The 100-Year Flood
The Post & Courier reports from South Carolina. “Weeks before Dorothy O’Mara put her Mount Pleasant condominium up for sale, the unit next door found a buyer in a mere four days. More than a year later, O’Mara’s unit is still on the market. In the Montclair condo and townhouse development…one in every six properties is up for sale. While her two-bedroom, 2 1/2-bathroom end unit has one of the lowest price tags at $175,000, it has been a struggle to attract buyers.”
“‘It’s been kind of an impossible situation,’ said O’Mara.”
“The local market is full of units that are up for sale, nearly 2,000 in all, compared with less than 500 in a given month just two years ago, according to figures from the Charleston Trident Association of Realtors.”
“The upshot is that some condo sellers are cutting prices or offering incentives to lure buyers. Also, several new projects have been delayed, and plans to convert at least one apartment complex into condos have been scrapped.”
“In Mount Pleasant, conversions became a popular option because of a town regulation that limits the number of building permits. Developers continued to build new projects alongside thousands of single-family homes.”
“‘This was the 100-year flood,’ said Fudgy Brabham, broker-in-charge of Harbourtowne Real Estate.”
“Sellers such as O’Mara are shocked at how difficult it has been to find buyers. ‘Some of the neighbors have been forced into foreclosure, and it’s just been very sad,’ she said.”
The News Press from Florida. “Occupancy rates in Fort Myers’ big apartment complexes plunged 10.9 percent in the second quarter, according to RealFacts. Rental complexes with 100 or more units were at 87.6 percent occupancy, down 10.9 percent from a year earlier.”
“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,’ he said.”
The Herald Tribune. “Stacked-up listings and double-digit price declines, phenomena that have plagued the Southwest Florida residential real estate since mid-2005, have skewed the rules for getting divorced.”
“It is not hard to find divorce attorneys who will complain about the effect that the housing blues are having on business. ‘I had another one today with the same problem,’ said Lisa Kleinberg, a family attorney in Sarasota. ‘House on Siesta. And it has gone down from being worth about $1.2 million to being $900,000. They can’t get it sold.’”
“‘We used to rely on appraisals, but their value is questionable,” he said. “Regardless of what the appraisal is, the value of a property is only what someone is willing to pay for it. There are fewer buyers now,’ said Richard Perlman, a Longboat Key Realtor.”
From NBC 2 in Florida. “Foreclosures in Lee County continue to soar and realtors say the housing boom of the past few years is to blame. In June alone, Lee County reports show that there were 968 foreclosures. That’s up dramatically from numbers in June of 2004 when there were only 156 foreclosed homes.”
“As home prices drop, foreclosures are increasing and with last months numbers equaling more than half of 2004’s entire total, local investors try to remain hopeful.”
“‘There is now way you can have 10 different houses and if you paid $300,000-$400,000 for them 2 years ago, that that house or condo is going to sell,’ said realtor Fern Twenhafel.”
“‘It’s really sad, but there is not much we can do about it,’ said Twenhafel who added that she has a condo like that now, as well as other properties that she need to sell soon.”
The Times Union from Florida. “Jacksonville’s foreclosure epidemic is widespread among all neighborhoods and income groups. But in one community on the Northside, a battleground of owners, investors, and lenders is strewn with the casualties of a mortgage industry in turmoil.”
“In Lake Forest, the concentration is much greater, with some neighborhood blocks plagued with clusters of homes in default.”
“Realtor Peggie Wattron said she has about 90 foreclosure listings. She said she’s handled all types of crises in foreclosed homes, from homeowners who won’t leave until a policeman and cleanup crew literally kick them, and their belongings, out to the curb, to urban campers that break in and move into foreclosed homes.”
“Wattron says…that she’s hardened to sob stories given by former owners who claim not to have seen an eviction coming. ‘I’ve heard every story in the world. I literally go out to the house and put a note on the door, and then some act like they didn’t think it could happen. Most of the time I never get a message and no phone calls,’ she said.”
“‘A lot of people, who tend to have low incomes, have had bad experiences and are used to being told ‘no’ when it comes time to take out a mortgage. The ploy with some mortgage brokers is that they’ll say ‘yes’ to you, but they don’t give the details of what that ‘yes’ really means,’ said (mortgage broker) Jeff Lazerson.”
“Sometimes an event is so unusual it demands our attention. Levitt and Sons did just this, with a developer closeout auction of the town homes in Fort Myers…held on June 7.”
“Expectations of many, was that between the hope to buy below market, the expected high number of bidders and the excitement of an auction, final prices would end up being close to the original developer prices … but just the opposite happened! In fact, only 37 of the 53 offered actually sold at the auction, plus an additional five directly after. Those that did sell sold well below original developer prices.”
“The absolute highest price paid for the entire evening was the very first property. The hammer price was $225,000 (plus 10 percent). The next hammer price was $210,000, then $195,000, $185,000 and so on all the way down to $140,000. So went the evening as each new group of town homes opened for bidding, opened high then drifted down as successful bidders were removed from the pool of potential buyers.”
“This audience wasn’t going to get sucked into ‘auction fever.’ In fact, when the reserves were too high, no one bid, making for an unusual silence. I had the opinion…that Levitt and Sons management felt like ‘deer in headlights’ when this happened.”
