What Made Sense Yesterday Doesn’t Make Sense Today
The Orlando Sentinel reports from Florida. “The last bit of good news vanished from Orlando’s gloomy home market last month, when the median price of the houses and condos sold by local Realtors fell from a year earlier for the first time in more than five years. Meanwhile, existing-home sales by Orlando Regional Realtor Association members were down more than 40 percent from a year ago, the inventory of homes listed hit a new high of 24,435.”
“‘It’s probably the slowest I’ve ever seen,’ said Earl Roberts, an agent in Longwood, who has been selling part time in Central Florida since 1970. ‘Everybody is having trouble.’”
“Caron Loveless and her husband are caught in that ‘buyer’s market’as they try to sell their MetroWest home, listed now for 11 months and counting. The couple bought a house in the Dr. Phillips area after finding a buyer for their MetroWest place, but the sale fell through when the buyer backed out.”
“‘Our heads are spinning,’ Caron Loveless said. ‘It’s a mystery to be in this situation. We’re carrying two mortgages, two pools, two pool cleaners, two exterminators and two of everything you need to keep a house going and looking good.’”
“Their agent, Ellie Musgrave, said the couple have done everything they can to sell the home, including cutting the asking price a number of times, from $489,000 to $415,000.”
“‘Buyers, unless they are relocating, are just not very motivated. You see that a lot,’Musgrave said. But homeowners are finally lowering their asking prices and their expectations, she added.”
“Craig Russo, director of strategic marketing for Pulte in Orlando, said that about 31 percent of all Realtor listings in the Orlando area involve sellers who are ‘not motivated,’ a figure that inflates the inventory total and has a dampening effect psychologically on prospective buyers.”
“Roberts, a retired teacher and longtime sales agent in Seminole County, said he’s getting ready to put his own Tuscawilla home on the market. ‘It’s time for me to get out of the state,’ he said.”
“Orlando, Tampa and Florida’s west coast have received an ‘F’ from the nation’s largest luxury-home builder as sales continue to slump.”
“Robert Toll, CEO of Toll Brothers Inc., said Wednesday during a conference call that the increased number of ‘F’ grades he gave to the company’s markets implied that business was slipping.”
From Florida Today. “Last year was no picnic for many builders, who saw profits shrink, as many housing markets slumped. Even Lennar relied on aggressive discounting and other incentives to boost its numbers, Professional Builder Senior Business Editor Bill Lurz said.”
“‘They took it to greater extremes than anyone else,’ Lurz said about Lennar.”
“‘It’s still going to be a pretty tough year,’ said Keith Buescher, president of Suntree-based Mercedes Homes. ‘We haven’t seen a lot of improvement.’”
“Builders have been adjusting to the new realities of the real estate market. Lennar, for instance, is focusing on building more homes with smaller floor plans and less square-footage to bring prices down to a level that more people can afford, or are willing to pay, in certain markets like Brevard County, said Laureen Ramsey, president of Lennar’s Space Coast Division.”
“‘What made sense yesterday doesn’t make sense today,’ Ramsey said.”
The Sun Sentinel. “Two South Florida builders underscored the severity of the housing woes Thursday, releasing first-quarter earnings that give little hope for a rebound in 2007.”
“Both TOUSA Inc. of Hollywood and Levitt Corp. of Fort Lauderdale offered gloomy short-term forecasts and wouldn’t predict when conditions might improve.”
“‘The wilder the party, the longer the hangover,’ said Per Gunnar Berglund, senior economist for Moody’s Economy.com.”
“TOUSA said it’s concerned that housing inventory appears to be rising in most of its markets. Sales in March and April were disappointing and conditions could linger for the foreseeable future. The company builds in Florida and nine other 10 states.”
“‘The spring selling season is now two-thirds complete and to date it has been uninspiring,’ CEO Antonio Mon said on a conference call Thursday. ‘Florida was probably the last market in the country to be hit by the housing downturn, so it could very well be one of the last ones to emerge from the downturn.’”
The Wall Street Journal. “In the latest fallout from the housing market’s decline, disputes are breaking out between builders and buyers who signed contracts for new homes and condos when the market was hot, and now want to get out of them.”
“Florida, a magnet for housing speculators in the boom, is ground zero for such disputes. The state long has been a boon to housing attorneys, some of whom are now filing lawsuits against developers.”
“One lawyer recently took out an ad in a Palm Beach newspaper reading: ‘Do you want your money back? Your contract for purchase of a new house or condominium may be illegal…To see if you are entitled to a refund, call us for a free consultation.’”
“Dennis Freeman, an attorney in Aventura, Fla., recently settled (a) case in which the developer agreed to return a $266,000 deposit to a condo buyer who claimed that the size of the pool deck and gym were smaller than the developer promised. Mr. Freeman said he was surprised by the settlement. ‘To me, it’s a reach,’ he said.”
The Tampa Tribune. “A residential real estate lender is laying off 177 local employees as it prepares for corporate extinction.”
