The Beginnings Of That Moment Of Truth In Florida
The News Press reports from Florida. “WCI Communities Inc. is the latest developer to be targeted by homebuyers trying to get out of deals now that prices have fallen drastically. A federal class action lawsuit filed recently claims there’s a fatal flaw in the contracts used by the Bonita Springs-based developer to sell the 116 units in its luxury, 21-story condo tower Florencia — now some buyers want their deposits back.”
“The lawsuit is one more symptom of a softening housing market. The median price of an existing condo in Lee County has fallen 38 percent from February 2006, at $353,900, the highest on record, to $218,800 in August 2007, the last month available, according to the Florida Association of Realtors. For single-family homes, the price has fallen 22 percent from the all-time high of $322,300 in December 2005 to $250,800 in August 2007.”
“In this case, David Berry and John Schrenkel want out of the contract and their $115,000 deposit returned. But WCI attorney Thomas Roehn told Miami-based attorney Robert Cooper, who filed the suit, in a letter that it’s all just a misunderstanding. ‘WCI looks forward to Mr. Schrenkel and Mr. Berry closing upon their purchase of Unit 1202 at Florencia.’”
The Palm Beach Post. “Behind doors in Palm Beach County and along the Treasure Coast, from the meanest fixer-upper to the glitziest gated community, thousands of homeowners are struggling to make the mortgage.”
“Between Jan. 1 and July 1, homeowners in Palm Beach, Martin and St. Lucie counties defaulted on 4,318 mortgages worth $1.05 billion. That’s a 311 percent increase in defaults from the 1,051 recorded during the same period in 2006.”
“Loans in tony new communities crashed just as disastrously as homes in Counterpoint Estates, the aging middle-income subdivision just down the road from Versailles’ golden gates. Condos that once generated traffic jams of eager buyers went dark.”
“The $1.05 billion would buy the net assets of Florida Atlantic University — twice. And the number of soured mortgages adds up to one for every man, woman and child in Juno Beach.”
“Millions of dollars in mortgages collapsed before a single payment was made. Borrowers holding pre-construction loans defaulted on dirt before homes could come out of the ground.”
“‘This is all new territory,’ said Jessica Cecere, president of Consumer Credit Counseling Services of Palm Beach County and the Treasure Coast. ‘Two years ago, we could see it coming and thought it would be a disaster, but not this.’”
“This is staring her in the face the minute she leaves her house: A half-dozen homes in her neighborhood are in foreclosure.”
“Michael Sichenzia, lead investigator for (a) Deerfield Beach law firm, noted the media frenzy accompanying the boom. ‘Every book that was written, every time you read the paper … all you heard was flipping your way to wealth, borrow your way to wealth,’ he said.”
“That’s the environment in which mortgage broker Micki O’Callaghan snapped up two homes in Andros Isles and three in Terracina in West Palm. Same thing for Demetrius Walton, a 24-year-old South Florida man, who managed to purchase two Wellington homes and a housing lot with roughly $2 million in loans and no money down.”
“That sort of exuberance, irrational or otherwise, is the sort of thing loan officers and lenders once walked away from.”
“To keep the roof over her head, cancer survivor Deborah Tipton is squaring off with one of the largest banks in the world. Global powerhouse Deutsche Bank never wrote a loan on her modest Greenacres condo. It never saw her credit score, checked her baby-sitting income or requested an appraisal.”
“Tipton admits her $100-a-week baby-sitting wages should not have qualified her for a home loan in January 2006. But when her abdomen ruptured and herniated, a life-threatening post-cancer complication, she had no health insurance. She needed money. After 12 lenders turned her down, Fremont Investment and Loan Co. and QuoteMeARate.com Inc. said yes.”
“In broker documents, there’s no mention of Tipton’s meager wages. Instead, the paperwork says Fremont made a call to Wyn Solution Services Inc. of Sunrise, which said Tipton worked there as a district manager, earning $3,800 a month.”
“Deutsche Bank, which purchased Tipton’s loan along with millions of others and sold them to investors, declined to comment, citing the pending foreclosure. Deutsche Bank holds roughly $154 million in Palm Beach, Martin and St. Lucie county mortgages that defaulted between Jan. 1 and July 1, more than any other lender.”
“‘We all own a piece of this mess,’ said Bill Davis, former president of the Palm Beach County Mortgage Brokers.”
“In Anthony Groves near West Palm Beach, a half dozen homes on Berenger Walk defaulted on mortgages between Jan. 1 and July 1. In Counterpoint Estates in Royal Palm Beach, Oliver Lane had defaults; in Lake Worth, Wauconda Way; in Riviera Beach, West 30th Street.”
“It’s economics 101, Davis said: Prices are a function of demand. In Palm Beach County, the number of homes for sale in August rose to a three-year supply at the current pace of sales. In August, 33,708 houses and condos were for sale in Palm Beach County, according to Illustrated Properties.”
“‘My neighborhood is a classic case,’ Davis said. ‘Three years ago, you could put a for-sale sign out, and in three days you would have a contract and two backups. Now, houses are still listed for 12, 18 months. They don’t even have open houses anymore.’”
“‘The first part of this year, we started to see an increase, a lot of layoffs, even with the smaller contractors,’ said Steve Munnell, executive director of the Florida Roofing, Sheet Metal and Air Conditioning Contractors Association.”
“Not only is construction of new homes off but also homeowners looking to put their homes on the market are more likely to repair or replace tiles and shingles. Now, though, ‘people are not putting their homes on the market because there is no market,’ he said.”