“My hope is that as land prices, labor costs and some materials continue to correct, builders will be able to offer quality properties like those at San Simeon at these affordable auction prices. When they do, buyers will appear.”
“In response to a recent column about home auctions, Realtor and auctioneer Marsha Wolak wrote in to say she successfully closed 18 properties in an auction last spring and is preparing another ‘mega-auction’ for August.”
“‘One (home) in particular had been on the market for a year and a half with no offers,’ she wrote. ‘I commend the brokers, agents, sellers, buyers and media for recognizing the need for auctions in this marketplace.’”
“‘It is not fiction, it is a fact, that properties are selling at auction. I only wish that all auction companies operated ethically and morally when it comes to ‘absolute’ sales, shills and rigged bidding as well as excessive fees and commissions,’ Wolak said.”
“She said buyers are being taken advantage of and believe the home really is selling ‘absolute’ when it is not.”
“Wolak said she attended a multi-property auction recently in Estero, and even in the terms and conditions it stated: ‘XYZ Company may act to protect the seller’s reserve, as an agent of the seller, by bidding on behalf of the seller. The auctioneer has the right to reject or raise any bid which, in his opinion, is not commensurate with the value of the property being offered.’”
“Similar language exists in some auction listing agreements and does not appear in their terms and conditions, and virtually turns an auction ‘into a joke,’ she said.”
The Sun Sentinel from Florida. “In half of Broward’s cities, more people are leaving than moving in, census figures show. ‘We left because we tried for almost two years to find a house we could afford to buy, but we couldn’t,’ said Diana Fernandez, who moved from Pembroke Pines to North Carolina with her husband and two daughters in February.”
“They traded a rented townhouse for a new $200,000, four-bedroom home on a large lot about an hour from Charlotte.”
“Another indicator of a downturn in population is declining school enrollments. Broward’s public school population has dropped two years in a row, with about 10,000 fewer students enrolled during that time. District projections show enrollment continuing to drop until 2012.”
“The gap between what people earn and home prices, despite the real estate market’s downturn, is still too wide for some to afford a home, financial experts say. Generally, the purchase price of a house should not exceed three times the annual salary of the buyer, they say.”
“The median price of a single-family home in Broward is about $370,000, almost seven times higher than the median household income in Broward of $53,100, according to the U.S. Department of Housing and Urban Development.”
“Roy and Ruth Smith, of Coral Springs, have their home of eight years on the market for about $330,000. They are hoping to join relatives in Loganville, Ga., a suburb of Atlanta. ‘If I get my price here, I can buy a house up in Georgia and not have a mortgage payment,’ said Roy Smith, who is retired.”
“Fourteen other Broward cities saw declines ranging from two people in Southwest Ranches to 241 in Lauderhill. The others were: Cooper City, Dania Beach, Deerfield Beach, Hollywood, Lauderdale-by-the-Sea, Margate, North Lauderdale, Oakland Park, Plantation, Sea Ranch Lakes, Weston and West Park.”
“‘Those young families that used to come in larger numbers to South Florida now are saying, ‘Where am I going to be able to afford to live?’ said real estate analyst Brad Hunter of Metrostudy.”
“It is not hard to find divorce attorneys who will complain about the effect that the housing blues are having on business. ‘I had another one today with the same problem,’ said Lisa Kleinberg, a family attorney in Sarasota. ‘House on Siesta. And it has gone down from being worth about $1.2 million to being $900,000. They can’t get it sold.’”
Silver lining of the burst bubble: ‘Honey, I guess we will have to stay the course. We can’t afford to get divorced.’
BTW, the divorce rate was relatively low during the Great Depression, as households needed to stick together for economic survival purposes.
True, but in the 1930s there was more farmland per person in America. The economic survival was more likely if both spouses worked in the 1930s, but the male breadwinner was the likely scenario. I fit that model and am better off since I do not have a non-working wife anyway. If I have to work 60 hour weeks to survive (past my several years savings) I can. I’m used to working 60 hours per week.
Bill —
Your point is taken — the move from a primarily agrarian society to an urban society plus changes in the workforce which open doors to female employment have both acted to make it easier to survive after a divorce.
Nonetheless, I maintain that a first order effect of 25% drops in market value of $1m homes could be to increase the incentive for couples to ride out a bad marriage. Is the pleasure of never having to listen to my spouse complain again worth a $250K hit plus the anticipated costly expense of dividing the family into two separate domiciles?
Bill, you have it backwords. there was less farm land per farmer in the 1930’s. Even though todays total population is greater, there were a lot more farmers in the 1930’s, because farms were a lot smaller than they are now. Also farm equipment was smaller, and slower than equipment now. And far more labor intensive. Also farmers, had a 1930’s welfare program, the Agricultural Adjustment Act, paying not to plant their full acerages. Paying them not the work.
Duane, I referred to farm per person (US Citizen), not farm per farmer.
A similar program is still in full force (called CRP, Conservation Reserve Program) and pays many farmers to not plant.
I heard of this. What states have this? The conservation is supposed to preserve wild land from development. They pay around $30 annually per acre. I might consider this as a second income and to help pay my taxes
Oh please when is this going to hit NYC? I want to work 60 hours a week as a paralegal week foreclosures bankruptcies heck divorces
Its all good…..i need money, its been a rough few years. All i ever get as responses is: we just don’t need to hire anyone smart here, or we just have enough work for our own employees. Either way no openings.
when the rents drop
in queens after the 20% down payment the mortgage/co-op maintenance is still about the same as the rents in most areas/buildings
As a lifetime resident of NYC I have 2 things to say about NYC prices.
