Dramatic Price Reductions Have Had Limited Success
The Memphis Business Journal reports from Tennessee. “Shelby County’s second-largest homebuilder, Levitt & Sons of Tennessee LLC, is leaving the market after parent company Levitt Corp. made a decision to exit the state. ‘Sales are not as prevalent as last year,’ says Anthony Gunter, president of Levitt & Sons of Tennessee.”
“Levitt’s exit from Tennessee, though decided on prior to the current layoffs, is part of a company-wide downsizing. In a letter to employees, Levitt Corp. leaders recently explained that the layoff decision could not be avoided since home sales have slowed significantly.”
“Efforts to increase home sales ‘through incentives, dramatic price reductions and aggressive marketing have had limited success,’ according to a recent Levitt Corp. filing with the Securities and Exchange Commission. ‘We cannot assure you that no further downsizing of our homebuilding activities will be required.’”
“‘If they dump everything they have, they will hurt the market,’ says Tim Wilson, president of the residential division at Chamberlain & McCreery. ‘It won’t hurt if they sell off what they have. It’s a responsible way to leave.’”
The Savannah Morning News from Georgia. “Eighteen months ago, upscale Whitemarsh Island apartment complexes Walden Park and the Merritt went condo, instantly adding more than 500 new homes to Savannah’s islands area.”
“Last month, online real estate auction marketing company Freedom Realty Exchange put 40 of the 70 remaining Mercer Point units up for bids in an online auction. Bids on 20 of those are set to close Thursday.”
“Minimum bids start at $86,000 for most units, although several models have $1 minimum bids and are guaranteed to be sold, said Kelly Lovegrove, communications director for LFC Group.”
“The minimum bids represent discounts of as much as $40,000 over the original prices, Lovegrove said.”
“Down the road at Merritt on Whitemarsh Island, Cora Bett Thomas Realty is offering hefty price reductions on the development’s last 30 units. ‘Everything is under $200,000 now and we have a number of units under $150,000,’ said sales agent Melanie Wright, who also sold the property for the developer when it first went condo.”
“‘That’s a pretty substantial price drop for units that were selling in the mid-$200s originally, but it’s also typical when a developer is closing out a property,’ Wright said.”
“Some original buyers have expressed concerns about the price cuts, Wright said. ‘But once these last units are sold and there is no more availability, the values will come right back up.’”
From CBS 4 in Florida. “With the spike in South Florida foreclosures, construction workers are feeling the heat, and we’re not talking about the South Florida sun.”
“Residential construction has slowed to a crawl, resulting in the loss of about 1000 construction jobs. Some local tradesmen told CBS4’s Al Sunshine they’re starting to worry more and more about a possible bigger slow-down over the next few months.”
“‘Yeah we still have jobs but it’s tight; it’s kinda tight,’ said welder Charles Eloisil. ‘I’m worried about it a little bit. Well I’m not making enough money. I’m making minimum wage now.’”
“Sam Bolden isn’t taking any chances. The Florida City native already has his own plan if the local construction industry doesn’t need elevator contractors any more. ‘If it does,I’ll travel go to Vegas [and] work over there for a while,’ said Bolden.”
The Miami Herald. “In the first roundup of suspects under a new campaign to crack down on home loan fraud in Miami-Dade County, 11 people — brokers, borrowers, sellers and title agents — were arrested in three separate mortgage fraud schemes, police announced Friday.”
“‘In the coming months, you will see more fraudulent mortgage brokers, title agents, attorney’s appraisers, and others bought to justice,’ Miami-Dade Mayor Carlos Alvarez said at a press conference announcing the arrests.”
“The roundup comes a week after federal prosecutors charged 18 people with taking out fraudulent home loans worth more than $50 million to buy luxury condos on South Beach and homes in Broward County.”
“In a third case, police said they were tipped off by a seller, who said he was approached by a buyer with an offer of approximately $100,000 more than the asking price for his condo. The buyer allegedly wanted the money to be returned to him as cash back at closing, purportedly to make renovations to the property.”