“Subprime lender New Century Financial Corp. is closing nearly all its remaining operations and laying off ‘most remaining personnel,’ including workers in Tampa, as it prepares to sell its assets and go out of business, spokeswoman Laura Oberhelman said Thursday afternoon.”
“Employees in New Century’s Tampa office mostly were involved in selling loans to borrowers.”
I could see a LOT of builders getting the shaft because they threw up shoddy homes. Find enough problems and discrepancies in the house with the right lawyer, and VOILA, your out of the contract.
“I could see a LOT of builders getting the shaft because they threw up shoddy homes.”
It’s not shafting them if you get out of your contract due to a reputation of shoddy homes.
true
Big National builder sucks… I had my house bought brand new from K.B. They suck ass big time. One year warranty and then things started to deteriorate slowly. They use cheap ass construction material, hire a bunch of illegal Mexican to do the frame put-up, the siding and the final product is just plain suck-ass. I hate KB…
Duh! Here in Austin KB has been the lowest $/sqft builder for a long time…
What are your thoughts on David Powers Homes?
http://www.davidpowershomes.com
I was impressed with the quality, and architectural features (e.g., curved oak staircases) the most other builders don’t touch.
Not perfect by any means (no mass builder will be), but a solid product.
Anybody could drive by a KB site, or almost any other national builder, and see first hand who was doing the construction and the shoddy materials they were using. My guestion is, why would anyone buy one of these houses without first doing some personal due dilligence on their construction and the builder’s reputation?
And yet people living in central Florida think that everyone wants to move there because of the mouse. Not at those overinflated prices. I keep reading that things are picking up there, and the only thing I see picking up is the number of listings (24,435). Sales are down 40%. I’d say that’s a sign that delusional sellers in that area better look at. Lots of people may like to live there, but most cannot afford it anymore.
‘ everyone wants to move there ‘
- My thoughts exactly. If 1000 new people are supposedly moving to Florida everyday, then 4000 folks must be leaving the state daily.
“And yet people living in central Florida think that everyone wants to move there because of the mouse.”
No offense to the people living there, but this famous quote is how I feel about Florida:
“It’s a nice place to visit, but I wouldn’t want to live there.”
“It’s a nice place to visit, but I wouldn’t want to live there.”
And in 2003 I would have disagreed with you and given the following reasons why:
1) Low cost of living
2) Great climate
3) Good (but nowhere near great) schools
4) No shortage of things to do
5) High wages compared with cost of living
Now I must take away argument 1 and 5. Once prices get in line with wages again, there’s no place I’d rather live.
As a product of Florida’s public school system, I really have to argue with #3. Florida is consistently ranked as one of the worst, if not the worst, school system in the entire country. In some rankings, Louisiana or Mississippi beats us to the bottom, but we’re always in the mix among the bottom feeders. Here in South Florida, it’s even worse than the rest of the state.
However, you’re correct; the weather is great and there are plenty of things to do.
“Here in South Florida, it’s even worse than the rest of the state.”
I beg to differ. When it comes to the arts in education, Palm Beach County ranks among the best in the country. The western communities have some of the best schools in the nation…all with funding per pupil that is among the worst in the nation.
As an overall package I would say that you get a good bang for your buck in the public school system. Those national rankings look at funding and graduation rates. Florida graduates 55.7% of students, however more than 70% hold a GED or high school diploma which ranks among the best in the south.
“among the best in the south” does not inspire confidence
“‘among the best in the south’ does not inspire confidence”
I can’t help it…that’s where we are. Remember that 3/4 of Florida would qualify as the “south.”
Yeah, and you STILL pay almost $190 a square foot for houses! South Florida is a SEWER unlike any other: 200-plus traffic deaths a year in Palm Beach County, a gang proble that EVEN OFFICIALS ADMIT is out of control, raging insuarnce rates, county commissioners and city officials who won’t cut taxes.
We have a saying here in West Central Florida: Flush twice, it’s a long way to South Florida!
“…gang proble that EVEN OFFICIALS ADMIT is out of control, raging insuarnce rates…”
Get a grip man! I’m from Detroit. Don’t talk to me about gang problems. The news in my market has a kitty stuck in a tree that needs to be rescued as the 2nd story.
$190/square foot? You’re crazy! Maybe peak boom prices..in fact probably $210. Now you’re looking at $125 to $175…My neighborhood is 1900 square feet under air for $249,000. That’s $131 per square foot…don’t forget the garage and the land!
I’m not defending prices as they stand now, but there ARE sellers throwing 2003 prices into this market. Those are the ones who are selling.
“I’m not defending prices as they stand now, but there ARE sellers throwing 2003 prices into this market.”
Not in Miami. Same slum properties are still sitting on the market at $150 - $250 a sqft. No one is buying either, lower end of the market ($200K - $350K) is essentially dead.
