The Speculators Need To Be Hurt
The State reports from South Carolina. “Bill Rhomberg is without a worry in the world, except for the two-bedroom, two-bath baggage he left behind in nearby Bluffton. There sits Rhomberg’s 1,900-square-foot home on a golf course. It is for sale. So are 280 other houses in Sun City. After no bites, Rhomberg soon dropped the price to $360,000. Then, he shaved it to $345,000. Again to $325,000. Then, $305,000.”
“Now I’m down to $295,000, looking for an offer, any offer,’ said Rhomberg, who spent about $64,000 on the home to build an addition, bar and bookcases. ‘So many people are just looking, looking, looking,’ Rhomberg said. ‘They just can’t sell their (own) house.’”
“Former Sun City resident Akber Haidri said he has been ’scrounging every penny’ since he moved to Atlanta in May with his wife and bought a $480,000 town house. The couple put their 2,600-square-foot, lagoon-side house in Sun City on the market in November for $459,000. Since then, they have reduced their asking price to $389,000. No one has toured the house for three months.”
“‘You can drop the price as much as you want, but if there’s no buyer, what do you do?’ asked Haidri.”
“Beside the glut of neighbors’ homes he’s competing against for a sale, Sun City developer Del Webb is building new houses at comparable prices.”
“The $3,000-a-month mortgage payment Haidri pays for the Sun City home has forced him to delay the decoration of his Atlanta home and cut out visits to restaurants. ‘We are postponing even putting curtains on the windows,’ Haidri said.”
“Rhomberg attempted to rent the house until it sells, but a property company said not to bother listing it, the company is flush with properties to rent.”
The News Press from Florida. “People who work for a living are feeling the pain — especially those in the construction trades who find themselves unable to make close to what they did during the boom.”
“Dolores Taylor, the former mortgage underwriter said a history of making good money is no help in the search for a new job.”
“‘I can’t even get a basic cashier job, things are so bad,’ she said. ‘I have 15 years’ mortgage experience. When they look at my resume, they basically say, ‘What are you doing here? You’re overqualified to be an $8-an-hour cashier.’”
“Christina Torres was a drywall installer and faux painter for 30 years, making good money in Southwest Florida and around the country. Now, she said, ‘I’m trying to brush off my GED, trying to get a teacher’s assistant job.’”
“Torres said she had been making $18 an hour, but the teaching job would pay $10. ‘I haven’t been making 10 dollars an hour for 30 years,’ she said.”
“The job, even if she gets it, will not pay all her living expenses. ‘I’ve got $2,300 a month in bills,’ she said. ‘I’m going to have to work two jobs.’”
“It doesn’t help that insurance on Torres’ North Fort Myers home has gone up $500 a month since she bought it in 2003. She likes Southwest Florida, but isn’t sure it’s in the cards for her to stay here. ‘Everything’s so expensive here, the housing’s so bleak here,’ she said. ‘It’s only made for the rich.’”
“The situation isn’t likely to turn around soon, she predicted. ‘I can feel the recession,’ she said, ‘and it’s going to get worse.’”
“Jim Rose used to spiff up his 16 rental apartments as fast as he could in order to get them leased out again. Now Rose doesn’t worry so much about getting a unit back on the market — it’s likely to take a while to get it leased out.”
“From his vantage point as landlord, he sees what’s happening: a mass exodus of the construction tradesmen and others who rented his $500-a-month efficiencies in Cape Coral. ‘In the last three months I’ve lost three tenants,’ Rose said. ‘It wasn’t like the lease was up and they left. They just left. One wrote me a letter; the other two just disappeared.’”
“It doesn’t help, he said, so many newly-built houses in Cape Coral are on the rental market at fire sale prices. ‘There are people desperate to rent their house because they can’t sell it,’ he said. ‘I can rent a three-bedroom house for $650.’”
“‘It just finally dawned on me a month ago, man: We’re in a fix here,’ he said. ‘If it’s not a recession, I don’t know what the hell it is.’”
“Ray Kest, an economics professor at Hodges University in Fort Myers, spent the summer tracking various economic indicators. ‘Each one of them shows a trend downward,’ Kest said. ‘Every one shows an upcurve from 2003 to a peak in 2005 and then it starts going down slightly in 2005 and a big free-for-all in 2006. They’re all down except foreclosures.’”
“Steve Shimp, president of construction company Owen-Ames-Kimball in Fort Myers, said he’s seeing it, too. ‘I would tell you that this is probably more broad spread than what we’re looking at on the surface, and deeper than what we want to believe,’ he said.”
“‘I think that unfortunately it is kind of flowing into the rest of the marketplace,’ said Michael Timmerman, Naples-based managing director for Florida at Hanley Wood. ‘The fact is that there’s a lot of people who can’t get the financing, can’t get refinanced. It gets to the point it starts affecting disposable income.’”
“Still, he said, the news isn’t all bad: Property and labor costs are falling, and the tourism industry remains relatively strong.”
The St Petersburg Times from Florida. “President Bush extended a helping hand Friday to thousands of homeowners caught in the financial bind of escalating mortgage rates.”
“Those most vulnerable may benefit little from the administration’s offer. ‘You’re talking about helping people who have relatively good credit and that’s not the problem,’ said Scott Brown, senior economist at Raymond James & Associates in St. Petersburg.”
“Wachovia Bank economist Mark Vitner said Bush is doing the right thing by not offering help to investors. ‘In Florida and California, unfortunately the speculators need to be hurt,’ Vitner said. ‘That’s the only way we’re going to restore affordability. If we don’t make housing more affordable in Florida, people can’t afford to move there.’”
“Exactly how much help to provide debt-burdened homeowners is not a simple issue. ‘We do not want to take all of the mortgages that are certain to default and just have the government pay them off,’ said Stuart Feldstein, president of SMR Research Corp., which researches housing issues. ‘Even if we could afford it, it would just encourage more loony lending going forward.’”
