Summertime Blues Came Early For Florida Home Sellers
The Herald Tribune reports from Florida. “The summertime blues came early for Florida home sellers this year. The season, ordinarily among the state’s weakest for realty transactions, had not even begun in May before the market dropped more than a third in existing home sales. Sarasota-Bradenton median prices fell 9 percent, from $322,600 to $294,700.”
“Statistics further south in Charlotte County-North Port painted a darker picture for that market. Home sales fell 39 percent, and the median price slid 12 percent, from $213,400 to $186,900.”
“The slump in sales has left investors scrambling to get any kind of cash flow they can. A condo at Grand Preserve looked like a hot deal when Dave Weam picked up the contract in 2005. ‘I paid $650,000 for it and I owe less than $300,000 and it is costing me $3,000 a month, with the maintenance fee and property tax and payment (principal and interest),’ he said. ‘I would rent it for $2,200. That is where we are at.’”
“Weam set the Grand Preserve condo up as a short-term rental, complete with furniture, but has been unable to rent it at all. He has the condo listed for $629,000.”
“‘If I lowered the price to $525,000 or $550,000, I still don’t think I’d be able to sell it,’ Weam said. ‘And if I am willing to rent it for $2,200 a month, why would somebody want to buy it? It is a lose-lose for me.’”
The Miami Herald. “Home sales in South Florida were sluggish in May and are expected to lag into the summer. The number of single-family homes sold in May plunged 44 percent in Miami-Dade from a year ago, according to figures released Monday by the Florida Association of Realtors. In Broward, sales dropped 34 percent from a year ago.”
“Condo sales also were down. In Miami-Dade, they were off 46 percent from last May. In Broward, they were down 29 percent from a year ago.”
“Last month, Jack Fredericks put his three-bedroom ranch house in Fort Lauderdale up for sale. He started at $335,000 and in three weeks dropped to $300,000. He found a buyer who couldn’t quite get a mortgage for his asking price and lowered it $5,000 more.”
“‘I had watched the neighborhood and saw what was going on with slow sales,’ said Fredericks, who is moving to North Florida. ‘If I could have afforded to wait around, I might have done that. But the way I look at it, I need to get any deal I can.’”
The Sun Sentinel. “Prospective home buyers let the spring selling season pass last month with a yawn and maybe a lowball offer. Palm Beach County had its slowest May since the Florida Association of Realtors started keeping track in 1994. There were 741 existing home sales compared with 982 a year ago, a 25 percent slide.”
“The median price fell $3,200, to $387,800 from $391,000 a year ago. It was the 12th consecutive month of year-over-year price declines.”
“At the end of May, Palm Beach County had nearly 37,000 homes and condominiums for sale, according to the Miami-based Keyes Co., up 29 percent from a year ago. At the current sales pace, it would take more than four years to sell all those properties.”
“Real estate agents and consumers in Palm Beach and Broward counties were hoping a new property-tax plan in Florida would boost sales. But many are disappointed, insisting the plan won’t provide enough long-term relief.”
“Josh Laddin owns a three-bedroom house, and he and his family want to buy a bigger place. Laddin is angry and frustrated at the tax changes. ‘Everything is against the home buyer,’ he said.”
The Palm Beach Post. “‘Buyers are waiting for prices to drop, and sellers are not reducing their sales prices to more realistic levels,’ said William Cozart, chief executive of the Realtors Association of the Palm Beaches.”
“Indeed, the median price of an existing single-family home in Palm Beach County fell only 1 percent in May, to $387,800 from $391,000 a year ago.”
“In the Treasure Coast, single-family home sales fell 39 percent in May 2006. New-home builders in the Treasure Coast, which saw an explosion of new development during the housing boom, have been slashing prices and offering buyer incentives, which have cut into the sales market for existing homes.”
“‘If you could buy a new home or an existing home for the same price, which would you buy?’ said Mike Morgan of Morgan Florida Real Estate Group.”
From TC Palm. “Existing home sales and prices continued to show a decline in Martin County in a year-to-year comparison, the Martin County Association of Realtors said Monday. ‘May was indicative of the amount of inventory on the market for single-family homes,’ said Jennifer Atkisson-Lovett, president of the Realtors Association of Martin County.”
“The Florida Association of Realtors said the Fort Pierce-Port St. Lucie Metropolitan Statistical Area, which includes Stuart, sold 315 existing single-family homes in May, down 39 percent from a year earlier. The median price for an existing single-family home in the area dropped 9 percent, to $228,500, in May compared with $252,300 during the same period last year.”
“Home sales in the Melbourne-Palm Bay area decreased 26 percent from 651 to 483 units sold. The median sales price declined 16 percent to $190,400 from the $227,400 recorded during the same period last year.”
The News Press. “Marquis Simms and her fiance moved to Naples from Michigan two years ago, only to find themselves aghast at the high prices of homes and the frenzied buyers who were snapping them up.”
“‘We felt like we were never going to be able to buy a house,’ the office manager said. ‘They’d be on the market one day and then gone.’”
“But that was then and this now. Sales of existing single-family homes in Lee County were down 42 percent from 993 in May 2006 to 575 last month and the median sales price was down 2 percent to $281,500.”
“Now, Simms said, they’re actively looking for a house and are looking forward to moving out of their tiny condominium and buying something bigger, they’ll probably rent out the condo because the market is so bad right now.”
