As We All Know, Things Got A Little Out Of Hand
The St Petersburg Times reports from Florida. “After handling close to 30,000 cases in his career, Pinellas County bankruptcy lawyer Jay Weller insists home debt has never loomed so large. ‘I’ve never had that many people walk away from their houses before,’ Weller said. ‘Real estate is playing a larger role in bankruptcy than in the 15 years I’ve been doing this.’”
“Angel and Myranda Acosta moved to Pasco County from Oklahoma in 2004 near the height of the housing boom and paid $139,000 for a three-bedroom, two-bath house in the Moon Lake Estates neighborhood.”
“They felt lucky to get a loan from Fremont Investment & Loan: 100 percent financing with an adjustable rate mortgage starting at 10 percent. The $1,810-per-month payment is already a struggle and it’s set to ‘bloom out’ next year by an undetermined amount. Their income and credit preclude them from refinancing.”
“‘No theme parks for us. We pretty much stay around the house. At least the weather’s nice,’ Myranda Acosta said.”
“Two homeowning friends recently walked away from their mortgage and moved into apartments. They’re far from alone. The national firm RealtyTrac lists 17,147 troubled properties in Pinellas, Hillsborough, Pasco and Hernando counties. They’re properties in preforeclosure, scheduled for auction or seized by the bank.”
“Horace Morgan, in addition to his realty and mortgage business in Brandon, also dispenses credit counseling for free. Four potential clients who called last week all had the same problem: They used their home equity as an ATM and now are almost broke.”
“‘All four owed more money than their homes were worth and all four were behind on their mortgages,’ Morgan said.”
The News Press. “Christopher and Cathy Comerota bought their Cape Coral home in December 2003 just as the boom in housing prices was taking off. But now they’re looking foreclosure in the face.”
“They’re not alone. Last month, 783 notices of foreclosures were filed in Lee County court, six times the number from the same period a year ago. The increase in foreclosures has been steady in a real estate market that has seen a yearlong fall in Lee County home prices and a glut of houses purchased by speculators who no longer want them.”
“The median sale price of an existing single-family home in the county was $268,000 in April, down 16.8 percent from the all-time high of $322,000 in December 2005.”
“They find themselves owing $350,000 on a house that’s worth about $300,000. Their income is down because Cathy Comerota’s job as a mortgage processor no longer pays much in today’s slack market, so they can’t afford the $3,000-a-month mortgage.”
“Robbie Roepstorff, president of Edison National Bank in Fort Myers, said a wave of speculation in the residential market is to blame for today’s foreclosures.”
“‘As we all know, things got a little out of hand, the real estate market got a little aggressive,’ she said. ‘Investors did a lot of investing in speculative homes. Unfortunately, that doesn’t last forever.’”
The Sun Sentinel. “The Housing Leadership of Palm Beach County has released a study concluding that 90 percent of households in the county can’t afford a single-family home; the median price of an existing single-family home countywide was $375,100 in March, the latest figure available. The situation is no better in Broward County, where the median price is $372,400.”
“Developers are beginning to respond to the growing need for work-force housing. While many of the projects are meant to be affordable to middle-income workers, the prices of others have some housing industry experts asking questions.”
“‘Developers are looking to sell their projects, and they need to do whatever they can to appeal to prospective buyers,’ said David Levin, a housing industry analyst in Delray Beach. ‘Some developers who anticipated selling…at prices that are no longer realistic are repackaging their projects and trying interesting marketing tactics to sell units.’”
“Even at just 5 percent down, a buyer has to cough up $20,000 on a $400,000 unit, a big investment for some. Eric Feldman, a real estate agent in Hollywood, said that the monthly carrying charges on a $400,000 townhouse could be a burden, too.”
The Herald Tribune. “Three years ago, North Port’s booming population set local leaders on a hunt to bring businesses to the fastest-growing city on Florida’s west coast. But now, the city faces many hurdles to stimulate a local economy that has suffered with the downturn in building and real estate.”
“In February 2006, the city looked like it would have a steady stream of growth revenue coming in from home building. Today, North Port is faced with diversifying a largely one-dimensional economy.”
“According to Jeff Finkle, CEO of the International Economic Development Council in Washington, many high-growth communities are facing similar problems. ‘You’re now 50,000 people,’ he said. ‘The economics are not working, and now everybody is going ‘Egads, what do we want to do?’”
“According to the 2005 city survey, the last conducted, only 8 percent of respondents worked in North Port. Many of the companies already in North Port rely in some way on the building industry and are suffering in the downturn.”
“Busy Bee Cabinets Inc. has had to lay off dozens of people as work has dried up. Matt Uebelacker, the company’s president, is trying to increase the company’s sales to homeowners and rely less on home builders, who are not nearly as active as they were even six months ago. North Port issued 41 new home permits in April, down from 88 a year ago.”
“‘It’s ugly right now,’ Uebelacker said.”
The Miami Herald. “At 3-year-old Great Florida Bank, the woes of two commercial real estate borrowers have caused the bank’s problem loans to jump.” “And BankUnited, one of South Florida biggest thrifts, saw the handwriting on the wall two years ago when it stopped making construction loans for high-end condominiums.”
“Several local banks have boosted their first-quarter reserves for loan losses, an indication they may be expecting more delinquent loans this year. At Great Florida Bank, two commercial real estate borrowers that ran into problems sent total nonperforming loans to $9.4 million, and loan payments overdue 30 to 89 days surged to $23 million, almost 2 percent of all loans. Anything over 0.80 percent is considered high.”
“At Ocean Bank, a big mortgage lender, loans that are 30 to 89 days overdue surged from about 2 percent of all loans at the end of 2006 to 4.6 percent at the end of the first quarter.”
“‘The change in the amount of the past-due category is a reflection of the slowdown in the real estate market in Florida,’ said Terry J. Curry, chief credit officer of Ocean Bank. Our loan portfolio is well-secured, and we look forward to the inevitable rebound in the real estate market,’ Curry said.”
“In a recent report, New York investment bank Goldman Sachs estimated the housing downturn would be a mild drag on the U.S. economy, but it singled out Florida as the one state where the slump ‘is likely to cause an outright recession.’”
