The Once-Hot Industry Is Beginning To Feel The Heat
The Montgomery Advertiser reports from Alabama. “There may be more houses on the Montgomery market than at any time in its history, and this glut of homes has led to the average price of existing homes in the area dropping about $20,000 in the past two months. The 3,629 homes on the Montgomery market was by far the highest number since the University of Alabama began its tracking of them in 2000.”
“Despite the large number of homes on the market, just 369 of them sold. The number of homes on the market is about twice what it was 18 months ago, and the monthly sales total from last month was the area’s lowest since January 2005.”
“That soft market pushed the average price of an existing home in Montgomery down to $156,418. It was $176,368 in August and $163,661 in September 2006.”
“Real estate veterans, they said, will recognize the current trend as part of a long-term cycle. Taylor Jernigan, president of the Montgomery Area Association of Realtors, said it was just the nature of the market. ‘I think all of it is cyclical,’ he said. ‘We have had five record years in a row, so certainly there is going to be a correction in the market.’”
From Online Athens in Georgia. “Owners of some units in the Georgia Traditions, a high-rise luxury condominium complex on the east end of downtown Athens, began using their condos recently, and the nine-story residential building should be completely ready for occupancy by the middle of November, the developer said.”
“Three more condominiums at 412 Thomas must be sold before financing will become available for construction, said Judy McDonald, a real estate agent.”
“The luxury condos, priced between $250,000 for the smaller units to $850,000 for the largest, were marketed to wealthy people with ties to the University of Georgia and the UGA Athletic Association, said Mark Jennings, the developer.”
“So far residential sales have not been robust, but once the buildings start rising, more interest should come, said Mike Travis with the Atlanta company developing the project.. ‘Most people are kind of waiting until we get out of the ground,’ Travis said.”
“Regarding the high prices on these downtown condominiums, the location dictates the market, said Barbara Dooley, the real estate agent overseeing sales of the Georgia Traditions condominiums. ‘They’re only pricey because of the location and convenience and everything else we’re offering,’ Dooley said. ‘A place like this in Atlanta you couldn’t touch for what we’re selling them for.’”
“For a project tied with UGA sports, winning seasons also help, Dooley added. ‘This market depends on Georgia football,’ Dooley said. ‘They need to keep winning so we can sell these.’”
The Herald Tribune from Florida. “As condo owners across the state bemoan a downward slide in values, an unusual situation is taking place at the Bermuda on Osprey condominium complex near downtown Sarasota.”
“A group of Californians — two of whom were arrested in March on charges of running a brothel in the Anaheim area — have been snapping up units at prices that are hundreds of thousands of dollars higher than those paid during the boom.”
“The buyers say they will convert the 46-unit complex into a senior-living center complete with a luxurious clubhouse, communal dining room and limo service. They believe the high prices they are paying are justified by all the improvements they plan for the flesh-colored, two-story walk-up built in 1969.”
“Since November, group members have paid an average of $566,667 each, for 15 of the units, and they have received an average of $480,000 per unit, in loans from a variety of lenders, Sarasota County Clerk of Court records show.”
“But the owners of the complex say they have received only about $300,000 for each unit, explaining that the remaining $250,000 or so from each sale has been placed in an ‘amenity fund’ controlled by the buyers to be used for future improvements.”
“Local appraisers, real estate experts and community leaders say they have never seen deals in which banks are willing to lend more than 50 percent of a condo’s purchase price on the promise that the extra cash will be placed in an amenity fund.”
“‘These are the kinds of deals that ruined the market in the first place,’ said Kerry Kirschner, executive director of a business-centered public watchdog group. ‘They are phony transactions that artificially inflate the value of property and lead to the fact that people are having to pay higher taxes.’”
“Dennis Black, a Port Charlotte appraiser instructor, agreed: ‘No one in this market is doing deals in which 50 percent of the purchase price is given back to buyers and placed in some sort of amenity fund. Speaking as a person with 25 years’ experience, this stinks like a five-day-old fish.’”
“Neither the buyers nor the sellers seem to know where that amenity fund is. Bryan Bond, whose Newport Beach, Calif., mortgage company made seven loans totaling $2.7 million, was so concerned about the amenity fund that he promptly canceled an eighth loan his firm had been processing.”
“After reviewing the HUD statements, Bond acknowledged that they contained a line item about amenity fund payments, but he said he did not know what an amenity fund was. ‘I’ve never heard of one.’”
“Appraiser…Terrie Moore in Brandon, said she was initially squeamish about appraising the Bermuda units when she saw that other appraisers were coming in with values of $700,000 to $900,000 per unit.”
“‘Other appraisers were trying to appraise the units as if some sort of exclusive club existed,’ Moore said. Moore said she insisted on appraising the units on an ‘as is’ basis, and ultimately presented a value of $525,000 for one. Critics say that number is still way too high.”
“‘When they told me about the prices being paid there, I was taken aback,’ said Richard Dear, a Siesta Key hotelier and real estate developer familiar with the Bermuda on Osprey project. ‘I don’t think the units are worth more than $400,000.’”