1) NYC prices have two different forces than the rest of America: Wall Street, and Europeans. Its possible (and it has happened many times) that America can be in a recession, and Wall Street bonuses can still be very strong. (ie: the 80’s). On top of that, we have an extremely low dollar (vs. the Euro) and that makes Manhattan and Brooklyn homes very tempting to Europeans. My neighborhood is currently filled with European buyers who are “thrilled” at these “cheap” prices.
2) People forget about the crime factor in NYC. Right now, and for the past decade, NYC has had one of the lowest crime rates in the country. The city is positively safe. Safer than many suburbs — which most people would probably assume are safer than the city. But crime won’t always be low in NYC. We will absolutely, at some point, have another massive crime wave. Poor people haven’t gone anywhere. The massive projects haven’t gone anywhere. Disparity hasn’t gone anywhere.
And with crime comes rapid declines in real estate prices. When people tell me “real estate always goes up” — I laugh at them and say “Really? How about Harlem? It used to be the nicest residential area in the city. Then prices plunged for the better part of a century. How about the fact that Brooklyn is now expensive? How exactly did it become cheap?”
The answer is that real estate dropped, single family homes turned into multi-family homes, poorer families moved in, schools went to shit and crime skyrocketed. The rest is history. And it happened FAST.
We might see Wall Street drop first. We might see crime go up first. But either way — NYC runs in cycles and has for 100’s of years. It’s not different now.
You could insert Miami into this paragraph. Wall Street = south beach, tourism, wealthy south Americans.
The forces in NYC are only minimally different than those in other places.
Miami sucks now, its crime infested. People are bailing out of this metro and its getting filled in with illegals who rent/buy cheap and live 10 people to the condo.
To those who live in NYC, go ahead and relocate where you can actually afford stuff! NYC is good for tourists, nothing more.
Excellent post, sohonyc.
What does that all translate into for the divorce attorney..
“No equity in home”=”No money to fight about so no fees for me”
Attorneys live to divide up the assets..1/3 for the wife, 1/3 for the husband, 1/3 for the attorney…well sorry bottom feeders..no food today or tomorrow..
I rather like this because lawyers must HATE this. Their 50% commissions for encouraging would-be divorcees to continue fighting ad infinitum continue to shrink. The longer they encourage the fighting, the smaller their commissions. Ha ha!
Good. Let the bastards and bastardesses suffer mightily. Lord knows they deserve to.
I know where you’re coming from, but I personally have been saved from my own stupidity more than once by good legal advice, esp. regarding real estate.
Don’t get me wrong - there’s definite good lawyers can do - covering their client’s behind before they sign on the dotted line (as you mentioned) is one of them.
That’s quite a bit different than the millions of lawyers who have no qualms about screwing people over as long as they make their money.
Everyone on this board likes to complain about/laugh at FBs, developers, realtors, flippers, etc. Where are all the comments about the LAWYERS who didn’t perform their duty throughout this obscene real estate run up?
There are tens of thousands of lawyers who should be splitting rocks right about now. Hell, it’d be the first time in the lives of many of them that they actually produced anything.
“Roy and Ruth Smith, of Coral Springs, have their home of eight years on the market for about $330,000. They are hoping to join relatives in Loganville, Ga., a suburb of Atlanta. ‘If I get my price here, I can buy a house up in Georgia and not have a mortgage payment,’ said Roy Smith, who is retired.”
This is why I will not buy a house until these types of people learn a simple lesson in economics.
I looked up Roy Smith’s property records. If I have the right person (only person named Roy Smith that purchased in Coral Springs)
He purchased his 1349 sq foot crap-shack built in 1978 on July 20, 1999 for 116,000
His property taxes are a whopping 1,963.
So the pig wants a 214,000 profit after owning for 8 years.
Ridiculous
That place should sell for 200K, and he should be happy to get that. That’s still almost 100% appreciation in 8 years. He is looking to get 200% appreciation on that property in 8 years, which, as you pointed out, is just being a pig.
He will get what he deserves (I hope), which certainly is not 300K.
I lived in Coral Springs.. and those people all think that there houses are worth so much money just cause they live there..I have someone I know who swore they lived in a million dollar home there.. yea during the boom..house is still on the market..be lucky to get 800.
Problem why people are not selling their home there is not only the insurance and taxes. It is that they don’t realize that “homes” several years ago that would have never been competition, are today. So a home that may have been 200K above your asking price is now in your asking price range. Until sellers in SFL realize that they will never get their home sold. Prices need to be reduced so that your home looks better than the level below you.
maybe the NAR was right???? It feels like I’m priced out forever…or at least the next 5 or more years….
God d***mn Free Loafer, ain’t it ?
SKB, what are you using to get the property records?
http://www.bcpa.net/RecInfo.asp?URL_Folio=484127035821
Thank you
That’s still $148 sq ft. Way overpriced, even at $200,000. Before the bubble most ordinary properties in FL were going for $75-$100 sq. ft. Even at $100 it’s only worth about $135,000.