“As the business environment gets trickier, South Florida banks have come up with strategies to ride out the bumps. BankUnited, for example, decided to eschew lending in the condominium construction market.”
“‘We see a glut coming,’ said Chief Financial Officer Bert Lopez. ‘We have not made a construction loan on a high-end condominium in two years.’”
‘Chief Deputy Brevard County Property Appraiser Lance Larsen may have run afoul of the law by filing for a property homestead exemption in October for the Rockledge home that he rents, but doesn’t own.’
MAY have?
You know, there was a time in this country when someome like this would have resigned in shame as soon as their misdeed was uncovered.
Today, guys like this just stonewall, wait for the attention to get diverted away from them, and continue on at their high-paying government job.
Did anyone one see that flipper show called real deal yesterday? They had a condo conversion with ~ 300 units and sold them out in less than a day.Richard was up to his wheeling and dealing days.He bought one of the units and tricked it out w/ stainless, granite etc.His company, trademark properties, set a record for 50 million in sales within one day for the state of south carolina I think.The open house was hilarious.They had casino gambleing and a helipcopter dropping money balls from the sky.I wonder when this the show was made?
Seems to have been 2005. I went out on the web and found many of those condos up for resale. Guess they got their payday and hauled a$$ soon as the checks cleared.
Reruns perhaps?
“Real Deal” is a new show. These guys used to be on “Flip that house”.. or was it “Flip this House”. I always got those 2 shows confused.
Alberto Gonzales anyone?
Took the words right out of my mouth…
http://www.washingtonpost.com/wp-dyn/content/article/2007/05/10/AR2007051000109.html?hpid=moreheadlines
My computer burped. Anyway, I was watching a CSpan re-run of the testimony yesterday and then it was followed by a panel discussion at a law school featuring three of the Gonzales 8 (the fired US attorneys). Contrasting David Iglesias with Gonzo, I was blown away. What a class act Iglesias is, combining grace, character and integrity with a full understanding of the rule of law as it applies in the US.
OT, but Iglesias was the US Atty in Albuquerque, NM. NM Senator Domenici has some potential issues on his plate. Ongoing story here in NM.
http://www.citizensforethics.org/node/25827
…rule of law as it
appliesformerly applied in the US.and never ,ever be fired
Somebody needs to tell this guy that renters do not pay property tax (at least not directly).
I read through the entire article; and maybe some of the other FL people have an idea, but what in the heck would be the point of this? Even if you can get the SOH exemption as a renter, the property tax bill is paid by the property owner. I might be missing something, but this seems really strange to me.
Also, anyone else pick up on the fact that the prop appraiser, who makes 125K a year, is renting in his county? He should be the first one in line to shout “homes always increase in value” as he is the one who actually increases the value for property tax purposes!
I think this year, and next year, we are going to see a huge surge of requests for reapprasials by those who are not protected by SOH. There is no denying that prop values are falling, even a 10% drop is a big difference when you are paying a 2% mill rate.
I may be missing something but I think if you buy a home and LIVE in it you can homestead it. If you own it but do not live in it, you can’t claim homestead so he is looking for a property tax discount for an investment property. That is illegal and that is fraud.
That would make sense to me, and just about everyone in FL would want to do that. However, from the article:
Like others, Lyman Tripp questioned why Larsen filed for a homestead exemption for a house he rents.
“He doesn’t own the property,” Tripp said. “Why would he file for a homestead exemption?”
So, he is the rentor of the property, not the landlord. I just don’t get it, WTF is the point when your not even directly paying the tax?
Yeah, that baffles me. Makes me think there is something wrong with the articles investigation or this guy is a freakin moron and should lose his job on that basis alone.
Don’t know what this guy is upto but the homestead exemption in FL is $25K that means he is saving roughly $500 in taxes for the property owner.
I’m thinking that if he files as “homestead” then the SOH limitations kick in for his benefit i.e. his property tax basis is fixed at the time he filed for homestead. In the future if he purchases the property his tax basis will not be set at the time of purchase but when he filed for the homestead. The man may not be getting a current benefit but may receive a benefit in the future.
This might not be illegal and he may not be an idiot. He might just be shrewd. Interesting.
Popper,
Now that would make sense to me!
We all need to follow this story a bit to see what the heck this guy was trying to do. There was obviously some motivation behind his actions, and perhaps he is trying to send us a message as to a part of the law (SOH) that nobody is taking advantage of. I will be very intersted to see how this whole thing plays out.
Of course, with dropping prop values, getting the SOH cap today is useless. I don’t want to cap at the highest number the home will see for the next 10 years!!
think this year, and next year, we are going to see a huge surge of requests for reapprasials by those who are not protected by SOH. There is no denying that prop values are falling, even a 10% drop is a big difference when you are paying a 2% mill rate.
In Maine state law allows the local assessor’s a “10%” valuation window by the upside or downside of “fair market value”.
The little poo-dunk towns with limited muni services to finance are always on the low end. I’ve seen certain town’s in non-compliance with re-valuation laws run as low as 50% assessment to FMV ratios.
Hehehe…some towns don’t even have property fields card to verify publically acknowledge what is being assessed. A total good ‘ole boy network designed to protect large old money land holdings.
But the towns with big numbers of public employees go right for the throat and run right up to the 110% number and beyond.
Expect the “slide” down the valuation ladder to be very “sticky”.
You can be the high val assessment numbers will be there until the threat of legal appeal starts.
But the reality is, the government’s at all levels are broke.
All of this is nothing more than reshuffling the deck chairs on the Titanic.
However in today’s Sunday editon of the Globe, there was a front page article on how exploding health care costs are literally destroying any semblance of muni fiscal management.
Expect continued fudging on valuation numbers and exploding
mill rates to cover the pension and retirement largesses bestowed on huge numbers of retiring boomers.
It’s a great time to rent.
hd74man,
I just unwittingly echoed your comments on the CA thread. Government’s going to lead the third wave of job cuts (after REIC and retail), since their costs are increasing just as fast as their revenues are decreasing.
Michael
“I think this year, and next year, we are going to see a huge surge of requests for reapprasials by those who are not protected by SOH.”
