A Healthy Thing For The Market In Florida
The Daily Mail reports on Florida. “Hundreds of British investors who pumped their money into Florida’s soaring housing market have been caught out in its spectacular collapse. They have been left with property they can’t sell, even for less than the original price, because of rising interest rates and a glut of condominiums for sale.”
“Miami lawyer James Ryan said he had 40 clients, including British investors, trying to get out of contracts even if it meant losing substantial deposits. One client abandoned a £170,000 deposit rather than complete on a £800,000 condominium now worth only £600,000.”
“Estate agents estimate at least 800 Britons have been caught out by the slump but the real figure could be four times that.”
“Florida property consultant Jack McCabe said: ‘Out of staters and foreigners, especially the British, flocked here and pushed the market to the point where about 70 per cent of all sales were to investors who never intended to live in what they were buying.’”
The Miami Herald. “Fearing that a spike in foreclosures will lower property values, Miramar is exploring ways for the city to help homeowners in distress.”
“In the first three months of 2006, the city had nine foreclosure filings. During the same period this year, there were 43.”
“Roughly half of owners of new homes in Miramar hold adjustable-rate mortgages, many of which will reset soon with higher interest rates, increasing monthly payments, said City Manager Bob Payton. ‘It’s alarming,’ Payton said. ‘They just got locked up in a mortgage that’s not best suited for them.’”
“Joann Soufisiavash bought a sprawling Miramar home for $459,900 almost two years ago using 100 percent financing and two mortgages. Now she can’t afford the $2,800 payment (not including taxes and insurance), and her home in a gated community is in the process of foreclosure.”
“She owes $502,000 on it. It has been appraised at $439,000. ‘My American dream turned into a nightmare,’ said Soufisiavash. ‘I don’t know how this is going to end up.’”
The Herald Tribune. “Rob Allegra is division president for Lennar Sarasota/Manatee. Staff writer Stephen Frater corresponded with Allegra recently.”
“Q: Prices have dropped in the existing homes market by as much as a third from the peak in late 2005. I know Lennar has been a leader in discounting new home prices in certain developments but could you describe your pricing strategy and history during the current downturn. Has the average sale price decreased and if so by how much?”
“A: I believe this is one of the most misrepresented measurements on the market. You see all sorts of reports on average home sale prices, but there are so many factors to a home purchase. Sizes of the homes being sold, amenities of the communities, upgrades in the homes.”
“With all that being said, prices have dropped since the peak. As painful as that’s been for everyone, especially for people trying to sell homes, in the long-term, this has been a healthy thing for the market, which has always been cyclical.”
“Q: Since many contractors are much less busy now than they were, has the labor component cost of a new home decreased? The raw materials? How many fewer subcontractor employees does Lennar utilize in this market now as compared to the market peak?”
“A: Lennar in particular has seen a significant decrease in the cost of building a home. It is our strategy to pass along our costs savings to homebuyers.”
“Q: What do you see as the trend for 2007 and 2008 in this new home market? A: We believe this is the bottom of the real estate downturn. This is why we are rolling out a whole new series of floor plans and picking up our permitting and start schedule. We are optimistic about moving back into a growth mode in late 2007 or into 2008.”
The St Petersburg Times. “The housing market has tanked. Banks threaten thousands of homes with repossession. Homes linger so long on the listings that some sellers dump properties for a song.”
“It’s a great time to be Shaun Carcary. The South Africa native has built a business on paying 50 cents on the dollar for stressed houses. He gets plenty of takers. ‘Yeah, you can call us bottom feeders,’ he says.”
“Sean and Mary Dean live in Wesley Chapel’s Lexington Oaks golf course community. Their 2,550-square-foot stucco house isn’t ugly. But their financial situation is.”
“Mary Dean complains they’re two months behind on their $1,750 monthly payment. By early June the bank has threatened to get tough. Sean Dean was laid off from his job. They have a For Sale sign out front, but no one’s biting in the tepid market.”
“The HomeVestors team gives the house a once-over. Right-hand-man Ryan Rickard conferences with the Deans at the dining table. He tells the couple he’ll get them the best price he can, reminds them he’s a no-hassle cash buyer.”
“After the 10-minute pitch, the team is back in the Expedition rocking down the highway to Tampa. ‘What’s the deal?’ Carcary asks. ‘If it was up to her, she’d sign the contract right now,’ Rickard says. ‘When I told them about the 80 other houses for sale in the neighborhood, they about spazzed.’”
“A model nearly identical to the Dean’s sold on their street in November for $302, 000. Rickard does a quick calculation and comes up with his best price: $165,000. The couple owes $140,000 on the house, so HomeVestors’ offer would leave them about $15,000 to $20,000 after closing costs.”
“If the bank forecloses, they could lose every scrap of equity and ruin their credit for seven years. ‘It just depends on how logical someone wants to be,’ Carcary says.”
“Competition for buyers is fierce. The Greater Tampa Association of Realtors said its membership doubled during the real estate boom. ‘Houses are on the market for more days, and the inventory is growing,’ said the group’s president, Carlos Fuentes. ‘I imagine many of our members who have other careers will go back to them and sell real estate part time.’”
“Agents popped up almost as quickly as homes were selling. Now, they’re dying under the collapse of the real estate bubble.”
“Jack Soifer, a real estate agent from Seminole, used to own an RV dealership in Pinellas County. He became a real estate agent in 2004. ‘Investors have left the marketplace, and real estate agents aren’t getting any new business’ he said. ‘People think we’re making all this money, and we’re not.’”
“Participation in the local MLS board, an online real estate portal, has taken a dive, Soifer said. ‘It’s much more difficult than one thinks,’ said Soifer, who puts in about 55 hours a week. ‘But I have no regrets.’”
The News Press. “With the ebb in real estate cash flow, players are turning to lawsuits, builders, subcontractors and buyers are suing each other to get out of contracts or simply to get paid. Builders are suing potential homebuyers for backing out of deals. Subcontractors are suing builders for not paying them. Former partners are even suing each other.”