I wouldn’t pay anywhere near $100/foot for any house anywhere. well maybe if it came with enough land and I was rich enough. Florida aren’t worth it. I want to live in the mountains or in the northeast and itll be much cheaper than Florida(always was, always will be)
Maybe this video of the housing bust in Florida will convince him.
http://www.youtube.com/watch?v=jIQaQn722QU#GU5U2spHI_4
Did you catch that the guy from the Miami Herald said it’s a buyers’ market if you want to buy and hold 3-5 years?
Come to think of it, we only paid about $100/sq ft NEW in Sarasota (off University) in 2002, including the lot. It had ten-foot ceilings, kitchen upgrades, floor tile everwhere except the bedrooms, and a big walk-in shower (no steps, no door) in the master bath. It remains my wife’s favorite house, and we’ve owned quite a few.
he needs to add some more years to that number…
Problem is that people in that city don’t want to learn..but they are all willing to complain about “not selling.” Wake up the boom is gone, gone, gone…Forbes predicts a 60%+ chance that prices will go down in SFL..so take what you can get or continue to be complaining again next year when they do the follow up..especially since he is moving to an area in GA where the prices are already WELL BELOW the Florida prices…everybody wants the world..
Well after doing some work in Cape Coral on saturday the parents and i spent 3 hours driving around. All i can say is…
WOW
I quit counting at 50 rentals for less than 550.00 month,most were under 500. The amount of empty rentals and homes is incredible. As bad as Socal was in the 90’s this area is going to make that look like a walk in the park…
One other Florida anecdote about how dead it is…A friend of my brothers has a place for sale in Titusville. He has been priced 25% below the lowest price house for the last six months. Not a single viewing. There are just no buyers at all right now…
Chris
It is this kind of price lopsidedness we need to see in other markets. The excesses are being wrung out I guess. Hopefully, a lesson will be learned, but I gather not. The whole 1990’s stock market run-up escapes the memory of many.
i’m afraid i’m hating baby boomers and olders by now!
have to admit, i will be happy for a moment if a RE crash comes and wipes out their home nest egg and at the same time a stock crash comes… social security disappears…
i know! i should calm down… but it would be great if old people stop abusing the young.
I used to feel that way but have since concluded that it isn’t a generational thing. The real problem, IMO, is that humans of all ages tend to act in their own *short term* interest at all times (including the political voting booth and shareholder ballots), which screws everyone including themselves in the long term.
“Never attribute to malice that which is adequately explained by stupidity.”
Here, here!
For every boomer counting on a home for retirement, there is a college student with a multitude of maxed-out credit cards.
“there is a college student with a multitude of maxed-out credit cards”
You mean a college student with a condo he/she can’t afford (it’s an “investment” after all), and so uses credit cards to go out to dinner with friends.
You tend to forget that a lot of boomers equity in their houses was used up paying for college kids tuition and room and board.
Plus plenty of college students use credit cards to pay for essentials, like books and tuition. College costs have skyrocketed over the past 20 years, and financial aid hasn’t kept up.
Student loans anyone?
“…humans of all ages tend to act in their own *short term* interest at all times…”
Not everyone. I was dead set against having the prescription drug benefit made available to all retirees, instead of making it a needs-based program. We’ve dropped our AARP membership because they’re constantly trying to get ever more handouts for seniors (which we are).
AARP is yet another example, IMO, of the old Eric Hoffer quote, “Every great cause starts out as a movement, degenerates into a business, and ends up a racket.”
A sad truth there.
I have to agree. My grandmother owned a 1/16 share in an oil field and owned a couple of properties (outright) in Encinitas, CA, as well as having multiple other income streams, yet was entitled to free this and free that, while young workers struggling to provied for thier children shouldered the massive cost. Of course there is no AARP for young folks…
Ultimately, this whole mess will unravel and most likely end in hyperinflation, as real income and tax bases dry up, and the government prints ever more currency to cover it’s obligations. We have cities like San Diego where some massive and overgenerous retirement benefits and are going bankrupt.
The generation before the boomers mostly had pensions and social security. You think the boomers didn’t help pay for those pensions in lower wages, etc. so the companies could contribute to them and pay out monthly pensions to retirees. Now that boomers are retiring, many of them do not have pensions anymore, because companies can’t afford them. Trust me, every generation pays for the the past generations. Just look at the National Debt.
“every generation pays for the the past generations”
Which works pretty well if every generation gets larger and more prosperous than the last…
Ghostwriter wrote: ” Now that boomers are retiring, many of them do not have pensions anymore, because companies can’t afford them.”
So if a company doesn’t give them a retirement plan they don’t have to plan and save for themselves? Pure crap! Most counties in CA offer 457 plans where the worker contributes but the county does not put any money into the pot. Great plan for those forward looking employees as it become an inflation hedge to the county retirement plan and any SS money.
Which works pretty well if every generation gets larger and more prosperous than the last…
Unfortunately, that stops next year. Look out below!!!
The Fed is currently running a monetary policy designed to encourage humans of all ages tend to act in their own *short term* interest at all times (aka The War on Savers). The War will be lost, and will end badly, just like previous such episodes in Central Banking history.
tendThe way AARP uses all those little kids in their commercials to suck more wealth into the 65+ group is just morally reprehensible.
We’ve dropped our AARP membership because they’re constantly trying to get ever more handouts for seniors (which we are).
