Nothing Is Booming Now In Florida
The Sun Sentinel reports from Florida. “When the city decided to redevelop 860 acres in the Midtown district five years ago, officials estimated it would take until 2025 to complete the job. But the housing slump threatens to delay the project’s completion by five years, City Councilwoman Diane Veltri Bendekovic said.”
“The first hints of trouble emerged in the past two months, when 21 people who put down deposits for condominiums in Veranda at Plantation,, filed suits in Broward Circuit Court and federal court for refunds and to get out of their contracts.”
“‘Any time you are losing investors on a project, it will have a negative impact on the development and anyone else moving forward on their development,’ Bendekovic said.”
“In Veranda’s case, the second of two phases — about 175 condos — are on hold because of ‘market conditions,’ Ken Simigran, president of builder WestCity Partners, Inc., said.”
“Because of market uncertainty, the city will postpone overhauling some parks, roads and other projects, Mayor Rae Carole Armstrong said. ‘We got off to a rapid start, now we are running into a downturn,’ said City Councilman Jerry Fadgen. ‘It is just unfortunate.’”
The Palm Beach Post. “An array of dire forces - from soaring inventory to fence-sitting buyers - continued to play havoc with housing markets in Palm Beach County and the Treasure Coast in the July-September quarter.”
“That’s the major conclusion to be reached from the Florida Association of Realtors’ third-quarter sales report for single-family homes and condominiums. Perhaps it will curb some appetites - prices and sales in nearly every market went down, down, down.”
“‘What goes unexplained is how so many people got caught up in this real estate fantasy after losing money in the tech-wreck bear market of 2000-2002,’ said John Pankauski of the Pankauski Law Firm in West Palm Beach. ‘It seems that as history repeats itself, it costs more each time.’”
From Florida Today. “Brevard County had the largest percentage drop in housing prices in the last quarter of any major market in the United States, the National Association of Realtors reported Wednesday.”
“Few people in the real estate industry are talking about an early rebound in the once red-hot housing market. Some market observers thought the local market would have been stronger by now. ‘I’m surprised that it’s still continuing. You keep thinking it’s going to turn around,’ Space Coast Association of Realtors President Lance Vandeberg said.”
The Sun Herald. “The price of existing houses sold in Charlotte County during the third quarter of 2007 dropped the most of any Florida metro area…an 18-percent decrease from the same quarter of 2006.”
“‘Unfortunately … Charlotte has been hit pretty hard by the housing correction and is one of the worst areas in the state in terms of price declines for housing,’ said Sean Snaith, economist at the University of Central Florida.”
“‘The good news is that the housing market hasn’t had the economy pulled out from under it. Just look at Detroit. A lot of the fundamental drivers are in place, you just have this excess supply,’ Snaith said.”
The Bradenton Herald. “When moving to this peaceful paradise, many new residents are faced with the nagging question: Is it better to rent or buy?”
“With more than 5,250 homes on the market in September compared to only 1,705 during the same month in 2005, according to the Manatee Association of Realtors, many in the real estate business believe there is no time like the present to purchase a home.”
“‘People have a great inventory to select from right now,’ said Realtor Cindy Morton. ‘My advice would be make your best offer. Find the property that you like the best, maybe your top three and start making offers on them because this market will change. And the opportunity to get something at the best price will be gone.’”
“‘If you are able to buy, the smartest thing to do is get out there and look,’ Morton said. ‘But both options, renting and buying, are pretty good right now. A lot of people are renting because they are waiting to see what the market is going to do. They want to know if it is going to come down a whole lot more.’”
“Realtor Jeanette Ward said sellers are ready and willing to negotiate. ‘It used to be location, location, location. Now it is definitely price, price, price,’ Ward said. ‘Renting is certainly a good option because sellers are negotiable, but it is the time to buy.’”
The St Petersburg Times. “In 2006, a year when most Tampa Bay real estate agents saw their business plummet, Lori Polin did remarkably well. It was an impressive feat at a time when Florida home sales and prices were dropping dramatically.”
“But now Polin is accused of owing at least some of her success to mortgage fraud. In a letter to Re/Max’s Denver headquarters, the Pinellas Realtor Organization and many of her fellow agents, an anonymous sender claims Polin ‘artificially inflated’ the prices of nine homes in Tampa and North Pinellas so buyers could get larger loans.”
“Most of the houses were mortgaged for far more than the actual sales price, with the buyer or a third party pocketing the difference. In one transaction, $109,000 went to a construction cleanup company although there is no evidence of any construction or cleanup up since the run-down Clearwater house sold last year.”
