Anybody Could See That It Was A Bubble
The St Petersburg Times reports from Florida. “Squeezed by rising property taxes and homeowners insurance rates, and frustrated by crowded roads and schools, increasing numbers of residents are moving from Florida. Evidence is mounting that the migration boom it experienced in the first half of the decade is over. Many housing analysts say these are signs not of a long-term population shift but of the slumping real estate market.”
“‘It’s temporary,’ said Mark Vitner, senior economist with Wachovia Corp. ‘Housing prices will correct. We need a couple of years with no hurricanes to right the ship.’”
“Growth has been so strong for so long in Florida that even wondering about it is momentous, said Gary Mormino, professor of Florida studies at the University of South Florida. ‘This is the first time since the recession of the 1970s when real question marks appear about the future of Florida,’ he said.”
“About 90 percent of the state’s population growth since 1950 has stemmed from migration, said Stanley Smith, director of the state Bureau of Economic and Business Research. This stream of net immigration has clearly dwindled since statewide sales of existing homes peaked two years ago this month.”
“Most of South Florida, Miami-Dade, Broward, Palm Beach and Monroe counties- has seen declines in numbers of public school students and licensed drivers in the past year. So has Pinellas County, which lost 2,265 students last school year and 7,601 drivers in 2006.”
“‘The population surveys we’re getting from government agencies are not anywhere near what’s happening in real life,’ said (Consultant) Jack McCabe, who said the state, and certainly its most crowded and expensive counties, may be losing more migrants than it is gaining.”
“‘It’s anecdotal evidence but it’s a preponderance of evidence. The idea of 1, 000 people per day moving to Florida is an absolute myth at this point,’ McCabe said.”
“‘In the past, Florida was a low-tax, low-cost, low-wage state,’ said Bennett, ‘but increasingly it is just a low-wage state and that’s a serious concern.’”
“Meanwhile, Florida’s housing market ‘underwent a large sales slump last year,’ said Lawrence Yun, an economist with the National Association of Realtors.”
“An agent for Atlas Van Lines moved more people out of the state than in for the first time in memory last year, said Bob Glenn, general manager. Many more out-of-state moves have been delayed by the sluggish housing market, he said.”
“‘We’ve got people who have been on the active list (to move) going back to September and they still haven’t been able to sell,’ he said. ‘People are almost being held hostage by their homes.’”
“The state’s housing prices were overinflated by speculation during the boom, said Vitner, the Wachovia economist. Even with recent declines in Florida prices, the median-priced home in South Florida costs more than twice as much as one in Atlanta, according to the NAR.”
“If housing prices continue to fall and lawmakers can reduce taxes and control insurance rates, the thinking goes, Florida will resume attracting Northerners, including a large share of the 77-million baby boomer retirees.”
From Florida Today. “Several homeowners asked where all the money from skyrocketing home values has gone in the past three years, adding that cities and counties should have utilized better budgeting.”
“Retiree Ron Chambers said local governmental agencies should have planned better during the real estate boom that saw home values, and property taxes, launch like a space shuttle.”
“‘Anybody could see that it was a bubble,’ Chambers said. ‘They should’ve paid off financial debt rather than use it on services. Now if you’re going to make a cut, you darn sure better do that wisely.’”
“Michael McNamara is a real estate broker who owns several investment properties. He said the last assessment on one of his properties was $386,000, up from $209,000. That drastically increased his tax bill on that property last year.”
“‘I thought it was pathetic,’ he said about the (property tax) proposal in the state Legislature. ‘I just don’t understand it. They’re talking about rolling back to the year that caused all the trouble. They need to roll back to at least three years ago.’” “Retiree Jerome Barry would like to sell his 1954 Loveridge Heights home, worth about $200,000, and buy something beachside for about $400,000. But he knows his $1,351 tax bill would more than triple.”
“‘It puts me out of the market,’ he said, adding that many people are in the same situation. ‘It’s a stalemate.’”
The Orlando Sentinel. “Karl Mooney recently wrapped up a nine-day training session with Signature GMAC Realty in Orlando, to become a sales agent. ‘Some people might question our sanity,’ said Mooney, a longtime educator. But Mooney said real estate still offers opportunities, and he figures that, with the market slower, ‘it’s a good time to get in and learn the business.’”
“Membership in the Orlando Regional Realtor Association has fallen from a peak of 12,400 last December to 11,970, reflecting the recent slowdown in housing sales. The 3.5 percent membership drop is less than the trade group had anticipated, but Randy Martin, president of the Orlando Association, said he still expects the group’s membership to dwindle further this year.”
“‘The business is just not out there. Some people haven’t had a closing in a year,’ said Martin, an agent in Winter Park.”
“One indicator shows that the pipeline for future Realtors is shrinking: Real-estate classes are attracting fewer students. ‘The numbers are definitely down at all of the larger schools around the state,’ said Dick Fryer, founder of the largest private real-estate school in the Orlando area.”