“‘A lot of people are tremendously upside down right now,’ said real estate attorney Kevin Jursinski. ‘Everybody’s saying, ‘Help me, I want to get out of it.’”
“The median price of an existing single-family home in Lee County has fallen from an all-time high of $322,300 in December 2005 to $283,200 in April, according to the Florida Association of Realtors.”
“Meanwhile, the number of homes on the market has quadrupled to about 15,000 as single-family home sales have spiraled down, from 1,084 in December 2005 to only 573 in April.”
“‘When the economy slows down, people’s income slows down,’ said Lee County Clerk Charlie Green. ‘The $1,000 that didn’t seem important then suddenly is important.’”
“The lawsuits are piling up on the second floor of the Lee County Justice Center and many companies are feeling pressure from attorneys. ‘We’re in an environment now that I’ve never seen,’ said Fort Myers attorney Richard Johnston Jr., who represents Cape Coral-based Caribbean Custom Homes.”
“Richard Friday, CFO for Youngquist Brothers, a well-drilling company, has filed 293 liens, according to the Lee County Clerk’s Web site. In 2005, he said, builders were spending tomorrow’s money, so when jobs stopped coming in, there were shortfalls. And when owners decided not to close on homes because values were down, builders were stuck with the shortfall. That’s when the lawsuits began.”
“‘Now, there’s a tremendous amount of litigation,’ Jursinski said. ‘I don’t think we’ve seen the worst of it yet.’”
“Friday said builders getting into trouble today are those that didn’t plan well two years ago. ‘One of the things about success is you don’t pay attention to details,’ Friday said.”
“Steve Magner, president of Advantage Builders of America, said in many of the 14 lawsuits in which Advantage is a defendant, owners are suing for breach of contract because the house’s value might have fallen with the market.”
“‘A lot of people don’t realize it’s a risk; it’s not a guarantee,’ Magner said of investing in real estate. ‘They want to blame everybody but themselves.’”
“She owes $502,000 on it. It has been appraised at $439,000. ‘My American dream turned into a nightmare,’ said Soufisiavash. ‘I don’t know how this is going to end up.’”
I know exactly how it’s going to end up; you’ll be foreclosed on and your all of your worldly possessions out on the street.
SubKommander Dred
If you want to fast forward to the ending just call the friendly people at 1-800-SCREWED.
“Operators are now standing by to laugh at you.”
Flight attendant Joann Soufisiavash bought a sprawling Miramar home for $459,900 almost two years ago using 100 percent financing and two mortgages.
Now she can’t afford the $2,800 payment (not including taxes and insurance), and her home in a gated community is in the process of foreclosure.
She owes $502,000 on it. It has been appraised at $439,000.
”My American dream turned into a nightmare,” said Soufisiavash, 46. “I don’t know how this is going to end up.”
I know more than a few pilots and flight attendants and when flight attendants start Wheeling and Dealing in 1/2 Million homes, it is usually IT usually ENDS UP in the Scenario of “Crash and Burn”.
What gets me is that if I had used the same ratios she did, I would be living in a 1.2 million house. Out here that would be a 6000+ sq ft custom home on lake front property.
http://homes.realtor.com/Prop/1080391255
Silly me, I “only” live in a 350K house.
Just what we need: another bitter, surly flight attendant taking out her frustrations on hapless air travelers.
Can’t entirely blame them for feeling surly. Many of them have had their wages slashed and pensions cancelled while theiur executives collect ever bigger bonuses.
you’ll be foreclosed on and your all of your worldly possessions out on the street.
Not only that, your house will go to auction, the highest bid will be $250k, and the lender will be coming back at you for a deficiency judgement of $253k plus liquidation costs.
And the IRS will be getting notice of the $250k 1099.
Bein’ on the street is the least of her problems.
She’ll be an indentured servant for life.
This is when having dual citizenship can come in very, very handy.
Wow, seeing a lot of HBB posters that we haven’t heard from in a while. Howz thingz, SD? Good to see you back!
Oh, I been around. Always lurking, always listening, and making the odd, nasty comment when appropriate…
Didn’t know I was missed. I feel truly special.
SubKommander Dred
‘Out of staters and foreigners, especially the British, flocked here and pushed the market to the point where about 70 per cent of all sales were to investors who never intended to live in what they were buying.’
I feel like this is the highest number I’ve seen yet and probably the closest to the true percentage of specuvestors in Florida. So even if everything else stayed the same (no lending standards, no insurance increases), you lose 70% of sales if all the investors pull out. This does not bode well for Florida.
It bodes very well for anyone holding a tall drink and a bag of popcorn, though…
Here is Seattle there are a lot of asians (chinese mostly) who have bought properties and are now landlords. i run into them all the them while I am looking for a place to rent. Very thick accents.
All of the Irish investors were buying up every piece of junk they could find in Spain. Florida got the English and a ton of New Yorkers.
Irelands price runup makes ours look like a walk in the park. Prices over the last 20 years must be up a good thousand percent in many areas there. And there is absolutely NO income base or economy to support it. I suspect easy access to sales and pricing information have helped foreign investors see what a bargain it was, and they all flood in. Of course, once investors see prices going a certain direction they all flood in and drown the market.
“Irelands price runup makes ours look like a walk in the park.”
What makes this really amusing is the low population density in Ireland. Its present population is about 5.5 million, but a hundred and fifty years ago, before the potato famine, the population was 8 million! There are old abandoned houses and lots all over Ireland. And they are running out of land?! It’s a worldwide bubble…
Spain got the Irish and Florida got the English? Clearly Spain had first pick.
I rented from a Japanese lady once. What a dragon lady. I’m convinced that copper wire was invented by two Asian landlords fighting over a penny.
There is a HUGE amount of British / Scottish / Irish born speculation here near Orlando at Four Corners in Polk County….I mean a HUGE amount.
There are thousands of vaction / 2nd homes here….the plan was to rent them to other foreigners who come over on vacation.
