“Looking For Further Price Erosion” In Florida
The News Herald reports from Florida. “In line with the rest of Florida, Panama City’s home sales declined in March as the state saw significant drops in most metropolitan-area housing markets. There were 814 sales spread across all Panama City MLS housing categories in the first three months. That compares to 984 sales in the first three months of 2006, said Association President Scott Bowman. ‘I just don’t see that sales have picked up,’ Bowman said.”
“Area real estate broker Evan Brusilow, said…some condos were selling for $305 to $310 per square foot, a figure he described as ‘2003 dollars.’”
The News Press. “Daphne and Randolph Sewell thought they were risking only $15,000 in the summer of 2005 when they took out $750,000 in construction loans for three First Home Builders houses in Lee County.”
“But in today’s market the houses are worth less than those loans and the tenants who were supposed to defray the Sewells’ mortgage payments never materialized.”
“‘We’re facing financial ruin,’ said Daphne Sewell.”
“On their combined income of less than $90,000 a year, the couple couldn’t afford to make the roughly $6,000 a month in payments on the houses if they bought them, she said. Now the couple, who live in Broward County, face foreclosure by First Florida Bank on two of the houses.”
“The Sewells’ lawyer, Gary Poliakoff of Fort Lauderdale, said his clients ‘kind of naively signed all these documents’ without realizing the consequences. ‘The Sewells are people who are hard-working individuals with family. They’re somewhat unsophisticated about making investments,’ Poliakoff said.”
“He said…the prospectus included language that adds up to securities fraud. For example, it states: ‘Investors will receive a gross return of 14 percent of the sales price of the home. The 14 percent is contractually agreed upon by the tenant before occupancy.’”
“In addition, Poliakoff said, ‘There’s a word in there that jumps off the page — that they will ‘coach’ the tenant on how to qualify for a mortgage. What the hell does that mean? It sounds like mortgage fraud.’”
The Star Banner. “While existing-home sales in the Ocala area last month continued to rebound, the number of homes sold was down 33 percent from the same month a year ago when the local real estate market was still red hot.”
“(Realtor) Bert Meadows said the real estate boom of the last couple of years was an anomaly, and said most Realtors would be happy to see sales figures similar to those witnessed in 2003 or 2004.”
“‘I think it was an unusual time in the market,’ he said of the frenzied sales period.”
“There’s still lots of inventory on the market. Realtor Judy Disney-DiFranco said she’s seeing more homes are being listed than are being sold and prices are falling. Buyers have the advantage, she said.”
“‘It’s still a buyer’s market,’ Disney-DiFranco said.”
The News Journal. “Volusia foreclosure filings have averaged 450 a month since January, compared with a 175 monthly average during 2006. In Flagler, the caseload growth has been even sharper: 90 a month since January, up from a 36 monthly average during 2006, the RealtyTrac figures show.”
“Social service agencies say area foreclosures have risen significantly over the past year, and the worst may be yet to come.”
“‘There’s over $1 trillion in adjustable mortgage debt that’s going to readjust this year around the nation, and that’s going to create havoc,’ said Richard N. Schram, spokesman for the Consumer Counseling Credit Service of Central Florida & Tampa Bay.”
“Higher interest charges are just part of the problem, Schram said. Rising insurance and property-tax bills are pumping up monthly escrow payments by hundreds of dollars. ‘We have seen cases of some monthly payments jumping by $800 to $900 a month,’ Schram said.”
The Palm Beach Post. “With home prices still falling and mortgage foreclosures rising, builders won’t see better days until the end of the year, industry economists said Thursday.”
“‘We’re definitely looking for further price erosion,’ David Seiders, chief economist for the National Association of Home Builders, said at the trade group’s Spring Construction Forecast Conference.”
“The key problem is the glut of unsold homes and rental properties choking the market. ‘Both are running very high,’ he said. ‘We’re heavily oversupplied.’”
“The construction plunge is far more severe in South Florida than in most other areas, because the boom there was greater in 2003 and 2004. In the Miami-Fort Lauderdale region, housing starts this year will decline nearly 35 percent from the previous year, to just 20,200, according to association data.”
“South Florida home building will recover eventually, but ‘there is a big overhang, so it’s going to take a while,’ said Patrick Lawler, chief economist for the Office of Federal Housing Enterprise Oversight.”
“With South Florida’s hot economy, many Baby Boomers hurried to buy condos before prices rose he said. ‘You start to see prices rising, so you think, ‘I better do this quick,’ but that clearly bred some speculation,’ he said. With the accelerated demand, builders too got carried away and flooded the market, he said.”
The Herald Tribune. “Joseph Pufta, the former CEO of a home building company that abandoned 50 home sites in North Port after taking money for construction work that was never completed, has turned himself in to authorities.”
“Avalon is one of three area home builders to have collapsed since the real estate bubble burst last year, but Pufta is the only local building executive to face criminal charges.”
“‘I hope the charges stick,’ said Sheila Schaller, a massage therapist from Michigan who contracted with Avalon in March 2005 to build her family’s home on San Mateo Drive. ‘I hope he doesn’t plead out. I don’t want it to be a slap on the wrist.’”
“Schaller, like many of Avalon’s customers, knew something was wrong when subcontractors started levying liens on her home because they were not paid.”
“Pufta’s grand theft charge stems from a case where police say a New Jersey woman wrote Avalon Homes a check for $42,180, yet no work was done. According to an arrest affidavit, Avalon Homes cashed Isabel Soto-Mercado’s personal check Aug. 16, 2005.”
“When Detective Lenny Hills visited her home site in February of this year, 18 months later, it was still an overgrown vacant lot.”
“‘It was very awful,’ Soto-Mercado, said in a telephone interview from New Jersey, where she and her husband remain while they figure out what to do with their abandoned home site. ‘Not only did we give him money, but we paid for the lot and have no house.’”