The Orlando Sentinel. “More than 11,000 homeowners in the seven-county Central Florida region have defaulted on their mortgages through August. As in other communities walloped by the nation’s mortgage crisis, real-estate agents say Osceola’s foreclosure boom is fueled by small-time speculators and buyers who got no-money-down mortgages at teaser rates — and then got trapped when home prices fell.”
“‘If a buyer’s looking for a house and they have 100 homes to look at, and 10 or 15 of them are bank-owned properties that are well below market value, those are the ones they’re going to buy,’ said broker, Bryant Tutas.”
“Leonardo Calvo, a carpenter in East Hampton, N.Y., thought the house would be an easy investment. Years earlier, his friend bought a house in the Kissimmee area for about $150,000 and sold it two years later for more than $200,000.”
“The broker who sold him the house said he could get $2,000 a month by renting it. But Calvo never got close to that. He tried to sell the house for a year before giving it back to the bank. ‘It was a big mistake,’ Calvo said. He also blamed real-estate agents for misleading him.”
“‘Those guys are liars. They said this is a good deal, you can do this, you can do that. They say everything is easy, and you’re going to make a lot of money,’ Calvo said. ”When they give you the keys and they say, ‘Congratulations, goodbye,’ by that time, you’re going to be in trouble.’”
“For every Poinciana house sold in August through a real-estate broker, more than three homeowners entered the foreclosure process.”
The St Petersburg Times. “Tampa Bay area home sales keep probing new bottoms. September’s totals were off 39 percent from the none-too-spectacular sales of September 2006. That part about probing bottoms sounds proctological, but the market is about as savory as a barium shake.”
“Why aren’t people buying? Prices have retreated up to 20 percent. Builders are giving away the kitchen sink, along with Jacuzzis and hard-wood floors. Banks are dumping repossessed homes at discounts.”
“Many buyers wait for home prices to strike bottom, whenever that might be. They assume prices have room to fall, so why buy a diminishing asset?”
From Reuters. “Workers are painting, patching stucco and peeling protective plastic from gleaming panes of balcony glass at a new 1,000-unit condo called The Plaza, two towers that rise 43 and 56 stories over Miami’s bank district.”
“The opening of a raft of big complexes has analysts predicting the market, fueled by a frenetic construction spree that saw cranes sprout like mushrooms on the skyline, is edging toward a cliff.”
“In August, condo sales in Miami-Dade County dropped 44 percent, according to the Florida Association of Realtors. But the number of condos on sale has climbed to 25,000, a 36-month supply.”
“Some analysts believe 2008 will be the turning point, when pre-construction buyers are forced to pony up the full purchase price or walk away from deposits, speculators feel the pain of holding too many properties and developers need to dump excess units at discounts of 30, 40 or even 50 percent.”
“At the peak some 60,000 units were under construction, planned or permitted in the city of Miami, whose 400,000 people represent only 16 percent of Miami-Dade County. Some of those projects have been canceled. But the ones already underway and soon ready for residents are shrouded in uncertainty as buyers look to back away from contracts, unable to get mortgages or fearing they are paying too much.”
“‘We have definitely not seen the bottom yet. In the next six to 12 months we’ll see the beginnings of that moment of truth,’ said Brad Hunter of Metrostudy. ‘It could be 2012 to 2014 before this market needs to build more condos.’”
“Between 2006 and 2009, one analyst said, developers will drop 28,000 new units into the Miami market. In just eight prominent buildings in the downtown and banking districts more than 6,600 units are nearly ready.”
“A smaller Miami-area condo glut in the 1980s took six years to correct, analysts say. This one could be worse. ‘I think we’ve only seen the tip of the iceberg in terms of the pain the market will see,’ said Matthew Martinez, point-man for a Connecticut-based private equity fund.”
From CBS 4.com. “CBS4 has been bringing you to the latest on South Florida’s housing crisis as countless condos and homes remain unsold and record-breaking foreclosures continue. Now some insiders say our real estate crunch is going from bad to worse.”
“Cutler Bays’ John Shimmel just put his home up for sale. Fed-up and laid off the Miami native is looking for a new life anywhere but Florida. ‘I just got laid off, and I think it’s just never a better opportunity to leave,’ said Shimmel. ‘It gave me a good chance to get the house up for sale 100 percent, and I’m ready to go.’”
“Shimmel’s optimistic he’ll be able to sell his home before he gets into real financial trouble. His advice for any other neighbors still struggling to pay their tax and insure bills?”
“‘If they want to stay, it’s a beautiful sunshiny state, but there’s better places to be. I’ve lived all around — traveled all around the United States, and there’s just better places to be than right here,’ said Shimmel.”
…..That part about probing bottoms sounds proctological, but the market is about as savory as a barium shake.”
Priceless!!
It’s not a buyer’s market — it’s a proctologist’s market!
‘But when her abdomen ruptured and herniated, a life-threatening post-cancer complication, she had no health insurance. She needed money. After 12 lenders turned her down, Fremont Investment and Loan Co. and QuoteMeARate.com Inc. said yes.’
IMO, these reports kinda miss the point. Lots of people need money in a spot, but since when is a home loan the first place to turn?
This is just bogus.
Hospitals usually will work something out with folks who don’t have health insurance. And on a $100/week salary, how was this lady keeping a roof over her head to begin with…not to mention feeding and clothing herself…
And then when she claims that she didn’t know her job and income were misrepresented…she knew enough to extract equity from her home, but she didn’t know she needed an income to support the amount of the loan?