“‘We’re all seeing about a 40 percent reduction,’ Fryer said, and ‘it has to translate to lower membership [for Realtor associations] down the line.’”
“The National Association of Realtors’ membership survey showed that, for newcomers in the field, the pickings are slim as they compete with veterans. Realtors in the business for two years or less earned a median of $15,300 last year; those with at least 16 years of experience earned $76,200.”
The Times Union reports on Georgia. “Just a year or two ago, many people were in a frenzy to buy their first homes or move up into a new one as mortgage companies pushed low ‘teaser’ interest rates, and all the packing up and moving was good for business owners.”
“But as the market has pulled back with foreclosures rising and property values stagnating, Georgia companies from construction supply stores to Realtors to homebuilders also have seen their sales slow down.”
“Moving companies have weathered the same concerns. ‘It was a horrible winter, and a lot of moving companies went out of business,’ said Eric De Weerd, owner of All My Sons Moving and Storage of Savannah. ‘With the drop down that we had in home sales and interest rates going up, essentially what it did was cause less people to move than normal.’”
“Erik Christensen, president of Atlanta-based Bulldog Movers, estimates that business is off about 20 percent compared with the same period last year. The housing slowdown is a major reason.”
“Economists say that Georgia’s housing market missed the brunt of the bubble burst because selling prices never got as overinflated as in some other parts of the country. So home values in the state have remained fairly stable, even though selling activity has dropped off substantially, said Jeff Humphreys, at the University of Georgia.”
“‘The people who derive their income, businesses that derive their profits from [home sales], they’re feeling the pain right now,’ Humphreys said.” “People seemed to be holding off. It was across the country. It wasn’t just Georgia,’ said De Weerd.”
As was discussed in yesterdays’ reader-topic post, one has to wonder how the media, government, etc, could miss the fact that such a dramatic run up in home prices would have negative consequences.
Also from Orlando:
‘ Sluggishness in residential construction continues to be a drag on the region’s economy, according to the latest CFB Economic Index. Building permits are projected to fall 40.49 percent this month from the total recorded in June 2006, when they were down 22.39 percent from the year before that.’
I can tell you, from the inside (working for govt), that they honestly and truly believed the hype generated by the RE establishment. Even the most obvious examples of bubble construction (750K condos for “baby boomers” in the middle of the dance club district in downtown) had a blind eye turned to them.
I think that many people in FL really think that people from up north are all truly rich. And yes, some are; but the number of rich northerners that want to buy a home in FL is nowhere near (like 1/10th) the number that was projected/promised.
The funniest thing about the whole boom (in my eyes) is that as all the builders were screaming “charge; the boomers are coming” the majority of what they were building was not at all attractive to the boomers. The building was mostly McMansions and downtown (urban) condos. Boomers (at least the ones I know) either want a smaller home in a laid back environment, or a beachfront/canal front condo (or home, assuming they have the income to support it).
I always used to laugh as I walked from my downtown condo (built for the boomers) across the street into the club district in WPB. Yeah, lots of boomers standing in line to get into the new downtown nightclubs!
one year VA state offered no raises to gov workers-you can cut 10% and none would quit- didn’t notice any reduced “services” either
that’s my solution
That’s because VA’s “services” weren’t squat to begin with … 3-5 year delays on signalizing “critical” intersections … little to no oversight on gas stations, water districts, you name it … no to minimal public transit …
You want to get hit by a car, die from lung cancer, or pay mucho buxx to a lawyer to keep your small business from being dissolved under the anti-gay-marriage law, come to Virginia.
As a former realtor I can tell you the honest realtors do not even believe the nation association of realtors. Most of us would not even belong except the association makes it mandatory that if your company belongs every agent in that company has to belong. We scoff at the ads they run on TV and are ashamed we have to be part of the organization. Plus we’re pissed at the larger and larger dues they charge so they can run these misleading ads.
I can’t believe government agencies would take the statistics of the organization who would benefit most. That’s like using a drug company’s test group to evaluate their own drug.
Also what I discovered, especially in central florida is that almost all the houses that are two stories have no master on the 1st floor. You’ve just eliminated all 77mil baby boomers right off the bat. Though most are active and into healthy living compared to their parents they start looking down the road when they hit their 50’s. Way to go builders…stupid…stupid…stupid. Guess you didn’t study the demographics very well or know what the demographics would want.
Good point; one I did not really consider. But certainly your experience in Orlando mirrors mine in Palm Beach. Almost all the homes have the master on the 2nd floor (the McMansions anyway), which, again, is probably a “no go” for most boomers before they even set foot in the home.
The lack of foresight is truly mind boggling; in 5 years everyone is going to be looking back on this period and saying “what were we thinking??”. Kind of like disco.