GDP anyone have a detailed breakdown ?
would love to see how big a number MIC is
bet it’s huge
tanks,security building in Iraq
all = BS transfer payments
According to this All the world is a bubble not just US
http://biz.yahoo.com/ts/070427/10353243.html?.v=2
We (US) go down, why not have everyone go down.
sinxe their seem to be no bits bucket i hope it is ok to post in this thread
china / stock market frenzy / economist
nasdaq reloaded or worse. amazing!
Comparative Math Quizzes / Minyanville
stock market rallies since 1900 / chart
Sale of the century - buy backs / economist
http://immobilienblasen.blogspot.com/
have a nice weekend
“The Sewells’ lawyer, Gary Poliakoff of Fort Lauderdale, said his clients ‘kind of naively signed all these documents’ without realizing the consequences. ‘The Sewells are people who are hard-working individuals with family. They’re somewhat unsophisticated about making investments,’ Poliakoff said.”
Translation: just another couple looking to get-rich-quick and assumed real estate was an easy path to that. Ooops! (But of course they have to add the “hard-working people with a family” in there to make it more of a sob story.)
“somewhat unsophisticated about making investments,’ Poliakoff said.”
Note how the lawyer carefully qualified that they are only “somewhat” unsophisticated. Means that they have other assets, they have bought real estate before, they are not uneducated, and they knew what they were getting into–a sure fire road to riches. Now that it hasn’t worked out, they hire a lawyer to plead them out of their contract.
What in the $”^%6/ is a couple that is “somewhat unsophisticated about making investments” borrowing three-quarters of a million dollars for?!?!
I’m just flabbergasted…
I’m pretty sure this lawyer is the same fellow who writes a regular column for Florida papers about condos. I used to read his column regularly when I subscribed to print newspapers. As best I recall, in his columns he was a bit more into personal responsibility for decisions than he appears to be in the case of the couple who needed three investment properties.
“The Sewells’ lawyer, Gary Poliakoff of Fort Lauderdale, said his clients ‘kind of naively signed all these documents’ without realizing the consequences.
Here’s a radically new concept whose time has come - let’s certify who is and who isn’t competent enough to sign binding agreements. The low-brows who “kind of naively sign” whatever is put in front of them would be barred from voting and breeding. Within a couple of generations, most of what’s wrong with this country would be corrected.
LMAOROTF
For those who may not know Northport is in Sarasota County.
better know as the I-75 speed trap.
These same talking heads have been in denial about the existence of a housing bubble for the last 2 years…and now they try to spin that there isn’t a recession just around the corner?
With 40% of the jobs created in the last 4 years being related to real estate, you’d think they’d have some kind of clue.
And the real numbers won’t be reported because most people in the field are considered “indepenant contractors”.
http://biz.yahoo.com/ap/070427/economy.html?.v=2
RE employment in 05 = 9%+
mean is 6%
and yep, most are 1099 so when they get a shty job they become “employed”
That’s a good thought. Kinda of been wondering about Yellen’s new ‘connumdrum’ (sp?) : her recent remarks wondering how the economy can decline yet employment rates drop. This is akin to the massive hidden jobs losses in the construction industry due to layoffs of off-the-books illegals. The Street won’t get it until Wal-Mart’s southwestern US numbers start tanking due to the spending pull-back of that huge population.
“‘We’re facing financial ruin,’ said Daphne Sewell.”
Sucks to be you.
Sounds like another couple learning the “pig” song (deliverance)!
You sure gotta pretty loan…
well played
nice loan, wanna fcuk?
“Sounds like another couple learning the “pig” song (deliverance)!”
Dueling Banjos… http://www.youtube.com/watch?v=esl2NNOtHQE
Maybe Ned Beatty should be the poster boy for every FB.
http://www.youtube.com/watch?v=0qz4L1O84_I
Be like Ned.
You guys are so bad.
the “pig” song
BayQT~
maybe we could get Alec Baldwin to be the spokesman, calling everyone “pigs”… or maybe run a sales contest: if you sell you get the steak knives
“maybe we could get Alec Baldwin to be the spokesman”
Coffee is for home owners!
They might have something of a case, though, with regard to securities fraud. Anytime an entity is handing out a prospectus, there are SEC regulations that govern what has to be said and what can’t be said in the prospectus. This is a little different than the couple just hearing about how people were making money in flipping and going out and signing contracts with builders on their own.
‘We’re facing financial ruin,’ said Daphne Sewell.
Honey…………for only $15000 I can get you off scott free…..honest….after I get your check….hurry.
From ‘Famous Quotes & Deep Thoughts’…. “We don’t need your steeenking flipper houses”
“On their combined income of less than $90,000 a year, the couple couldn’t afford to make the roughly $6,000 a month in payments on the houses if they bought them, she said….”
Really? I thought a debt to income ratio of 80% is standard nowadays.
Now they are sueing the developers. Hey, you idiots got caught holding the bag, the music stopped as we knew it would. So now that they can’t make a ton of money without working they are going to sue. What has happened to our society?
I thinik the prospectus promising a 14% return gives them a good cause of action. Whether the guarantor of the 14% will be in business very long, depends on how many other “investors” decide to hold the guarantor to the promise.
isn’t that unusual for a developer to be dumb enough to put that in writing ?
I’m not a lawyer ,but would know better
Has the builder declared bk? Maybe some jail time if fraud, but doubtful they’ll get $ back from the builder. I would think their best chance is likely getting the lender to eat some of it.
I like the $15k “risk” for the apparent ~14% of 750k = $105k “guaranteed” return.
It sounds as if their legal defense will be, “innocent by reasons of insanity”. I just can’t believe it!
“The 14 percent is contractually agreed upon by the tenant before occupancy.’”
The prospectus didn’t say the builder would guarantee a 14% return it said the tenent would guarantee the return. No tenent = no return.
That’s the way I read it it. Basically saying the buyers can make 14% gauranteed if they find a stupid renter.
Captain…
Yep,I was driving around the undeveloped section to the east of i75 yesterday. This area has not been touched since the roads were put in I think in the early 70’s. I found a couple of very remote(I mean in freakin bfe) lots for sale. Made the call. The morons want 30-50k per lot. They sold before the run up for 5-7k. Oh well,I can wait em out. The really scary part is Port Charlotte/North Port is maybe 30-40 percent developed and people are asking prices like there is no land left. I actually saw a lot, nuthin special, that a for sale sign for 100k. It is going to come down here,It just hasn’t settled in yet…..
