A Reflection Of The Market In Florida
The Bradenton Herald reports from Florida. “Pre-construction sales at SevenShores condominiums on Perico Island have temporarily ground to a halt just a year after units first went on the market and despite developers reducing their prices by $60,000 in December. In December, officials at SevenShores said deposits had been received on only nine units in the project’s first building with 40 units.”
“Sales officials said at least 20 units needed to be pre-sold before vertical construction could begin. That same month, St. Joe officials said they had reduced the price of entry-level units from the $700,000s to $534,900.”
“‘”I just think it’s a reflection of the market and obviously the condominium market has not been one that would give developers a warm and fuzzy feeling right now,’ said Manatee County Commissioner Ron Getman.”
The Herald Tribune. “Responding to the softened downtown condo market, developer Enterprise Associates of Sarasota LLC has reconfigured the design of its planned Marquee on the Bay residential tower.”
“Some of the 15 units planned for the site have gotten smaller, to 1,900 square feet and 2,800 square feet, down from about 4,000 square feet. Not surprisingly, prices have dropped commensurately, from a range of $3.55 million to $4.1 million, down to $1.6 million to $2.5 million.”
“‘Given the condition of the market, there have been a lot of requests for smaller units,’ said Sam Hamad, Enterprise’s CEO.”
“While the $45 million project has been on the boards since mid-2004, Hamad says he will start construction when he sells just two more residences. ‘The building is going up, and there’s no power on Earth that can stop it,’ Hamad said.’
The News Press. “Our residential market…suffered its fall almost two years ago, and it has been painful for property owners to see their values plummet.”
“Let’s first look at the entry level market, which includes price points below $200,000. It is now possible to purchase a new home in Lehigh or Cape Coral for well below $200,000. Some have sold in the $160,000 range! That is roughly 50 percent less than a similar home would have sold for at the peak of the market.”
“These attractive prices are a result of lot prices falling more than 80 percent in the past 20 months, construction costs becoming more competitive, heavy inventory, and in some cases short sales offered by sellers trying to avoid the foreclosure process.”
“The same opportunity exists with existing inventory in the dozens of new developments around town. The developers’ backlog of sales is turning into a backache as many initial buyers are walking from their deposits and leaving the developer with unwanted homes for sale.”
“Buyers are taking full advantage by getting discounts as much as 30 percent off the sticker price as well as other attractive goodies such as special financing. In some cases the sale prices have been rolled back to pre-boom prices.”
“Gulf-front properties are in limited supply due to the relatively small amount of privately owned beachfront real estate. But according to recent sales, it appears like Gulf-front property came down with the rest of the market.”
“In March 2007 there were still a number of condo sales exceeding $600 per square foot, but in March 2006 it was much more common to see sales exceed $700 or $800 per square foot.”
“Let’s look at some examples of Gulf-front condominiums on Estero Boulevard in Fort Myers Beach by narrowing the comparison down to units with 1,000-1,200 square feet built around 1980. Last month a Gulf-front condo located midway on the island sold for $465,000, or $406 per square foot.”
“A year ago, a similar condo just down the street sold for much more: $700,000, or $664 per square foot (that buyer was a company, suggesting the purchase was most likely for investment).”
“A 4,840-square-foot singe-family home on Sanibel Island recently sold for $2.4 million, or $496 per square foot. Compare that with a similar transaction from a year ago, when a 4,570-square-foot home on the same street sold for $3.35 million, or $733 per square foot. (That home was sold to a company, suggesting once again an investor-driven purchase).”
“The comparables demonstrate factually that even Gulf-front property is not immune to the market cycle.”
The Palm Beach Post. “Last year, Drew Burris bought four boat slips in Charleston, S.C. He’s now looking at picking up a few more in South Florida.”
“‘It’s a great investment play,’ he said. ‘I’ve seen the prices continue to escalate as more and more people move closer to the coast. It’s a good way to park your money into a boat slip, have it rented and in the future realize a capital gain.’”
“Touting rising values, some marina developers are pushing the high-priced spaces to a new brand of customer: the real estate investor. It’s a no-brainer, they say, especially in Florida.”
“‘There’s frustration in the marketplace, certainly with single- and multi-family homes and especially in South Florida. They’ve fallen out of love with the residential side of the business, and they’re looking for other creative places to put their money,’ said Dunston Powell, sales manager for Atlantic Marina Holdings, LLC.”