Hey I like disco.
I would like to point out that many of the two-story houses I have looked at in Ibis and Mirasol in Palm Beach Gardens have master bedrooms on the first floor.
Here is what I see a the big problem for us “rich northerners”. TAXES. I live in Montgomery County Maryland where the schools and services are second to none. The property taxes on my house are $5,500 on a house that is worth at least $800,000. I can retire in two years, however if I were to buy the same priced house in Florida the taxes would be over $16,000. I know Florida does not have state income taxes but my MD income will go down once I retire. RE Taxes in Florida will be greater than my current income and RE taxes in Maryland plus Florida has a higher sales tax.
Boomers like myself are going to think twice before moving down there.
Apropos of building mismatched with demographics. This crazy spec house I’m living in has very steep staircases, no separable BR on first floor - the kitchen/dining/living/den all sort of run together. The bathroom off the den is just toilet & sink. The jobless folks with the $500K+ are all age 55+, and none of them wants to buy the kind of design I have just described. Even my dinner guests walk all the way around to the side door (first floor) rather than use the front door and undertake the hazards of the main staircase. Could someone use the front door and live ONLY on the 2nd floor? Sure, if you have a cook and a maid to bring the meals upstairs! And waste both the 1st and the 3rd floors. The stairs are so steep that even a couple with little kids would think twice. Who’s left? Yuppies in 40’s w/ teenagers? Where are their jobs? Not in downeast Maine, certainly.
$5500 on a house worth $800k? Here in Loudoun county VA, I was paying ~$4800 on a townhouse appraised at around $440k (appraisal has dropped since).
I think property taxes are generally lower in Maryland (and I don’t know if they try to stay as up to date on current value as Northern Virginia suburbs do) — but, I think transfer/recordation fees are higher on transactions.
I don’t think that the problem is that they think people up north are rich..Florida has always and will always be one of those states that just always misses the boat..The reality of what was happening with property taxes,insurance and the lack of “good” paying wages has been going on for much longer than realized. As companies such as Mortorola, Ryder,Microsoft and many other fled due to better corporate tax breaks and standard of living for employees Florida never realized what was happening to them..and still don’t get it..They are so focused on “what my house is worth” and the “real estate market” itself, that the don’t again understand it is a matter of the overall economy. High cost of living plus low wages=migration for not only families but retirees as well. This means less teachers, students,workers,corporations,small businesses, and disposible income to flow into the ecomony to keep the state afloat..Again the pebble in the water effect…the circles for Florida going into a recession economy get larger and larger each day yet the government of Florida just does not see it and won’t until it is too late..
RE: Michelle’s comments: ditto that for California. All these ass-hat boomers think this is paradise because their homes have quintupled in value over the past 20 years, but what they fail to see is that extreme housing costs eventually make a locale undesirable for the workers. Of course, most Americans cannot think ahead more than 5 days, so perhaps we should not be amazed.
SOH is also a problem (p13 for FL).
It will never go away. CA is 4evar changed by p13, most people with a low basis wont sell until they are ready to leave the state or they die. Thus less RE transactions 4 ever.
As was discussed in yesterdays’ reader-topic post, one has to wonder how the media, government, etc, could miss the fact that such a dramatic run up in home prices would have negative consequences.
Maybe they weren’t looking. The consequences weren’t so negative for most governments. Higher home prices mean more revenue from “transfer” taxes, property taxes, and sales taxes (you have to buy furniture somewhere).
“‘The population surveys we’re getting from government agencies are not anywhere near what’s happening in real life,’ said (Consultant) Jack McCabe, who said the state, and certainly its most crowded and expensive counties, may be losing more migrants than it is gaining.”
The goverment is not in touch with ‘what is happening in real life’? How true, they are ‘reactive’ not ‘proactive.’ By the time the gov’t or these experts reach their conclusions … the real world has moved on.
By the time the data comes out, the world has moved on.
Now working in the private information business after years in the public sector, I can tell you that private data doesn’t have to be nearly as comprehensive or good, but it has to come out a whole lot faster. Two year old data is pretty good for the government, and data that comes out sooner is routinely revised as more complete information becomes available. By that time, in the private sector, the money is already made or lost.
“‘The population surveys we’re getting from government agencies are not anywhere near what’s happening in real life,’ said (Consultant) Jack McCabe”
Doesn’t surprise me, My management (Fed Gov) wouldn’t accept the truth when it didn’t give them the results they expected or wanted.
It kindas reminds me when I used to work for the USPS at the OLD Chicago Main Post Office. At the Harrison street employee entrance they had a big board on a wall showing mail delivery rates at various zip codes in the city of Chicago, all where in the high 90 percent range. These internally generated
liesstatistics where providing management with cash incentive awards every month.Then a new Postmaster General out of DC decided to hire a big ten accounting firm to find out, with seeded mail, what the postal delivery rate was at various large cities. It turns out the delivery rates in Chicago where woefully overstated (and in most other cities as well).
