Sellers ‘May Take Less Than They Were Expecting’: FL
A pair of reports on the Florida housing bubble. “The Orlando area’s existing-home sales set another record in February, with prices leveling off but buyers and sellers still signing contracts at a brisk pace, defying predictions of a slowdown. The number of homes for sale in the Orlando area, 12,966, was at record levels. February’s inventory was more than triple the number from a year ago, which contributed to the ongoing flattening of the median sales price.”
“‘There is more of a balance now,’ the Orlando Regional Realtor Association president Beverly Pindling said, between buyers and sellers, but ‘we are leaning towards a buyer’s market. If rates continue to rise, Pindling said, ‘you will see fewer buyers,’ and that’s one reason some sellers are placing their homes for sale now, rather than take a chance that more home buyers will be forced out of the market.”
“People may take less [for their home] than they were expecting,’ to close the deal, Pindling said. Often, she said, they have to trim their asking price because they need the sale to complete their own home purchase.”
“February’s existing-homes sales for the nation are scheduled to be released today by the National Association of Realtors.”
“The signs of change are popping up all over Southwest Florida, but those looking to move or upgrade their current house are having a hard time selling. Last year, sellers had 4 or 5 buyers for every home, now they’re lucky to get just one. Many real estate agents don’t see the odds changing anytime soon, so they are changing the way they sell.”
“‘The real estate agent thought it would be sold by January, but that didn’t happen,’ said Ron Conrad. Now Conrad keeps making improvements and checking the condition of his home. Despite the efforts, he still can’t reel in a buyer. ‘We reduced it by $45,000,’ said Conrad. His house is on the water. Now other sellers are stressing too.”
“‘It used to be that the buyer would come to you, now you’ve got to bring your property to the buyer,’ said realtor Brett Ellis. ‘We are spending, just the Ellis Team alone, between $60,000 and $70,000 a month,’ said Ellis.”
“Many local real estate agents who don’t use techniques similar to the Ellis Team’s are reporting a 25 to 60 percent drop in sales from this time last year to now. ‘She did try really hard,’ said Conrad. But not hard enough. The ‘For Sale’ sign still sits in the front yard.”
“The downturn in the housing market isn’t just in Lee County. Real estate offices in Collier County report sales are down between 25 and 50 percent. Some agents say it’s the toughest they’ve ever had it. Agents in Charlotte County are struggling as well. Sales are slumping about fifty percent in some areas.”
From the Wall Street Journal. “Housing bargains are hard to come by in the Fort Lauderdale region. But as sales began to fall late last year, many brokers say this tropical seller’s paradise may be hitting a cool spot. Brokers note softening investor interest in the area and increasingly common price reductions on listings.”
“‘A year ago I could sell something in a half hour with a phone call to an investor,’ said Jeanette Nogosanti who owns Oceanique Realty in Pompano Beach, Fl. ‘Now those investors have houses they want to sell.’”
Not suprising in Orlando in 2005 many realtors rented tour busses to bring in speculators to new developements. They bought 3-4 homes a peice. They were coming from South Florida, Ft Myers, Naples, Miami, Ft Lauderdale and West Palm, taking out HELOCS and refinancing their home to put money down on investments here in Orlando.
In Orlando that 12,996 number is most likely low considering all the “ready to move in” homes and condo conversions sitting on the market. 12,996 may only represent a fraction of new home, new condo, and condo conversions for sale right now.
It seems like there is a condo conversion on every corner here that have been selling for almost a year now, some of which have had “final close out” advertising for 3-6 months now.
Its not uncommon to drive down the street and see the entrances to newer subdivisions littered with “for sale” & “open house” signs, with signs running up and down the main roads trying to lure people in. Its also common place to drive around in a new developement and find 10-20% or more of the homes for sale. Parts of Waterford Lakes & Avalon Park you can drive down a street and count 6-7 for sale signs on one street.
One thing you don’t see any more are tour busses pulling up to sales centers any more… walk in traffic is way down in these places and its now standard to offer discounts and incentives for new construction or conversions.