“Buyers who purchased units before the Californians got involved at Bermuda agree. ‘The market dropped after we purchased,’ said Dona Norton, who paid $359,857 for a unit in May 2006. ‘We took a loss on our investment. Everyone did.’”
“‘If Coldwell Banker sells one unit for $300,000, we’re dead,’ said Christopher Woods, brother-in-law of the leader of the California buyers group. ‘All our units would lose value.’”
The Tampa Bay Business Journal from Florida. “Prices of existing family homes continue to slide nationally and especially in the Tampa area where prices are down 10.1 percent over the previous year, according to a new report from Standard & Poor’s S&P/Case-Shiller Home Price Indices.”
“Prices of existing family homes continue to slide nationally and especially in the Tampa area where prices are down 10.1 percent over the previous year, according to a new report from Standard & Poor’s S&P/Case-Shiller Home Price Indices.”
The Tampa Tribune. “A federal judge has granted Tampa-based SimDag LLC up to 65 more days to respond to a lawsuit Donald Trump filed in May seeking to terminate his licensing agreement with the developer. The agreement allows the developer to market the building as a Trump property.”
“That comes a week after SimDag representatives told a group of 80 buyers it hopes to secure financing from an unidentified New York hedge fund by early January. The order is the latest twist for a developer that refuses to give up on its dream to build the 52-story waterfront tower in downtown Tampa despite financing problems, construction liens and lawsuits from buyers wanting their money back.”
“Florida’s housing funk already has battered the state’s single-family home and condo markets. Now, signs are appearing that the once-hot ‘rackaminium’ industry - basically condominiums for boats - is beginning to feel the heat.”
“Sales at Tampa Harbour Yacht Club in South Tampa, which might be the area’s highest-profile rackaminium project, are 50 percent behind schedule, said project developer Steeven Knight.”
“Meanwhile, Kirby Cay Scheimann, a managing director of Marinas International, which owns and manages marinas nationwide, said some of the momentum in the entire rackaminium industry has been lost, as banks tighten their lending practices and some investors put their money elsewhere.”
“‘There are some site-specific locations where rackaminiums work, but it’s no where near the broad-based appeal people thought it would be,’ said Scheimann, whose company owns Harborage Marina in downtown St. Petersburg.”
“In recent years, dozens of marinas across the state have stopped renting boat slips to boaters and began selling slips instead. Knight said the sluggish real estate market is creating challenges for rackaminium and dockominium projects. The slips don’t come cheap, running from $125,000 to $600,000.”
“But Knight is marketing the yacht club as part of a prestigious boating lifestyle, instead of just a place to store boats.”
“So far, he has sold 114 dry rackaminiums and one wet dockominium, which is about half of what he had expected to sell by this time, Knight said. To save on expenses, he has cut some of his in-house sales staff and outsourced sales to a local real estate firm.”
“For now, the slumping real estate market is giving potential rackaminium buyers the jitters and causing them to hold off on purchases, Knight said.”
“Overall, the industry faces new challenges, such as tighter lending standards by banks. Also, the industry had been counting on purchases by investors, who were betting the slips would continue to rise in value.”
“However, ‘the investors aren’t there like they were before,’ Scheimann said.”
‘We have had five record years in a row’
In Alabama. No national bubble, MSM?
Indeed, it is good to see stories coming out of places like Montgomery, etc etc. The focus for the most part has been on areas like CA, NY, FL, etc etc. But as for many of the folks I know who still live in TN, the prices in some of the “desireable” areas got overpriced.
As someone mentioned yesterday, and I partially agree with, the South didn’t necessarily escape the bubble. It was naturally attractive to people from FL and the Northeast. My big fear has been that as we now sit, prices in the Northeast and FL are even now still roughly 2,3, 4 or more times expensive than a large majority of the Southeast. Add the fact that the Northeast is older and full of ripe, ready-to-retire boomers poised to move on down has me wondering if even after the boom subsides, will this area have an echo-boom as a result of the mass influx. As long as there is a severe price advantage for those from other areas, I think this will remains threat. At least with reports like these, the interest has subsided.
I think it’s a fools game to speculate on the so called boomer equity bandits. I believe many of them already made their move in the last 5 years and I believe some are sinking fast and many others will return to their original locations.
I don’t think the boomer exodus has even started yet. The reason I believe so is that I used to rummage around on a number of city forums/relocation sites. The biggest was the citydata site, which had most major cities in it. SF, NY, Boston, and Miami had the slowest forums. Cities like Raleigh, Knoxville, Atlanta, and so on were absolutely jam-packed, mostly with families with kids, retirees, and even young professionals.