‘Southwest Florida’s stagnant real estate market has already brought growth in public school student enrollment to an abrupt halt. But now the area’s economic downturn is having a new effect on Charlotte, Manatee and Sarasota classrooms: an increase in the number of students getting free or reduced-price lunch because of their families’ low income.’
‘Christina Rexrode has it all wrong in this article regarding the reaction of Realtors to today’s housing market. Most of my real estate friends are not “whining” about falling home prices, but they are “whining” about the lack of government intervention in this eroding housing market.’
‘If our politicians had done something meaningful about the homeowners insurance and property tax crises, we wouldn’t be seeing these huge drops in housing prices’
‘Contrary to her opinion, we Realtors welcome housing affordability, as that means we will have buyers to sell houses to! But unfortunately, making a home affordable is not just the price, but the amount of taxes, insurance and mortgage interest rates that the buyer must pay. We will not see affordable housing in this area until we see changes in all these areas.’
‘So, unfortunately, we Realtors must sit, wait and “whine” until someone in power does something to help make homes affordable again and bring the buyers out of hiding.’
Went to pardaise bakery for a tea yesterday and was shocked at the level of incompetence out there.I bought a tea for 1.68 and gave the girl a ten. She then handed me 9.32 back and was asking here coworker how much to give back.They both agreed on 9.32.I said wait a minute here.What is ten -1.68? They said, “we are not good at math, our computer is down”.WTF is wrong with these people? I gave here a dollar back and she laughed as she thanked me.
I can beat that one, I had “price check” last week by a sales clerk at a national grocer. The assistant manager did the price check said the item was 4 for $10.00. I wanted one item, the clerk was dumbfounded, the assistant manager replied “that’s a buck something”, I replied it was $2.50.
10 divide by 4 is 2.5
What, they aren’t even teaching addition and subtraction in schools now? I used to work a cash register long before it did the math for you. Go figure.
My (just turned) 9 year old can do it…however, she goes to one of the few remaining ‘good’ public schools in California, and I supplement her and her sisters’ education at home after school…
So are you doing society a favor with that “supplemental education” of your children? When I grew up that was called raising your children. I guess thats the Governments job now and the taxpayers burden!
They’re teaching all that in school. The problems is there’re so many retards in public schools that are just a tad bit slow on picking up on such difficult concepts like basic arithmetic.
As a recent grad, I can attest to this. The problem isn’t money or bad teachers, it’s the fact that every class is dumbed down to the lowest common denominator to ensure that nobody gets their feelings hurt. Teachers admit that “don’t give anyone an F because they’ll feel bad” trumps “teach them what they need to know”. I’d be laughing if it wasn’t so horribly sad.
I should mention, throughout all of high school (including many honors courses that doubled as college credit) I rarely spent more than 15 minutes per night on homework, doodled and daydreamed in most classes, and not one single time did I ever study for a test or final. Cruise control all the way, thanks to the dumbed-down courses. Everybody I knew (including many “average” students) were in basically the same boat.
If you want to fix education, listen to the students. Don’t throw money at the problem, and don’t hold teachers accountable for the revised courses. Let me also say that this predates NCLB (it even predates Bush), so let’s not make this political in either direction.
Sure they are taught, many students don’t think that math is cool or important to know, or aren’t interested and just don’t pay any attention.
When I was in school I thought it was important to learn arithmatic and I took pride in being able to do it in my head. When I was a cashier in college, this set me in good stead.
Most of my classmates said, Why learn this, as we’ll all use calculators anyway? When I later encountered them in the workplace they had trouble using the computer to do basic calculations for them too.
That said, I learned more in Math Team than I did in the classroom. The “survey course” system of math teaching DOES NOT WORK. Guess what, they don’t do that overseas, and they didn’t do it that way in the US in the 50’s and 60’s either. I was lucky enough in the Newton Public Schools to use vintage textbooks for some of my high school math classes. I learned WAY more from them than I did from the brand new textbooks a certain teacher brought in one year–the one with the glossy pictures, numerous errors, and twenty authors.
I know a girl who is both smart and stupid at math at the same time. Brain Age (Nintendo DS) has a competitive simple speed math quiz game and she beats me 95% of the time. However, when it comes to real life problems, she is dumbfounded. “What’s 20% of $100?” she’ll ask. I stop her and say, “come on.” She has to think for a minute to get it. She’s also not quick with 5 based numbers as she should. She also says, “I want a house,” but only says it jokingly because she knows she would never pay $600K for something. She doesn’t even know what the monthly would come out to. At least she has sticker shock at the full price.
‘Christina Rexrode has it all wrong in this article regarding the reaction of Realtors to today’s housing market. Most of my real estate friends are not “whining” about falling home prices, but they are “whining” about the lack of government intervention in this eroding housing market.’
‘If our politicians had done something meaningful about the homeowners insurance and property tax crises, we wouldn’t be seeing these huge drops in housing prices’
I talked extensively to my local state representative Mr. Aubuchon, about doing realistic house appraisals in Lee county 6 months ago, in order to help save the housing market. I knew full well they wouldn’t do anything about it at the time, and everyone this year received tax bills that are just as high or higher than they were at the peak, even though average prices are down 35% or more from the peak. I just wanted to make sure that they knew that they could have done something of substance at the time, to lower taxes. Personally, I want to see house prices crash long and hard, so that the children now leaving the nest will be able to afford a home of their own some day.
‘It just finally dawned on me a month ago, man: We’re in a fix here,’ he said. ‘If it’s not a recession, I don’t know what the hell it is.’
Wow, does this ever bring back memories of the Texas bust. There wasn’t any one headline or a press conference on TV. It was the dull, slow, house-to-house realization that things weren’t going to turn up anytime soon. One by one, everyone pulls back and there you sit.
Boom gone bust?
They usually do.