Previously, the statistical team at the Chicago MPO was giving the heads up to the organization where the mail was being placed, and at what time. The organization would then undertake herculean efforts to get that particular scheduled mail pick-up at that location and processed through the system with lots of management oversight. The irony is that none of the middle level management accomplices that where involved in this lying effort ever got any cash incentive awards, all of the spoils went to the big shots.
The moral of the story? That a bogus system of quality measurement (conducted by an “external” entity, like a marketing research firm) is deliberately put in place by the CEOs to grease or facilitate their compensation. An example of this is the customer satisfaction surveys of people who use the service departments of new car dealerships. These things are soooooo easily defeated by the dealers.
Got 10% down?
“…and he figures that, with the market slower, ‘it’s a good time to get in and learn the business.’”
He’s right unless you want to eat! I sure hope he’s got his finances in order.
On Bloomberg.Com Bill Gross says“We’re having a housing bust” not a readjustment “… a housing bust,”
exactly…when you get a 22 in blackjack that is a BUST, not a readjustment…you lose (or loose in Casey-speak) your wager.
“‘In the past, Florida was a low-tax, low-cost, low-wage state,’ said Bennett, ‘but increasingly it is just a low-wage state and that’s a serious concern.’”
You mean to tell me that a “high cost, insane tax, low wage” state is not attractive? But we have palm trees! Agh, to hell with you. The boomers are coming! And they are bringing suitcases of money and buckets of stupid!!
“You mean to tell me that a “high cost, insane tax, low wage” state is not attractive?”
LA has always been low wage, high cost. People pay to live there. That’s the argument that the housing cheerleaders have been using the past few years. I don’t think it applies here.
Mike, I saw the “love” they give you on the post blogs. Why do you still go there?
I have really cut back my time on that site, however, I just have the feeling that by posting the facts in there from time to time, I may be saving someone from listening to those idiots and making a horrible mistake.
There are a few other people with the “bubble” point of view in there now, I have been able to step back a bit; but I may be the most hated and villified person ever on that blog. The personal attacks and the hate that those guys throw around… Ah yes, welcome to palm beach!
“There are a few other people with the “bubble” point of view in there now, I have been able to step back a bit…”
It is quite funny. I can’t stand to read the blog there. It burns my eyes. My neighborhood is proof positive of a HUGE decline in values. From $300+++ at peak to as low as $199K now. Anyone who could even think to try to deny that makes me want to vomit.
what blog is that?
Palm Beach Post
Florida is toast? No, Florida is thermonuclear, center-of-the-sun toast.
Absolute population declines mean ever more vacant house which means ever more declining house values. How low will they go before they stabilize?
10%-20% below breakeven cashflow on 10%-20% down 30 yr fixed. That’s how low they will go with a few exceptions for quality/location.
Amazing. The Florida Times Union (Jacksonville Florida’s local paper) will report on the bad housing market in Georgia, but will never print anything buy positive spin for the NE Florida market. Why is the Times Union printing stories about companies being hurt in Savannah when similar local Jacksonville companies are hurting even worse. Rediculous.
What have you heard about the St. Augustine area? Last I heard it was still overpriced by quite a bit.
It depends on what part of St. Augustine you are talking about. The cities of Jacksonville, Ponte Vedra and St. Augustine split up the entire county recently, so St. Augustine is a very large area with different sub-areas. The areas that are suburbs of Jacksonville are complete toast. Lots of empty homes for sale with no buyers. Prices have fallen about 15-20% but still have a long way to go because nobody is buying and it is VERY overbuilt in that area. In St. Augustine proper, things are a little bit better because they are not as overbuilt. Still way overpriced, but starting to fall. I really don’t know how the southern part of St. Augustine is doing because it’s out of my area.
“‘It’s temporary,’ said Mark Vitner, senior economist with Wachovia Corp. ‘Housing prices will correct. We need a couple of years with no hurricanes to right the ship.’”
I picture him saying that with all his fingers and toes crossed.
hmmm, he needs EZ credit to return. Without it, housing is toast no matter what.
A couple of years without hurricanes? That is the plan for real estate prices to recover? I love the “ship” reference. Even as the Titanic sank, parties apparently continued for some time.
I thought that the hurricane comment was pretty silly as well. I bet all Arizona needs are a couple of summers where the temperature never gets about 95 degrees and they will be fine. Maybe the Twin Cities can have a couple of winters with less than a foot of snow and it will reduce their condo inventory.
Even after the Poseidon turned turtle, one small band of crew, brave passengers, and Shelley Winters struggled mightily to crawl upward to the bottom of the ship. Pity that David Lereah, the Housing Industry’s friendly author, stopped writing the script. Withoout this support, the chances of survival are slim, yet they won’t give up!