The boomers pretty much wanted raw land on lakes, rivers, etc etc. They all had the exact same story too: ” My and hubby are from NJ, and we want to sell our house and move to ( name that southern city) and -tee-hee!- buy a huge plot of land, for cash!” I can’t tell you how many people were on there wanting to do exactly that. Whether things have changed is questionable because this wasn’t that long ago. Many of these were on the very verge of retirement, which makes me think that this has barely started. Secondly, if I was in NJ, NY, and about to retire… would you want to stay there? I certainly wouldn’t. The taxes alone would eat you alive if the snow didn’t.
I hope that you’re right because if everyone from NJ moves on down, then say bye-bye to the region and say hello to the Northeast… Part II.
Not surprising to see those numbers in Montgomery. Here in Mobile the supply has recently increased from 4 months to slightly over 8 months. Baldwin county (across the bay) has something like a 20 month supply (if I remember correctly). The beach numbers are maybe a 4-5 year supply.
I don’t think this area is going to see the problems of other places, however it is NOT immune to the RE downturn but more a question of what the percentage drop will be. I’m thinking a 5-10% decrease (certainly different that the locally projected increases) as we are no different than any other place (again, contrary to the local RE shills).
The Boomer thing is a crap. I don’t see Boomers flooding Florida. maybe SC, NC, Tenn or Georgia.
The assumption that Boomers will flood into the South, particularly Florida from the North is flawed.
Not everyone who retires, moves. The majority don’t. I was born in New York State and most of my extended family still lives there. A minority has moved to Florida.
If the Baby Boom started in 1946, the boomers will begin to retire in 2008, at 62. Most boomers cannot afford to retire at 62, especially if their houses up north won’t sell.
I was born in 1951 and at 56, I don’t plan to retire for 20 years. Also, with Social Security being the cluster f**k it is, the logical thing for the politicians to do is raise the retirement age, which, if you haven’t noticed they are already doing. I’m guessing it will go from 65 to 70 before I am eligable. I learned a long time ago not to depend on SS and I don’t need it. A lot of people do, more so now as the biggest component of their nest egg was the equity in their house.
A comparison between Florida and California is also flawed because Cal has, or at least had a solid economic base that provided good jobs that paid well. We have the working class leaving because they can’t afford to live here. We have no real economic base, the biggest thing being tourism. Hey, if Dad loses his job in New Jersey, the trip to Disney is out. Tourism is already way off in Florida. Some dumb ass made the comment about “tourism being recession proof” in the paper the other morning. Where do they get these guys?
As far a Florida is concerned, when I moved here it was cheap. That’’s not the case anymore. It still is cheaper than a lot of Northern cities, but the bubble is national and those prices are falling, if you can sell.
As far as taxes, the Florida politicians wasted no time in taxing the s**t out of us based on the huge uptick in assesed values. Fortunatly, if your home is homesteaded, your taxes can only go up 1.5% per year. They’re f**king with that now.
But if you buy new, bend over. Plus, they are “assesing” proerty owners for extra stuff in many areas. Insurance is a joke, but actually getting better. They used two bad hurricane years in 30 to jack us big time. Wow, no hurricanes in two years. They’re doing us a favor by not raising rates.
I love Florida for the beaches, climate etc. It is hot as hell and humid in Orlando in the summer, but I prefer it to winters. It’s just not the Boomer magnet people claim it is. Florida will suffer a depression, while the rest of the country suffers a recession.
We get a lot of our tax money from all you notherners vacationing here. Already its projected that 2007 sales tax revenues will be down 2% due to the effects of the housing market and tourism.
The Boomers are not poised to save us.
If you move to the Southeast, choose wisely. Atlanta currently has 110 days of water left since they haven’t planned for growth of the region. Lake Lanier is also the source of water for areas of Florida and Alabama.
Plus the first boomers are only turning 62 this year. I’d bet 90% of them don’t have the funds to retire at 62 and many probably not at 65. Many boomers moved up and up and up in houses and still owe the same as or maybe even more than their house is worth. If they were using their houses as ATM’s, I’d bet most do not have any savings. I wouldn’t count on boomers, many who will be working until 70 or more, and also many who won’t have the funds to relocate.
Add in the Fed — by introducing ever-higher inflation while holding annual cost-of-living increases in check, they will erode the purchasing power of those Social Security bucks in a hurry. That should put a big ding in a lot of boomers’ retirement dreams. It was fun to think about a house on a lake when everyone was making fun money during the bubble, but as Ghost notes, now there will be a giant reality check for most of these folks.
The lack of funds further makes the case that the boomer flight was waaaaaay overstated. In real time, what I’m seeing is boomers moving back to populations centers (home) to be near children, grand children and world class medical care.
“All Real Estate is Local” - David Lereah, NAR
why would anyone even think this would ever work?
These are the projects that enjoy serious attention during a financial mania, IMO:
‘Development of a second luxury condominium tower downtown has been put on hold until the real estate market recovers. Hines announced its plans for The St. John in 2005, with an unveiling last year of an all-glass design for the 300-unit tower.’
‘Market cycles are market cycles,’ Barton said. ‘Jacksonville was into residential development much later than other cities, especially with the condo boom. … We were late, so it’s just a matter of how long this will last.’