I agree and based on what I see and read, I believe that this process is well under way. But here is my question. What or how big an effect on property values will this have? What does it mean for appraisals, credit, and true market values? It can’t be good for prices if everybody is trying to argue and or prove that their house is worth less than it was previously appraised at.
Michael
“I think this year, and next year, we are going to see a huge surge of requests for reapprasials by those who are not protected by SOH.”
I agree and based on what I see and read, I believe that this process is well under way. But here is my question. What or how big an effect on property values will this have? What does it mean for appraisals, credit, and true market values? It can’t be good for prices if everybody is trying to argue and or prove that their house is worth less than it was previously appraised at
As you pointed out, this is going to be very interseting from a loan (LTV) perpective.
Say you bought a home for 500K with 20% down (I know, YEAH RIGHT!). Anyway, you have a 400K loan on the home, and with the 20% down, you have a fully conforming A rated product.
Next year; you get pissed at your 10K tax bill, especially as you watching people buy your model home across the street for 300K. You demand a reapprasial; your new value comes back at 300K.
What the heck happens to the loan at this point? You just went from a fully conforming product into the Alt-A market (100K over appraised value). Does the paper get re-rated? Is there even a process by which this can occur? Even Wall St has been complacent with the idea that home prices only go up. What happens when Prime paper turns into Alt-A or subprime? Remember, that loan package is being sold over and over again; do they re-rate every time there is a sale?
It will be very intersting, that’s for sure.
I don’t think it will have any effect on prop values. The effect on prop values is determined by comps and sale prices. The neighbor getting a lower assesment is not really going to show in any MLS stats (to the best of my knowledge). You would be able to see it on the property appraiser’s site though; so perhaps that will help push down the comps faster.
It is a very interesting problem, and one I am sure we are going to have in the very near future in FL. In the development I currently live in there are homes across the st from one another that are 100% different in value for the same SQ footage. I am sure one is more upgraded, but still, those buying today are getting similar houses for 500K that were sold 3 years ago for 1M (I have only been able to find 2 of these so far, but they are out there). That’s a huge swing; it represented 10K in property tax difference between the 2 homes. 10K is worth fighting over; that’s for sure (especially if someone puts togeter a class action suit).
Let’s see — could it be, “I’ll get you homestead and ‘Save Our Homes’ and you give me a break on rent”? Wonder what a jury would think about that. Maybe just after they receive their own property assessments.
That would also make sense. 2 good possiblities as to why this guy is/was trying to do this. Either way, as I mentioned above, we should all try to follow this story a bit. I have a feeling he is trying to expose/utilize some part of the law that most people do not realize is there or understand.
“application was being made based on his leasehold interest.”
kickback
“In a recent report, New York investment bank Goldman Sachs estimated the housing downturn would be a mild drag on the U.S. economy, but it singled out Florida as the one state where the slump ‘is likely to cause an outright recession.’”
By implication, California has nothing to worry about. Phew!
Every day the Florida news is more dire. Looks like the powers that be won’t admit the severity of the problems in real estate until they are undeniable, like Florida is. Florida is leading the way down. Did Florida turn downward before San Diego? or is it just accelerating there?
California has the govenator to save them.California is the worst bubble state I think.They is so much fraud and enough crooked realtors to from an army for a lot of countires.California is in deep sh@t about now.
But at least Cali has an economy. Florida has attempted Cali prices with Florida incomes. Not working out.
Well, I hope California still has an economy after all this. What I’ve been seeing on satellite TV is an ad showing Arnold & Maria walking on the beach asking people to visit CA, Clint Eastwood playing golf at PB, and there are others, asking for visitors.
Aside from the tourism nonsense, something needs to be done to restrict the speculators who, except for their own bank accounts, have destroyed the CA economy. Every time a developer builds housing for workers (you know, those folks who actually contribute to the local economy), speculators just swooped down and bought them all up. High housing costs (artificially created by specs, flippers, illegals, greedy LLs) made the situation unsustainable for many employers who up and left and moved operations to India/China. This situation has college grads waitressing or working as newspaper deliverers.
So, I do not feel sorry at all for the sob stories of the FBs. They can all go to hell.
~Misstrial
“What I’ve been seeing on satellite TV is an ad showing Arnold & Maria walking on the beach asking people to visit CA, Clint Eastwood playing golf at PB, and there are others, asking for visitors.”
Wow, that sounds like Florida. Well, if there’s one good thing I can see about this busted bubble, it’s that it seems to have made many people so disgusted with Florida, they are leaving in droves. I have to say, this does not make me unhappy. Florida is definitely not for everyone and with its weather and environment, it is not suited to be a center of population or commerce in any big way. Even a lot of illegals don’t like it, but the bad news is, they’re headed to the Carolinas, Georgia and Tennessee, since housing went bust here and they don’t want to go back to the fields. They’d rather have the factory jobs in other parts of the South, is the word on the street.
“Aside from the tourism nonsense, something needs to be done to restrict the speculators who, except for their own bank accounts, have destroyed the CA economy.”
This is a problem which the invisible hand would readily correct if the govt would just let market forces work free from interference. But I doubt the Fed and the Congress have the temerity or the political motive to face the near-term consequences of a speculator bloodbath, which is why I am anticipating behind-the-scene efforts to reinforce the speculation and fraud premiums that are currently built into California’s unaffordable home prices, rather than letting the market take prices back down to a level supported by end-user demand.
My parents live in a modest house away from the beach in Sarasota. They bought it 10 years ago for 109k. They are nowhere near the beach but their homeowners just jumped to 8k a year. Taxes are about 3k a year because of the save our homes. They did a remodel to the bathroom and they obviously had to pull a permit, it caused their taxes to make a pretty big jump over the 3% per year cap. I wonder if the cabinet guy or others who focus on existing homeowners will get stung by this as many Floridians are already stretched enough?
My parents are contemplating moving out of state. They only owe about 40k on their mortgage that they refinanced a few years ago for a super cheap fixed rate mortgage. They can afford to drop the price and sale. Many others cannot. In fact, if my parents sold just to move (meaning a much lower price and still walking away with plenty of cash) it screws the comps for everyone else.
Tom, how much coverage (dollar amount) is that $8K buying? Is there a 10% deductible for wind damage?