“Residential real estate broker Denny Grimes in Fort Myers said the future is bleak for home values in Lee County. ‘I think there’s a 100 percent chance our prices are going to be lower in two years,’ Grimes said.”
“The inventory of unsold homes is about 15,200, he said, noting that foreclosures and dumping of houses by builders at discount prices are preventing that number from going down anytime soon.”
“J. Larry Sorsby, chief financial officer of Hovnanian Enterprises, said Monday at the Reuters Real Estate Summit in New York that Lee County is ‘by far the worst housing market that we’re in and I wouldn’t be surprised if it’s the worst housing market in the country.’”
The Gainesville Sun. “Market conditions are tipping the balance toward renting instead of buying for many would-be home buyers, Gainesville housing observers say. That is especially true in the condominium market, with many struggling condo conversions going back to leasing.”
“‘The problem with a lot of conversions is they’re not unique,’ said Wayne Archer, director of the University of Florida’s Bergstrom Center for Real Estate Studies. ‘All the conversions are garden apartments out in the perimeter areas. They’ve got more competition from the rental market.’”
The St Petersburg Times. “If you’re a real estate agent, the bay area is a rough place to be right now…and it’s getting rougher. In May, home sales here fell harder than almost anywhere in the country. The good news (for buyers, anyway): Prices are falling, too, though not as quickly.”
“According to the Florida Association of Realtors, sales of existing single-family homes in the Tampa Bay area fell 42 percent last month, compared with May 2006. In May, the median price of an existing home in the bay area was $209,300, an 8 percent decline from the previous year.”
The Orlando Sentinel. “Existing-home sales for May in the Orlando area, released earlier this month by the Orlando Regional Realtor Association, were down even more than those at the state and national levels, 45 percent compared with a year earlier.”
“The local inventory of homes for sale also surged to a record 25,463 in May, up more than 40 percent from a year ago. And that doesn’t include for-sale-by-owner properties or unsold homes in builders’ inventories.”
“‘When you see the inventory dropping four or five months in a row, we’ll be out of the woods. Right now, we’re still in the woods,’ said Bob Walters, chief economist for Quicken Loans.”
The News Journal. “During May, Realtors sold just 644 existing single-family homes in Volusia and Flagler counties, 29 percent fewer than the 912 that changed hands in May 2006. The median selling price in the two-county area dropped 14 percent to $196,800, the Florida Association of Realtors reported Monday.”
‘It was the second time in the past three months that area house prices have dipped below the $200,000 level.”
“Terri Ossi tried to sell her Ormond beachside home for $349,000 but, after three months, only one person came by to take a look. So she decided to lower her asking price by $14,000 and throw in some freebies.”
“Her new package deal includes not only a pool home with an in-law apartment, but also the kitchen appliances, washer, dryer, house warranty, termite bond, and a 1998 Honda CR-V valued at $5,000.”
“‘The furniture is negotiable, and if they want the dog, they can have him, too,’ Ossi joked.”
“‘Pricing is everything,’ added said Marge Allison, VP of the Daytona Beach Area Association of Realtors. ‘The buyers that we have are looking for bargains.’”
“Builders are offering the biggest incentives, Allison said. ‘They’re the ones offering the free appliances, free cars and the free boats,’ she said.”
“No one has shown any interest yet in Ossi’s aging Honda, said her agent, Keith Freeman. ‘But it can’t hurt,’ he added.”
“‘The furniture is negotiable, and if they want the dog, they can have him, too,’ Ossi joked.”
Will the seller come back to feed the dog?
I have not heard that kind of talk from a seller since 93-94. I think they are coming around.
The immediate need to sell will be the driving factor in the market.
One thing that seems very different in this current bubble is the number of potential sellers upside-down on their mortgages. In previous booms a buyer sill had to qualify and generally needed a down on the purchase. We are not short of desparate sellers, we are short of desparate sellers who can sell at all. This leaves foreclosures, and unless the banks end up really squeezed, so far from what I can see of auction talk they are playing games right now.
Don’t worry,
The FDIC will eventually tell the banks to sell.
It might not be until this December… but when they do, FIRE SALE TIME.
Got popcorn?
and cash?
Neil
The problem with REO sitting around for two years is:
1. no A/C during the summer in humid areas will cause mold and other damage
2. no watering of the foundation will split the house in half
3. insects and other pests will find a nice home
4. vandalism
5. natural damage - if there is a leak in the roof, nobody would know
If the lenders wait too long, the home might be uninhabitable
REO’s are usually a big risk. Not only are they not taken care of as they sit vacant, but many sellers are mad and really destroy the insides. Utilities are turned off and a buyer has no clue if anything works anymore unless they want to pay to have everything turned on for inspections. Plus the bank does not have to disclose any defects. Sometimes a great deal can become a bad nightmare.
The best solution for Florida, is to put all these house investors in chicken suits and take them to the alligator farm
“and if they want the dog, they can have him, too”
she’s a freak of nature.
I would not buy from a person (joking or not) who is willing to discard a living creature just to make a deal. And I don’t want your used car either.
Oh, come on. People discard them every day just to feed their faces.
Cars or dogs?
living creatures, silly
You’re being too kind.
The very idea of giving away their dog is repugnant. I hope these people don’t find a buyer, ever. If I lived in the neighborhood I would paint graffiti on the house and throw eggs.
“The summertime blues came early for Florida home sellers this year.”
Summertime
And the livin’ is easy,
Fish are jumpin’
And the cotton is high.