“‘The condo market is soft because it’s saturated. Too many condos, not enough buyers. That’s not a problem for slips,’ said Steeven Knight, CEO of the Fort Myers-based Yacht Clubs of the Americas.”
“Others aren’t as bullish. Boat slips saw a rapid rise in prices during the past few years, partially driven by speculation. But prices have leveled off.”
“Marty Laven started The Dockominium Group, based in Fort Pierce, in 2001. Laven’s skeptical of the investor and the promise of large returns. Prices peaked in 2005, and some slips have sold since for less than their original price, Laven said. In early 2006, he listed a 130-foot slip in Jupiter for $1.2 million, or $9,231 a foot. It’s now reduced to $775,000.”
“‘It doesn’t make sense to buy one of these things and hope that you can sell it on the upside,’ he said. ‘Nobody’s going to make money in three to five years. The prices are too high.’”
“Many investors will lease their slips, but that’s not where the value is. ‘The prices are so high, you’re not going to make any real return on leasing your slip,’ said Boca Raton lawyer Dennis Hillier, who sets up slip-sale programs for marinas. ‘You make your money on the resale.’”
The Orlando Sentinel. “Condominium converters drained more than 30,000 apartment units from Metro Orlando’s rental pool during the height of the nation’s home-buying frenzy, creating a market so tight that many landlords had waiting lists of would-be tenants. No more.”
“The current slump in home sales has turned the local rental market on its head. Thousands of condos have slipped back into the rental pool during the past year.”
“‘Before the condo-conversion craze, condos were an insignificant part of the rental market,’ said Jim Lewis, president of a Maitland research firm. ‘Now it’s big, but how big, we don’t know. It’s a shadow market.’”
“Lewis said the firm’s March survey of Metro Orlando’s apartment complexes found they were 91.3 percent full, down from 94.1 percent in September and way down from the record-high, 96.4 percent occupancy rate set just a year earlier, in March 2006. He attributed the decline in apartment occupancy to the flood of condo conversions re-entering the rental pool.”
“Thousands of units were sold to investors who planned to rent them out as the home-buying frenzy drove property values ever higher. Once the housing market cooled, converters began dumping condo units back into the rental pool when they could no longer sell them.”
“Greg Willett, VP of research for a apartment-research company, said anecdotal evidence from across the country suggests that about one-third of all apartment units caught up in condominium conversions are back in the nation’s rental pool.”
“He said the two Florida markets in which landlords are ‘getting hammered’ the most by condo-conversion rentals are Orlando and West Palm Beach.”
FL has a 5 year escrow for repairs on condos, or used to, how do they account for an unfinished building w so few owners
West Palm Beach mayor takes jabs at Christ over the proposed tax cuts.
http://www.palmbeachpost.com/localnews/content/local_news/epaper/2007/05/22/m1a_frankel_0522.html?imw=Y
Also, can someone PLEASE explain to me how spending 150M dollars on a new City Hall is not “spending” the money because of a bond issue? If you read that story, you will see the mayor brushes off the talk about spending on the Taj Mahal by saying “it was a bond issue” or something to that effect.
Don’t these have to be paid back? This sounds like FB mentality (I will borrow my way to prosperity). I am asking because I don’t know (not because I am trying to be glib or smart), so please, if someone has some insight, share away!
“Don’t these have to be paid back? This sounds like FB mentality…”
We are working off from a new economic model in South Florida.
Yeah, a broken one.
a broken one
EXACTLY!!
Wow! The Mayor Palm Beach (who happens to be Jewish) is taking jabs at Christ over tax cuts? Yikes! I’m sure the evangelicals aren’t happy. How does Christ’s command, “Render unto Caesar the things that are Caesar’s and unto God the things that are God’s,” fit into this whole debate?
Just kidding; it’s “Crist” not “Christ” — a subtle difference that can really make a huge difference in the meaning of a sentence.
Saying the mayor of WPB is Jewish is like announcng the head of a NY mafia family is Italian. Some things are just assumed.
Of course the bonds have to be paid back, and, more to the point, debt service on them has to be paid in the interval. However, as you know, bonds issued by cities and states pay interest that is exempt from Federal income tax, enabling them to borrow (currently) at rates below 4%. So they think of it as Free Money. BS.
Actually, I didn’t know that!
