40 To 50 Cents On The Dollar Is The New Reality In Florida
The Sun Herald reports from Florida. “Sean Snaith, a University of Central Florida economist, is noted for his work debunking the media-driven image of a ‘housing bubble.’ A speculative ‘bubble’ is a rising market driven only by expectations of still greater price increases. The cost of Florida housing has been driven up by real-world factors like strong demand from a growing population of retirees.”
“The slump in residential construction is putting Charlotte County, at least for now, into the unenviable position of being one of the worst counties in Florida to find a job.”
“‘Looking at the state as a whole, I see nothing that surprising,’ said Snaith. ‘I see job losses in those sectors most closely tied to the housing boom…this is a fairly positive report that shows we’re one step closer to getting through this whole housing correction.’”
“However, ‘There are pockets of pain throughout the state, and unfortunately you’re in one of them. Charlotte County has been hit pretty hard by the housing correction, and has been one of the worst areas in the state in terms of price declines for housing,’ Snaith added.”
“That’s not to say new jobs aren’t being created — they just aren’t being created in certain sectors that have been critical to Florida’s economy. Snaith noted that many of these jobs are good ones. And the hospitality industry is likely to benefit from the cheap dollar, which makes a Florida vacation once again affordable for Europeans.”
The Ledger. “Emily Camp, a staffing consultant in Lakeland, said the firm has seen a rising influx of workers from housing-related professions as the state’s housing market continues to suffer.”
“Some real estate agents and brokers have found clerical positions in medical and legal offices, while skilled workers such as carpenters and roofers are being absorbed by warehouses and other employers, Camp said.”
“‘But they’re taking pretty big pay cuts. They’re going from $15, $16, $17 an hour to $8-an-hour warehouse jobs just to get by,’ she said.”
The Orlando Sentinel. “The state and local unemployment rates have been climbing steadily for the past year. The increases have coincided with steep declines in Florida’s residential-construction industry.”
“Economist Sean Snaith said other areas could begin to pick up once the real-estate market begins to strengthen. ‘We will have some white knuckles here for a few quarters, as we work our way through this phase,’ Snaith said. ‘Every month that the data comes out and looks like it does today means we are one step closer to coming through the other side of this.’”
“‘There are a lot of people in industries affiliated with home building, especially residential mortgage lending, that are looking,’ said Steve Kirby, VP of (an) employment agency in Altamonte Springs.”
“Kirby said that businesses are becoming increasingly reluctant to hire part-time workers as they worry about costs. ‘They are using their own staff to fill in when needed,’ Kirby said. ‘The ‘R’ word, recession, is looming out there.’”
From The Star. “Florida real estate can be had for a song. The Canadian dollar boasts buying power unheard of in decades…and surely there will never be a better time for a Canadian to buy real estate here.”
“Should you really be buying when a short drive from their bayside suite, there are apocalyptic signs advertising homes discounted by $100,000, desperately seeking any offer? What about those blocks of abandoned homes in counties south of here?”
“But the inventory will never be greater. In Lee County, which includes Fort Myers to the south of here, there were 1,538 foreclosures last month. In December 2005, the median price of a single-family home in Lee County was $322,300. Today, that median price is under $231,000.”
“Lots in Lehigh Acres went from $8,000 in 2000 to selling for $65,000 a couple of years later, says Charles Richardson, Coldwell Banker’s senior VP for residential real estate in southwest Florida. Homes in the county went from $80,000 to $350,000 in less than 24 months.”
“Condominiums were wildly overbuilt, driven again by speculators, with unoccupied units never filled, and a further correction is coming, Richardson says. ‘People got so drunk with the fervour, they anticipated it going on forever, which, of course, it couldn’t.’”
From Local 10. “A newly released report says Florida leads the nation when it comes to mortgage fraud. That does not come as a surprise at all to Glenn Theobald. He heads up Miami-Dade County’s newly formed mortgage fraud task force. ‘This is just scratching the surface,’ said Theobald.”
“In 2005, Miami-Dade police detectives were asked to look into 15 cases of possible mortgage fraud. In 2007, that number spiked to a possible 1,000 cases.”
“A recent report by the Reuters news service said The Club at Brickell Bay is ground zero for foreclosures and mortgage fraud, going on to report that 200 deals within the last year and a half are questionable.”
“Local 10’s Kellie Butler spoke with the head of The Club’s homeowners association. Diana Ospina told Butler foreclosures in the building have led to missed maintenance fees and, in turn, that has affected other owners.”
“Miami Shores real estate broker Alice Kellogg said lenders are now requiring exceptional credit and two or three appraisals on a property before granting a loan. ‘It’s getting more and more difficult,’ said Kellogg.”
From Miami Today. “Although residential inventory remains high, a slowing of new construction has helped to slowly push the home sales market toward a balance in which prices begin to match inventories, local professionals and market reports say.”
“‘There are signs that certain aspects of the market are improving and some are not,’ said Brad Hunter, director of the South Florida division of Metrostudy. ‘The number of finished vacant homes is falling, but the other side of that is that the reason the number is falling is because they are getting rented.’”
“People who bought property in 2005 and are now renting out those properties, Mr. Hunter said, are losing money. ‘There will be an increased number of foreclosures in 2008.’”
“Finished vacant inventory of single-family homes increased from 1,436 units to 2,142, according to the third-quarter statistics. ‘What happened in Miami-Dade is there was a surge in completions of townhomes,’ Mr. Hunter said, explaining the townhomes in the count are unattached single-family residences.”
“‘The townhome inventory doubled in a three-month period. If it weren’t for the townhomes, the level of inventory would have stayed about the same,’ he said.”