Oh yo’ daddy’s rich
An’ yo’ ma is good lookin’
So hush, little baby,
Don’t you cry.
I was under the impression that there ain’t no cure for the summertime blues…
I guess Chris got “Weamed” in that condo deal….
I know many people here don’t agree or like Richard Kiyosaki but I was shocked to find what he wrote on yahoo.
http://finance.yahoo.com/expert/article/richricher/37414
Why would you be surprised ? He loves dispensing his bad advice to his crowd of knuckle draggers who dote on his every word as they trudge back to the trailer park.
gee ,when did komikazi blow the whistle on RE?
before or after his trump tour
Sounds like Rich Dad does not believe the Fed’s stated commitment to contain inflation.
Time for a New Standard
While it’s tough to predict the future, one thing is for certain: The U.S. dollar will continue to go down in value, and savers will be losers. With people all over the world piling debt upon debt and spending like fools, it might be best to follow the Chinese.
They’ve never trusted banks, but have always trusted gold. Maybe it’s time we started doing the same.
When flim-flam men like Kiyosake get on the gold bandwagon, it makes me nervous. Help like his we don’t need, and I say this as a PM buyer.
Could this be the sell signal PM buyers were awaiting?
No, just savers of dollars. LOL Got gold?
Although he touts gold as the answer, I think his argument just as well supports my well-known predilection for Australian government bonds. He does mention Australia’s boom based on natural resources.
Most that tout mellow yellow, rarely talk about the real thing…
Usually mining stocks, or metal that they’ll “store” for you.
I’d guess the percentage of non physical transactions, must be 20 to 1, versus actually taking possession.
Resources are more valuable than gold. You can’t eat gold, and you can’t fill your gas tank with it. It has limited uses as an industrial metal, but I would buy silver before I would buy gold for those purposes. Wood, water, oil, gas, crops: back to basics and everybody needs these to live. Therein, it has a store of value. Gold basically looks pretty, and it is just another defacto fiat currency.
I’ll buy that. Also, if you look carefully at what has happened in the commodities markets in the past five years or so, you will see that gold has been a real dog. Everything, absolutely everything, even wheat and corn, is up way more than gold. Buy Gold. Yeah, right.
FWIW, the U.S. Dollar is right now the only “asset” that is universally and completely despised by one and all. No one, anywhere, has anything nice to say about it.
If there is a true contrarian among us, I’ll bet he is buying the U.S. Dollar.
Gold is an inflated asset like a home. Same argument with the rest of commodities.
Though, the real value of gold is its not in a bank. So, a few nuggets might not be a bad thing considering the derivatives eruption / bankruptcies that will be occurring soon.
I suppose if you own most of your home its not in a bank either. Though, the credit bubble has inflated it beyond its proper market prices.
That is an old argument. Of course you also can’t eat federal reserve notes.
or old food
http://globaleconomicanalysis.blogspot.com/
Here are a couple of thoughts on the subject.
They’re pounding all commodities - especially silver- today. A sign that fear about economic slowdown is beginning to spread outward from the U.S. just a bit.
Everytime they pound them, they bounce back up in a couple of days or so. We’ve been in a holding pattern for something like a year now.
I posted over in the bits bucket that the housing bust is now big news on the local Tampa Bay MSM. Last night’s 11:00 news on the local NBC affiliate had the bust as the lead story. The verbal headline was that the housing market has “Ground to a halt” in the Tampa Bay area. Lots of video shots of homes with “For Sale” signs, and a realtor wandering the grounds of property muttering “Lower the price, lower the price”. Tonight, on the local ABC affiliate, they are going to be doing a story about all the construction that continues to occur, despit the glut of inventory.
And, the other big story is Gov. Crist’s potential deal with Dubai, to build something called “Media City” (a huge film studio complex, complete with back lots, sound stages, sets, etc.) in either Tampa, Orlando, Palm Beach or Miami. Supposedly Dubai needs 200 to 800 acres and plans to purchase within 90 days and break ground within a year.
so the arabs are going to save us? oh there is some irony there.
Oil exporters are looking to trade their big (depreciating) USD reserves for anything, and fast. Expect a lot of deals for real estate, natural resources, etc.
watcher, Florida has the largest number of freshwater springs of any state in the country. The “water” business is an area of global interest.
If you want to get in the ‘water’ business, go to Canada. They have 90% of the world’s fresh water.
I don’t think water is their main interest anyway. Cuba and the Florida Straits. Not gonna let China get their hands on it. Crist sees Dubai as the answer to the Florida tax situation and he’s touting “jobs”. In a pig’s eye. Except for a very few management jobs, there won’t be any “jobs” to speak of, for Floridians. It’s a Trojan Horse, IMHO.
HAHAHAH! Do you people honestly believe that the Arabs are going to bail out this State? Ok, so Crist and his political cronies were going to fix the tax situation. How did that work out for you? I can’t believe that even in this forum you folks are drinking the cool-aid. “Ooooh we have so much fresh water that the Arabs need! Oooo yeah, we’re saved!” Please. Get a grip!
Dang, I don’t know what you’re smoking or if you just can’t read or if you don’t understand sarcasm, but nobody thinks much of this idea or wants it.
Yeah, they’re buying US property just like in the 80s the Japanese bought Rockefeller Center, Pebble Beach…..
why do I imagine selling swamp land to arabs is not such a bad idea?