Bad Andy:
I sold my 1991 4BR tract hime in West Boca (a pretty average house and neighborhood) for $190 per square foot (I’m only talking the area under air, not counting the garage) in December — the midst of a terrible sour market. That fact of the matter is that what IS selling is STILL way overpriced when people’s incomes, taxes and insurance are figured in. All you SUCKAS with houses to sell in Palm Beach County better bend over and hope it isn’t too painfull when this market gives it to you in the a$$!
The whole “move somewhere to shop” idea really offends my sensibilities.
They have almost completed a 20-30 story condo tower (500K starting, into the millions for a larger unit) in the middle of a mall parking lot in the Palm Beach Gardens area. One of the selling points is that shopping will be “easier” if you live right in the parking lot of a mall.
WTF??? I supposed going to the dump would be easier if I lived in on the top of the trash heap too!
If these were low priced/starter condos, I would understand. We all have to have somewhere to live. But to put luxury units in a mall parking lot? Are these people nuts?
Living downtown (in any 1st or 2nd tier city) does not mean you live to shop. And just because you put up lots of malls and places to spend money does not make a downtown. The first clue would be the total lack of sidewalks. Also, the absence of nightclubs/bars would be another good clue that you do not live downtown; you live in the mall parking lot.
I think this is the building. The artist rendering makes it look MUCH nicer then it really is. I will have to get a picture from the front door of the mall one day to put it in perspective.
http://www.sarahmazor.com/communities/PBG/lk.htm
“The artist rendering makes it look MUCH nicer then it really is.”
Mike…you know that the artist rendering HAS to look much nicer than it really is. I’m thinking Blue Martini…mmmm Friday night at City Place!
Sorry…went off topic. That new office tower at City Place is really nice! Doesn’t kill the skyline at all like those silly condos.
Mike,
I know those condos. They look completely out of place. You are right, they are right in the damn parking lot of The Gardens Mall. The area is OK as there are some bar/grilles to visit and some minor strip malls to shop but $500K on up is totally insane. It is by no means even in the same breath as living in Manhattan, LA, Chicago, etc. Palm Beach County has been ruined by the gawdy and ugly overdevelopment.
“They look completely out of place.”
Anytime you put a large development in a parking lot it’s going to look out of place. There’s no excuse for $500,000 condos anywhere…let alone in the parking lot of the Gardens! I remember when the Gardens opened. A very normal mall. Sears, Burdines…very middle class. Now look at it.
I hear ya, Michael. The entire Reston Town Square are in NoVA is like that, plus we got a similar condo development off Hwy 66 in Fairfax, Virginia, right in the middle of a upscale strip-shopping mall with Whole Foods, Pei Wei and lots of national retailors.
These kinds of condo developments are pricey, but have no soul or character….just lots of places to spend money on stupid shit that soon to be FB condo owners probably won’t soon be able to afford.
Talk about delusional sellers, check out this quote! It is from Mike Thomas’ blog in the Orlando sentinel from 5/9. Honestly people, I couldn’t make up material this good…
“If these seller would stop lowering the price of their homes and start going up on the prices again, I’ll just bet you the market would start busting again. It irks the hell out of me when you see all of the publicity of, sales down, prices down, etc: the buyers are of course going to sit back and wait for the prices to fall more and the market will stay down. The real estate sales people need to start advising the sellers to go up on prices instead of going down, and the media should start printing positive publicity. Our house has been on the market for 6 months now and it has only been shown 3 time. It is a very nice home and if it is ever shown it will sell. In the mean time we sit on it and listen to the negative of it being a buyers market. Well, to heck with the buyers market, I think it is time it should be the sellers market again and only the sellers can do it. Let go up on prices again and just show the buyers they waited to long.
Brenda “
“It is a very nice home and if it is ever shown it will sell.”
hahaha.. what an idiot
“It is a very nice home and if it is ever shown it will sell.”
Correction: It is a very nice home and if we lowered the price by $100,000 it might sell.
LOL. This is the funniest thing I’ve read here in a long time. I sort of understand the seller’s distorted perspective: when you’re watching prices continually go up, you think that you’d better get in before you are priced out of the market. Theoretically, I guess if everyone who was selling a house had the luxury of not having to sell and all of the sellers got together and conspired to fix prices at a higher level, and buyers had an unlimited supply of money (which was formerly the case), she might have something. Unfortunately, there are people who have to sell, buyers who cannot afford to buy, and the sellers are competing against one another.
Gee, that sounds like what the oil companies are doing with gas prices.
Okay Brenda — you first! Go ahead and RAISE the price of the house YOU’RE trying to sell.
My guess is that Brenda’s response would be — “Well, I didn’t mean ME …. I meant that everyone else should raise their prices. I need to get my place sold.”
There are tens of millions of Brenda’s in our country. You see, nobody values a real education anymore.
The basic concepts of working forward logically from simple premises has been replaced by arguing backward from desired goals. And the Brenda’s wouldn’t even understand this concept if you tried to explain it to her.
In geometry we learn to build complex mathematical structures from simple axioms. In science we learn to start with a hypothesis and test and refine it using scientific method. And in ECONOMICS we learn how basic market forces lead to predictable economic outcomes.