Very true L,
Since us people have stopped looking to give our money away to developers and converters, they have started to come out after us. You can’t drive down 436 on the weekend without being assulted by the bum-vertising of these slum-conversions.
This is the exact same scenario that occured in 2004 out in the west with the busloads of speculators from California going on day trips to Phoenix to pre-purchase numerous homes each in new developments. Un-freakin-believable! My sense of morality (the balance of life) hopes these folks burn (financially).
“If rates continue to rise, Pindling said, ‘you will see fewer buyers,’ and that’s one reason some sellers are placing their homes for sale now, rather than take a chance that more home buyers will be forced out of the market.”
Beverly Pindling take heed,
Raising rates are not the reason people are forced out of the market you idiot. Incomes have out paced the market place the last three years and most of the useful idiot pool of greater fools has been exhausted.
I posted last night but had another incident to relay as well. We are visiting central Fl,and took a cruise down Daytona, New Smyrna beaches….No exaggeration, at least one sale sign ,and up to 3 it seems on every corner! I wish I had my camera. Not sure whether it is Hurricane fears, tax increase or what ,but it was amazing how many signs there were!…….
Then we got back here in Deland, and stopped by a sale sign to grab a sheet from the sale tube….3 blocks up we had someone tailing us ,and flashing lights etc. We pulled over as we thought maybe an emergency. She jumped out of her car ,and asked if we were interested. She would not take no for an answer “we just were curious what the prices in this area were” She wouldn’t let us go for 10 minutes,and dropped the price by first 10k ,then another 5k by the end of the conversation. Anectdotal to be sure ,but she surely seemed desperate ,and boy does she have competition! Signs everywhere!
LOL! Realtor stalker. That is at first!
That’s hilarious!
Next, the R/E agents will use the PIT maneuver.
This is really going to be a “buyer beware market”. To me if I saw to many for sale signs in a area I would be questioning
why so many people are leaving . I would back off in a minute . When everyone wants out :nobody wants in .
Interesting insights from a realtor on realty times:
Orlando leads the nation this year in the number of apartments converted to condominiums — a phenomenon that has roiled the area’s rental inventory and raised fears of an overheated real-estate market.
So far this year, apartment properties with a combined 14,183 units have been bought for conversion to condos — more than triple the number in 2004, according to Real Capital Analytics Inc., a New York research company.
Orlando turned out to be the busiest of the 20 big condo-conversion markets studied by the company — bigger than Miami, bigger than Manhattan.
Tampa was second, with 13,468 units, while Broward County was third, with 11,955 units.
The competition for properties is so fierce that converters have left in the dust investors seeking to buy apartments for their rental income, said Cole Whitaker, executive director of the apartment-brokerage division for Cushman & Wakefield of Florida, a big commercial real-estate brokerage.
Orlando, the eighth largest housing market in the U.S. has been performing extraordinarily well over the last year, with excellent job growth and low unemployment. The Employment Growth / Building Permit ratio is at a healthy 1.2, with the region adding nearly 40,000 jobs (a 4.1% job growth rate) and issuing just under 34,000 total permits in the last year.
There has been a real run-up in construction activity in Orlando over the last several years. The market ranks eighth in the nation in single-family permits and seventh in total permits, with total permit activity reaching 95% of its historical peak. Single-family permits (26,077) for the 12 months ending July 2005 are twice as high as the annual average during the 1990s.
The median home price is $200,000, an increase of $60,000 from three years ago. The Housing Cycle Barometer is at 5.7, meaning home prices in relation to incomes only slightly exceed the historical median.
The luxury market in Orlando has exploded. The Orlando Regional Realtor Association reports that, through July 2005, sales of existing homes priced at more than $500,000 jumped 86% when compared to the first seven months of 2004, and that the demand for homes above the one-million-dollar level continues to rise.