I just love how these kinds of projects go forth unchallanged, but at the same time, the good people who work for these agencies are threated with job loss. Makes me sick; I would rather have more public services (and better) then a Taj Mahal for a city hall building (that almost nobody steps foot into anyway).
If these bonds are free money, how about you just make up any budget shortfalls by selling more of them!
“That’s not coming out of your taxes, we issued bonds for that”. BS!!! And we wonder why so much of the American public got caught up in this lending stupidity. Even govt agencies are starting to believe the FB mentality (the more you owe, the richer you are).
I was really hoping the article would explain why the mayor was so upset at Jesus Christ about tax xuts, but apparently you just spelled the governor’s name wrong
Jesus just left Chicago…
http://www.youtube.com/watch?v=xo1wf32IbPE
join your local
here’s mine http://www.fcta.org
bring your musket
Orlandoans are about to get screwed with about $1B in new bonds. When politicians seize new property tax revenues to justify bond issues, they are chaining the residents to 20-30-40 years of payments on those bonds even if the revenue source diminishes or never appears. This is the infrastructural nightmare that is resulting from the aberrations in the housing bubble property evaluations. Sure glad I’m not paying that property tax any longer — I am m-o-b-i-l-e.
Sputter…sputter…and what REALLY grates me is that after the citizens have been robbed to pay for these “capital improvements,” the politicians then let some commercial company come in and name it after themselves! I much prefer the “Taxpayer Arena” to the “TD Waterhouse Center,” thank you.
” fortunately we are at a point in time that allows us to pause and initiate new market research,
“The slowing market has provided an opportunity to measure and analyze current demand”
Our ship hit the rocks, caught fire, overturned, and started sinking. But fortunately this provided us with the opportunity to closely examine the bottom of the ship just before it slipped beneath the waves.
‘allows us to pause and initiate new market research’.
- Sweet… I will be sure to use that at our Tuesday morning sales meeting. This blog is a great source of mind spinning quotes.
From the Orlando Article: “We keep the rents very competitive to keep the units full,” she said. “That keeps the investors happy.” One- and two-bedroom units in Lakewood Park rent for between $700 and $900 a month, she said.
Does anybody have any idea how much the average two bedroom condo in Orlando was bought for during the boom? Are these people even breaking even?
This is another minidisaster on the horizon as the converter paid high dollars for the units planning on the conversion and retail sales.
The rents will not support the debt service on the units. It is a delaying action at best and will implode in time. I feel for the fools who bought in these complexes as they are really holding the bag in several ways.
I can tell you that many of these converters were buying at a 2-3% cap rate if held as rental. The conversion was the exit stategy producing the upside. They are now stuck with a property that cash flows at a yield less than a T-Bill under occupancy assumption in the low 90% range. I’ll place a bet that in 3-4 years as expenses continue to outstrip revenue the converter will hand the keys back to the bank.
This of course is assuming the conversion was shelved prior to unit sales taking place. Any building that is partially sold is going to be subject to some interesting legal wrangling w.r.t. the Condo Association in addition to the above mentioned operational issues.
dimedropped,
I looked at a 35 unit complex here in Sarasota 18 months ago. The guy wanted 100k per unit. Even with 20% down it would not cash flow positive. I asked the owner wtf he was thinking pricing the units that high. His response “They will make great condo conversions”. I rolled my eyes,my dad laughed and that was the last unit we looked at. Maybe we return to sanity when the banks take all the crap back.
Chris
P.S.- rents were 550-650 month/insurance wasn’t bad but you do not want to ask about taxes…EEEEKKKK
During the boom I saw modest 2bdrm / 2ba condos going for $ 250,000 and much in Orlando, depending on “location”.
Now that the bust is here these huge stucco sh!tboxes they are pigeonholing “investors” into will go bust big time. In fact they already have toppled in value.
You could rent a nice 2bdr/2ba unit in a decent, gated complex in Orlando for $ 750.00 - $ 900.00 / month before 2000….and I mean a nice, decent complex.
Prices will return to those levesl and anybody who paid more than say 120X of the 2000 rents will be “drowning-upside-down-under-the-boat” in debt with no way out.
And I don’t care what in the he11 the mainstream media, the chamber of commerce or the Realtors down here in Orange County tell you…I have lived here for over 20 years and median salaries for a single person renting ( more like myself, above median income ) will NOT sustain higher rents.
People who are doing better financially would want a home down here. Condos are for singles, empty nesters and median income people without families.