But only one student and one parent out of 100 even cares if all the little Brendas understand anything of geometry or science or economics. The just want the diploma which leads to the job which leads to buying lots of stuff.
This attitude permeates our society now. Look at our Great Decider in Chief. He just knows “in his gut” what he wants. And he has never let facts, reality, knowledge or reason stand in the way of getting it. In a sense he is the perfect expression of the American mindset of the 21st century.
Brilliant, you could write your own column. Well said in a short space!
Binko, I hereby award you a Phd in common sense. I however doubt that it will get you a job in today’s climate or requests from women to have your baby, not when the insane have taken over the asylum.
Very well said, binko. couldn’t resist myself from reading it again and again.
Great post.
Good post until you brought politics in, which essentially refuted your entire post as you were then “arguing backward from desired goals.”
Some facts and knowledge you may have missed:
http://freedomagenda.com/iraq/wmd_quotes.html
Hi Beer and Cigar Guy. Look at yesterday’s HBB posts for some hilarious blogging about Brenda. She’s certainly one in a million.
Beer and Cigar Guy’s repost of Brenda’s tirade gets my vote for post of the week. It earns my nomination not just based on the hilarity of it, but because it describes the current market so well. We have record inventories, ridiculously low sales volume, steadily decreasing prices, a massive subprime mess that has only started to break the surface, and a huge discrepancy between median home prices and median salaries. Yet Brenda and her cheerleading brethren blame the MSM for the mess.
Just imagine how PO’ed Brenda and her ilk will be when the MSM *really* starts reporting on the bursting bubble.
If everyone helped out by mentioning the 60 minutes segment playing on Sunday, it may help a bit.
So…..Go tell em about 60 minutes on Sunday!!
I wish someone would only tell all these people to stop carrying umbrellas to work. At least then all the rain would stop.
It’s not just delusional sellers. Here’s a convo I had with an Orlando-area Pulte salesman back in ‘05 when we were considering buying a townhouse:
Pulse salesman: “We can charge 275K for a townhouse because everyone wants to live in this areas”.
Same Pulte salesman five minutes later: “The down payment is $36K, unless you finance with Pulte. Then it’s 10K”
Me: “Why the difference? What’s the extra 26K for?”
PS (shortly): “Damages.”
Me: “What kind of damages?”
PS (belligerently): “Punitive damages”.
Me: “Punishment for what?”
PS: “In case someone decides to back out after we make a deal”
Me: “Ummm, you just said everyone wants to live here, so why are you worried about people backing out?”
PS: “”Take it or leave it.”
Guess what I chose?
“The first thing we do, is kill all the lawyers”
Shakespeare
“One lawyer recently took out an ad in a Palm Beach newspaper reading: ‘Do you want your money back? Your contract for purchase of a new house or condominium may be illegal…To see if you are entitled to a refund, call us for a free consultation.’”
This helps keep builders in line. Lawyers will take a case on contingency only if there appears to be a good chance that the case has merit. They have their place in society, and I don’t mean six feet under.
actually 20,000 of them at the bottom of the sea is a good start.
I don’t see anything indicating they take these cases on contingency. “Free consultation” isn’t the same thing as “we pursue your case for free.”
“Roberts, a retired teacher and longtime sales agent in Seminole County, said he’s getting ready to put his own Tuscawilla home on the market. ‘It’s time for me to get out of the state,’ he said.”
Priceless Roberts…
There’s a NEW SHERIFF in town and his name is AUSTERITY!
The Realtors, Whores and Gamblers are all Getting out of Dodge City because the FREE and EASY Money is drying up in the Wild, Wild West of the their OLD Housing Racket.
I LOVE IT Robert…don’t let the Saloon swinging door hit you in the ASS on the way OUT.
“Tuscawilla”- WTH? Sounds like an animal native to Australia.
‘It’s time for me to get out of the state,’ he said.
Slowpoke!
My thinking exactly. I have a lot of friends and acquaintances who are “getting ready to put their houses on the market”. Hmm, as if there were still any market.
If they have not even put their buildings on the market by now, then they will either have to 1) “lose” lots and lots of dough when they sell, or 2) they will follow the market down and stay in a place they detest for many, many years. Looks like my bro in FL is going for option #2.
Got 10% down?
NOT on your life Antonio, its NYC where they are building High priced Kondoze in Long Island City sure a lot of them will have views of Manhattan, but they also leveled blocks of low rise 1 and 2 story industrial buildings too.
And the great part about Long island city…NO parking..yes so many streets have No parking during the day because the streets are old school and narrow, back when all the workers used the 7 or G train or buses to get to work. So these Morons will have to PAY for a garage space on top of all the other costs….
=====================
CEO Antonio Mon said on a conference call Thursday. ‘Florida was probably the last market in the country to be hit by the housing downturn, so it could very well be one of the last ones to emerge from the downturn.’”