Chris
Its funny that you mention port charlotte, as my grandfather bought a whole bunch of lots there in the ’70s. They were sold 2 years ago for aroun 25K each, but no taxes had been paid by my grandmother in like 5 years…. I guess that if you net it out, they did OK, but, if he had invested the money into anything other, even a money market account, I bet he would have done much better. It took almost 30 years to sell the things at anything like a number gain (probably under what was paid for them adjusted for inflation) but it is even amazing that they sold at all. That is what awaits all these ghost developments… It was supposed to be their retirement home, but never got around to it before he died…
“It is going to come down here,It just hasn’t settled in yet…..”
I think that’s the key…I believe there’s still a crowd out there that are believeing the MSM hype..” it’s the bottom, turaround right ahead” and have some savings to wait it out. I even heard real estate ‘never goes down ‘ just yesterday. It’s still ‘this place is different..gods’ country’. The market is screaming top, the dollar tanking,GDP down, yet the talking heads are saying full steam ahead 14k here we come. Maybe,but for how long….the tanker has slowed to be sure, just hasn’t stopped ,and changed direction. At that point I hope you already have your seat on the raft as too many for too long havn’t read their history primer.
…OT,but up another 15K+ in 2 days http://tinyurl.com/2jcads
“The key problem is the glut of unsold homes and rental properties choking the market. ‘Both are running very high,’ he said. ‘We’re heavily oversupplied.’”
————————————————————————————————-
Although I know little about the internal mechanics of the homebuilding business, from what I’ve been told is that it’s “build or die.” If that’s the case, then there is no alternative other than the kamikaze dive into oblivion. How HB stocks have not completely imploded to date is a sure sign of market intervention by the big brokerage houses. The invisible hand does not exist in today’s securities markets.
Well, let’s hope the invisible hand does exist in the housing market itself. [from the post:] “Builders won’t see better days till the end of the year.” — Right. The end of the year is the all-time peak of ARM resets. Somehow I don’t think builders’ better days will immediately follow that phenomenon.
“Builders won’t see better days till the end of the year.” Are you kiding me? End of 2009, maybe
And I’d bet not even then, in Florida. Unless they get a good hurricaine to wash 1000’s of homes into the sea, they’re going to have an oversupply for a decade.
Which year?
Roidy
“Pufta.” Isn’t that an Oz expression?
Loan Wankers, would be a better term.
Rule One: No Puftas!
The Oz expression is “poofter.” It’s meant to refer to gay people.
“They were supposed to be sweet deals” -Joe Pufta
–
No Bits Bucket, so I post here.
April 27, 2007
HOT Off The Press – Housing Supply-Demand Horror Show Continues
The latest US Housing Survey is out. Here are the YoY numbers:
2007Q1 YoY Change, Thousands
Total Units 1,893
Total Occupied 415
Total Vacant, Year Round 1,216
As you can see the increase in the supply was more than four times the increase in the demand and 2/3rd of the increased supply was added to the Vacant Units, Year Round.
The economist at the Calculated Risk blog keeps his imagined number of demand at 1.7M units while the real world demand is very low. I have pointed out to him at least four times and supplied him with the data and the source and yet he keeps his “estimate” that may be years, if not decades, old. Economists have been the willing accomplices of the housing promotion industry that lied to people about the supply-demand of homes to trick people into buying now.
Homeowner Vacancy Rate at 2.8% is at multi-year, if not multi-decade, high.
Housing will bottom only after 90% of the homebuilders are out of business because with 13.4M Vacant Units, Year Round, there is no need to build for years. In a recession the demand actually turns negative (people move in with others).
Jas
I agree with you. I plan on moving back in with my parents after I graduate from college, help them with payments cause I feel bad that their going through this situation. My parents are eager to change their mortgage to a 30 fixed.
Wow — now there’s a watershed. Kids moving back in with parents in order to help the parents keep their alligator at bay.
“Kids moving back in with parents in order to help the parents keep their alligator at bay.”
LMAO! Great PR! Wish I’d thought of that one back in the day.
We almost had to do that, my dad lost his job of 34 years. Now, he and mom both work - for a combined income less than what he was making before. Good thing they had assets, and bought their current home over a decade ago.
Oh, and they bought it with 30% down and fixed 15 year. It’s almost paid for, almost. Thought you might like that. Good thing I had parents that taught me good financial responsibility.
2.8 is the highest all time since stats have been kept - 50 years. 2006 was the first time this number ever broke 2.0.
This is a key illustration of why the bottom is still a long way off.
link?
http://tinyurl.com/yr3yvd
P.S. - make a graph of the data - you’ll be amazed.
IN broward county alone properties for sale have risen from last month to this month by 3,000. Puting the amount of properties for sale at the 40,000 mark. Based on simple economics of the average amount of properties being sold at around 700 you have 3 years plus worth of inventory..these kind of sad stories are only going to get worse as more ARMS of these “leased” homes, since that is what you are doing now having to refi every two years, happen. South Florida between these investor properties, ARM’s, taxes and insurance will be seeing an economic housing depression that will not be corrected until 2010/2011.
$3 gasoline locally is here and 100 dollar oil coming.
Oh, yes, read on Marketwatch that the Fraudis just rounded up 170 suspects with weapons and millions of spondulicks that wanted to attack the oil infrastructure of the Magic Kingdom.
Won’t be long now. This will break the back of what is left of the economy. Housing bubble will be the least of our worries….glad I have a little 30 mile to the gallon pickup truck now. The F series and giganto-mobiles are going to be PARKED soon.
Fraudis…now that’s good. I read Tenet’s comments about why he is puzzled the Al Qaeda sleeper cells haven’t attacked in the U.S. and my only answer is that there are better targets in Iraq and Saudi. Break the Saudi family’s stranglehold on Saudi Arabia, and you break dollar hegemony. The economic fallout would be far greater than even a localized dirty bomb.