We have friends near the SC coast and about 30 miles from the NC coast. Both their insurance policies will only pay for named storm wind damage that’s above 10% of the covered amount. One guy is totally unconcerned, but the other guy has moved and has his (vacant) house on the market. He took a hit to his wallet a few years ago in MD from Isabel, and doesn’t want a repeat.
I dont know the specifics but the insurance companies look at the replacement costs etc. They dont care what you bought your house for, they know now that repairs in FL will cause supply constraints and cause repairs to cost more. I think that is a huge reason for the cost. Even if construction costs go down, if we have a major storm, you are looking at hiked prices while repairs happen.
So the advantage in Florida of no state income tax is killed by homeowners insurance and property taxes. They should rent instead of moving.
Isn’t that kind of like Texas? Low state income tax but high property taxes? For this reason, a number of Texans have relocated to NM. They live in a town called Anthony which is right on the border of Texas and NM. So they are about 15 miles from El Paso. The only thing to watch out for is avoiding the flood basin of the Rio Grande. Then, you are OK.
~Misstrial
Probably depends on your situation.
While NM has fairly low property taxes, incomes are low and you hit the max state income tax rate at a fairly low level of income.
NM gets the most federal $ returned to the state per dollar sent to DC in the US.
I would not be surprised if the people living there work in TX and do not claim to be NM residents.
or Ma,NH,and 40 other states
Thanks again for maintaining this blog Ben, you and those posting saved me from becoming another FB here in FL after I found the blog in early 2005…
“In a recent report, New York investment bank Goldman Sachs estimated the housing downturn would be a mild drag on the U.S. economy, but it singled out Florida as the one state where the slump ‘is likely to cause an outright recession.’”
Brother you have no idea, take it from someone in the field who is speaking to borrowers up front and personal. I had contemplated starting a blog on the borrowers and potential homeowner(s) I have dealt with in the last 6 months.
It is going to get very ugly here in FL, very ugly indeed.
Please post your stories here Flmtgbroker. This is the perfect place for them.
Heres one that I had recently:
Flashback to late 2005, I had a borrower come into my office for a refinance to continue to use her house as an ATM. Pulled credit went over available options and came to the conclusion that she while she could qualify on her salary it (available financing option)was not a long term solution… period. Told her to sell pay down debt and rent for a bit.
She was unhappy about this and while I did write her up a GFE on costs at her request I didnt hear back from her for about two months. She came in with paperwork from World Savings which had gotten ahold of her via telemarketing. She was excited that they could something for her and upon reviewing the paperwork it turned out that all they would do was a HELOC at intro rate of 5.99 but a true rate of Prime plus 2. I advised her if she did do it and paid off/closed all of her CC’s it would raise her score and we could get her conforming financing for the long term within 3-6 months….
A few followup calls through mid 2006 and let it drop off the face of the planet as a result of no response….
Forward to a week and a half ago…
She paid them (CC’s) down per my advice and ran them right back up unfortunately… Combined with the drop of home values in her neighborhood and the equity removal she is f’ed. 50K underwater on the home and just missed her first mortgage payment in Feb. BK was the only alternative I could give her as she is now a 500 credit score borrower and as all of us are aware this is not the environment to be a nonprime borrower. Particularly when you cannot qualify other than overstating your income and even then on a 2/28 ARM with 9-10% as a start rate….
Please keep singing the loan, electric…
Do these darelicts ever learn?
My Aunt and Uncle just refied at a higher rate to pull out 70k to pay off CC’s and buy her a new car. The interest rate on the loan is much lower than the car loan would be and it makes it tax deductible but for the higher interest they are now paying it is not worth it. Bottom line, I know them and I know they will charge those credit cards right back up. About the only good thing I see is that the new car gets much better gas mileage than the old one and she drives about 120 miles a day back and forth to work.
I’ve said it before:
This is “THE MORON GENERATION”
Reduced buyer pool with tightening lending standards makes it happen faster.
GFE = Greater Fool’s Estimate?
So it’s not “Girlfriend Experience”?
“Particularly when you cannot qualify other than overstating your income and even then on a 2/28 ARM with 9-10% as a start rate…”
Aren’t banking regulators murmuring about a crackdown on borrowers who fraudulently overstate their incomes?
Oh the HORROR.
You mean I actually have to be honest about what I make? And you want a downpayment? And a decent/good credit score?? Come ON!! That’s nuts, nobody could ever do that, it’s just impossible.
Not lie about my income. Phew.. What an idiot that banker was. I will just go find somebody who could care less if I will ever be able to pay back the loan.
This weakens confidence in our banking system. We think it is “too big” to fail. I guess the Titanic was too big to sink. It takes a shock like this to humble us. Unfortunately Congress will hold hearing (always late to the party as usual) and the knee jerk reaction will be just as bad.
Sarbannes-Oxley anyone? It’s a nightmare and goes way too far if you ask me. Lots of money is wasted but hey, the stocks in companies like IBM, Oracle, and Microsoft seem up. I guess it is good for someone and us “IT” folks who have to implement the controls from the CFO’s office on down.
“I will just go find somebody who could care less if I will ever be able to pay back the loan.”
Too bad that 67 or more such ’somebodies’ went out of business so far in 2007.
Above are examples of borrowers and their friendly mortgage brokers abusing credit .When you give borrowers like this high loan to value loans ,they keep going until they are cut off ,than they run up their credit cards .
o down purchase money loans or giving high loan to value refinances = they walk because no skin in the game or already pulled out all the bogus equity .
When I was in lending we would just cap these credit addicts off at a low loan to value and the appraisal was tight also . How many of those recent refinance loans were based on bogus inflated appraisals that exceeded the value of the homes ? As a lender you don’t have security for the debt if the refinance appraisals were inflated . Major reason why these borrowers can’t sell because the debt exceeds the property value .
Maybe they should have a knew rating system on loan risk for Wallstreet .
F paper = 0 chance of re-pay will default within 1 year
D paper=80% chance of default
C paper =50% chance of default
B paper =20% chance of default
A paper 10% chance of default .