One reason for the increase in luxury buying is an influx of foreign buyers in the market. A recent study by the Florida Association of Realtors and the National Association of Realtors showed that international buyers account for 15% of all home sales in Florida, and Orlando accounted for 22.7% of the state’s sales to these buyers, second only to Miami. The study found that 58% of the state’s international buyers came from Europe, and more than half of those were from the United Kingdom, which has several direct flights per day from London to Orlando. International buyers were found to be more likely to purchase higher-priced homes and to pay cash, and these purchases were likely to be used as a vacation home (38%) or as investment property (37%).
http://realtytimes.com/rtmcrcond/Florida~Orlando~chbo
Simmssays…
AmericanInventorSpot.com
Yeah I read that too… That guy is using out dated numbers and statistics. The average home price has been around 240-245K since May 2005 in Orlando. The average price of condo conversions (from what I have seen in advertising in the paper)
1 bed 1 bath - 140-160K
2 bed 2 bath - 190-220K
3 bed 2 bath - 240-310K
There are some more “luxury” units down town and in celebration but these numbers are just from the listings i have seen.
These condo converters were betting on two things to occur…
1- there would be a strong demand from investors and people “priced out”
2- home prices would continue their 40% increase yoy well into 2006.
What has happened is prices for homes remained flat and now its actually more affordable to own a 2/2 or 3/2 home vs a 2/2 or 2/3 condo-conversion. Plus there is no shortage of homes right now.
GM said Thursday it’s completed a deal to sell a majority interest in its GMAC Commercial Holding Corp. business to an investor group led by Kohlberg Kravis Roberts, Five Mile Capital Partners and Goldman Sachs Capital Partners. The company said its GMAC unit sold 78% of its equity in GMAC Commercial Holding Corp. for more than $1.5 billion. The company had previously said it was targeting the sale of a 60% stake. Also, at closing, GMAC Commercial Holding, which provides real estate financing, re-paid GMAC about $7.3 billion in inter-company loans, bringing its total proceeds from the deal to nearly $9 billion.
From what I understand GMAC is one of the more successful (may not mean as profitable) business units for GM. Typical GM though, if something is going good, get rid of it. They discontinue their best selling cars (Firebird, Camaro, and so on) and replace them with either bland rental type cars. Not the smartest company in the world.
I can almost gurantee the numbers due out at 7:00 am will not reflect any of the above from the article. I bet the Median is up and sales are only slightly down.
This is typical of the Orlando Sentinel: to write about the year-over-year change in real estate and say that we’re “still breaking sales records.” Given that last summer was the peak of the market, year-over-year numbers are useless (except of course for the realtors who want to create another buying frenzy). With each article the Orlando Sentinel writes, I’m more and more convinced that they are in cahoots with the realtors and lenders (which is something others on this board have been saying for quite a while).
They have to support the ones who pay for their livelihood. Subscription dollars are not enough and the biggest advertisers are the real estate folks.
Simmsays…
AmericanInventorSpot.com
Hmm… I wonder how much developers, home builders, realtors, condo converters and mortgage brokers pay for advertising in the Orlando Sentinal per week? Those full page, full color ads can’t be cheap.
OT: Kiyosaki the gold bug:
http://finance.yahoo.com/columnist/article/richricher/2987
Who’d a thunk it??
So why is this shill still out pimping real estate with Donald Trump, Tony Robbins, and Suze Orman ?
He’s been -real estate +commodities for about a year now.
At least Yahoo hired him an editor. His first book was functionally illiterate, apart from the nonsense of his “advice.”
Morning call on squawk box had the CEO of KB. They usually rerun during the news day. HB can’t over build (compared to auto industry) because of land constraints.He walked a picket fence on all the questions, dah.
They may not be able to over build because of land constraints but they SURE AS HELL CAN OVER BUILD BECAUSE OF DEMAND CONSTRAINTS…
Can anyone tell me what’s happening in Destin, and recommend any bubble Web sites specific to that part of Florida? Thanks.
RE: Dustin-Last time I was there doing some disaster inspection work for FEMA, it looked like Winter Carnival in Quebec City what with the dunes of white sand left in the streets from Hurricane Ivan.