Another BIG project that started during the boom (in 2004) and will finish in spring of 2008 is the National Harbor Project (www.nationalharbor.com). I guess “if you build it, they will come” is working here in MD.
National Harbour has a big office/hotel component (yet another big Gaylord Hotel). I think they will at least do well in terms of convention business. They’ve owned that land for a long time - so they also might have some room to do okay on the residential side of things. Of course, the DC are doesn’t need more housing or office stock — but, Nat Harbour may at least do better than some huge residential development planned up the beltway (ar about 1 or 2 o’clock on the DC beltway.
It’ll be interesting to see how it pans out — it was on the drawing boards so long, it’s pretty suprising to see it come through.
the development I’ve referenced is “Konterra” - looking to break ground in 2008 or 2009, I think (or, probably 2012-15 or never if market conditions persist in current direction)
Just try buying some raw land in Alabama for some sticker shock. AL land for sale is almost always clearcut and they want and get at least $3000/acre for it. Add in the ubiquitous junk yards and single wide trailers(with waist high weeds and 5 junked lawnmowers scattered about) and you have some very pricey real estate.
A group of Californians — two of whom were arrested in March on charges of running a brothel in the Anaheim area —
are buying lots of condos at inflated prices, but only 300k goes to the cost of the unit, cause the rest goes to:
the remaining $250,000 or so from each sale has been placed in an ‘amenity fund’ controlled by the buyers to be used for future improvements.”
but he said he did not know what an amenity fund was. ‘I’ve never heard of one.’”
Can I take a stab at this one?
The amenity fund is for the toys and paraphernalia that will be used to outfit the new brothel, and of course, really good blow for the patrons.
Hey Phil - hard to drink coffee with jaw dropped and mouth hanging open. I’m reading this story and my mind just keeps saying no way, no way, no way….You just know a few weeks or months down the line there will be some sort of investigation. We could save the public some bucks because I’m sure this blog could figure out what shenanigans took place on this one. I’m sure they’re going to try to get some sort of tax break because it will be a senior complex.
Wow!
You have to go to the full Trib article. Its pretty long, & has more crooked craziness than a Carl Hiaasen novel. At least 3 interlocking levels of fraud - hard to imagine living in a place like that.
I couldn’t even believe it. Fraud is what’s driving up the assessments and the taxes and they’re up in Tallahassee pulling each other’s PUDs and gasbagging about tax relief. How about some “fraud” relief?
When I saw the adjective “flesh-colored” it became obvious that the reporter thinks this building will become a brothel also. Senior living center? That’s a good one.
“It was the strangest group I’ve ever seen,” said Peter Finch, who bought a unit at Bermuda before the California investors got involved. “They did not make me feel comfortable.”
Gee Peter what tipped you off…the orange jumpsuits.
“‘If Coldwell Banker sells one unit for $300,000, we’re dead,’
I think he means that if word gets out about what they’re doing they’re dead.
Can I take a stab at this one?
You left out the part of the money they will need for bonding out of jail and the attorney fee’s to defend them on the criminal charges they will soon be facing.
why. are. these. banks. so. stupid.
I’ll bet you anything that mortgage broker Bryan has no friggin’ idea how to read a HUD. That’s for the little people in his office to do. So he has no idea what an amenity fund is but goes ahead and lends the 2.7 mill anyway?
You reap what you sow dummy Bryan.
Excellent Seinfeld impersonation!
What the bloody hell are these people thinking???
What just happened in the RE market??? If it looks like s**t, smells like s**t, tastes like s**t, hey, it probably is s**t!!!
And no one knows where this mysterious fund is????
You cannot make this s**t up!! I swear, like the above poster says, if you wrote this down as a plot to a book, no one would buy it because it isn’t realistic.
Athens, GA has 2 to 4 months left of water at which time the school will be shut down.
Are you serious? I haven’t been home in over a year, but all my relatives have been mentioning the fact that they are in dire need of some rain. It just seems astounding seeing that it used to rain cats and dogs all summer long. What’s the situation there?
The situation in Georgia is a “holy crap Georgians are stupid” situation. They have been warned for months that the reservoir is running low, but people have refused to lower consumption (businesses have reduced consumption however). They have believed that:
A) Rain would come
B) The Army Corp of Engineers would simply stop releasing water from Lake Lanier - except that the whole point of the law was to protect natural habitat from irresponsible human behavior.
C) Some even think that Great Lakes water will be shipped down to them. Good luck with that!
I would like to also point out that no other major city in the country has water reserves as small as the Atlanta Metro. The state of Georgia had plans to build more reservoirs and even issued bonds to build them. The current governor (Perdue) got elected and spent the money somewhere else. He gets a lot of TV time threatening to sue the Corp, but he has a huge hand in allowing Atlanta to get to this water emergency.
A few minor points….Most areas do not allow watering, washing cars, etc. Most of all the other water is put back in the system as treated waste water. The consumption is not much. The issue is once lake lanier runs out of water the habitat downstream is ruined anyways.