Was that Antonio Moron? Yes, FL may be last to emerge, but I think we here all know it was the first to be hard hit. This time last year, CA and AZ were still kind of riding high, when Palm Beach County already had a 3-yr inventory, or was it 4 years.
Not only do people in FL now have to deal with falling housing prices (those who bought) and the landlords deal with falling rents. There are now rising gas prices, rising insurance, rising taxes.
If you thought that wasn’t bad enough, people have to deal with it smelling like BBQ. I mean there is smoke everywhere. Even at work the smell has infiltrated the Air Conditioning and it stinks.
I’m thinking of throwing some ribs outside and smoking them.
Remember Ribs like dry Hot smoke.
Oh and don’t forget to dry rub them before smoking them.
sean_from_NVA-
Any views on the Weber Smoky Mountain bullet- was thinking of picking one up this weekend.
Awesome smoker! Low fuel consumption. 12 hours burns on one load of charcoal and excellent 225 to 250 degrees temperature control. I picked one up at Ace Hardware when I was in the States in early April. Check out the link below for all the info:
http://www.virtualweberbullet.com/index.html
“I mean there is smoke everywhere.”
Short term problem. The rainy season will take care of that one.
You know I have lived here for a while and in the last 5 years fires have really become a problem. Yes, the rainey season will come, but what happens if year after year, we have to deal with this sort of problem 3 months out of the year?
“Yes, the rainey season will come, but what happens if year after year, we have to deal with this sort of problem 3 months out of the year?”
I don’t know. LA has a smog problem and it doesn’t really seem like a problem to them. They also have fire issues on a yearly basis. I think people just learn to live with it…long term health be damned.
Speaking of fire:
http://www.naplesnews.com/news/2007/may/11/overnight_fire_north_naples/
You don’t need subprime mortgage to do the damage, you have fires that will take care of the rest.
Somewhat OT, the smoke in Tampa is horrible today. I’m looking out the window from my office downtown and it almost reminds me of the pictures from NYC on 9/11. My truck is covered in ash. Any idea on how long the winds are going to stay shifted towards us?
I am doing the same thing–I can barely discern nearby buildings. Visibility must be less than a quarter mile, the city smells like a charcoal briquet, and my eyes are burning. There was ash on my car this morning too.
Regarding the articles, if my reading of the Orange County Property Appraiser website data is correct, Caron Loveless is trying to sell a house she and her husband bought in 1997 for 189,900. Their “move up” is a 4,700 foot house purchased last year for $647,000. I hope everyone excuses me for being unsympathetic. Greed goeth before a fall.
She should lay tracks of kindling in her yard.
it’s awful–it smells like campfire in the elevator lobby of my building. i thought about bringing weinies and marshmallows.
Marshmallows for everyone!
I’ll bring the coathangers.
Good to see you back! Haven’t seen you post in a while.
Unless you’ve been skipping the Florida threads, I have not seen you post here for months! Welcome back.
Yeah, I’m in an office building in northern St. Pete and see the smoke fog too. We need a hurricane ASAP to hose off the fires!
Who would have thunk we would be wishing for Hurricanes!
Pick your poison I guess :-/
As long as Robert Toll is handing out report cards. Here’s his:
http://www.secform4.com/insider-trading/794170.htm
wow. not that I was planning on it, but purchasing shares whilst Mr. Toll sells 393K worth in last few months probably would be a bad idea
neat site
oops, I meant 393 million, and I guess that’s over last 2 years, but wow
Buyers, unless they are relocating, are just not very motivated. You see that a lot,’Musgrave said. But homeowners are finally lowering their asking prices and their expectations, she added.”
WTF is a motivated buyer? And why would someone relocating (and trying to sell a overpriced POS in another area) be motivated to buy here?? This makes no sense. There is no such thing as a motivated buyer when you can rent the home for 1/3rd the cost of buying it and prices continue to fall.
Motivated buyer = Moron
“Buyers, unless they are relocating, are just not very motivated. You see that a lot,’Musgrave said.”
Yep, the minute “guaranteed appreciation” and access to the house ATM are gone, there’s not a whole lot of motivation left to get mortgaged to the gills. For the past few years, people paid these prices because they knew there was a GF who would pay more a year or two later. Take that away, and there’s little point in buying now.
“Motivated buyer = Moron”
Unless we’re talking 2002 or 2003 pricing you’re absolutely right. Just know that we’re starting to see that in Palm Beach County. Look at Olympia…in 2003 you could buy in at $350K to start. Today you can buy in at $330 and change.
And by the way…30 year mortgage P&I is $1567 taxes are in the $400 range and insurance is in the $200 range.
That puts cost of ownership at $2167 monthly compared with rents in the $1700 neighborhood for the same house. Don’t forget there are tax deductions. Most people who can actually afford a $300K home would save about $500 monthly in tax burden. That makes ownership a little less expensive in the early years when you’re paying more interest than anything else.
Most people who can actually afford a $300K home would save about $500 monthly in tax burden.