However, the foreigners have come to realize in the last couple of years that they can’t flip or rent for any kind of profit. All those homes are upside down.
A quick drive over to those areas shows lonely neighborhoods with low occupancy rates.
Those houses were hastily thrown-up by illegal labor and won’t last 20 years.
I really don’t know what all the bagholders and the banks are gonna do with all the empty houses down here. There are thousands of them……..
they might be able to make a business out of it renting weekly rates to other foreigners. with the cheap dollar, you’d think they’d be able to rent to a lot of foreigners going to disneyland and etc.
Except that Disney has a surplus of hotel rooms on their property and are not above discounting to fill them during the low season.
The best bargains are in the late summer, early fall. They throw in the “dining plan” for free.
While speaking with my landlord yesterday here in Boston he mentioned that he bought a place outside of Orlando last week (why I don’t know). Apparently the previous owner lived in the UK and had never even seen the property, he rented it several times and each time the place was trashed and the payments stopped after the initial deposit…what a shame
Not only are the British “investors” getting screwed on collapsing real estate prices, but those dollar-denominated assets are shrinking as the British Pound has topped the two-dollar mark. Those poor blokes are getting their worst buggering since boarding school.
Wow, most people here predicted the number (nationwide, I believe) was around 35%. I never thought 70% would set the high end, though. Perhaps the number nationwide is even higher than 35%.
Oof!!
sleepless_near_seattle,
Not only that minor problem but i have read where something on the order of 60-70 percent of all loans here in florida were some type of zero down. This is for that last couple of years…
Chris
So much for trying to compete with speculators, eh?
““She owes $502,000 on it. It has been appraised at $439,000. ‘My American dream turned into a nightmare,’ said Soufisiavash. ‘I don’t know how this is going to end up.’””
The notion of owning a home as being The American Dream(TM) really gets under my skin. Really? Your dream is to own the place in which you live? Really?! How about raising your kids to have a better life than you? How about helping poor kids get to college? How about curing a disease?
If that’s all these people strive for then, frankly, I have a hard time drumming up sympathy.
/Rant off
I agree home ownership has become a nightmare for more and more. Not just bank payments, but unstable taxes and insurance all add up to bad news.
“A Lobster in every pot, and a Beemer in every garage”
Isn’t that the new American Dream?
haha, oops, you actually have to have a garage. Sorry, no american dream for you. You can keep the pot, however.
Thank you for playing!
Sadly, The American Dream™ is nothing but a collective national orgy of gluttony and materialism.
The American Dream™ is nothing but a collective national orgy of gluttony and materialism.
Well put…
The American Dream was traditionally the gaining of freedom and prosperity, which were unavailable to most immigrants in their home countries. Ironically, they probably had houses (hovels), but they did not have freedom and were impovershed. I think the RE advertisers stole the phrase and applied it to owning a house. If you think about it, the FB are the opposite of prosperous and free- maybe homeowning has become the Anti-American Dream.
When did “American dream” become synonomous with greed and stupidity?
Recently I’ve been thinking about the old Billy Joel song - “Moving Out” The lyrics basically talk about pointlessness of working all your life for a suburban house.
At 33, we’re burned out on “the dream”. All we can afford despite 10 years of non-stop work and saving is a house 40 minutes from a job center that probably requires rebuilding from the ground up. For the same monthly payment as our current abode, my husband is less than 10 minutes from work on a bad day, our kids have access to the best school system in the state, and someone else mows the lawn. The last time I checked my husband and I still retained our voting rights as renters.
I can’t even remember why I wanted to own a house so badly but I know there’s way more to life than that. Here’s to “Moving Out”….
The Brits are really getting a swift kick in the @ss on this. Take a 20% or so depreciation so far on the house, and couple that with the dollar’s 25% tank against the Pound and you have a serious loss on your hands
and they won’t be back in a long, long time. Oops, there goes the “foreign Investers will save us” component out of the housing market………..Too bad, “bottom callers”.
“A: Lennar in particular has seen a significant decrease in the cost of building a home. It is our strategy to pass along our costs savings to homebuyers.”
Above sentence decoded from home builder doublespeak;
“It is our intention to sell as many of these poorly constructed and overpriced hovels to as many fools that we can before the entire economy crashes or we can flee to some country that lacks an extradition treaty with the US.”
“We just want to keep this thing going long enough for all of our stock options to mature and we can get the hell out of this racket.”
““A: Lennar in particular has seen a significant decrease in the cost of building a home. It is our strategy to pass along our costs savings to homebuyers.”
(begin sarcasm)
Well well well, isn’t that just something - Lennar can change its financial direction on a dime.
I wonder if its because:
1. illegal or green card labor - you know, just 1 generation out of the adobe hut - they are skilled artisans - yeah right,
2. fixtures imported from that wonderful country of China - known for its high-quality and attention to detail in craftsmanship,
3. building materials from overseas, ~AND~
4. those substandard soils - you know, like former waste dumps and swamps! Lots of fun when your home rocks with the soil changes due to building on landfill, etc!
(end sarcasm)
~Misstrial
you know, just 1 generation out of the adobe hut
Those are the upper class illegals. The poor ones live in cardboard shacks.
You may be more accurate than you think on item 4. Lennar has put up a development here in Henderson NV, right next to a main street that gets 10s of 1000s of cars a day. Its west side is an expanding casino, a lovely view of the parking lot for some homeowners. Casinos tend to bring some problems with them, and locating next to a casino is not where you’d want your home.
Worst is the land the homes are built on. For decades it was part of an industrial area. Only God knows what was dumped there. It’s directly across the main street from these homes. An explosion a few years ago at one of the plants looked like and atom bomb and sent hundreds to the hospital. A chlorine gas leak a few years later did the same.
