Sellers Need To Put Themselves Into The Buyer’s Shoes
The News Press reports from Florida. “Many of the Real Estate Network Services’s clients, 65 percent, are faced with a ’short sale’ situation, where the loan balance exceeds the home’s market value, said broker Beth White-Dahlstrom. ‘It’s very intricate, right now, to make sure that a property owner knows, realistically, what a property is worth,’ she said. ‘But that’s not always a really bad thing because the banks are working with us now. But it makes it tougher to sell a house. That’s why we have to be realistic with the price.’”
“‘If you don’t need to sell right now, I would say hold on to your house for a little while. But if there is a need to sell, I’d say make sure your price is competitive with similar homes within a quarter mile of you. No matter how much you owe, what we have to look at is what is today’s value,’ she said. ‘You should make sure that you’re priced toward the bottom few homes in your class. I’m not saying give it away, but make sure that your value is correct. The sellers need to put themselves into the buyer’s shoes because when you’re a seller, right now, you’re competing with a lot of other people.’”
The Star Banner from Florida. “In Marion County, some 1,181 petitions were filed with the county’s Value Adjustment Board. By comparison, there were 626 petitions filed in 2006 and 108 filed in 2005.”
“Greg Meade owns a few mobile homes he rents out. The appraised value went from $75,500 in 2005 to more than $303,000 in 2007.”
“‘Make no mistake, those people went crazy on assessments,’ Meade said.”
“After Meade filed his appeal, the Property Appraiser’s Office went out to visit the property and reduced the appraised value to a little more than $254,000. Meade dropped his appeal. But he said his concerns remain.”
“‘We’ve got an actual property tax crisis here,’ Meade said. ‘If you own any property except homestead, you’re dying. It leaves me in the unenviable position of maybe getting out of the rental business.’”
The Orlando Sentinel from Florida. “Nearly twice as many people face losing their homes in Central Florida this year compared with 2006, many of them borrowers struggling to repay adjustable-rate loans or investors unable to sell in a glutted market.”
“Through the first eight months of 2007, more than 11,000 homeowners in a seven-county area in and around Orlando have entered the foreclosure process by defaulting on their mortgage payments — 85 percent more than all of last year.”
“Experts say the evidence points to both homeowners living beyond their means and investors grasping for quick riches as prime sources of the problem, with foreclosure notices stretching from the new resort-home subdivisions near Walt Disney World in Osceola to the established starter-home neighborhoods of Deltona in Volusia County.”
“‘There is blame for everybody: builders who overbuilt, Realtors who oversold, lenders who weakened loan criteria and borrowers who stretched too far knowing nothing goes up forever,’ said Doug Duncan, chief economist for the Mortgage Bankers Association.”
“Don Casselman of St. Cloud started missing mortgage payments on his home earlier this year, after work injuries and a failed attempt to start a business. When Casselman, saddled with two mortgages, tried to sell it recently, he got no takers. Last month, Minneapolis-based U.S. Bank forced his family to leave.”
“‘They take people who are not in the best of credit, and they treat us like we’re millionaires — then they try to rip every dollar that you can make from your pocket, and they try to draw blood,’ said Casselman, who couldn’t persuade lenders to refinance his adjustable-rate loans when the $974 monthly payment was about to double. ‘They try to keep a poor man poor.’”
The Atlanta Journal Constitution from Georgia. “Foreclosure actions for metro Atlanta hit an all-time high this month, with 6,809 properties in 13 counties threatened with public auction in November. So far this year, lenders have published 41,312 foreclosure notices against properties in the 13-county area of metro Atlanta.”
“The October statistics, released Monday by Equity Depot, represent a 38 percent increase over September and a 49 percent jump when compared with October 2006. ‘This is the largest swing we have ever seen from month to month,’ said Barry Bramlett, an Equity Depot VP.”
“The total estimated value of properties entering foreclosure in metro Atlanta was $1,076,975,783.”
“Bramlett said mortgages with high interest rates are driving foreclosures across Atlanta. Adjustable rate mortgages make up about half of 2007 foreclosure notices.”
“Bramlett said an unusually high number of construction loans also showed up in this month’s listings, representing developments that never got off the ground or that failed to sell when construction was complete.”
“The October totals represented an all-time high for each of the 13 metro Atlanta counties, suggesting that the national mortgage meltdown is touching virtually every corner of the metro area. Even Fayette and Forsyth, where foreclosures have historically been rare, saw big jumps this month.”
“‘Now that we are at this kind of quantum level up in terms of foreclosure activity, I think we’re going to start really seeing the effects on housing prices,’ said Dan Immergluck, a Georgia Tech professor who is an expert on foreclosures.”
The Post & Courier from South Carolina. “Homes sales in the Charleston area were off significantly again last month, weighed down by too much supply and not enough demand. The Charleston Trident Association of Realtors said Wednesday that 885 homes changed hands in the three-county region in September, a 28 percent drop compared with the same month in 2006.”
“It was the second-steepest decline in monthly sales since the local housing slump took hold early last year.”
“Builders are trying to keep their prices stable, but to do so they are offering upgrades and more-attractive financing packages to bring buyers in the door, said Frank Hefner, an economist with the College of Charleston.”
“Nearly every zone that the Realtors association tracks saw sales volume drop off last month. The declines were mild in some areas and eye-opening in others. In Hanahan, sales plummeted to 10 last month, compared to 84 a year earlier.”
“The competition for buyers is especially tough in developing suburban residential areas where sellers of existing homes are going up against deep-pocketed national companies that are offering incentives on newly built models, said real estate agent Tenia Cattles. ‘They get very frustrated because they can’t give away the farm like builders can afford to do,’ she said.”
“Frank Finlaw, the local president of Atlanta-based Beazer Homes, said September sales for his division were healthy compared to the first half of the year, thanks to reduced prices and more-attractive incentive packages. ‘We’re much more willing to negotiate,’ he said.”
“These days, many local home buyers are either relocating from other areas or are making their first purchase, Finlaw said. ‘Someone who has to sell their house — those folks have come to the realization that it would be very difficult to sell right now,’ he said.”
“Experts agreed that the local inventory will have to fall back to a more-manageable level before the market trends will change course. As of Wednesday, 10,887 residences were listed for sale in the Charleston region, more than double the average number of properties on the market in 2004 and 2005, according to association data.”