I heard the condo investor’s from the deep south inland states, are pretty squeamish at the moment what with the devastation upshore in Navarro Beach and Pensacola. But I never saw what I considered an undue amount of For Sale signs.
With rising sea levels and weather pattern changes conducive to monster hurricanes, you sure the hell couldn’t get me to invest in shorefront-now or never.
Why do realtors and politicians refer to apartment conversions as “affordable housing”? That is like calling McDonald’s “affordable food.” Yeah it does the job, but I wouldn’t recommend a steady diet of it. I’m afraid that all these people who purchased a conversion have no idea what the maintenence and insurance costs will be on these things over the next couple years. Do you honestly think that the average person will have 10-20k to pay for a major repair job when the next hurricane hits? Opps, sorry you have no equity to pull out either since the market has tanked….and the insurance premiums go up again after that.
Disco Stu- Good point. In Florida we have “hurricane deductables” that are typically around 7% of the homes value. That means if you get hurricane damage the home owner is responcible for the first 7% of the damage. In 2004 when Charley came through Orlando thousands of homes needed new roofs. Well back then if your home was worth 200K you were responcible for the first 14,000 worth of damage (not to mention all the stuff the insurence companies wont cover). It worked out because of the appreciation, we had record levels of refi’s and heloc’s here.
You bought a house this year, home values are flat. You probably need at about 10% equity to cover hurricane damage.
Condos are a little different, you pay insurence as part of the fees but that covers damage to the building and I don’t beleive there is much of a deductable there because it would be very difficult collecting a deductable when 70% of your owners are speculators or investors many of which are from outside the US.
Politicians will do anything to distract people from the fact that it’s zoning and buidling codes that make housing unaffordable. Even if you build a house yourself the local regulations and taxes and fees will run a substantial fraction of the cost, and you will likely not be able to build what you really want.
On the other hand, apartment conversions are not bad as far as housing goes - it’s all in the price. If you could buy a decent apartment for $30k it would be a good deal, even with maintenance and such. You think renters don’t eventually pay for all of that?
Think about this: The reason most working poor people can’t afford housing is because they are not allowed to live in what they could afford. Just take a peek at what is “required” for a modern dwelling. Then take a look at what most people lived in 150 years ago, and what most people in the world live in now. The fact is that almost anyone can afford housing of some kind, we just won’t let them.
Umm…. Have you priced out some of these places? I beleive the 30K condo conversions you are looking at were former motel rooms up and down US 192 or 441 (not very pleasant). 30-60K will get you a 260 square foot studio at the former motel 6.
Condo conversions in Orlando are starting around 140,000 for one bed one bath units. You can get some cheaper units for 100-120K but those are in really bad shape, the buildings should have been condemed not converted.
Not to mention the fact that building codes are much different between condo and apartment units. Condos require a block fire wall for one, apartments are wood frame through out. Also there are many problems resulting from conversions.
I agree. Last time I was in Juarez Mexico there was no homeless. The poorest of the poor lived in houses with walls made of stacked tires filled with dirt and roofs shingled with old car hoods
From Tampa, a couple of observations beyond the explosive spread of realtor shingles, FSBO snipe signs and “for lease” flyers, which collectively define this state better than any endangered animal mascot or subdued Indian tribe ever could. First, today’s Tampa Tribune had another large ad for the just-broken-ground-on Trump Plaza development, only this time the ad was coupled with a discreet red-lettered notice that “units have become available for back-up buyers.” Second, on what was the first hot day of the year last week, I saw some poor guy standing at an intersection, sweating profusely, wearing a sandwich board in the shape of a large arrow that proclaimed “condos for sale–$90,000.” It was like he was selling newspapers.
There should be no question that we are on the way down. Everyone who wanted to buy at these prices has bought, sometimes more than once. Yet each week brings yet another announcement of a planned development, usually named after somewhere in Italy or southern France to give the illusion that we don’t live in the middle of increasingly ugly, car-choked urban sprawl, busily turning our last environmental, historic, or unique places into “investments” purchased largely by people who don’t even live here.