My Father-in-law is an 85-year-old, blind, WWII vet. Among other things, he gets free rides on the T, a property-tax abatement, a free funeral, and free health care. In his eyes, whatever he gets is a “benefit”, but if anyone else gets it, it’s a “handout”. His free T pass (for being blind) is a benefit; my subsidised T pass (I volunteer at a hospital) is a “handout”. His masters’ degree (paid for by the GI bill) is a “benefit”. My student loans are a “handout.”
If we can agree that it’s all “handouts” no matter what name we put on it, then the real question is, does he have a valid point that veterans (especially those with service-connected disabilities) have “earned” their handout to a degree that puts their handouts in a completely different category from everyone else’s?
I’m open to arguments either way, but my sympathies lie with the veterans who do the nation’s dirtiest work. The country’s ability to meet *any* of its obligations is thanks to them.
His blindness isn’t combat-related.
I agree that veterans deserve something, I just don’t like the attitude of “It’s a handout unless it’s going to me.”
Exactly. And this is why, long-term, we are all so screwed in terms of the energy crisis/population bomb/global warming, you name it.
But still I can’t help thinking that the older one gets, the more one should be thinking about the health and welfare of future generations. But I just don’t see it in terms of most people my parents’ age (70s). No real thoughts or remorse about what type of world is being left to the children of today. Except a superficial concern.
Will the children of tomorrow will be cursing them (me?) and spitting on their graves?
Unfortunately, I need to concure with you on this one. My parents (early 70s) and Aunts/Uncles and family friends in their 70s all fit your description. Their motto should be “What can America do for us, not what can we do for America”. The attitude is very much: So what if the grandchildren can’t go to college because it costs too much… who needs to go to college? So what if your employee health premiums go up 50-100% a year… pay for our medical coverage!!!!
who needs to go to college?
About 20% of the population, that’s who. That’s how many college-educated workers a modern economy really needs.
But when more than this go to college, you get two problems. One, colleges have to dumb down their programs to the lower average ability of their students. Two, because of the excess numbers of college grads, they compete against each other for jobs that really don’t need a degree. Thus a job that would get filled by a high school or tech school grad in Japan or Europe would go to a college grad in US, who is no better suited for it.
End result is you spend a lot more money on education than any other country, yet the average person isn’t really more educated, or better equipped for the job market. It also has the side effect of keeping official unemployment down (at high public and private expense), because of the large number of people going to college or teaching them, who otherwise would have to look for real jobs. Like the prison system, another overenrolled government institution.
This is why I am done with college. I have an AA 2-year degree and sadly it won’t really do me any good as I am self employed. Job salaries are too low to do much good, I know people with master’s degrees making only $35k a year or less, one company cut everyone’s pay from $40k to $23k because legal immigrants moved and were willing to work those same jobs for much less.
I think its all going to shake out and many graduates will end up unemployed, self employed or working for $10/hour same as a high school graduate.
It’s not how many degrees you have but how much skills you got for a job or business that matters.
Jean, then hate me. I have been renting. I live well below my means. I can live several years without a job on my savings outside of my retirement plans. I did not bid up house prices since I’m renting. There are a lot of boomers like myself too. I see a few in the apartment complex where I rent.
social security disappears…
Not likely. They won’t be able to pay the full benefits they are promising, but they will pay out discounted benefits.
they will pay out discounted benefits
Indeed. The pension systems in various other countries (see: Europe) have been in dire straits for some time, and they manage it by (1) reducing benefits, generally by failing to keep up with wage inflation, and (2) increasing taxes. That’s what we can expect here, in fits and starts, over the next decades.
Social Security is not the worry; Medicare is. Those numbers look REALLY scary, but then again, our Medicare tax is only what, 3%? Plenty of room for “expansion”, not that I am advocating it, mind you, but be ready when the proposals start rolling in over the next two decades.
In the meantime, enjoy your low marginal tax rates, all. Sadly, I fear that they will not last, no matter who is in office in future, certainly not at current levels of entitlement.
Yet another argument for Roth IRAs, where you pay taxes at todays rate before you put the money in, but pay no taxes when you take out your deposits and earnings after retirement.
Yet another argument for Roth IRAs, where you pay taxes at todays rate before you put the money in, but pay no taxes when you take out your deposits and earnings after retirement.
And we know the government would NEVER renege on a promise, right?
If young people think the system is stacked against them as expressed above, just wait until they have worked 30 years for a company and plan on retiring at age 55. Most of their retirement income will be going to pay for medical insurance that will only cover about 80% of their expenses. They may not even make it to age 55 and still be working. I see many people in their late 60’s still healthy and going strong and I see many, many in their 30’s, 40′, and 50’s with back problems, weight problems, psyche problems, etc. The youth of today will be paying largely for those of their own generation who just can’t cut the mustard!
It’s not the fault of the baby boomers and seniors that caused this mess. Make sure you direct your anger towards the proper channels.
I would say most people would want to take advantage of this situation.
Find me one person that would list and price their home as if the bubble didn’t happen by wanting to do the right thing.
I doubt we could find any such person.
GenXer here…the generation bashing is *so* 2006…as is whining.
i’m afraid i’m hating baby boomers and olders by now!
Discrimination at it’s best!
I saw something new (to me at least this weekend) an open house for a rental. Has anyone else seen this in thier areas?
Collusion of bitter renters! LOL
Pretty common up here in the McMansion rental market.