Need a couple more years with hurricanes to wipe out the excess houses.
Believe it or not I know quite a few people in Fl who WANT a hurricane…they feel that if 1/3 of the state is wiped out then those residents will look in other areas of Fl to live…of course they are sellers…
That is just more gambling for them. Roll the dice and if another 1/3 of the state is destroyed, they make out, if their own 1/3 is destroyed then they can blame their bad luck (and file bankruptcy as needed, and get lots of federal largess) and never face the social and moral consequences of their incredible, selfish stupidity.
I suspect we will see more and more housing fires in the near future, I bet the how to books on arson are selling pretty good right now. In the case an act of God might not take their mcmansion problem away, some oily rags in the garage might get things started.
http://tinyurl.com/3246el
“There’s probably not a homeowner who hasn’t thought about taking a match to a house that has languished on the market for months, or perhaps years.
Luckily, few people act on such a felonious impulse. And why should they when the fire department will torch the house lawfully?
Local fire officials will accept houses or other structures as donations to practice firefighting techniques.”
Wouldn’t a couple of years w/o a ‘cane make it statistically more
likely that one will hit right after you buy?
Heckova last name…
“It was across the country. It wasn’t just Georgia,’ said De Weerd.”
I don’t see a darn thing wrong with that name. It’s a real-uh-tor, right?
Hat tip to Chicago reals estate bubble, this quote from the link he/she posted really got me..
You have to live somewhere. If you rent, you are making some or all of someone else’s mortgage payment. But even if you have to work two jobs and barely scrape by to make your own mortgage payment, you are building equity that over time will be quite substantial.
No, you idiot, it is about the quality of life, and being able to enjoy friends family and hobbies, working two/three jobs to pay a bloated mortgage is the current version of the company store, economic slavery. I just bet most of on our death bed are going to say, gee I wish had a bigger mcmansion…
If you make a mortgage payment, aren’t you renting someone else’s money? If the money “rent” vastly exceeds the rent the market bears, and the property does not appreciate, is that a sensible carry trade?
“…it is about the quality of life…”
That’s exactly right. If all you are doing is barely getting by, you will have no savings outside of your home and no life outside of you home. Makes no sense to me.
he
There was SOOO much good marterial in that aricle. That is a great quote. “…even if you have to work two jobs and barely scrape by to make your own mortgage payment…” Talk about someone advocating financial surfdom just to keep his industry afloat. I think that article deserves it’s own thread. If you missed it I posted it in today’s bits bucket.
Wow. That would make a great NAR slogan, “Helping Americans live the scrape by lifestyle.”
Or how about, “Mortgage, Friends, Sleep: pick two. We’re the NAR helping you live the scrape by lifestyle.”
Or how about……..Kosher Mortgage Co. “We Bleed ‘em dry”.
“The business is just not out there. Some people haven’t had a closing in a year,’
this is great news, keep up the good work.
Not one single sale in one whole year? Dang some people have lots of patience!
These Realtors (TM) may very well be the bagholders of multiple properties they are now trying to unload, and can not leave the business until they find buyers (or most probably, get their RE empire foreclosed on).
Got 10% down?
Outstanding eleven-photo series from Miami in the gallery. No sooner did I wonder about the relative absence of Miami bloggers from this site than these pictures get posted!
The condo buildings truly are totems built to appease and satiate our real gods, and someday they will have all the residential value of a derelict ziggurat. But they won’t be a tourist attraction.
A lot you know - this is the new “target condo” system developed by the Miami politicians. These are authentic looking, but empty condos, that will emit “hurricane attracting signals” when one approaches, thus keeping the worst of the winds from populated areas. It’s like the flak that fighter planes eject when heat-seeking missles are after them. Now, if the hurricanes were smart, they’d realize that noone would actually BUY one of those condos at those prices, but they don’t read this blog.
There is a very strong possibility that these condo closet towers will wind up as section eight rental housing. Luxurious granite and SS for welfare people; what a country!
Got 10% down?
That would fit right in with the rest of downtown Miami.
Downtown revival an elusive dream
http://www.miamiherald.com/103/story/133961.html
PS
Be sure to watch the slideshow that goes with the story.
http://biz.yahoo.com/ibd/070607/realestate.html?.v=1&.pf=real-estate
NAR spokesman Walter Molony said “The declines should start to disappear in the second half of this year,” …”The national price decline will start to flatten. Then it should start to rise. And those distortions will fade away.”
So, vested interests want us to believe there wasn’t a bubble. According to them the market is actually abnormal and distorted NOW. It should only get better and normal soon - just like it was before 2006. It really looks like Fed, NAR and part of the MSM believe that good times are just around the corner!!
