Guess What? It’s Become A Renters’ Market In Florida
WESH reports from Florida. “Orlando is becoming one of the most difficult cities in America to sell a home for fair-market value, WESH 2 News reported. A new study shows Orlando-area homeowners more than a 50 percent chance of lower home values by mid-2009.”
“Tawn Kelley helps people get loans to buy Morrison homes. She said that like every builder trying to sell their developments, the shrinking values in the housing market as well as the glut of homes for sale has forced them to play by new rules.”
“‘A customer would come in and talk about…purchasing something that was going to built specifically for them eight, nine or 10 months from now,’ Kelley said. ‘It is now inventory that is selling.’”
“Even with houses for sale all around him, James Phillips said he will only let serious buyers inside his front door because he’s in no hurry to sell. ‘I’m not really desperate to sell,’ Phillips said. ‘I know the value of my house, so I just have to wait it out.’”
The Ledger. “Polk County builders pulled 321 home permits last month, a 44 percent decline from the June 2006 total of 571. It is a story home builders are getting used to, an overabundance of new home inventory has the market at a near standstill.”
“‘We still have a lot of entry-level houses on the market,’ said Bill Cook, president of Cook Construction in Winter Haven. ‘Until those get cleared off, it’s going to be slow.’”
“Many Polk cities had their totals take a plunge in June. Auburndale, Bartow, Haines City, Lake Alfred and Winter Haven continue to be affected by Central Florida’s sluggish housing market.”
From Bay News 9. “The number of foreclosed homes in Pasco County has jumped in the last year. ‘Unfortunately, a lot of people have adjustable rates and can’t afford the insurance,’ said Pasco County community development director George Romagnoli.”
“Rosalyn Fenton from the Pasco County Clerk’s Office said last year about 10 foreclosures were processed per week, but now it’s about 40 per week. The number of actual cases where they did lose their property has jumped almost 200 percent.”
The Palm Beach Post. “Now that Palm Beach County’s boom-time home-sales market is settling down…guess what? It’s become a renters’ market, according to a report released Wednesday. While that’s good for renters, it isn’t welcome news to landlords or home sellers.”
“Home sellers competing for buyers in the county’s volatile market now have a glut of rental apartments to worry about, according to RealFacts.”
“The occupancy rate for (June) was 90.7 percent, down nearly 3 percent from a year ago. ‘I would anticipate that as long as occupancy stays in the lower 90s, there won’t be much rent growth - and maybe you’ll even see decreases,’ said Chris Bates, sales and marketing director for RealFacts.”
“‘In the MLS, the average days on market (to find a renter) is between 90 and 105 days,’ said Todd Breen, broker-president of an affiliate of Re/Max. ‘When you have days on market that are three months or longer, that’s extraordinary,’ he said.”
“Rental communities, like sellers of new homes, are offering ’so many concessions I can’t remember them all,’ Breen said.”
“‘One trend is emerging that I find very refreshing,’ he said. ‘After years of the mortgage market taking tenants away from our inventory by turning them into buyers, we’re now seeing prime tenants - good incomes and credentials - returning to the rental market vs. buying a house in a declining market.’”
From Business Week. “In Palm Beach…rents declined 0.5% in the second quarter. ‘In Florida, so many apartment buildings were converted to condos over the course of the housing boom that there’s now a large shadow inventory, or shadow market [of condos being rented out],’ says Sam Chandon, chief economist at Reis.”
“How long will renting remain a more appealing option than buying? ‘When negative news comes out, from a consumer’s point of view they just see ‘housing is bad,’ says NAR senior economist Lawrence Yun. ‘But that just doesn’t make sense in all markets. Eventually, renters will say, ‘I’m tired of putting my rental payment into some landlord’s pocket—I want to build equity.’”
The News Press. “Occupancy rates in Fort Myers’ big apartment complexes plunged 10.9 percent in the second quarter while rents edged up, according to a report.”
“Jim Garinger, a real estate agent who follows the multifamily market, said occupancy rates in the big complexes dropped because of competition from other sources, including the conversion of apartments to condominiums.”
“‘The amount of condo conversions that’s happened in the last two years has had a big impact,’ he said. ‘Those units were pulled off initially as condominiums but now we see them coming back on and being rented.’”
“‘That in combination with the regular condo products that were sold pre-construction and they were either sold to someone who’s renting them out or the developer decided to rent them,’ Garinger said.”
“‘Apartment complexes also are competing with single-family homes that were built by speculators who weren’t able to sell at a profit, Garinger said. ‘You can rent a single-family, three-bedroom home in south Lee County for $1,800 a month.’”
The Herald Tribune. “Although real estate auctions have become a more familiar phenomenon in Southwest Florida and the state as a whole with the cooling housing market, the region’s top brokerage, Michael Saunders & Co., fired off a sharp broadside against the practice in a recent advertising section.”
“Recently, real estate broker Sky Sotheby’s International and J.P. King Auction Co. sold more than $30 million of property, virtually in one afternoon, in front of a standing-room-only crowd at the Ritz-Carlton Sarasota.”
“But the Saunders ad poo-pooed ‘the well-publicized tent auction, held amid a party atmosphere and attended by fewer buyers than curious onlookers. We daresay that sellers who participated were in no mood to party at the end of the day.’”
“I attended that auction and did not see any sellers with twisted arms or guns to their heads. If a seller chooses to accept an immediate cash sale, it is a successful sale at the then-market price.”
“WESH reports from Florida. “Orlando is becoming one of the most difficult cities in America to sell a home for fair-market value, WESH 2 News reported.”
First line, they start in with the lies. No, you could probably sell it for fair market value, if you realize fair market value is 1998 prices.