If other states need water then they should build their own reservoirs.
Sounds like an investigation should be done. Too bad our local paper is corporate owned, and all the politians are tied to local developers. Hmmm… do you think maybe that’s where the money went?
Rackaminium??? Dockaminium??? Prestigious boating lifestyle???
Omigosh, too funny!!!
Florida is definitely toast.
yeah, I loved that “rackaminium” thing. I immediately thought of a busty bottle blonde realtor.
LOL!!
Rackaminium = multi-level boat GARAGE.
When you google “rackaminium” the HBB pops up.
“When you google “rackaminium” the HBB pops up.”
LOL! Pops up.
Busty bottle blondes have that effect on me too.
My first word association with “rackaminium” was “racketeering,” which probaby isn’t too far off.
The bubble created the illusion that a lot of rich people, the kind who can pay six figures for a place to permanently store or dock a boat, live here. They don’t. For my part, I’m still trying to understand how a boat slip can be an “investment.” I’m not a boat owner, but if there was anything in the world that I would want to rent rather than buy, a boat slip would come in second to a DVD movie.
You’re dead on about boat “invetments”. I heard what the acronym stands for every time he does anything with his (put it in storage, repair it, buy a trailer, etc.) - Bet On Another Thousand.
thats true but that tower would have been like a sore thumb sticking out of the downtown skyline. i am glad they are not going to built it. there are already some highrises in downtown and they are having trouble selling those units or renting them.
I agree, a little less building and a little more thinking would help.
http://about.countrywide.com/secfilings/docs/form4%20Cisneros%20May3007.pdf#page=1
Henry sold 5000 shares back in May when CFC was trading at 39.5
He left public office as a result of the Henry Cisneros payments controversy, after pleading guilty to making false statements to federal officials.
While Henry does have a right to sell he did plead guilty to making false statements but who doesn’t?
GDP came in at 3.9% - so what does everyone think: Are we going into recession on not? I keep thinking we are but the numbers just aren’t there. Personal spending is still strong and retail sales aren’t too shabby. If exports hold strong, we may dodge the bullet.
I vote for recession. It’s going to be a cr*ppy Christmas for all those FB’s with no equity left to borrow and pending ARM resets.
Same here, though I still believe all will be made to look rosy until after Christmas.
Same here, though I still believe all will be made to look rosy until after Christmas.
More like after the elections of 2008.
Not sure what to think - retail sales figures remain strong. Through out the last recession, American’s spent inspite of job looses and insecurity. Lets face it - Americans love to spend money. I kep thinking it’ll slow down - but it never seems to.
Maybe making those numbers look good (in nominal dollars) is one reason the fed seems so eager to embrace inflationary tactics.
I suspect that the numbers have been so manipulated that we do not have a clue what is correct. I vote yes we will have a recession, this time the consumer will participate as well…
It could be a profits recession, with stagnant wages relative to inflation. Everyone keeps working to supply the rest of the world with things to offset all our excess spending in the past, but living costs rise and profits fall. The bright spot — cheaper housing, since housing cannot be exported.
Master Card profits up 63% on strong card applications…Hmmm ?? Strong Card applications just prior to the holidays Hmmm ?? Maybe a delayed recession ?? Fed won’t do anything with rates in 2008 IMO…What ever we are going to get we get this year….Is that enough to stop us from tipping over ?? My bet is recession in 3rd quarter 2008….
Can’t you pay your mortgage with a credit card?
Read MC’s stuff carefully. It mostly came from -outside- the US.
I think gas prices are going to be a serious problem. It’s not like gas is a major issue for me as I carpool with a truck that gets 30MPG, but yesterday I really started noticing that prices are starting to become a bit uncomfortable. It was $3.40 yesterday at the station I went to. Now just imagine someone making 40k per year. That’s a major problem, especially since quite a few “good-ole’ boys” still have love affairs with big-honkin’-trucks.
I think the Fed will cut rates with regularity, which will have the effect of jump starting the market which will put a pretty face on things. On the other hand, commodities, jobs, the dollar, and the cost of living is going to skyrocket. The question is not as simple as what’s going to happen on Wall Street, but to the American public because the way I see it, Wall Street has less and less direct connection to the populace anyway.
As long as oil quotes in dollars what we have is a standard demand + speculation stuff. Remember, the largest oil consumers are the largest exchange traders as well. To them win is not “sell high buy low” but rather “spend less on what we need to buy anyway”.
The bigger issue is that as dollar tanks they may start quoting oil in other currencies, at which points dollar slide against other currencies will send oil prices as seen by the US consumers up faster than Progress lifts off to international space station.
I would interpret “strong applications” as a negative. It means more people want to borrow more money that they can’t pay back.
I think more people HAVE to borrow more money to pay for the bills they couldn’t pay back in the first place. This Christmas sounds like an “in for a penny, in for a pound” type season.
And how does one make a profit off of applications??