“This will break the back of what is left of the economy.”
Cripled economy drives oil prices down no matter what the geo polictical concerns are. If we have a major recession, we’ll be back to the $11 oil that we had in the late 90’s that caused the tightening of the belt by OPEC which led to this mess. Wash, rinse, repeat.
Can you elaborat on this? Why would the price of oil go down? Not being snarky, I just don’t know.
And would this history repeat itself even in the face of Peak Oil/etc?
recession means less “work” is being done. less work means less gas needed for that work. Less demand for gass, lower prices…
now it gets wierd and paradoxical when cheaper prices means more is used, but then add peak oil….
Not so fast. Most of the usage is “baked in” regardless of the economic conditions.
Good point, Andy. I recall back in the early 80s in South Florida when energy prices (electric bills) started skyrocketing. Interest in solar started developing in a big way. People began to install some solar heating units for water, etc. There was much talk then of alternative energy. People even started to (gasp!) conserve. Of course, then OPEC dropped trou (sers). And solar and other technologies were rendered “cost-prohibitive”. We should have had the courage to push forward with alternative energy anyway, we’d be in much better position right now.
Solar technology with a cost structure equivalent to grid prices in more expensive areas should be available sometime in 2008. The pace of innovation in solar is startling. The constraint will probably be production capacity.
geothermal getting popular here in W. Colorado - even a few developers are into it…
Production capacity will ramp up fast if there’s good money in it. Look how quick cell phones caught on. BTW, check out Nanosolar. com. God I hope those people are for real.
Ask yourselves what keeps the debt bubble inflated - $30 oil or $100 oil?
Strange how the ‘terrorists’ always play into the hands of the rulers in charge.
This time around, that’s only going to happen if the economies of China, India, etc. tank at the same time - certainly possible, but not a certainty. Those guys have lots of $$ to buy oil, now…
>back to $11 oil
this could happen, but most likely it’ll be temporary. Oil is a finite resource and what little that’s left sits in places where we aren’t liked very much. See: peak oil
$3 gasoline sounds great! Bring it on! It has been $3.50 for the last couple of months in the San Francisco / San Jose area. Thankfully I can get it “cheap” for $3.30 at Costco…
Speaking of which — before anyone runs out to buy an ethanol-capable vehicle, read pg. 18-19 of the Ethanol Flexible-Fuel Vehicles report (PDF) at http://www.fueleconomy.gov. This is a government Web site, obviously, and it shows highway mileage using ethanol to be the same as city mileage for gasoline. Nice to know that there are so many greenies out there who will be willing to spend even more per mile driven.
It appears that the price per gallon of ethanol and gas are about the same:
http://environment.about.com/od/ethanolfaq/f/ethanol_cost.htm
“Nice to know that there are so many greenies out there who will be willing to spend even more per mile driven.”
Most greenies don’t want anything to do with ethanol - most corn belt politicians, however, love the stuff!!
“…most corn belt politicians, however, love the stuff!!”
No joke — yet again, government screws up what was a nicely functioning market for an essential commodity. Corn prices are way up, but who is buying the ethanol, that supposedly was produced by the corn that disappeared, that made corn prices rise for the gourmet tortilla eaters?
Screw that. The energy content of E85 is something like 67% that of regular gasoline. So, if you are getting much worse mileage, and filling up more, the benefit gap closes QUICKLY. And, it takes more energy (read: fossil fuel) to refine corn into a burnable fuel that it does oil. So, the gap closes more. Furthermore, many of the flex fuel vehicles are GM trucks, which are a joke when considered for “saving fuel” anyway. Lastly, the corn producers are subsidized by the Federal government, meaning that we are ALL PAYING FOR IT ANYWAY. And the point was made that it reduces the amount of corn available for human consumption, animal consumption, etc, which raises the price you pay for corn at the store, and any meat that is corn fed, so you are paying for it there too! You thought there was a benefit? It’s a total joke. Want to save fuel? Get a Prius.
Rant off.
Chad, you are SO right. And don’t forget the fuel to run those big tractors and corn harvesters/combines. Did I mention the pesticides and fertilizers (oil based)?
Two random comments:
“No joke — yet again, government screws up what was a nicely functioning market for an essential commodity. Corn prices are way up, but who is buying the ethanol, that supposedly was produced by the corn that disappeared, that made corn prices rise for the gourmet tortilla eaters?”
However, corn production has been manipulated (and heavily subsidized) for ages by the Dept. of Agriculture. Not much of a nicely-functioning commodity market. In fact, much of our foreign trade problems come from anger with us for ‘unfairly’ subsidizing corn.
“Screw that. The energy content of E85 is something like 67% that of regular gasoline.”
I don’t disagree with the sentiment, and ethanol does have only 67% of the energy of gasoline (and can produce only this much using gasoline engines). However, if there was a lot of ethanol available, people could switch to higher compression engines (ethanol takes a higher compression than gasoline), which are considerably more efficient. Tho’ the whole thing really is just a way to subsidize ADM…
Housing prices in Broward County we were told increased by $4300. This is due to a surge of give backs from mortgage companies. Too many properties are being sold for higher than sale price listed. Why? Because mortgage brokers are giving buyers money back after closing. Example if house was listed for $600 and sold for $700 chances are that the mortgage broker has a appraiser in its pocket who appraised the property at a highter value. Then the difference between the asking price and actual sold price is refunded to the buyer. This kind of situation is becoming all to common as sellers get more desperate to sell their homes.
Since we can be pretty sure that the cash-back is not disclosed in the papers given the lender, this is fraud. Maybe they’re counting on there being so much fraud that the fraud-catchers cannot keep up with it and they’ll get away by virtue of sheers numbers and probability.
“they’ll get away by virtue of sheers numbers and probability.”
Could be they will. In yesterday’s blog, the FBI was quoted as being “generally uninterested in housing fraud.”