It’s not difficult to sell ANYTHING at fair market value. It’s only difficult when you want to sell above that value.
I just can’t believe that none of the news journals in the area jump on them when they say something like that! But, as you mentioned Andy; nice way to start off the article. Begin with lies, end with lies, and fill the body with lies!
The “fair-market value” is no more (and no less) than what someone will pay you for it, today. Why is this concept so hard for the media to understand?
Because it violates the First Law of Ecodynamics, “Conservation of Equity”?
Good one… lol.
The Fair Market Value is the most probable price in terms of money which an asset should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
-Buyer and seller are typically motivated.
- Both parties are well informed or well advised, and each acting in what they consider their own best interest.
- A reasonable time is allowed for exposure in the open market.
- The price represents a normal consideration for the asset sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
Which certainly implies that while it might be possible to have a sale at below market value (seller in a hurry, needs the money fast) it is always just as easy to sell at fair market value, at least if we define “typicaly motivated” as “typical of the sellers in that particular market.”
What’s missing from the definition is the renumeration factor noted as the “cash or it’s equivalency” clause.
Equivalency usually meaning some form of lender participation, as it’s the rare individual who brings 100% cash
to a real estate closing.
So-muck with the “eqivalency” part, aka…nobody wants to lend or conditions become extreme. Next, stick a date of sale or transfer as a condition say, 30 days and now your talking “FAIR VALUE” which was a criteria set up by FIRREA during the Savings and Loan Crisis.
Or otherwords…
WHAT”S A HOUSE WORTH IF YOU GOTTA USE CASH TO BUY IT IN 30 DAYS?
Gulp…
hehehe…FEDS outta make all these fooks holdin’ CDO’s revaluate the physical assets behind the paper and use FAIR VALUE as the measuring stick.
Now we’re talking crash…
When I saw that quote about not being able to sell at fair market value, I thought that Ben must be paraphrasing, or maybe it was April 1. No news organization would print something that dumb. So I followed the link, and they really are that dumb!
Some good might come from it. There must be a fair number of intelligent viewers/readers who quickly grasp the incongruousness of the statement and among those there could be a fair number of wishful sellers.
The video at the link is a real tap dance. “…kind of a correction…” Right. Just keep telling yourself that and don’t forget to feed the ‘gator.
Yep, the opening line says it all. Fools - what you sell the house for IS the new fair market value. If that means the F’d Seller can’t now afford to buy any more Hummers, tough!
The statement would be logically accurate and make sense if we changed ‘fair’ to ‘unfair’ OR ‘above.’
“Orlando is becoming one of the most difficult cities in America to sell a home [above]-market value, WESH 2 News reported.”
I emailed the author of that “news” story with the correct defintion of “fair market value”. I doubt it’ll do any good, but we’ll see.
Dear Mr. Oliver,
I just read your article regarding the Orlando housing market (”Orlando Real Estate Is Risky Business”) and wanted to make one modest correction to this paragraph:
QUOTE:
“Orlando is becoming one of the most difficult cities in America to sell a home for fair-market value, WESH 2 News reported.”
ENDQUOTE
Actually, the “fair market value” of ANY asset, be it house, car, stocks, bonds, bullion, etc., can always be defined as “what a willing and able buyer will pay for it right now”. If the owner of a house finds s/he cannot sell a house at the desired asking price, then that asking price is clearly ABOVE the house’s current “fair market value”.
Economics 101 tells us that there is *always* a buyer for any asset when it is priced appropriately, and that seller’s desires/expectations/needs is simply not a factor in the market pricing process. However, many would-be home sellers today are under the (false) impression that they can continue to command 2005 or 2006 prices, when in fact this price peak is a quickly fading memory. In fact there is even a term for this phenomenon: it is called “mental accounting”.
An accurate re-phrasing of your paragraph would look something like this:
“Orlando is becoming one of the most difficult cities in America to sell a home for sellers’ unrealistic asking prices, WESH 2 News reported.”
Best regards,
(HARM)
I sent a similar email and received the following response:
“I agree with your definition. However, the term fair market value was in reference to the value relative to the high point of appreciation. That should have been made clearer. ”
In other words, I agree with your definition of fair-market value but I used the term to describe something completely different!
Crum — I sold an SUV last month and now realize I probably got way less than fair market value for it. What a fool I was. Next time, maybe I’ll ask a media guy what he thinks the asset is worth, so I don’t do something stupid again.
You’re probably lucky to be rid of it. Tomorrow in the bits bucket I will post my experience of visiting 441 and The Villages last weekend.
I don’t think I’ll get what I want for my truck, so I’ll just hold onto it and wait for the market to rebound and gas to be $1/gallon again
Moman — look forward to reading about that zoo on 441. BTW, I was being facetious. I was happy to take what the buyer offered and get into a smaller vehicle that costs a lot less to drive.
Fair market Value in Florida =(( ( Cost of Lot Bought by NewYork Speculator = 2002 Price X 10 ) + ((Cost of Material + Labor) )x 1.2 = Builder Profit from materials)) )x 1.5 = Builder Sale Price x 1.5 = Speculator Wishing 50% Profit = Fair Market Value
True dat! Price correctly and it most certainly will sell. You could still keep some of the funny money if you sell now and not wait till 2010
“Even with houses for sale all around him, James Phillips said he will only let serious buyers inside his front door because he’s in no hurry to sell. ‘I’m not really desperate to sell,’ Phillips said. ‘I know the value of my house, so I just have to wait it out.’”