I ran some numbers - if you made 100K, and paid 20K in mortgage interest, you’d reduce your taxes by less than 175 per month. If you made less than 100K the tax effect would be even less. Of course some assumptions are involved, e.g. joint return, YMMV.
“e.g. joint return,…”
Yes…and don’t forget the real estate taxes which are also deductible.
A $330K home should require $132,000 yearly salary to afford.
From the WSJ article…
“In the latest fallout from the housing market’s decline, disputes are breaking out between builders and buyers who signed contracts for new homes and condos when the market was hot — and now want to get out of them.”
You’re going to see this happening in Chicago in ‘08, ‘09 & ‘10 as things continue to cool here. The bulls here continue to trumpet the that all the major developments here are 70%, 80% or 90% “sold” but they’re not CLOSED!
Send the lawyers in to bayonet the wounded… There was a huge Ponzi scheme in Alaska (World Plus) that suckered in many people and busted at the >$100 million level. After the fact, the govt appointed a lawyer to clear up the mess. What the lawyer did was find everyone who got out early and profited from the scheme, sued them, put the money in a pool, and divvied it up among all the participants (i.e. suckers). Of course the lawyer got a percentage, so the net result was an already small ‘pie’ got a slice taken out, and was redivided.
The spate of lawsuits (predatory lender suits, suits to get out of housing deposits, etc) will, as a net result, just take that already feeble pie of housing prices, remove a slice for the lawyers, and redivide the smaller pie. This is an unanticipated expense that wil only lead to a more brutal crash. Of course, some people might say ‘Bring it On’!
Isn’t that the truth, AKRon. Class action suits a-plenty nowadays. In the last year we’ve received several miniscule checks in the as our share of large lawsuits. The wronged aren’t cleaning up, but the lawyers seem to be. You have to give them credit for creativity, though.
“It would take a record 16.6 months to sell all those homes and condos at the recent sales pace, and that’s not counting the thousands of for-sale-by-owner properties. Many homes have been on the market for a year or more, frustrating sellers and Realtors.”
The highest national inventory # was about 11 months during the early 80s, and 9 months during the early 90s; all-time records are already being set and we’re only about 18 months into the melt-down…with at least another 5-6 years to go. Soon the number of months of inventory is going to absolutely explode…when the number of months in inventory hits triple digits approaching infinity it will become meaningless.
“Their agent, Ellie Musgrave of Signature GMAC, said the couple have done everything they can to sell the home — including cutting the asking price a number of times, from $489,000 to $415,000.”
Hmmm…I’m not an expert like their realt-whore, but I can think of something…lower the price further to market. Hope these greedy pigs lose both houses and end up on the street where they belong.
Got diversified assets and debt to equity ratio of less than 1:1?
PDX: when the number of months in inventory hits triple digits approaching infinity it will become meaningless
You’re right PDX, and when Joe Six Pack figures this out he and Mrs. Joe aren’t going to be happy campers.
Got diversified assets and debt to equity ratio of less than 1:1?
Yes.
Got 10% down?
The Tampa Tribune. “A residential real estate lender is laying off 177 local employees as it prepares for corporate extinction.”
Corporate extinction? Can’t say BANKRUPT nowadays? BANKRUPT BANKRUPT BANKRUPT…! The use of words in the news over the last 8 months (since I have found this blog and have been paying attention) have truely been enlightening to me and what I read or hear in the paper or in the news. Reading between the lines is so easy now. My wife and I hear something on the radio or tv and we think TRANSLATION and state what the person is saying in our own words.
Words like Wellness…..Negative Outcomes….my favorite, Sentinel Event (i.e. when someone croaks).
Orwell would be having a field day today with NAR and others.
I hate ‘wellness’ too - is it even a word?
What’s wrong with the good old-fashioned Anglo-saxon ‘Health?’
What’s wrong with with “health”? Well, it’s old fashioned. And Anglo-Saxon.
“What’s wrong with with “health”? ”
It just doesn’t seem right, toasting ‘to your wellness’ before slugging down another drink…
“It just doesn’t seem right, toasting ‘to your wellness’ before slugging down another drink…”
Wine is good for you. So is beer. So if one beer is good, several is better!
“‘What made sense yesterday doesn’t make sense today,’ Ramsey said.”
It didn’t make sense yesterday either. We just have conclusive proof now whereas before it required you to actually think for myself.
My son is just starting school. As an illustration of how important it is to be able to read, do math and think for yourself I showed him a mortgage ad that popped up on WeatherUnderground. They were offering a $500k mortagage for $1400/ month. I showed him on the calculator how to calculate the monthly interest payment (~$2500/ month). With just simple math you can prove that the offer was bogus and not worth considering.
Climber, LOL! Only a HBB blogger would teach their five-year-old mortgage calculations! If he’s anything like my sons he’s probably thinking to himself, “There goes crazy old mom again.”