Hey all, OT, but I have a question:
I know someone who has been approached by another person who wants to “borrow” their credit score to perform a flip, in return for a promise of money. They claim they’ll have the flip completed in 3 months, but I don’t know how much is supposed to be paid back to the, um, shall we say “sucker”.
In any case, I know this is bad news and have been advising such. However, I’d like to get some references for this person to read, preferably via web links so they understand there are serious risks in deals like this. I’ve been googling around (perhaps not the right search terms) and I can’t find any information about this kind of activity.
I would like to know:
1) What is this type of activity (maybe scam) called?
2) Some web references discussing how it’s done and possible consequences to people who’ve done this. News, blogs, wikipedia, etc.
I figured the HBB would be a great source for this information. Thanks.
Crispy has a discussion on his blog today.
http://bakersfieldbubble.blogspot.com/
Also, see the $1.7 romanian straw man on ocrenters blog
http://bubbletracking.blogspot.com///
an article in today’s ny newsday on a straw buyer scam..
http://tinyurl.com/yu78p5
Feds make arrests in real estate scam
Raid on mortgage company centered in Bangladeshi area of Forest Hills leads to charges against 10
BY ANTHONY M. DESTEFANO
April 26, 2007
Ten people from Bangladesh were charged yesterday by federal prosecutors in a mortgage fraud scheme that centered on that immigrant community in Queens, officials said.
The scheme, as alleged in an arrest warrant unsealed in federal court in Brooklyn, involved a Forest Hills mortgage company’s use of so-called “straw buyers.” At least 13 legitimate mortgage banking companies made loans, according to the affidavit.
South Asians are the biggest fraudsters and scam artists on the planet, especially when they’re sticking it to us infidels on our own turf.
How does one “borrow” somebody’s credit score without actually borrowing his or her identity? If your friend with the good credit is actually going to co-sign the loan documents, there’s obviously nothing illegal about that, but it makes it perfectly plain that your friend is being asked to commit financial suicide.
you make them an authorized user on your accounts. Those accounts and your payment history shows up in their credit report, raising their score.
It is still in a grey area of legality. However it is very easy for as the “lender” to be F’d, badly.
In my opinion, anyone that is even giving this serious consideration has already got “Sucker” tatooed on their forehead. Therefore, they don’t want to be bothered by facts.
Of course, if you care about them, you should at least make your best effort to discourage them from this “investment”.
Anyone stupid enough to consider it deserves to crash and burn.
This happens to be like a RE agent that approached my sister on her campus, asking her if she was interested in buying a house.
It might be the same person.
You’re making this up, right?!
Realtors approaching undergrads looking to find buy… er, suckers?
Unreal.
Thanks for all the comments folks!
Also, since there are no LOCAL housing posts, here is some general observations from Key West and the Florida Keys. The word that best describes housing down here is “party on, dudes”.
The prices are insane and the listings are multiplying. I would estimate from my ground tour of the island that about 10% of the houses are for sale, and many more condos/conversions. My buddies from the island say more, but it’s really hard to tell without a complete inventory. Asking prices are retirement incomes for the truly greedy. But sales are slow to non-existant and some selling prices are coming down to more reasonable levels. Example: 1/1 condo in KW for $250k. That’s what they had been asking for efficiency studios along the barrier islands in Pinellas County.
But here’s a list of prices, just to give you some ideas:
Marathon Island:
Boat slip only in marina, fees are extra: $300,000. (reduced)
Open water lot (not deep water) Duck Key 1/2 acre: $2,295,000.
(not a misprint)….no house just a vacant lot.
3/2 block house, low roof (7′4″) circa 1970: $649,000 (no waterfront)
2/2 mobile home with carport and utility shed: $234,500.
Stilt house 4/3 overlooking bay (behind mangroves/no access):$749,000.
Big Pine Key and Sugarloaf:
2/2 stilt 1500 s.f. on canal with dock: $548,000.
2/2 stilt, 1800 sf, canal access: $695,000.
Approx. 2000 sf with a 1b/1b apt. NO water: $$899,000.
2/1 mobile home with seawall/ boat slip: $449,900. (such a steal!)
1/2 a duplex on canal (2/1) $399,000. whole duplex: $599,000.
From Key West:
New Townhouse/condo one of four units (1b/1b) 663 sf: $545,000.
(That’s 663 sf of living area, not 1663, such a bargain).
Renovated approx. 1000sf block low ceiling small lot: $649,000
LOTS OF SMALL 3/2’s in the $$650K range. IN Town, off water, no land, just a tiny place to live. and many more pricy homes to choose from.
But my favorite was one I stopped to get the flyer out of the sign/box. A small wood-frame (built 1928, probably termite infested), 5500 sf lot, 1150 sf, low ceiling (vaulted to ridge beam), probably 2×4 construction in a low-lying area in “Old Town” with tile floors: $980,000. And the best part, it has “lots of potential”.
My windsheild appraisal was $165k prior to the “boom” Taxes are $1330 per year, currently. At $1 mil. sales price, they will go to 24k/year, so you get a good idea of the overall inflation rate.
I talked with a number of my buddies from the working poor in KW, and a number of their associates are in trouble keeping the places cash flow positive. Basically, those who bought a few years back are staying afloat with 3 bedroom models, renting the rooms at $1000 per month. I college frat house business enterprise in the middle of expensive SFR. The town hasn’t busted the houses with 6 cars parked in front because they wouldn’t have any workers left.
New construction continues, condos are being remodeled, every worker is an illegal Mexican. Many sleep in the cars, or crowded into houses with other workers. Friday’s Western Union and the post-office is packed with money being wired back home.
The same goes with Homestead and Florida City on the way into the keys. I did not see a single “anglo” amongst the population. I stopped for gas in Homestead. I was a stranger in my own land.
And just as an aside, Hurricane Wilma did quite a bit of damage 2 years ago. Most all the damage has been cleaned up, but even with all the tax money from all the expensive homes, they still haven’t put new decking on the Reynolds Street pier at Higgs Beach. Where’s all the money going, I wonder?