“Beth Butler, chief operating officer for Esslinger Wooten Maxwell Realtors, said she has seen a build-up of ‘nice, good-sized, three- and four-bedroom’ townhomes in Homestead. ‘Certainly, we’re coming into the market where we have a lot of things delivering, especially in Homestead and West Dade,’ she said. ‘A lot of single-family houses are reaching completion in our markets where they are still building single-family homes.’”
“Additionally, many more condominiums will be finished within six months, she said. ‘I think overall everybody knows we’re into this surplus inventory and expect that there will be lot more coming, more condos, more townhouses, more single-family houses.’”
“Mike Pappas, CEO of The Keyes Co., has seen builders give huge incentives and upgrades in the new home market. ‘If you are going to buy, you could get $50,000 from a builder on a mid-sized home,’ he said. ‘Behind every gray cloud, there is a silver lining.’”
From CBS 4.com. “A new study shows developers in South Florida’s real estate market are slowing down with projects in what economists are calling a housing depression. New-home construction is at a ten-year low.”
“Just beyond the 55th Street Station in Miami, off Biscayne Boulevard, there is a building site for a project called Kubik, 315 ultra-hip condos overlooking Biscayne Bay. It was a project so attractive, the developer sold half the building.”
“That was three and a half years ago. Now, on the empty lot is a building crane, beginning to show signs of rust.”
“A neighborhood lawsuit brought the project to a halt. ‘Oddly enough we were thinking of not moving forward with Kubik anyway because of the market,’ said developer Paul Murphy. ‘You know, sales came to a dead halt.’”
The St Petersburg Times. “When freebies like granite countertops and no-cost closings didn’t woo back buyers, homebuilders began trying to outdo one another with bigger and better price cuts. But now, the tactic may have backfired.”
“The reductions, builders complain, have sliced into already thin margins. And buyers, fearful their houses will depreciate faster than a new car, won’t make purchases until prices stabilize.”
“‘If people stop cutting prices, that’s actually good,’ said David Goldberg, an analyst with UBS Investment Bank. ‘If everybody does it, it works. If one builder does it, it doesn’t.’”
“Last month, nearly 60 percent of builders cut prices. But some may be losing faith. About half labeled the cuts at least ’somewhat effective’ in bolstering sales or limiting cancellations, down from a high of 72 percent in May, according to the National Association of Home Builders.”
“‘The reason some companies say ‘enough is enough’ on the price cuts is because price cuts often generate expectations of further reductions,’ said Dave Seiders, the Washington group’s chief economist.”
“But empty homes carry costs, including insurance and maintenance. And after a year or so, there can be significant additional costs, such as repainting and redoing landscaping.”
“‘It doesn’t get better with age,’said Jim Dietz, chief financial officer of WCI Communities Inc., a condominium and traditional homebuilder in Florida that has sold some completed units for minimal profit.” “Reduction-aversion, he said, is a risky play.”
“‘Their risk is that, okay, sales drop 80 percent and now you don’t have enough cash come in to pay the bills and your debt sours. How long can you do that?’ he said. ‘I agree that discounting is bad, but I also believe that the market needs to reset. The inventory needs to be cleared through before we can get to a more normal selling environment.’”
“If you want to move waterfront mansions in a hurry, it’s best to settle for 40 cents to 70 cents on the dollar. ‘The current market has been dysfunctional,’ said SKY president Chad Roffers, whose company offered up 79 homes worth about $200-million in a giant lawn tent at the private Long Boat Key Club. ‘Homeowners learned what fair market value is.’”
“About 30 of the 79 properties sold on Friday. Some were auctioned, but required a minimum bid, while others were sold ;absolute; - best offer takes the property.”
“While Roffers proclaimed the day a triumph, none of the three Pinellas and Hillsborough County properties on the block ever passed Go. One 5,200-square-foot waterfront house in Bayway Isles in St. Petersburg, originally listed for sale at $2.4-million, couldn’t rustle up a minimum $800,000 bid.”
“Another of the higher-end waterfront properties, listed at $11.9-million on Longboat Key’s Gulf of Mexico Drive, also failed to sell.”
“Considering their ability to toss around tens of millions of dollars, many of the buyers were a secretive lot. Participants paid a $10,000 deposit just to win use of a blue bidder’s paddle. If they won, they had to write a check for 10 percent of the purchase price on the spot.”
“‘It’s the aftermath of irrational exuberance,’ said one anonymous millionaire with a British accent from Southeast Asia who - no doubt enjoying the weak U.S. dollar bargain effect for foreign buyers - scooped up four properties for about half their recent value.”
“His son chimed in: ‘This is a market wake-up call. Forty to 50 cents on the dollar: I think this is the new reality.’”
“Auctioneer Daniel DeCaro, who’s done 40 luxury real estate auctions so far this year, mostly in Florida’s hard-pressed market, spent most of the four-hour auction trying to flog interest in the properties that didn’t sell.”
“A house in Apollo Beach’s MiraBay was such one no-sell. It was originally listed for $1.25-million but couldn’t attract an acceptable opening bid. ‘Five hundred!’ DeCaro bellowed from the stage in the auction tent, seeking half-a-million dollars for the MiraBay. ‘Four hundred to get it started? Four hundred, anybody?’”
“By the end of the auction, interest had waned to a trickle. No-sale followed no-sale. Blue bottles of Saratoga spring water littered the floor along with glossy auction booklets. ‘Looks like there’s a lot of money in this auditorium,’ DeCaro told a dwindling crowd. ‘But you guys aren’t spending it.’”
LOL! Notice what the place appraised for in October. Yes, I’m sure it’s probably a misprint, but an amusing one.
http://tampa.craigslist.org/rfs/481552318.html
..