Reminds me of the 47yo single-moms in short dresses, wrinkly knees, sagging boobs, and an ass that looks like two boneless turkey breat halves squashed together still out in clubs trying to snag a millionaire. LOL
‘I know the value of my house, so I just have to wait it out.’”
“And since I’m not desperate, I’m gonna watch that value go down while I wait.”
Please Please God. Just send me one of those idiots that listen to the NAR. If I wait long enough one will come.
We should all go to his mls and schedule an appointment to view his home. It would be fantastically funny to keep his delusion going by making him think that the market came back today….just for him.
Show up all at once and start haggling and outbidding each other then walk out. LOL Monty Python-ish.
We should all go to his mls and schedule an appointment to view his home. It would be fantastically funny to keep his delusion going by making him think that the market came back today….just for him.
mdmortgageguy…
ROTFL. But what would be even better is his face when he gets zero bids.
Anyone else think he won’t sell before 2017? Enjoy the home Jim P., you’re really going to get to know its value over the next decade.
Oh, we discussed yesterday when to buy. One addendum. I *know* that the time to buy won’t be until 12 to 18 months after rents start to go back up… So I’ll concede that the buying window could shift to the right quite a bit.
Got popcorn?
Neil
Maybe we should just mail HIM popcorn, he’s going to be waiting for awhile.
‘I know the value of my house, so I just have to wait it out.’”
Can someone down in FL flag this guys residence for future updates.
No need - we can go ahead and do it now…
9/2007 - lowers price by $3k. gets another visitor - no offer.
3/2008 - lowers price by $2k. still no visitors.
4/2008 - fires realtor. goes FSBO and raises price by $5k.
7/2008 - still no visitors.
12/2008 - got a visitor! no offer though.
2/2009 - got a low-ball offer. chased the idiot off with a shotgun.
5/2009 - lowers price by $2k.
8/2009 - lowers price by $2k.
1/2010 - new years resolution is to finally sell this damn house. lowers price by $5k. gets a couple of visitors, but no offers.
3/2010 - gets another visit from lowball-offer-guy, with the same offer. thinks in the back of his head maybe he should consider it, but says no and chases the guy off again.
8/2010 - goes driving around town looking for lowball-offer-guy’s car - hoping to maybe do some negotiating. can’t find him.
12/2010 - finds out the lowball-offer-guy bought another house. finds out his phone # and calls him up cussing him out. asks him if he has any relatives willing to make an offer. lowball-offer-guy laughs and hangs up.
1/2011 - vows to really get serious this time - lowers price by $10k and installs crown molding. gets some more visitors - and a good offer! however the buyer’s offer is contingent on his inheritance, and he’s not sure how long that’ll take. his dad’s been a little short of breath lately though - so it could be any time.
5/2011 - wonders how new-offer-guy’s dad is doing. hopes he’s got cancer. hasn’t heard from him though.
4/2015 - never heard back from new-offer-guy. guess his dad pulled through. lowers price another $10k. housing market’s looking better, so maybe it’ll work this time.
7/2015 - finally sells the house after the market has recovered, and inflation has reduced the real value of his home by 50%.
But dangit - he stuck to his principles!
Good thoughts, but you missed it here.
8/09 - house destroyed in Hurricane and insurance only offers to pay equal to 2001 price
8/09 - house destroyed in hurricane and insurance offers to pay 2001 price. Man goes ballistic and shoots up a WalMart
‘I know the value of my house, so I just have to wait it out.’
(cricket sounds)
“‘I know the value of my house, so I just have to wait it out.’”
It will be fun to continue to watch the downfall of blowhards like this.
“..he’s in no hurry to sell..”
then you’re not a seller, Mr. Phillips.. so shut yer yap.
Right. These “testing the water” types shouldn’t even be quoted. Who cares what a non-seller who has a house listed thinks?
Yea, some of the prices I see are “wishing” prices by sellers who have no need to sell and are just dreaming. My own parents said they will sell this house if some idiot offers way too much, but otherwise their house arent for sale.
So now a “serious buyer” = sucker/bag holder!?
That’s not a picture I want to visualize…
I’ve heard more than a few tell me they’re looking for the Sugar Daddy.
LOL. True, but the dedicated gold-diggers get boob jobs. Everything else is sagging, but those two mounds of plastic are firmly pointed at the heavens.
says NAR senior economist Lawrence Yun. ‘But that just doesn’t make sense in all markets. Eventually, renters will say, ‘I’m tired of putting my rental payment into some landlord’s pocket—I want to build equity.’”
Better yet, might as well throw that money away into the abyss. Instead of being able to walk away from a rental unit, you’re now stuck in a house that you have to pay to get out of. Sounds like a bad rental lease doens’t it Yun?
Ah but the will built equity. For the seller, the moment their check clears. Equity will subsequently be torn down.
I may not be “building equity”, but I’m saving a decent amount of money. Were I to buy at these prices I would A) wipe out that savings; B) no longer be able to save; and C) not be building any of this fantasy equity for years. Sure, if I stay there for a long, LONG time I’ll build equity, but at what cost in the present?
No thanks, I’ll wait it out.
Eastcoaster,
Exactly. I’m saving $2,500+ more a month renting than I would buying. Plus, I’m spending a bit more freely than I could after purchasing a home. For example, we’re looking for a new couch, matching chair, and coffee table. Our budget is $1,500 *more* than it would be if we were home debtors.
Three years of waiting will be about $100k of added savings. So again, no thanks. I can do math (unlike most Realtors ™ ). In a few years it will be time to buy. But not for years (note the plural).
And six more coworkers just up and left CA for TX… Hmmm…
Got popcorn?
Neil
What kind of furniture are you buying that costs that much?
Where are your coworkers going in TX?