That “slow, house-to-house realization” is what I have been waiting for. Unfortunately for many we desperately NEED a tough recession to make the light bulbs go on in people’s heads about money and debt and spending and savings. I for one, WELCOME it.
Yep. The blood-letting carnage is upon us.
Ben,
Just a note of thanks. You manage to pull together a number of different articles that work together like pieces of tile to create a compelling mosaic. The theme of this mosaic appears to be “recession”.
My favorite is when Ben will quote someone saying (paraphrasing) “with all the retirees and people moving here, we’re somehat insulated compared to other areas” directly followed by something like “area foreclosures and inventory are reaching record levels” etc. I love the direct contradictions.
I just remember friends parents in North Texas having “for sale” signs in front of their homes for 3/4 years.
I’m sure there are still plenty of people in denial. But by January, several of those people will be in the fear bracket. The surrounding negativity will feed on itself just as the previous positivity did.
To paraphrase a quote I’ve seen often enough, “men tend to go mad in crowds, yet come back to their senses slowly, and one by one.”
I predict the revisionist analysis will show, that the nation entered recession, in Q4 2007.
http://www.youtube.com/watch?v=V3g6NMS41rg
One person at a time
“‘You can drop the price as much as you want, but if there’s no buyer, what do you do?’ asked Haidri.”
Methinks you would find a buyer if you drop it more…the thought experiment being that it would probably sell in an instant for $1…therefore, there is some price between the current sales price and $1 that it would sell quickly and seem somewhat reasonable. Maybe your definition of “reasonable” is too high?
There will be plenty of buyers at 1998 prices and the city would have to lower taxes accrodially.
“Methinks you would find a buyer if you drop it more…the thought experiment being that it would probably sell in an instant for $1.”
Would it sell immediately in Florida with insurance and property taxes being what they are and the threat of having you home wiped out in the next hurricane? I don’t think I would take a house in Florida if someone gave it to me for nothing.
Oh come on.
Well, it really depends on the expenses doesn’t it? If your property tax and insurance exceeds the amount it takes to rent a similar property would you really want to own? I suppose one could make the argument that insurance on a home that was purchased for $1. wouldn’t be needed. However, we can’t forget maintenance issues and all that entails either. So, yes, I can see a scenario where a person would NOT take a property that was offered for $1 depending on the other variables. What do you figure is the property tax on a 3 bedroom house in Cape Coral? You can rent one for $650 according to the article.
I certainly agree with rent needing to be more than taxes and insurance (and maintenance). Although I’m not familiar with Cape Coral, $650/month for a three bedroom house seems unrealistically cheap from anything I’ve seen in FL, unless the place is a real dump. And like someone else said below, you could easily flip it and make a bundle.
I wouldn’t/couldn’t accept even a free house if the taxes, utilities & maintenance exceeded my yearly income. Do the math.
I hear you. I have lots of fun looking at the HGTV Dream Home giveaways realizing that I’d never be able to afford the utilities on most of their houses. They probably exceed the mortgage on my house by a big chunk. If I were to win, I’d just flip the house for whatever I could get.
A bit dramatic. That would be like turning down a free car because you might die in a car accident, which is far more likely than having your house blown down in a hurricane.
you know, I agree with Toast, I wouldn’t take a free house in Florida. why would you? high taxes, too hot, tanking economy, illegals…wait, I’m describing a lot of the U.S. Guess I wouldn’t take a free house in a lot of places (with a few exceptions).
agree here as well. No thanks, Fl.
Actually, their property tax and insurance, together, are likely more than my rent. Add in upkeep (time AND money), and it’s cheaper and more convenient for me to just rent. (San Diego apt.)
Damn you, auger.
I’m in Lee County (rent), and I don’t plan to buy a house here…at all–even after the bubble has finished its burst. I have heard too many stories from people here about how their tax/insurance bills are on par with their mortgage payments.
I don’t intend to stay here permanently, but I’m not leaving here for a few years, as I have a fairly secure job. I’m thinking the 09/10 school year for a move right now.
I am a teacher; unlike MANY other teachers here in Lee, I am in a good position with regard to seniority in case (when) the staff reductions come our way. Though we haven’t yet, the county will follow the East Coast’s wake and start to lose its student population.
My students this year have already been telling me about people they know who have moved or who are moving.
This is my 7th year, but, thanks to the growth/turnover here, I am further up the chain that a lot of other folks. I’m not the only teacher I know who has been reading and rereading the section in the contract about staff reductions, surplussing and seniority. This is also the first year that my school has been fully staffed–with people waiting in the wings, in case there is an opening.
“I am a teacher; unlike MANY other teachers here in Lee, I am in a good position with regard to seniority in case (when) the staff reductions come our way. Though we haven’t yet, the county will follow the East Coast’s wake and start to lose its student population.
My students this year have already been telling me about people they know who have moved or who are moving”
I’m a teacher in San Antonio, Tx. We’re getting quite a few of those kids from Florida - and California. Our schools are busting at the seams - classes are way too large and that is a huge problem.
Another poster asked if kids are being taught math in school anymore. Well, of course they are. We’re working our a$$es off to get through to them. The ones who aren’t getting it - well, there are “home” issues, societal issues, OK? And we’re trying to help out there as well with parent contact and what I call “life lessons” - as in how not to screw up.
Teachers, like everyone else, have a stake in seeing that we have an educated populace. We need help and it’s not necessarily about throwing more money our way.
No, but it is about knowing what your job is. I’m not referring to you folks, but I’m sure you’ve run into teachers who don’t even bother to define for their students what subject they are teaching them. Swear to God. I had a friend whose kid was doing lousy in school. He asked the kid to make a list of subjects he was taking. Then he asked the kid for the definitions of the subjects. LMAO! Kid couldn’t even define the words. So right there they’d lost him. He had no idea what he was even studying, or for that matter WHY he was studying these things.