I could write an essay, but don’t want to clog the blog. All I can say is San Francisco, you got nothin’ on the Florida Keys. Our prices are astronomical and wages are even lower.
I read somewhere that a significant percentage of the Keys’ hourly work force is bussed in daily from south Dade. I don’t know if that’s true, but it would make sense to me. And can insurance be procured on some of these houses at any price?
Make sure you stop at Porky’s BBQ in Marathon. Yum!
>I read somewhere that a significant percentage of the Keys’ hourly work force is bussed in daily from south Dade.
The above is true.
Note to self - scratch FL Keys off my potential retirement list.
won’t it be under water anyway? Marathon is really nice btw…
Oh, I forgot about the gas. Prices down from Key Largo:
Lowest at Islamorada is $2.89. Same in Tavernier.
Further south, lowest at about $2.99 in Marathon.
Anything south is $3.10 minimum on average for regular grade
Some $3.14 -$3.19 for the name branded stations.
Check out the cost for marine/boat gas.
Heck, 100LL AvGas is $5.69 at Boca Raton Airport
$2.77/gallon when I refueled the boat at our community’s private marina last week. I suspect the marina got that tank of gas quite some time ago!
That’s really cheap, relative to marine gas in central and south Florida.
yeah but if you watch the MLS there are 2/2 on canals now for around 400, and there are condos in Key West 300k
6 months ago when I moved here, the cheapest condo in Key West was like 450k and a total dump
I think we all agree that the fit is going to hit the shan after the “$1 trillion” in ARMs reset.
What I would like to know is is there a leading indicator to track this?
What I mean is, the owners, if they are shocked with the reset, won’t be delinquent or in foreclosure at that point. I would like a reference to gauge the “oh sh!t” factor.
Any ideas?
Nothing scientific, but this week the SDCIA investor blog seems to be a goo place to start.
Don’t forget to drop in on Jeff’s thread. A few days ago, I was up late reading his posts I was laughing so loud that my wife woke up and came downstairs to check on me.
Thanks. I’ll check it out.
The kettle is coming to a boil.
Last night the Beantown evening news had a clip on a mob of 50+ lead by reps of the National Housing Coalition descended on the capital building demanding an audience with the governor with the agenda of having him proclaim a statewide moratorium against any more residential foreclosure action by lenders.
The women on camera were virtually hysterical.
Two were screaming about how they had 5 children to support, another said she’d suffered 2 heart attacks, and on and on into the night.
And the governor is a former flack hack for AmeriQuest, LMFAO!
The noose draws tighter.
Prediction? Deval will promise a lot and do nothing. He has about as much interest in “governing” as Brittany has in sobriety.
Deval is just positioning himself for some big, corporate, job down the road. With the giant house he’s building in the Berkshires (an the bath he’s certainly going to take on it) he’s going to need all the income he can get. For the next four years its going to be all about how “smoothly” he managed Massachusetts.
In some respects, that’s not all bad news. The last thing this state needs is another Dukakis like “activist”.
Jag~
So you’ve seen pic’s of Deval’s 10,000SF Berkshire “summer home” too?
Populist governor…whatta a bunch of BS.
Heard about this on NPR this morning. They mentioned one person’s story who appeared to have “refinanced” recently, into an adjustable loan. Refinanced for what reason? Took out how much equity? Deserves her home how much? Can’t manage to conceive of renting for what reason?
It’s all lame.
I’m not without sympathy. But there’s no good served by letting them stay in a house that they obviously can’t afford. Those who didn’t commit fraud on their loan applications should be able to avoid a deficiency judgement by filing bankrupcy.
The best thing the could do for the women and children is get them into some affordable rental housing. Ease the transition. Let the house go to the lender, who deserves it. Ironically, the FB’s can’t see beyond the next loan payment to know they are better off without the noose around their necks.
Anyone have any insight on real estate in St. Augistine? Still moving, dead in the water? I have a friend selling her home and she is having severe problems. Started out at 300k (next door neighbor sold for that) and is down to 269k. I told her to take any offer and get out. Any insights?
St. Augustine is going through the “gentrification” of the Market/Fort area, with new condos being built out of warehouses in the downtown district, at exorbitant prices, as though the boom continues. The projects will fail. There is no real economy in St. Augustine other than the port tourism and Flagler College.
It is a small town. Prices of houses and apartments in the Market area and nearby waterways bring higher prices, but the surrrounding areas are much like Jax Beach and the Coastal trip up US1. About 6-7 years ago, houses in Jax Beach were about 85k on average. Rents are still under $1000/month. 5 years ago they broke out to 135k, then went up, like everywhere else.
Lots started selling for 100k, that would have sold for 20k just a few years earlier. Condos are EVERYWHERE, and still building.
Now prices are in the $300’s, but sales have dropped and only a few idiots are buying. One moron bought a vacant 50×100 lot for $150k and put it back on the market for 200k. Another flipper that hasn’t caught on yet. Flagler and Duval Counties have some of the highest foreclosure rates in the State, and rising.
Your friends 300k house is probably one of those 85k houses that just got into the flipping game.
A friend of mine sold his swampland with small 2bdr house last year for $500k. I think it was 2 acres. He basically quit working.
He is now siting and waiting to buy back as the prices in the area fall.
Unless the house is on the coast or in the “cultural center”, there is no reason for an average house in North Florida to support a price tag of $300k, unless you can buy it for NOTHING DOWN, and payments of $599/month. That’s what got it there.
Bon Chance.
she is on the island just on on the otherside of the bridge leaving downtown. The bridge they are rebuilding. She bought the place for about 139k back in 2001. 30yr fixed. But this year her property taxes and insurance doubled so she can no longer afford the monthly costs. She got a roommate to cover the costs until she can sell. I lived in Jax from 1994 - 1998. I am shocked to see how much home development has taken place there since 1998. It is almost like the population has went up by a factor of 10.
A side note, the only people that have looked at her place were investors looking to tear it down.