“That house and the others listed by the anonymous sender are all now in foreclosure proceedings. Polin said she is the innocent victim of a ’smear campaign,’ which she says may have been started by a jealous rival. ”
“‘It’s serious about these people going into foreclosure, but it has nothing to do with me except this Realtor trying to get me into trouble,’ Polin said. ‘All these deals were put together by attorneys and title companies and lenders. Nothing was inappropriate as far as what I did.’”
“Iris Alfonso said her house had been on the market for months when Polin asked if she would accept a reduced price of $449,900. So Alfonso was surprised to find a contract price of $540,000. She was surprised, too, that the buyer…agreed to let her sister stay on as a tenant at the same low rent she had been paying.”
“‘It did make us wonder if something was going on here,’ Alfonso said. ‘Why would he be willing to take such a small amount of rent when his loan was so much higher than ours had been?’”
My Fox Tampa Bay. “Rising taxes are crushing Florida’s housing market. Now a new report shows our home values are dropping. According to Zillow.com, Tampa Bay area home values have declined, on average, 13 percent in a year.”
“The report shows home values in Clearwater Beach have dropped more than 20 percent. Homeowners like Stefanie Pignatelli can’t move because they can’t sell. She’s asking $205,000 for a house she bought for $250,000.”
“‘With a house that’s not selling, and a job in jeopardy, it’s very scary,’ said Pignatelli.”
The News Journal. “Four months have passed since Lynn Friel and her husband moved into a $425,000 place not far from the Intracoastal Waterway in Edgewater. She calls it their ‘dream house,’ one they couldn’t pass up.”
“But their previous home hasn’t sold, and making monthly mortgage payments on two houses in the same county has become a nightmare for the young married couple.”
“Not a single prospective buyer has dropped by to see the three-bedroom, two-bath house. An open house in September drew only a curious neighbor. The country house (is) listed at $269,900, $10,000 less than a few weeks ago.”
“‘We’ll negotiate,’ she said. ‘It’s not set in stone.’”
“Friel believes most buyers these days are looking for deals, houses in the high $100,000 or low $200,000 price range. The Friels can’t afford to go that low, given the equity loans they have on both houses to help pay the bills.”
“‘If we still haven’t sold it by December, I’ll have more gray hair,’ she said, smiling. ‘But I try not to dwell on the negative.’”
“Don’t feel sorry for Ray Hagood. The veteran homebuilder has seen his share of ups and downs in the housing market in more than three decades in the business, and he’s confident another upswing is coming. He just doesn’t know when.”
“‘It’s unfortunate we’re in this temporary crisis, but it is temporary and we’ll get through this. In three years…there won’t be any gloom and doom,’ said the certified building contractor. ‘I went from five supervisors down to none, at this point,’ he said.”
“Still, Hagood said he can’t help but get discouraged at times. ‘I’m sitting on a lot of real estate, and I can’t sell it unless I want to let somebody steal it,’ he said. ‘And I don’t want to let somebody steal it.’”
“So, like many builders stuck with high-priced land, he’ll hold onto the properties as long as he can because paying the taxes, interest and other carrying costs is less expensive than selling them at huge discounts.”
“‘You start wondering if you can hold onto a house for two more years,’ he said.”
“‘Most builders that are still left are not going to dump their homes, (but) a lot of resales will be dumped,’ he said. ‘Buyers are waiting for prices to go down. Builders are waiting for prices to go up. Somewhere, we have to find some kind of understanding. Only time will tell.’”
“When Carmen Bosco arrives at the office in Ormond Beach, it is nearly 9 o’clock, half an hour later than he started these shifts back when business was booming. Nothing is booming now. There are no other real estate agents in the office on this morning. No customers have pulled up, their engines and air conditioning still purring, to await the office’s opening. The phones are silent.”
“A few years ago, he would have fielded half a dozen phone calls by now, he estimates. He would have needed a back-up agent to take over as Bosco ran out to pick up a listing or show a property. Back then, everything was different.”
“‘As soon as you got a listing, you sold it,’ he said. ‘That was my heyday. I enjoyed that.’”
“By last year, his commissions had fallen to just $35,000 or $40,000. And this year, Bosco said he is on course for just half that.”
“Bosco can handle the slump financially. Still, he likes to work. And now, ‘it’s just completely dead. The phone doesn’t ring.’”
“For mortgage broker Janet Lawrence, a file cabinet that no longer bulges testifies to the year-long drought in her business. ‘I’d say our volume is down 75 percent from a year ago,’ said John Nugent, the other half of the two-person team that’s managing to keep the Ormond Beach brokerage afloat.”
“‘I don’t have the heart to put them in a loan that I know they can’t afford. I can’t morally do this,’ Nugent said. ‘But at the same time, I know they can go down the street and get the same deal from someone else in 20 minutes.’”