“The rental side of the housing industry also is providing some relief, said Bonnie Miller, owner of Mount Pleasant-based Old Dominion Realtors. She said some owners who bought a new home before selling their first are having to seek tenants to help them cover both mortgages.”
“Miller said the rental trend ‘helps the market, too, because it gets some of that influx of supply off.’”
“Finlaw noted that the local supply of new homes is falling, a good sign for the industry. Once that happens, demand for existing homes will go up, bringing the overall market back into balance. ‘This has been a cyclical business since the housing industry started,’ Finlaw said.”
‘Central Florida’s sagging housing market has turned into a blessing for at least one group: land conservationists. Falling land prices and lack of home-builder interest now have property owners flocking to public land-acquisition programs, looking to sell. In Lake County, for example, itchy property owners have flooded county offices with applications, asking officials to look at their acres of old scrubland, citrus groves and pastureland.’
Where’s Olympiagal? This would make her very happy, as it does me.
me, too, very happy
Me too. I’m generally not thrilled with such groups on principal but I hate seeing every last square inch of the US covered in houses. I’d happily spend the rest of my life in high density housing (ie an apartment) if we could get enough people together to save the remaining wildnernesses and farmland.
Why are you “generally not thrilled with such groups” if they share your goals and ideals?
That’s what the Gore like people have in mind for everyone but their own elite cadre of uberrich rulers. I’ll never be happy in an apartment crowded in the middle of an inescapable metropolis.
You wouldn’t believe how many people I have met in Denver who have never been to the mountains or grasslands, they’re urban captives.
Will you get real? Even in the UK, which is vastly more crowded than the US, most families live in houses (including row housing).
There is way, way, way more land in the US with no wilderness or ecological value than is needed for housing for the foreseeable future. Oh and one more thing - the reason US cities are so much more spread out than over there is mostly because of space given over to cars, not to housing.
So I guess your point is we have the land, we may as well waste it? Profligate. American development patterns favor sprawl over density, which is why prime farmland, forest land and prairie is getting eaten up so the bourgeoisie can have their half acre of “freedom.” As far as the comment about england, nice caveat on the row housing. Row housing is far more dense then typical developments in America, therefore not comparable to a “house” in the American context. Take a look at google Earth sometime. Compare a typical mid-size American city (100K population) to a typical European or middle eastern city of the same size.
It’s hard to be against people buying land at market rate to keep it undeveloped. In fact, that’s the right way to do it.
Historically, “environmentalists” simply convinced the government and courts to steal people’s land by having it declared “wetland”, etc.
Buying land is fine!
Here I am! And I am very happy! Hooray! Hooray! Hooray!
You know, that is such fabulous news, I can’t even express how pleased I am to hear this.
And I am hoping mightily that this is a foreshadowing of events that will occur elsewhere, all across the nation.
Greed and this lending/housing bubble has killed so much good farm and forest land.
When you consider that California produces most of America’s food, it’s painful to see farmland become the wasteland of residential pos disturbia. Farmers are losing not only land, but also water, to sprawl.
On another note, I built a passive solar home on an acre of land and have a private well. I have a large garden and landscaped the front yard, but have left the other side of my property in its natural vegative state. Its interesting that only the side that I’ve gardened or landscaped has been invaded by insects and weeds, while the side with native plants has no weeds or invasive insects.
Not too far up the river from Moab, Utah, a developer bought desert land next to the Colo River and subdivided it. He then built a huge ugly Santa-Faux adobe house, looking right over the river, right over where the boaters launched their rafts and camped at a public rec site. So much for their wilderness experience (and keep in mind no houses anywhere nearby for miles). He had plans to do many more houses and also build a gas station, shopping mall, etc.
Now here’s the good part of the story. A woman from Salt Lake City came down and bought the entire development and decided to restore it back. She had the house taken apart and recycled what could be reused, then took out the streets, etc. and replanted native vegetation. She’s a local hero, her name is Jennifer Spears. For those of you who know the area, it’s across from Dewey Bridge.
Proves there are sane people on this planet who don’t believe development is the holy grail.
They seemed to used Moab Rules, in terms of overbuilding there…
What not to do, to a previously cool place.
“The contraction in housing is transitioning from an average downturn to among the worst in the post-World War II history. As the current downturn probes deeper depths, the risk of an outright recession will mount,” said Michael Gregory, an economist with BMO Capital Markets.
I thought you would all like to read this one:
http://finance.myway.com/jsp/nw/nwdt_rt_top.jsp?news_id=ap-d8sb2ef01&
If they would read this blog, then they would have already known this. That is one thing I love about this blog - it feels like I am a full year ahead of everyone else on what is happening.
Thank you everybody for the wonderful contributions and updates.
“land conservation” makes land more expensive for everyone, and whoever gets to “manage” that land gets to decide who gets to use it. In other words, that public land may be no more accessable for recreation than it was when it was private depending on what agency gets it and what their goals are.
Not all private land is covered in houses. My grandparents’ farm is still much like it was 100 years ago. As the “conservation” land eats into tax revenue they try to make it up by taxing private landowners even more heavily, making it even more difficult for family farms to break even (forget ever making enough to actually support a modest family - most family farms are supported by outside jobs).
And then they come up with ideas like buying development rights. Local government taxes property owners so that they can buy development rights from other property owners (i.e., farmers that really want to keep farming anyway) just to keep their farm as a farm. As close as it can get to “have your cake and eat it too” at least for the people that sell. Everyone else gets property taxes that are hard to pay. I own a small home on a lake that I thought about renting until I realized that I would have to generate about $1000 a month just to pay the non-homestead property taxes.
“land conservation” makes land more expensive for everyone..”
Ummm…huh? No, really…huh? I happen to know just a wee bit about this, and boy, I just love to hear your wisdom.
So, using tax dollars to take land off the private market makes the land that remains on the private market cheaper? Please explain.
I would argue that there is nothing wrong with that.
In my opinion, most environmental issues occur because natural resources are not being priced properly. No company would cause air or water pollution if they knew they would have to bear the cost of cleaning it up. They allow their plants to cause pollution because they believe there is a nonzero chance that it will cost them nothing, or because they believe that someone else will bear the true cost of cleaning it up. Economically, it is cheaper to prevent pollution than to clean it up. From an economic perspective, you could argue that air and water are not expensive enough.
I believe land use has similar issues. Home builders would not be building houses in the middle of the desert if they had to pay for the true cost of providing water to those places. Companies would not be providing jobs in those places either, if they had to bear that cost. Likewise, valuable farmland would not be converted to empty housing if farmable land was priced higher than unfarmable land.