I am not sure which is better: (1) An outright, massive crash so that current breed of fools is quickly punished, or (2) Slow bleeding to death so that more of the potential fools continue to be trapped and our future gets to be on a more solid footing.
As one of the first posts said gov believes NAR’s stats. No one is going to benefit from NAR stats, but NAR. I was a realtor and believe me most honest realtors do not want to belong to the NAR. NAR has it set up that if the company belongs, all their agents have to belong. They get $450+ bucks a year from every agent for local, state and national dues. Plus if you don’t belong you can’t access the MLS. The MLS is not free; when I left they charged $350 a year for that privilege. And every year they decide to run campaigns to get people to use a realtor with all their crappy, lying campaigns they add a surcharge onto realtors dues. A lot us want to literally throw up watching those ads, and we were pissed when we had to belong to the organization. It’s as big as government and the “taxes” just keep getting higher.
“We’re having a housing bust,’’ said Gross, who manages Pacific Investment Management Co.’s $103 billion Total Return Fund. Not an adjustment …“… a housing bust’’ (From Bloomberg.Com)
What article was that from?
http://www.bloomberg.com/apps/news?pid=20601087&sid=asGoEIicHptw&refer=home
Thank you
OT; slightly off target but Denver making a push to curb global warming is proposing the following: “Much of the city’s plan involves finding ways to encourage energy conservation by mandating efficiency standards for new construction and setting standards for older homes that would be enforced when the home is sold.”
What will be the costs of bringing an older home up to market value for the home buyer? If proposals like this come into fruition, it will only put more downward pressure on an already devastated housing market. And what about those ‘view’ taxes up in NH, what is that doing to the resale market?
Solar is the obvious answer and it’s around $20-30k and you need enough space on your roof, facing south, to make it work.
Most houses aren’t candidates, because of cost and placement.
Mandates are more regulation, more market manipulation, and mis-allocation of resources……… blah, blah, blah…
my favorite part of the quote, “encourage energy conservation through mandates”…… that my friends is the heal of the boot mashing your nose as encouragement….. no thank you.
Forbes is getting talking points from NAR..
http://www.msnbc.msn.com/id/19116753/from/RS.4/
Thinks Tampa and Phoenix are headed for recovery, yet admits that one in four homes are owned by investors. Unbelievable.
The best quote from that article, aside from the ridiculous prediction that our prices will appreciate 10% in 2008: “Tampa’s a pretty affordable market.”
The person saying that obviously doesn’t work or live here. The disconnection with reality is approaching levels more commonly associated with a serious clinical deficit.
“There is no real estate bubble. Bubbles are for bathtubs.” -Kendra Todd -fall ‘06
You can’t go anywhere without hearing people talk about “the real estate bubble.” Such talk drives me to distraction, and I’ll tell you why. It’s because there is no real estate bubble. Bubbles are for bathtubs.
Despite a thousand articles in Sunday newspaper real estate sections, the bubble is a myth. The real estate markets in many areas are going through a normal correction cycle. I’m going to tell you how to recognize the signs of a correction in your market, how you can avoid getting sucked into “bubble trouble” and how you can even benefit from the current environment.
A bubble is a market in which the value of the key asset is inflated based on speculation and psychology. Talking about a bubble implies a sudden burst, and real estate does not work that way. You don’t go to sleep one night with your house worth half a million dollars and wake up to find it’s lost half its value.
I think Kendra might be taking a bath right about now. (in a granite tub, of course.)
That is a pleasant thought…
She looks decent in this picture: http://en.wikipedia.org/wiki/Image:Kendratodd.jpg
She is a double-bagger.
“You don’t go to sleep one night with your house worth half a million dollars and wake up to find it’s lost half its value.”
Tell that to some people in New Orleans…
and Florida, and San Diego, and Sacramento, and Spain, and Ireland, and Japan, and Arizona, and…
That statement is largely true — but, it’s quite possible that you could go about your life for a couple years and look up and notice that your home has lost 20% (or more, or less) in value, making it worth less than you paid for it, or even less than you owe on it - perhaps as much as a year of your salary, or maybe equal to a good chunk of your savings for retirement.
That’s plenty terrifying enough!
Typical bulls*** disingenuous tactic there by Kendra — exaggerate your opponents argument to a ridiculous degree, instead of addressing the actual argument.
“You don’t go to sleep one night with your house worth half a million dollars and wake up to find it’s lost half its value.”
Well, yeah, you can. Wake up, turn on the radio or TV, find out Saudi Arabia just had a revolution and is stopping or cutting back on selling oil to the US. And you live 10-20 miles out from major employment, no public transit, and totally screwed.
The Florida situation has me concerned. The article mentioning the out-migration from FL is an understatement. There are quiet a few relocation web sites out there for various cities. Just about every in the Southeast ( Raleigh,Atlanta,Nashville,Charlotte,and so forth) are crammed with people from FL wanting to move there.