The industrial area is county controlled as no city wants any part of it. Perchlorate, a form of rocket fuel, was dumped willy-nilly for ages, and is getting into the water system, virtually everything south of Henderson, Lake Mead, and the Colorado River are tainted by it. Vegetables grown in California’s Imperial Valley test high for the chemical. Not much detail is known, but there has also been some kind of radioactive contamination also in the area working its way to Lake Mead. The DoD denied any such materials, but later admitted to using radioactive material in the 1960s.
This is the area Lennar chose, I don’t know what kind of soils testing they did on this very ugly piece of property, but I wouldn’t put myself or my kids in a home on that soil for anything. In fact, when the casino next door was being built and they dug out ground, I assume for a basement, one woman told me she watched every day as she went to work. The workers working in that area all had something that appeared to her to be hazmat suits.
Lennar seems to be having some problems wrapping this place up, always offering incentives. Prices start at $395,000 to over a half million. A casino and chemical plants as neighbors, and a railroad track on the south side. It’s one of the ugliest places around but I see a few have people in them.
And I’m having trouble getting $305K in a better area, doesn’t make sense somehow. At least we won’t be glowing in the dark or grow three heads from contamination, or have our roofs blown off by the next explosion, or choke to death on chlorine gas. I suppose I could use those as selling points.
Thank you for your excellent post, SteveR.
Amazing that the blogs are where we are informed of this sort of thing. The newspapers only report on it after average people do all the investigation themselves and a lawsuit is filed.
~Misstrial
“This is the area Lennar chose, I don’t know what kind of soils testing they did on this very ugly piece of property, but I wouldn’t put myself or my kids in a home on that soil for anything.”
Lennar is based in South Florida and has been for years. If you did a google search on Lennar, you’d come up with new stories about a development they did in Miramar, Florida, back in the mid-90s. Where they built over an old dump or landfill. I remember watching all the stories on the news about it. There were old bedframes and other trash popping out of the ground of the common areas. The association brought suit, was settled, but Lennar fought tooth and nail. Plus they also built a development in South Miami with a great view and whiff of Mt. Trashmore, the final resting place for most of Miami’s garbage. People bought there, go figure.
Lennar wouldn’t be my choice for a home.
“Q: What do you see as the trend for 2007 and 2008 in this new home market? A: We believe this is the bottom of the real estate downturn. This is why we are rolling out a whole new series of floor plans and picking up our permitting and start schedule. We are optimistic about moving back into a growth mode in late 2007 or into 2008.”
I’d like to see a chart of every “bottom calling” since late last year juxtaposed with sales volume and price information. It would amuse me greatly
These comments also show the builders have no intention of halting construction.
I cannot help but think that even at current prices or lower, there is still huge profit to be made in certain markets.
http://www.lennar.com/findhome/community.aspx?COMID=16339&DIVID=OLHLEN
Apopka, Fl trust me, you DO NOT want to live there
New homes priced from $341,990 - $475,990
Ben- I was in the field two days ago and am stunned to see the new subdivisions being cleared now. It is amazing when you drive through these ghost towns and still the builders are building more. WTF?
It probably depends on whether the builder just had options on the land (in which case they probably would just drop them), or whether they owned the land. Once they own the land and have started work on a subdivision, the land is sunk cost, so they have to do the calculation- will the revenue from sales cover construction? If it can, they will be able to undercut the FB prices and sell their buildings. This will keep the builder alive for the interim by keeping up the cash flow. In the long term, the builder might be killed when it has to cover their loans, but in the short term the best move is to keep building.
I once saw a chart of bottom calling during the Great Depression…. now that was something. The *whole* way down.
Shaun, I know what chart you’re referring to, great example. It appears that the ghost of Irving Fisher is among us still.
“Hundreds of British investors who pumped their money into Florida’s soaring housing market have been caught out in its spectacular collapse. They have been left with property they can’t sell, even for less than the original price, because of rising interest rates and a glut of condominiums for sale.”
21st Century Redcoats, GO HOME! It looks like investing in Florida alligators is not your cup of tea.
I knew a guy who loved to play options on the stock market. He took out 20K in cash advances in 2000 on a dot com he was certain would fail. They did great for a couple of years and the stock went up. I would nto be surprised if he still carries a large credit card balance, and he did not even get the cool stuff. Lesson, never gamble with money you don’t have or cannot afford to lose.
It must have been either very poor research or remarkable bad luck (like, the company found oil under the office building they owned), because virtually every dot.com went down from 2000 highs, no matter how good or bad. He should have made at least some money… There were very few companies that went up and they most certainly were not dot.coms.
Maybe sm_landlord will come by and rework this classic about the last British invasion:
http://www.youtube.com/watch?v=OWkOeK5AmI8&mode=related&search=
“A model nearly identical to the Dean’s sold on their street in November for $302, 000. Rickard does a quick calculation and comes up with his best price: $165,000. The couple owes $140,000 on the house, so HomeVestors’ offer would leave them about $15,000 to $20,000 after closing costs.”
This is the start of the “bottom feeding”. While i agree this guy might make a couple of bucks on this deal and the owners will get out from under their problems,the downside is still to great.
Yes, i am sitting on cash to invest here in Florida,i personally am not ready to jump in yet. I will let someone esle set the comps for me :).
Chris
Reading the FLA posts almost makes me envious of Palmetto and others who have a front row seat (with popcorn) for the collapse.
But then, if things get really bad, and the starving hordes of realtor/speculators turn to cannibalism, I’m glad my (relatively) tender, plump carcass is a looong way away….
LOL, good thinking. Remember, sharks simply sample bite the bony ones. It’s the plump ones they like to feast on.
“With the ebb in real estate cash flow, players are turning to lawsuits, builders, subcontractors and buyers are suing each other to get out of contracts or simply to get paid. Builders are suing potential homebuyers for backing out of deals. Subcontractors are suing builders for not paying them. Former partners are even suing each other.”
That story brings to mind a pack of jackals fighting over a scrap of meat.
A rotted scrap of meat. In many of these cases I would bet that the money was spent a long time ago.
Did the money ever really exist?
No, which is why NYC will crash hard eventually, too.