Implosion:
We’re looking at nice leather furniture and good woodwork coffee tables. Classy stuff that can serve for decades.
Where in Texas? Almost everywhere. One to some small town to be with her brother. A pair to Houston. I think one each to Dallas and Austin… and one who just smirks.
Got popcorn?
Neil
I know lots of people leaving CA and FL to other states, including Texas where $150k gets you a nice huge new 2500 square feet 4-5 bedroom house. Hard to imagine it getting much cheaper. A house of that caliber in CA could cost around a million and even the rent would be a good $3000 a month. That $150k house in Texas is cheaper than even renting in CA so its a no brainer!
I got my eye on NW PA where $50k gets me a nice house. If prices drop enough, theres other states on my list pending big price drops.
I can do math (unlike most Realtors ™ ). In a few years it will be time to buy.
Neil: I have done exactly the same thing down here in Tampa Bay. The cost savings of renting versus owning a home was significant. I also purchased a Natuzzi leather sectional for $2,500 that was maked down 80% off retail due to lack of sales. If the NAR would simply tell the truth and drop the spin and cheerleading, they might regain the confidence of the consumer. The NAR needs to understand that consumers like you and I are doing the math and are not interested in hearing the spin and cheerleading to increase their members sales. The bottom line is housing must drop into the affordability range before the market will correct and the consumer will begin purchasing.
I too was struck by the Yun comment as worthy of great derision. My mortgage clientele are putting money in MY pocket, and I don’t have to do the work a landlord would do. Considering that Case-Shiller declined at an annual 5% rate in the past six months, the “building of equity” is certainly illusory for homeowners. Long-term owners who bought 10 years ago can weather the continuing decline, but I wonder if more of them will suddenly decide to try to cash out when they understand that the housing bust is not a short-term thing.
Eventually, renters will say, ‘I’m tired of putting my rental payment into some landlord’s pocket—I want to build equity.’
Eventually, ARMers will say, ‘I’m tired of putting my interest payment into some investors portfolio—I want to build my own portfolio.
JP,
Small correction. Eventually ARMers will get their bill and shout “F&*% me! I hosed.” Its happening and will accelerate next year.
Got popcorn?
Neil
Eventually, renters will say, ‘I’m tired of putting my rental payment into some landlord’s pocket—I want to build equity.’
Speculators and Flippers are saying I am tired of holding a declining asset and are walking away! It’s hard to build equity in a declining asset and in a market that is years away from corrrection. Look at what happened to the Nasdaq when it fell from a high of 5300 and as of today it is 2723.43. That is what is going to happen to the housing market in areas of high speculation.
‘But that just doesn’t make sense in all markets. Eventually, renters will say, ‘I’m tired of putting my rental payment into some landlord’s pocket—I want to build equity.’”
You all just don’t understand he ment to say lose equity- the down payment he must now make to buy
palm beach county is going to explode. i just took a drive down congress in boynton. that monster across from the mall alone will create shockwaves for years.
(there is this new develop on 441 near boynton beach. massive amount of mcmansions.)
when i drive around south florida, it is totally amazing. there is alot of people losing alot of money these days.
I live there and am seeing the same story. However im still leaving cause FL sucks
No, renters have something better than Mr. Yun’s phantom equity. They have CA$H that was not spent on mortgage payments. You can’t spend equity, you can only borrow against it, and those lending expect to be paid back.
What the REIC types assume that if I can afford to spend $2,000 a month on housing, I’m going to rent a modern penthouse or buy a prewar sh!thole? Those aren’t the only alternatives. I can rent the sh!thole, or maybe something a little nicer but still less than the penthouse, and keep/save/invest the difference (see CA$H, above). Yun will have you believe that renters are blowing the difference on hookers and coke.
I wonder if Yun would like to comment on how his sacred 6% commission comes right the top of that “equity”. I’ve seen several transactions lately where the realtor netted way more than the homeowner.
“‘I’m tired of putting my rental payment into some landlord’s pocket—I want to build equity.”
You mean the equity that is in my investment account that increases $2000 a month…EXACTLY the monthly amount that I save renting vs. buying the exact same house (taking taxes, gardener, etc. into account)?
At least in my case, why would I want to throw my money away ($2000 a month!) on mortgage interest and (phantom) equity?
DL was dumb. LY is dumberer. What a team!
The News Press. “Occupancy rates in Fort Myers’ big apartment complexes plunged 10.9 percent in the second quarter while rents edged up, according to a report.”
Considering someone here on another thread said that below 90% occupancy is panic time, well, we know that the original occupancy wasn’t 100%, so I’d guess it’s now below 90% with a 10+% drop. Looks like it’s already panic time, and this hasn’t even started yet, 2nd inning.
Is below 90% “panic time?” The reason I ask is that my complex is at 90% occupancy.
And this is just the 2nd inning. The home team is at bat… with broom sticks (they just cannot hit the dang ball…).
Got popcorn?
Neil
I’m the one who brought up 90% as the panic point, and here is why without a lot of detail. A typical healthy apartment complex in Florida has about a 5-7% profit margin at a 90-95% occupancy rate (if it has a mortgage, which the vast majority do). When the occupancy rate drops to 90%, the profit margin usually hits 0% and the complex starts taking a loss. Example: In the late 1980’s the occupancy rate in Jacksonville dropped to 88% due to overbuilding and remained there for several years. MANY property management companies went out of business. They could not rent, they could not sell, they were stuck. If this is the case for Fort Myers, then they are in a lot of trouble.
David — nice short course in apartment math. Thanks.
If you’ve met Michael Saunders, you’d know that she makes Leona Helmsley look like Mother Theresa.
