not to pay it.
When you were in school didn’t you consider it unfair when the teacher went light on discipline with a teacher’s pet while he repeatedly laced into the troublemaker? Now what motivation would there be for the pet to question the treatment of the troublemaker? NONE! That’s why SOH is bad. As long as Florida’s populace continues to receive love-tap taxes while businesses are financially pummeled there won’t BE any industry in Florida!
Why, oh why, are Floridians such a feeble-minded, short-sighted bunch? (I guess it’s because many of them are so close to death the long-term is irrelevant.)
In case you forgot…
Today is Friday, April 13th~
Good morning and good luck
I DID notice that. No financial transactions today. My income tax is already paid. No long drives. I did just pay a dollar for two cookies at this Internet cafe. Hope I didn’t give them a 20 by accident.
Half-built developments are going to become common. The bond will provide the money to finish the roads and other infrastructure, but the lots themselves will remain vacant. That’s better than a bunch of unsold and unsellable houses which become squatter havens, shooting galleries and the like.
[i]“Seiders said there are a record 1.4 million excess vacant housing units for sale nationwide, and the number will grow as homeowners lose their properties to foreclosure. [/i]
This is a factor that I feel is under reported. Vacant homes have a shelf life. Probably of no more than a year to a year and a half. After that they are unsellable. The pressure to sell them before they are worthless will only grow. They can’t simply be taken off the market like an occupied home.
1.5 million is about 30% of the total inventory.
“Vacant homes have a shelf life. Probably of no more than a year to a year and a half. After that they are unsellable. The pressure to sell them before they are worthless will only grow. They can’t simply be taken off the market like an occupied home.”
Very good point, edhopper.
edhopper and palmetto - please explain this shelf life comment. Why do vacant homes have a shelf life? Why do they become unsellable?
“Why do vacant homes have a shelf life? Why do they become unsellable?’
Because generally speaking, vacant homes are not maintained and that which is not maintained, deteriorates. Maybe not always entirely unsellable, but it does happen that vacant homes get declared unsafe by code and zoning entities and end up being bulldozed.
That and vandals discover them, and squatters and homeless use them as giant garbage cans and urinals.
Can you all see this?
http://www.minyanville.com/articles/Sbprime-FNM-FRE/index/a/12580
How about a little contest to see who can come up with the best bouquet of black flowers?
i.e.:
Like, later dude, real estate is so early 2000’s, serf’s up, gotta go catch a wage…
that graph makes my stomach turn.
Debt. It’s the new wealth!
IAT
pretty interesting graph thanks tx
Wow. That is scarier than the house price graph, because you can’t imagine it ever correcting itself.
I told my friends at the end of 2005 that housing price in Miami will fall 40% in three years. They all thought I was nuts.
I said the same thing to people in Palm Beach county. And yes, they looked at me like I had 3 heads. They expected values to GROW by 50+% over the next 3 years. So, we were almost polar opposites.
I expect that with some looking, you can find a home where from peak until today there is already a 40% drop (very motivated seller). I have seen one in my development that was a 30% drop, but then others that are more in the 15-20% range (which seems pretty typical right now).
seeing 30% - 40% markdowns here from peak, and even at those prices, nothing is selling. I have now revised my predictions, I think at least 60% is likely now.
The pressure to buy was pretty strong then, but I learned a hard lesson during the .com bust, so I told them I’d kill myself before being sucked in again. I am glad I am completely debt free.
I’m seeing the same. There are a LOT of homes in Palm Beach County that are going for far less than list, and far less than 2005 values. I have yet to see a Zip Code where that is not true - from the run-down areas to the nice historical areas and new construction communities.
I recently looked at a home bought by an “investor” out of foreclosure last fall. The investor dumped all sorts of money into it, and listed it at 280k when area comperables were listing for 325k. It still sits unsold, and the realtor’s sign is now replaced with a FSBO sign. That’s one story among so so many in PBC.
That said, I still find a fair smattering of very foolish buyers.
“They expected values to GROW by 50+% over the next 3 years.”
Actually a very good friend of mine sells real estate. Her expectation in 05 when I was looking was that prices were going to drop in the neighborhood of 40% and to hold off. That’s why she’s still a good friend of mine. We didn’t buy until December of ‘06 and only after a 40% haircut from peak. We may still see our value go down, but as it stands now our $221K house sits in a neighborhood where the lowest listing is $255K.
BadAndy: I’ve seen other posters complain that their lowball offers are rejected. How did you do it?
I’ve said this several times: we’re gonna end up with half-built 40-story concrete skeletons in Miami.
don’t we have them already;-) at least a lot of very dark buildings at night.
Those concrete skeletons will make great artificial reefs if the water level rises.
I think they’ll wind up being housing projects.
LOL! Then the residents will truly be “underwater”!