From my experience, these suits result in a very small recovery for the plaintiffs. Reason being that business and personal bankruptcy is usually declared and that complicates matters by providing a shelter of sorts for the defendant(s).
Further, the plaintiff(s) may win the case, but collection is another matter.
~Misstrial
“‘When the economy slows down, people’s income slows down,’ said Lee County Clerk Charlie Green. ‘The $1,000 that didn’t seem important then suddenly is important.’”
Taxman has it all wrong as usual. What he really means is “I set the rules, gimme my money”
“With all that being said, prices have dropped since the peak. As painful as that’s been for everyone, especially for people trying to sell homes, in the long-term, this has been a healthy thing for the market, which has always been cyclical.”
Painful for everyone? …..espeically sellers??
What about the BUYERS? Any pain there????
What buyers? Even here we keep making this mistake. At this point in time there are almost no buyers. The onlookers are the ones benefitting greatly. They will benefit even more when they morph into buyers.
What buyers? I am in FL this week visiting friends and family. A friend owns a condo in East Boca and mentioned there were over 100 units for sale in her complex? That has to hurt. I would guess there are about 800-1000 units overall in this concrete jungle. That has to sting.
She paid 89k 10 years ago for this 2/2. They were selling for over 200k last year. She asked if I think they will go below 150. The last “sale” in her building was a foreclosure; the bank took it back for 190k. I think 150k is in the bag and look out below.
Sounds like the development called Spanish Oaks. Look out below is right.
I’ve been thinking about this lately too. There’s so much excess inventory that even if prices were affordable, are there any end users available to buy? I know that sometimes people here talk about snapping up properties for pennies on the dollar, but are there even enough people to rent to. In my older established neighbor there are lots of rentals sitting vacant, in part because with all of the overbuilding (on the fringes of town), there are just more places than people. My guess is that in a few years, a lot of the junk that was built in during the boom will be torn down or abandoned, but until then, who knows. Anyone who thinks that if prices are low enough all of the properties will be absorbed should take a trip to upstate New York.
Just pathetic, before it wasn’t happening their “statistics” showed it was not a bubble just a economic blip, now it is a healthy thing that it is happening. I hope all these smarmy, slimy, sacks of shiit get what is coming to them if there is justice in the world. Hopefully the “reap what you sew” or “karma” catches up to them, I am sure the women they are with probably cheat on these fools. How could any woman wake up and look over at that steaming pile of crap who has no self respect or moral compass and think “I am with a winner!”.
Someone should have a dartboard graphic made that has years on it and the title, “bottom of downturn calculator”. When….WHEN are we going to see one reporter with two brain cells to rub together question what they say who has a clue about economics and history?
You would be surprised at what some women consider to be a winner. I woman I know divorced her husband after he cheated on her about 20 times and gave two 2 STD’s. The next guy she hooked up with was already married and had several children with several different women. He was also an ex-felon, illiterate, and a woman beater. She would always brag about what a catch she found. I told her he reminded me of a retarded chimp and she must have been fishing in a toilet to catch him. Eventually he nearly killed her before she finally called the cops on him and he fled like a coward. Women are a species I will never understand.
Women are a species I will never understand.
I have been in the dating world since my divorce in 2001.
Given the enormous amount of thought, energy, and money I have spent in the pursuit of a woman I have pretty much nothing to show for it.
Based on my experience, I’ve comed to the following conclusions about what a contemporary US woman wants from a man.
1.) Full head of hair
2.) a 9″ dick
3.) some sort of sailing vessel.
4.) a million dollar primary residence
5.) 7 figure net worth.
Lack any of the above…and you’re a second stringer.
You could stick a toothpick thru the veneer of superficiality.
It’s all about the dough.
Which of those seem to be a hurdle for you?
The women in their lives are either:
a. just like them
b. stupid
c. ugly
Decent women dump them and run as fast as they can.
Most of the reporters are homeowners as well - they have no vested interest in reporting the truth and contributing to a run for the exits.
“A model nearly identical to the Dean’s sold on their street in November for $302, 000. Rickard does a quick calculation and comes up with his best price: $165,000. The couple owes $140,000 on the house, so HomeVestors’ offer would leave them about $15,000 to $20,000 after closing costs.” I believe the new comp has been set. By the way according to the old timers around here, in the last housing downturn in Fresno, it cost more to build a house that it did to buy an existing one.
this is not a “new comp”, this is someone almost as bad as realtors, mortgage bankers, etc., preying on someone at their most vulnerable time. Six months ago the comp was 302K, now it’s 165K? Not exactly.
Not so quick, only a year before that the comp was not much over $200K. Things have and are moving quickly in this market. There is a great deal of instability. 6 months ago you could get a no money down liar loan with bad credit. Try that today!
it’s not a “new comp” unless it or something like it sells at that price.
dwr,
I am going to be a dissenting voice here…Where does it say that this guy is going to be making any money even if he buys at 165k ? As somebody who owns rentals here in south florida i can say even this price is somewhat risky. Why ? The house up the street from me has been REO for 16 months. The note is 129k. I know the loan officer at the local bank. He mentioned to me that the bank has had ZERO offers in over a year. this house was on the maket 2.5 years ago for 305k. There are now 7 plus foreclosures in a very small 2 block area with most still having to go thru auction. Florida has just started to retreat…
Chris
I am not saying that Florida won’t drop 50% from its peak, but prices haven’t dropped 50% in six months. I’m sure if the bank listed the property you mentioned at 150K they’d have some offers. they’ve probably listed it at 299K, so the fact they have no offers is immaterial.
Only 4 months ago New Century stock was at $30/shr and today it’s about 40 cents. Was it fair when homes were being bought and sold for a 100% profit in 6 months? If the Deans can find a buyer willing to pay more, then they are free to do so
“…this is not a “new comp”, this is someone almost as bad as realtors, mortgage bankers, etc., preying on someone at their most vulnerable time.”