The teachers that impressed me the most were those who wrote on the blackboard the name of the subject and what it meant and why it might be useful to study it. Whatta concept, eh? That’s about as basic as it gets, but there are many teachers who haven’t a clue. Trust me, I’ve met a few.
So have I, Palmetto–more than a few, actually. In many ways, I’m glad that it’s getting harder to get a job in education b/c the profession really does need cleaning up. I know of a Geography teacher whose idea of teaching Mexico was showing “The Three Amigos.” I am not even kidding.
I have to say, though, that, at least in our school (which is fairly low socio-economic and about 50-60% minority–mostly Hispanic) the kids are getting brighter each year. I’m seeing more kids who love to read than ever before, and, more kids who like school and want to do well.
Quick aside: last year, I had the students choose group names and draw a poster with the name on it. I had a group of all immigrants name their group (with no suggestions from anyone else) “Children of Liberty” and draw an amazing poster with an outline map of the U.S.A. with the Statue of Liberty super-imposed.
Just last week, there was a 13 year old railing in one of my class against over-development and “cutting down trees to build all these houses that they never finish.” She then went on to complain about the state of the yards in the abandoned houses, etc.
There is hope for the future–even down here in Lee County.
(Saywhat?: three of my students from last year moved to Texas this summer. One went to Brownsville, another went to San Antonio. Not sure about the 3rd. I know of more families who are planning to make the move there, as well.)
Yea, I would take any house in Florida for free and flip it for a few tens of thousands. Those GF’s are still willing to “own” a house despite those high taxes and insurance. There are vultures that are willing to pay 30 cents on the dollar, but I can sell “by owner” for 50 cents on the dollar and itll be sold within a week to some GF who thinks hes getting the deal of a lifetime
This is a Good point that I have Pondered.
Yes I would take a house in Florida for a Dollar, because I know I could sell it. But would I keep it?
Right now I can rent a brand New 5/3/2 2 story 3120 sf plus garage for 1k a month. ( probablty for a few months , till forclosure) Asking Price 429k. In my county, avg family income is about $35k. They said it was higher during the boom . ( about 40k. )
The point is , Taxes and insurance would run over 1k a month on this place, plus upkeep and it is really a lot more house than I need. My electric bill on a ( energy effecient? ) 3/2/1 1100 SF was $208 last month.
I’m assuming all in with upkeep and utilities this place would cost about 1700 month easily, without a Mortgage. Management jobs here with ten years experience pay about 40K per year. Most jobs pay 8 to 12 dollars an hour. And the $12 an hour are slim
If I decided to give this house to my children they could not afford to pay the upkeep on this place untill they were probably forty Years old and had a upper Level Job.
Florida’s wages suck. They always have. But when this ” Boom ‘ hit and everyone said ” We’ll get Rich just selling houses for the Rich People from up North.” , it is a real Mess.
This is Going to take a long time to straighten this Mess out if they ever do. I’m not counting on it, in my lifetime.
““Christina Torres was a drywall installer and faux painter…The job, even if she gets it, will not pay all her living expenses. ‘I’ve got $2,300 a month in bills,’ she said. ‘I’m going to have to work two jobs.’””
I’d be willing to bet that Christina Torres owns a house or two…perhaps she should sell to free up her equity?
“insurance on Torres’ North Fort Myers home”
Bingo. Do an “Equity Extraction Monetary Transfer”, ie sell it.
As someone who works in a school, I think Ms. Torres is shit out of luck “brushing off her GED” for a teaching assistant job. I mean I think you at least must have a high school diploma for that. Most places you need a college diploma.
Yes, it has to do with NCLB. I took a job at a school while taking graduate classes a while back. They announced most supplemental personnel must meet NCLB criteria - there are a few ways to do this but basically it amounted to having 60 hours college credit.
Welcome to the housing bubble walk of shame.
I believe the term is “liberate” the equity from one of the homes she “Snapped up” lol
“‘We are postponing even putting curtains on the windows,’ Haidri said.”
Oh, the inhumanity! Perhaps the government can help with their curtains. It’s barbaric, how their forced to live without curtains in their modest $480,000 townhouse.
Hey - sheets and thumbtacks are oh-so-fashionable! And I’m sure your neighbors will looooove you for that.
You see a lot of that, in new subdivisions all over central Florida these days. Sheets on the windows for more than a couple of weeks usually means either a renter who didn’t cut a good enough deal (window treatments) or an FB whose place will soon be foreclosed on. Or maybe a meth lab.
Are they nuts? $480K on a townhome???? You can get beautiful single family homes in the Atlanta burbs for like $300K with amenities up the wazu…oh by the way..a NEW single family home!!!
This guy fits the story about people thinking you’re stupid and then opening your mouth and proving it.
“Are they nuts? $480K on a townhome???? You can get beautiful single family homes in the Atlanta burbs for like $300K with amenities up the wazu…oh by the way..a NEW single family home!!!”
Yeah, true..but then you got to cope with the toxic air quality and soul sucking traffic. Ah, not thanks - been there, done that.
Maybe they can get together with this guy…remember:
“…He’s exploring ways to generate income. One option is to sell an aluminum foil-like product he says can cut people’s power bills by functioning as a radiant barrier. Another possibility, ironically, would be to get a license to sell real estate.”
Bugs: “eh, Daffy do you got any of Martin the Martian’s gamma-ray tin foil left over?”
Daffy: “Sorry Bugs, some funny looking guys in fancy suits came in and took every last roll I had…said something about heading to Jackson’s Hole”
Bugs: “Jackson’s Hole?…eh, I think I have a cousin that lives near there…says there’s Big Bad Bears that roam close by.”
Daffy: “They even bought up all of my “Daffy’s Duck Tape” too Bugsy!”
Bugs: “Eh, Daffy…give Cheney a call at that “Shadow Gov’t toll free number: 1-800-ispy-on everyone…tell’em to alert Home Land Security…me thinks these guys are in cahoots with Martin the Martian”
Martin the Martian: “That furry wabbit makes me sooooooooooooo…Angry!”