The big question is what is going to happen to all the thousands of houses that the Mexicans built just west of Orlando for the EuroSpeculators ? There are thousands of these places and they are only seasonally occupied. Most were bought with extremely toxic loans and well over “sustainable vacation rents” market price…..you can rent a beautiful 2bdr hotel suite at one of the Disney Resorts for a week or month much cheaper than they are trying to rent these vacation shitboxes from 15 miles away.
Poinciana in East Polk County is also gonna burst. Most of that area is filled with thousands newly immigrated Latinos in sh!tboxes on toxic financing. Most homes were built there in the last 6-7 years. IN 2000 Poinciana was a cow pasture east of Haines City.
The whole area down here in Central Florida is a mess.
…..you can rent a beautiful 2bdr hotel suite at one of the Disney Resorts for a week or month much cheaper than they are trying to rent these vacation shitboxes from 15 miles away.
I have noticed this as well. The only motivation to stay in one of those houses would be to save money. And Disney does have some rather affordable hotel properties (the so called “value” resorts). WDW is so big that staying off property is a chore (getting to the parks and back can take up to 30 minutes each way if you stay off Disney property.)
If I was a tourist, driving on International Drive would be enough to deter me from ever returning.
You are making the assumption that you live through your experiences on I drive. An assumption that I am not sure you can correctly infer.
It is quite a contrast from Disney’s super controlled “on property” environment in Orlando.
Apparently Walt Disney’s motivation to buy those thousands of acres in orlando was motivated by his dismayal by the squalor around the Anaheim property. He wanted full control of everthing within a large radius of his Florida themeparks and hotels.
The “community”/subdivision of Poinciana actually started in 1972, but it didn’t go anywhere for years and years. I went to a large New Year’s Eve party at their “club,” in 1973 as I recall. It was waaaay out in the boonies, in farm country, just too far from anywhere. It was many years before there was even a gas station nearby. The original part was in Osceola County, I think off Pleasant Hill Road. Back then, of course, there was no Buenaventura or any of that large-scale development. We were buying 5-acre tracts for $6,000 with $150 down, on what were called “land contracts,” and selling them six months later for $12,000.
not even close. well over 1,000 and they drove many potential renters out of the area and state.
wpb is worst because it was going up to 1,500. condo conversion owners are hanging upside down big time. it is just too much inventory. i have seen and know of 40% price cut in condo conversion and even divided locations, half condo - half rentals.
Fremont got bought out for $1.9 billion. Stock is up 46% premarket.
Shares of Fremont General Corp. jumped 50% in pre-open trading Tuesday after iStar Financial Inc. said it would pay $1.9 billion in cash for the firm’s commercial-real-estate lending business.
It’s also buying an interest in the commercial-real-estate loan assets of Fremont General (FMT : Fremont General Corporation
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Under the terms of the agreement, iStar is to acquire Fremont General’s California-based commercial-real-estate lending business and buy a 30% stake in Fremont’s roughly $6.5 billion loan portfolio.
In addition, iStar has agreed to fund up to about $4.4 billion of existing unfunded loan commitments associated with the portfolio, the companies said.
The final purchase price will be subject to adjustments to reflect agreed upon pro-rations, according to iStar, and the transaction is expected to close this summer.
Fremont shares rose $3.54 to $10.65.
In April, the Santa Monica, Calif.-based company said it had agreed to sell roughly $2.9 billion in subprime loans, representing most of the residential subprime mortgages it had been holding for sale. On Tuesday, it identified Ellington Capital Management as the buyer of those loans
iStar = Ishtar
http://en.wikipedia.org/wiki/Ishtar_(film)
Deep, this is taking us on a completely different journey, interesting….
I give up
LBO is the current bubble- who will buy this sht in 08,09 ?
Funny…
The sun-sentinel used to allow reader comments on drought related stories, as recently as a few weeks ago.
http://www.sun-sentinel.com/news/local/palmbeach/sfl-pnwater18may18,0,7278329.story?coll=sfla-news-palm
What is this fishwrap trying to hide from it’s readership?
I think they PURPOSELY word bond issues so that none of that $150 million can be used for any other purpose.
So the mayor is right, cut libraries police and other services if they enact a RE tax cut….but build a new city hall because the bond money is there.
Words spoken by my Hero…
“America will not entrust its future, it’s hopes, to the masters of a house divided against itself, to men so divided in their own thoughts that they cannot, or will not, tell us where their party stands on America’s pressing problems”
Adlai E. Stevenson, Jr.