Are there that many people out there who think there’s a Home Equity Good Fairy dispensing all this money just because your name’s on the deed to a house?
She only made $100 a week…there was nothing to misrepresent to begin with!!
And still signed for a loan. Outrageous.
I think if the hospital knows you own a home they put the pressure on you to borrow on it. They much prefer that to working out payments.
I had a friend who made 20k a year. She needed extensive eye treatment at the Cleveland Clinic. Not only did they cover it 100%, they also told her they would cover 100% any other health treatments she needed there. She didn’t owe anything when all was said and done.
My friend in the above post owns her own home outright, but that did not even enter in the picture. Cleveland Clinic paid everything.
I had surgery a couple of years ago and the hospital wouldn’t even talk to me until I brought them cash.
She is basically saying “I stole, but I had a really good reason.”
Perhaps the housing bubble will turn out to have been a Robin Hood rather than a fleecing of the poor. But in any event, the Sheriff of Nottingham has caught up with him.
Do you think she wears a “cancer victim/survivor” button/ribbon, too, for added sympathy?
The artilce also says she made two previous refis. Anyone taking bets that she paid not one cent of the refi to the hospital?
Healthcare should be provided to every American. She should have never needed a loan. As the only industrialized nation without it, there are no excuses.
Here’s a pre-emptive:
LET’S NOT GO THERE.
Seconded.
thirded.. unless someone else starts it.. then, I’m in with guns blazin’..
I highly recommend seeing Sicko. But hey, the free-market does a GREAT job of providing health-care.
So should houses.
The only reason her cancer problem is in the story is as usual to play the victim angle. Bleeding hearts in the media can’t help themselves. She is 100% wrong, she lied and of course now does not want to be held accountable.
“But WCI attorney Thomas Roehn told Miami-based attorney Robert Cooper, who filed the suit, in a letter that it’s all just a misunderstanding. ‘WCI looks forward to Mr. Schrenkel and Mr. Berry closing upon their purchase of Unit 1202 at Florencia.’”
One of the best stonewalling tactics I’ve ever seen. Don’t even bother to acknowledge, just say “Tut-tut, all a misunderstanding and we’ll see you at closing”. Brilliant.
A federal class action lawsuit filed recently claims there’s a fatal flaw in the contracts used by the Bonita Springs-based developer
I would like to hear comments from lawyers who post here about this flaw. Can this be true?
I’m under the impression that builder contracts are sewed up pretty tightly in favor of themselves.
The contract says they will get 2000 square foot and in reality they end up with 2001 square foot so that voids the contract and they want out. They say, I only wanted 2000 feet. So they go to arbitration and the arbitor tells the builder to make their condo smaller, so they do for about 20 dollars in materials and the attorney representing the plaintiff collects about $10,000.
Yes the fatal flaw is when they have to close the buyer dies of a heart attack.
Yep, and at least in my state (California) you can’t vest ownership in real property in a dead person. Early in my career as an escrow officer this actually happened twice (the eve of an 8:00a.m. recording the next day that had to be pulled).
It might fly, if the provision is found to be material to the transaction. Worth a try.
That was pretty funny.
WCI was such a rip off “wanna be like the joneses” sell to so many people. Hubby and I flipped a house in one of their communities in the beginning of the housing boom. They sold houses in communities without even building one model for homeowners to look at, sold lots at $70-$200K premium and the suckers bought it. I keep checking and the buyers in those communities are FB BIG TIME! Losses in the hundreds of thousands….
“Now, though, ‘people are not putting their homes on the market because there is no market,’ he said.”
Oh, there’s ALWAYS a market. Just not a market at wishing prices.
Same thing with the “unable to get market price” comment I keep seeing over and over again. You ALWAYS get market price during an arms length sale (assuming sufficent opprotunity was given to all those involved in the possible purchase)… That’s what SETS MARKET PRICE!
It’s just aggrevating to see no reporters ask that next question.
“You say your unable to get market price for your home, but, by definition, isn’t what people are willing to pay actually the market price?”..
isn’t what people are willing to pay actually the market price?”..
i dunno if it’s that simple.. there are requirements aside from arms-length, opportunity, etc.
Market price is the price an informed market would pay.
An ignorant buyer is not informed, and that buyer’s opinion should be, if not ignored, heavily discounted. Just because some dingbat has a bucket of stupid money and pays double asking-price does not mean he’s setting a new market value.
The sale does become new, legitimate market information and should be taken into account. The market can then digest this sale and decide if it matters and, if so, to what degree.
“‘If a buyer’s looking for a house and they have 100 homes to look at, and 10 or 15 of them are bank-owned properties that are well below market value, those are the ones they’re going to buy,’ said broker, Bryant Tutas.”
There, you see. All of you are wrong. They cant fetch market price Mr Tutas says so. However they are selling….. below market price. Ahhhhhaaahhhhaa.. Really Mr Tutas. Oh, so they ARE selling, but you cant find anyone to pay how much again??? But they are paying…….what….how much was that. Oh, so then if i want to actually sell my place, i could….but i would have to see it for that 40% lower price….yes, yes. OK. Now we understand each other.
So Mr. Tutas, what is the market price again ???
I think we have a confusion here between market price and retail.
Everything sells at the right price. When I used to sell real estate, somone in our office listed a house near a large lake that had no doors, and the interior was trashed. It still sold, at the right price.
The lake had no doors??
Markets can and do go effectivley no bid . A couple of years from now when these new Miami condo’s have 10% occupancy and cannot pay utilities, other units will be no bid
“Banks are dumping repossessed homes at discounts.”