So Michael is a she?
And what about “Tawn”-
“Tawn Kelley helps people get loans to buy Morrison homes.
Who would name their daughter Tawn? They must have some potent goofy-making drugs in the maternity ward.
Yes, Michael is a 70-something beast of a woman. Pure evil.
I don’t know about Tawn. Never met them.
sounds like they were hoping for a kitten but had a girl..
…or a hooker.
hilarious!
“Although real estate auctions have become a more familiar phenomenon in Southwest Florida and the state as a whole with the cooling housing market, the region’s top brokerage, Michael Saunders & Co., fired off a sharp broadside against the practice in a recent advertising section.”
Michael Saunders, who several months ago during a local housing summit said: “There will never be affordable housing around here so let’s just stop talking about it.”
Yes, she says Florida is paradise. Then why is everyone leaving the state in droves?
I wonder if anyone has done any Uhaul indexes lately. I wonder how out of whack they are.
“There will never be affordable housing around here so let’s just stop talking about it.”
‘Shut up’ she explained.
“There will never be affordable housing around here so let’s just stop talking about it.”
It’s statements like this that will give rise to class war fare in this country. IF 90% of the people in this country can pull their head’s out of their a$$ and take a critical look at what is going on in this country, the 10% better watch out.
“IF 90% of the people in this country can pull their head’s out of their a$$ and take a critical look at what is going on in this country, the 10% better watch out.”
YES!! But that’s where I get depressed because when I look around I see very few who I think are capable of pulling their head out and start thinking independently. Let alone acting on it.
Why would Americans pull their heads out of their asses? It is nice and warm there.
Unfortunately, it is more like 99% and 1%.
Is she insane?!
What real estate agent would PROUDLY declare that there will NEVER be affordable housing in a given area?! Okay, so what then? We’re all supposed to believe that absurd statement and then go buy a house we can’t afford? Or, we could just watch the continuing trends prove her wrong - or just move someplace where people are less proud of taking advantage of others! I hope she ends up in a negative amortization option ARM for a cardboard box under a bridge before this is all over!
“Although real estate auctions have become a more familiar phenomenon in Southwest Florida and the state as a whole with the cooling housing market, the region’s top brokerage, Michael Saunders & Co., fired off a sharp broadside against the practice in a recent advertising section.”
If he was the owner of these properties and could not sell them via brokers like himself, I am certain he would be selling the properties at the auction in order to dump the declining assets.
OT, but has anyone noticed anything funny in their stocks? Like a stock being down for one day, yet the next day before opening it shows the stock as being up for the previous day?
You might want to check if your stock is being traded “after-hours”.
‘I’m not really desperate to sell,’ Phillips said. ‘I know the value of my house, so I just have to wait it out.’
Well, at least he THINKS he knows the value of his house. Perception always lags behind reality. This is even more true in markets where there is mass participation, market information is fragmented and often outdated and the average participant is poorly informed - like RE.
I think he’s mistaking value and price. He may know the value of his house, but he seems to be a bit off on price.
In Florida desprate sellers are the only kind that there is. The non-desprate are simply LISTERS.
With rents going down there will be even less incentive to buy. This will make home prices go down further which will of course make buyers even more unwilling to buy.
Maybe those homeowners in Orlando are also waiting for their NASDAQ stocks purchased in 1999 and 2000 to also reach fair market value again.
“Even with houses for sale all around him, James Phillips said he will only let serious buyers inside his front door because he’s in no hurry to sell. ‘I’m not really desperate to sell,’ Phillips said. ‘I know the value of my house, so I just have to wait it out.’”
Which isn’t what it was last year, and won’t be what it is next year as the price continues to drop. Do you think James Phillips knows this?
Mr. Phillips reminds me of Mickey Rourke crying at the end of Angel Heart: “I know who I am!”. Heh.
How do you tell a serious buyer from non-serious? Is there a secret handshake? Do they have to buy a ticket?
he will only let serious buyers inside his front door because he’s in no hurry to sell.
With prices falling, I am in no hurry to buy
“‘Apartment complexes also are competing with single-family homes that were built by speculators who weren’t able to sell at a profit, Garinger said. ‘You can rent a single-family, three-bedroom home in south Lee County for $1,800 a month.’”
Hilarious. What is this guy smoking? You can rent the same thing for as low as $800 or $900. I’m renting a SFDU, 3bdr, 2bath, den, garage, pool, 1900 sq. ft. with a pool for $1,200.
Wishing prices on Craig’s List don’t equal market rents. I see that crap all the time here in San Diego. It’s mostly flippers asking ridiculous rents but I think some of your long time owners check Craig’s List and think those sky high wishing prices are actually market value. Idiots, it’s not how much a month, it’s how much rent you collect in a year. There’s a flipper owned house in our neighborhood that has been for rent for well over a year now.
Same thing here. In my small town a modular bought at peak for 240K was orig. listed at $1200/m. - then $1100 - then $950 - now $895. Will be one year this Sept. Oh, the joys of ownership.
It’s empty SFDU city down here, it’s really as bad as they say. You can just walk down the street and pick the house you want to rent. Signs say “For Sale, or Rent, or…ANYTHING, PLEASE JUST HELP US!!!” Laugh in their faces if they’re like this knuclehead with his $1,800 business and go next door. They’ll be some desperate FB dancing for joy when they see you coming.
Ayuh, I rented a 1600 3/2 in the Cape for $950 last October from a property management company. Now I’m seeing their listings hovering around $800. Time to negotiate when the lease is up.
I can’t wait to see what the going rate will be when come the August reset.