I can’t tell you how many houses I see in my area here in Bradenton FL where people have sheets over the windows. These are houses that were selling in the $400-$500k range……..
“They” are actually the “New Renters”… “They’ll” get new curtains as soon as “they” can steal them from Wal-Mart.
the sheet indicator- lagging or leading ?
It’s a sagging indicator.
Now we see why White House Press Sec’y Tony Snow needed to quit his $168,000 a year job, for financial reasons.
At the traditional lending standard of 3x income, Mr. Snow can just about afford that $480,000 townhouse, [he could get a loan for as much as $504,000] with enough left over for some gaily colored sheets and thumbtacks from Wal-Mart.
Sounds like my Neighborhood with the curtains. New houses 189k asking prices are being rented to people driving $200 Cars. Looks like ” The Beverly Hillbillies ” moving in. Blankets and sheets Pinned up over the windows, Plastic lawn furniture for the living room, blowup air mattresses for beds.
The wild thing is some of these people move in, and out in 2 weeks. These landlords must be real desperate. I can just imagine the rental agreement.
Renter……” I really want to rent Your house . I’ve got a settlement check from workmans comp coming in but I won’t have it for 30 days, and I had to give all my money to my Attorney. Can We go ahead and move in and I’ll pay You in a couple of weeks?
First Time Landlord…….. “Sure , No Problem. I trust You. You can even bring the Dogs! “
“That’s the only way we’re going to restore affordability. If we don’t make housing more affordable in Florida, people can’t afford to move there.”
A year or two ago, the mantra was “affordability doesn’t matter, it’s how much a month that counts.” If you talked about affordability, people looked at you with squinted eyes and a head cocked sideways and said “but don’t you see, rich people are moving here now”.
However, at the end of this debacle, *everyone* will be chanting “it’s the affordability, stupid”.
“However, at the end of this debacle, *everyone* will be chanting “it’s the affordability, stupid”.
The fact that prices are artificially high, relative to incomes, due to a speculative mania, rarely gets mentioned in the MSM. Everything seems to revolve around, how do we keep prices artificially levitated to keep consumers borrowing and spending. The fact is, prices are to high and economically unjustified . The sooner prices correct the sooner foreclosure rates will fall. Until then we will just continue a foreclosure cycle.
There is a long article in the Sunday New york times in Biz sectionabout a neighborhood/city going down in Ohio and not one mention of incomes to house ratio or affordability. Business reporters don’t have common sense understanding!
Wow, does this ever bring back memories of the Texas bust. There wasn’t any one headline or a press conference on TV. It was the dull, slow, house-to-house realization that things weren’t going to turn up anytime soon. One by one, everyone pulls back and there you sit.
I’ve been wondering how this will all play out in my own area of central Texas. My wife and I are still relative newcomers here having come to Texas from the west coast where cities are more established and dense.
My guess is that the housing glut will have huge geographic implications for many Texas cities. Most of the new subdivisions have gone up in newer edge areas where schools tend to be nicer (and whiter). Here in Texas the correlation between housing development and the reputation of the local schools is pretty strong. Around Waco you can almost see the school district boundaries from the air by looking at the new subdivision patterns.
Point is this. If a Town like Waco finds itself with a housing surplus of say 10% I really don’t think that 10% surplus of houses will be spread evenly around the metro area. The newer and nicer subdivisions will continue to suck in new residents from the older central city because the houses are newer, nicer, and the schools are better. The central cities will just become even greater wastelands than they already are.
Around here there are thousands of new “starter” homes being thrown up in all the outlying suburbs. Typically they are 1600 sf 3br 2ba homes sitting in former corn fields and they sell for between $100,000 and $125,000. Even with the mortgage meltdown that is still an affordable price for virtually any middle class two income couple.
Absent the housing boom I thing we would have seen a lot more renovation and sweat equity type action on the older housing stock in the central cities.
I had a coworker who was recently let go that came to California from the Texas bust period (was it something about oil?). He said that it was hard for people to get any job there. So no jobs means how do you pay a mortgage or rent????
The newer and nicer subdivisions will continue to suck in new residents from the older central city because the houses are newer, nicer, and the schools are better. The central cities will just become even greater wastelands than they already are.
I think the price of gas will have a large effect on these outlying exurbs. Some people may not be able to afford to drive 80 miles round trip to their jobs.
Also, your hypothosis on racial makeup of the newer subdivisions may be slightly out of date. With the increase in subprime lending(especially the no money down part), I know of several subdivisions south of the metroplex were minorities makeup a large percentage of the buyers.
“It doesn’t help, he said, so many newly-built houses in Cape Coral are on the rental market at fire sale prices. ‘There are people desperate to rent their house because they can’t sell it,’ he said. ‘I can rent a three-bedroom house for $650.’”
Ah, isn’t it nice to be a tenant? If you can rent that house for $650 a month, that house isn’t worth even $100k lol!
That’s exactly right. And when I was trying to explain to local realtors that rents matter, about two years ago, they just looked puzzled.
You know, I’ve never rented, but am getting a rental in a week or so, just waiting for the owners to move out. But while I’m waiting, I’m planning on cleaning out my two storage units full of stuff from my house (sold) and will try to sell everything but the stuff I really want to keep. I’ve become intrigued with the idea of living in one place for awhile, then moving to another, something I could never do when I owned. Since my responsibilities are pretty light (just me and some dogs and cats), I can pretty much move when I want (not retired, but work for myself).
Sort of a Kerouac kind of attitude right now, have joined the Slackers Revolution (don’t earn much and don’t pay much to our gubmint in taxes). Somehow I suspect this is going to catch on more among those of us who can do so, the freedom of renting is pretty nice, as well as we’re all pretty fed up with where our tax monies are going.