The Tampa Tribune. “At the peak of the housing boom two years ago, apartment renters like Richard Daniel were at the mercy of landlords in the Tampa Bay area. Rents were skyrocketing, up to 13 percent a year in some areas, such as Pinellas County.”
“These days, though, Daniel finds himself in the driver’s seat.”
“As he searches the Bay area for a new apartment, landlords have been showering him with promotional offers, such as a free month’s rent here, or free use of a washer-dryer set there.”
“‘I’ve noticed some landlords, as I’m walking out the door, will say, ‘Let us know, whatever it takes to get you in here, we’ll work something out,’ said Daniel.”
“During the housing boom, Bay area developers snapped up apartment complexes, gussied them up with new landscaping and appliances, and turned them into condos. Between 2001 and today, about 31,000 apartment units were converted to condos in Hillsborough, Pinellas, Pasco and Polk counties, the Cushman & Wakefield estimates.”
“Michael Slater, who runs Triad Research & Consulting, said landlords have entered a concessionary mode where they’re offering promotions to get people to rent empty units.”
“Apartment broker John Stone said landlords spent millions upgrading their apartments to ready them for sale as condos. Many landlords must charge higher rents to pay off the cost of those renovations, he said.”
“For example, an apartment that might have rented for $700 a month before its conversion into a condo might come back onto the apartment market with a rental rate of $850 a month, Stone said. That phenomenon is boosting the overall average rent in the Bay area, Stone said.”
“William Sultenfuss, who owns two apartment complexes in Pinellas County and one in Hillsborough, never converted his apartments into condos. However, he says he’s competing for tenants against many landlords who did just that.”
“Sultenfuss said that he and other landlords can’t continue to hold out much longer. Already, he is considering dropping rates at his complexes, he said. He likens the situation to the single-family-housing market, where homeowners have been reluctant to drop their prices, but will eventually be forced to do so to find buyers.”
“Sultenfuss said that he and other landlords can’t continue to hold out much longer. Already, he is considering dropping rates at his complexes, he said. He likens the situation to the single-family-housing market, where homeowners have been reluctant to drop their prices, but will eventually be forced to do so to find buyers.”
I can attest to the easing of the rental market in the Tampa Bay area, as I am now a beneficiary of this phenomenon. And it is true, at the height of the bubble, finding a decent, affordable rental was a major frustration. I had not been a renter since 1992 and it was a shock at first. One thing I learned about is the vast proliferation of subsidized rental housing in this part of Florida. Wow. What a boondoggle the USDA housing scam is.
Here’s a little taste and I’m actually typing this out from the August 31 issue of the Waterfront News (which I’ve saved) here in South Hillsborough County:
“Florida Home Partnership purchased nearly 9.5 acres of land from Spencer Farms Inc. in Ruskin for more than $1.5 million.
The buyer is known for creating affordable housing communities, including Bayou Pass in Ruskin.
While the county’s property appraiser has listed the nearly 10 acre site as having a just market value of $218,000, FLORIDA HOME AGREED TO BUY THE LAND FOR $1.54 MILLION.
Attempts to reach Florida Home Partnership’s executive director, Earl Pfeiffer, were unsuccessful.”
Well, whaddya have to say, Earl? A little strange, doncha think, expecially since Florida property is currently over-valued? What’s going on here, Earl?
Palmetto, I’ll see your 1.5 and raise you 350.
http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20071004/NEWS/710040483
Babcock audit questions state influence
By BOB MAHLBURG and KEVIN DALE
STAFF WRITERS
bob.mahlburg@heraldtribune.com
kevin.dale@heraldtribune.com
The biggest environmental land purchase in Florida history was based on an appraisal that appears to have been influenced by state officials to satisfy a private developer, according to a state audit.
But the audit stops short of saying taxpayers paid too much for Babcock Ranch.. And a Charlotte County tax official said the higher property appraisal appears justified.
More than 73,000 acres of the ranch in Charlotte and Lee counties will become a state preserve, with a residential development expected to eventually house 50,000 people on bordering land.
Auditors criticized the state purchase because they said it was based on appraisals that did not explain the land’s value and left “an appearance of influence” by state environmental officials.