“But being finicky about ethics can hurt in the pocketbook, he said. ‘It’s been over a year since I took my kids to Disney,’ said Nugent.”
“Brian Harrington still rents an office in DeBary for Apex Funding, but he had to get rid of four other staff members and run his shop single-handed. ‘The bread and butter of the business is gone,’ he said. ‘There no such thing as a subprime market still left.’”
“And mortgage closings take a lot longer, added Nugent, as lenders demand the borrower’s income be fully documented and appraisals updated to reflect declining market values.”
“‘I used to be able to close a loan in eight business days,’ Nugent said. ‘Now I’m lucky to do it in 38 days.’”
The Herald Tribune. “The magic number is 3,254,530. That is how many ‘yes’ votes are needed to approve the sale of beleaguered Coast Financial Holdings Inc. to First Banks Inc. of St. Louis. The fate of the $664 million-asset bank is at stake.”
“With a positive nod, shareholders will get something from their investment, though many will still take a bath.”
“If the merger is rejected, Bradenton-based Coast Bank could become the fourth U.S. bank failure of 2007, and the stockholders would be left empty-handed.”
“Steve Aidlin of Sarasota, one of the 71/2-year-old bank’s original stockholders, is voting his 50,000 shares in favor of the sale. ‘I don’t see any reasonable alternative,’ Aidlin said. ‘The bank, as I understand it, if it doesn’t go this way, the Fed will take it over.’”
“Aidlin expects to lose at least $500,000 on the sale.”
“The bank has been hemorrhaging, $50.1 million in losses the last four quarters, under the weight of its mortgage meltdown. Nearly $80 million in loans are overdue. Many of them involve borrowers with investment homes who stopped making payments when their builders quit and the real estate market tanked.”
“Coast’s troubles will not simply vanish if it becomes part of First Banks. Some shareholders have filed a federal lawsuit seeking class action status against Coast, claiming they were defrauded when the company lied about its financial condition.”
“More than 100 borrowers have sued Coast to get out of their mortgages for homes that are worth less than their loans.”
‘I can’t sell it unless I want to let somebody steal it,’ he said. ‘And I don’t want to let somebody steal it.’ So, like many builders stuck with high-priced land, he’ll hold onto the properties as long as he can because paying the taxes, interest and other carrying costs is less expensive than selling them at huge discounts.’
It’s unfortunate, but illustrative as to why these RE corrections take time. Guys like this have to be bled into capitultion. So keep it up with the rebound talk NAR, so that thousands of bagholders will hang on until they are bankrupt. Nice work…
The kind of thinking you describe has been an immense help to me. I sold last year in Tampa to take another job in another state. I listed my house at $25K less than comparibles in my neighborhood. I didn’t make any friends doing that, but I did sell it in 3 weeks from listing to closing. Everyone else was still waiting when we left. I’m pretty sure they got caught when the downturn really get going.
Roidy
“I’m sitting on a lot of real estate, and I can’t sell it unless I want to let somebody steal it,” he said. “And I don’t want to let somebody steal it.”
At this point in time, this does not seem the appropriate attitude to take.
Good for you, Roidy/ACH. The whole situation would be a lot healthier if more sellers like you would price their places in a way that brings down “comps” in a hurry. BTW I sold a small house in 6/06, 3 days from “mentioning” to earnest money payment. I don’t say “listing,” because it was never listed. The RE agent knew a customer who would want it and he was right. Prof Bear says you can typically get a sales contract in a week if you price right, and I’m inclined to agree.
The best strategy is to find what the last comparable sold for and undercut it by 5%. Homes priced at current market or above will sit for years, while prices will fall in excess of 5% of year, add on that carrying costs, etc. and it is negligent to try to hold out. There will be no Spring jump. Also it absolutely disgusts me when ppl that bought a house for 200k and see it rise to 500k, dont want to let someone “steal” it for “only” 400k. Its simple math, if the offer comes in at more than 100 times what the realistic monthly rent would be, its no steal, regardless of what the current paid or what it used to be worth at the peak of an ignorant bubble.
“The best strategy is to find what the last comparable sold for and undercut it by 5%.”
That’s a far cry from 2004 and 2005, when the strategy was to RAISE your price at least 5% above the last sale in your community. I still remember our Sarasota realtor telling us, “You’re not asking enough.”
Yes Ben. It’s amazing that we hear about potential buyers attempting to “steal” these Dream Homes or at least trying to force poor owners and builders to “give them away” a LOSS.
That makes it so hard for these greedy, super-inflated POS Shacks with suicide loans to provide their temperary owners with an early retirement for doing absolutely NOTHING.