So, do you think Trump Tower will get built or not? It’s on such a tiny piece of land across from the Tampa tribute Building, I can’t imagine how the city could have approved it, but then, all building codes appear to have been abandoned in favor of the bubble. Have you noticed that there are no more setbacks for new construction, and that the variance board gives EVERYONE who wants one a variance (I’m assuming money is changing hands)?
There isn’t a single foreclosure in South Tampa, but there are a bunch of “pre-foreclosures” (whatever that means), and the usual pile of tax liens.
You should see the land in Chicago where Trump Tower is being built, real tiny too.
Rumor has it the biggest issue with Trump Tower Tampa is no one wants to lend the Donald the money to build these places any more. Especially now that in 2006 builders and developers are finally acknowledging the influence of speculators and how they create false demand.
Trump isn’t even involved in most of these new projects, other than selling the use of his name (logo). I personally think Trump is an idiot (I’ve researched his background), but this is probably one of his smarter moves…why risk his money on crazy developments in bubble areas, when someome else will pay him huge amounts just to use his name. I guess Trump has found the real easy money is in T.V., i.e. The Apprentice, hawking stuff on commercials, etc. I don’t think he has any real estate smarts, but he sure knows how to bamboozle people into giving him money.
“Will Trump Tower get built?”
Hmmm… I don’t know. It depends on how unfavorably the bankers would look upon Donald’s joking confession that if Ivanka wasn’t his daughter, he’d date her… Cute girl, though. I’m dating someone a year older than her!
Stephanie
Cradle Robber
Hey man, Tampa is a great area… Where else can you buy a $500,000 home thats walking distance from a check cashing store, strip club, crack house & “message parlor”.
Ah, a Tampa expert! You didn’t mention dodging used condoms in convenience store parking lots. What a beauty spot!!! Yes, the Tribune ran a story on Trump Tower stating no known Florida bank was willing to back it, but doubtless Mr. Trump has others waiting in line to kiss his butt. Did you see the fools falling over themselves to get one of his apartments? I’m astounded that human beings can possess so little self-esteem.
Has anybody ever told the county commissioners or city council members that Tampa is trashy, backward, ugly, depressing, and a laughing stock? Remember when Tampa was actually vying with Paris, London, New York, and somewhere else for the Olympics??? And the locals ACTUALLY thought Tampa was in the same league as Paris and London?
I’ve been arguing for years that somebody has cast a glamour over the place, because there is no rational explanation for people moving here and calling it beautiful (unless they moved here from Hell). What a junk pile. And these narrow, crappy streets with housings and buildings piled up on each side, and cars parked along the curbs in both directions, so that only one car at a time can move. And yet the city and county and state keep working to get more and more and more people to move here.
Ugh.
Lets not forget the new if ever Trump Tower is being built around the corner where the homeless gather everyday.
What’s with that? Why doesn’t Tampa have a single city-owned shelter for the poor? Odd for a city crawling with poor people. It’s really a terrible place.
Also, Ashley Drive (or is it Street) is far too narrow to handle traffic for Trump Tower. Does this city do ANYTHING logical? Ever? Notice that the traffic lights are reverse-synchronized, so that you have to stop at every one, no matter how fast or slow you drive? The city actually brags about that, saying it slows down traffic!!!!!!!!!!!!! I’ll say.
The most idiotic local government possible.
“After nixing $500M deal, oceanfront mobile home park again on the block”
“Joe Paolucci predicted the residents “will never sell unless it’s $750 million or more.””
One million dollars is not enough for a trailer, it’s time for a category 5 hurricane to wipe this place off the map.
http://www.miami.com/mld/miamiherald/14167578.htm
The ‘talking points’ amongst the Real Estate circle is this is a “pause” in the market and that it has created a wonderful “buying opportunity.” The mantra of ” they aren’t making any more land” and that property values will continue to rise by 10% + per annum still prevail.
SouthFlorida is still in denial for the most part. Sellers feel they can sell for last year’s prices. The slime realtors are pulling and re-listing their homes and other tricks such as giving you a free year of payments to get the full “listing price”. They will not go down without a fight.