Back in 2000, that would have been a 50K house in a very marginal neighborhood.
It still is.
Amazing prices that these asshat flippers trumped up as they traded houses to each other over the last 5 years.
Foreclose ‘em all. Let the market sort ‘em out..
..
WTF? Why can’t these idiots at least find a decent digital camera for their photographs? They must have bought one when the Heloc’ed the “equity” out of this POS? On the bright side, we are getting nearer to having legitimate “starter home” pricing in some areas of the country. Starter homes should be roughly $100,000 in most of the country, by my calculations.
When you say “$100,000 starter homes”, do you mean free-standing, or do you include townhomes/condos as well?
a decent digital camera for their photographs
Because no one would come to look at the house if they saw a clear high-res image of it. For POS houses bad photography is better.
Starter homes are about $120K here on a Maine island. Trouble is, if you don’t own a lobster boat and commercial license, your income is likely to be $16K/yr if you are lucky enough to have year-round job — not enough to buy the starter home unless there are two of you working full time AND managing to keep your jobs through the winter when the out-of-state money disappears.
“A house in Apollo Beach’s MiraBay was such one no-sell. It was originally listed for $1.25-million but couldn’t attract an acceptable opening bid. ‘Five hundred!’ DeCaro bellowed from the stage in the auction tent, seeking half-a-million dollars for the MiraBay. ‘Four hundred to get it started? Four hundred, anybody?’”
Hmm, $400k actually sounds like a good deal that my wife and I would have considered were we moving to the area and looking for a new residence. What am I missing here?
I mean, have things gone farther down the tubes than even I thought they would, where a 68% reduction in asking price isn’t enough to motivate capable buyers?
If so, this bubble correciton going to be an outright catastrophe.
Yeah, where are those ‘30% is extreme, you make this site look delusional’ people now? Geez, with quotes like this, who knows what ‘value’ is in Florida:
‘Lots in Lehigh Acres went from $8,000 in 2000 to selling for $65,000 a couple of years later, says Charles Richardson, Coldwell Banker’s senior VP for residential real estate in southwest Florida. Homes in the county went from $80,000 to $350,000 in less than 24 months.”’
Many people on your blog, Ben, have been saying that humans are overwhelmingly driven by greed and fear. The belief is that fear is the stronger of the two emotions. That is why prices will fall to a further extreme than the extreme to which they rose. That concept is starting to be proven correct. I think the conclusion we can draw is that a loose wallet is no match for a tightened butthole.
I’ve been calling 50% for about the last 3 years now, and I still stick by it. 50% off peak will be about where we bottom out in South FL, imho. Condos will fall more, SFH in good areas (waterfront) less… But, as a whole, we will see a return to a median price of around 200-250K in PBC (depending on how long it takes to play out, and how much inflation we see in the meantime).
30% from the peak, honestly, is really entry level in PBC to get someone to look at your home. Yes, there are tons of places still at peak pricing.. If you want to see, you better be 20+% off the peak, just as a starting point!
Value in FL, for almost everything but waterfront, is about ~75-150/sq/ft. That’s it, there is no land shortage to push the prices higher, and those cookie cutter homes just don’t cost that much to put up.
And, where are those “30% off is insane!” people now?
“I’ve been calling 50% for about the last 3 years now”
I thought that Ben had rooted out all of the trolls. Calling for a 50% reduction, you optimist, you’re not welcome here.
Try 80%.
Apollo Beach? Isn’t that where the big coal-fired power plant is located? Coming south on I-75 beyond the I-4 turnoff you can see the sky ahead turning brown and the visibility decreasing. Once past, it’s clear and blue again.
Who would buy a $million-plus McMansion there?
The thing You are missing here is that 1.25 Million Dollar house would have been 125K five years ago. Not only that , property taxes are 1000% more than in 2005. Insurance is 200 to 400% higher . Plus You are buying in an unfinished Development with a bunch of Forclosed properties , High Crime Rate, and then have HOA fess that equal rent in some states.
The Counties won’t lower Taxes more than a couple of bucks a Year and their are No Jobs.
People were and are still asking Fantasy Prices here in Florida. People got used to throwing Big Numbers around and Foreigners would fall for it, till the Ponzi scheme hit the wall.
400K for any normal SFH or Condo in Florida is still a Huge amount of money. Anyone that has lived here for 20 Years would know that. Don’t get sucked in by Crazy numbers.
In 2003 You could by a ” NICE” Home for 75k in most of Florida and there weren’t Hundreds of thousands of them sitting empty to buy.
Wait another 2 Years and You’ll soon discover what that little piece of dirt and Pile of Blocks , Lumber is really worth.
I view $400,000 as a really big number in any language. I keep asking, “what happened to people that they think $500,000 is not a huge number?” I get blank looks. I guess that’s what happened. Blank minds can’t comprehend big numbers.
“Not only that , property taxes are 1000% more than in 2005.”
Up till now, this has been an overlooked point. Even assuming you can buy today at ‘96-’98 prices, you’ve still got outrageous carry costs due to hyperinflated property tax problems.
Here on Long Island, I am seeing houses in marginal neighborhoods with 6K to 10K annual property tax evaluations — so, until the assessor catches up, even historical pricing isn’t a good enough reason to buy, yet.
Actually, not true in FL.
Remember, for those of us who live here, the ONLY thing that matters in FL is sale price. So, if I buy a 1.25M dollar home for 400K, my taxes will be 8K a year (as compared to the 25K a year the previous sucker was paying).
For those that live out of the state that’s not the way it works. But for FL residents, its ALL about purchase price (which is why it was SO stupid to take incentives during the boom…I digress)..