“How long will renting remain a more appealing option than buying? ‘When negative news comes out, from a consumer’s point of view they just see ‘housing is bad,’ says NAR senior economist Lawrence Yun. ‘But that just doesn’t make sense in all markets. Eventually, renters will say, ‘I’m tired of them.putting my rental payment into some landlord’s pocket—I want to build equity.’”
I think Lawrence Yun answered his own question. Real estate buyers want to build equity, not lose it over the life of their mortgage. At current prices, that is just not likely short term or long term. So they are putting off purchasing a home or forming a family until the market price breaks significantly. The consumer is being very rational. Sadly, the banks were allowing people to spend money that wasn’t really theirs and they got us into this mess.
I’m tired of throwing my money away on 6% commissions. At least a landlord fixes stuff when it breaks and has put his own money on the line to provide someone a place to live.
In a financial affidavit, he said he earned $25,000 monthly.
http://www.sptimes.com/2007/07/17/Hillsborough/Doctor_dead_in_possib.shtml
As a highly paid anesthesiologist, Socrates Francis had all the symbols of success, including several homes and a Hummer.
He purchased a 2,700-square-foot home in Valrico for $208,300 in 2000. Amid the booming real estate market of 2005, he bought two more parcels in a gated, 32-home Brandon subdivision called the Vineyard and paid more than $1-million to build two houses on Vintage Way.
Then the market slowed.
“I knew he was having some financial difficulties,” said Steve Bristol, a real estate agent who sold Francis and his wife the Valrico home where they lived for seven years.
Recently, Bristol said, the couple moved to one of the Vineyard homes. They put the Valrico house up for sale, then took it off the market and decided to refinance, Bristol said. Francis was found in the second Vineyard home, at 510 Vintage Way.
Records show that over the past six years, he took out nearly $2-million in mortgages on the three homes. But none of the lenders had initiated foreclosure proceedings.
Two steps up then three steps down. He ran out of steps.
“..Francis was scheduled to appear in court last week in a child support case involving his 13-year-old son.”
Hard to say what did it, but this guy likely had personal troubles that may have mattered more than money.. ya can’t buy happiness.
Socrates Francis had all the symbols of success, including several homes and a Hummer…
Then the market slowed.
“But honey, if we name him Socrates he’s BOUND to be a winner!”
You forgot to mention that he offed himself.
He’s not dead, he just gave himself enough anesthesia to knock him out until housing prices come back.
Wow. Is a structure that can be flattened in an instant by mother nature really worth busting your hump over to buy if the end result is depression so deep you commit suicide? This boom has been damaging on so many levels. And I think “we ain’t seen nothin’ yet.”
FB’s taking a bath on ‘rental condo conversions’ marketed as an investment through real estate investment clubs and ‘I wanna be Donald Trump’ seminars.
After 18 months and paying the original $156,000 purchase price - the HOA is $250,000 in the hole, units barely rent for $775 (lots of vacancies), taxes are $260 per month, HOA is $225 (not including the shortfall), and in some cases mortgages with interest of 10 to 15%.
Karma - the majority committed mortgage fraud by claiming the condos were “second homes.”
$130,900 1 Bed, 1 Bath
Type: Lender owned, Sold “as is”
710 EXECUTIVE CENTER Dr # 512
West Palm Beach, FL 33401
MLS ID# R2813673
$123,900 1 Bed, 1 Bath
710 EXECUTIVE CENTER Dr # 313
West Palm Beach, FL 33401
MLS ID# R2782087
**JUST REDUCED $30K**..LOWEST PRICE IN AREA.
Oh?
$109,000 1 Bed, 1 Bath
710 EXECUTIVE CENTER Dr # 11-38
West Palm Beach, FL 33401
MLS ID# R2817965
$89,000 1 Bed, 1 Bath
710 EXECUTIVE CENTER DR # 1-12
WEST PALM BEACH, FL 33401
MLS ID# R2812912
$89,000 1 Bed, 1 Bath
710 EXECUTIVE CENTER DR # 11-25
WEST PALM BEACH, FL 33401
MLS ID# R2812909
I thought you might keep going into the 70’s
Same type of thing on the MLS in Central Florida. Lots for sale , same Neighborhood. Price on one lot 80K , Next Door 20K. Owners are from all around the Globe and ” Haven’t got a Clue”
I see those sorts of pricing. Some of the sellers are just deluded and this holds true even in NW Pennsylvania when one seller correctly prices a 2000+ square feet house for $50k and another seller wants $75k for his dinky 1100 square foot house with a smaller lot! LOL! I checked Zillow and 2000 prices were only about 20% lower. So some of the houses ARE correctly priced, but others are wishful prices in an area that never saw much of a bubble.
Robert In Florida
“It’s statements like this that will give rise to class war fare in this country. IF 90% of the people in this country can pull their head’s out of their a$$ and take a critical look at what is going on in this country, the 10% better watch out … ”
Good statement Robert. Well said, but until the sheeple in the U.S. finally figure out that the system, good as it is, has been getting worse by those in power, they will never have the cajones to change anything.
The sheeple are still just too interested in every stupid detail of Britney Spears, American Idol, video games, cable tv, and other entertain me now drivel.
My wife is a prime example, bless her. She is unable to fathom anything outside of structured, do-what-I’m-told type of lifestyle. I have given up suggesting creative things to do. She just plants herself in front of the damm TV after her 9-5 job. All her friends are just like her.
Our kids watch so much effen TV that they know every commmercial, cartoon, etc by heart & constantly ask ” can we buy that ” ?
The balance between a lifestyle of ones own making & force-fed consumer directed lifestyle is slipping into the Matrix abyss.