Right - the Japanese owned half of Waikiki Beach back then. but not any more.
The Arabs have an advantage in that the wealth is concentrated to very few. 5 people with 20 billion can do a lot more than millions with just a handful of dollars. The millions will buy TV’s and new Cars. The few will build massive structures etc …
Jeb Bush’s oil-smeared fingerprints are all over this.
And his brother Neil, he of the Silverado S&L scandal, who racked up big profits selling his software with taxpayer dollars earmarked for Katrina relief, is based in Dubai and advises on “investments” there.
Our country was built by millions of people with only a few dollars in their pockets. I have yet to see anything substantial that Gates/Buffet/Turner/Trump/Bloomberg/etc have built other than mansions to house their egos.
Buffett lives in a $400K house in a middle-class suburb and drives a 5 year old oldsmobile or something of the sort. You are right though that his house probably reflects his ego — very modest.
snip:
“Despite his immense wealth, Buffett is renowned for his unpretentious and frugal lifestyle.[5] When he spent $9.7 million of Berkshire’s funds on a corporate jet in 1989, he jokingly named it “The Indefensible” because of his past criticisms of such purchases by other CEOs.[4] He continues to live in the same house in the central Dundee neighborhood of Omaha, Nebraska that he bought in 1958 for $31,500[6] (although he also owned a more expensive home in Laguna Beach, California which he sold in 2004). The current estimated value for his house is around $700,000.”
You’re telling me!! I don’t care if Dubai wants to shower gold coins in the streets, I want them as far away from Fla as possible. I can’t tell you how sick at heart this makes me. First, we had 9/11, where a number of the terrorists were supposedly from Dubai. Now, we have soldiers dead, maimed or stuck in the quagmire of Iraq. Hey, but it’s all good. Globalization, you know. You don’t want to know what I think if Crist. It’s beyond unprintable.
I smell the stinkiest dead rat ever. Dubai is making a show of looking at various locations in Florida, but you know it will be Miami. Not just because of the port and the beaches, but let’s not forget Cuba. Cuba is the joker in the deck. Think Dubai and other oil interests are going to let China put rigs in the Florida straits? Dubai building a media center in Miami gives them great positioning.
What he said!
Ahem….sorry, Palmetto, but I think you have no idea what you’re talking about.
Dubai is a wealthy country, with legitimate business interests all over the world, they’re a close ally of the US and stand to lose as much as we do should either the Al-Qaida or Al-Sadr types rise in influence in the region.
And I wouldn’t blame the people of Dubai for getting us into this quadmire in Iraq either….
“they’re a close ally of the US ”
Yeah, right. They were a client state and now we are becoming their client state.
One might as well describe the Cayman Islands or a Swiss bank as a “close ally” of the US.
We have no shared history, we do not share any fundamental values and it is a matter of convenience for the US to close it’s eyes to human rights violations, horrendous labor practices, and the disenfranchisement of more than 50% of their population.
There’s nothing the US gov’t like better than a wealthy dictatorship with a single-minded interest in protecting and expanding it’s wealth, especially if they can use the US military and its soldiers to protect themselves, at no cost to themselves.
For reference, see Kuwait during Gulf War.
If I recall, all of the terrorists in 9/11 were Saudi or Yemeni. Implacating Dubai is like implicating Kuwait.
Just what the H-E-doublehockeysticks IS a media center??? They gonna watch dvds all day?
Nope, two were from the United Arab Emirates, and Dubai is part of the UAE.
UAE was also only 1 of 3 countries in the world which recognized Bin Laden’s sponsor and protector, the Taliban government of Afghanistan.
The other 2 were those other good “friends” of the US, Saudi Arabia and Pakistan.
“The slump in sales has left investors scrambling to get any kind of cash flow they can. A condo at Grand Preserve looked like a hot deal when Dave Weam picked up the contract in 2005. ‘I paid $650,000 for it and I owe less than $300,000 and it is costing me $3,000 a month, with the maintenance fee and property tax and payment (principal and interest),’ he said. ‘I would rent it for $2,200. That is where we are at.’”
Yup, that’s where we are at. When you can put over 50% down and still not being able to rent it to cover all the liabilities on this albatross. If you notice, he also did not include maintenance on this house. It was new when he bought it, but it certainly won’t be new when he sells it.
OMG did someone just notice that price-to-rent fundamentals are crazy?
At this rate, someone might notice the rental-implied value of their house in 2009. Then things will REALLY get interesting.
It’s just insane that someone would buy such an albatross as an investment. A common problem with amateur investors, highlighted with this guy, is they don’t even think of the “cost of money” that their down payment entails.
So he’s losing $800/month on his lace? No, he’s losing at the bare minimum an additonal $1500 per month that he could be earning (guaranteed, insured) on that down payment or equity. Ouch. Very bad deal.
This is why I long ago gave up looking for rental properties to buy. It’s just not worth competing against people who will accept losses like that.
What a pairing this guy has — a lousy investment that keeps siphoning money AND no clear exit strategy.
At least if you buy a stock and it drops 30% in value, you can sell it fairly quickly and cut the carnage. This guy is bleeding carrying costs AND will probably take a heck of a haircut when he sells it — unless he holds on for (lets say for argument’s sake) 5 years of monthly losses and missed opportunity costs on his equity. And that’s a best-case scenario, probably.