Oh..The UNJUSTICE of it it all
“That makes it so hard for these greedy, super-inflated POS Shacks with suicide loans to provide their temperary owners with an early retirement for doing absolutely NOTHING.”
They were “investors”. They just want a return on their “investment”, ya know.
But the key is psycology. Remember, they have already mentally SPENT all the earnings they thought they were entitled to. They can’t let go of the DREAM.
Remember, they have already mentally SPENT all the earnings they thought they were entitled to.
“Mentally” spent? Yeah, all those cash-out refi’s were just a fuzzy vision.
ROTFL!!!
Hagood The Builder waits for the cold day in Florida (or is it hell?) when prices go back up to their bubble level. His properties won’t get stolen, his lenders will take them over.
“Realtor Jeanette Ward said sellers are ready and willing to negotiate. ‘It used to be location, location, location. Now it is definitely price, price, price,’ Ward said. ‘
It’s still Location, Location, Location but with a really great price.
What kind of house discount do you need to drive 40 miles from your employment center at $4.00 a gallon gas in 2 hour bumper-to-bumper traffic vs. a house under 10 miles away. The “New” Location factor is drive time at $4.00 a gallon
Yesterday restaurant in a nearby county promoted a free, all-trimmings Thanksgiving dinner for the general public. I calculated the roundtrip mileage as 86 & figured it wasn’t worth the drive, even if the meal were free.
‘I’m surprised that it’s still continuing. You keep thinking it’s going to turn around,’ Space Coast Association of Realtors President Lance Vandeberg said.”
- Lance is a little spaced out. The ‘turn around’ will happen when income can service a fully amortized loan, and we are a long ways from that happening. Everthing looks smaller from outer space.
“Just look at Detroit. A lot of the fundamental drivers are in place” Snaith said.
OMFG.
I know, this guy…
yeah, he keeps talking about the bubble being more of a “souffle”, both when he was in CA and now in FLA. I really think he’d make a better sous-chef than an economist. No offense meant to sous-chefs.
UOP in Stockton ??
Sean Snaith is rapidly becoming the laughing stock of the blogosphere.
What’s really sad about him is he’s supposed to be a head of an unbaised Institute of Economic Competitiveness at the University of Central Florida.
While we can at least partially excuse Lereah and Yun because they were heads of a private industry group and therefore are being paid to be shills. However, Snaith heads up a public, tax-payer-supported institute.
Here’s the link to Snaith’s institute:
http://www.bus.ucf.edu/hitec/
Here’s his contact information if you’re inclined to send him an email:
http://www.bus.ucf.edu/pages/cgi-bin/directory/engine.pl?id=ssnaith
He just doesn’t get it.
“The first hints of trouble emerged in the past two months, when 21 people who put down deposits for condominiums in Veranda at Plantation,, filed suits in Broward Circuit Court and federal court for refunds and to get out of their contracts.”
I don’t know anything about the legal ramifications of these cases, but I’ll bet that even if the ruling is in favor of those who put down deposits, the money has been spent somehow. Does anyone know if these deposits go into escrow accounts? I would think, if the builder needs the money to build, the deposits get spent.
Not sure about Florida but in California they would be escrowed with a title company…Money cannot be released until both Nuyer and Seller sign release instructions…
Nuyer = Buyer
This is NEW CONSTRUCTION. It is not like a typical escrow fund where down payment money is given as an “earnest money deposit” pending closing.
It is part of a down-payment CONTRACT. “I will take your deposit as a guarantee that you will pay me the rest when I finish building the house.” Then I want the rest.
The builder takes the CONTRACT to the bank to get interim financing until the can close the deal.
The BANK who made the loan, certainly would have some claim on this deposit wouldn’t you think?
It’s not like the builder and lender haven’t been put at risk in this venture.
I would hold the BUYER liable to complete the deal, as CONTRACTED. The SELLER has performed as agreed.
This board discussed the Veranda at Plantation condos at length after the last article Ben posted on the problems with them. It was the one where the law student wanted her money back after her flip went South:
http://www.sun-sentinel.com/news/local/palmbeach/sfl-flbcondos1024nboct24,0,6525152.story
In OH if a realtor is involved deposits are escrowed with the brokerage, by law. If the builder handles the sales the escrow goes right into his pocket. There’s no escrow laws for builders, as they design their own contracts.
Don’t Blame Al, It Ain’t His Fault, He Says…
Greenspan Harbors No `Regrets’ as U.S. Housing Slump Deepens
Nov. 23 (Bloomberg) — Former Federal Reserve Chairman Alan Greenspan said he has `no particular regrets’ about his time at the central bank, adding that the deepening U.S. housing-market slump isn’t a result of his policies.