People are just basically sheep that go where ordered. Anyone with half a brain thats gets it either self medicates or swallows a bullet.
example: what would happen to our justice system if everyone in court decided NOT to plea bargain at first appearance to a guilty plea in order for a light sentence?
There Is NO WAY the system could handle the load & would collapse under weight of litigants in 48hrs.
Thats a dirty little secret the powers thaty be want to keep hidden.
question: what would blood banks do without people donating FREE blood?
Well, what other industry ( beside thrift stores ) gets the supply for free then marks it up 5000% ? Price a whole unit of blood lately at the hospital?
Of course the industry fights to keep from paying cash to donors, claiming it would open a horror market of body parts but still … all the civic duty ads to donate blood just disgust me, as the middle-men take a cut & jack up the price to insane levels.
Kinda like … I dunno … maybe … the HOUSING INDUSTRY !?
Another dirty little secret.
Anyone who uses their brain for more than calling to upgrade cable/cell phone/ordering pizza faces scorn & derision from the herd.
The people in this country have so much power, but like mel said in Braveheart, they are too apathetic to USE IT !!
WAKE UP for gods sake. WAKE THE HELL UP !!!!
You forgot to say ‘rant off’. Maybe you should consider staying away from sharp objects for an hour or two.
Other than those observations, nice post.
aqius, chill out.
This is a Housing Bubble blog, thanks to our freind Ben Jones.
I’d suggest another blog if you want to call for revolution. However, I do agreewith your point on apathy.
Some people may think that if the sleepy sheeple-majority wake up they will naturally support our “righteous” endeavors and share our “learned” opinions.. but I’d be cautious about that assumption .. and be careful what you wish for.
I agree, especially on the zombie part. It seems that the education system in our country is set up by the elites to indoctrinate and keep the status quo. Very little of value to real life is learned in school, to get an education you have to educate yourself. However this requires free thinking, something public schools do all in their power to stamp out.
I get tired dealing with people daily who can only see one way to do things, never educate themselves, and whine “no one taught me how to do that”.
Rant off.
“Our kids watch so much effen TV”
“Very little of value to real life is learned in school”
As I parent of three, I can tell you, it’s up to the parents…turn off the TV and talk to/teach your kids. Teach them after school. Teach them when you are out on a family outing or vacation. It is the PARENTS responsibility to teach and guide their kids, not the government’s (although, through indocrination and lazyness, many of us have forgotten this little fact). And either limit, or completely disconnect (at least for a little while) the TV, video games, whatever. Almost everything is bad in excess, limit how much time the kids get with tv/internet/video games.
lack of parental responsibility is a generational problem.. Someone has to teach and instill it before it can be applied.
Turn off the damn TV now or pay later. You’ll wish you’d had more “influence” in your own family when you realize your kids are part of the lost (and I ain’t talking like “lost” in Utah). Good post, Ben’s out looking at houses and didn’t notice how OT it is. LOL
dude.. this is way too deep for 9am.. mixing something extra with your coffee?
i completely agree, but for those who scratch the surface and see things for what they are, what’s the choice? a bunker in Montana?
i have pretty much come to the conclusion, that the best we can hope for is a gradual erosion of living standard till a significant minority wakes up and pushes for change. i believe that it only takes a dedicated minority to make change, if you get the majority involved than you get loped heads, mob justice and a sordid state of affairs. so personally, a zombie majority is fine by me. A drastic meltdown that jolts the >50% of the population out of a stupor doesn’t bode well for anyone. if things do get that bad - than there is always the bunker till things calm down.
got cash?
A Montana bunker? A little too survivalist for me. While I think this will be far worse than most, I’m just trying to save up to own my own small farm free and clear. I’ve already designed and will build my own house when the time comes. If things get as bad as I believe they will it could mean your life to be self sufficient (and yes, I already have a year’s supply of food stored and am completely debt free). If things don’t get bad, well I grew up on a farm and I want to grow old on one too.
Either way it’s good…..
I’ve always wondered. Does “survival” food have an expiration date? Do you continually eat the oldest stuff and buy “fresh” packages to replace it?
Bill — you’d be amazed how long that stuff can last, if it was made by the same companies that make military rations. Flavor-free, though. If I were into “survival food,” I’d buy MREs. They are much, much better than the C-rations I had to eat and pack a huge amount of calories into small packages. They even have little Tabasco sauce bottles.
It has a date stamped on the side and says it is good for 5 years from that date. (It was a gift.)
Simple - shoot your TV, save $50-100/month on the cable bill. Then disconnect the internet or limit access to 1 hour per day per kid, take the kids cells phones away, make them compete for the land line. Guess I’m old fashioned.
Well quite interesting reply to that little note. What I was getting at was that if their was any use of critical thinking the 90% would attend to thier best interests. However, they don’t know what those interests really are because they are listening to someone else telling them what they should be. Not looking for revolution via guns and bullets but a shifting of thinking toward the greatest good for the greatest number. Admittedly a difficult concept for the ME ME ME ME ME all about ME ME ME society that we live in.
Sell the TV.
Just sell it! Save $80 a month on the cable bill.
My dad did years ago.
We complained like hell for 48 hours!
Then we found something else to do.
Same here. We never had cable, just broadcast, and when we disobeyed the “PBS-only” rule or fought too much around the TV or just watched too much, it went into the attic.
We bitched and moaned but then found other activities, outdoors and in.
It’s disgusting how little kids play outside these days. Then again, who would blame the parents for keeping them in, when any little accident the kid gets into is considered negligence or child abuse.
I rode my bike around for hours without parental supervision … jeez.