“If you want SOH, and think it deserves to stay, justify it.”
diogenes, incredulous and myself have stated our reasons for our support of SOH yesterday. I’ve done so in the past. I support SOH because it is working out exactly as it was intended to, allowing people to keep their homes instead of being tossed out due to massive increases in taxes during crazy bubble run-ups like this one, caused by speculators and other unsavory characters. No one complained about SOH until the bubble happened. As diogenes patiently and politely explained, let the market take its course and it won’t be an issue. And besides, buying a place in Florida is not some sort of God-given, inalienable right.
“The fear is palatiable down here,”
What is “palatiable”? Palatial? Palatable? Palpable? I’m going with door number 3. According to the post, homebuilders and local gov seem to be feeling the fear. That’s a good thing. Two entities that screwed things up royally, and they begrudge homeowners a little bit of a tax break.
On a slightly related note, did you see that Pam Iorio has put a hiring freeze into effect in anticipation of budget cuts due to property tax “reform”?
Most of the govt agencies I work with are in a hiring freeze. Some are in a budget freeze as well (until the new budget year). The rumblings up north definately have the cities scared; but we will have to see if anything is done to actually enact a change.
I am too busy today to comment in detail. I have already made the case i needed, but let’s touch on a similar matter.
What about “green laws” for agricultural zoning? Do you think it’s fair that a farmer who raises cattle on 1000 acres should get agricultural zoning and pay less taxes on his farm than the neighboring subdivisions? I do.
Why should a family be force to sell their homestead because their $800 per acre (1970 price) ranch is now “valued” at $25000 per acre by a developer? Do you think they should be forced out by taxes? What if they don’t want to develop the property??
Too bad, hey, Michael.. Book it a current “best use” value and make the farmer pay $500,000 per year in taxes. That’s fair, isn’t it?
He did ask for all the sprawl, and his business model won’t stand the hit. Solution, Mike? Force him to sell to the developers so they can build tract homes for flippers to buy and dream of vast riches. It isn’t happening anymore, but the farms are still be vacated. take a good look at Florida Ranch/Farm land. In South HIllsborough County and East Dade, all the FOOD GROWING lands are being devoured by development that makes no sense.
But, then, maybe the farmers should take the money and run, so that homeowners can pay $100,000 per acre valued assessments.
Get a clue.
This financial scheme is ruining hard-working peoples lives so that people gaming the credit system can fly away with our money. SOH is not a problem, and you wouldn’t even give it a second thought if the “values” had not Skyrocketed. It would be a moot point. Let get pricing back in line, then it won’t be an issue.
As I have said countless times. I don’t want a MILLION DOLLAR house, I want a $50,000 house. Speculators have made that house go to $180,000 in just 4 years. The house is the same.
The utility is the same, the “value” is the same. The TAXES/INSURANCE/Maintenance are much higher. My only break is the SOH bill spared me of even greater increases. I want the price to go back DOWN. My house is a residence, not an “investment”.
Now………….back to work for me, to pay the cost of all the “appreciation”.
-Diogenes.
Amen, brothah Diogenes! Testify! You have summed it up exactly! Wish I could express it as well as you have, so I thank you.
“Seiders said there are a record 1.4 million excess vacant housing units for sale nationwide, and the number will grow as homeowners lose their properties to foreclosure. He expects more home and condominium price declines in many areas, including South Florida.”
Does Seiders’ 1.4m refer to all vacant homes, or only new ones?
Interestingly, that figure alone exceeds ziprealty.com’s total national for-sale inventory count…
‘Am I allowed to use negative numbers?’
Negatives are the least of your problem. You’re gonna need exponents! Underflow errors! Division by zero!
h_a_n aka passthebubbly
From the “negative numbers” article:
Builders and other real estate businesses nationally and regionally have cut jobs in recent months as the demand for housing wanes. A government report released this week showed that South Florida wages are flat or declining, in part because of the real estate slide.
The average weekly salary in Broward County grew just under 1 percent to $754 a week for the third quarter of 2006, compared with a year ago. Palm Beach County’s weekly wage fell 1.6 percent to $756.
Does anyone know who puts this kind of data out (census, DOL, etc), and where I can find it? It would be fun to play with. Also I’d like to see their definitions: is this pretax or after-tax, is it really average and not median, etc.
A government report released this week showed that South Florida wages are flat or declining, in part because of the real estate slide.
Awww… sniffle. No more $200k+/year mortgage brokers “helping” clients into a sub-prime? No more years of realtors getting 0.9% of GNP in commissions and instead of hitting the normal 0.6% peak, 0.45% normal… we’re headed down to at best 0.3% GNP for commissions.
They don’t even know what a haircut is yet. I think that real estate commissions could hit 0.2% of GNP. (Awww…) Also, due to declining prices, I think the rebate buying services (ziprealty, redfin, buysiderealty, etc.) will gain more clients. Thus making permanent the “haircut” in commisions.
Then we could discuss how all of these proposed laws to punish MBS security buyers is going to tighten credit. I would be all of the investment banks are achieving new “pucker factors.” Yes… credit is still loose. But its tightening up. Its a ship tough to change course but once it does its tough to get it back on a straight line (much less back on the original course).