On the other hand, he may internalize this lesson as Something Every Mom Teaches Her Kids. The first time I taught the inverse-square law as it applies to flux from a radiating source of light, I wondered why I was so puzzled by scommunity college tudents’ not already knowing it. Eventually I remembered that my father had caught me in front of a sunlamp when I was eight, and had said, “Hey! Watch out! If you get twice as close to that thing, you get four times the rays, and if you get three times as close, you get nine times the rays.” Since I was still having trouble tying my shoes, I interpreted all parental instructions as What Everyone Is Supposed To Know.
I am pretty sure one of these New Century employees laid off might be a AE that used to solicit our office. I remember this person because when they visited the rep had a stud in their nose, like something you would see at a Nine Inch Nails concert. I don’t care about appearances outside of the workplace, but if you ask for my business with metal sticking out of your face, I will not to take you seriously. This person might have been the most knowledgeable person ever, but I couldn’t get past the nosestud. Maybe I’m old fashioned, but coolness shouldn’t come before professionalism.
I remember working for my dad’s company and I wasn’t wearing socks (the 80’s, it was OK for TV cops). My dad walked by and told me to leave and not to come back until I had socks on. Lesson learned.
Yeah, the nose stud thing bothers me too. What keeps it in there, anyway-boogers? What happens if that person tried to suppress a wicked sneeze? Could that thing fly out and ricochet around the room? You could put out somebodies eye. Who the hell thought that up anyway? Did someone just turn to their freind one day and say, “Hey, Bob- do me big favor? Grab that needle over there and ram it through the side of my nose, will you? Yeah, all the way through. No, just one side. Thanks man, I owe you one.”
What do they do when they get a cold? Blow it?
I dunno. I LIKE corporate extinction. Nowadays “bankrupt” is just an accounting tactic to screw over the worker’s pay and stick the taxpayer with pensions *cough*airlines*cough*. Corporate extinction means you’re selling typwriters on the courthouse steps.
What is scary you see a house closed escrow and 4 months later you see the moving van?
“‘The wilder the party, the longer the hangover,’ said Per Gunnar Berglund, senior economist for Moody’s Economy.com.”
About 3-4 years to late pal!
What is scary you see a house closed escrow and 4 months later you see the moving van?
LOL!
Lots of nightmare stories and way more to come in the future.
Greedy debt homezombies lower your prices.
Oh you can’t you overpaid.
At least you can live for free until the eviction notice.
LOL!
Greenspan sees one-third chance of recession
Former Fed chairman reiterates his concerns about U.S economy
http://www.msnbc.msn.com/id/18608776/
I’ll go 60% on that
“Greenspan sees one-third chance of recession”
Remember, a recession is when your neighbor is out of work, a depression is when you are out of work. I would guess there is only a 1/3 chance that Greenspan’s neighbors would lose their jobs. The rest of the country, on the other hand…
What a jerk. He allowed the sub prime and alt a loans and then now that he is off the hook he tells a bit of truth. He will remembered as the worst Fed Chairman.
The odds of recession in 12 months are 80%. The odds of a severe
recession after the presidential election in 08 are close to 100% in my book. The odds of a depression 50%.
There’s an area in orlando called the “Dr. Phillips” area?
What’s the story behind that?
http://en.wikipedia.org/wiki/Philip_Phillips_%28businessman%29
It has a reasonably-high-ranked (but huge) government high school. It was a fairly fairly exclusive before the expansion of International Drive. Now it just has lots and lots of houses and traffic — nothing much for or against it, IMO, relative to other parts of Orlando. I am native to Orlando and would not want to live in that area now. Suppose it would be tolerable enough if you worked at the big tourist attractions.
“One lawyer recently took out an ad in a Palm Beach newspaper reading: ‘Do you want your money back? Your contract for purchase of a new house or condominium may be illegal…To see if you are entitled to a refund, call us for a free consultation.’”
Ambulance chasers are retooling into FB’er-chasers…
The lower forms of life tend to evolve and adapt fast.
Good article on a blog here, run by the local newspaper. $400,000 plus condos in Orlando, we now have a 41 year sellout period for existing inventory based upon recent sales activity. There are more coming on line this year.
Life according to HOA.
Nazis without a life will decide what’s in good taste.
http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20070510/NEWS/705100396
I will *never* live in a home with a HOA.
“I will *never* live in a home with a HOA.”
I said that once. Unfortunately I moved to Florida.
When I bought in ‘93, the neighborhood had covenants and an HOA and such, but we asked around, and the board had not been active in more than a decade.
So, 5 years after living there, we receive a notice from a lady down the street saying the board was being reactivated. Show up at such-and-such a time on some date, to participate in board activation and member selection, etc.
So, we show up. The need 5 members of the board so first on the agenda, nominations, a few minutes to speak, and elections.
7 people nominated themselves. The lady that called the meeting complained about yard conditions, cars parked in driveways, and recently repainted houses. 5 of the 7 had a platform of “if elected, my first motion will be to disband the board”. Each of these got cheers from the 50 or so people there. Then the lady that called the meeting got angry and sent everyone home.