State Auditor General William Monroe cited documents used in the purchase last year by the Department of Environmental Protection that show the agency got two appraisals of the land, but then ordered two new appraisals that boosted the estimated value nearly 50 percent.
Auditors questioned an undated, unsigned document that said the first appraisals fell $117.2 million short of developer Syd Kitson’s asking price of $350 million for the ranch.
The document, which says, “Our challenge is how to meet his price with the appraisals,” lists two options: pay more than the appraised value or have the property reappraised.
The state chose to do new appraisals in 2005, a year after the originals. But auditors said the appraisals fail to properly document why the new values were so much higher.>>>>>>>>
LMAO! And people wonder why we have budget shortfalls all over Florida, at the state and local levels.
By the way, I want to send a shout-out to my gal Rose Ferlita, Hillsborough County Commissioner, for standing up to the idiotic plan to pave over East Hillsborough County in the Plant City area with a huge sports complex. You go, lady! Unreal, she actually had to go on the air with reams of paper representing unfunded, necessary programs to prove that this “sports complex” is an unecessary luxury we can’t afford. Good for Rose!
stadiums are always BS taxpayers ripoffs
Does Florida have the title of crookedest state, or does it just look like that on a map?
Great to hear, palmy. Here in Thurston co we have one great county commissioner, one dozey dingle, and one who probably wears a hard hat to bed, whether or not it clashes with her jammies.
Those small cabals reeeeeally make a difference in what your community will become. I think it’s great you pay attention, and that you spread the word.
You don’t know what is going on???
Cash back!!
To my astonishment, of late there have been plenty of vacancies in my south Tampa apartment complex, which is not in a high-crime area and which does not charge premium rents. If people can’t afford these rents, there’s no way in hell they can afford a mortgage, property taxes, and insurance even if these things were halved from their current prices and rates.
I see that Lawrence Yun was not quoted on this point during his speech to realtors in Clearwater last week. If I had known he was scheduled to give a talk at that function, I might have crashed it.
The vacancies have been going up all over the state..why?..alot of those people who rented over the past few years were in relation to the building industry..since that has dried up they have left for greener pastures in other states…I have some friends that own apartment buildings and they said this is the first time in the last 10 years they have had a hard time getting tenants..also they said rentals are available in many SFH for cheap so some of their renters said it was cheaper to rent the 3 bedroom house and get roommates.
I had this discussion yesterday with someone who expects rents to increase. I argued:
Foreclosed FBs will create higher demand for rentals. However, the properties they leave behind will increase supply and drive down home prices. Consequently, bubble sitting bitter renters will be motivated to wave goodbye to their landlords and buy. Landlords will need to keep that plus shadow rental supply in mind before increasing rents.
The NAR is trying hard to create the meme that you should buy because rents are going up. Rents track incomes. I’m not seeing rapid income inflation…
Got popcorn?
Neil
And Neil, IMHO, you won’t see it anytime soon. Where’s the pressure going to come from, the UAW?
Its going to be intresting to see how the governments in Fla and California deal with a severe deflationary enviroment.
Considering where Michigan/Ohio/Illinois are at along with Colorado; I expect companies to move there. Should be much lower opperating costs. That will a strong negative growth function for the coasts.
We will have an increasingly grey population. I also expect that we will see a flood of summer rental/tourism push in the southbagholder area to pay for all tis crap.
I don’t think we have so many millionaries here… at least as many as people think.
Foreclosed FBs have absolutely nothing to lose by screwing with a land lord.. bouncing rent checks, destroying property, complaining about conditions in a rental, and/or just “forgetting” to pay the rent and fighting for the full 6 or 8 months it will take before they are finally threatened with physical eviction by authorities..
i don’t think FBs will find it easy to rent en mass, and i dont think they will be a large part of some fanciful impetus that NAR imagines will drive rents upward in what is probably going to be a recession in anycase.
My Hyde Park landlord just raised my rent, claiming his insurance and taxes went up–the same thing he said last year. I pay more to rent an apartment, than many people pay to rent houses, townhouses, and condos.