I went to about 10 open houses before finding my rental unit; which was not an open house (but was found for me by a RE agent). We have them all weekend in the development where I live (open houses for rentals) just about every single weekend.
Welcome to FL, the land of rentals for 25% of carrying costs.
A larger house with a better layout and $100 a month less rent may be opening up near us soon…things aren’t to bad here in house renter land.
How many weeks left in the Spring Selling Season? To all of those holding vacant houses: better luck next year…
Sure — especially useful for a landlord renting the place himself. Put a craigslist ad or real estate classified open house ad in the rental section, and spare yourself having to make 10 different appointments. And, with rentals, people usually make up their minds pretty quickly.
I’m suprised more people — even realtors — don’t try that method. Burns up a monring or afternoon on a weekend day, but much easier than going back and forth a bunch to show it.
I love looking up old projections about the Florida housing market. Much of their projections were based on continued populations growth. Of course, as the Sun Sentinel article shows that continued population growth isn’t materialising (mainly because it’s too freakin’ expensive to live down here).
Here’s one prediction from Wachovia Bank economists back on September 8, 2005:
“Higher home prices will not snuff out Florida’s housing boom. Prices are still significantly lower in most Florida markets than they are in the Northeast United States, where many of Florida’s in-migrants come from. In addition, several Florida markets,
including Jacksonville, Ocala, Gainesville, and Pensacola still have housing costs well below the national median, while the Tampa/St. Petersburg area is essentially even with the national measure.”
“Demand will also remain strong, in our view. The weak dollar should continue to attract scores of buyers from Europe, and high commodity prices, stronger economic growth, and a strong Brazilian real will continue to stoke demand from Latin America. Interest rates are also expected to remain relatively low over the next few years, which will keep demand for second homes and vacation properties strong. Finally, demographics should remain favorable for Florida’s housing markets through at least the end of the decade, with more people reaching their peak homeownership years and more retirees and working-age adults moving to the state.”
Here’s the link to their analysis (beware large PDF file):
http://www.wachovia.com/ws/econ/view/0,,2672,00.pdf
OMG! “Scores” of buyers! Prices are going up!
Thanks for the hilarious link, you made my morning.
Hmm.. And on that note, I think I may go down to Wachovia and withdrawl all my money for saying something that f**ing stupid. Unfortunately, I will have to hide it under my bed as all the financial insititutions also said stuff just as stupid during the run-up.
Just Google “Florida”, “house prices” and “baby boomers”…it was retiring baby boomers that were going to keep prices at a permanently high plateau.
Example (note the date):
http://westcoastfloridahomes.com/news_article.htm
House prices keep on surging
By ROBERT TRIGAUX, Times Business Columnist
Published December 3, 2004
“Does a 17.7-percent gain in Tampa Bay’s average home price mean a real estate bubble is threatening?
Not according to Randy Johnson, chief executive of Clearwater’s Market Street Mortgage, a major mortgage lender in the Tampa Bay area.
He says the migration of new people to the area, the rise of first-time home buyers and the anticipated swarm of retiring baby boomers should keep this housing market strong.”
Perfect example of a dolt, blinded by the financial windfall he was (then) receiving, who repeated the story line of the NAR, hook line and sinker.
“While her (Mount Pleasant/Charleston, SC) two-bedroom, 2 1/2-bathroom end unit has one of the lowest price tags at $175,000, it has been a struggle to attract buyers.”
Add in the insurance, taxes and condo fees and the monthly nut becomes far greater than the cost of renting an equivalent property. South Carolina coastal areas have seen the same exodus of insurers and big rate increases that are whacking coastal Florida.
Take that same quote and a different perspective.
“has one of the lowest price tags at $175,000″
Sales rates are too low to be “one of the lowest.” You must now be the lowest priced. Man are Sheeple good at denial.
And if you are not the lowest, prices in many areas are dropping $500/day! In other words, to get down to market price that $175k will need to be $160k in a few weeks. Better to cut now.
Its just getting interesting.
Got popcorn?
Neil
“Regardless of what the appraisal is, the value of a property is only what someone is willing to pay for it. There are fewer buyers now,’ said Richard Perlman, a Longboat Key Realtor.”
A realtwhore who understands “market value”? Say it ain’t so, Joe!
“Roy and Ruth Smith, of Coral Springs, have their home of eight years on the market for about $330,000. They are hoping to join relatives in Loganville, Ga., a suburb of Atlanta. ‘If I get my price here, I can buy a house up in Georgia and not have a mortgage payment,’ said Roy Smith, who is retired.”
A very common story. Trying to cash in, all the while complaining about the high cost of living. Passing your future obligations off to others is like a national sport.
Roy Smith, who is retired.”
“A very common story. Trying to cash in, all the while complaining about the high cost of living. Passing your future obligations off to others is like a national sport”
Seems to be that it is considered your right in this country these days. Could just be me, what do I know?
We had a very similar newspaper article in our local paper. Retired couple unable to sell their home priced well above average, and 7X local incomes. They were also moving to the Southeast, and complaining about the local ‘high cost of living’. But that said, all’s fair in love and real estate.
Just like here in central florida. People have property ( Lots)Priced 40% below 18 months ago asking Prices.( Motivated Seller! ) But when You look at what they paid in 2004 they still want 400% Profit. For 3 years! Plus Property Taxes went up 700% in 3 Years, Impact fees 500%(Raising to 800%) in January from 2004. Ridiculous.