Maybe it’s different where You live Michael. But here in Marion County, all Property is figured on 100% of comps or what the county Deems ” Just Market Value” Due to Best Use unless I have missed something.
With Best Use they don’t care what You Pay for the Property, they only care what they think the most it would be worth under any circumstance.
Here in Marion county, they only use sale price on the way up. On the way down thay use what ” THEY” think it’s worth.
But other than all that, things are great, right?
This property-tax issue seems to be one of the reasons why prices must “over-correct” — as I consider buying some $300K property that used to be $500K, I ask myself, do I want to pay $300/mo (Calif) or $500/mo (FL) in property tax? — and according to marionsucks, the FL prop tax could even be more than that if “just price” is the basis of tax assessment.
If Mr. Snaith would only step out of his flip flops, or whatever he wears in his ivory tower, and put on sneakers and get out there:
After one and a half decades in international tourism, including the people side of it (i.e., getting European feedback first hand & in person): they prefer Cuba and the Dominican Rep. for beach holidays. Italians were famous for being very snobistic about Floridda. And do not forget, that European tourists do not appreciate to be treated like potential criminals by US customs, and that is a very real life factor.
In short, unless Mr. Snaith analyzes the real numbers (Charter airline pax, for example), I doubt that Florida is getting its popularity back, at least from here (Europe). Europeans like to go to Asia (just imagine this!), or a short flight away to Tunisia (an Arab country, yes indeed). Currently, it is a fact that a lot of them snub the US, period.
Gotta agree with assessment on Criminal treatment by Customs in MIami. Watched a Crewmember IN uniform and native US cit, get treated like scum by customs. And then watched as they treated another young boy of color the same way from Brazil @ 5am ..
Interesting. If I didn’t live here, I wouldn’t want to go through customs either. YIkes.
Getting in and out of Cuba is very easy and quick if you are not Cuban. And some of the beaches there are simply amazing. The Cuban people are some of the warmest people I’ve met. Oh, and forget about “consumerism” there. I can definitely see why Euros and So Americans love to vacation there. It truely is time away from the hustle and bustle of normal life. And extremely safe too. Do get me wrong Cuba has it’s issues but I’m not sure the country will be better off once the embargo ends. Personally I think it is a pissing match between the Bushs and Fidel.
I witnessed the same thing. A very dignified UK passport holder, who appeared to be South Asian, had to endure humiliating treatment by some tatooed redneck scumbag with a badge but zero natural authority. I’m sure that kind of “welcome” leaves a deep impression on visitors.
I live in New Zealand now(I have both passports) and I can tell you that non-US citizens really, REALLY hate entering the US. My cousins, who travel to Europe about once a year, no longer take flights that land in the US. Passengers who are just in transit through the US (not entering the country, just changing planes) now have to go through full entrance requirements, including fingerprinting and dealing with immigration. After being repeatedly mistreated, they have had enough. I know, from talking to fellow passengers on international flights, that quite a few of them are pretty pissed off and have had enough. Take a look at tourist visit numbers to the US. Hoping that foreigners will dive in and save the market is nuts. They don’t even like us anymore.
This was an exceptionally brutal series of articles. I say that because the reality is that there’s a lot of subprime resets to churn through, and this can only get worse.
“This was an exceptionally brutal series of articles.”
Naw, according to Sean Snaith it was all good news.
“‘We will have some white knuckles here for a few quarters, as we work our way through this phase,’ Snaith said. ‘Every month that the data comes out and looks like it does today means we are one step closer to coming through the other side of this.’”
Translation: this is going to take years to work out…
Who’s we?
A minor correction, RJ. Consulting Ivy Zellman’s chart, which admittedly is a bit out of date, I believe there are almost NO more subprime resets to churn through — but there are mountains of Alt-A, option ARMs, etc looming in front of us.
I wish I didn’t dislike the thought of living in Florida so much. It certainly appears I could afford a home there now.
i wish that more east coasters would have shared your sentiment….
Not me. I’m happy knowing that a lot of Long Islanders are getting their a$$es handed to them both in Florida and here at home.
You all know how much I hate the all real estate is local bit as it is a shallow attempt to cover up the national mortgage crisis that will have a tremendous negative impact on all real estate, but in FL it really is different. With the increased taxes and insurance, low paying jobs, and dependence on the real estate industry, that state is screwed. I wouldnt offer 25 cents on the dollar. I know ppl paying over 25k in taxes and insurance on a 500k house. Where I live (Denver), it would be under 10k. That’s an additional 10k+ per year you have to back out of any appreciation (or more likely depreciation) model to determine if buying in Florida is a sound investment that wouldnt apply to most other States. They keep saying it will be underwater soon anyway on all those global warming specials. Why dont we just put a gate around it and declare it a wildlife santuary?
taxes, and especially insurance are the other gorillas in the room with Mr. 800 Lb. Price Gorilla. the insurance companies just tried to raise (double, in some cases) home insurance rates again, but a state regulatory board turned them down.
it will be interesting to see how local governments deal with declining home prices. will taxes go down too? somehow, i doubt that they will.
“will taxes go down too? somehow, i doubt that they will.”
The assessors are all fighting tooth and nail to keep from revaluing properties downward. There’s an irony, of course. Property A sold for $300K and identical property B, next to it, sold for $450K. Because A is not homesteaded (or not long enough), A is assessed at $450K. A’s owner feels good, initially, because s/he feels richer, owning a property that has increased in value. So A does not fight the increase. Now, with values tanking, A finds that an assessment at A’s purchase price is about right, but that doesn’t fly at the tax office.