And how does one make a profit off of applications??
Exactly. What kind of crap is this?
And how does one make a profit off of applications??
Probably off the teaser cash advances that go with the applications.
Something big is happening; oil just rocketed, energy is through the roof and now this; looks like a big gap up in energy coming
11:06 ICE: Brent, WTI, gasoil futures, spread mkts trade halted - DJ
It really isn’t a surprise to me. I pay attention to traffic at stores, cars in parking lots, etc. and I’ve never seen it busier. It makes me wonder if the people at the Fed and other economists ever get out of their ivory towers to “see” what’s actually going on in the economy rather than just reading “reports” put together by analysts.
When GDP was strong last quarter and the initial claims for the past few months have been fine, I began wondering if Wall Street “pulled the wool over the Fed’s eyes.” I now think the rate cuts are not about keeping the economy out of recession but rather to rescue certain financial institutions.
I was in a Target this past Sunday and was amazed at the line of people waiting to spend 5 bucks on a Starbucks coffee. The whole place was fairly busy. It’s as if everybody was/is oblivious to what’s going on in the financial world.
Walked around the whole store, knowing happily I didn’t need to buy a thing, and didn’t. Just spent $1.29 for a bag of popcorn (not as good as Neil’s, I’m sure) and waited for my daughter.
I think as long as the credit cards work and there are alternative ways to borrow money (401K loans anyone?) Americans will spend spend spend until their dying breath. We have a zero/negative savings rate and lifestyles that do not match our incomes.
What happened to the basics?
1. Keep 6 months income in SAVINGS if you lose your job. How many Americans have even 6 weeks or 6 days of savings?
2. Don’t buy a house until you have at least a 20% downpayment SAVED - rent until then. No comment needed.
3. Spend less than you earn.
4. You should not spend more than 33% of your after-taxed salary on housing - PERIOD. SO for median HH income Hawaii of $58,555 Annual Gross Pay Federal Withholding $6,815.75
Social Security $3,630.41 Medicare $849.05 Hawaii $3,509.18
Disability $213.20 = Net Pay $43,537.41 /12 = monthly net income of $3628 and 33% of this is $1197. So basically everyone should be renting or homes should cost 200K (they are 350% over than).
The gluttony and materialism is apparent at every level of our society. I think it is no coincidence that we are fatter than ever and our countries finances are such a disaster.
Busy? Where do you live? In OC, things are slowing down significantly.
Southern suburbs of Detroit.
Haven’t parked that far back in the lot in quite a while.
In our very own OC(Oakland County) things are still booming. There are layoffs and plummeting house values but people still spend like there is no tomorrow. Wait times for almost any restaurant is an hour or more at dinnertime. Starbuck’s is packed. People are still leasing new Hummers, Benzes, and BMWs.
Oops, sorry, thought you were referring to me.
Here in Coachella Valley it’s grinding to a halt. Target has been empty, parking is a breeze nearly everywhere, and there are for rent signs all over the place. Usually, by this time of year, there’s nothing to rent and it’s packed everywhere.
This is one thing that I have to slightly disagree with. I often drive NYC-PHL-DC legs. The number of trucks on NJ turnpike and I-95 decreased significantly over last year and half.
My nephew worked in logistics, scheduling independent truckers, until last week. Business dropped off so drastically that he decided to look for another line of work.
There was an article a while back, I think in Business Week, that pointed out that the US GDP was probably distorted because it counts productivity gains in other countries as ours
“Some of the cost cuts and productivity gains in overseas supply chains are being booked as U.S. output—in other words, phantom gross domestic product”
http://www.businessweek.com/magazine/content/07_25/b4039009.htm?chan=search
I had an economics professor explain that the statistics for most government reports is based upon information required of all employers with over fifty employees. Small business is excluded from the numbers. Also, the amount of “black market” employment has increased substantially in the past twenty years. The statistics are gamed.
Wow, if there is a lot of “black market” (unreported) employment out there, then the unemployment number is even LOWER than reported.
Your economics prof didn’t happen to be Dr. Denslow at UF did it? I took his class in the late 80’s. Now he’s an economist for the state of FL, I think.
“GDP came in at 3.9% …..”
Yes and inflation is 1%.
I concur.
Dockominiums?!?
“The slips don’t come cheap, running from $125,000 to $600,000.”
Bubbling has a whole different meaning in Florida. Last I heard, slips down in Sarasota were about $25K. I realize some of those yachts are really big, but WOW.
I own a dock at my yacht club. I shall begin to refer to it as my dockominium! I think my boat is still just a boat though. Right now it’s on the hardominium for the winter.
Docks at my club change hands for around $5K for LOA 40 ft.