Higher prices can be good. Because of higher gasoline prices, we now have econobox cars that get 30mpg that can hit 60mph in less than 7 sec. If gas was cheap, we’d still be driving 1960’s cars that are slower and used more gas.
Higher priced farm land will really help the farmers eh?- NOT unless they SELL it.
It’s too bad that farmland is valuable to everyone but the farmer, to them it’s a cost. Who is willing to pay the food prices to make farmland expensive enough to choke out development? My dad works (off the farm) a 36 hour week to support his farming habit. He’s 66 years old and his job is 5 hours from the farm. There are NO jobs in the area that would pay enough to support the farm. If farm land is so valuable why does it take so much to support it? Sounds to me like a farm has negative worth unless you sell it to some housing developer.
Inflation - i.e. high and higher prices - benefits the parasites, but not the workers.
I didn’t say it would be good for the farmer. I said it would prevent farmland from being wasted as housing.
What you’re pointing out is fundamentally a symptom of the same problem. It’s difficult to make a living farming because somewhere in the chain, something isn’t priced commensurate to cost. One obvious place to point the figure is labor. If the cost of labor was accurately factored into the market price of food, then illegal farm labor would not be a problem. If you really think about it, there is no way you can convince yourself that the $1 cost of a McDonald’s hamburger could accurately reflect the cost of making that thing. Somebody in the supply chain of that product is offloading their costs unto someone else.
Higher prices don’t always mean inflation. After all, we talk about interest rates in the last five years as being abnormally low, not about current interest rates having inflated. Making natural resources available at abnormally low cost produces the same kind of problems as making money available at abnormally low cost.
“From an economic perspective, you could argue that air and water are not expensive enough…”
Jeez, so now you want to charge for air???
“And they shall beat their McMansions into parks and public lands, and no more shall they drive their SUV’s to the mall to buy crap they don’t need.” or something like that. Sounds good to me!
Oh, one other note: Yes, in the Algore future, they will want us to all live in dense slums while the rich get to play in the mountains, forests, etc. Normal people won’t be allowed in those places since that would “disturb the environment” - in other words, annoy the rich.
The only environmentalism I support is the type where people put their money where their mouth is and live by the same rules: Buying up wasted development land to make it into greenspace is good: demanding somebody else pay to buy that land would not be good, and the Algore model is probably worst of all.
“Greg Meade owns a few mobile homes he rents out. The appraised value went from $75,500 in 2005 to more than $303,000 in 2007.”
“‘Make no mistake, those people went crazy on assessments,’ Meade said.”
Big problem in FLA. Local govs did indeed go nutz.
Funny, when you’re selling commodities at insane rates they get taxed at insane rates.
Are people in this country really that thick? That quick to get swept away in irrational exhuberance? I gotta start a company of my own.
Since everyone was getting a free car with purchase of a house … or their own HELOC equal… Now they are paying yearly property taxes on that stuff they HELOC into their refinanced mortgage. Even the stainless steel refridge and stove, which surely won’t last the value of the house and land itself.
It was just a matter of years until those inflated loans with fully furnished kitchen, cars… started to work their way into property tax values. Good lucky paying _yearly_ property tax on those stupid mortgage inclusions.
In a way, isn’t insurance cost [higher in Florida] even a factor in property assessment?
It would be stupid if not idiotic to live in a state like Florida where a mobile home can be taxed for $300K. Wouldn’t it be for a homeowner to go back to the cow-brain property appraiser and say: “Yo, dude. You appraised my property for $300K. I would like you to buy this sucker right now for $300K since you appraised it.”. I wonder what the appraiser will think. Or maybe all local government employees are just DUMB-ASS as the sheeples, especially property appraisers.
This is exactly the reason why I support a “Right of Sale” provision in the appraisal process. Every year, after you recieve your appraisal, you should be given the right of appeal (which you already have). If you exhaust all appeals, and still feel your home is overvalued, you then have the right to SELL the home to the property appraiser that the assesed value. The appraiser, at that time, no longer has ANY wiggle room, they MUST buy it at the appraised value, no questions asked.
This would result in a systematic undervaluation of homes for appraisal purposes, a good thing for all of us in the wonderful dual tax system state of FL.
good idea mike. which of course would never get passed. shame.
The better idea would be to not have a dual tax system in the first place.
I think a county in Wisconsin tried something similar, but in reverse. Instead of appraisal, you tell the county how much you value your property, and pay the property tax accordingly. But your valuation, which can be changed up or down at any moment, is recorded and anyone can buy your property for exactly the price listed.
This scheme was too clever, and the voters quickly eliminated it.
Interesting idea. Your assessment, which you yourself set, then becomes the equivalent of Zillow’s “Make Me Move!” price, only legally binding.
Here’s what would happen if you dared to question & try to contact any prop appraiser in Fl. :
thats right - NOTHING ! They wont answer the phone themselves, or they hide behind a staff or E-Mails. Every FL govt worker tries as hard as they can to NOT work. Even if by some miracle a new hard charger was employed they are quickly taken to task to ease-up as not to make the others look bad.
Hell, thats pretty much the motive for all public employees nationwide, not just Florida, but the State Of Florida excels at protecting it’s slackers.
( Been to a DMV office lately?! Ha !! HAH HAH!!!! )
followup comment: same thing at Tampa/Hillsborough county schools. Good LUCK getting anyone in THAT lazy-azzed organization to do their job without repeated threats to call tallahasse.
Florida govt just sucks. always has. probably always will.
Dammnit Palmy, get on the ticket sometime & straighten this mess out!!
I used to own property in Sedona , Arizona and they did the same thing to my vacant lot. Increased value by 70% in one year. I appealed and go a $crew you letter. Sold my property last month.
Increased value by 70% in one year ??
Whether you like Prop#13 or not this is exactly why it passed in Cali…Put a stop to the “greedy hand” of municipalities to raise taxes at will to fund more waste…
Well, they have to raise residential rates when they allow developers to come in and knock down productive commercial property and give them 20 years of tax abatements for the privilege of doing so. Bye-bye revenue.
“‘There is blame for everybody: builders who overbuilt, Realtors who oversold, lenders who weakened loan criteria and borrowers who stretched too far knowing nothing goes up forever,’ said Doug Duncan, chief economist for the Mortgage Bankers Association.”