Essentially this guy is a buyer who has submitted a lowball offer, based on a realistic guess at what it would take to profitably resell or rent the property. Anyone can submit a lowball offer- if the sellers are insulted, they can just turn him down.
Hey, Joann. We all know how it will end up. I second/third from above posts. If the good folks at 800URSCREWED are busy. Try the next nice folks. They can be reached at 800-URF&CKED or 800EAT$HIT. Be nice to your local foreclosure sheriff now. That way he might help you put your junk in a truck instead of just chucking in the street.
A: Lennar in particular has seen a significant decrease in the cost of building a home. It is our strategy to pass along our costs savings to homebuyers.”
Wow, that sounds like you really have my best interests at heart. Great, I’ll buy asap. But first, I’m off to buy a new mattress that is advertised at half off. Can you believe it!
The city of Miramar is ready to use tax money to prevent foreclosures and prevent home price declines, so that they can justify the taxes which are a factor pushing people into foreclosures. Got it?
And they have $60,000! to do it! How are they going to spend that kind of money?
LOL . Rolling on the floor laughing! They can prevent exactly 0 foreclosures and can prop up a handful for a couple of months.
Wow…60k. The sad thing is all they are using this for is catching up a homeowner up on payments. Also the max per household is 10k. So the city can throw money at six FB’s and the people will still probably loose their homes.
And this will stop what exactly ?
Chris
Buy them a few months to iron out the details of their new Breathing Tax?
Sounds like a rent subsidy.
Competition for buyers is fierce. The Greater Tampa Association of Realtors said its membership doubled during the real estate boom. ‘Houses are on the market for more days, and the inventory is growing,’ said the group’s president, Carlos Fuentes. ‘I imagine many of our members who have other careers will go back to them and sell real estate part time.’”
“Agents popped up almost as quickly as homes were selling. Now, they’re dying under the collapse of the real estate bubble.”
Can we have a count of the dead agent’s bodies?
Before it was competition to see who would sell the ovepriced McShithouse to the highest bidder. Boy, how something changed. Didn’t all the Brits want to move into those condos?
Homevestors will help bring this whole house of cards down. Then maybe, they will find they overpaid at $.50 on the dollar in some bubbly areas?
I agree - Homevestors better get that house turned over really, really, fast if they want to make some money on it. In a few months, what they paid will be the market, and their house will sit there along side of the others in the 36+ month supply.
I don’t know there business model, but it better involve a really fast turnover if they’re playing ball in Florida today.
Testify, GotRocks! There’s still too many gotchas in the Florida market. With the insurance issues, Florida’s market will have to become cheap enuf for people to pay cash outright. I’m looking forward to it.
Maybe homevestors will buy the house that was trashed by the pigs?
I am looking forward to reading future new stories about buyers who purchased sight-unseen at a foreclosure auction, only to discover the home of their dreams was trashed by the pigs who previously occupied it.
“With all that being said, prices have dropped since the peak. As painful as that’s been for everyone, especially for people trying to sell homes, in the long-term, this has been a healthy thing for the market, which has always been cyclical.”
Always cyclical? Huh?? What about Florida’s “new paradigm” that the NYT was crowing about a few years back? What about NAR??
Absolutely no one was out there saying “if you miss this cycle, don’t worry. You can always catch the next one. No need to rush in and do something you’ll regret down the road. There’s never just one opportunity to buy a house.”
I heard it again recently on a streaming interview and it always disgusts me: “It’s a great time for both Buyers AND Sellers in the current market.”
They just forgot to finish the sentence:
It’s a great time for both Buyers AND Sellers in the current market to go BK.
Great point Lisa,
Now it a “healthy cycle.” Before it was “buy now or spend the rest of your life gnashing your teeth and rocking back and forth in renters hell.”
Lareah’s half-a$$ed mea culpa grates even more had he said nothing. The lies and half-truths are now self-evident and the perpetrators now only try to spread the blame or act like it was self-evident all along.
The “axis of weasels” is a hundred miles wide on this one.
OT - Folks, I just wanted to share some micro-level information that shows how sales have dropped off a cliff in St. Petersburg.
Last year, I visited a condo conversion called Bay Isle Key Condos. You all probably agree that most condo conversions are crap, but this place was one of the better conversions.
Well, last night I went to the Pinellas County Property Appraiser website (www.pcpao.org), looked up sales information on Bay Isle Key and found the following:
570 - total units in Bay Isle Key (370 in Phase I, approx. 200 in Phase II)
68 - units sold since 08/06 (when closings began)
9 - units sold since 01/07
Reviewing individual sales records, it’s looks like the developer gradually increased prices a bit with each sale. And suspiciously, a good portion of the buyers are concentrated in Brooklyn NY, and a few from Hungray.
“Q: Since many contractors are much less busy now than they were, has the labor component cost of a new home decreased? The raw materials? How many fewer subcontractor employees does Lennar utilize in this market now as compared to the market peak?”
“A: Lennar in particular has seen a significant decrease in the cost of building a home.
Since I work in the construction industry (Custom Cabinets), I can truthfully say that there is real pain in So Cal. Most of my work is in the beach area and Malibu / Pacific Palisades. The spec element is much lower and most of our work is for custom homes that the homeowner has contracted for.
Whatever contribution the construction workers were making to the economy has tanked.
Another reason for falling contractor demand and falling labor costs is that I’d guess that most of the rebuilding from the 2004 hurricanes has now been completed. Two years ago, all the licensed roofing contractors were working seven days a week if they wanted to, and you were still considered to be lucky if they could get to your blue roof tarp in 3-4 months. Charges were whatever you could talk the insurance company into covering.
Now you can call one of those guys up, and you’ll have a shiny new roof within a month, and the company is now back to a five day work week.
Last July I was staying at a lovely countryside hotel in Scotland. While quaffing the local drop in the hotel bar, I met a couple from London who brought up the subject of Florida Real Estate.
They were keen to buy near Tampa - to use a couple of weeks a year and rent out the rest.