But…but…but…you won’t be invited to dinner parties. If you go this route, shouldn’t you at least buy a brand new BMW or Mercedes (on credit, of course) to park in front of the place you are renting? You don’t even need to drive it, it would be there to just impress the neighbors.
Buy a cardboard BMW to put in the driveway.
Well, the irony is that I actually have a really nice brand new vehicle, and it’s 100% paid for.
We’ve living parallel lives!
where are you? maybe one of us has multiple personality disorder and doesn’t know it…
I’ve personally been to Cape Coral and it is a mess. Lots were divided and sold to investors over 30 years ago for a few thousand a piece. Few people built on their investments, resulting in an undeveloped community. Five or six years ago you could still buy a lot for $5,000, but prices escalated during the bubble and peaked at about $115,000 in late 2005. This area had homebuilders buying up appreciating land and selling homes to speculators and flippers, with very few people actually buying to live in the town.
Don’t make the mistake of thinking Cape Coral, FL is a typical housing market.
I beg to differ. Having lived in Florida over 10 years and travelled through a lot if it, i can tell you that Cape Coral, FL is a VERY typical housing market in Florida. There are empty speculator houses and condos just about everywhere here. Areas of Orlando look like a nuclear wasteland of uncompleted or empty developments and condos. Ditto greater Miami. Lakeland. Tampa. Ocala…
Cape Coral has vacant lots lined up next to each other, with some houses here and there. If that is typical for a Florida subdivision, then I am one sheltered person, because I have been traveling to that State for 35 years and am a property owner. I guess you need to choose your location carefully because the area I go to is not suffering like Cape Coral.
You are correct. My step-dad had one of these plots in Cape Coral he got from his father and it had been worth around $5000 for the longest time. They were getting unsolicited offers of over $100k constantly back in 2005 and I told him to SELL. He held on to it thinking “land doesn’t go down in value” and it’s probably now back to $5000…….
Hey Utah-
My brother has to sell his house because he’s been on the unemployment line too long. His broker told him to move his family out NOW - that they should start renting - so it’ll be easier to sell the house. Broker claims faster sale plus “20% higher price”.
Has anyone heard of this? Did you start renting before the sale, Utah? Doesn’t seem so.
Only if the house is filthy and/or furnished in early shabby Salvation Army decor.
It’s possible the broker is thinking that offers will come in faster on an empty house — I’d guess that is true. Problem is, of course, that most or all of those offers would be from sharks who smell the blood of an empty house. But it DOES imply a motivated seller and that is likely what the broker getting at.
As for the 20% higher selling price, gimme a break. 20% higher than what? Seller’s going to have to take a bath, but it’ll be a bigger bath the longer he waits, IMO.
I’ll note that that the home is located in a fairly prosperous NJ suburb/bedroom community, 45 minute out of Grand Central. Not sure if the current downtrend is as pronounced in that area.
It’s also possible the realty-whore is thinking that a house vacated will cause the owner to be very negotiable on a sale, thereby accepting a bid sooner, and producing a commission sooner. De-clutter, stage, and live in the house until sale, IMO.
BTW, I rented before I sold a few years ago. Intended at the time to buy again, but would not commit on #2 before having cash-in-hand from #1. Found Ben’s blog about the time. I’d have been SOL today if I had bought, at the prices then.
“‘I can’t even get a basic cashier job, things are so bad,’ she said. ‘I have 15 years’ mortgage experience. When they look at my resume, they basically say, ‘What are you doing here? You’re overqualified to be an $8-an-hour cashier.’”
I can attest to this one, I live here in Naples, FL. I arrived in January of this year. The only job I could find is paying me $10.00 an hour, so I treat my time here as “vacation” even though I work five days a week, while I look for work in other states. I will not be here past December when my lease expires.
Six years ago I lived here and easily found a job paying 30K, they were plentiful, of course I only paid $72k cash for a decent real condo then so it worked. Those condos are now in the $235k range and jobs only pay $10.00 an hour now, this business model doesn’t work. Naples, FL is total toast.
Six years ago there wasn’t a Mexican to be found here either. Now they are everywhere you go. There was an article in the local paper and on television here how Mexican’s represent 32% of the jail population. They are also eating up all the county health services, they are breeding here like rabbits. I how the affluent seasonal midwest bitches are pleased when they get here this “season” to find their waitress asking them “hablo espanol?”
South Florida is a dump now. Full of illegals, crime and crappy jobs. I could not find a job paying more than $10 an hour either so ive become self employed and will be moving to another state with nice houses for $50,000 and none of the problems south Florida faces. North Florida has less problems but not worth it still.
Dolores Taylor, the former mortgage underwriter said a history of making good money is no help in the search for a new job.”
“‘I can’t even get a basic cashier job, things are so bad,’ she said. ‘I have 15 years’ mortgage experience. When they look at my resume, they basically say, ‘What are you doing here? You’re overqualified to be an $8-an-hour cashier.’”
- How odd, the CNBC experts have said for months that employment is strong and it is different this …..
Hey they aren’t saying you can’t find a job..you just can’t find one in FL that will afford you more than a cardboard box under the turnpike bridge..
Happy I left SFl everyday!!!!
I wish my parents would wake up and get outta south FL too! The only good thing they can say is the weather. I hate the weather except in the “winter” when it gets to 70 then it’s not so burning hot. Even the snowbirds that visit south FL do only for the lack of winters. A little cold never hurt anyone
I am as anti-PC as they come, but your last paragraph was atrocious. Nice job turning an informative post into a racist rant (breeding like rabbits).
If they had refered to So Cal -
they would of been ‘UNDER-REPORTING.’
Now you all be nice and leave little Jose and Isabella alone. You hear… Seniorita TOAST!!!
Sorry, 2006 stats show that there were 4700 non citizen inmates in Florida, out of a total of 88,500 inmates. Hardly 32%.