Realtors oversold? BS. They may have done some unsavory stuff, but “overselling” was not one of them. If they had willing buyers, what’re they gonna do? Turn the business down? I wouldn’t.
Of course, if I had to lay blame in one direction more than others, I’d lay it at the feet of the mortgage bankers and brokers. So it figures this guy wants to spread the blame around.
You always hear statements like this from the guilty. There is blame for everybody: ….said Doug Duncan, chief economist for the Mortgage Bankers Association. Ya see that way nobody’s specific culpability stands out. It’s the old “well I guess it was wrong but how was I supposed to know when everybody was doing it”.
After the Tech bubble blew up, I heard this kind of BS from those who were involved in helping investors loose a ton of money.
Hey Doug, those of us formally known as bitter renters bear absolutely none of the blame for this mess.
Yeah, the one I like is “it’s the system”. LMAO! Who came up with the system? Who participated in “the system”?
Typical among any conspiracy. It is always the OTHER GUY that is the guilty one.
Reminds me of a phrase I heard pop up in bars a couple years ago:
“I was overserved.”
At first it was an obvious pub witticism, then I noticed people were using it without the attendant sense of irony.
“There is blame for everybody: builders who overbuilt, Realtors who oversold..”"
True, it doesn’t make sense to blame Realtors for doing what they do — unless by “oversold” one means that they added to the hype and fueled the speculation by preaching with blue-sky platitudes.
I can’t count the number of times Realtors told me (to my face) that real-estate only goes up and that buying was a “you can’t lose” proposition. As my wife likes to point out to real-estate types, making statements like that are flat out illegal in the investment (equities) world. Once, after being naive enough to explain the math behind my decision to rent and not buy a realtor asked me how I could be a money manager if I was so stupid when it came to real-estate.
So, yes it’s true, even if I know better, I’m now enjoying all aspects of my “I told you so” moment. The kicker is that this “I told you so moment” gets better and better with each passing day and looks like it’s going to continue on for a few years.
Realtors oversold? BS. They may have done some unsavory stuff, but “overselling” was not one of them.
I would disagree. I found numerous newspaper advertisments from realtors in Florida trying to get people from out of state, specifically California to buy property here in Florida. Most of the advertisments said Florida was the next California and that Florida was running out of land. Buy now or forever be priced out was a normal saying.
Overselling is creating demand through unethical tatics and limit supply by buying up the goods and then selling it back to these people. We call it flipping. That was very common in the Tampa area.
“‘They take people who are not in the best of credit, and they treat us like we’re millionaires …” said Casselman, …. ‘They try to keep a poor man poor.’”
Yet another example of why someone who is poor stays poor. You give them some money (unjustified and unwarranted money specifically), they spend it, and then complain that they are poor again. In better days, this individual would never have been loaned the money in the first place.
But they put a gun to this guys head and forced him to sign!!!
“‘They take people who are not in the best of credit, and they treat us like we’re millionaires — then they try to rip every dollar that you can make from your pocket, and they try to draw blood,’ said Casselman, who couldn’t persuade lenders to refinance his adjustable-rate loans when the $974 monthly payment was about to double. ‘They try to keep a poor man poor.’”
Okay, what is these fool complaining about!
He got the money to start a business, although he should not have, and now that he failed on he’s business, he is complaining that they should’ve stopped him from getting the money so he would not make the mistake of starting a business he failed at. Now he is complaining that the bank will not feed him a few more dollars(via a refi), to correct he’s mistake!
wow, these are guys the gov wants us to bail out?
amazing!
It is the same kind of person that says “I didn’t file any tax return that year. I didn’t have any money coming back.”
late to the game sorry boys (and olympia gal or others out there). Ran straight to the comments after seeing this gem. A real daimond in the…..well….jewlery cabinet the way Ben J. puts together this blog
This guy….wow…what a piece of work. Once again we wee, Ya just cant invent that kind of stupid. Yes, that is the huge comsipricy theory. The banks take the poor, shove fists full of dollars in their hands, and then try to take it back, but cant. Ummm. Right. Ok then Mr Hee Haw rerun fan…just start a bank, if that’s where the money is…..
For this guy, and the rest of his ilk, im reminded of the line from the origional Airplane move……they were running thru news flash segments of the pending disaster. Japan, banging on drums, American news cast saying how horrible it all was, then hit the guy from “Counterpoint”
He spins his chair towads the camera and in the most firm Vince Lombardi voice speals: “THEY bought their tickets, THEY knew what they were getting into. I say LET ‘EM crash”
J
Speaking of land prices.
Do land prices usually fall harder than housing prices during these RE busts?
Also, I don’t think we will be close to bottom until the press starts calling this a Housing CRASH not just a downturn, recession, slump, etc.
Raw land really has no “value” until you can develop it into something.
I expect not a lot of anything will get built on raw land, for years to come.
I will build my own home when land prices outside of Portland, Oregon get back to the long term norm.
I’ve been patiently waiting since 2000 for this disgusting bubble to burst.
Watching the mass psychology change, but I don’t see the final capitulation yet. Like I said earlier, when the press freely floats the term CRASH I will start shopping.
Uh, tell that to Georgia Pacific, Rayonier, Union Camp…
I believe so. And I also think they rise higher during a boom, due to lower buy-in and carry costs. Here is AZ raw land has zoomed above housing costs. Another aspect of this; folks bid up land that IMO will never have houses on it.
–
Ben is right. For example, the home prices in Tehachapi doubled during the 15-month period ending 2005Q2 and soon the lot prices quadrupled in a 12-month period. Now, no one knows what the lot prices are since the volume has dropped 85-90%.
Most of the gains and losses during boom and bust are in the underlying land and infrastructure (various utilities) prices. The structure doesn’t go up and down as much as the home prices and the same is true on the downside.
In Antelope Valley, the raw land is only worth $1,000 an acre. Utilities, including roads, if present, are worth $25-50K. No, I am not talking about the boom years of 2004-06. I am talking about B.B. and A.B. (before bubble and after bubble).
Jas
Yes, land will fall quite a lot further in percentage terms. If housing goes down 40%…land may tank 70-80%.
‘If you own any property except homestead, you’re dying. It leaves me in the unenviable position of maybe getting out of the rental business.’”