The only other good scenario for him is huge inflation / devaluation of the currency — which will help long term mortgage holders (I am at least assuming this is a fixed loan, but who knows). But, that’s a hell of a wild card to hold out for.
Dude - three words for you: just — get — out !!!
Actually, had he invested the $350K in a 5% saving account he would be positive by $1500 a month, so he is still more than twice the cost to rent. Worse, one can assume the value is falling at $50K a year (based on his own observation), so he is really losing about $5,000 a month and that assumes the condo will retain most of it’s value for a long time. If I were in his shoes, I would suck up right now and dump the monster at current market value what ever that is. Of course like many here I recognized the bubble and saw all the crazy loans etc, so I am not in his shoes.
You know what Eddie Cochran says, “Ain’t no cure for the summertime blues.”
Anyone from the West Palm Beach area? How is the market there? I last spoke to a friend who lives down there, he was very upbeat and said that everything was rosy. However, I dont believe he was being honest. Anyone care to update me with the facts?
I’m assuming your friend was Hank Paulson?
He owns a tony home in Palm Beach.
Your “friend” is either a liar or a lunatic other than that he sound just fine! Talking to folks who know the real estate market well there tell me it is down right depressed and worse each month. Prices are down about 20% from high if you can sell at all.
“Prices are down about 20% from high if you can sell at all.”
Much more than that. We’re fast approaching 50% in some neighborhoods. Look at some of these new construction sites. We’re down 40% from peak at Olympia!
Do you remember the roses from the “Adams Family?”
No flowers only dead sticks and leaves(the flowers were cut off)…that sums it up…
W.P.B is hurting centex 4 bed single family homes off 150,000 frm ayear ago. Nice 4 bed home in jupiter asking 450,000 amonth ago down to 388,000
WPB = ground zero for housing bust. YEARS of vacant inventory and more in the making. “upbeat” = drunk, or worse.
Palm beach is definitely ground zero. From a financial standpoint, the Neutron bomb has already gone off; people are just ignoring the early radiation symptoms.
Got popcorn?
Neil
people are just ignoring the early radiation symptoms.
Not everyone Neil, I use the radiation to pop my popcorn and then watch the RE show play out!
Last weekend I got together with a group that includes a long-time acquaintance from the Tampa area. Without my even bringing up the subject he told me I don’t know how lucky I am to have moved from Florida. He said “everyone” he talks to is either in the process of leaving, or wishes they could. Most are heading to the Carolinas. He cursed the recent insurance and property tax “solutions” as useless. I can only thank Charlie, Jeanne, and a couple of their blustery friends for motivating me to move back in ‘05.
BTW, this get-together was in Maryland, near D.C. I had a chance to drive through the old NoVA communities where we once lived, as well as our host’s, and none of them had any great number of For Sale signs, just a bit more than usual. But like Florida, what’s on the market there isn’t selling.
There are no buyers in Northern VA. For whatever reason, the masses have realized that a 30 year old 3-bedroom house just isn’t worth $700,000.
That being said, my neighbor is trying to sell his townhouse. He got two offers, one was $5k below his asking price, and he gave them a counter offer. I was in a bit of shock and suggested he take the offer and run, rather than follow the prices down.
Of course, the deal fell through, and it appears that was the end of the offers.
37,000 properties reported for sale in pbc. pbc is the new atlantis!
Some sellers are idiots with the counter offers. They are lucky to to get an offer to begin with, but then they feel they need to negotiate. What a joke! As a buyer, I’d say “No thanks” too. The first offer is the best one. From there, my offers go down, down, down….
Four cities — Altanta, Boston, Dallas and Denver — reported price increases in April compared to March”
don’t know about Dallas, but the rest of these are NOT turning around
I think the price increases in Dallas are due to the new McMansions. They are tearing down older neighborhoods and replacing them with WalMart size homes. I wouldn’t be surprised if prices did increase.
“‘Pricing is everything,’ added said Marge Allison, VP of the Daytona Beach Area Association of Realtors. ‘The buyers that we have are looking for bargains.’”
Excuse me “What buyers?”
If price is the SURE WAY of a deal happening and prices are lowering in Florida why are the buyers not buying?
Simple..it isn’t worth it…there is no home in Florida that is worth the aggrevation of
1)high insurance with a high deductible (mine before I left $8K with a $56K deductible and that was for a regular inland home no McMansion)
2)high taxes and the gamble of property tax reform working
3)high chance of buying now and negative in value in the property 1 year later
4)the high possibility of a hurrricane that could wipe out your job, live savings and property.
To end up finding out that your state run insurance does not have the money to give you for repairs, went out of business and that even getting a FEMA truck on your front lawn could be a challenge..
There are certain conditions that exist in Florida that are unique to the area…and many buyers have become educated in understanding more on how the market works(mortgage + taxes+insurance) and the risks, since Katrina, of establishing your “life” in so called “paradise.”
What got me is the statement that buyers are “looking for bargains.”
What a load of crap. Buyers are looking for sane prices with any remotely realistic relation to incomes and rental values. That does NOT make them bargains.
OT… hate to say I saw this coming:
The new mortgage lending growth sector
“Cash-strapped seniors are now “sitting on vast amounts of untapped equity” and something has got to be done about it!
“Enter legions of helpful bankers and Wall Street firms anxious to help facilitate the equity extraction for upwards of four percent before the homeowner sees a penny, all in the name of perpetuating an economic model that looks more and more like Bizarro World.