If she paid 139 and is listed at 269 with no lookers, why doesn’t she slash her price already? Actually I know someone in the same boat, house listed for a year and they’ve only lowered the price about 10%, still looking for a 100% profit in 5 years. Noone’s looking but still they hold out hope that the market will turn around soon. It’s just hard to let go of those dreams of selling at 2005 prices, and I don’t have the heart to break the news.
“I don’t have the heart to break the news.”
EXACTLY. No one likes to hear something they own is worth less, even if they stand to make a ton of profit anyways.
Thanks for the impromptu update on St. Augustine RE. I used to live there during the 1980’s. I last visited in 2003 and was shocked to see how much bigger the city has grown!
It would be nice to live in St. Augustine again, but methinks I’ll wait for the housing scene there to cool down.
I have friend in REIC there. He says total bubble burst. Rampant speculation. He is looking to get out as he says the worst is at least two years off as every month more and more foreclosure. No supporting economy. If I were your friend I would price 10% below most recent comp. Sorry to be bearer of bad news.
Also looking for news on Flager Estates west of there. Friend of mine is holding several lots for “retirement investment” (I call it speculation) and reckons the price is leveling off. Ha! Prices seem to me to be diving, but that’s just anecdotal. His main justification for prices is the property listings (i.e. wishing prices), but we haven’t found any actual place to find the executed sales prices. One thing he and can both agree on is that his tax bills are soaring, and garbage keeps getting dumped on one of his places. “Look! Another old washing machine — ewwwww, sweet passive income!”
Flagler Estates is in the extreme southwest corner of St. Johns County, several miles south of Hastings. It is in the middle of no-where. The lots were platted way back in the 1970’s and were sold mostly to out of state buyers thru a direct mailing program. The original developers made almost more money by managing the homeowners association with annual fees for road maintenance, etc. The last time I was out there was like ten years ago. Some people were finally building some homes, but there are “thousands” of lots.
Yep, and he has some of them, and he’s an out-of-stater as well. He bought a few years ago for
No fallout, don’t worry… http://biz.yahoo.com/rb/070427/ford_sales_us.html?.v=2
NO SPILLOVER
DETROIT (Reuters) - Ford Motor Co. (NYSE:F - News) said on Friday that U.S. auto industry sales to date in April were “terrible” as consumer confidence was hit by a slow housing market and rising gas prices.
“This month is terrible,” Ford chief sales analyst George Pipas said in an interview. “We are not even close to where we expected to be in April.”
Pipas said industry volume appeared to be down 10 percent to date before seasonal adjustment, but expected Ford’s U.S. retail share to hold steady around 13 percent.
How much do you think all the transaction fees were to facilitate that?
Do you ever have days where you don’t know if it should be schadenfreude or stark terror and the economic news?
This is spreading. I cannot imagine cars are moving at even half their normal rate in Florida compared to say 4 years ago (a normal year); forget comparing to 2004 or 2005… Those were total bubble years.
I just blogged about my coworkers MIL…
The dam is about to break an no one will be able to stop it. Hopefully they don’t pull a Smoot-Hawley Tariff act on us…
I cannot believe people are still bullish. Latest bit? Dow 13,000 will save real estate! Sigh…
Got popcorn
Neil
aka “Lightsaber” if you’re from airliners.net.
funny how Fords claims the slowdown as because of the housign market, whereas Toyota’s sales didn’t seem to be effected….
Somewhat true. Toyota did have to reconfigure the Tundra line to produce more low cost trucks versus their initial run which was more high end. The difference is that Toyota is the low cost producer of vehicles; thus they can break even at a much lower point than Ford. Not to mention Toyota has that quality thing going for it…
Detroit is in big trouble…
Lightsaber
My wife told me, just this morning, that it seems Toyota/Lexus dealers are running twice the volume of TV ads as any other dealers. Can’t verify, as I don’t watch TV much.
I lived in So. Florida for 10 years and still have friends there. The big question mark now is Hurricane season. With all other costs going through the roof a hurricane hit on the area would be “game over” pretty much a disaster for Florida as insurance would double or triple if you could get it. I think there would be a mass exodus out of So Fla.
I still remember every year waiting in fear for my house to be leveled starting in July and around early October every let out a big sigh as we made it through another year.
I’ve been thinking the same thing for a while.
As soon as a hurricane hits the news media will go crazy talking about all the poor home owners that have lost vaule in their homes and now this!!!
3-4 days of hurricane on top of housing bubble talk will effectively kill the Florida housing market.
My friends left in SFL are already at the breaking point with taxes and insurance and ANY hurricane that even takes out the power for a few days will be enough to push them over the edge!
What’s keeping the hurricane worriers there? Hurricanes concerned me, so we left.
People like the sun, the heat, the humidity. Seriously, some even like the humidity. I lived there a few years, and it drove me mad, not to mention the flat landscape. I had a hard time living hours away from the nearest hill, as well as the lack of seasons, but that’s just me. As for hurricanes, I figured I we only got a hurricane every few years, but nasty humidity was every day.
Yet to some, it’s just heaven on earth. I cannot understand it.
spent a long hot summer in Tampa once, going to the university there. The lightning scared the beejeebers outta me (and I’m USED to lightning, for pete’s sake, if you can ever be, I spend a lotta time outdoors).
http://tropical.atmos.colostate.edu/Forecasts/2007/april2007/
We have increased our forecast for the 2007 hurricane season, largely due to the rapid dissipation of El Niño conditions. We are now calling for a very active hurricane season. Landfall probabilities for the 2007 hurricane season are well above their long-period averages.
http://www.msnbc.msn.com/id/18349148/
Well well looks like things aren’t really local after all are they. This whole thing is going to be what splitting the atom was to Nagasaki.
and from that same article:
Consumers whose shopping is indispensable to a booming economy boosted their spending at a 3.8 percent pace in the first quarter. That was a solid showing although it was slightly weaker than the 4.2 percent growth rate logged in the fourth quarter.
A key reason why consumers have remained resilient, even in the face of the painful housing slump, is that the jobs markets has managed to stay in good shape.
Jobs the Key reason?!? B.S. The key reason is in the massive use of credit cards. Negative saving rate. Why not follow in the footsteps of such a great teacher, Uncle SAmmy.