Got popcorn?
Neil
These bastard industry leaders (reic) need to be escorted to the nearest bread line. they are all surprised by the severity while they looted everything in sight for last 5 years. hope they have a miserable 5 years.
Renterfornow
Here’s the bad news. Those “bastard industry leaders” will not have 5 miserable years. Unfortunately. They have high powered lobbyists and crooked politicians of which there is a majority. The only ones who will end up being “unfortunate” as this mess unfolds are the dumb Joe Sixpacks who bought into the American Dream b.s and the taxpayers (you and me) who do not have off-shore accounts where we can put our money after pasying off the politicians and lobbyists.
I have to laugh at people who are “looking for the bottom,” as if this is the stock market where people can pull their money out at the drop of a hat. These get-rich-quick folks are so freakin’ stupid, except, of course, those who got in and out fairly quickly. But I’d guess there aren’t many of those; greed can make people pretty stupid.
A lot of people will find the bottom.
However, they will not have done it intentionally.
You haven’t found the bottom for sure until you see a sustained and sustainable upturn. Smart buyers don’t worry about missing the first few percent of profit on the way up — just like smart sellers don’t try and wring the last few percent of profit out before prices hit their peak.
We have soooo far to go before finding a bottom. And we won’t really know it’s the bottom until it turns back up.
Anybody see the “Internationally Featured” designation for houses on the market? The logo for the designation is a gemstone. To me, this designation implies that the house is so overpriced that they have to look all over the world for someone stupid enough to buy it. The sad thing about it is that some people will actually be enticed by the gemstone and the “international” label.
ROFL, yep, there is on brokerage that seems to specialize in POS canal houses, some of them in pitiful condition, and they are all “internationally” featured.
I’ve had the opportunity to watch many tiny investment bubbles burst and the human part of the equation is much the same and it never varies…
Here it is:
More demand than supply? Can’t get enough.
More supply than demand? Couldn’t be interested.
Don Ho is no ho in my book…
Tiny Bubbles
Somewhere in the print, de la fine
Make me happy
Make me heloc, all the time
Tiny Bubbles
Make me warn, all over
With a feeling that i’m gonna
Owe on this house til the end of time
So here’s to the golden goose
And here’s to Glengary Glen Ross, by the sea
And mostly here’s a toast to you and me…
where to put the money?
something bright and shiny and you can take it out and look at it and it just gives you a warm glow inside
you are harshing my mellow
Brad, you do a very good impression of aladin.
Oh this market is going to crash. Guy stops into my office to review his refi paperwork. SFH on the southside of Chicago. Purchased in ‘06 for $103K with 80/20 financing. Payment is 50% of his take home income. 12 months later he wants to refi with a major national bank to pay off $15K in credit card debt.
His 2nd jumps from $20K to $45K. His payment jumps from $163 to $350 per month. Fortunately, both his first and second are fixed rates - both are below 9%. He is the definition of Alt-A.
He looks at me and says, “One paycheck goes to the mortgage; One paycheck goes to the bills.” Well, after the refi it’ll be “One paycheck (plus some of the next paycheck) goes to the mortgage…..”
Just because it’s a fixed rate doesn’t mean it’s horrible horrible lending standards. This guy misses one paycheck and his entire house of cards will come tumbling down. He has 0 savings. I mean 0. Why are the banks still doing this?
The bigest problem is the guy will use those now empty credit cards anytimer someting does go wrong, and not have a way to pay them. Things won’t really blow up until all these fools using MEW and cashing out to pay CCs have enough time to re-maxout their cards with no where else to go.
I’m sure there are plenty of people following these kinds of locations, and nothing is wrong with them of course, but from my perspective in LA, it seems to me that news about how bad it’s getting for builders who’ve been building new homes out in cheap areas with tons of land (TX, NV), or two+ hours outside of major cities (Newhall, Porter Ranch), is totally disconnected from the market for older homes in established, high density areas with no room to build (LA). I mean, most of those new homes were mainly built for flippers and other speculators anyway. Massive building of new tracts of thousands of houses just hasn’t happened in expensive, high density areas. Well, good news for anyone shopping for a house in Newhall or TX, I guess.
bad news for anyone who wants a home in San Diego, LA, or SF right now this very instant can’t wait another minute why is it taking so freaking long i want it
F U I’ve been at this game SEVEN years
yes and about a year of posting every day:
prices haven’t come down yet
when are prices going to come down here
prices haven’t come down yet
I just saw a tiny price reduction
when are prices going to drop
prices haven’t come down yet
I’m waiting for lower prices to buy
prices haven’t come down yet
OK Brad, stop annoying lainvestorgirl.
Oy! This is a FLORIDA thread!
It will happen there, just not as fast and far. I lived in NYC through the 90’s and even though it is “differnt” there, it was not different at all. I expect that LA and NY will just be a long tortuous slide down. There are simply not enough people with real income high enough to sustain the prices in these areas without suicide loan products & liar loans.