Not so much, just yet, IMHO.
This dumping seems to be very localized in nature. I was talking with a friend who is an appraiser, and he was telling me of one he did in Poinciana last week. It was on a 2000 square foot home that sold in ‘05 for about $230k. The bank was allowing a short sale of under $150k now, and other REOs in that area can be had for well under list price. Meanwhile, the Lakeland-Winter Haven area doesn’t allow such things yet, and that is a big yet (or is it a little yeti? I forget).
_______________________________________________
But, Oh, they will.
Two new words for the blog that you will be hearing in the future concerning Winter Haven…
“Terra Nova”.
You’ll see:)
Palmetto;
You’re right. I haven’t seen any wholesale dumping of REO’s in Orlando.
It’s inevitable. It may be a tax issue as any write down now goes on 2007 taxes. It’s possible that the first Q of 2008 we will see more bank blow outs and dumping as they feel like they can recover in the last 3 Q’s.
There a lot of poeple lowering prices. I’ve seen 50% below the 2005 high.
Also, I think it is misleading to look at the 2007 YOY compared to 2006. I think, to get the accurate picture, eveything from here on out should be compared to the peak.
In terms of $/sq ft, how low will they go? If they get $150K for a 2000 sq ft house, that’s $75/sq ft. We may yet regret buying our foreclosure here for $69/sq ft in 2005. Do I hear $60? How about $50? Forty-five?
I think we are entering a “limbo market” for real estate, where potential buyers will keep pushing lenders and other sellers to find out, “How low can you go?” Limbo market, you heard it here first.
And won’t it be great when coctail party and office water cooler conversations include people bragging that, “We got our place for just XX dollars a square foot.”
I did see a bank owned prop in Celebration Fl this morning that was reduced $95k. There are 10 short sales listed right now. Some of them have been on the market for almost 2 years.
I think the best way to compare what you’re buying is:
What was the price per sq ft before the bubble?
What is the price per sq ft now?
That’s the only way, house by house, to know if it’s still grossly overpriced.
The loans on these repossessed houses are causing banks to price them way above where they’re actually going to sell. Most of them could take an additional 20-40% haircut.
“‘This is all new territory,’ said Jessica Cecere, president of Consumer Credit Counseling Services of Palm Beach County and the Treasure Coast. ‘Two years ago, we could see it coming and thought it would be a disaster, but not this.’”
Another person that needs to be immediately removed of there duties. All of us (mostly uneduacated in RE) could see this coming, and yet the head of a consumer credit company missed it.
Lady, it was SO obvious 3 years ago that we were heading for a trainwreck that it’s just beyond reason that you missed it. Welcome to the party, glad you finally got here. But don’t tell me that nobody gave you directions!
Michael, all this Palm Beach county news sounds positively grim.
“The $1.05 billion would buy the net assets of Florida Atlantic University — twice. And the number of soured mortgages adds up to one for every man, woman and child in Juno Beach.”
Well, at least it’s not Riviera Beach, a favorite venue of “Cops”.
PBC, I have said it 1M times and will continue to say it, may well turn out to be one of the poster children for the excesses during the boom. PBC is the northern most tip of the S. FL craziness (Ft. Lauderdale and Miami making up the middle and southern tip), and really has the least reason of any of these places to put 1-5M dollar condos in a mall parking lot (see The Landmark at the Gardens). There is NO shortage of land here, NOT AT ALL. Even very “desireable” areas, like CityPlace in WPB, there are entire blocks of grass right on the strip. It was just crazy to think that the we could support the prices, and that the “shortage” of land was going to support them for a long period of time.
The power of denial is indeed something to recon with! I would point (literally) to the EMPTY lots in CityPlace and ask people, how can you say we have no land? The answer “Well, that lot would cost 100M dollars!!”. I would just shake my head and walk away… We never had a problem with land, we had a problem with affordable land because of the boom/insane lending…
Every day I become more and more convinced that my intial thoughts (of 3 years ago) will prove true. 1/2 off the total RE value in PBC (inflation adjusted, of course) it where we are going. Homes will be 30-45% (depending on area) and condos 50%+ (pretty much everywhere).
In my neighborhood I am already seeing 35% off on homes and expect to see much more in the next few years (my area will be worse then the averages above, I think we could see SFHs at 60% off in the next year here; there are already homes that have comps at 1.5M selling in the 800s).
Mike, I have always said Palm Beach is really ground zero for the bubble. Areas in California are close but at least they have real jobs and incomes. Palm Beach County had better paying jobs in the 80’s then now. IBM Pratt and so on. If you read the Post today you will see the unwinding is now feeding itself. All the small contractors, cabinet makers, flooring companies etc … are taking a huge hit and you know they expected this to go on forever so they didn’t plan. You are going to see them moving out and/or foreclosing which will just add to the misery. Once people realize Palm Beach County used to a cheap place to live for a reason it will unravel more. The whole area’s economy is literally built on two things tourists and construction. I can’t help but laugh I had a realtor up here in WNC tell me Palm Beach is coming back because of Scripps!! There were more people working in the cafeteria at IBM then all of Scripps when it is finally built out. There were something like 10,000 IBM workers in the 80s. Now everyone is getting all hot a bothered about 200 “well paid” jobs.
LOL. Scripps, the great white horse to save (especially N. PBC) home values.