I was a long-time owner. Had I bought the place I sold for what I received for it, my property taxes would have become 5.6 times what they were. Regardless of the debate about whether Save Our Homes is good or bad, property taxes of $700-1,200/month per house are keeping plenty of people away, including the retiree base on which the economy had grown to depend. It seems to be devastating the second-home market, at least for honest owners who do not falsely claim them as their principal residence. And as for “renting it out,” there is no way more than a percent or two of these properties can cash-flow positive with our combination of high taxes, high insurance and relative low rental rates. So it’s not even a good deal for foreigners who are buying their dollars cheap — the rent would be in dollars, too.
Doomed R Us.
More like “Tombs R Us”.
In PBC, you can rent out a SFH for the cost of insurance + taxes + HOA fees. As in, exactly what it would cost you to run the home if you had bought it for CASH.
Someone please tell me what that means about home values, honestly, the numbers just don’t work in any traditional sense; it makes the home appear to be valued at 0!
Oh, and yes, I fully expect to see the mill rates go up in FL soon. In FL, property taxes are 2% of home value/year. They can go up to 3% without any major changes. And I anticipate that will be happening in the next 2-3 years.
Quote: In PBC, you can rent out a SFH for the cost of insurance + taxes + HOA fees.
In September I just started renting a 2/2 single family house in Boca Raton just off of Palmetto and Military Trail. The owner tried to sell it for $314k. Here’s the sales history and tax info on it.
Sales
Aug-1998 10669/0356 $137,000 WARRANTY DEED
Dec-1988 05922/1199 $129,500 WARRANTY DEED
Dec-1983 04121/1359 $110,000 WARRANTY DEED
Taxes
Tax Year: 2007 2006 2005
Improvement Value: $261,910 $281,300 $203,300
Land Value: $0 $0 $0
Total Market Value: $261,910 $281,300 $203,300
Total Tax: $4,916 $5,720 $4,378
The house is 1614 sq ft. plus a garage. It’s not a POS, but it’s not special either. I think it was built in the late 70s. Its a nice quiet neighborhood. I wouldn’t buy this house because I’d like a nicer location, a newer house, and no HOA.
I’m paying $1600/month to rent this house and that’s the best deal I could find. I say a few crap houses for rent for $1300/month, but their locations were not so good. I don’t even look at the houses that are near the railroad tracks and Dixie Highway. That’s total ghetto.
Anyway, my point is that although rent has not increased and might have come down for some people, rent ain’t cheap. Definitely, no one should buy in the next year as the correction is only starting. But my rent is definitely more than my landlord’s taxes, insurance, HOA fees, lawn fees, and maintenance cost.
People keep saying it’s cheaper to rent than to own, but I haven’t seen that at all. It’s cheaper to rent than to BUY, but if you bought pre-2000, it’s definitely cheaper to own than to rent.
I think that basically land lords are holding out for top rent and leaving most rental properties unrented. This does squeeze out more money from renters, but on the bright side, it does encourage people to leave Florida as well. I think the only good thing about the bubble was to drive out some of the population of Florida. The state has gotten too crowded.
Quote: Why not saw off Florida from the rest of the country and let it float off into the ocean.
I’ve been suggesting digging a moat just below the pan-handle for years. Cross breed alligators and crocodiles into crocagators and fill the moat to discourage trespassers. Maybe even add some sharks with lasers.
Didn’t nest. 2
Quote: In PBC, you can rent out a SFH for the cost of insurance + taxes + HOA fees.
In September I just started renting a 2/2 single family house in Boca Raton just off of Palmetto and Military Trail. The owner tried to sell it for $314k. Here’s the sales history and tax info on it.
Sales
Aug-1998 10669/0356 $137,000 WARRANTY DEED
Dec-1988 05922/1199 $129,500 WARRANTY DEED
Dec-1983 04121/1359 $110,000 WARRANTY DEED
Taxes
Tax Year: 2007 2006 2005
Improvement Value: $261,910 $281,300 $203,300
Land Value: $0 $0 $0
Total Market Value: $261,910 $281,300 $203,300
Total Tax: $4,916 $5,720 $4,378
The house is 1614 sq ft. plus a garage. It’s not a POS, but it’s not special either. I think it was built in the late 70s. Its a nice quiet neighborhood. I wouldn’t buy this house because I’d like a nicer location, a newer house, and no HOA.
I’m paying $1600/month to rent this house and that’s the best deal I could find. I say a few crap houses for rent for $1300/month, but their locations were not so good. I don’t even look at the houses that are near the railroad tracks and Dixie Highway. That’s total ghetto.
Anyway, my point is that although rent has not increased and might have come down for some people, rent ain’t cheap. Definitely, no one should buy in the next year as the correction is only starting. But my rent is definitely more than my landlord’s taxes, insurance, HOA fees, lawn fees, and maintenance cost.
People keep saying it’s cheaper to rent than to own, but I haven’t seen that at all. It’s cheaper to rent than to BUY, but if you bought pre-2000, it’s definitely cheaper to own than to rent.
I think that basically land lords are holding out for top rent and leaving most rental properties unrented. This does squeeze out more money from renters, but on the bright side, it does encourage people to leave Florida as well. I think the only good thing about the bubble was to drive out some of the population of Florida. The state has gotten too crowded.
Quote: Why not saw off Florida from the rest of the country and let it float off into the ocean.
I’ve been suggesting digging a moat just below the pan-handle for years. Cross breed alligators and crocodiles into crocagators and fill the moat to discourage trespassers. Maybe even add some sharks with lasers.
Why not saw off Florida from the rest of the country and let it float off into the ocean.