With the information gleaned from this blog, I went into a 15 minute explanation why renting is much better given the bubble, insurance, and tax issues.
I went back to my social group, and about 20 minutes later, the gentleman came over and thanked me for being so candid.
The English are drunk on their own market to the point that everything else looks cheap in comparison. Greed is a strong human emotion, but that greed goes both ways - no one wants to willingly lose money on an investment.
I think the “estimate” of 800 Britons caught up in this state’s bubble is way off, and not by a factor of four either. My guess is that the estimate is in error by a factor of at least fifty. I remember one local apartment/condo converter in Tampa was asked in the newspaper why his asking prices were so far in excess of local median incomes. His cavalier response? “It doesn’t matter. We have investors in England, Russia, whatever.”
oh god…..the horror
The housing slowdown certainly has real estate agents singing the blues. On Wednesday in Fort Lauderdale, some also will be singing pop and maybe even rap.
“Realtor Idol” is coming to MJ’s Rock `n’ Roll Clubhouse, 1620 N. Federal Highway. The event, from 6-9 p.m., is sponsored by the Realtor Association of Greater Fort Lauderdale.
“Some of our members are taking this real seriously,” said Danielle Clermont, the association’s communications director
roll film ,please.
and then post here!
“‘When the economy slows down, people’s income slows down,’ said Lee County Clerk Charlie Green. ‘The $1,000 that didn’t seem important then suddenly is important.’”
Is this where the helicopter drops come in? To make that $1,000 suddenly seem less important again?
“Fearing that a spike in foreclosures will lower property values, Miramar is exploring ways for the city to help homeowners in distress.”
They still don’t get it. These were virtual home values. An aberration. The buyers couldn’t afford these homes in the first place. Why is this so difficult to understand?
Driving around here in Naples, FL yesterday, in many communities it was easier to count the homes that were not for sale!
There are 1500 condos for sale within 5 miles of were I live.
My mom lives in Hallandale Beach, Florida. She bought a super-luxo condo on the beach in 04 and after unsuccessfully trying to flip it, has moved in. There are 3 towers in the development. Her building, tower 1, has 50 foreclosures out of 350 units. She paid 500K for a 2 BR with an unspectacular view on the 4th floor. She mentioned that a bank is trying to sell a 3Br in her building for 350K and the HOA is trying to fight that pricing to keep values from dropping. The other two towers are in worse shape as they came online in 06 - 07. In her building, they’ve had to resurface the pools due to leakage into the parking garage below and they’ve had to repair cracks in the walls of the building. She pays 1000 per month in HOA fees (up from 700 a couple years ago).
Its amazing to me that this kind of story doesn’t get in to the papers. There is a conspiracy to suppress the truth about the extend of the crisis here in South Florida.
She pays 1000 per month in HOA fees (up from 700 a couple years ago
Did you mistakenly add an extra zero to those numbers? If not, that is mind-boggling.
I’ve always been surprised at how few regular posters we have on this blog from Miami and Ft. Lauderdale. Perhaps it’s because “south Florida is working off a totally new economic model.” When I drove down I-95 last year downtown Miami looked like one of those primitive cultures frantically building totems to appease an angry God.
Even though most Miamians are reasonably bilingual, most do no read or participate in the English-language press, including blogs. Net out the non-English native speakers and Broward/Miami-Dade is probably a smaller metro area than Jax, Orlando, or Tampa.
AHEM! I’m here and I’m from that area of which you speak. Most of the time I don’t get any responses to anything I post, so I sometimes don’t post.
I’ve been on the road a lot lately and seeing the rest of south Florida beyond perpetually screwed Miami/Fort Laud and may I say it is a venerable real estate bloodbath wherever you turn.
A 55+ home near my parents’ has been on the market for months. Price started at $109K, then $100K, $90K, $87K, still unsold. Realtor shows it, nothing happens. Fully furnished, too! Others in that complex are priced no higher than $125K and no action on them either. (I see my folks month after month when I visit, and I memorized the locations of the homes.)
Hollywood, FL should be nicknamed “Home of the Fokked Flipper” for its widespread use of bandit signs advertising great “investor specials” and desire for “real estate apprentices”. I’m familiar with the Hallandale complex mentioned above and knew its construction had to be suspect. There are another few complexes going up in downtown Hollywood in rapid-fire time. (How did they get SO MANY skilled laborers to work so quickly on $400K apartments? Hmm…)
Miami, well, is a joke. Anyone who bought anything there deserves a swift kick in the wallet. Crime is on the way upswing and there are hundreds, THOUSANDS of empty condos and new homes. People still ask outrageous prices for them. Why? BECAUSE THEY DON’T LIVE HERE! The sellers have no idea what the comps are, what the local pay scales are, what the rental rates are! They are absentee property owners becoming absentee landlords becoming absentee foreclosure victims. If they’ve sucked any HELOC money out of the places they’ve already spent it and are skulking away to foreign lands where extradition will never find them.
Today’s Port St. Lucie News had three - yes, you heard me - THREE separate sections containing invitations to bid on tax liens. (Now I don’t know how bidding on a tax lien is of economic benefit, but I’m sure one of you does.) The fact that there were thousands of local people who are experiencing some sort of tax lien on either raw land or a home is astonishing. What happened to Port St. Lucie being “America’s Fastest Growing City?” Looks like it’s fast growing for other reasons. You can now get a new home here in the $100’s. You couldn’t say that two years ago. AND DON’T COME IN HERE AND START SCAPPING THEM UP FOR “INVESTMENT”. There’s no investment money to be made in South Florida. The smart money has flown the coop already, and rents haven’t kept pace with real estate prices. It’s a losing battle of the Nth degree, so STAY AWAY FROM THE KOOL-AID!
Finally, Orlando isn’t satisfied building on all of the land in the city. They’ve started mowing down cowtowns in the way suburbs and putting up Flipper Specials “starting in the $200’s”. Veritable ghost towns they are, with many an illegal toiling away daily in futility. Now if THAT isn’t the American dream, what is?