I have heard this one many times as well… I point out the 200 or so jobs that are expected and get the response “It’s the feeder jobs that will feed the economy; and the cluster jobs that will start to really turn things”. Feeder jobs like what? And, also, last time I looked, the salary range for Scripps is in the 60K range (avg salary). You need 3 people working in Scripps to afford one home at the avg salary! And, wtf is a cluster job anyway?? That sounds like some RE idiots made up word to me.
Even if all those people are making 200K a year, there are probably 1000 homes in the 600K range on the market, RIGHT NOW, within 5 miles of the proposed site. It’s just not even close to a drop in the bucket…. It’s a total non-event. But it’s the only piece of good news the RE folks can center on…
As you get further south, there are some real jobs (FTL and Miami both have bigger businesses), but, again, not NEARLY enough (or with enough pay) to support these home prices.
Add in the near limitless amount of buildable land we have in PBC, and you have the makings to a real disaster.. Which, as I can see we both agree, may, in fact, be one of the worst in the country. The other thing, one that satisfies me more then anything else, is the smug “We are Palm Beach” attitude that many of the people here have. Yes, areas in Palm Beach area very nice; I love where I live. But that does not change the fact that PBC is horribly violent; and frankly, much of it is a slum.
Yes, there are nice areas…. But the “snotty” attitude that many have, just because they live in PBC, is kind of silly, especially for those of us who live here and know what most of PBC is really like.
The attitude is why you saw such sticky prices on the way down. I saw the hand writing on the wall in 2004 and sold out and moved in 2005. When I did people looked at me like I was crazy when I told them what would be coming down the line. The self induced delusions and/or ignorance was amazing. Nobody and I mean nobody thought I was doing the right thing. Now they all say “of course the bubble collapse had to happen”.
I used to work in Martin County in planning and redevelopment and had many conversations about Scripps and how it would take decades for it to create the cluster and spinoffs to truly make a real financial impact on the region (if ever). I can’t tell you how many economist, etc… would not agree with that, let alone the average Joe that needs something to hope for, that will save the local economy and their home values. PBC county and the TC will continue to become more like South America, extreme wealth and extreme poverty with very little middle class. Sad!!!
“In my neighborhood I am already seeing 35% off on homes and expect to see much more in the next few years (my area will be worse then the averages above, I think we could see SFHs at 60% off in the next year here; there are already homes that have comps at 1.5M selling in the 800s). ”
We’re already close in my neighborhood. I always post the updates, but this week it’s absolutey insane. 49 active homes for sale. 3/2/2 built in 2004 listed for $239,900. This would have been a $399K home in 2005 and 1st quarter of 2006. A 3/2.5/2 two story built in 2003 was just reduced to $220K and it just continues to slide. If you look at the homes built in phase I and II, there are list prices for 3/2/2 for $170,000. No stop to that decline anytime soon IMO.
Bad Andy,
You don’t want to know what 3/2/2 in Wellington were going for in 98-99. And I mean in the best neighborhoods.
“You don’t want to know what 3/2/2 in Wellington were going for in 98-99. And I mean in the best neighborhoods.”
I already know. The biggest home in the best neighborhoods were running $160K-$200K. If you were spending over $200,000 you had made it in life.
A few years ago I was visiting out-of-state friends, and we tuned in mid-episode to “Cops.” After a few minutes, I noticed that some of the intersections and storefronts looked vaguely familiar. Then I realized that the episode was being filmed in Tampa.
“Tipton admits her $100-a-week baby-sitting wages should not have qualified her for a home loan in January 2006. But when her abdomen ruptured and herniated, a life-threatening post-cancer complication, she had no health insurance. She needed money. After 12 lenders turned her down, Fremont Investment and Loan Co. and QuoteMeARate.com Inc. said yes.”
Wow, wow, wow.
A “take-home” income of $5200 a year?
You get a loan!
I have been praying all night (I read this yesterday in the PB post print edition) that Ben would pick up this story.
100/wk salary? That should have qualifed her, at a MAX, for a 15K home!
I mean, wtf?? Come on, at some point the rest of the country will have to wake up and start to realize what these stories mean for the broader housing market… Right??
100/wk salary? That should have qualifed her, at a MAX, for a 15K home!
At 5200 a year she wouldn’t even have enought to buy food and gas.
If California lettuce and strawberry pickers can purchase $500K houses don’t begrudge a Florida babysitter her piece of the pie– fraud pie that is! Go Florida!
I think I recall reading that the strawberry pickers were actually able to score a $750,000 house. That’s $250,000 more. But hey, who’s counting? $250,000…no big deal.
hey, back when the strawberry pickers got their house, this one was worth 750k also. What was that, 6 months ago?
i talked to a childhood friend the otherday.. he’s sorta slipped here and there.. is currently a homeless ex-con junkie, but he is working right now.. makes a few hundred a week.
While we were talking SF bay construction job prospects he says “Dude, I’m broke but I could go to a bank right now and buy a house.” So, the word certainly did get out.
i mentioned he was just a hair late.. a couple months. If you snooze you lose.
last year I was testing a water and applied for a loan off 200k for with bank of Amrica. I didn’t get the loan. I’m making 83k at the time. The only porblem with my credit is a pay the whole balnace every month. I didn’t have a late payments or paid iterest for 10 years.
I should have tell’m that I’m making 100$ a week. ?????
Does anyone remember a chart of declining RE that Mish or Charles Hugh Smith posted many moons ago? If memory serves, it was based on the Japanese model. There was a point where a false bottom was called and people came out to buy temporarily, and then prices plummetted from there. Feels like we’re at that point. Folks going for the $100,000, $150,000 discounts in Cali, for example.