“‘Looks like there’s a lot of money in this auditorium,’ DeCaro told a dwindling crowd. ‘But you guys aren’t spending it.’”
Rich people don’t get rich by overpaying for junk. Or by tipping well :p
“‘Looks like there’s a lot of money in this auditorium,’ DeCaro told a dwindling crowd. ‘But you guys aren’t spending it.’”
May be those people in the room did not have any “trust accounts” like the folks in California!
Frankly Charlotte,
I could give a dam.
Rhett Snaithler, eCONomist
“However, ‘There are pockets of pain throughout the state, and unfortunately you’re in one of them. Charlotte County has been hit pretty hard by the housing correction, and has been one of the worst areas in the state in terms of price declines for housing,’ Snaith added.”
“Auctioneer Daniel DeCaro, who’s done 40 luxury real estate auctions so far this year, mostly in Florida’s hard-pressed market, spent most of the four-hour auction trying to flog interest in the properties that didn’t sell.”
“A house in Apollo Beach’s MiraBay was such one no-sell. It was originally listed for $1.25-million but couldn’t attract an acceptable opening bid. ‘Five hundred!’ DeCaro bellowed from the stage in the auction tent, seeking half-a-million dollars for the MiraBay. ‘Four hundred to get it started? Four hundred, anybody?’”
“By the end of the auction, interest had waned to a trickle. No-sale followed no-sale. Blue bottles of Saratoga spring water littered the floor along with glossy auction booklets. ‘Looks like there’s a lot of money in this auditorium,’ DeCaro told a dwindling crowd. ‘But you guys aren’t spending it.’”
That last sentence is a beauty…DeCaro you right..they ain’t spending it, because not only are they now buying the houses, they ain’t buyin’ your line of BS.
Maybe there is some glimmer of hope for the Sheople…
“Sean Snaith, a University of Central Florida economist, is noted for his work debunking the media-driven image of a ‘housing bubble.’ A speculative ‘bubble’ is a rising market driven only by expectations of still greater price increases. The cost of Florida housing has been driven up by real-world factors like strong demand from a growing population of retirees.”
WTF is he talking about? The media helped fuel the bubble. Rationality is fueling its burst. He calls himself an economist, but in making that conclusion he didnt even check for variations in rent v. mortgage payment ratios during various periods. If it was a desire to live in FL that was behind all this, both would rise at similar rates. If, however, it was a bubble feuled by expected increased appreciation, housing prices would be increasing much faster than rental rates. Clearly any 2 minute review of the data would make clear the latter was true. Let’s not throw around the term “economist” loosely ppl. I am an economist. That guy is a moron, or if he has a financial interest in his conclusions, a liar.
yes, excellent review and totally agree. It will some day make an excellent topic about how the majority of economists were unable to properly predict both the housing bust and the upcoming depression. I’m told it is because the only discipline taught in colleges is that of the Keynesian persuasion and we were all supposed to be dead before this upcoming debacle happened.
Well, well, well … looks like a Sean Snaith did the same thing in Sacramento a while back — no bubble there, either! Same guy?
http://sacramentolanding.blogspot.com/2007/06/sean-snaith-was-wrong.html
Sorry about the long link — can’t get TinyURL to work for me this morning.
“When Sean Snaith headed the UOP’s Business Forecasting Center [based in Stockton] he liked to predict the housing market here - at a time when the bubble was about as big as it seemed possible to get - would not burst. In fact, he likened the housing market to a soufflé that would slowly sink as it cooled.”
Thanks, Chip, he’s used that souffle analogy in a recent Florida report as well, I think Ben posted it a few weeks ago. I’ve already spoken with my Florida senator’s office about paying taxes to pay the likes of folks like this to mislead Floridian citizens and businesses.
The average 30 something in FL couldnt even afford the carrying costs (repairs, taxes, insurance, etc.) on a 500k FL home if it was given to them for free. How screwed up is that? Now that taxes and insurance, as well as the mortgage crisis, is stopping rich North Easterners from getting second homes there, or driving them to the Carolinas, it would be interesting to see how low prices can go in Florida. Im thinking a 100k avg selling price is in order.
Mike, you”re absolutely right.
Median personal salary in FL is something like 40K a year.
If you have a 500K home with no MTG at all, you’re expenses would be something like this:
Taxes - 10K
Insurance - 5K (that’s being nice, could be MUCH worse)
HOA - 5K
Maint/Repairs - 5K (also being nice)
Your looking at about 20-30K to operate a 500K home in FL, assuming no MTG at all. WAY too much for a person making even 50K a year (which is the median household income).
You need a salary of ~150K to support a 500K home. I would not do it on less then 200K, but that’s because I know how much FL costs; everything is expensive here, and I don’t want to eat dogfood.
Good point Mike.
Many people who jump to purchase a house when prices fall say 30% to 50% will find themselves turning around to sell the same house when the holding costs come home to roost—-especially if we get a nasty recession that effects incomes.
This is when we will see the next big leg down in prices.
Your absolutely right.. But it does not take 2 mins to examine that data.
Rent - Down
Prices - Up (2-3X)
And, that’s about all you have to know.
“They are not near Baghdad. Don’t believe them…. They said they entered with… tanks in the middle of the capital. They claim that they - I tell you, I… that this speech is too far from the reality. It is a part of this sickness of their plan. There is no an… - no any existence to the American troops or for the troops in Baghdad at all.”
Baghdad Bob 04/05/2003
http://www.welovetheiraqiinformationminister.com/
Ah yes, Comical Ali, aka Baghdad Bob. Of course, he’s an pillar of credibility next to any NAR spokesperson of recent years
Not only that. but HE had an exit plan!