And that is how it is possible that rentals could (I say “could”, not “will”) rise in FLA. It’s a business, and businesses that don’t make a profit, don’t last. During the bubble, it was all but impossible to find a reasonably priced rental around here. I was just lucky in the end. That problem could return big time, if rentals become unprofitable, people won’t rent.
Big time inflation issues, weak dollar, twin deficits not going away, new home construction will be in depression for several years, most builders go under with land prices down double in percentage terms over and above existing home price drops, I’ve already seen the some ground zero markets with land down 75-80% and home prices down 40-50%.. supply will eventually tighten dramtically, costs of construction and infrastructure build will power much higher, end users or new investors will buy up all the excess supply from the bubble at much lower price points..renting long term, not owning property a big mistake..the 2004-06 ridiculous bubble won’t be repeated for a long time…properties will eventually appreciate again with cost of living and wages but rents will probably increase at an even faster clip
“And that is how it is possible that rentals could (I say “could”, not “will”) rise in FLA.”
The problem with that argument is that there will always be bagholders who won’t give it up. Those people will take a loss year in and year out until they just can’t afford to do it any more.
If anything, we’ll see rents continue to drop across the entire state. Those big apartment building owners don’t need too much in rent to cover overhead and they have to compete with the FB’s.
If people won’t rent, what will they do with the property? Leave it vacant? No, they’ll sell. And if enough sell it will bring prices down to the point where buying a property and renting it out is (or appears to be) profitable. That’s how a market works. If supply of housing exceeds demand, the cost drops until sufficient demand is generated. To drive up rentals cost in this sort of environment, you need to have some other factor increasing demand, like rising wages or an increasing population (with the funds to generate demand).
“It leaves me in the unenviable position of maybe getting out of the rental business.”
Which, of course means, more properties for sale thereby putting more downward pressure on prices. Bring it on!
Yeah, but it puts upward pressure on rentals, I’ve seen what happens when Mom and Pop rentals disappear, you’re left with corporate managed rentals that put the squeeze on. So the properties go to the banks. And the banks aren’t renting them out, some little number crunching turd at corporate doesn’t give a crap whether people can find housing in Ruskin.
Rental rates are marvelously self-regulating, however. The corporates can hang any price tag they want on the front door. Supply, demand and ABILITY TO PAY, in cash, every month, will determine prices. You can’t lever the rent.
I don’t know about that. In Washington DC we have had several condos switch to rentals - - one literally right outside my front door which hasn’t even had the foundation poured yet. I can’t imagine that an additional 50 rental units on the market across the street from me is going to do anything but tank the rents everywhere else.
Speaking of which . . . talk about “eating the losses”! A construction co’s brand new condo units - - brand spankin’ new - - are going to end up going to renters and/or a property management company, and just get trashed.
Thanks to the speculators for they’re hard work over the past eight years in getting us affordable housing for the next twenty.
I just got my rent renual from a corporate management firm yesterday. They are trying to raise my rent $90 a month next year. Bunch of condo buildings just tried to open and are now renting near by. I’m about to spend my weekends collecting negotiation data. Not fun, but $1596 is absurd in a first floor one bedroom in Rockville. $1506 is too, but I was in the middle of finishing my LLM at this time last year. I have more time this year.
If you’re in Rockville, MD, gently remind them about the white condo tower downtown … the one built in a burst of exuberance maybe 30 years ago … the one that is now Section 8.
Rockville is really not that special. Surely one can find a rental in Maryvale for $1500. Take the bicycle to the Metro. Or why not look around White Flint? Metro and shopping.
I’m already near Twinbrook - behind the Whole Foods. I walk to the metro - it was my only absolute rule when I found this place. Real problem is moving - the books are a killer, but this has gotten ridiculous. But I’m willing to do it this time. I should have gotten a rent decrease this year.
Tell them you’ve already had a tenants meeting and you’ve all agreed to move enmasse to the new empty apartment complex for $300/month less. U-Haul gave all of you a volume discount and the new complex is giving everyone free-rent for one month for bringing them the lifesaving business. LOL
Don’t worry palmetto, I think there will be plenty of affordable rentals for quite some time because existing landlords are forced to keep renting since they are unable to sell, even though they may want to. Also, many would-be sellers are reluctantly becoming landlords.
Yeah, but it puts upward pressure on rentals
No it doesn’t. Where are the buyers of those former rentals living now? Take it from there.
OK, fine, you can be right if you want. All I know is that for a couple of years at least, a rental at a decent rate was practically impossible to find. All I can give you is anecdotal of how it played out for me. And I wasn’t the only one in that boat. Also factor in the stubbornness of the people who refused and I do mean refused to rent unless they could get the rental to cover their stupid mortgage. Rentals are down right now, thank God, but as owners of rental property decide to throw in the towel due to taxes and insurance and FBs lose their places to foreclosure, rentals very well could dry up. Who is going to rent out property if it isn’t worth it? I wouldn’t.
“Rentals are down right now,”
Meaning price wise, and there are more of them and the ads for them stay longer in the local fishwrap, so it is OK at the moment.
Nice thing about rent… makes it a lot easier, financially and emotionally, to just pick up and move somewhere else where the income/rent ratios are better.
So who is going to buy a Florida house? Not retirees from other states now that it’s well-known how the SOH cap screws them. Not existing residents who would (under current law at least) have to pay much more in property taxes on the new place, even if they bought something less expensive.
So who’s left? Rich Europeans and South Americans I guess. They can play the currency exchange rate game, hoping that the dollar will recover down the road.
How much like New York. Where every state policy favors prior generations and existing businesses, and everyone whines the young people are moving away and there aren’t enough jobs Upstate.
Well, I guess they won’t be moving to Florida now. Got room in Carolina?
No Room!
No water, either (yikes)
Do I sense panic in your post? I don’t blame you. Why wreck a good state?
I explained this to my husband one day - that any policy that involves keeping grandma in a home she can’t afford screws young people by keeping housing off the market and keeping tax rates artifically high.
My own grandmother was exhibit “A” in the process. She would have not been able to keep her home except for the tax break the state of VT provided for her. One of the reasons the overall property tax rates are so high in VT is because they end up refunding so much money back to low-income residents. In the meantime, 1 women occupied a 3 bedroom house for 15 years, creating an unefficient demand for housing and keeping her in competition with 1 and 2 income families.
My grandmother fretted until the end of her life about spending money to upkeep the house. Once she got through the emotional trama of moving, she might have been much happier in a small apartment where all she had to do was call the landlord when things broke.