I’ve been following the NoVA and Florida markets closely. They both experienced a bounce (more a flattening really) this past spring, and are now heading back down again.
N va 22151 starting down again w 2 foreclosures and a short sale
just busted 400k
“Shimmel’s optimistic he’ll be able to sell his home before he gets into real financial trouble….”
And I am optimistic that I can still get a date with Cindy Crawford.
“And I am optimistic that I can still get a date with Cindy Crawford.”
LOL, you’d have to be here to really get the point of view of some of the fellows in South Florida. Real mouth breathers who think they’re the bee’s knees. The younger pupsters look at Kevin Federline and figure if he could do it, so could they.
you guys take the date….i just want to neg amt, interest only, ARM her.
“And I am optimistic that I can still get a date with Cindy Crawford.”
Today is your lucky day, you can find her at Tampa’s original Bush Gardens….Mons Venus.
“‘We all own a piece of this mess,’ said Bill Davis, former president of the Palm Beach County Mortgage Brokers.”
Now it’s all our faults. I’ll see you at Burger King chump
As Tonto said to the Lone Ranger, “What you mean “we”, paleface?”
“What do you mean we? You gotta mouse in your pocket?”
You misunderstand, he was just saying that most brokers and real estate agents got so wrapped up and bought into their own con. So they all own their own piece of this mess.
This is good stuff. Hit me more.
I don’t know about you guys but I don’t own any of this mess. Stop with the “We” business Davis unless you are referring to your reflection in the mirror.
Popper, whenever you hear the “we” business out of anyone’s mouth, it’s as close as you’ll hear to an admission of a debacle. The main participants love to use the word “we”. I saw that happen with a very good company up in the Midwest that hired a bunch of young Turk business school management types. Within a year, these pupsters had done a number on the place. I spoke to one of them in a vain effort to get him to reverse a disastrous policy he’d put in place. It was HIS problem, but he kept saying it was a COMPANY problem, when he finally admitted there even was a problem. Up until that time, it was all sunshine and roses. And that’s why problems don’t get solved. A “company” never solves a problem. People within the company can, but as long as they keep saying “company” problem, they don’t take individual action.
I hear ya Palmetto.
Just the normal human tendency to minimize one’s own pain by attempted collectivization of the guilt.
The worst thing about this whole mess is that we do own the mess. You could have been a happy renter, or a happy home owner who did things the right way, and we’re all gonna still pay for it in some way. We’re paying for it when the fed reduces interest rates and inflation spikes. We’re paying for it when banks may charge more for services or pay less for deposits in order to up their bottom line. We’re paying for it when interest rates on mortgages (like a 30 yr fixed) goes up. There’s probably 10 other ways we’re paying for it that I can’t think of right now.
That’s why this whole thing pisses me off–you bust your butt working for your family and watch all these other people get free money for a time. I make sacrifices and pay way too much for health insurance so that I don’t have to borrow from other people to pay when I get sick.
Banks want to start a fund to keep commercial paper off their books. Hello Enron!
http://www.marketwatch.com/news/story/banks-create-credit-market-cleanup-fund/story.aspx?guid=%7BC608EA98%2D9B6A%2D4C5B%2DB782%2DDB3B58BD594C%7D&siteid=yhoof
The paper is apparently already not on their books (that seems to be the reason SIVs were invented — to give banks a means of avoiding time-tested reserve requirements). The purpose of the Superfund is to give the banks a dump site to liquidate (at above-market prices) toxic SIV-held subprime debt, which currently threatens to implode the balance sheets of some really big banks (like big C) if they were required either to take this debt back on balance sheet or to sell it. It is unclear at this point exactly whose money would be used to purchase the toxic subprime debt at above-market prices.
How this is supposed to make the credit crunch magically disappear is way beyond my meager grasp of high finance.
It is unclear at this point exactly whose money would be used to purchase the toxic subprime debt at above-market prices.
This deal was made with the help of the Treasury. My guess is they will figure some way to inject the cash needed for this Superfund and in the end they and thus all of us, will be left with an empty bag.
They don’t think it will make the credit crunch disappear. What they do think is that they can sell a small part of their garbage to the fund at artificially high prices. Then they can then say to the regulators “See, we told you it wasn’t worthless”.
did anyone catch the ABC news about americaquest? they had people on saying they didnt know their mortgage would switch after two years. ether the people are lying, that they didnt know, or are very retarded that they just signed what was put under their nose.
Hell we have renter coming back to our building she left to move up the ladder, but now with that reset she is walking away.
Are you a landlord or manager, max? If so, tell us some good stories.
My family does rentals its my grandmother and her nephew my cousin’s place. 26 units in Bakersfield so while I dont get the direct joy of the business I have had quite an education from people who have done it for 50+ years
I have a bette story about girl I knew who in 2001 when she turned 18 received 200,000 dollars inheritance. her mom passed away and she mostly grew up with her grandma. so grandma goes to up OR
and little miss 18 year old high school drop out buy grandmas house for 80,000. leaving 120,000 left. 18 months later can you guess how much money is left?
Welcome - fellow Bakersfield person!
Yes, yes, tell us funny stories! I love a good story with amusing idiots in it and stuff.
okay well like that girl i mentioned. She owned a home free and clear. So once she loses the rest of her 120,000 on a car and new bath tub and i guess thats all i could see she bought. neat trick really spending 80,000 and having nothing to show for it.
Well her house went up in value so she took 20,000 out to get a car loan cause she wrecked her car. so she had a car payment and house payment. and no job.