Why Wall street thought that charging a higher rate on high risk loans would offset the risk is stupid . It’s always been low loan to value for high risk loans + charging a higher rate . Stupid , Stupid , Stupid lending .
lol, H/W: at first glance I thought you were spelling out the “f” word
~Misstrial
If she had sold in 2005 at the top of the market as you suggested, she’d be fine now.
Don’t know REH, seems like they have spending issues, no? Would probably still would max out the cards. It is really wild to know and talk to people like this.
One guy I know just blows incredible amounts of cash on buying many of the same random item, e.g., 5 pressure washers. He has a good pension, but has blown through a good amount of his retirement accounts. No self-control whatsoever.
Another person I know just spends it all and gets into debt, takes money out of their retirement account intending to pay it back, can’t pay it back and pays the extra 10% tax penalty. Truly, f*ing, amazing.
“They find themselves owing $350,000 on a house that’s worth about $300,000. Their income is down because Cathy Comerota’s job as a mortgage processor no longer pays much in today’s slack market, so they can’t afford the $3,000-a-month mortgage.”
How many stories like this will we hear? Honestly, mortgage processor does not sound like a vital function in society. Mortgage broker, title officer, realtor, staging experts, window and blind salespeople, these are all bubble-related jobs.
Having watched the housing market in the Florida for the last 10 years, I would say they probably owe 350,000 on a house that is worth 150,000!!
Nobody in my circle is in real estate. That’s a good thing.
Muggy — LOL — must be a small circle! It’s almost like trying to drive through Florida right now without hitting a lovebug — they’re everywhere.
I keep reading these stories about people with $3,000+ mortgage payments, and my jaw drops open.
I cannot imagine making a $3,000/month housing payment…especially in Florida.
Where do these people get the money?
I mean, I feel like I’m the only one who isn’t in on the joke. Like there’s a big pile of money somewhere, and everyone just goes to it and takes some when they need it.
Our household makes about $100,000/year. Our house isn’t mortgaged, we paid cash for our (uesd) cars, and we live a nice life. Our house isn’t huge, our cars cost less than $10,000 each. We don’t have $500 shoes on our feet, and we don’t drink Starbucks coffee each morning.
If I suddenly had to come up with $3,000/month, it would mean that I couldn’t save much for retirement, kid’s education, etc. It would mean that I couldn’t take a nice vacation each year, or help my deadbeat brother when he needed a few bucks.
$3,000/month in Florida is just plain stupid.
That is SO funny that you say that. I often feel exactly the same way. Like there is a printing press (money) somewhere in FL that only some people know about. You bring a few reams of paper, and it spits out another 10-20K in nice fresh cash.
I have often wondered where the money comes from in FL for this lunacy. Perhaps I will go drive through Palm Beach (as it appears to have a direct link to the printing press, perhaps it is located there) to look for the press today. If I find it, I am sure I will be sworn to secrecy, and therefore be unable to post anything on the blogs anymore. However, if you see a Gulfstream sold on Monday to a “independently wealthy” 30 year old guy in Palm Beach Gardens, you may have some indication that I found it!
I make close to $100k and can’t even figure out how I could afford $3000 a month and still eat. What about saving for retirement or just plain savings??? I wonder what the ratio is of people who are saving for retirement to people who just spend it all. I am 28 btw, so this would apply to the age group around me.
Let me add my “ditto”.
Our household income is over $120K a year, our house payment is only $900. My vehilce was $7K used. My fiancee’s was $12K used. We live way below the lifestyle of many of our friends/family that make less money but have way higher house payments.
Still, we’re just barely breaking even. Well, we do put 5% to our 401(k)s. We’re paying more than minimum on our debts.
But still, we’re not swimming in money as one would expect having higher income and lower payments.
How do they do it?
All I can figure is:
1) We do have way too much debt, largely divorce related. I was married for 15 years, and when it ended, I got hit with $7K legal fees and paid $40K in alimony over 5 years. That much going out in alimony, I did use my credit cards some. A second divorce from an 18 month re-bound marriage added another $5K to the debt…. no alimony from that one.
My alimony ended in February, so I’m just starting to pay down on the $20K debt I have.
My fiancee also has debt from her divorce, and just had a custody battle with the ex. that cost her an extra $5K. Looks like the ex. will have to pay her back $3-4K of that since the battle was prompted by him violating the previous agreement, yet we can’t be sure how long/if we’ll actually be able to collect.
Oh, and she has a Master’s, and has $50K in student loans. My degree was paid for by the U.S. Navy.
Anyway, maybe the $1500 we pay on debt a month is what makes all the difference.
2) We’re paying more in taxes. We may make $30K more, but govt is sucking up $20K ($10K off the the extra income and $10K from lower deductions)
3) Our friends are going into debt instead of digging out.
Can you afford to up your 401K to try and save on Taxes? I live in Phoenix also…. kinda hot this time of year ugh.
Our rent (here in LaLaland) is $1700 and we think that’s crazy. I can’t even fathom a $3K mortgage despite being able to “afford” it. Even when housing does eventually bottom it’ll be hard as hell to pull the trigger.
sheesh. You guys shouldn’t be getting married, given your track record.
“I mean, I feel like I’m the only one who isn’t in on the joke. Like there’s a big pile of money somewhere, and everyone just goes to it and takes some when they need it.”
Good one! LMAO!
Rocky Horror Loaning Show?
“‘The change in the amount of the past-due category is a reflection of the slowdown in the real estate market in Florida,’ said Terry J. Curry, chief credit officer of Ocean Bank. Our loan portfolio is well-secured, and we look forward to the inevitable rebound in the real estate market,’ Curry said.”
“Even at just 5 percent down, a buyer has to cough up $20,000 on a $400,000 unit, a big investment for some. Eric Feldman, a real estate agent in Hollywood, said that the monthly carrying charges on a $400,000 townhouse could be a burden, too.”
Don’t even mention the P&I of $2,340. There must be lots of folks in Florida who make $150,000 per year.
“Even at just 5 percent down, a buyer has to cough up $20,000.’
- Probably only 1% of all Americans can come to the table with 20K cash.
I looked it up a few months ago (perhaps someone else has it bookmarked). 150K puts you (~) in the top 5% of all income earners in FL. Now, given that stat, that means that about 90% (and I would argue closer to 95% because of the high tax and insurance costs) of people in S. FL cannot afford a median priced home.