Of course, you it’s hard to look like anything but a monster by pointing out that someone other than grandma is impacted by such policies and that in the long run she might be happier in a smaller place. I think my husband gave me a pretty blank stare after my discussion.
Vermonter,
I could give you half dozen similar stories off the top of my head among relatives and neighbors. Its VERY hard for an elderly person to move (unfortunately) and, yes, the subsidies for staying and over consuming something like a three bedroom home make the situation far worse.
Sadly, its “feel good” legislation that prevails even though it often results in a worse outcome for the elderly. That and the vote angle make it all too easy for pols to make the situation even worse with ever more subsidies.
If the elderly knew their costs would rise, perhaps to a visible point of unaffordability, they might make plans at an earlier point when they still had the “flexibility” and energy to evaluate their options. As it is, there’s every expectation by the elderly to believe something will come along to allow them to stay exactly where they are. So many don’t even think about it until, literally, the house is collapsing around them and the equity they might have had to reasonably apply to a better housing solution desolves.
Man, another example of “feel good” legislation having “unintended (bad) consequences”. People (voters) never seem to get it. And, like you said, to bring it up only invites the charge of being “mean”.
Here, here.
We are approaching empty nesterhood a decade away. We live in a city where overconsumption of housing is NOT the problem — only one-third of all NYC housing units have three or more bedrooms, vs. 2/3 nationally. Tough for young families.
So will we save some money by downsizing to a 1 BR or 2 BR condo, cutting operating costs and liberating some equity? Not so fast! The tax policy here holds that 1-4 family homes can only have their assessments rise at a restricted rate, while multi-family rises to the moon. (Senior homeowners get even more breaks).
No wonder rents are so high.
I’ve got that exact situation across the street from me. Older couple, both have health problems, 4 bedroom house is starting to fall apart.
They would probably be much happier in a 2 bedroom condo with maintenence crews doing all the work, and sell the house to a younger family that could actually get outside and enjoy the yard. They missed a great opportunity to sell in 2005.
Hear! Hear! (LISTEN)
If you listen to the UK Parliament, they say, “Oye! Oye!”
just a pet peeve of mine. sorry if I caused anyone to loose interest…
It took a lot of persuading to get my Mother in law into an apartment and out of her 3br 2 story. I told her we had enough to do taking care of our house & property and it wasn’t fair for her to expect us to keep up her house and her lawn too. She’s never been happier in her little 1 bedroom. It lifted a big burden off her shoulders.
Our first house was a 4br 2 story that belonged to the parents of a friend of the family. They both went into a nursing home and we got a great house for us and our 2 sons. The kids (in their late 50’s themselves) sold it to us in the early 80’s, purchase contract at 12 % interest, at a time when rates were 18-21%. It helped us out and it helped them out. We couldn’t afford 18-21% interest and there were no buyers anywhere to be had. Win, win all the way around.
In that Orlando Sentinel article about foreclosures, they said a lot of Brits bought in Osceola county and are now going into foreclosure. If they can’t sell these to other people in their country, what makes anyone think more of them will be coming over here to buy. Plus they have their own housing crisis and we all know the 2nd home is the first to go.
“The sellers need to put themselves into the buyer’s shoes.”
Right on. And when they do, they will find that their dreams of easy riches were predicated on the assumption that the next generation of homeowners would enjoy a vastly lower standard of living, and those riches would have been obtained at their expense.
–
How about mortgage brokers putting themselves in the buyers’ shoes?
Jas
We don’t have a tax problem in FL, we have a MORON problem..the tax assessor is a Complete blithering Idiot MORON for not lowering the millage rate 75% so the total tax remains the same….
When we ever fire a MORON in govmint is the REAL question!
==========
“‘Make no mistake, those people went crazy on assessments,’ Meade said.”
Lesson twelve: Goverment does not equal reality.
Actually, the tax assessor does not set the mill rates in FL, the taxing bodies do (local govt, water mgmt, school board, etc). I know this is an overly simplified view, but I also know that the appraiser is only responsible for setting relative values (apprasials) NOT for determining the tax on each individual home.
And, in my view, the reason the mill rates were not adjusted is because of SOH. All the voters were seeing flat or slightly decreasing taxes while those that can’t vote were seeing 200%+ increases. SOH removed any incentive to EVER lower the mill rates, which, IMHO, is why it was not done.
Even if you don’t balme SOH, the fact is crystal clear, FL NEEDS SPENDING CAPS. Revenue up 100’s of % in some of these taxing bodies over the past few years, without even a THOUGHT to the idea “let’s lower the mill rate 50%, values are up 100%, that should make everyone happy!!”.
Phuc*ers… The FL tax system pisses me off (can anyone tell) to no end. Add portability to this mix, and we have a real powderkeg… And, as someone said above, the market distortions will continue to get worse and worse, until, finally, someone steps in and does the right thing.
Don’t you vote on your millage in FL? Here when the rates get too high we don’t vote back in the replacement levies. Some of the permanent ones we’re stuck with, the everything has a mixture of both that they get their funding from.
They can’t lower millage because they gave 20 year tax abatements to the commercial RE developers. They murdered their tax base for the ego boost of wrecking cranes and Nuuuuuu buildings. Now residents must pick up the slack, or no police and fire. Oopsie-woopsie.
Next year, fun for all when the commercial buildings lose their tenants as squeezed homeowners curb their consumption. What a crazy spectacle to see the city put up literally millions of dollars for more retail space, when retail profit margins run from 5% to negative. Oh well, the commercials can hang on for years–after all, they aren’t paying any taxes. Just like those churches that buy a parcel of land and don’t build on it for fifteen years while their “future home” sign weathers and falls down.
Worst is when some research companies (you know, actual INDUSTRY, not RETAIL) wanted to move into the city, but they would not put up one red cent to help convert retail spaces into lab spaces. No, Gainesville does not need your good-paying jobs or your real goods for export! UF will provide for us! Praise the Lard!
It’s 2007 and the Commerce Building is still empty…
Dear God;
Thank you for the McDelusion. It was nice to move in and have my wife stop nagging me about a house. Can you please take it back?
amen
the wife or the house?
Take my wife, I need my house for my old age.
(with apologies to Henny Godman)
sure! please send picture of house!
Sure, one 8 x 10 glossy of my McDelusion is on its way!
A couple weeks back someone posted the Suzanne Researched This! scenario, real life version. An FB called Dr. Laura talking about how her marriage was strained because she convinced husband to buy a house they couldn’t afford.