“Markets are becoming aware of the fact that the decline in house prices is not stopping,” Greenspan said today in Oslo. “I have no particular regrets. The housing bubble is not a reflection of what we did, as it is a global phenomenon.”
“I have no particular regrets. The housing bubble is not a reflection of what we did, as it is a global phenomenon.’’
I’d like Easy Al to stick the “globe” up his you-know-where. This guy is a lying old sack.
He said that once before. IMO, it was all of the central banks doing, with years of too much money creation. And don’t they all meet and coordinate policy? Come on mainstream media, do SOMETHING for your pay!
Ben, you and others like you are the real MSM now. Besides, Easy Al is married to Andrea Mitchell and you don’t get any more MSM than that, under the old dinosaur media model. What we think of as the MSM is dying an ugly death and it is easy to see why.
If Easy Al and Andrea Mitchell are the MSM standard-bearers, then I submit the MSM is dying a Fugly death.
Andrea Mitchell…………..under the old dinosaur………Easy Al. Thanks for the visual. I think I’ll skip lunch.
Ben I have been a lurker here for a year or so and really enjoy this site and usually agree with you but I must strongly disagree about who is the most culpable. The fed did keep rates too low for too long causing diffuse asset inflation however it was the real estate propaganda machine that motivated the sheeple to jump off the cliff and created the real estate bubble. No other asset class has the same massive price appreciation (false appreciation). When did the fed ever promote to buy now or you will never be able to afford a McMasion? Yes the “real” of real estate really hurt the sheeple and as a renter I am laughing my ass off.
Prices go up with demand. Demand went up with crazy loan availability. Real estate can be advertised all they want, but if people can’t get the loans they wouldn’t have been buying, and prices wouldn’t have bubbled as much.
true , the fed made it possible but the 6%’rs made people want to jump –that is they created the psuedo demand you referenced. As I see it the fed loaded the gun but the RE clones talked the sheeple into putting the gun to their heads and pulling the trigger.
Dr. X,
While the 6%’rs certainly didn’t help matters, you have to think of it from the lenders’ perspectives.
When the Fed lowered rates to 1%, and the other CBs followed suit, rates came down across the board.
Many investors (pension funds being BIG players here) have a certain return required in order to maintain solvency. If they cannot get a safe return of, say 5%, they will go further out, looking for higher yields on higher risk investments.
Many of these investors relied on the ratings given by the ratings agencies. If they were told something was “AAA”, they felt it was safe enough to make large invetments.
As investors compete with one another in their search for a higher yield, they have to go further and further out on the risk curve. This is how we ended up with such huge “sup-prime” and “alt-A” markets (most of which will end up in default, IMO).
Bottom line, no money, no market, no bubble. It’s the lending side (and all the enablers) that caused this credit bubble to expand like it did.
Hey there Dr. welcome. If it was just housing, I might agree with you, but people have become credit whores and nouveau riche crazies. People used easy credit way beyond housing and in every class from the poor on up. Have you seen the stories today about how many are out in the cold waiting to buy and buying big even with all the housing and other financial news, even with credit tightening up? I know there are bad decisions being made by the central banks, banks and financial markets, but the general public doesn’t really pay much attention to any of that anyway. I become afraid when it is suggested that the people have to be protected from themselves with government or market manipulation. No thank you - I don’t need protecting and I don’t want to be protected because others choose to ignore reality.
People became credit whores based on “release your equity” housing ATM.
“‘It’s serious about these people going into foreclosure, but it has nothing to do with me except this Realtor trying to get me into trouble,’ Polin said. ‘All these deals were put together by attorneys and title companies and lenders. Nothing was inappropriate as far as what I did.’”
The innocent Nazi defense…”I vas chust taking ordahs!”
What a inspiration to other realtors: just become a part of ongoing fraud, and you too can increase your income.
“‘What goes unexplained is how so many people got caught up in this real estate fantasy after losing money in the tech-wreck bear market of 2000-2002,’ said John Pankauski of the Pankauski Law Firm in West Palm Beach. ‘It seems that as history repeats itself, it costs more each time.’”
Well, jeez! Anybody who’s ever lost their shirt playing blackjack at the Hard Rock Casino can tell you that when you start losing you don’t get conservative you just make bigger and bigger bets because you get impatient about recouping your losses!
Floridians are sh@t for brains people sometimes.
Some of us have a hard time understanding normal Joes and their stupid antics … like the way JULS likes to spend all his raises before they’re in, as if job losses never happen.