You might like Merritt Island, in Brevard County. Large but totally unincorporated. Lots of canals, most of which were developed in the ’50s and ’60s. So you can rebuild your Jeep’s engine in your driveway while your neighbor edges the driveway of his big new house. Seems to work well enough. Enforcement of whatever codes exist seems to be lax at best, but I never read about squabbles. There are individual subdivisions with HOAs/covenants, but those are distinctly in the minority, acreage-wise.
Our first neighborhood was in Irvine, CA. The HOA Nazis were very active. They would wander around snooping for violations. Houseowners were suing each other over silly things. I hated it. First thing we did when we relocated was to buy a basketball hoop for the driveway, which was banned in our previous place.
Builders went a long way toward helping inflate this bubble by marketing to speculators and unqualified buyers with their “special lenders” during the housing boom . The builders bear part of the blame for trying to make hay on this” speculator madness ” when they should of been building affordable housing for qualified buyers .
Builders know that they are weak on the legal point of the current pre-construction borrowers being able to qualify as well as the appraisals hitting on the construction contracts that were written before the down-turn .
It would be easy for lawyers to prove that their clients can’t perform on the contract because of market conditions .
Sure these buyers shuld have a deposit penalty ,but a builder should offer the the market price for the condo or home because the lenders are not going to give loans based on the higher contract prices . Real estate contracts are a conditional sale . The builders should not of been selling to a bunch of zero down sub-prime speculators and unqualified buyers anyway in 2004-2006.
In large part one of the reasons why builders were giving incentives and cash-backs deals were because they didn’t want the pre-construction contracts to by affected by the lenders cutting the loan amounts . Everybody wants to have their cake and eat it also in a down-turn . In fact, alot of those buyers of builders homes could prove that the builders lenders were frudulent in approving the pre-construction loans anyway for these greedy speculators .
I don’t like any of the players in this housing boom because it was all based on faulty bogus lending and greedy short term speculation .
I just don’t see why the tax-payers should pay the price for some stupid mania that turned fraudulent and out of control . Sure the lawyers are jumping on this bad faith market by all parties .
“Sure these buyers shuld have a deposit penalty ,but a builder should offer the the market price for the condo or home because the lenders are not going to give loans based on the higher contract prices ”
If you didn’t give yourself an out for financing you deserve to be bent over by the builder. If you signed a 100% contract last year and you DID give yourself an out, go ahead and let the appraisal come in $50,000 lower and see if you can get the loan…no loan, no closing, no penalty.
I read the transcript of the Toll conference call yesterday and they clearly implied that they consider the deposit to be the sum total of liquidated damages — that they do not plan to go for specific performance.
Legally speaking, specific performance is VERY hard to get. Toll Brothers knows that… In the grand scheme of things, it would be a waste of time and money to even pursue specific performance.
I agree with you Bad Andy that if contract wise the purchaser did not give themselves a out ,they could be toast legally .
The problem lie in the kind of defenses Lawyers come up with . The courts don’t seem to like situations in which one party is taken advantage of in a one-sided contract, especially when material conditions change . For instance one could argue that the builder is not really offering the product the purchaser bought during pre-construction in that it dropped in market value .
Of course these greedy speculators were just signing any contract offered during the mania without very much thought . These borrowers deserve a penalty for reckless speculation ,but do you think Courts are going to make them purchase the house/condo ,especially when they don’t qualify and perhaps could never qualify to begin with . There is a concept in law regarding grounds for a voidable contract .
I believe the purchasers should have a penalty for the fact that they tied up the property which caused loss for the builder . Whats fair and reasonable for a penalty is the next question . Some people put a higher deposit down than others did so it should not be based exactly on the deposit amount .Maybe it should be based on what the actual loss is for the builder regarding the cancellation . Maybe it should be based on a 10% penalty of the purchase price . The lawyers are going to be spliting hairs over this stuff for years to come.
According to NY Times, prices still going up in the Old Northeast neighborhood of St. Petersburg:
“As elsewhere in Florida, sales have slowed, according to Alona Dishy, an agent with Realty Executives in St. Petersburg, who said houses stay on the market for an average of six months. Price increases, once 30 to 35 percent a year, now are at 10 to 12 percent in Old Northeast, Ms. Dishy said. She said that there are about 50 active listings in the neighborhood.”
Correct?!
TinyURL.com/24ffox
“Investment” — yeah, right. It’s different here. Find a way to get her to guarantee you just 6% per year over the next several years.
I don’t believe it. I keep track of downtown St. Pete, and it’s in the same boat as the rest of the state.
“Lennar, for instance, is focusing on building more homes with smaller floor plans and less square-footage to bring prices down to a level that more people can afford, or are willing to pay, in certain markets like Brevard County, said Laureen Ramsey, president of Lennar’s Space Coast Division.”
Yup, let’s keep that gross margin per square foot up there — until the buyers figure it out. Truss prices down more than half, but no lowered prices per foot? Not on my watch.
“bring prices down to a level that more people can afford, or are willing to pay”
I love that carefully placed little “or”, it means so much to a needy builder.