“James Phillips said he will only let serious buyers inside his front door because he’s in no hurry to sell”
——————————————————————————-
That works out great since I am in no hurry to buy.
My friend had a home she owed about 300k on but it appraised at 800k. She did a refi at an ARM and pulled out the cash and bought rental properties. Her 800k prop is now worth less than she owes and so are all the other 5 properties she bought. Talk about trying to play the ponzi-scheme to becoming a millionaire and then watching the slow train wreck happen without being able to get off kinda sucks.
Ouch… nothing like pissing 500k into the wind. There is a BK with six properties on the market. I hope your friend is ok (if poorer).
Neil
“Orlando is becoming one of the most difficult cities in America to sell a home for fair-market value, WESH 2 News reported. A new study shows Orlando-area homeowners more than a 50 percent chance of lower home values by mid-2009.”
Unbe-flippin-lievable! The price a house sells at is fair market value (or more!) by definition.
IT’s more than FMV when people with nothing to lose are given mortages they can’t afford. Then prices can actually exceed FMV. But a house will never sell BELOW fair market value. DUH!
Fair Market Value: Price at which an asset or service passes from a willing seller to a willing buyer. It is assumed that both buyer and seller are rational and have a reasonable knowledge of relevant facts.
By this definition, there hasn’t been a fair market value on any house in the past 5 or so years IMO. I believe there were a lot of irrational and impulsive purchases. Also, if most of the people out there thought like the HBB bloggers, they would have had a “knowledge of relevant facts” and would have opted out of the madness.
Comment by AndyInJersey
2007-07-19 07:21:05
“ Reminds me of the 47yo single-moms in short dresses, wrinkly knees, sagging boobs, and an ass that looks like two boneless turkey breast halves squashed together still out in clubs trying to snag a millionaire.”
You’ve just described my dream woman.
Oh the humanity!
Got a million dollars. Otherwise forget it pal, she’s not yours for the taking. Better try the overpriced house skippy has for sale. LOL
“Even with houses for sale all around him, James Phillips said he will only let serious buyers inside his front door because he’s in no hurry to sell. ‘I’m not really desperate to sell,’ Phillips said. ‘I know the value of my house, so I just have to wait it out.’”
Phillips said I like catching falling knifes and losing money!
More on “a renter’s market”, from Los Angeles:
LA TImes
Housing skid beginning to affect Southland rents
Southland landlords see occupancy rates slip as more apartments and vacant houses come on the market.
http://www.latimes.com/business/la-fi-rents19jul19,1,912862.story?coll=la-headlines-business&ctrack=2&cset=true
“But now as the housing market is starting to temper — and home prices in some neighborhoods are declining — landlords’ ability to push up rents could be curtailed.”
We haven’t raised the rent on one of our rentals in, what, 2 1/2 years…we like our tenant and want to keep her. There is just too much competition out there for *good* tenants.
I should think that a lot of people in FL should be rejoicing that rents are dropping. Just last year we were reading about how law enforcement, fire, and teachers couldn’t find anything affordable to live in. Problem solved! But guess what? With people moving you won’t need all them thar teachers and perhaps not need to increase fire and police staffing and maybe even lower starting wages.
“How long will renting remain a more appealing option than buying? ‘When negative news comes out, from a consumer’s point of view they just see ‘housing is bad,’ says NAR senior economist Lawrence Yun. ‘But that just doesn’t make sense in all markets. Eventually, renters will say, ‘I’m tired of putting my rental payment into some landlord’s pocket—I want to build equity.’”
Lawrence Yun, the real reason consumers are not buying is affordability!! The other reason is consumers are no longer listening to you and the NAR because you lack credibility. The negative news the public is hearing is true information and not the spin and information that lacks credibility put out by the RE spinners.
BIG drexel heritage furniture store that the JUST BUILT in Sarasota is going out of buisness
drip drip drip
You are profoundly mistaken. The carnage is all contained to a tiny, tincy, itsy bit of the subprime housing market
Fink and other Palm Beach County-er’s
Do you think a 3bed,2bath is achievable in PBG, Jupiter, Abacoa area for $1300? Or is that too low? Where would I look — not having much luck in Craiglist or PbPost.
if you are in pbc, i would look around and try to negotiate. alot of people are clearly in denial here. if they dont want to negotiate, just wait till after hurricane season (actually december). taxes and insurance bills will be coming in. that will start changing peoples mind.
(state farm is going to drop 50,000 homes this year.)
Just saw the State Farm piece on TV news. Apparently the State plans to tap private insurance companies to make up any shortfalls, if Citizens can’t pay off. That should work for one year. Then who is going to insure in Florida? Although I’ve never thought it can’t get worse, I still am set back by the implications of such “positions.” Seems the only thing that might save insurance in Florida is a reversion to 1998 prices for houses.
News like this makes me feel that I am in the wrong state. Why even bother staying in FL? Save that $1300 a month and leave FL and get a house for $50k elsewhere!
http://www.sun-sentinel.com/business/sfl-flzcpi0719pnjul19,0,2004141.story
Shows the true story of Florida. It spreads way beyond the housing market and shows tax reforms proposed and currently in place are not going to make any kind of difference.
Another reason to leave FL(or at least move to north FL) I can’t even think of a good thing to say about south FL, why would anyone want to live there?
“Even with houses for sale all around him, James Phillips said he will only let serious buyers inside his front door because he’s in no hurry to sell. ‘I’m not really desperate to sell,’ Phillips said. ‘I know the value of my house, so I just have to wait it out.’”
Perhaps Mr Philips should watch the Bloomberg story on Miami condos at 6PM tonight. Maybe then he’ll get a clue about what’s going on in the housing market.