Exactly. Consumer sentiment won’t change till they’re all maxed out, then it’ll fall off a cliff.
What I find crazy lately is now that homes have stopped going up 10, 15,20% or more for the last year, all of a sudden every body is saying its a bad market, it unfair, blah, blah,blah. Still we have not had a huge correction in prices to bring things back to the mean which we must have to bring the RE market back to normality. When RE median prices are back to traditional measures ie. 10x annual rent, mortgages at 30% of gross pay, a certain x yearly incomes etc. what ever measure you want then we can move on.
I think you’re confusing who’s on which end of the leash here. The government is profligate because profligate people INSIST on electing profligate politicians.
And how much of that increase in spending is due to inflation? I know my grocery bills have gone up a LOT more than 3.8%
This thing is really starting to pick up momentum. Even Eureka, California, long a haven for washed-up baby boomers, is seeing inventory finally climb. Plus, low grade gas was up again yesterday, to $3.56/gallon. Nothing makes people feel poorer than declining home prices and increasing gasoline prices. Perfect!!!!
It’s starting. A house fire in Longwood, FL (suburb of Orlando). Owner bought for $450,000 in 8/2006. Look it up.
http://www.wftv.com/news/13209068/detail.html
http://www.scpafl.org/web/re_web.seminole_county_title?PARCEL=0821295CL00000060&cowner=FRULAND%20J%25&cctr=&ctotal=&cfparcel=0821295CL00000060&cmap=Y&cdor=&crank=1
or look up on Seminole County Property Appraiser’s Website.
http://www.scpafl.org
Yale Economist Robert Schiller Sees Possibility of Major Real Estate Crash:
http://www.sanfranciscosentinel.com/?p=1546
Possibility?
“JPL astronomer sees possibility of sun rising tomorrow.”
Well said.
I guess I shouldn’t make too much fun of the 1960s generation. Daphne and Randolph Sewell are my near contemporaries.
test
Suspcious fire.
owner bought it in 8/06 for $450K
http://www.wftv.com/news/13209068/detail.html
http://www.scpafl.org/web/re_web.seminole_county_title?PARCEL=0821295CL00000060&cowner=FRULAND%20J%25&cctr=&ctotal=&cfparcel=0821295CL00000060&cmap=Y&cdor=&crank=1
or
http://www.scpafl.org
I am sure that someone here has seen this and posted it but in case you haven’t, is this sweet or what? Taco Bell Jeff going down the tubes, giving all of his “profit” back in his other houses thru three bad ones in Florida. Gawd, if I were him, I’d be ashamed to put that on the internet.
http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1854186
Well, you’re obviously not the entrepreneur that Jeff is.
My response to that thread resulted in me being banned - something I expected, but I couldn’t help myself!
“Good advice for you from another board:
“OK, Jeff, here is the answer:
- You abandoned ethics when you decided to become a no-money-down RE King. Don’t worry about the ethics now.
- Sell the SLC homes NOW. Get short sales on the three FL homes.
- Take the hit on your credit report
- Never go near RE again; You do not have the brains for it.”
“the first bankruptcy is always the most difficult”
LOL!
I was going to say, the first bean burrito is the hardest!
Welcome back, I was saving the links for you tex. I know Casey was “special” but for my money Jeff has a much higher humor factor. His posts are so funny that I almost can’t believe he’s for real. I keep thinking he’s some sort of internet version of Father Guido Sarducci’s Lazlo Letters.
http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=444014&highlight=favorite
http://www.websitetoolbox.com/tool/post/sdcia/vpost?id=1854186
Those two links are the best entertainment I’ve had all week.
The saddest part of the whole thing is the fact that lenders contributed to this fiasco. What lender in their right mind would allow someone to buy so many houses with no money down?
Stupid foolish financial decisions should be rewarded with huge losses. this is how the system SHOULD WORK!!!!!!!!!!!!!!!!!!!!!!!!
Jeff can either pray for a very, very, very active hurricane season or perhaps price it SouthFlo style (you know since no buyers at $300K it can now be priced at $400K with $100K cash back).
“Pufta’s grand theft charge stems from a case where police say a New Jersey woman wrote Avalon Homes a check for $42,180, yet no work was done.
People simply have more money than brains.
With all the scams and dishonesty, you never, ever let a building contractor get ahead of ya on take-down monies.
“‘We’re definitely looking for further price erosion,’ David Seiders, chief economist for the National Association of Home Builders, said at the trade group’s Spring Construction Forecast Conference.”
You have not seen the worse yet. This ponzo scheme is imploding. The economics of buying a home does not compute.
A bubble across all asset classes:
http://biz.yahoo.com/ts/070427/10353243.html?.v=2
I can tell you that Boynton Beach is having serious problems. Rumor has it GLhomes for Canyon Lakes is going bankrupt because so many people are in foreclosure or not paying maintenance. The HOA costs are soaring for people who continue to live in Canyon Lakes, Canyon Isles etc…
Holy cow - Dontbuyahome is right! Check this out, including the JUD about the courthouse auction on Monday, 4/30:
http://preview.tinyurl.com/3blyx8
http://tinyurl.com/3blyx8
A friend of the family’s son and wife (late 20’s) are in foreclosure in Port. St. Lucie. They bought in 3/06 for $180K. The house is a 2/2, 998sf, .25 acre lot built 1980. Unreal. The house history was 9/00 $52K & 12/04 $135K. The worst part is that of course they used an IO/ARM ($126K, 6.875% with a prepayment penalty) but it wasn’t going to reset for another 4 years. I guess an increase in taxes or maybe insurance drove them over the edge? They also had a $45K 2nd mtg and I can only guess the rate. They also had a car repossessed last month too. Luckily they dont have kids. They plan to move to NY to live with the wife’s parents and start all over again. I wonder how many times this type of story will be repeated.
I almost forgot… current comps have a sale in 1/06 for $108K for same size house. Ouch.
current comps have a sale in 1/06 for $108K for same size house
Fooked by a crooked appraiser!