Their posts could be fused together into one because they all say the same thing: “We can’t afford FL anymore, the prices got too high, I’m retired and can’t afford the taxes, the schools suck, etc etc. They ALL want out and they’re ALL moving to our area.
Add the Florida evacuees to the gazillions of families and young people from the Northeast where things are also overpriced, the rust belt states like MI where their economy is dying, and California where again the prices are too high.
Lastly, there are a kabillion baby-boomer retirees who want the same damned thing: A cheap couple of acres on a pristine lake in TN somewhere and a nice house because they are from NJ where they sucked all the money they could out of their careers, sold their crappy house for half a mil, and are now wanting to ruin the economy of another state by “Floridizing” it.
Sorry to sound mean, but I sometimes wish these people would just stay away and deal with their own messes and not make another mess in our back yard just because we didn’t participate.
It is sad that states that had nothing to do with the lunacy will probably pay the price.
I think you should build a TN wall to keep them out.
Duh, Wait a minute..
Fla license plates around here in Midtown/Buckhead Atlanta a lot. Followed by NY, Mich, NJ, Mass and Ohio. Quite a few houses just went under contract or sold in my neighborhood 2 miles out of Midtown. Was quite surprised at the speed of some of them when some of them had been sitting for quite some time and others, the quality, usually moved if priced right. A few were junk last redone in 1970 and needing a total overhaul. Wonder if some of the Outside the Perimeter types are getting worried about gasoline (not price but availability risk)? Or more likely the 1-2 hour commute? But the Hummer won’t fit in these 1920s/30s driveways
Prices are flat since 2005, but there is actually less inventory now than 2 years ago (in my neighborhood…NOT the city).
There certainly has been a subtle/slow inverse wealth migration trend here (overall - with exceptions)…I believe Fulton Co recently passed up more than a couple of its suburban counties for median household income.
This part of the original post bopped me over the head:
“The National Association of Realtors’ membership survey showed that, for newcomers in the field, the pickings are slim as they compete with veterans. Realtors in the business for two years or less earned a median of $15,300 last year; those with at least 16 years of experience earned $76,200.”
You’d think that after 16 years in a field, especially one that supposedly offers the advantages of entrepreneurship, that the annual income would be higher than $76k.
But one question: Is that $76k figure the annual gross or the annual net? If it’s the annual net, then the real estate biz might be worth it. Might be.
I’m guessing it means “$76k in commissions paid to them”
But, that’s just a guess.
My wife (realtor in NoVA in 80s and early 90s) thinks it’s probably the median for gross commissions. Then subtract expenses (real and contrived) to come up with taxable income in the $40k to $50K range.
$76,000 / .015 (6% X .5 (listing + selling brokerage house) X (.5 (listing & selling agent)) = $5M+ in annual sales.
Hard to believe.
You are absolutely correct. By the time a commission gets split between 2 companies and 2 agents and sometimes a referral fee to a third company and agent, there isn’t much left. The $76k is probably before expenses (gas, advertsing, mls dues, realtor dues, 2 sides of social security, city tax, county tax, state tax, and federal tax). There isn’t much left. Ususally 50-60% of the gross. You have a lot of wear and tear on your vehicle and no health insurance. Unless you are someone who runs from one client to the next without servicing them, you usually gross closer to $30k and clear about $15-20 (excluding high value areas). Except during this boom when no one had to work except in the areas that didn’t bubble.
Don’t forget to deduct from that all of their “investment” alligators eating them alive.
Got 10% down?
You know - Florida should be able to do better, economically, as a state — by focusing on retirees. They bring out-of-state assets and cash flows, and put less strain on school systems. And, the high proportion of “part time” residents (snowbirds) would seem to put less stress on services — you’re living there 6 months, but paying property taxes for 12 months.
Or - has the retiree influx over the past 20 years just overheated the market too much for normal folks with average jobs and families?
Outside of weather issues - you would have a leg up on other places - but I guess the non-tourist, non-housing, non-agriculture parts of the economy are otherwise pretty weak.
I know it’s a simplistic argument - but, does it hold water?
They may not use schools but I’d argue they put more stress on health system. One of the issues with Florida is not retirees but speculator fever that everyone had. Local fundamentals can’t be support the financial liabiliaties of taxes, insurances and mortgage payments.
Pure and simple it was the availability of cheap financing that enabled the speculators to drive prices up. Low wages and high insurance guarantee prices will come down. Remember the crazy financing just started to slow within the past couple months. Everyone is so impatient regarding falling prices since we’ve been waiting for a couple years and it SEEMS so slow in unfolding. But it has just started, the worm has finally turned, so give it a few more months and the wait will have definitely been worthwhile.