Later she tried to refinance no luck. she takes in renters, and throws them out about every six months. Finally she sold her house to a lending company with an option to buy back in 5 years. (I still dont get it.)
She opened her own business…A shop in down town bakersfield near 18th and eye. It was a Magic shop. they sold magic like that wica stuff. I saw that she really was nether stupid nor lazy she worked hard and got things organized. I really think she just has an aversion to reality. Better to pretend your in an episode of buffy then to really take care of yourself.
A huge proportion of easy money, like lottery winnings and inheritance, just goes “poof!” within a year or two.. something like 95% of it disappears, like magic.
so she had a car payment and house payment. and no job.
….yeah, so what anyways?
Thank you. I love funny stories.
I love it how these RE geniuses turn into victims.
If the market hadn’t popped and we were still riding the wave, these “victims” would have refi’d to the max and bought another Hummer, content in the thought that they were indeed RE geniuses.
Also, allow me to point out how much a lot of them would have screamed “dicrimination” if they hadn’t gotten the loan that now makes them the victim.
I’m sure there was some overt pressure from Ameriquest to close loans, but did you sign a document that said you made 150K when you really made 50K?
“The Devil, Ameriquest made me do it!” probably won’t sit well with the judge. If we’re going after fraud, go after everyone.
You take that back, Bill Davis! Don’t blame others for your wrongdoings.
*I* had nothing to do with this mess. It was you, and you alone, who are in the position to qualify borrowers, either with a credit check, or a large down-payment requirement.
I think what he meant is “we all own a piece of this mess” because without your knowledge I sold a piece to a financial intermediary acting on your behalf.
$word$wallower$ought?
“Many buyers wait for home prices to strike bottom, whenever that might be. They assume prices have room to fall, so why buy a diminishing asset?”
Yeah, regarding that quote, what a stealthy and underhanded way of calling bottom - imply that waiting for a bottom is foolhardy.
Leonardo Calvo, a carpenter from N.Y says, “Realtors are liars……” NO! Tell me it isn’t so Leonardo! Well, at least we can trust the brokers. (lol)
“I’ve lived all around — traveled all around the United States, and there’s just better places to be than right here,’ said Shimmel.”
How many people across this nation will reach the same conclusion as Mr. Shimmel before this plays itself out? The “it’s different here” crowd needs to listen up - people will only stand for so much before leaving a locale.
It’s different here - it sucks!
What a dumbass! That’s a terrible business.
Let’s take the numbers $150K and $200 that his friend bragged about.
First of all, that’s 12K in transaction fees, so now we only have a 38K profit.
38K over 2 years is $1583/month. The mortgage on 150K (let’s presume he had a teaser rate of 6%). The minimum his PITI can be is about $1150. (don’t forget he has to pay PMI, etc.)
(1583 - 1150) * 24 = $10K “profit” presuming he didn’t have to put a penny into the house.
Realistically, the minimum he’d have to put in to make the house fit is maybe $5K.
So the “killing” his friend made the past two years was really a profit of only $5K (presuming there was no rental income).
With a lot less hassle, he could have made more $$ working weekends at Starbucks
For some loser making 100 dollars a week babysitting (probably did real estate before hand) 5K IS a killing, it’s what she makes in one year.
In addition:
“The broker who sold him the house said he could get $2,000 a month by renting it. But Calvo never got close to that. He tried to sell the house for a year before giving it back to the bank. ‘It was a big mistake,’ Calvo said. He also blamed real-estate agents for misleading him.”
“‘Those guys are liars. They said this is a good deal, you can do this, you can do that. They say everything is easy, and you’re going to make a lot of money,’ Calvo said. ‘’When they give you the keys and they say, ‘Congratulations, goodbye,’ by that time, you’re going to be in trouble.’”
“For every Poinciana house sold in August through a real-estate broker, more than three homeowners entered the foreclosure process.”
RE Brokers should not be telling anyone how much they “will” make on a house. However, every buyer should have a remedial understanding of the market, especially if he is buying for investment.
Look ar reuven’s numbers. I bet Calvo never did the math.
“But it’s the Realtors fault”. The Realtor’s job is to put buyer and seller together, not to justify an investment. We can do ROI’s and Cap Rates but that doesn’t gaurantee any future appreciation and it is based on historical numbers.
But, then again a real investor would know all that.
so these historical numbers how will they look in say 2010?
I wonder what this bubble will do to tax records, imagine trying to keep a house you paid 500,000 for in 2006 and the tax knowing your neighbor bought in same place for less than half that.
makes me wanna throw up.
Max;
I don’t know the answer. Imagine if everyone thought a 10$ bill had a differant value. The guy at the convenience store might think its worth 7$ while the guy at the cleaners might think its worth 5$.
RE is in that state right now because there is no way to fix a real value to it because the numbers are so skewed.
2010, who knows? What if you could buy a 3/2 in a decent neighborhood for $100? Thats a no brainer.
There are still some rules of thumb to live by;
1- A house is worth 100 times what it rents for.
2- A median house should be priced at 2.5 to 3 times median wage
3- Go back to 1999 thru 2002, calculate appreciation, and apply that to 2003 thru 2010. All these numbers should converge.
But don’t be to quick to buy in this quagmire. Prices will likely go way below where they should have been, had we had normal appreciation, i.e. 3% per year compounded.
Will RE at 20% of the 2005 peak be a good deal in Florida? I think Florida has a lot of other problems, not the least of which is a decline in the pop growth and possibly a reversal in 2008 and beyond
When I sold real estate people used to ask me all the time if the area they were considering would be a good investment. My stock answer was: Nothing is a given. The economy could be booming or we could be in a recession. What you pay today is no guarantee of what you’ll sell for tomorrow.