People are such stupid, greedy fools in the aggregate. Sure, I’ve been greedy and stupid myself, but being autistic, and growing up in the family I did, I often find myself zigging while others zag… I will never understand why people feel comfortable buying an overpriced investment. I feel like I’m cliff-hanging and the bottom is a long way down … eeeeuuuuugghhhhh…
What’s up with the market in Gville these days? Any capitulation yet?
Also, did they ever build the condo development across University from campus where the Burritto Bros. use to be?
“‘What goes unexplained is how so many people got caught up in this real estate fantasy after losing money in the tech-wreck bear market of 2000-2002,’ said John Pankauski of the Pankauski Law Firm in West Palm Beach.
I think you are wrong about the gambler mentality that started this thing. Real Estate was the alternative to Stock Market gambling. It was a SAFE INVESTMENT.
However, once the money started flowing in, with really cheap loan money, and the prices started rising, demand increased exponentially, and so did prices.
There you have it. A fool’s bet, based on “economic fundamentals”.
Good point. Mortgages were a safe investment — because any risk was filtered out by that pesky 20% down payment and income verification. And there was additional seasoning before a loan was sold to Wall-Street. They were doubly safe.
The real problem began when they selling loans with no filtering and no seasoning. They thought MBS were safe when they no longer were. Add in that lovely (not) “good accounting practice” of booking all those minimum neg-am payments as full amort to make us think it was safe, and you get, well, what we got.
For Palmy,
NYtimes catches up on the insurance companies shifting the risks to homeowners with higher rates, lower coverage.\
http://www.nytimes.com/2007/11/23/business/23insure.html
“Now most policies pay the insured value of a house and up to about an additional 25 percent — which is often not enough to rebuild, as many victims of the recent wildfires in California are discovering.”
sigh, spike, it’s just part of the vicious operating basis that so much of the corporate world has adopted. At some point, you just can’t pay anymore for getting nothing and I suspect that’s where the insurance industry is headed.
As far as the rebuilding goes, that’s where I’d negotiate with the insurance company to walk away. Just get the max, pay off the mortgage, bulldoze the house, sell the lot and walk away.
spike, this also brings up another issue. I spent a good part of my down time yesterday wading through the “amendments of agreement” sent to my by two of my credit cards. One I pay off monthly, the other I don’t use, but keep just in case. Seems to me like contracts don’t exist anymore, when credit cards, insurance policies, etc. can change terms at will. That’s not a meeting of the minds (definition of a contract), even IF the original “agreement” says they can do whatever they want.
I know we’ve debated the issue of lenders freezing rates and what the ramifications are and how mortgage lenders won’t lend money anymore if the terms can be amended after the fact. I don’t approve of it, but hey, why not? What’s good for the goose is good for the gander.
Part of the problem is that insurance co’s made a lot of stupid investments and lost a lot of money. Before the 17 year bull run, many states had laws prohibiting insurance co’s from investing in equities because of insurers going under in the late 19th century.
The other problem is that state legislatures leaned on/encouraged/mandated overly low rates for extremely risky properties, and basically had the insurers cross-subsidize. Eventually, those being overcharged clue in and stop paying (this is also what happens to private health insurance over time, which is why the rest of the 1st world has nationalized it), while those being undercharged flood the system every time the inevitable happens: earthquake, mudslide, hurricane, flood, erosion, ocean-front house falls into sea, tsunami, nor’easter, cape cod moves another 12 inches north, tropical storm, hurricane … Hmm, maybe I’m a little BITTER about these richie-riches who want FEMA to rebuild their oceanfront houses every time they encounter a little WATER when the seashore should be public anyway … grrr …
The problem with insurance is the assumption that all parties being insured are more or less equally at risk. When people build in safe(r) places with adequate building codes, that’s probably true. When you have FEMA providing the moral hazard to build palaces-on-the-sea, well … no. They’re not. Game over.
This is a problem with other forms of insurance as well… some people are awful drivers and keep getting into fender benders (but of course, they’re never at fault) while other drivers never get into an accident. As a commercial driver, I can tell you that luck has nothing to do with it. (Except for getting rear-ended–engineers actually created an increased risk for rear-end collisions, believing that was a lesser evil than angle crashes, and so you are always at risk of being plowed into from behind by some inattentive moron when you legally come to a stop at a red light.)
Health insurance … age, smoking, lifestyle (exercize and eating habits), genes, risk-taking behaviors (mountain climbing, unprotected sex), degree of alcohol and drug use, even sticking with crappy doctors or patronizing woo-woo practitioners until you get *really* sick, these can all have a big difference on how much you cost to the insurance company. Of course, with the current PPO system, the more that’s paid out, the more money they make, and so premiums are escalating as never before. You start to wonder why you’re paying… I pay $358.80 a year to cover about $200 in doctor’s bills (maybe less if I were to shop around, but going to the guy who takes the insurance for $20, nominal $100, beats finding the guy who doesn’t for $80–for now), and if I really get hurt I have an $800 deductible before coverage kicks in. Oh, and $30 co-pay on meds, ie $1/pill. I’m sure I could do better mail-order from Oh Canada.