“I am an economist, that guy is a moron”
Tim I know just how you feel. All the time I am posting, “I am a lender, those guys are loan-peddlers.” How many of my few dozen debtors are in default? Well, one is a few weeks behind, the rest are performing perfectly. It remains to be seen how they will weather the storm, but the ones who are not retired are mainly nurses, probably pretty safe employment.
“‘But they’re taking pretty big pay cuts. They’re going from $15, $16, $17 an hour to $8-an-hour warehouse jobs just to get by,’ she said.”
Water finds its own level.
..
I know some subcontractors down here that averaged $ 30.00 + per hour over the last 4-5 years and would only “accept” jobs requiring the least amount of effort and the most profit…….I know of one that made tens of thousands off-books and he bragged about it.
I frequent some of the biker bar haunts here in Central Florida and you are starting to hear the hard-luck stories from the construction carnies.
No sympathy from me. I told several people to save up the windfall and that it wouldn’t last forever…
The Lakeland Ledger ran an article the other day saying that the pawn shops aren’t taking any more power tools down here….They are swamped.
You are going to see a continuing mass exodus of trade workers from Florida looking for what production jobs are left up north in the next few months.
..
Yes ,You can always tell a lot about the construction market by what tools are selling for.
A guy down the road from Me just bought a 8×20 enclosed trailer ” Full” from a Contractor for 4 grand. The trailer would usualyy bring 3 to 4 grand, and He threw in 15K worth of tools for Free so He could eat and Run!
OUCH!
“…A speculative ‘bubble’ is a rising market driven only by expectations of still greater price increases. The cost of Florida housing has been driven up by real-world factors like strong demand from a growing population of retirees.”
Hello!! Mr. Snaith, have you ever seen a statistic on how many of those new houses were never occupied by their owners? This guy is amazing. He is easily Liareah’s equal.
I always try to spread the Good Word to the people of Pensacola when there is an RE article in the local paper. One RE bull was spouting off the “population growth” story as the reason that prices have increased locally 100% plus.
Well, I just popped over and checked out the US Census data for Escambia County and low and behold there was a population boom of 1,000 people from 2000 to 2006 (0.3%)! What a joke!
My strategy is never to hit them with the full force of the HBB as it would truly overwhelm. Like a good Sawbones I like to take off one leg at at time.
Escambia County Population Growth
http://www.fedstats.gov/qf/states/12/12033.html
You can ask him a question…
http://www.bus.ucf.edu/hitec/Ask%20the%20Economist.htm
If the retirees stop coming for a few years, won’t the death rates of those who remain put a demographic hole in the market about the time things might otherwise stabilize? (Of course, the retirees might start coming again then, if anyone elsewhere in the country still has money.)
Today’s Officer Of Loan (TOOL)
“Beth Butler, chief operating officer for Esslinger Wooten Maxwell Realtors, said she has seen a build-up of ‘nice, good-sized, three- and four-bedroom’ townhomes in Homestead. ‘Certainly, we’re coming into the market where we have a lot of things delivering, especially in Homestead and West Dade,’ she said. ‘A lot of single-family houses are reaching completion in our markets where they are still building single-family homes.’”
“But the inventory will never be greater.”
Thanks for your insight, journalist Tim Harper.
Snaith mention in ‘06 Stockton newspaper:
“That’s because Snaith has a home he needs to unload. He’s headed to Florida where he’ll take up a similar position at a much larger college, the University of Central Florida in Orlando. He’s been here two years and probably secretly wishes he’d gotten the job six or eight months ago, before the inventory of homes for sale shot up, prices softened and buyers became the market bosses.
He will now have a real life opportunity to test the soufflé theory of Valley real estate.”
http://www.recordnet.com/apps/pbcs.dll/article?AID=/20060709/OPED0304/607090302/-1/OPED03
Russ — sorry — I duplicated your post above, from a Sacramento blog post. So it is the same guy. We need to get this quote into the Orlando Sentinel.
“By the end of the auction, interest had waned to a trickle. No-sale followed no-sale. Blue bottles of Saratoga spring water littered the floor along with glossy auction booklets. ‘Looks like there’s a lot of money in this auditorium,’ DeCaro told a dwindling crowd. ‘But you guys aren’t spending it.’”
translation:
We sprang for spring water and pomp & circumstance, you could at least buy something.
Went to Bradenton last week. More and more for-sale signs in yards, including increasing numbers of FSBOs. Also more and more closed Mom & Pops, which to me is the sadder part of the bust. There’s a shopping center on Cortez near 59th St, with a Publix as the anchor — seems like the entire shopping center to the east of Publix was closed up.
I wanted to drive by some of the SKY auction sites but didn’t have time (nor inclination to bid). A map of the properties took up the entire back page of the A section of Friday’s Bradenton Herald. They should have had a scratch ‘n sniff on the page, of “Desperation” perfume.
O/T - Palmetto — some good news — went to the family-run Iron Skillet restaurant (Cortez at 70th, NE corner) and had some great food at fair prices. The chef/owner does a great job and the menu has a lot of variety. Simple place, nothing fancy.
“O/T - Palmetto — some good news — went to the family-run Iron Skillet restaurant (Cortez at 70th, NE corner) and had some great food at fair prices. The chef/owner does a great job and the menu has a lot of variety. Simple place, nothing fancy.”
Chip, just saw this. Thanks so much for the tip. I’m always looking for good eats at a good price. You thinking of moving over this way?
“You thinking of moving over this way?”
Palmetto — if the price were right, I’d certainly consider it. But there’s also the really heavy cloud of what will happen to property (and other) taxes in the state. So I’ll just tire-kick for probably a long while to come. Am very happy in my rental — just wish it were closer to the great seafood over there where you are.