“As the subprime debacle shows no sign of slowing down and credit begins to tighten for traditional mortgage products (a few years too late), the banking industry has set its sights on the next hot growth sector - reverse mortgages.
“This story from yesterday’s LA Times provides all the particulars….”
Okay, can someone tell me: Are these reverse mortgages tranched/bundled and then sold off as CMOs/etc.?
I noticed you FAR has not updated stats for May at media.living.net/releases/archive.htm Does anybody else have the site for the raw numbers?
centex4 bed single family homes in abacoa off 150,000 from a year ago
centex4 bed single family homes in abacoa off 150,000 from a year ago
I am going down (from Maryland) to look in Ibis in PB Gardens for a vacation house but still think the market can and will drop another 25% or so. Sellers/investors will get desparate and start lowering prices, or the banks will when they start foreclosing.
Stay away from buying in Fl right now as all have indicated recession is in the near future..signs of it are definitely showing as the small mom and pop businesses are closing, reducing hours and employees(this is the mainstay of the economy in Florida..they have very little “big” corporate employers)..I would be leary of any kind of “vacation” home…prices will have to come down much more…
Somewhat OT for this thread, but the hot news today…
“New Home Sales Down 1.6%” (AP, Commerce Dept.)
But…
IT SHOULD NOT HAVE TO BE THIS HARD: It took me a good while to compare May 2007 with May 2006! Almost every article is spinning this by comparing May with April. Hogwash! Here are the YOY numbers (Dow Jones):
“Year over year, new-home sales were 15.8% lower than the level in May 2006.”
Why can’t the reporters just put that simple fact in there? OK, maybe the Commerce Dept conveniently left it out of its press release, and we can’t expect lazy AP reporters to take valuable minutes scrounging up last year’s data, can we?
Nice catch. Thanks for the yoy comparison.
http://www.reuters.com/article/fundsFundsNews/idUSN2635126420070626
Ben Bernanke, Henry “Hank” Paulson, and the White House are calling Bill Gross now to ask him why he is making their jobs that much harder?
If you recall, Bernanke and Paulson keep preaching that subprime is contained.
the subprime crisis is not an isolated event and it won’t be contained by a few days of headlines in The New York Times.”
But they will try, to no avail. The worst is yet to come.
“Palm Beach County had its slowest May since the Florida Association of Realtors started keeping track in 1994.”
What’s left for a positive spin? Median prices? They didn’t drop so bad, but there were fewer homes sold. You MUST remember that Palm Beach County median includes home sold on Palm Beach. Even 2 or 3 homes sold for $15+ mil are going to really throw the numbers off when pooled in with only 741 sales. I disagree with the assessment that homeowners are not dropping prices. I’ve posted before but I’ll post again for my neighborhood.
2005: $350K
2006: $275K (depends on the sale but probably a more accurate average than what I said before)
2007: $235K (again probably a little more accurate)
median prices don’t get thrown off by the sale of 2 or 3 high priced homes.
“median prices don’t get thrown off by the sale of 2 or 3 high priced homes.”
Are you in the real estate business? A single $15 million home is the same as 50 $300K homes. Have you lost your mind? There were only 741 homes sold in Palm Beach County last month!
Median…the point at which half sell for more and half sell for less.
“Median…the point at which half sell for more and half sell for less.”
And when the vultures start using average instead of Median…that’s when we’ll really have to start to wonder.
dont matter. the more they wait the longer the fall. i only look at a few numbers, like inventory! you cant hide the amount of product that is out there and of course, you cant force people to buy!
good luck and good night!
The mansions sold on Palm Beach will affect the MEAN price rather than the median.
MEAN = average
MEDIAN = if you listed all the selling prices in numerical order, it’s the one in the middle.
Still amazing to me that PBC’s median has been stubbornly high while sales fall off a cliff and inventory sky rockets. I have seen many houses on my block in the El Cid area that have been up for sale well over a year now.
Miami median is 6% up yoy, over 400k for the first time, I think.
The prices are stubborbnly high, and this drives me (a sideline buyer) nuts.
“When you see the inventory dropping four or five months in a row, we’ll be out of the woods. Right now, we’re still in the woods…”
Somebody wake me when this happens — I’m going to take a nap for a few years.
How much is the Florida fall off affecting pocketbooks in other parts of the country?
I know that people in DC and NYC and Boston were rushing down there a few years ago and buying up vacation/rental property, whatever they could get there hands on. Will the destruction of capital have an affect on the market in the NE?
In my neighborhood (Rockville, MD) , the last house sold just set a new price record for the development. Prices have remained fairly steady for houses that are close to DC, the subway stations, and price under $900,000.
gov workers can bet all-they never lose their jobs
A new price record? You must mean to the downside? DC is holding up better than a lot of other bubble markets, sure. It’s only a matter of time.
Did you see the Forbes piece, a few weeks back, that put us as the most overvalued metro area on the east coast, second only to Miami? Look out below….
I couldn’t resist - Zip Realty is showing 200 listings in zip code 20850, the zip that Rockville Town Hall is located in.
Of those 200 listings, 96 are marked “Price Reduced.” Now there’s a bull market for you, with the metro rail riding right underneath.
Liar.
Our friends in 20853 have dropped their price 12% in less than 2 months on the market. They have lookers but no offers. They figure their asking price is almost 20% below what they could have gotten early last year.
Sold my place in Loudoun a month ago for about 85% of what a neighbor got 12 months earlier, and about 80% of the summer 05 peak.