I never lost a sale because of it.
Yeah, wouldn’t we all love to bring home the gross amount of our paychecks. No one does it, yet they all look at gross profit in other endeavors.
“A smaller Miami-area condo glut in the 1980s took six years to correct”
Take this qoute and use it nationally. If a little glut took six years to get absorbed, what happens when you get a flood?
And, what happens when a lot of the illegals that came to take advantage of the boom have to leave?
And of course soon, more retirees may want to downside.
Yes, we are still in the fist inning.
Yes, we are still in the fist inning.
Gross.
When they get to the Joshua tree inning, the fist inning is going to seem pretty comfortable in retrospect.
In 10 years these new condos are going to be the new projects. Heck, they’re already falling apart.
“Some analysts believe 2008 will be the turning point, when pre-construction buyers are forced to pony up the full purchase price or walk away from deposits, speculators feel the pain of holding too many properties and developers need to dump excess units at discounts of 30, 40 or even 50 percent.”
“A smaller Miami-area condo glut in the 1980s took six years to correct, analysts say. This one could be worse. ‘I think we’ve only seen the tip of the iceberg in terms of the pain the market will see,’ said Matthew Martinez, point-man for a Connecticut-based private equity fund.”
Yep. It’s only the beginning. I still think this whole entire housing bubble is mostly fraud, not lax lending. Quite frankly, I expect most of these condos to sell for perhaps less than 10% of their peak value. In fact, most of the recent housing crap in the USA won’t sell for that much. Hey if you people believe in Peak Oil (I don’t) you’d think that this would cause most of the housing in this country to be absolutely worthless in no time flat. I wouldn’t be surprised if housing in many parts of the USA goes to four digit figures. Why? Fraud. A lack of credibility and fraud can go a long way, and what I’ve seen in the last 7 - 10 years is going to shut us down, maybe permanently. Ultimately, what will be more important to Americans: your gold or your freedom? You can’t have both with the way things are set up right now.
Shut down the Blue states; they lose, you win.
Shut down the Red States; you lose they win.
The more things change, the more they stay the same.
So what do I do? Disappear.
Welcome to the 21st century.
Had to post this here from the Gainesville Sun, since this is a Florida thread:
New car sales drop; more buy used in Gainesville
Larry Scott, CEO of Campus USA Credit Union, said his office is writing more used car loans because consumers are facing sticker shock with the price of new cars.
“We are seeing a lot of migration to that one-year-old car with low mileage,” Scott said. “The median incomes in Alachua (County) have not improved drastically, but cars have continued to escalate.”
Loans are off whenever there is news about state budget cuts, UF budget cuts, property tax changes and rising credit card debt, he said.
“I think we’re having difficulty having disposable income enough to save for major [purchases],” he said.
Bob Miller, general manager of Tomlinson Motor Co., which specializes in one-year-old pickups and SUVs, said sales are off a little this year compared to last. When gas prices are high, he said he is able to offset some of his sales losses by buying hybrids and economy cars.
“Gasoline costs have affected our business more than anything,” he said. “A lot of people are singing the blues right now.”
News from Naples:
The Median Price Drops in Naples. Story has some charts. NABOR still doesn’t release their data to FAR, and uses some mysterious boundary to define Naples.
Rents Drop in Southwest Florida.
32 month supply–is that a good market?
yowza
Editor’s note:
“‘If a buyer’s looking for a house and they have 100 homes to look at, and 10 or 15 of them are bank-owned properties that are well below market value, those are the ones they’re going to buy,’ said broker, Bryant Tutas.”
Should be:
“‘If a buyer’s looking for a house and they have 100 homes to look at, and 10 or 15 of them are bank-owned properties that are [at] market value, [and 85 - 90 are well above market value] those are the ones they’re going to buy,’ said broker, Bryant Tutas.”
Another piece from the Fort Myers News Press. Look’s like the repo man is doing huge business in SW FLA. Article ties it back to the housing meltdown.
http://tinyurl.com/3ceytm
“Why aren’t people buying?
Here is a real live example of why people are not buying in the Tampa Bay area.
I bought a house that was one year old in 1996 from a friend who could not sell it back then due to the RE downturn for $85K. The house sold new in 1995 for $94K. In 2006, the same house model across the street sold for $249K! Both houses were 1490sqft and identical cookie cutter model types.
The value of this home nearly tripled in about a ten year span. The house is probally worth in terms of FMV about $130K and that would be on the high side. When you add in taxes and insurance as this house was less than 10 miles as the crow flies to the Gulf, it makes a terrible affordability issue worse. That is the problem in Florida where speculators/flippers who have bought up the majority of new homes have now flipped to forclosure.
I sold the property mentioned above in April of 2004 for more than double what I paid for it. The subdivision has since gone downhill due to forclosures.
For single-family homes, the price has fallen 22 percent from the all-time high of $322,300 in December 2005 to $250,800 in August 2007.” “In this case, David Berry and John Schrenkel want out of the contract and their $115,000 deposit returned.
Why should we bail these people out? I’m sure that would have had NO QUALMS at all about sticking it to the next person for $500K 6 months from now if the prices were to keep going up.
It makes me sick…if there was a way to contact these people directly I’d send them a real nasty letter.
There is look up their property tax records and find their name and look up their new address.
I’m forward to it, too!
Any of these homeowners who sue need to make sure their mortgage application was 100% honest before the even have a snowballs-chance-in-hell of winning.