If this goes on, I may very well drop coverage. Right now I’m subsidizing my sicker co-workers, and I feel okay about that to a degree, but I’m getting impatient. End game for private insurance is rapidly approaching. The ironic thing is, this is the world the AMA wanted, and actual doctors are less happy than ever, especially GPs. The current system SUCKS.
I’ve got a good friend who’s a commercial driver. A few months ago he was driving a 2-lane across Iowa, topped a gentle rise, and found a moderately large trailer (unattached) coming at him at 55 mph, with a full line of oncoming traffic in the other lane. He went towards the ditch, fortunately the trailer tore off his right front fender & went into the ditch before he could. He was able to drive away. One of the risks of driving is the more you do, the more likely you are to be in this kind of accident, through no fault of your own, being in the wrong place at the wrong time. For auto insurance, the # of miles driven, # hours on the road, and locales driven are key elements of the cost of insurance, regardless of the driver’s skill. Certainly my friend’s truck driving skill saved either his own life or those of the people in the oncoming lane.
Each type of insurance has its own type of problems, such as the one I’ve cited.
The need for health insurance varies mostly with age. If people live long enough, they will require increasing amounts of care, except for the proverbial Hunza peasant, who, it is said, never needs any medical care and dies in his sleep at the age of 120. Health insurance can only work if the healthy pay premiums for services they will not use. Almost every health insurance customer is paying for the sickest of the pool of customers, but this is not much different from fire insurance — homeowners whose houses don’t burn down are paying for the those who do. Health insurance has warped the market so that providers (especially drug companies) always charge the limit of what insurance companies will pay, a key difference between health insurance & fire insurance. Prior to WWII most people paid for medical care in cash, and the fees were on the low side. Currently the non-insured, to get treated at hospitals, sign a contract that they will pay whatever the hospital chooses to charge, and this is never disclosed in advance. Just for fun, call your local hospital’s laboratory (and then their billing department) and ask what they will charge you for a CBC (Complete Blood Count, one of the most frequently done blood tests.) Most will act as if they’ve never been asked that question before. Most will not answer the question directly. Some will refuse to answer. Those that do answer will quote a truly alarming figure. I know because I’ve done this very thing. I do not know what would happen if a patient showed up at an ER and refused to promise to pay the bill. A prospective patient’s agreement/permission for medical treatment and the contract to pay the bill are always intermingled.
Rather than dropping coverage, look for a much higher deductible & no prescription coverage. That should (but usually doesn’t) give a drastically lower premium. Most people are just one minor fall away from a $10K medical bill.
“I pay $358.80 a year to cover about $200 in doctor’s bills (maybe less if I were to shop around, but going to the guy who takes the insurance for $20, nominal $100, beats finding the guy who doesn’t for $80–for now), and if I really get hurt I have an $800 deductible before coverage kicks in. Oh, and $30 co-pay on meds, ie $1/pill. I’m sure I could do better mail-order from Oh Canada.”
Cheap cheap cheap coverage. I spend a lot of time working on healthcare policy analyses.
Nationally, the average cost of coverage employer-sponsored group coverage with a $1000 deductible and 80/20 copays for an individual is right about $4800 a year. For a family with a $2000 deductible, it is $12,000 a year.
If you buy it on your own as non-group coverage, you would be looking at about anywhere from 20% more (assuming you are under 40) to up to double (in your 50’s.)
You are paying $358.80 a year as your share of premiums. Do the math.
If you drop that coverage and ever had to buy a policy on your own (non-group) and have had or ever have an illness before buying new coverage, you are dead in the water. In all but 4 or 5 states, the insurers can refuse to sell to you because of your health history. That includes things like acne, bronchitis, astham as a child but it went away, knee injury doing sports that healed…….
Your $30 copay on meds is nothing and I bet that it is $30 for brand but less for generic. Buying from Canda would cost you $10 -15 in shipping alone. Go look up the retail price of your prescriptions - you will be shocked. The Walgreens pharmacy website is informative.
A pack of Zithromax in the generic form (standard antibiotic for bronchitis etc) is $45 - 56. Diabetic? No such thing as generic so you will pay $50 -75 a week for insulin.
$358.80 a YEAR??? If paying out of pocket, that is 2 office visits or 2 xrays or 13 1/4 minutes if you are admitted to the hospital.