No big deal to me: when I bought the place, I expected it to appreciate with inflation, and never in my wildest dreams did I expect the price to nearly double in 3 years. Now I’m renting, and my profits are invested in Tbills.
Did the same. Sold at year end 2005 in Loudoun at about 10% off of the peak (was eager to sell). Went to contract about 50 days after listing. Asking prices on realtor.com support your price conclusion of about 20% below the peak. I left the DC area and now rent with house proceeds invested in T-Bills (a six month ladder to give me monthly income). Might switch to brokered, insured CDs when troubled banks start paying big premiums. Won’t consider buying until 2009 and it will be all cash.
I live in 20852 which is totally different than 20850. Check out what is available for under $1,000,000 that is halfway decent. You won’t find much. The averge condo in this zip cope is over $500,000.
“I live in 20852 which is totally different than 20850.”
Bwahahah…
Mike,
What is the name of the development where this new price record ocurred?
The development is North Farm and is in zip code 20852. People want to live in this neighborhood. The schools are excellent, you can be in DC in thirty five minutes via car, three subway stops are nearby and is located with easy access to the interstate. The last two houses sold without ever holding an open house. Put on the market on a Tuesday, under contract by Thursday. I believe the reason is that the houses are priced between $760,000 and $830,000 and if you look in you can’t find much in that price range in the 20852 zip code which is North Bethesda/Rockville.
Ah, so “it’s different here“.
Check out zip code 20852 over $600,000 the cheapest single family home listed is $689,000, $699,000, $788,000, and $819,000. Those are the only SFH listed between $600,000 and $900,000. I not saying it is different it is just a neighborhood where people want to live with very good schools and is near metro.
“I not saying it is different it is just a neighborhood where…”
Um, look, don’t take this the wrong way, nothing personal, but yes, actually you are saying it’s different - that’s exactly what you just said. Again, nothing personal obviously, best of luck to you.
Didn’t MD lag NoVA in the run-up? If so, it would make sense that it would lag on the way down. I would also expect closer-in neighborhoods to lags the suburbs, and the suburbs to lag the exurbs.
For example, right now Mannassas and Prince William are getting creamed. Folks in Alexandria can sit there smugly noting that Alexandria prices didn’t drop, but eventually their time will come, and the price declines inside the beltway will match the declines farther out.
http://www.itulip.com/housingpriceregionscascade.htm
I can’t speak to your particular zip code, but with a few isolated hold outs that might be truly FBs who can’t bend or the truly wealthy who don’t need to sell at all, there have been drops of 2 to 20% all over the metro area.
The classic example of Rockville RE problems is Rockville town square… it sold so poorly they had to turn half the development into low income housing… I can only just imagine how pissed off I’d be if I paid $700K for a new 2 bed condo in one building and then having the development (funded in part by state, county, and city funds) end up allowing someone to rent the exact same model in the next building over for $300-$600 a month… subsidized again by me the taxpayer.
Prices are on a very slow decline, but anyone looking over the past 6 months or more would notice a lot houses that would have been listed at $510 are down to around $450 … houses that would have been listed around $450K now listed around $399. There are still almost no SFH for less than $399, but that will change by the time September rolls around and the summer housing market drys up even more.
Sellers will remain irrational longer than they can remain solvent. How much longer can they remain solvent? That is the question.
“Sellers will remain irrational longer than they can remain solvent. How much longer can they remain solvent? That is the question.”
That’s a very good point and question. When we bought our house the bank was knocking at the door. Sellers had 2 mortgages for a year before they got 90 days behind and the bank wanted their money. House was listed well over $300K until the bank started to forclose. Then all of a sudden it went down to $230K and they took $221K (even though the real estate agent said they could go no lower than asking).
Interesting that prices are dropping at abacoa, what with scripps going up there.
Scripps is going to add jobs very, very slowly over a 10 year period. It will not be the boom they said it would be.
I’m glad they didn’t develop Mecca Farms. No reason to develop in the middle of nowhere especially with the overdevelopment already present in PBC.
I have to give the Ormond Beach homeowner kudos for at least doing something positive to try to stimulate interest in her listing.
Good for her for not just sitting around whining / my sincere compliments to her & anyone else trying to help themsleves in a sensible manner, and not playing the ” poor-me blame-game ” !
I saw a poll in Yahoo/Finance today and concluded that about 12% of the US population consists of RE agents and fools. The poll results are given below:
Home sales prices have skidded for ten consecutive months. Will they fall again in June?
Yes 89%
No 12%
35183 Votes to date
“‘If I lowered the price to $525,000 or $550,000, I still don’t think I’d be able to sell it,’ Weam said. ‘And if I am willing to rent it for $2,200 a month, why would somebody want to buy it?”
Bingo. Here’s one FB who has finally figured out the purchase/rent ratio doesn’t “pencil out” in this market. Even factoring in the tax break, it is still more expensive to own. And all that interest money is down the toilet when the asset is depreciating.
Now, we just need a few more like him to wrap their heads around this.
He owes less than $300K on it, but he won’t test his theory of “what the market will bear” by lowering the price to $525K or $550K. Why? Because he bought it for $650K and can’t stand to finalize his losses.
Lose a little now, or lose a lot later. He is losing more by hanging onto it, for all the reasons people above have posted.
Ditch your dogs, is what I always say! The peace of mind alone is worth it.