Blue Skye….Since you own a boat you may have the answer….Do larger boats say 30-40 feet rapidly lose value say like a Motor Home….I have owned Motor homes for 30 years and you can buy a used Motor Home that is almost new for 50 cents on the dollar or less…Are big boats the same and where would be the best place..Florida ??
is this the case across the country. Used RVs in the pacific northwest have unfortunately been keeping values
My former neighbor (the jeweler) is in jail and his RV is for sale. Maybe you can get a good deal.
dave,
I’m no expert in the high end stuff. My boat is vintage (35 yrs) and I paid approx 10% of the price of a new similar boat. It is all done depreciating.
Folks next to me have a custom built 42 ft trawler that is less than 5 years old. It surveyed (boat talk for appraisal) over $500K which is more than they paid to have it built. I’d say no, you don’t loose 50% when you drive it off the lot.
A cabin cruiser is a house without the land (or the taxes LOL). Maybe more like vacation cottages. The market for them is at the end of the housing equity whip. What happens in the housing market should be exagerated in the boat market.
As for where to shop, I think the key is that the boat is almost as portable as your motorhome. It only costs a few thousand to move a boat from Florida to NYC. I’d shop close to home only to make it easier to go trial the thing.
My vacation this year was a 500 mile trip up into Canada with a red headed deck fox.
If your looking for a sailboat, shop the great lakes. Freshwater sailing and they pull the boats out of the water during the winter.
Yes indeed. Keep in mind, however, that sailboaters up here tend to own sailboats that are more racing-oriented rather than the leisurely cruising type. The sailing community is very big on racing - races are held weekday evenings and weekend mornings, all culminating at the end of the season with the big Chicago to Mackinaw race.
Yeah, the term “dockaminium” is annoying. It does take condominium documents though to divide the docks and submerged land so they can be sold.
You can call it the Blue Skye Dockominium.
LOL, that is the name of the boat.
Missed posting this on an earlier thread but I wanted to throw it out for thoughts…
“ Leslie Appleton-Young, chief economist for the California Association of Realtors….With so many sales of lower-price homes out of the picture, the median price has been bumped up artificially”
So if the median is distorted UPWARD as a sales activity decline impacts the low end of the market disproportionately, it stands to reason that median prices will be distorted DOWNWARD when lower end housing activity picks up.
So the paradox of the median pricing picture is that it rises more slowly or falls more rapidly the HEALTHIER the lower end property activity is and rises more quickly or falls more slowly as the lower end of the pyramid WEAKENS.
Ironically, this means that median prices should decline MORE dramatically once the lower end of the housing market stabilizes and begins to become healthy again.
In other words, only when median prices look the WORST will they’ll actually be improving.
Ugh, Florida condo news now means even more to me.
I’ve been trying to convince my father to hold off on buying a condo in Lauderdale. He’s owned in Lauderdale for almost 15 years, selling his more recent aquisition near the top in 2005. It’s a vacation condo that is used about 12 weeks a year, and he prefers privacy over a hotel. He’s also legally blind, so location is very important as he walks to the store if he’s vacationing alone.
When he sold in 2005, he profited greatly. This past spring he started looking again, and I told him to hold off since prices are sure to fall at least 20% and possibly much more in the areas he wants. Well, he made an offer last week that I knew was too high, and they accepted. Closing is next week (that’s desperation!).
His needs: On the Intercoastal, close to beach (within 5 blocks), close to groceries and restaurants (within 3 blocks), at least one parking place, 2/1.5 with at least 1000 square feet. The unit he offered on had an asking of $250, so he offered $210. I told him to offer $170. It’s a cash offer, and they accepted within days.
While he can afford it (no mortgage, owns a house worth around $650 at the 2005 top), and the location is perfect, it is hard to convince him that he bought too high. He feels the area might drop 5% in 1-2 years, but not more.
Of course I went into the debate with as much info as I found, but the info I found supports the purchase rather than not. First of all, nothing is for sale in the area he looked at. Secondly, the banks aren’t listing any REOs in that area. Thirdly, there seem to be almost no pre-foreclosure filings in the area.
So what does one do to convince a knife-catcher of the pending issues? Yes, he caught a knife, but he’ll use it enough in the next 3 years that maybe it won’t be AS much of an issue. Yet he’s also retired, and hoping to not lose his money to inflation, hence buying the vacation home. I figured since he’s already ahead $150,000 on the previous purchase, there is no way he’ll actually lose any money once the profits are included, but I am fearful that he will lose that profit.
Yet the data I researched aren’t showing problems in some areas — notably the areas close to the beach/intercoastal, without a ton of new condos (note, I’m talking specific areas, not the whole zip code), and not many foreclosures or REOs.
I hate Lauderdale because of all the overbuilding, but it seems that there are still overpriced “gems” which aren’t budging.
Frustrating, though.
Dada…I am not sure if your father is in failing health but if he is he is likely not concerned about the value going down he just wants to “Dance in the Sunshine” with the time he has left…I heard a story in my early years regarding a older woman…. A Realtor trying to “Maximize” the profits for his client and advised her to reject many offers that she was more than willing to accept…They finally sold for the amount he considered fair value but it took four months…A short while later he learned that she had passed away from cancer…He did not know she had terminal cancer and all she wanted to do was get out of dodge with what ever money she had and dance in the sunshine with the time she had left…The lesson for me was we need to listen sometimes more than we talk…We are sometimes responsible to people but not responsible for them…What the heck…Its their life right ??