As for subsidized rental housing in the Tampa area, it’s a nightmare, and pushes prices WAY up everywhere because landlords know they can fill their places with people from the military or poor people on welfare, and one government or another will pay whatever they want. This is especially the case in south Tampa, which pretends to be ultra-prosperous.
“he was approached by a buyer with an offer of approximately $100,000 more than the asking price for his condo”
How many cities and towns have this same type of sale? How hard will it be for Barney and Dodd to go thru all the sales to find the fraud before they let the taxes go unpaid? They may find out that the people they let off the tax payments own multiple homes.
Each of which they indicated was their primary residence on the loan documents.
Does the tax break even contain an exception for fraudulent borrowing? Or is mortgage fraud now going to be the best way to steal without even having to go to the trouble of laundering the money?
Why didn’t congress bother to bail out rich dot com investors?
Why can’t homebuilders and banks go way down and stay down the way tech stocks have done.
Why do people buy stocks in an industry thats down in the earnings?
The difference being…
Dotcomers weren’t part of the powers that be, and honestly, a dumber bunch of entrepreneurs, i’ve never seen.
You just didn’t “get it”.
I got it, but I saw a doctor and got rid of it.
One type of fraud in CA that I heard about was a person with excellent credit would be offered $15k in return for the use of their name to buy a home; the payments would be made by the real ‘buyers’ of the property who because of bad credit would otherwise have had super high interest rates.
Incredible. What’s to stop the signatory from repossessing the property whenever they wanted? How dumb can people get?
Evidently, very!
That kind of fraud is rampant in SFL..I see it all the time when I look at the MLS..McMansions in this market selling for 1.2 when the asking price was 1Mill…even with lower price homes listed at $450K sells for $500K..nobody cares in SFL…the buyer looks at it as easy cash in the bank, the seller says “Thank God somebody bought my house,”, the realtor and mortgage broker say yea! Got my commission and the appraiser says “finally some work.” It is all their in black and white and no one does anything about it..I mean they make such a big deal about Fl being a “fraud state.” and yet even the finance company doesn’t bother to ask why this home is selling for $100K more in this market because they are going to make money on the interest…The cycle just goes on and on…greed$$$$
“Some original buyers have expressed concerns about the price cuts, Wright said.
‘But once these last units are sold and there is no more availability, the values will come right back up.’”
-The ‘values will come right back up’?! That guy has been smoking the herb to long.
It’s too bad that mental gymnastics isn’t an olympic event. I’d give this guy a 10.0.
Why, because its utterly impossible to buy anything else across the street?
It’s all about perspective. Maybe he’s thinking in geological time…
I believe he is a she…Melanie Wright. She is a sales agent, so can we really expect her to not be selling this as a “window of opportunity” ?
This spin will be seen as nonsense in the next six to eight months as the distress continues due to ARM resets, increased foreclosures, higher lending standards, higher mortgage rates and ridiculous levels of inventory.
I’m glad to see that arrests are being made! But I’d really like to see individuals arrested too!
Three cheers for this seller for turning them in! But what about the thousands of transactions like this last year where buyer and seller were complicit? It’s immoral of Florida not to find some of these people and arrest them. The harm they did–by causing property taxes to rise, by cheating the lender’s shareholders, by essentially fixing prices so people who wouldn’t consider toxic mortgages were priced out–was enormous.
Even “little cheats” like misstating your stated income should be dealt with severely. (At least, make them liable for income tax on that Stated Income.)
I’ll write some letters to Miami/Dade prosecutors (as if that would do any good. They’re probably still busy parading around with Anita Bryant.)
Groundhog Day Island (suggested new name for it)
“Some original buyers have expressed concerns about the price cuts, Wright said. ‘But once these last units are sold and there is no more availability, the values will come right back up.’”
During the depression in the 1930’s, it was common for men to traipse all over the country, riding the rails, hearing of employment opportunities that didn’t ring true, once they got to there…
The only thing that’s changed, is the mode of transport to get there.
“Sam Bolden isn’t taking any chances. The Florida City native already has his own plan if the local construction industry doesn’t need elevator contractors any more. ‘If it does,I’ll travel go to Vegas [and] work over there for a while,’ said Bolden.”