“The current slump in home sales has turned the local rental market on its head. Thousands of condos have slipped back into the rental pool during the past year.”
This was predicted here last year. I never realized that so many psychics could haunt just one blog
Also on the Orlando sentinel link is a Centex ad. 60-80K off sale on about a dozen developments. Me, I’ll wait til the half off sale…..
“I’ll wait til the half off sale…”
Me, too.
This a.m. I chatted with a woman who used to summer in Maine, winter in Fla. In 2003 she sold a house on Sanibel and bought one in Ft. Myers. Fall 2006 she married a guy who summers in Maine, winters in L.A. She spent most of the winter in L.A. before deciding to sell the Fla house. She has the (mistaken) impression that she was “only” three months late in putting the Ft. Myers house on the market. If I knew her better, I would tell her to cut the price by as much as it takes to get it sold in a hurry. If she is already having trouble getting the 2003 price, it is not going to be any easier in 2008, 2009, or 2010.
Considering that the economy is about to enter a recession, I cannot understand the boom in boat slips. Yet Drew Burris talks about parking his money in them as if they were certificates of deposit. Somebody needs to cue the laugh track.
When you think about it, “Dunston Powell” is only a few letters short of Gilligan’s Island.
‘I cannot understand the boom in boat slips.’
Boat slips are a trailing indicator.
I agree, they are trailing. and the private slip rentals are beginning to fall in my area (outside of the new electronic cat 5 super marinas which I am skeptical of anyway) Watch the foreclosures on boats go sky high soon. Two types of boat owners, wannabes who usually sell at a loss in a year or two, or die hards, who will spend all disposable income to keep thier boat on the water. There may be treatment for this, but I am not ready to admit my problem.
Never mind the high gas prices. Boats are always a silly purchase, but I’ll take one for 1/10th the retail price.
Depending on the area, if you are allowed to “live aboard”, having a boat slip and living on board can be a lot cheaper than renting. Where I live there are several marinas that allow “live aboards” because they feel it adds to security to have someone coming and going after closing hours. It is usually about $300-400 a month and includes electricity, water, and use of the marina’s shower and laundry facilities.
wow, I am jealous. Down here IF you can find it, it will be in the 1500 a month range.
wow, I am jealous. Down here IF you can find it, it will be in the 1500 a month range.
“Never mind the high gas prices. Boats are always a silly purchase, but I’ll take one for 1/10th the retail price.”
Just bought one. New purchase at $28,000 or 5 years old at $5,690. That’s a no brainer if you’re going to buy one. There are a ton of boats on the market right now selling for thousands less than 2 years ago.
I saw a shirt for sale that said “If it flies, floats or f**ks you’re better off renting it”
Boat slips for everyone !
I want that shirt.
Bad Andy, what style and size of boat? I know pontoon boats depreciate deeply very quickly, as they are popular on the lake here. But $28K to under $6K in five years? Wow.
18′8″ cruiser. No sleeping quarters
Whats the point of living if you don’t have boat?
Bubbles or Manias in their last phases cause mental and rationality impairments…so in these guys fevered reptilian brains, boat slips are a natural boom item to invest in.
Personally myself, canned goods, tools, a good firearm, and dry goods and winter living gear will be more important.
As an added bonus, power boats get awful gas mileage, around 5 miles to the gallon…
Cars do so much better, because of inertia
Only very small powerboats get 5 MPG. My single-engine 24′ boat gets about 2-1/4. A 50′ sportsfisher gets less than .5 MPG. Fuel is actually a pretty small part of small boat ownership, as you’re not cruising on plane the whole time you’re on the boat. Most of the time you are fishing, trolling, swimming, hanging out with friends. I’d almost never go through more than $100 fuel in a day. If I take six people out for 6 hours of recreation for $100, that’s pretty reasonable in my book.
5 miles to the gallon? Try 2 gallons per mile. Powerboats are second only to jetskis in the amount of waste that they consume and dump back into the ocean.
You don’t have clue what your talking about, the new 4 stroke outboards are essentially the same as the engine in your car. They don’t dump a bunch of waste in the ocean.
My boat gets about 4 mpg, going at about 30 miles an hour, when its loaded light.
As the chief said to the shark hunter in the original “Jaws” movie: “You’re gonna need a bigger boat.”