Quirk I am looking forward to reading more of your posts.
You are in a most enviable position, because you are right there at bubble central in FL. In my area in South Central Kentucky the Realtors (TM) are complaining of growing inventory that is not moving and pending sales that never finalize. Foreclosures are up, particularly with the McMansions. But it is not anything like the condo towers that have mushroomed in FL over just a few years, and we did not have any foreigners buying everything sight unseen.
I have family in BOCA that have fallen for the new mantra hook, line, and sinker; so I get some of my FL information (from the FB perspective) first hand over the telephone. But this is not enough. To fully appreciate this once in a lifetime event (I may never again witness a housing bubble of this magnitude) I would need the input from people like yourself describing these events as you see them, in real time.
Great, great post. Keep it up.
Got 10% down?
You should always post if you have something valuable to contribute. This one, for example, was very informative.
OTOH, if you post BS, we’ll flame your ass.
Now that’s a rocking post!
Yes on the totems.
And, I lived in Miami 37 years until 2004.
The fraud I witnessed, the stupidity I saw, would be hard to beleive even by regulars to this forum.
My office has great views on downtown miami, biscayne corridor craneland…and the montstruous midtown miami that has not hit the market yet with its 1000’s of unit..still most people, even educated, are still in the denial phase…I’ve been telling them about this blog since jan 05 and was never taken seriously…if your only source of info in florida is the herald or local 10 it’s as good as being iliterate.
FYI I sold my properties and now rent
“She mentioned that a bank is trying to sell a 3Br in her building for 350K and the HOA is trying to fight that pricing to keep values from dropping.”
I had never considered this happening. Does the HOA have any legal leverage at all in pricing, or are they just begging the bank not to try to sell at that price?
The HOA can meddle if the condo docs were written to require board approval of unit transfers and residents. I’m not sure how that comes into play a foreclosure situation.
Disclaimer: I’m not a lawyer and I don’t play one on TV…
The HOA can meddle if the condo docs were written to require board approval of unit transfers and residents
If this is indeed the case, “HOA” is an oxymoron, since you don’t own something if someone else can tell you whether you can sell it.
It’s a co-op.
I think the answer is “no,” here in Florida. The only tool the HOA would have, and I wouldn’t call it leverage, is right of first refusal, which must be in the condo docs; all that does is give existing owners the right to buy the unit “first” at the agreed-to contract price.
“‘But I have no regrets.’”
That’s probably because you’re no longer selling RVs. If you were, you’d probably already be in bankruptcy court. Now, as a real estate clerk, you should be able to delay your court appearance another couple months.
FL should have no problem. Aren’t a 1000 people a day moving there? That should take up all of the excess inventory? Or did they forget to mention that the counter balance of 2000 people a day leaving and trying to sell their overpriced Mc$hitboxes. If grandma’s HOA is $1000 now, what will it go up to after the next hurricane washes away half the building? LOL And my HOA was concerned about raising the HOA from $38 to $41. At least I know a hurricane isn’t going to be roaring through Albuquerque, as no kind of water like that is near.
FWIW, in Florida, at least, there is no useful comparison at all between condo HOA fees and those for SFRs and townhouses. Condo fees almost always cover water, sewer, trash pickup, basic cable TV, all landscape maintenance, all exterior maintenance, pool maintenance, elevator maintenance, etc. Some even include hot water, because it is safer to have central hot water than to count on cheapskate owners to replace their interior tanks when needed.
Chip, You left out the biggie, insurance. Condo fees include the insurance on the building. As insurance is skyrocketing, many once-affordable buildings are getting shocking increases to the monthlies. A small riverfront building near me had their monthly fees raised from $250 to $520 in one jump. Pay $300K for a unit there and you’re out $1000 a month just on taxes and fees.
http://www.housepricecrash.co.uk/index.php
Gotta check out our “sister” blog, UK House Price Crash. The bubble has gone on far longer in the UK, which means it’s probably going to crash much harder. House prices are beyond insane there. Hey Ben, maybe we can arrange vacation house swaps with our UK housing bear counterparts!
Yeah, they are long overdue. When I lived there, my (English) accountant kept nagging me to buy an overpriced house because of the profit I’d make on appreciation. Here only two years? Hey, now worries… I didn’t take the bait, but in retrospect, he was right — if only by blind luck. And if I sold NOW.
Their housing prices and the sentiment behind them remind me more of the dot-com boom/bust than anything else, totally out of sync with incomes and ability to pay. But as with most bubbles, the big question is not IF but WHEN.
There is still a lot of positive sentiment over there, but a few (as the aforementioned blog shows) are getting a bit alarmed at what they see in the USA, especially considering that they thought US prices were good, and so what does or crash mean for their own prices when ven their bulls admit their own real estate is pricier based on fundamentals?
Anyway, they went through a nasty, nasty crash some 15 years ago, and a few of them are bracing for it again. Most, however, and as usual, will be totally taken by surprise when it does happen. ’tis ever so.
“A model nearly identical to the Dean’s sold on their street in November for $302, 000. Rickard does a quick calculation and comes up with his best price: $165,000.
BWAHAHAHAAHAHA! The neighbors are going to LOVE these comps.
Sammy, love your humor. Where is imploder and his humor?
And Rainman?
The wife and and I went driving around this weekend. There is so much for sale in the outskirts of Tampa in areas like Clearwater, Oldsmar, etc. Every condo complex has like 10 signs out from with for sale or for rent. A number of the former conversions have gone back to rentals. The condo we rent has now started offering rentals which has the people who bought them as investments or retirement homes up in arms. The construction was shoddy at best and cheap. People are still trying to get way to much in rent for places and they just sit. We had dinner with some realtor friends and they mentioned that many realtors in their circle had dropped off and returned to some other job. Nothing is moving they said and projects are stalled or being scrapped. They are buying into a new complex that hasn’t even broken ground yet. They both work in real estate and have a child on the way. They are good people, but I worry for them.