Sure, that’s going to work out great. Nothing like pricing out 90% of the market.
Also, the other issue is that anything much below the median (300K or below) is going to be either:
1) Too small to raise a family (
Here is a good article on US wide income stats.
166K (household) puts you in the top 5% of all households in the US. FL is a traditionally low earning state, so I would still stand by 150K puts you in the top 5%, however I can find the stat that I saw before.
150K X 3 = 450K (safe loan amount).
Yeah, we are in for an enormous correction.
Link:
http://en.wikipedia.org/wiki/Affluence_in_the_United_States
A ton of those earning $150K aren’t doing it anymore. They were in some area of real estate.
Soon to be followed by those in both the financial sector and government.
The bubble aside, what COULD be the future in Florida, if those of us who love the state took control? Building on our strengths, which if you subtracted out housing, (never really a sustainable economy anywhere) are agriculture and aquaculture, tourism and healthcare. We could add alternative energy to that.
The correction always over corrects. The price of RE will drop. The only thing is our dollar is sinking and that means imports cost more. Could mean a return of manufacturing jobs but also higher energy prices. Could be stagflation, who knows? Im thinking Stag with a slowing economy and runaway inflation. Either way, houses will go down because people have less disposable income to spend after buying food and gas. We might have foreign investors and maybe some hedge funds do some massive buying of RE at distressed prices but they better be willing to maintain them or they will not hold up too well. But they may not invest at all if the dollar keeps plunging (meaning they lose money in their investment). They will want to see a bottom as well.
“hedge funds do some massive buying of RE at distressed prices but they better be willing to maintain them or they will not hold up too well.”
Hedge funds aren’t going to do squat. They’re even less in the real estate business than banks are. Hedge funds are about pulling money OUT of the system, not putting any money in. They are basically parasitic on productive people.
Hedge funds may actually play a useful role in the real estate bust, by catching the falling knives on the way down.
What’s the difference between a porcupine and a hedge fund manager in a Porsche?
With a porcupine, the pricks are on the outside.
“The correction always over corrects. The price of RE will drop.”
Tom —
Don’t you sense how top U.S. economic leaders must be working hard behind the scenes to limit nominal losses on residentially RE? The real losses are in the bag, but if they spill over into nominal losses, the gears of the lending system would seize up as the lubricating effect of housing price inflation was sucked dry, and a slow burn would turn into a devastating conflagration.
So I expect every effort to be made behind the scenes to prop up current price levels for a virtually indefinite period of time until wage inflation can finally come up to levels where end-user demand lines up with market values. I am personally not sure how this will be accomplished, but I can see the alternative to making it happen will be politically intolerable.
The only problem I can see with the above scenario is that speculative buying and building will be encouraged and will continue until an even bigger crash will play out down the road. Other than that little problem, I see no reason not to try this.
It seems to be poping the stock market…. the FED can unlease money but the folks who get the money ( I don’t know Goldman , etc. ) seem to want to buy stocks with it not housing……….
Remember, we’ve been advising the Japanese on this very subject for quite a while. Hasn’t that worked out well?
Exactly. Look at Japan - virtually zero new supply of housing, substantial current account surplus and foreign reserves, no foreign borrowing (so they can set their interest rates anywhere they want), substantial personal savings, a culture that discourages people from defaulting on debts.
With all these things going for them they were not able to prevent a 50%+ nominal price drop. The is NO F#CKING WAY any power on earth can support nominal US housing prices.
“The Housing Leadership of Palm Beach County has released a study concluding that 90 percent of households in the county can’t afford a single-family home; the median price of an existing single-family home countywide was $375,100 in March, the latest figure available. The situation is no better in Broward County, where the median price is $372,400.”
Are they just figuring this out or is this part of the “acceptance” cycle of the collapse? This might also give a clue to some of the genius Realtors ™ who are wondering why the folks in Key West just can’t seem to afford a $400K 2/1 condo on $10 an hour.
Oh they’re probably just fence sitters anyway.
The New Myranda Act:
You have the right to pay too much, you have the right to not read your loan docs, anything you were lent, can be used against you in a court of law.
Do you understand your rights?
“Angel and Myranda Acosta moved to Pasco County from Oklahoma in 2004 near the height of the housing boom and paid $139,000 for a three-bedroom, two-bath house in the Moon Lake Estates neighborhood.”
lol
Only one change is that I would draft this to read “can’t” in lieu of “can.”
Fortunately, Floridians have something coming up that will take their minds off the sad state of housing. Here’s a partial list of hurricane preparedness items in today’s Herald-Tribune.
If you are ordered to evacuate, where would you go? What would you do if you lost power for hours or days? Do you have a list of out-of-town emergency contacts? Do you have a basic emergency disaster kit prepared? What would you do if you could not return to your home? Who will shutter your home if you are away when a storm strikes? Do you have enough non-perishable food and water to sustain your family in the event power is out for days?
And last but definitely not least: Do you know the difference between “actual cash value” and “replacement cost?”
The local Faux News weatherman had a great segment on hurricane/emergency supplies. One of them was this really cool thing called an AquaBubble. Basically, a huge plastic bag that fills the bathtub and hooks up to the faucet. Fill it up and you’ve got enough water for a couple of weeks. Another great device (but way out of my price range) was a water purifier that acts on solar and batteries and purifies water from any source. They took water out of the Hillsborough River and ran it through. Cool stuff.
Palmetto- I don’t know if you are old enough to recall that after Donna(1960) we had a call for Hurricanes every year and there was a considerable pucker factor. Well, forty years later it all came true. Only yankees and tourists predict the weather in Florida.
We might get one and we might not. I don’t know about you but I have plenty of stuff to worry about besides what “might happen”. I know the tax man will show up for sure.
dime, I experienced the tail end of Donna up in the Northeast as a grammar school pup. I agree with you about worrying about what “might happen”. Simple, basic preps and an evacuation plan if needed, that’s about it for me. Gotta pay my greedy Uncle.
Rat Finkle…
“According to Jeff Finkle, CEO of the International Economic Development Council in Washington, many high-growth communities are facing similar problems. ‘You’re now 50,000 people,’ he said. ‘The economics are not working, and now everybody is going ‘Egads, what do we want to do?’”