Boaters ALWAYS need a bigger boat. I remember how big our 21′ runabout looked as the forklift carried it from the rack to the water. It was amazing how much smaller it got once it was in the water.
Shrinkage?
I think you are on the right track, IMO
BTW, down here in the Mystic Lake Casino, MN area the building is still going strong. I don’t have any numbers on sales, I believe they are weak at best. I did hear that the lake home sales are way down but don’t have any other evidence to point to.
What percentage are bought/rented by the truly rich vs. the wannabees?
That’s a good question. I have a retired relative who bought a small sailboat, which he dutifully tends to every day. When I visited recently I asked him how many of the dozens of sailboats at the marina were used on any kind of regular basis. His answer? “Almost none.”
There are a few legitimate sailors out there. For the rest, I think it’s an expensive status symbol, like a $20,000 wristwatch.
For most people, a boat is a hole in the ocean into which you throw money.
At least a 20K watch does not need thousands of dollars a year in care and feeding. And the resale value is held much better in expensive watches then in boats.
Not that I am defending the Rolex lovers of the world, I still think it’s a crazy luxury. However, I think a boat is even more so (for most people, anyway). At least the watch costs next to nothing YOY, and will provide some use (granted, the same thing that a 15 dollar Timex would provide)..
I love boats, can easily afford mine, and intend to be a boater all my life. I go into withdrawal when I haven’t been out on the ocean for a while. Like many things, it’s impossible to explain it to people who may not have the same interest. I have no idea why anyone would live in Florida more than 5 miles from the ocean. I have no idea why anyone gambles. I have no idea why anyone likes golf. I’m not interested in those things. There are people here in South Florida that never see the ocean, whereas I go almost every day. To each his own.
I agree, boating is the whole reason I moved to Florida
I try to be out on the water at least one or two days a week, maybe more when those calm summer days start
But hey to each is own
Even our 25 mile long lake is an adequate palliative for my chronic boating fever. But the Chesapeake Bay was a lot better. Don’t knock boating if you ain’t tried it.
I spoke to the local bank owned boat storage/ auctioneers in Lauderdale (@ Jackson Marine) They are recieving 5-10 repo’ed boats - A DAY! They are running out of space to put them and the buyers are all Europeans and South Americans exporting them as they are doubly cheap to them due to dollar decline.
When you think about it, “Dunston Powell” is only a few letters short of Gilligan’s Island.
Dunston Powell aka Thurston Howell?… “Lovey, did the maid pack the cocktail napkins?”
Note that “purchased by a company” is more likely a relocation agreement than an investment.
DIRECT FROM TAMPA - my apartment complex had a waiting list as recent as August 2005. Now about 1/4 of the units appear to be empty, and the office is offering $500 CASH to anyone who refers a tenant, and the manager said the complex has never been so empty. Then again, why would someone want to rent from the apartments when it’s easy to find a local FB who is renting a larger condo out for the same price. At my current rent, I can walk across the street and get a 2/2/1CG for $100 more a month.
I’ve been watching rent on SF homes in my neighborhood and they are slowly going down. Looks like a 3/2 is now about $1750, down from $2500 last summer. The ceiling for a 2/2 with 1 Car garage is about $1000, and I expect rent deflation to around $850 in the next year, which would put it in line with the 2004 rental take on the units.
SF house rents are definitely falling here, and I’m going to go month-to-month on rent so that my wife and I can take advantage of anything we like that comes up. We’re at the point, however, where checking up on the owner’s mortgage situation is mandatory. I looked at one HELOC’d place in south Tampa where my research showed that the owner had bought two other houses in 2004-05, and almost immediately said no.
Did you read Sunday’s Tribune? A big Toni Everett ad for the Trump Tower, promising “construction to resume soon!”
In the Fort Myers/Cape Coral area, I’ve seen 1300 sq ft. 3/2 with a 2 car garage and screened lanai go for around $725 with a move-in bonus of $200. As yet another bitter-turned-schadenfreuding renter, I look forward to shaving a couple hundred bucks off my rent when I move to another alligator at the expiration of my lease in October.
It’s going to be a bloodbath come August.
rentals here are getting cheaper, offering incentives, allowing pets, and still sitting empty.
“While the $45 million project has been on the boards since mid-2004, Hamad says he will start construction when he sells just two more residences. ‘The building is going up, and there’s no power on Earth that can stop it,’ Hamad said.’