Yeah Right. And they wonder how things got so screwed up?
Why did this guy buy a house 8 years ago with a mortgage that extended into his retirement anyway? Was he gambling on a big payoff? You should have taken your chips off the table 2 years ago, Roy.
He’s probably got a mortgage and can’t really retire completely unless he sells enough to pay it off and buy another house.
[financial experts say] generally, the purchase price of a house should not exceed three times the annual salary of the buyer, they say.
I knew this, which is why I slept through this bubble and have been renting. Most people who forclosed and are going to foreclose in a few years should have gone to the library and do their homework on homebuying and read, read, read! Instead they had greed, greed, greed! I laugh at their stupidity.
I can’t even bring this rule of thumb up to anyone anymore. I get mocked; told I’m delusional and that those old rules no longer apply (said almost in a way that makes it seem like it hasn’t been the rule for 100 years or so!).
We’ll see who’s delusional at the end of this whole debacle.
You must be talking to a lot of stupid people.
Although it does make sense if they’re all homeowners and have a mindblock against their so-called wealth evaporating for no good reason other than that “old rule” of supply and demand.
“I get mocked; told I’m delusional and that those old rules no longer apply”
Same here. However, I also heard the same story about price/earnings ratios (”those rules for valuations no longer apply!”) just before the stock market tanked in 2000. “It’s different this time”. Yeah, it’s different all right, we have a “booming economy” and low unemployment, yet we have skyrocketing foreclosures.
I used to post on another forum full of dumb people who think you can afford a $200k house on a $35k annual salary. Everyone seemed shocked when I said im looking for a $50k house, they said I need at least $150k for a decent house.
I can’t wait to see their $200k house become a $100k house and meanwhile ill be saving, saving, saving!
OT… but relates to the contained contaigen…
But Expedia Inc (EXPE.O: Quote, Profile, Research), the largest online travel agency, fell after it slashed its share repurchase plan blaming a lack of attractive financing in credit markets. The stock declined 9.1 percent to $26.73.
why would any co back back common shares w debt ?
WTF it’s not like they pay or will ever pay a dividend
“why would any co [buy] back common shares w debt ?”
When market growth and revenue slows, it creates the impression of growth when earnings per share (EPS) increases. Some investors only care about growth not dividends.
In addition, buybacks allow companies to squeeze shorts and create an artificial floor for their share price. It’s like share-price maintenance insurance. As a result, some investors feel more confident about the companies shares; what’s more, large institutional holders aren’t forced to sell!
When an organization does something thats obviously not in its best interests, you will usually find that it is in the best interest of those running the organization.
Hold it!
3X salary is STILL short-sighted and dangerous.
My rule-of-thumb is:
1. Closed price of 3X average of your last 3 years of salary.
2. Mortgage at fixed rate.
3. Mortgage + All Insurance + Taxes + Association = lower than 24% of average of your last 3 years of salary.
4. 20% down payment, no second loan.
5. Commitment to no HELOCs except for dire emergencies.
6. Commitment to only refi to lower fixed rate for same remainder of years left on current loan.
Yo, Dada, you are gonna KILL the housing market with that advice! How would anyone be able to buy anything at current prices? (Oh wait, that’s happening already…)
“Closed price of 3X average of your last 3 years of salary.”
Should people compute this with their real salary, or their “stated income” salary? With “stated income” salary, mansions for everyone!
I would add: If you’re buying a house with a working partner or spouse, “income” should be the lower of your 2 salaries. If your partner loses their job, leaves the workforce to raise kids, dies, gets sick, or leaves, you can still pay for your house.
Excellent point, though keep in mind that, in Flipperville, no one ever gets laid off, sick, has kids, gets divorced or dies.
I got a question for the San Diego people…
I was enjoying a day off work Friday and I went down South to SD and enjoyed some time off for the birthday thing. I was going to go to Del Mar and I was driving up to the exit and it was backed up and I was sitting there inching along the freeway and I looked over to my right and there was this river wash and it looked to my amazement that they were leveling off these crumbling little plateaus in the middle of the wash for housing. I was just sitting there looking at this wondering wtf are they thinking….houses next to the 12 lanes of the 5 and in the middle of a river wash next to a bridge…you gotta be kidding me! I also saw pipes in the background that looked like they were getting ready to put in for basic services….unreal I have to be wrong on this who would ever live there…seriously that is beyond retarded. Any SD locals insights into this?
Its wetland re-building, not housing development. Thats a flood plain. I know because when I saw it I asked the same thing of my girlfriend. She is a horse trainer at a barn there on that flood plain. My first thought was that they were building a golf course.
For those of you from parts elsewhere, Patricio is asking about the area right off of I-5, by the Del Mar racetrack. One of the last few flat undeveloped pieces of land in SD.
Cool, I looked at it and just couldn’t believe what I was seeing. I went to Pechenga and won some money and took the 15 back home, and a couple of things shocked me. The first thing was the developments with a two foot gap between them a little north of Elsinore, that was gross beyond comprehension, I can only imagine the people who are going to live there what a joke an inland empire stereotype for sure. The next thing that struck me as amazing, no one coming home on the 15? It normally is a parking lot when you hit the 55, and we just cruised through there at 80 mph keeping up with traffic. In years passed I hated coming home from the river it was stuffed with people who were coming home from weekend trips….what is going on am I seeing the beginnings of the big implosion in So Cal? Is reality on a crash course with stucco land? I think so and boy is it going to be fugly!