Right, he shouldn’t count on anyone already in Vegas giving up even 15 minutes of their O.T. pay to make room for another little piggie at the trough.
I recall that in 2005, I used to use conversations with my tradesman friends as an anecdotal measure of the market. When I would ask them what they would do if it ever slowed down, they almost all told me they would go to Vegas. About half are gone now, but none to Vegas.
Interesting. Word on the street for the documentally challenged construction workers in Fla is that the Carolinas are the promised land.
During the airline slump of the early 1990s a lot of mechanics talked up going to Vegas to get work in HVAC, elevators, and other mechanicals. Two that I knew actually did it - said the casinos liked Midwesterners’ work ethic. But that was early on in The Strip’s boom - and those types of guys have undoubtedly closed up their ranks since.
Oh, great blog Ben - thanks for the education - it’s helping me a lot with my graduate degree.
great, but don’t forget to send Ben some tuition, then
construction work.. construction work in Vegas??
forget vegas.. he should go someplace that has mild weather year round, and is homeless-friendly, like San Francisco
The WSJ ran a front-page article titled, “Is Florida Over?” a week ago. Today they printed some rebuttal letters to the editor. One economist had the gall to describe how Florida’s population is still growing, though less rapidly, based on the number of new electric meter connections. How much electricity does an empty house use? Is YOY electric consumption increasing at the same rate as meter connections? I doubt it. Is YOY electric consumption increasing at all?
Gonna see if I can get some consumption info from FPL and TECO web sites.
“One economist had the gall to describe how Florida’s population is still growing, though less rapidly, based on the number of new electric meter connections.”
ROTFLMAO! He’s basing his assumptions on the proliferation of marijuana grow houses! Oh, God, I can’t stand it, I’ve got tears of laughter running down my face..
“You’ll love it @ Levitt’s” (el lay furniture chain jingle)
“Levitt’s exit from Tennessee, though decided on prior to the current layoffs, is part of a company-wide downsizing. In a letter to employees, Levitt Corp. leaders recently explained that the layoff decision could not be avoided since home sales have slowed significantly.”
(el lay furniture chain jingle)
Also used to hear that all the time when I lived in So Flo.
I was on Cavuto bitching about my county that allows folks unlimited earnings ounce they get in-some now making 6 figures, probably with the county………
Huh?
“Apartment broker John Stone said landlords spent millions upgrading their apartments to ready them for sale as condos. Many landlords must charge higher rents to pay off the cost of those renovations, he said.”
“MUST charge.” Well, Mr. Stone, you’re about to find out that that is not the same as “Must GET.”
That’s what is so great about rent — it’s the Meter of Truth. No amount of wishful thinking is going to have me affording more rent money than is in my wallet, and because in a move, renters do not have the level of expense as homoaners, rises in rent can be voted on with renters’ feet much more swiftly than can increases in taxes and insurance by stuck owners of properties for which they paid too much in the first place.
Yes, Chip, when I was going through my frustrating search for a rental, I had landlords of POS older flipper houses give me the “haftaget” routine. “I haftaget X amount of $$ to cover my mortgage”. I had to bite my tongue to keep from saying “Get bent, buddy”. Yep, and I drive by a couple of those houses every once in a while to see the For Rent signs out front, because they “haftaget”. What idiots. If they’d taken a reasonable rent in the first place, at least they’d have some money coming in to cover at least part of the mortgage. But oh, no, they “haftaget” nothing rather than something.
Actually, this does make *some* sense for a landlord that does not have much debt on his properties. I have two, and won’t rent either of them for less than actual PITI costs. I’d rather have an empty unit that costs me $400 a month than a hassle tenant chosen in a hurry. I’m careful about who my tenants are. I like quiet, older types that keep to themselves and rarely call me.
Palmetto — when I first looked to rent, I found a very nice place and offered the owner the full amount he was asking, for a 1-year lease, provided he paint a few of the white walls the neutral color of his choice and add a ceiling fan and a light fixture. He said he would do so only for a 2-year lease. At the time, I had no idea I’d want to rent for so long, so passed and found a noticeably better rent and a landlord who bent over backwards to make the place as we wanted it. Still here, still happy — even though rents have declined to below what I’m paying. And the first landlord? His place sat vacant for two full years before he rented it.