“‘As we all know, things got a little out of hand, the real estate market got a little aggressive,’ she said. ‘Investors did a lot of investing in speculative homes. Unfortunately, that doesn’t last forever.’
I really am bugged with statements like this, ” a little out of hand” and “a little aggressive”. That is like saying you have ” a little Cancer”
Why don’t people just say, lending got out of hand and real estate got aggressive.
The down playing being done is past revolting already.
SKB
Yeah, the whole industry seems to think that BS will save them.
FL is going to be just fine. I lived in FL for 20 years before moving to Cali this year. What a mistake. FL is heaven compared to the bay area. All the doomsayers, please go and live in some other states before prdicting doom and gloom for FL.
Are you freaking on glue? You are on the wrong blog dude. You must work for the NAR and they must have some kind of a denial forum someplace, I suggest you post your moronic comments over there.
I think you’ve misunderstood the post, SKB. Don’t be so quick to malign. The way I understood it, sobay is just making a comparison. Cali can be a huge culture and environmental shock to those who relocate from Fla. I’ve been there on a visit or two and I couldn’t handle it. There were parts of Cali that I thought were wonderful, but I was glad to get back to Fla. Be it ever so humble, fires and hurricanes, swamps and all.
Sure, FLA is going to tank, but that’s a good thing and I think sobay is just saying we’ll be able to weather it. I agree, provided we return to our successful fundamentals.
If this is the case then I stand humbled and apologize
PMS housing day today.
Come back, sobay. Florida is calling her sons and daughters home.
Exactly! Someone needs to live in all of that soon-to-be vacant/vacant housing. sobay-renter should be able to get a great rate!
~Misstrial
Thanks everyone. I am planning to move back there soon. Just keep up the drum roll so that the prices won’t go back up.
Will do, sobay. With all its faults, I love this state. I talk about leaving, but I really don’t want to. Some wag on this blog once said my attitude toward Florida is like that of an abused spouse that can’t seem to leave.
How funny, I moved from Cali to Phoenix last year to sit out the housing bubble and now thats its 108F in May I’m thinking of moving back to Cali , Ventura Co. Even though Cali is so mucked up there is no place like home. I may try for Tucson though, better climate, better air quality and better cactus
A guy at work bought a home in Florida and of course still lives here in Phoenix with a home in Goodyear I think? He wants to move back to Florida in a year or so, why he bought when he did ? I don’t say anything I just smile and nod.
sobay, you can always come back to the “other” bay area. Besides, crossing the Skyway Bridge here gives me a mild case of the shakes. If I had to cross the Bay Bridge out there, I’d have a permanent case of Parkinson’s.
From the Miami Herald:
“The only Florida bank now facing real troubles is Bradenton’s Credit Bank, which ended up making almost 500 loans totaling $110 million to customers of a St. Petersburg builder that later went broke, triggering a cascade of loan problems for borrowers and the bank.”
Okay. Okay. Obviously this reporter doesn’t get out much or has just emerged from the bong smoke. Ahem, what about Coast Bank?
Delusions done dirt cheap.
Guys and gals I was born and raised in Florida by parents from the midwest and south. It was heaven for a boy. I spent all my time on the water fishing, playing, making forts and tree houses. My sister and I left as soon as we could get outside and we lived a life of freedom and kid stuff. I had my Fanner 50 and my sister her Barbie.
In the day there was no polution. The lakes were crystal clear and there was always a lake breeze off the water. (before ac)
The majority of people were in the citrus business and my dad was a lawyer who made a living taking care of the inevitable issues that arise in agriculture. The people were what I would call deep south and everyone waved to each other and said hello. I recall dad’s clients who were poor coming by the house to drop off vegetables they had grown in lieu of a fee by dad. He did that alot.
In my home town if my sister and I wanted to go to the soda fountain we just ordered it and they put a check mark next to our names on the poster behind the counter.. My dad would stop in for coffee and they would collect the 35 cents or so.
When we had 35 cents(took me two weeks to get that) we would go to the movies on Saturday and spend the whole day watching movies in the air conditioning. After the movie we walked to our friends houses and hung out and listened to records. TV was only 3 channels and it was all grown up stuff.
Educationally I think we had a wonderful environment other than the heat. Lord was it ever hot in those classrooms. I can remember the paper always stuck to my arm when I was writing. Virtually all of my classmates became professionals and all of us graduated college.
I can recall the first day of school we had to give our phone numbers for an emergency. At least 30% of my class had to give a neighbors number as they had no phone. Many had parents who worked in the citrus plants at very low paying jobs.
We all got along well regardless of our economic situation. We also made our own fun by hanging out at McDonalds and such. We would sneak off to the groves with our girls as well.(that was fun)
When we had a cold front coming and they were afraid the fruit would freeze they would send all us boys out to the groves to light the heaters and tires. We would be out there all night in the cold having a ball. We were paid nothing as the community depended upon the fruit to survive.
Our Mom’s would drive out to the middle of nowhere and bring us food and hot chocolate.
If you want to feel old Florida go to my hometown, Winter Haven, the city of 100 Lakes. It is the same now as then. I have my 40th HS reunion coming up next month and it is amazing that we are all the same as when we lived there regardless of where life has taken us. Who knows I may get to go to the groves again with one of my old girlfriends.(to reminisce only, no doubt)
Great post Dimedropped.
Even though I am a bit younger than you I did get to catch if not the “golden days” than at least the tarnished “silver days” in NWF and they were pretty good too!
I read a great book about old Florida a couple years back called “A Tinker’s Damn” by Darryl Wimberley. I didn’t like the ending but the other 150 pages or so were pretty good. Check it out:
http://partners.nytimes.com/books/00/12/17/bib/001217.rv111526.html
I could do a Boomer’s Lament, along the very same lines, growing up in the outskirts of the city of angles…
We lived in a Great Time~
Those were double features on Sat afternoon. Bonnie and Clyde, all the spaghetti westerns, Night of the Living Dead, some sci-fi, The Graduate, horror movies…
Had forgotten about some simple pleasures. Different time, different place.