It was a shame, it seemed like the husband was really at wit’s end. And the wife calls Doctor Laura. WTF did she think La Schlessinger was going to do, pay off her note?
Stupidity. Membership has its consequences.
No on the wife, paying for a house is one way she gets paid for her “womanhood”
At least the housing crash will not make her want to keep the house in a divorce. And she is still responsible for 1/2 the losses in a short sale. Which can be used to lower any alimony or other payments.
Can you imagine the outrage if the man has to pay alimony AND eat all the losses on the short sale?
Mission Accomplished
“The Star Banner from Florida. “In Marion County, some 1,181 petitions were filed with the county’s Value Adjustment Board. By comparison, there were 626 petitions filed in 2006 and 108 filed in 2005.”
It’s strange to me that nobody that was pushing homes and loans stopped to think about how high prices would raise taxes ,insurance costs ,etc.The market makers didn’t think about how many people in the future they were pricing out of the market .It got to the point that the real estate pushers were looking for people under rocks to try to keep this baby going .The real estate market got more and more fraudulent and more and more fueled by cash back deals in which sub prime buyers were being paid to buy a house .What a joke ,yet the REIC didn’t object to all this hanky panky because volume was the name of the game and true long term stable demand didn’t matter .This was criminal behavior as far as I’m concerned
I have never seen a “global “money supply be so misplaced as with this housing bubble .It reached a point that the real estate market took on a life of it’s own where buying to flip or refinance was considered a sure bet .
I’m still so very shocked that the world turned this crazy in the last 5 years and crazy behavior just brings more crazy behavior like we see with bail out talk and homeowners demanding 1% teaser rates forever. Watching people line up at some banks to withdraw funds or people demanding teaser rates with signs at Countrywide is a sure sign of more crazy down the road as the sh*t hit’s the fan.
“It’s strange to me that nobody that was pushing homes and loans stopped to think about how high prices would raise taxes ,insurance costs ,etc.The market makers didn’t think about how many people in the future they were pricing out of the market ”
Not really all that suprising as this country has collective ADD and can not see past the short term and long term is considered a couple of years.
I’m still so very shocked that the world turned this crazy in the last 5 years and crazy behavior just brings more crazy behavior
Just look at what happened in the dot com era. The NASDAQ was around 5300 and today it is at 2756. It has never recovered from it’s all time high of 5300. I think the housing meltdown will be much worse than the dot com bust.
“‘If you don’t need to sell right now, I would say hold on to your house for a little while.”
Not because it will ever recover some value, but because we already have so many G-D houses to sell that we can’t handle any more. So for the love of God, just sit there and lose money.
signed your Local Realtor
And just who “doesn’t need to sell” anyway?
1. People of thinking of moving to something different in the same market. No effect on the market whether they move or not, because the seller is also a buyer.
2. People wanting to clear out to somewhere cheaper because they think that the market has topped. Why on earth would they wait to sell?
3. Cash flow positive (or not too severely negative) investors selling for the same reason. Ditto.
You know it really is mindblowing that the REIC tells people to not sell unless they need to . It’s none of the REIC’S business why I might want to sell .In fact ,the less the people in the real estate business know about you the better it is because they just use knowledge against you .
I have seen listing brokers reveal vunerable information to a buyers agent and buyer agents reveal vunerable information about buyers (like how high or low they will go ).When I was in the business I had a poker face and talk was cheap to me .I only would believe something once I saw it in writing .I forced a realtor to pay interest for a whole month on a deal because they didn’t close when they said they would (which I put in the contract ).There is no room in business for not putting you intentions in writing .
You got that right. I had to physically list every item that needed to be removed from some houses before they could close. People tend to hand over the keys and forget the trash. Glad I’m out of that rat race.
Responding to the guy that bought through them last year.
How’s that guy who runs Trademark Properties doing? He sounds like one arrogant SOB.
–
“‘We’ve got an actual property tax crisis here,’ Meade said. ‘If you own any property except homestead, you’re dying. It leaves me in the unenviable position of maybe getting out of the rental business.’”
Yeah, own free-and-lear, or rent, or leave the residential RE business!
Jas
“‘There is blame for everybody: builders who overbuilt, Realtors who oversold, lenders who weakened loan criteria and borrowers who stretched too far knowing nothing goes up forever,’ said Doug Duncan, chief economist for the Mortgage Bankers Association.”
wow from an overpaid expert who failed to warn 3-5 years ago.
A little late dougy
Off topic, but about the water shortage madness here in the Carolinas… I read that NC is angry with SC because we are “taking their water”. Anyone that looks at a geological map can see that their rivers naturally drain to the Atlantic Ocean, and many happen to do so at our lowcountry coast.
Put up a big siphon at the state border. See how they react to that.
Florida is mad with Georgia as well….
“…renting long term, not owning property a big mistake.”
agree but there are times like now that require rational people to wait for prices to come down to acceptable levels. then allow someone to buy a piece of property at a reasonable price not the inflated titanic prices.
I guess that depends where you live. If you can’t buy with PITI on a fixed rate amortizing mortgage comparable to rent then continue renting..
Fraud still going strong:
http://dallas.craigslist.org/rfs/451498018.html
Note this comment in the ad:
I’m also willingly to write a check at closing to a buyer/investor for $6,000 CASH to cover 2008 taxes or to simply put cash in your pocket at closings with a 3 week or faster closing! We will just add $6K onto the agreed upon sales price. This will only add about $15 a month to your mortgage, but puts alot of cash into your pockets!
(Live in Austin area)
This is just disgusting. Not just the $6000 cash into a mortgage, but fully furnished. EVERYTHING!
How can banks do this? Insane. Appraisals need to split the value of the house from the house contents. Same goes with tax collections. That will stop this idiocy.
Who the hell want to pay Texas high property tax on a bagless swepper and knife set that comes with a house? Those property taxes are EVERY YEAR!!
What if you don’t like their cheesy furniture? Did you see the picture of the broker? He looks like a Chippendale’s (sp?) reject.
Broker= pudding eatin’ cowboy
What I really want to know is whether the box of Kleenex and the Yankee candles you see in the bathroom are included too, because that would really seal the deal for me…what with the paper towel holder and the….wait for it…Swifter mop…I can hardly contain myself.
$15 a month for 30 years is nearly 4 times the original $6000.