Please turn off Lou Dobbs and try not to sound like a bigot.
This was on the local news, thank you.
http://www.marconews.com/news/2007/jun/30/collier_sheriff_partners_feds_curb_jails_illegal_i/?latest
I’ll retract the 32% that’s what county employees said. 25% is much better ratio.
remember, we mexi “cans” are the ones out there cutting your grass, growing your crops and cooking your food, you cant do for yourself.
mexicans didnt buy all of these homes either.
better yet, i hope all of the mexicans go back to mexico and americans work for the slave wages americans dont want to apply for. then again there is alot or re cheerleaders needing jobs right now.
I can’t tell you how not threatened I am by the prospect of Mexicans going back to Mexico. Every time this threat is raised, I just think, “please?” I’m far more threatened by the prospect of American blue-collar pay being undermined by those used to a lower living standard, than I am by the prospect of having no access to cheap labor to do my yardwork. Seriously, the only people that will respond to your threat are those that employ cheap and often illegal labor to run their businesses. Unfortunately for me, those are generally the same class represented by DC lobbyists. The theory of trickle down economics is 99% BS, we all know whose pockets the profits of cheap labor end up in. Take your threats to DC, where you’ll be able to scare the rich immoral people.
Geez, postman, I cook my own food, and live in a condo where the grass is cut by Americans of varying ethnicity. Get my fruits and veggies from a local hydro harvest farm owned by a nice American family.
Personally, I don’t care where somebody is from as long as they are not illegally here. It just happens in this area, the majority of illegals are from south of the border, though we do have a few Russians I’ll bet are here illegally.
Go, postman. You are the man. The little “Speedy Gonzalez” of the sacred land of the Chihuahua !!!
“Rhomberg attempted to rent the house until it sells, but a property company said not to bother listing it, the company is flush with properties to rent.”
“It doesn’t help, he said, so many newly-built houses in Cape Coral are on the rental market at fire sale prices. ‘There are people desperate to rent their house because they can’t sell it,’ he said. ‘I can rent a three-bedroom house for $650.’”
Can someone explain to me again all the news we saw this week about rent going up this year, cause I just don’t get it.
About the only city I could see that applying to is NYC..in SFL you can get into a home with low low rent and no deposits…
We’ve been looking for a rental house in the Chandler/Gilbert, Az. area. The rates seem to be $100.-200. higher than a year ago for the identical floorplan in the same zipcode. We finally gave up in disgust and signed a lease renewal for our apartment.
“The Speculators Need To Be Hurt”
Yea Baby!!! Bring on DA PAIN!!!
Be careful what you wish for. Yes, most of the r/e speculators are toast, even if they don’t know it yet.
A good friend, retired teacher, is living on a modest public teachers pension, with health insurance. Has a mortgage, 7/1 ARM due to reset in 3-4 years. I bet a million bucks the pension plan is stuffed full of this financial gobble-dee-gook. Sadly, she is toast too in a few years.
Quick question…if she bought in 2004, why didn’t she get a fixed rate loan? Weren’t rates at something like 5.5% for a 30 year fixed rate conforming loan? That’s an *insanely low rate*. Why didn’t she lock that in?
Because the “teaser” rate was 1.25% and she was “making her pension go further”. Not realizing it was further down the road to financial ruin.
Don’t know why she didn’t lock a fixed rate in, but it was probably a teaser for the first 7 years - I can’t imagine it being worth it, but she probably only looked at the monthly payments, and compared it to her pension check.
The sad thing is that if her pension and/or health care gets cut, because of all the financial crap floating around out there, she is toast. The idiots who bought all this crap, like the pension funds, etc, and subsequently all the people who have investments or depend on income from them, are the ultimate bag holders.
Even if the federal govt bails them out, by, what else, printing money, all the rest of us suffer through higher taxes and/or inflation.
Then the nice teacher will just have to die. Every body dies sooner or later. So I think the teacher will die sooner when she does not get her health insurance to be in a hospital when she is having one of those “FAT-ASS POMPOUS AMERICANO Heart Attack”…
“Rhomberg soon dropped the price to $360,000. Then, he shaved it to $345,000. Again to $325,000. Then, $305,000.”
All those shaves. How about a haircut?
and house for two bits, ba ding boom
He would be better walking away at this point
RJ — good one — not many of us here old enough to remember the jingle that it came from.
“People who work for a living are feeling the pain — especially those in the construction trades who find themselves unable to make close to what they did during the boom.”
Somehow it’s hard for me to feel sorry for those people who were making big bucks in the construction trade. They were getting so arrogant that it was next to impossible to get them to do small jobs for us “little” people like basic repairs to our houses.
And just who are they really referring to? The owners of these companies? I know people who have worked construction all their careers and they didn’t see their income skyrocket merely because housing was booming. But I’m sure their employers did.
The owners brought in more and more illegals to build around here. Jacked up the price and pocketed the cash. And being good developers that they are, they spent it all and are now going broke.
I know a flopped flipper around these parts who bought a house, upgraded it, can’t sell it and now houses some of his illegal workers there. I’d hate to be the buyer of that place a few years from now. If and when I do buy a place, I’m having it inspected for things like chagas disease, TB (not sure if TB dissipates, chagas doesn’t), etc.
My ex just bought his 6th house. He has the others mostly paid for, if not all paid for, rents them out. He works really hard and lives like a miser, saves his money like crazy and is now pretty wealthy. But this last house purchase was based on pure greed - he’s going to flip a tiny brick house that’s already overpriced by 40%. I told him about this blog some time ago, but he ignored me - he thinks the RE market it still hot here in W. Colo.
Ironically, there’s been a house for sale for months next to where he lives.
He’s going to lose his a$$. I hate to see it happen because he’s a decent guy. Just got greedy - well, I guess greed maybe isn’t really very decent.