“…and surely there will never be a better time for a Canadian to buy real estate here.”
“The loons… the loons!”… Katharine Hepburn “On Golden Pond”
Loonie’s hurricane repair and summer rental company
911 Fema Ave.
Paradise, FL 34639
http://www.paradiselakes.com/
Like every other number we get from government (and the Fed) the unemployment numbers are fake. For the last 6 years, hundreds of thousands (literally) of illegal immigrants jumped on the building boom. Fast food workers, gardeners, field workers, car wash employees, etc, grabbed a hand saw and went to work constructing ticky-tacky, way over priced sh*t boxes in places like Florida and California and Arizona and Nevada.
If you couldn’t speak english but knew one end of hammer from the other end, you could get a job paying 4 or 5 times what you made (as an illegal) picking fruit in Florida or strawberries in California or washing dishes in Las Vegas or Arizona. No questions asked.
As we all know, the construction business came to a screeching halt last year and slowly, as different building projects have been completed, the illegal construction workers have been laid off. The true numbers are staggering - but not included in the “official” unemployment numbers. So all of these government unemployment numbers are the result of sleight of hand and manipulation. You might notice we have not heard a word from Bernanke or the government as to how many illegals were employed in the building boom.
Also, don’t trust the new numbers the Fed will soon start to put out concerning prices and inflation. There’s a “hidden agenda” in the works. Bernanke states that, by including more items in their calculations, it will “Help everyone have a better understanding of where we are in the economy and what the true inflation numbers are.”
Frankly, I don’t trust Bernanke to be “honest” or any of those in government to be “honest” either. The only people Bernanke or the SEC do where the economy is concerned is to help their pals on Wall Street. All these “new numbers” will do, is help them hone their well organized propaganda machine to give it a sharper edge so they can manipulate the numbers even more - just as they are manipulating the REAL inflation numbers at the moment.
I don’t care what Bernanke or the so called economists say - inflation is running at around 7% to 10% depending on the price of oil and to a lesser extent food. At the moment. It’s a total joke that the three main causes of inflation, (Energy, food and property prices) are NOT included in the numbers. However, rents are and there has been very little movement in rental prices over the past year compared to oil, real estate and food.
I’m not sure what they are up to but I’ll take a guess and say the trick Bernanke and the rest of the Washington whores will use with these new numbers (for instance where property is concerned) is to spread the prices. Thus, a $600,000 property in California, will be included with a $20,000 shack in Alabama or a $10,000 crack house in Detroit, thus making it look like property prices are “stable”. To simplify: Using the above example, 3 properties, total value $630,000 - thus the average price for a sfh in the USA will be $210,000 according to the government - and even a California or Florida or New York WalMart employee should be able to afford a house for $210,000.
If they included property prices in inflation, the current numbers would be very low (and likewise, 3 years ago it would have been much higher).
I disagree with energy being a main contributor to inflation, energy prices are far too volatile. But I definitely agree on food prices.
All of the above observations are true save the Snake (Snaith’s) Here it is beyond bad, as in hopeless.
I actually made an offer last week, on a townhouse in Pinecrest school district (this is 33156 zipcode, “good” part of Miami).
The development is small - 25 townhomes, ~3000 sq. ft each, built in 2004. The construction and finishes seem good.
At the peak, mid-2006, a couple of units sold for 820k, even 835k.
This one was listed at 759k, I offered 644k cash, he countered 699k “final”. I said get back to me in May, if you feel like it. Btw, 699k is already 15% below the peak.
The inventory in Miami proper has stabilized, though I expect another spike next spring. Many sellers are trying to rent, and will relist at some point in 2008.
Hi, I don’t know Miami very well but that seems like very high price for I townhouse. It it large ? Well built lots of bells and whistles ?
It’s large - 4/3.5, 3000 sq. ft under air. The materials are high-end, though nothing super.
Also, this is the best school discrict in Miami-Dade, and nice neighborhood.
“‘If people stop cutting prices, that’s actually good,’ said David Goldberg, an ANALYST with UBS Investment Bank. ‘If everybody does it, it works. If one builder does it, it doesn’t.’”
No wonder we have such a mess. This ANALYST was never taught anything about free markets.
Does anyone have a link for stories about dudes cutting catalytic converters out from trucks for the metals. I saw something on the news about people cutting valuable metals from anything and everything in Florida. I can’t find any stories though.
Good thing I drive a beater. Always have, always will.
can snaith
oh, he’s a gov worker and can say and do what he wants
The super-exemption ammendment, which was canned, was much better legislation than this new portability crap. I believe the Palm beach, miami beach, Marco island and orlando millionaires have those hillbilly politicians in FL bought and paid for. Save our homes lets them pay 1995 assessed value property taxes. Mr. Fink is right, you simply cannot invest in FL real estate for rental purposes. If every homeowner paid their fair share of tax the rate would be 1%. Then retirees and foreign investors would slow the descent of home values otherwise, 70% drop will be likely.
[In 2003 You could by a ” NICE” Home for 75k in most of Florida and there weren’t Hundreds of thousands of them sitting empty to buy.]
You my friend are out of your mind! I have bought and sold land and homes all over florida, you could not buy a nice house in 2003 for that amount in 99% of that state.
Good call, George - change “2003″ to “2001,” “nice” to “decent,” and “75K” to “100K,” and then “most of Florida” might make sense.
The cost of Florida housing has been driven up by real-world factors like strong demand from a growing population of retirees.”
This is so far from the actual truth and clearly borderlines on a “bold lie”. The Florida realestate was driven up not by retiree’s, but by speculators to which many were realtors and mortgage brokers.