Grew up on a mini-ranch in Northern Colorado (now known as foreclosure central). Horses, dirt roads, Chevy trucks, Friday night football, Saturday night cruising, shooting clay pigeons in the field across the street… ahhh, the days!
Dime, your post brings back a lot of memories for me also. I was born in Tampa and live there until I was 9 years old when we moved to Ft. Lauderdale. In Ft. Lauderdale we lived in an apt. in a trailer park, we had very little money (no t.v., no car, no phone) but we always played outside and had a good time. When I was 11 years old my friend and I rode bicycles to the beach and stayed all day. We ate mangos all the time, visited friends near the groves and played. We picked up coconuts on the street, broke them open, sat down on the curb and ate coconut, also plenty of avodados. We have a guava tree in our back yard. Are there any of those around anymore? Yes, I have great memories of living in Florida back in the day before all of this happened. I love to tell people how I grew up in Fla. and how little money we had, but it was great!
Barbara-Fantastic, and you stirred the eating of tangerines on a cold day memory. We would sit in the trees and eat ice cold tangerines and they were so good. I have not had one taste that good in many years.
Yes mam, we had little money and when I finally got an allowance out of my dad, at the age of ten, I blew the whole amount on candy. He took away my allowance as it showed I was not responsible. I was supposed to save 5 cents. Damn noone told me the rules, but then Dad’s who grew up in the depression were like that.
When he died my sister and I went through his house and he had stored dry beans everywhere. For many years he had this old barrel we thought had a bottom in it. It didn’t. I picked it straight up and under it we found, Gold, beans, batteries, candles and silver dollars.
Pop made a lot of money but he lived like a monk. He had 2 suits for court and 2 sport jackets but I remember him in chinos with a pullover most of the time. He had no hobbies, no outlets, no toys, nothing. Oh he did have a Zenith trancontinental radio he loved. I think he bought it in about 1960. He died in 97′.
The men of that generation, WWII veterans were simple fellas and they expected nothing special out of life. They worked and saved and always listened for the wolf at the door. Damn I wish I had been able to spend more time with the guy.
He flew bombers in WWII and I am amazed as this guy had no mechanical aptitude I ever saw. One day I asked him how that was to fly those big bombers. He said, “hell it scared me to death. You see I am afraid of heights. Every time I got scared I would stamp my feet on the floor of the airplane and say to myself, ” oh hell I am in an elevator with windows”.
He was one of the youngest squadron commanders in the air corps at that time,23, and I am sure the guys flying with him never knew he was afraid of heights. Imagine if they had known. Too funny.
Forgive me for prattling on about this but it is kind of a hot button for the sociologist in me.
But in the day did any of us have a lot of money? I don’t think we did. I recall we had a couple of “rich” men in our town but hell we didn’t think anything about it. They were kind of looked at askance as their integrity was in question on some of their dealings.
Is it at all possible we are about to undergo some rebalancing of our populace? Since when does every job or vocation entitle the individual equity of lifestyle? There are simple reasons for economic worth of services or goods.
Back then some people had 2 cars and some had none. How did we treat it? Car pools.
Lord, now that I look at it from the 50’s -60’s perspective this is a great thing we are going through and I think the boys have really done us a favor.
No doubt in my mind that we are all tethered together regardless. Welcome the new paradigm. It is comin’ anyway.
dime, I just got in and read your posts and the reponses. Great stuff from all and thanks so much for one of the nicest experiences on this blog. Brought back a lot of good memories for me, too. Of course, comparing life in the US during the first half or 2/3 of my life to now, I can’t say life has improved much, with the exception of maybe the internet and even that’s debatable. But a lot of us had it good, didn’t we? And actually, I was lucky enough to realize I had it good.
Great posts dimedropped ,you could of been talking about my father .
As a relatively young man, I am sorry that I didn’t get to spend more time with folks who grew up during the Depression and who really knew the “good old day.” My grandparents - may they all rest in peace now - told me stories and such, but I was too young to fully appreciate them until only relatively recently.
What is sad in a way is that even my youth growing up in the 1980’s is far better than the decay I see today. The culture of drugs, guns, “hip-hop” and so forth was far weaker at the time. I guess you’re getting old when you can talk about the “good old days”, or perhaps our society is just declining at an ever increasing rate.
I would love to go back to a “better time” as it were, but I have doubts that such a thing will happen. Still, one can always hope…
Same here. Given what I’ve learned these past few years, I really would have loved the opportunity to discuss the 30’s and 40’s again with my grandparents. Mind you, I did listen intently; at the time I just couldn’t fathom history repeating itself.
Economics are a great equalizer my friends and there is no better friend than one in need. Whether we huddle together and cry over our fate or sit and reminisce and plan for a more user friendly society is up to us.
The world is the same, only we change it. My 19 year old came through the room one night and I was looking at the cave man thing from Geico and laughing. I said, ” Come over here son and check this out, it is really funny.” He said, ” I don’t find them funny dad, that is an indication of the type of world we live in.” “Silly nonsense for a buck.”
I was stunned and a little ashamed. In fact we have evolved into just that, a silly bunch of gigglers while they lift our wallets. What happened to the good hands people?
My point is my three kids are becoming ultra conservative relative to their view of our state of affairs. More than that I think they are worried. They may be the first generation to actually have a lesser lifestyle than the “standard package” we all anticpated and exceeded. I am glad my grandparents never saw what we see daily, and accept as normal. Imagine your mom or grandmother watching sex and the city.
When my grandmother used to get upset and worry she would say, “hummy hummy hummy.”
Well, hummy, hummy, hummy.
I love these comments about the good ole days. I went to school in the 50s and 60s and thought I’d died and goe to heaven when they built a new high school with air conditioning for us! We had somehow survived living in Florida without AC, and we had to dress up for school too -no shorts, t-shirts and flip flops like today’s kids. When I taught school five years ago, and told the students we had no drugs in school back in my day, they called me a liar. They REFUSED to believe we weren’t all drug-crazed hippies. How sad that drugs and the “ME” generation is all they have known. Many of today’s kids can not imagine a world different than what they see on TV and the Internet, and THAT is sad. I thank God I was born in 1950 and not 1990.