We have McMansion developments right up against the Ohio Turnpike in some areas. Who would pay big money to have all that traffic noise in your back yard, let alone all the dirt from the car and truck exhausts.
“Fudgy Brabham, broker-in-charge of Harbourtowne Real Estate”
Like Dave Barry says, you can’t make these kind of names up.
Need to get “Fudgy” together with the “I”m a schmuck” sign guy.
Doghouse - I was just about the add a comment on this as I was tickled by this name. “Fudgy Numbers” would be a great name.
You beat me to it, Doghouse. I think Ben’s just making this stuff up.
“…which would be a great name for a rock band…”
Paul
“Rental complexes with 100 or more units were at 87.6 percent occupancy”
Ummmmm…I thought that prices would always go up because there is a housing shortage?
Think about what will happen as job losses force twenty and thirty somethings back in with mom and dad. Heck, after this boom, mom and dad might need help with their mortgage. (I’m serious!)
Here in LA construction is nothing like Florida… but according to the LA Times a few months ago, we have more apartments under construction than ever before… woo hoo!
Got popcorn?
Neil
“said Twenhafel who added that she has a condo like that now, as well as other properties that she need to sell soon”
And I thought that prices wouldn’t go down because “sellers will just hold on to a property instead of ‘just giving it away’”, and “they can just hold onto the property forever, they don’t *have to* sell”. Have we been lied to all this time?
Property values up in Palm Beach county 5%:
http://www.sun-sentinel.com/news/local/palmbeach/sfl-flptrim0723pnjul23,0,3770344.story
Anything to keep that gravy train flowing!
My friend in one of those Broward cities mentioned is now underwater. Let the record reflect that in the summer of ‘05 he was “up” 100K from his purchase price one year earlier, and that I begged him to sell to whoever was dumb enough to pay that. Needless to say, he told me to shut up and is now crying the blues (to me, of course).
TX - you are so heartless: He was ENTITLED to that money as he was so smart. The feds need to bail him out.
Curious… what do you say to him?
That’s the thing about Las Vegas, nobody cares how much you were “up” by, the only thing that matters is how much you left with.
I was in Palm Beach Gardens last week and stayed at a friends house in Mirasol. The development was really really nice, the club house incredible, and the grounds were spectacular. However, my question is……. who is buying those places. The lowest priced house in there is selling for around $800K going up to $4 million. For the life of me I can’t figure it out. But from what I have read there are not the kind of high paying jobs in Florida to support that kind of lifestyle. Plus on top of the house cost you have to join the country club for another $100,000 plus and then pay $12,000 a year to belong. Then add on the RE tax of say $25,000, insurance $8,000, and a HOA of only god knows. I just don’t get it.
I did see some houses that were trying to be flipped. I believe those people will be lucky to break even.
Just my two cents.
Get a teaser rate of 1%, negative amortization, 100% financing, no closing costs, stated income loan. Easy peasy lemon squeezy.
The investments guys will then tell you you are “Alt-A”, and have very little chance of default (unlike the dirty, stinky little “sub-prime” people, which are causing all of this mess).
It’s all good.
I agree that many who live in the “wealthy” communities do so at all cost and means..just to try to keep up with the Jones’s that they think are watching their every move..(As if people have nothing else better to do)… those are the same ones who send their kids to public schools while “swimming in debt” in a McMansion home..I once had someone comment to me that the community next to Boca Raton was so much better..my answer..Boca is “real” old money.. and that community is “heavily in debt” money.. she didn’t obviously like hearing the truth.. I love it when you visit their ..”The furniture hasn’t been delivered yet” home..or its “decorated” with junk..What’t real money? When you can pay your mortgage, go on vacations, enjoy life, eat out and not pay with a credit card because you “have to.”
“Another indicator of a downturn in population is declining school enrollments. Broward’s public school population has dropped two years in a row, with about 10,000 fewer students enrolled during that time”
At 20 to 30 students per classroom that means they need somewhere between 330 to 500 fewer teachers. More higher paying jobs going down the drain.
Someone from FL will have to keep us posted on this year’s enrollment numbers and how far they are down. It won’t be long before school starts again.
A quick common sense analysis shows that as student enrollment declines, average teacher salaries go up due to a lack of new hires and thus an increase in average years worked (seniority) of teachers. This in turn causes HIGHER education costs per student.
Is that the mean or the median salary? … or the mode
? .. .or the standard deviation … or the skew?
average=mean
“The gap between what people earn and home prices, despite the real estate market’s downturn, is still too wide for some to afford a home, financial experts say. Generally, the purchase price of a house should not exceed three times the annual salary of the buyer, they say.”
“The median price of a single-family home in Broward is about $370,000, almost seven times higher than the median household income in Broward of $53,100, according to the U.S. Department of Housing and Urban Development.”
Then prices have to drop to $160k and/or salaries have to increase till the 3x factor kicks in. Even at 3x, those with children won’t afford due to $10k per child per year expenses. They will be stuck renting or in a condo or relocate.
But what about the cheap places where houses already cost less than 3x income? Will those prices still drop? For instance, in Houston Texas, a nice 3/2 house can be had for $100k!