We’re a monthly payment society now. No one seems to understand how compounding interest works anymore. Hence why no one saves and consumer debt is through the freaking roof.
“How close can get I get my monthly payments to my monthly income?” seems to be the prevailing mindset anymore.
Oh boy. Count me in.
Those Williams and Sonoma wineglasses are the clincher.
Where do I sign ?:)
PRICE REDUCED a WHOPPING $41,000! Price is $46,000 UNDER what two top Austin realtors told me to list condo for just 7 weeks ago! This is a steal of a deal!
That’s because prices have probably gone down $5k in the last 7 weeks, jerk.
I’d say make sure your price is competitive with similar homes within a quarter mile of you.
Sounds good and it works in a normal market. The problem is that in most areas in Florida, the home prices for similar homes in a quarter mile have had a significant unrealistic increase during the boom from 2003 through 2006. Therefore, the comps are not correct and the buyer should not use this data because of the skewed data.
One would be better off comparing the prices of homes sold in 2002 and adjusting the price with inflation plus one or two additional points. I believe this would provide a far better fair market value (FMV) than the comps provided by a realtor. You can also exclude the homes sold from 2003 through 2006 from the comps and adjust the price to include inflation plus one or two points year over year to get a FMV.
My rule of thumb is never trust that realtor with your money. Most of the realtors only have a limited education and are only interested in selling at a higher value because their commision is higher. By simply doing your own research and math, you should be able to come up with the true FMV.
I’d go to 2001 or 2002 prices, but I’m not sure I’d even adjust for inflation. When an area gets bad the prices go in the toilet and they go backwards and don’t appreciate at all. I think housing in some parts of FL is going to go all the way back to 2002 prices or further.
When the going gets weird, the weird go Gold.
signing off on my ball & chain, for a bit
From the original post:
“The rental side of the housing industry also is providing some relief, said Bonnie Miller, owner of Mount Pleasant-based Old Dominion Realtors. She said some owners who bought a new home before selling their first are having to seek tenants to help them cover both mortgages.”
If I were a tenant, I wouldn’t be at all interested in helping my landlord cover the mortgage. I’d be more interested in a clean, quiet, safe place to live — at a reasonable rent.
..
Also, when the “Landlord” gets financially pounded into a fine dust because he/she can no longer afford their “investment”, you may come home from work to see a yellow Foreclosure Notice tacked to the front door.
Its happening all around me in Central Florida as I type…..
.
I have a friend who owns a condo on Isle of Palm across from Mt. Pleasant. She says Mt Pleasant is a wonderful place. Clean, pretty, lots to do. They bought a condo years back to get their foot in the door and build equity and eventually they want to sell it and buy in Mt Pleasant. They bought way before the boom so they’ll probably come out OK, but their main goal is to live on the mainland instead of the island which is mostly tourist rentals.
Why are there so many stupid people?
First, Immergluck, of Georgia Tech, proving once again that GA Tech suchs and that the balkanization of academia is the precursor to intellectual flabbiness. A QUANTUM step up? Mr–I mean Perfessor–Immergluck, that word does not mean what you think it means.
And then the chaser: Finlaw, of Beazer Homes, telling us that when supply falls, demand will increase. Mr. Finlaw, back to Econ 101 with you!
The only way in which falling supply could increase demand is the special situation where values driven up by rarity induce speculator demand, i.e., in a bubble! Keep wishing, Mr. Finlaw!
I agree that falling supply = incresing demand is generally stupid, but you have to think through his statement. He was really saying that fewer new houses being built will require people who want to buy to look to existing homes. That is true only if the supply of new homes falls far enough. It’s the “enough” that is the clincher.
Demand will continue to dry up while the builders slow down. If Mr. Finlaw thinks he has some way to assure folks that the supply of newly built homes coming on the market will slow down way more than the supply of qualified, interested buyers, he should say so and then prove it.
I dare him. I double dare him.
“‘They take people who are not in the best of credit, and they treat us like we’re millionaires — then they try to rip every dollar that you can make from your pocket, and they try to draw blood,’ said Casselman, who couldn’t persuade lenders to refinance his adjustable-rate loans when the $974 monthly payment was about to double. ‘They try to keep a poor man poor.’”
At least with a Mafia loan you only get your legs broken or maybe some cement shoes, beat with a black-pipe and tossed in the river.
Anybody have any thought why building starts were strong for the northesast (up 45%) is is multi family, or such a small number, that any increase can look dramatic. Thanks in advance.
We have a military man visiting the Empire today…
Say hello to Lieutenant Dub
Listen, buddy, I don’t know who you are or where you came from, but this Blog is reserved for comments that include educated and informed insights about micro- or macro-economics, or recipes involving turtle urine or rooster testicles, or remarks about forced sodomy on REIC members. If you can’t swing at that, don’t step up to the plate.
“The total estimated value of properties entering foreclosure in metro Atlanta was $1,076,975,783.”
90% of $1,076,975,783
85% of $1,076,975,783…….
…………….
80% of $1,076,975,783 …………….
……………………..
70% of $1,076,975,783
Atlanta was a growth for 07 city
The Atlanta Journal Constitution from Georgia. “Foreclosure actions for metro Atlanta hit an all-time high this month,
way over built…especially outside the perimeter.
and despite migration inbound, people coming either
1. can’t sell their existing house
2. dont want to buy a house now and will wait…
I love this! So funny. Things are worth what someone’s willing to pay for them. I can’t imagine why you’d resist the highest bona fide offer if you need to get rid of your house. What could you possibly be waiting for?
“If you don’t need to sell right now, I would say hold on to your house for a little while.”
When I read this, mouthed again and again like a mantra by real estate “professionals” (just as “now is a great time to buy” was until recently) and others, I can only think that they must be completely ignorant, and by extension largely harmful to their clients. Does anyone really still believe that housing prices will recover in “a little while”? Even NAR, the eternal delusionary optimists, admit that prices will not recover from present values for a couple of years. By taking your house off the market, you are either committing to stay put for a _long_ while, or you are making a choice to sell for less than what you could get now.
Its that simple, but apparently so difficult to grasp. If you plan to sell for whatever reason within five years, sell now, not in a little bit.
Rational expectations
there are a lot of people that believe we will begin to recover next year.
Since when are we supposed to feel sorry for “investors” who lose their money? Isn’t that the whole point of investing? Taking a risk with your money?
Buy Treasury bonds or a CD.