Look at Jubak’s article today, on the bond market:
‘Can bond market stand to be exposed?’
http://articles.moneycentral.msn.com/Investing/JubaksJournal/CanBondMarketStandToBeExposed.aspx?page=2
this is on MSN Money, even, and they are normally the sweetest of candyasses.
The tide’s going out. Looks like there are a lot more naked swimmers than expected.
‘And if I am willing to rent it for $2,200 a month, why would somebody want to buy it? It is a lose-lose for me.’”
It was a lose-lose for you the minute you bought it.
Ben,
Has taken me a bit to figure this out. I’m simply trying to say thanks for a great blog! The blog and the always interesting people and their comments are useful as well frequently quite intertaining.
I like the Adams Family reference. The Rolling Stones sum it up very well too:
Take me down little susie, take me down
I know you think youre the queen of the underground
And you can send me dead flowers every morning
Send me dead flowers by the us mail
Say it with dead flowers at my wedding
And I wont forget to put roses on your grave
No I wont forget to put roses on your grave
The good news (for buyers, anyway): Prices are falling, too, though not as quickly.” Carlos Fuentes, president of Greater Tampa Association of Realtors, didn’t seem alarmed by the sales decline.
Hey Carlos Fuentes, if your not alarmed by the sales decline, your members are alarmed! Your members are the ones stuck holding the properties they thought they could flip. From a prospective buyer standpoint it is not good news. The good news will come when the listings from your members lower prices by a minimum of 23.2 percent in the Tampa Bay area. That will certainly bring good news for everyone because prices will now be more inline with incomes. Without the declines in home values, things will get much worse than the current situation. The Tampa Bay area is not the next California simply because it does not have enough of the high paying jobs to support the large increases in home values. What is looking attractive and good news to to me Carlos is the low cost of housing in Atlanta as compared to Tampa Bay…….. Get my message Mr. Fuentes?
I just read something this morning on TBO.com that Tampa was the worst city in the country for young professionals because of the low pay, high cost of living problem. I can’t imagine what people who make the median household income here do to get by.
Did you notice, also, that the Case-Schiller #4 city for price declines YOY is Tampa - 5.5%. Tampa also had the 3rd greatest month to month decline of the 20 cities listed.
Crash and burn, baby. Crash and burn.
Why do the people here (Tampa) have an inferiority complex? We are constantly compared to Atlanta. Truth is, we have minimal good jobs unless you want to work at a call center, the housing is way overpriced, even up in wanna-be-mcmansion-ville Wesley Chapel, and the education system here is nothing to be proud of. We have a dearth of local college graduates, and those from here want to go elsewhere. Many of the younger people move here a couple years then go on to bigger and greener pastures once they reach their glass ceiling.
But you know what, I like it here. I like the weather, the small town feel, and driving home in the summer night over the bridge.
In short, the high housing prices are not good for the local economy. It drives people away, ironically the same people that we need here to build the economy and create jobs. It’s not farfetched to believe that if housing prices continued to climb, the only people left here would be McDonalds’ workers and rich retirees.
It is a lose-lose for me.’”
That’s right you dopey flipper.
“‘If you could buy a new home or an existing home for the same price, which would you buy?’ said Mike Morgan of Morgan Florida Real Estate Group.”
How about a new one at a much lower price ? Mikey
Existing home sellers better get off the the bottle.
Hello All,
Just throwing this out there. A big collapse in the bee population is going on. It might cause widespread crop failures. I think there will be a huge boom in futures prices for ag products. Not sure if this is a US phenomena or a world wide.
Anyhow, if the markets are retreating on real estate and dollar goes down along with an actual food shortage… Wow big boom in futures on the exchange.
Just thinking about it.
Tinfoil hat time. Agribusiness/chemtrails/bees. Hmmm….
My tomatoes are doing really lousy this year. No bees.
No tinfoil hat just a natural phenomena that has all the scientists confused. It will have some profound effects on crops that use honeybees for fertilization. It was on nightline.
Its just like the price effect on corn from the ethanol inititive that bush put out there. Thought the policy is dumb it had a pretty pronounced effect on prices.
I’m just going to gamble a little bit on some price runups while sticking a few extra pounds of beans/rice/flour exc into the cabinets.
This is actually a really big distrubing peice of news.
It’s worldwide. The Europeans are having problems too. Nobody knows what is causing it, but there has been a mass die-off of honeybees since last summer. Do a google search on colony collapse
we’re having some of the same in w. colo- nobody knows why, but it’s not tinfoil hat at all. very concerning.
I wrote before that the bees are being raptured. And the evangelicals thought it would be them! Bwaaahaahaaahaaaa!!!
Just a local observation in Southern Oregon: No bees, no butterfly s very few hummingbirds, and very few flying insects of any kind or insect eating birds. Also fewer bats and lizards (although my cat kills lizards, but at least she eats them (ugh).)
The median sales price declined 16 percent …yeah right. just subtract another 30% + and maybe some rationality is back into the market.
“Market conditions are tipping the balance toward renting instead of buying for many would-be home buyers, Gainesville housing observers say.
“Tipping” It is flipped over already in last several years. What stupid talk.
I think it is wonderful. The people moving from the north, and the greedy developers need a lesson.
I left Florida 8 years ago because I could no longer be witness to the destruction of paradese.
May the developers go bankrupt, and the people who ruined Florida, go back where they came from.
CharlyD