After my first landlord sold our place out from underneath us (with a few months warning), a colleague who was relocating overseas “offered” to rent me his place for $2200 a month. He justified the figure by saying he had to “cover the mortgage.” I just smiled and said, “You have to cover the mortgage - I don’t.” My current place cost hundreds less, and is a good house in a good neighborhood.
the cape coral dud says they off 20%? and dropping…….
Government inflation trick scam. Here’s how it works. Within the numbers they use to calculate inflation, government INCLUDES rents - but NOT property prices. Thus, property went up double or triple in 6 years, the numbers meant nothing to inflation (according to the government). On the other hand, rents didn’t move that much. Now rents might be dropping, the government will manipulate the numbers and tell the sheeeple that inflation is under control. It isn’t and btw, we are already in a recession. We just don’t know how deep it will get.
“It isn’t and btw, we are already in a recession.”
Only bloggers wearing tinfoil hats would say such things. It is “obvious” from the revised jobs figures that Goldilocks is alive and well.
Employment, economy growing
Improved jobs data in face of credit crisis welcomed on Wall St.
By Cecilia Kang
THE WASHINGTON POST
October 6, 2007
…
Yesterday’s jobs report represented an about-face from a month ago, when the government surprised economists with estimates that the number of jobs had declined by 4,000, prompting worries that a recession might be in the offing.
Those fears eased yesterday when the Labor Department revised the August numbers and said the U.S. economy actually gained 89,000 jobs that month.
“The bottom line is that this screams ‘no recession,’ ” said Stuart Hoffman, chief economist at PNC Financial Services Group.
http://www.signonsandiego.com/uniontrib/20071006/news_1b6econ.html
Gee Stuart, really? And where have you invested your money?
Another monkey with an econ degree.
Isn’t 110,000 way below what is needed to keep unemployment from growing? Never mind the fact that about half of it was in schools…recess aides make such a living wage.
“Sam Bolden isn’t taking any chances. The Florida City native already has his own plan if the local construction industry doesn’t need elevator contractors any more. ‘If it does,I’ll travel go to Vegas [and] work over there for a while,’ said Bolden.”
Someone need to point this poor soul to our blog, if he thinks that there’s money to be made in Vegas.
nah, let him go to Vegas, experience is the only teacher for fools.
“Some original buyers have expressed concerns about the price cuts, Wright said. ‘But once these last units are sold and there is no more availability, the values will come right back up.’”
If you believe that, then I have some swamp land in Florida I would like to interest you in purchasing.
Rents seem to be dropping here. I found a couple of homes similar to mine renting for a little bit less. We pay $1950 for a 3br cape near Hanscom AFB in Mass. Found one in my school district for $1650, but I really have no desire to move.
I have seen more houses for rent in the area in NH that we hope to buy again someday. I think in another year’s time we might move there and rent. We would have moved there last year, but there simply wasn’t anything for rent, other than apartment complexes. We’re interested in the region between Manchester and the seacoast, towns like Hampstead, Chester, Sandown.
Our current school district seems to be out of money. Many are getting fee’d to death: $600 for the bus, $300 to join the band, $1000 to play a sport. That’s per child, per year. With these fees in place, it would be silly to stay, even if we are getting a good deal rent-wise. It’s an established concept in many Massachusetts towns, the schools charging for the bus, etc. (Did I spell Massachusetts wrong? - that’s another good reason to leave.)
“Our current school district seems to be out of money. Many are getting fee’d to death: $600 for the bus, $300 to join the band, $1000 to play a sport.”
Isn’t this the practice in NH as well? I can see where it hits parents, but after all, these are extras, no? Better to charge the users of such services, than to raise property taxes for everyone. Sounds fair to me.
@spike66 - it’s too bad that there are so many fees these days. I remember when everything was free or minimal in fees. Why do you think it’s going up? Aren’t people still paying state taxes that cover school fees?