“Wachovia Bank economist Mark Vitner said Bush is doing the right thing by not offering help to investors. ‘In Florida and California, unfortunately the speculators need to be hurt,’ Vitner said. ‘That’s the only way we’re going to restore affordability. If we don’t make housing more affordable in Florida, people can’t afford to move there.’”
IMO, this issue is underdiscussed amidst the race to bail out the housing market. Given the Fed’s apparent eagerness to support asset prices at their recent, unaffordable levels through FFR cuts and God knows what unannounced programs, it looks like a long period of economic malaise is in the cards for CA and FL, as the ‘little people who pay taxes’ and provide the labor inputs necessary to fuel local economies cannot afford to settle in these overpriced locales.
i think it was the LA times headlines yesterday - i quickly glanced through the newsrack glass on my way into ralphs - pronouncing bush’s bailout DOA for LA county, we’re too far down the road.
“The situation isn’t likely to turn around soon, she predicted. ‘I can feel the recession,’ she said, ‘and it’s going to get worse.’”
I work in the banking industry and analyze online bill payment trends for banking customers at several banks. We process about $8 Billion in online bill payments per month, and YTD, the average dollar amount per bill payment comes out to about $540 to $550 per month….until we got to July, where it went down to $500 per bill payment per month (10% decrease). Ok, so one month does not a trend make, but it’ll be interesting if this trend does continue.
Hondje, your inside view may prove very valuable. Please keep us posted.
“‘I can’t even get a basic cashier job, things are so bad,’ she said. ‘I have 15 years’ mortgage experience. When they look at my resume, they basically say, ‘What are you doing here? You’re overqualified to be an $8-an-hour cashier.’”
Perhaps it’s the attitude. “I can’t even get” is like saying “OK, I know I am too good for this but I will slum it.” Who wants to hire such a person? A job’s a job’s a job. Any work is honorable… even working as a “lowly” cashier.
Most likely, the store managers look at her resume and see that she is underqualified. Mortgage brokers have not provided much of any value over the past 5 years to real estate transactions. What benefits can an angry former mortgage broker bring to a retail store?
Yes all work is honorable.
But she is up against the “why pay her $8, when I can get an illegal for $5″
Bush et al are trying to keep asset prices up because if the local gov’t has to “mark to market” tax revenues will plummet and many locales will go BK. Got to keep up the illusion.
FL need to realize they are low wage, low cost, NO GOV’T state. But since most of the NY/NJ/CT retirees want what they had up north, gov’t grew and grew. Prices drop 50%, tax revenue drops. Or the gov’t raises the mil rate to keep the same amount coming in and people see themselves paying an even LARGER tax bill on a house worth next to nothing, and they will vote the bums out of office.
Another idiot waiting for that majic spring market when all will be well again. But I thought everything was groovy in Austin!
http://austin.craigslist.org/apa/412006630.html
So has Austin reached it’s “City Limits” in reagrds to specuvesting?
It’s not a bad house. Don’t think it’s worth the $300+k they are asking for it.
http://www.austinhomesearch.com/Search/AdditionalPhotos.aspx?id=57847&mlsid=6164439
TXchick(or someone spoofing her) was planning to spend $300k on a house much like this one. I sure hope she(or the spoofer) was kidding because she knows well enough that this house is really worth only $150k LOL
It wasn’t even close. The place I was looking at was a factor of 5 better than that one.
yeah, and pets negotiable means they’re desperate, esp. with teak wood floors and designer everything.
totally completely OT - for TXchick and otgher dog lovers - just read a fantastic book - Merle’s Door - by Ted Kerasote - lives in Kacson Hole area - check it out
Kacson Hole shld read Jackson Hole
I recently called about a rental property in Gilbert which was posted on Craigslist. The owner, who identified himself as a realtor, stated that he was only interested in a six-month term since he hoped/needed to sell upon expiration. I questioned whether he would be able to do so given the state of the local market. He responded that he really hoped so since the costs were double what he was asking for rent. I have looked at many rentals in the area during the past two months, and virtually all are owned by realtors.
Noticed a strong vein of that here too while perusing the newest r.e. catalogue……Many were extreme high-end listings. I cannot imagine what will happen to these
I believe Austin is a year late on the bust but it is making it’s way here in the coming months. Tightening credit, seven new towers filled with quarter million dollar condo’s coming on line, and the usual problems of income-to-affordability.
Saw a reprint of a recent Kiplinger Mag article. The author said she and her husband moved from SF to Baltimore becaus ethe cost of living is less. The article was about “starter cities”, low cost places where professionals could get started on less money and still save, etc.
She was proud of the fact that because of the move they were able to save AND BUY a house. This “money maven” BOUGHT into a declining market and thinks she will be able to move in five yrs.
Have the people at Kiplingers not noticed that loud popping sound?
I guess everything is relative because B-more and surrounding areas are WAY overpriced. I left there in 2003 and thought things were too high then!! Of course they are coming from San Francisco but yes, they are buying into a declining market for sure….
$650 for a 3-bedroom in Cape Coral? That town must be hosed!
Rents in Gville haven’t really come down much (if they have, it’s mostly because of oversupply). Nothing like government spending to even out the bumps.
‘So, unfortunately, we Realtors must sit, wait and “whine” until someone in power does something to help make homes affordable again and bring the buyers out of hiding.’
It’s the “we Realtors” that helped fuel the housing problem and are now complaining. It is the “we Realtors” who informed their clients of incorrect information that housing prices would not fall. It is the”we Realtors” who tried to corner the market by purchasing the houses and then inflating the price of the home by $50-$100,000. It’s the “we Realtors” that helped fuel the rapid increase in property taxes due to inflated prices. And it is now the “we Realtors” that are complaining because they have driven the affordability out of the housing market and no longer can afford to stay in business.
We the public need to send a loud and clear message to the “we Realtors” that we are no longer going to buy houses at the current price levels and we are not going to bail you out of your mess!