Except for the fact that this guy wants $850/sqft, whereas on Fort Myers beach, which is another barrier island, on the same ocean, in a slightly warmer place, they’re going for $406/sqft.
And if one could buy a 4,800 sqft home on Sanibel for $2.4 million, why in the world would anyone buy a 2,800 sqft. CONDO for $2.5 million in Sarasota?
Yeah Right~
Buy NOW…they aren’t making anymore boat SLIPS for 54 footers.
I don’t understand how these condo projects get in such trouble. Let me list my assumptions, and then somebody poke a hole in my reasoning, because there’s got to be one somewhere.
1) Single family homebuilders can still make a profit in an environment of falling prices, because their sizable margins give them ample room to cut.
2) Condos have as decent a margin as single family homes, if not more.
3) Condo developers once upon a time had profitable projects BEFORE this boom came along, when they sold for $100k-200k a pop, and not $535k-700k.
4) Construction costs on condos have not risen 400-500%.
Clearly, one of these must be wrong. It can’t be the cost of all the “upgrades” that appear in “luxury” condos now. I don’t believe materials have risen that much. Is it all in increased land acquisition costs? I can’t figure it out.
It has to be in the land. Here in northern VA, there are no new SFH that have less than 2500 square feet. There are just no normal sized houses. There are enormous townhouses in the suburbs, and huge huge houses in the exurbs, but anything close to reasonable distance from employement is high-rises condos.
Maybe the builders are just idiots.
big gov has the median income the highest in USA in NVA
ain’t it grand- people that made things are kaput ,but clock watching chair warmers rock on
They might have paid too much for the land, and in the case of conversions for the building it’s self.
Also, the taller the building the more it costs to build each livable square foot. After 3-4 stories condos are not more cost effective than a house, this is especially true in hurricane/eqrthquake zones.
A lot of places they’re building condos where the demand is for apartments or trailer parks. A lot of people in this country just don’t make enough money to buy this stuff. Those who can afford it mostly already have what they want (and a condo is not what they want).
I don’t believe materials have risen that much. Is it all in increased land acquisition costs? I can’t figure it out.
The high-rise building boom in Dubai and China have driven the cost of concrete and structural steel through the roof. Not to mention the cost to rent a tower crane.
That doesn’t mean a high-rise condo tower can’t be built profitably at prices in line with reality though. Nobody wants to do it anymore. That’s the problem.
it would be nice in the united states could make steel and concrete to support building needs. govt and business are too greedy to provide basic health care and pensions to support industry in the united states. it is like eating their young!
its greed. everyone paid too much and want to make x amount of profit. i always couldnt understand why people wouldnt redevelop alot of areas in south florida. fort lauderdale west of downtown is prime real estate, yet no one wanted to develop any kind of housing. the govt could have went block by block and created affordable housing, clear the neighborhoods of crime and develop a reasonable shopping place.
silly me, most officals are not forward thinking!
tick tick tick tick tick tick tick tick tick tick tick
boom.
http://financialsense.com/fsu/editorials/andros/2007/0517.html
Good article. That IS a ticking time bomb waiting to explode. Interesting thing about the Chinese, it would appear from the article, they act more in unison as a group than other nationalities. We have more individualists and contrarians in the US, for example. Anyway, my point, and I do have one, is that because of the mass agreement on stocks and other things, a bubble on China would be a bubble on steroids and makes the housing bubble in the US look like a tiny blister compared to a beach ball.
Ok, can anyone tell me why, in the face of upcoming New home and existing home sales, are homebuilders all up sharply?
Its all about the level of ‘crazy’ in the marketplace. Once it reaches a certain critical mass, there is no stopping it until it blows. Yup, pour me another nice, hot cup-o-crazy and let ‘er rip…
this is what I call”Whipping the market”
Everyone knows housing sucks……just turn on the tube. When everyone “knows” the stock is going down, many short positions are created because its a “cant miss” opportunity. Well, the big boys (hedgies, and other assorted market MOVERS) “squeeze the shorts” by bidding up the price (buying shares).
Then the big boys get on the phone and make whats called a margin call……that my friend is a call you never want to receive.
I’ve been watching rent on SF homes in my neighborhood and they are slowly going down. Looks like a 3/2 is now about $1750, down from $2500 last summer. The ceiling for a 2/2 with 1 Car garage is about $1000, and I expect rent deflation to around $850 in the next year, which would put it in line with the 2004 rental take on the units. …Where the heck do people get these kinds of rents?? When people talk about rents this cheap I have to conclude that a lot of people don’t mind living in the ghetto or in a complex that has section 8 housing. You can’t get nice, slightly upscale 2/2 with 1CG for under $1700/mo in palm beach county.