As a ex Floridian as of one week ago, I can tell you that the “snowbirds” have already flown away..How can you tell?..by the severe lack of out of state plates and Canadian plates that were MISSING this winter and last..the snowbirds had a sour note put on their condos/trailer homes(alot bought out by CONDO developers) that even after 1.5 years are still not fixed from Wilma as well as the insurance companies that went out of business and the ones who sorry oops…CAN’T PAY ENOUGH TO COVER ANY REAL DAMAGE..The state of Florida thinks that the snowbirds are stupid..they are not..and they have left in droves well ahead of the residents and their kids are dumping the properties left and right after they pass on….but as usual no one is covering that bit of info…
You’re spot on. My strong Canadian dollar can do much better in other states. I’m one of your “missing”.
“‘I thought it was pathetic,’ he said about the (property tax) proposal in the state Legislature. ‘I just don’t understand it. They’re talking about rolling back to the year that caused all the trouble. They need to roll back to at least three years ago.’”
Let me guess. He wants his tax assessment rolled back but not his equity position. Since property taxes are a percentage of home value, it’s his home’s value that needs to be rolled back not his tax amount.
“Retiree Jerome Barry would like to sell his 1954 Loveridge Heights home, worth about $200,000, and buy something beachside for about $400,000. But he knows his $1,351 tax bill would more than triple.”
Wow. A $4,053 property tax bill for a $400k home? Most New Jersey homeowners would give their left arm for a tax bill like that. In Bergen County North Jersey, you are probably looking at $7k-$8K in property taxes for a $400k home, which, by the way, is going to be some tiny POS 2 bedroom starter cape built in the 1950’s that needs a ton of work. Also, unlike Florida, you don’t lock in a tax bill (subject to inflation increases) when you buy a home . You can expect your tax bill to go up 6% or more every year. In a re-valuation, you could get hit even harder.
A 400K house on the beach in florida will run 8-12k in property taxes yearly. This man should do his research before moving. Beach tax rates are among the highest here.
New Jersey is a higher wage state than Florida. And home owner insurance is $1000 on a $400,000 home vs $4000 in many parts of Florida. And school districts are much more highly rated in NJ than FL. You really can not compare NJ taxes with FL.
How does higher wages excuse higher property taxes, that have nothing to do with wages (except the wages of state/local bureaucrats)? And of course NJ has state income tax on those higher wages, which FL doesn’t. Comparing taxes across states is one of the _first_ things to do when thinking about moving.
I agree on the comparison for states..that is why I left FL. Enough paying 8K in taxes,and 8K in insurance with a $56K DEDUCTIBLE! And I did not live near the beach and was pretty far inland…with a house I paid 400K built in 1999(had house before the boom bought in 02). Plus to replace my roof, since it is s barrel tile would have been 70-80K on a two story house(the cities require you to use certain types of roof material whether you like it or not!)..FORGETABOUTIT! That is what you are dealing with in Florida..why would you want to live there!
“‘It’s temporary,’ said Mark Vitner, senior economist with Wachovia Corp. ‘Housing prices will correct. We need a couple of years with no hurricanes to right the ship.’”
Actually, a few more bad hurricanes might help the Florida market correct back to the fundamental value of housing to end users, which is what is needed to right local economies which have been decimated by the pricing out of working families from the housing market. The 1920s Florida Land Boom was brought back to earth in part by some big hurricanes, and it may appear through the lens of history that the bad hurricane season of 2005 had a similar effect in getting the Florida bubble correction underway, particularly through the indirect effect of higher insurance premiums.
http://fcit.usf.edu/florida/lessons/ld_boom/ld_boom1.htm
“People are almost being held hostage by their homes.”
Almost. Heh. Funny.
Saw an ad on TV last night for Quicken Loan. Said on a $150,000 loan you could have a $450 payment structured however you want instead of a $1000 payment. I thought these loans were being outlawed, or is interest only loans still OK. Interest alone would be over $800 a month. How much more upside down can you get?
Probably one of those MTA loans
To be honest, I call bull on anyone in the last 10 years or so that says that they didn’t see a bubble. Hell I could figure it out a long time ago and I wasn’t even college aged yet. Personally I think the whole country was wanting money for nothing, and just as the housing market took off in the last few years, the next couple of years will be a nightmare. I’d say that 1999-2000 prices are an optomistic number to be rooting for. I wouldn’t be surprised if you see early 90’s or even lower prices after this mess ends.
Apropos the remark about hurricanes, Mr. Vitner clearly hasn’t read reports from NOAA indicating we are now in a “multi-decadal cycle” of increased storm frequency and intensity.
Bring on the popcorn, Neil.
A nice article at NOAA, that includes a cool chart of major hurricane strikes from 1950-2006.
http://www.magazine.noaa.gov/stories/mag229.htm
a version of this article also said that the people moving out of FL are using full service moving van companies and the people moving in are using u-hauls. Money moving out, poverty moving in. Some how I don’t see this as the recipe for recovery.