Dada - your father bought for exactly the right reason, a place to use and enjoy. The fact that he might lose some equity in the next couple of years should be a minor concern, and not a deal breaker. Given his special needs, the place sounds perfect.
Give him a big house warming party.
there will always be a flight to quality. Plus a retired guy has a shorter horizon to gamble & wait for the market to do its thing. A vacation place is a form of consumption, and Homo Sapiens Consumeris is what we are now.
WOW! I am simply blown away by this article. The more I read, the more I can’t believe it.
Good article, keep up the excellent work!
I think this is our troll from yesterday.
Yes it is.
The more I read from you, the more I can’t believe you’re wasting your time trolling a housing bubble blog.
‘This market depends on Georgia football,’ Dooley said. ‘They need to keep winning so we can sell these.’”
Now that’s a winning marketing strategy, bank the sales of a multi-million dollar construction project on the outcome of a sporting event over which you have no control.
Got Vegas?
buy vs rent calc w emphasis on BUY
http://finance.yahoo.com/calculator/family-home/hom-06
This calculator doesn’t allow you to assume negative appreciation…..
“Neither the buyers nor the sellers seem to know where the amenity funds are “.
The mortgage broker on these deals is so shocked and awed by the amenity fund that he pulled the last loan he was working on after making 7 loans . Now this loan rep. creep is claiming he doesn’t know what a “amenity fund “is .
Arrest this mortgage broker scum now ,along with the creep appraiser and the sellers and buyers. The problem with this kind of fraud is that they will claim that they disclosed the “kickbacks”. As long as lenders don’t underwrite loans and escrow and title companies fund these big kick-back checks ,the fraud will continue . Any of the parties that engaged in these transactions is a crook . It just makes you wonder how many fake deals raised the price of real estate all over the Country . That’s alright ,all the third party Mortgage Brokers will get cut off in the future ,but they are making hay while there is still time . New condo projects have the greatest potential for fraud now ,so ,any lender with half a brain has to assume fraud at the get go.
Oil up to $94 a barrel!! Spread trades halted, this is a breakout.
We’ve been lied to about so many things, the true scope of our oil predicament is only one of the lies. The focus is always on “reserves.” It’s the size of the tap that matters (how much can be pumped on a daily basis) rather than the size of the overall tank (how much is left in the ground).
Do you really think it’s a coincidence that oil production and the housing bubble peaked at roughly the same exact time (December 2005)
Maybe. Not amazing if oil production and housing production and dollar production were all partying up at the same time, along with copper and steel and cement and corn and lumber. The dollars have to go somewhere.
It isn’t like we’ve run out of any of these things. We have only bet that we would.
If we have exhausted ourselves eating houses, and the folks next door will soon too, we won’t call for so much oil and building materials. Someone’s call of “peak oil” Dec ‘05 doesn’t change our economics at all. We had a peak decades earlier and may have one again.
My question is; what is for desert? We’ve got money to burn and the night is still young!
“Prices of existing family homes continue to slide nationally and especially in the Tampa area where prices are down 10.1 percent over the previous year,
Prices are down 10% in Tampa. That means there is about 40% more drop to come in order to bring prices back in-line with incomes in the Tampa area. That in itself is an excellent reason not to buy in the Tampa Bay area! Syay tuned, more pain is coming to Tampa in 2008!
That’s median. Same-house/same neighborhood prices are down more like 30%.
‘All our units would lose value.’
This prompted the following thought-oid in my brain:
Hmm, you know, there’s an important semantic difference between “value” and “valuation”.
rackam dockom robots
“So far, he has sold 114 dry rackaminiums and one wet dockominium, which is about half of what he had expected to sell by this time, Knight said. To save on expenses, he has cut some of his in-house sales staff and outsourced sales to a local real estate firm.”
“A group of Californians — two of whom were arrested in March on charges of running a brothel in the Anaheim area — have been snapping up units at prices that are hundreds of thousands of dollars higher than those paid during the boom.”
Many Californians are thinking of heading for greener pastures, elsewhere in the outer 49.
I keep seeing stories like this, innuendos from many of you on here, 49 staters that are constantly making fun of us…
Stay put here, but find the kinder, gentler spots…
Cedarville, Ca.
If you want to get away from it all, would be an example.
Rackaminium / Dockominium
I was going to buy one of these slips in the Tampa area until I met this guy… totally shady! I had a bad feeling about him so I had a background check done on him.. WOW!! is all I can say
If you ever need some entertainment, it’s worth the money hahahaha
And from what the sales people there said - they aren’t selling ANYTHING!! And I mean how could you in this market? It’s a luxury item and the prices he is asking are far above the rest of the market and for what? Sandwiches and fuel at wholesale cost??? I’m going back to my boat trailer and boat ramp!