“You can’t get nice, slightly upscale 2/2 with 1CG for under $1700/mo in palm beach county.”
There’s your answer, I guess. It’s easy to get nice rentals for $1,700 in central Florida — at least a new or newish 3/2/2-car garage. If you’re going the SFR route, be sure to work out who is responsible for what re hurricane preparation and damage. Some of these homes have hurricane slats stacked in the garage, but they can be a pain to put up and sometimes the studs to which they are supposed to attach are painted over. If you write the lease so that the landlord is responsible for putting up and taking down the slats, then you’re at their mercy re the timing of it. Sometimes looks like lose-lose, during storm season.
Here is an article from money magazine about a couple who lacked sufficient savings to retire (they only had 260K saved) and who thought that they could flip some houses to make some quick bucks: ‘”We thought we’d make $100,000 without batting an eye,” says Carol’.
Now their anemic kitty is being drained feeding the two gators they bought (plus they have a vacation house in NC): “The couple are pulling out $15,000 a month from savings to cover their expenses, and they’ve already run through more than half of their nest egg.”
http://money.cnn.com/2007/05/22/magazines/moneymag/retirement_interrupted.moneymag/index.htm?postversion=2007052212
The best part is that while the vacation home is paid for and “worth” 600K, they won’t sell it. So they will exhaust their liquid savings, borrow against their vacation house, and when that is gone borrow againt their Florida house (also paid for).
Of course what they should have done was discount their flipper houses and cut their losses.
What gets me is that these people wanted to retire with less than 400K in savings while mainaining two houses (as if one money pit isn’t bad enough). Now if they had 7 figures stashed away that might be different. But a 400K in perpetuity annuity won’t generate all that much income.
Remind me not to buy a “Dream Home” it seem to always lead to disaster.
It’s amazing that their residence in Florida bought in Spring of 2005 is now increased in value by 130K and the investments that won’t sell are ‘worth’ 68K more than they have in them. I question their stated net worth.
I think we should all contact the staff writers for that site. It’s a positive sign that their “Millionaires in the Making” have mostly now been replaced by “Honey, I shrunk the retirement fund,” however they are still showing a “net worth” based on hokey real estate equities. I think this couple’s net worth is grossly over-estimated and anybody who can read a financial newspaper or website should be well aware of that by now.
They will be the stars of the new HGTV show: HELOC this house!
I was also amused that the article described them as “experienced” real estate investors. I guess its easy to be “experienced” and “savvy” when one makes a killing in a bull market. Of course if they were truly savvy, they would have unloaded the dream house at its peak, and not bought the flipper properties (and maybe bought a more modest base home). They could have had well over $1,000,000 in liquid investments instead of a non liquid investment that is depreciating. That and a reasonable, paid for house and they would have been set. No looking for a new job at the age of 60!
There is going to be a lot of people looking for jobs at age 60 and 70 and even 80.
Off thread…but currently on MPR:
John Robbins, chairman of the Mortgage Bankers Association, speaks Tuesday at the National Press Club in Washington. His speech is titled “Subprime Mortgages and Accessible Credit.”
On the 12pm section of Midday.
Here is one for ya The quay (a multi purpose circ 1980s’ building)
is being torn down in downtown Sarasota fl to put up some Irishmans Billion dollar condo office shop extravaganza!
Apologies if this has already been posted. Someone got a bit careless with their retirement planning:
http://tinyurl.com/28hy7v
9k in the bank, with 31k on credit cards. American Millionairs on the verge of bankruptcy.
these people are gettting just what the doctor ordered….buried upside down in a tanking market…If I ran my life like these two experts, I’d have called in Kavorkian.
“Dam the torpedoes full speed ahead” BUILD!
“While the $45 million project has been on the boards since mid-2004, Hamad says he will start construction when he sells just two more residences. ‘The building is going up, and there’s no power on Earth that can stop it,’ Hamad said
‘”We thought we’d make $100,000 without batting an eye,” says Carol’.
What happens in Vegas stays in Vegas.
Gambling, pure and simple.
I’ve said it before. Many baby boomers have the dreams of retirement, but most are not going to be able to.