The NY Times has it backwards as usual. Property insurance exists only because property owners want to shift their risk to someone else for a fee. The level of rates & coverage is a deal between the owners & the insurance companies. If the rates/coverage ratio is unacceptable to the owners, they can (1) take their insurance business elsewhere or (2) go without property insurance. I’m not a libertarian, but that much is clear.
Don’t mortgage holders still require insurance?
It is truly amazing that so many RE people continue to insist that the current situation is part of a common cyclical trend with an easy glide path, when even a renter like me can see this as a titanic global clusterf*** which has vaporized a couple trillion bucks so far, with more on the way.
And while it is easy, and maybe appropriate, to look at previous renters who drank the home-flippership Kool-Aid™ served by a media all too willing to avoid the destruction of the Middle East as clueless rubes… the next few years will not be a “correction”, allowing everyone to get off the canvas and touch gloves and start swinging again.
This is a unique, horrible, and permanent destruction of an American myth, and, short of the upcoming Automobile and Credit Card Debt Overhang™… (you know, we just have this overhang of maxed car(d)s out there…) it’s the most well-documented and obvious train wreck in history.
Thanks to this blog for the documentation.
Yes, I too get mad when ppl say “I’ve seen these cycles before.” They don’t really understand what kind of storm we are in for. The ratio between rents and mortgage payments has never been this much out of whack, add to that the securitization meltdown (a component that never existed before), and this is an entirely different animal. This is not part of any up 20% down 5% cycle tied to changes in the health of the economy. This is an up 150%+ down 50%- kind of cycle brought on by wall street and fed manipulation at the highest levels. It’s the difference between a spousal dispute and nuclear war. Remember ppl, our economy is in decent shape and interest rates are being kept artifically low by the fed, and things are still busting apart at the seams. When either of these two factors ceaase to exist, life as we know it in the US will change dramatically. I truly think this will be no less of a disaster than that Great Depression.
Good post, Tim. I continue to believe the focus on the price-to-rent ratio is the correct one, and that it will take nominal declines in the neighborhood of 50% to adjust things to some sort of equilibrium. Foreign buyers COULD prop it up a little bit as our dollar declines in value, but I basically agree with you that the decline will be long, ugly, and truly memorable (= no repeat for 50+ years).
Yes, I too get mad when ppl say “I’ve seen these cycles before.”
Yes, I too have have seen these cycles over a few decades, and this is no cycle. This is a full blown cyclone and it’s too late to get out of the way. It’s coming and it’s going to cause horrendous damage, and there’s nothing anyone can do about it now.
Too true. This is not a normal cycle. This is one of those major life time events that will be documented in economics books for centuries.
I think it’s more the Perfect Storm — an economic bubble, Peak Oil and the Jihad coming together at the same time. It’ll be a major part of future history books, should there be any future historians to write them.
I think too that they go hand in hand.
I remember after the Simpson acuittal someone saying (don’t remember who) that the response of the white majority would be to “riot” (queing Rodney King) in their own way, not by marching and burning on the streets, but by practicing discrimination in other ways of American life.
I think of that being said each time the barrel hits a new high. The Muslims in general are working against us and their way of retaliating is through manipulation of the oil market.
As of today, I’m starting a “cash stash.” Too late for gold!
I have watched this blog since 2005. The knowledgeable people here convinced me to not buy in Tampa in 2006. I passed this information on to others in my office and now everyone thinks I ‘knew’ what they didn’t. Thanks to everyone. The wife and I go out and look and we are literally begged to put in lowball offers. Toll Brothers, Richmond American all tell us to ‘put in an offer’. I’m now being reassigned to another area. Thank you for saving me at least $100K and my peace of mind!
I experienced the same thing. Everyone told me I was over-reacting for selling in 2005 and renting instead, and telling them to do the same thing. Some even thought I was depressed or suffering from mental illness as I warned of a major collapse and went all cash. I no longer deal with such issues. I plan to start my own vulture fund with the cash I have hoarded. I see major declines in 2008 and 2009 and then a period of flatlining before the next rise. Those that asked me to get professional help, have asked to be investors.
This blog made me look like a genius too. A coworker listed her rental property for sale just after the market turned south. I advised to price it well below comps to avoid following the market down. Also referred her to the HBB. She declined all advice. Now her property is listed at half the original wishing price and she frequently tells me she should have listened to my sage advice. I tell her I’m no genius, just a student of the HBB. She still won’t check it out though.
She declined all advice.
This is why I said ungazz’ to anyone in my circle who was buying or selling. They were all grown-ups, and getting sage advice from their friendly, knowledgeable realtor or brother-in-law soon to be in foreclosure, or next door neighbor scaminar graduate, etc. etc. You get the picture.
“ungazz” - loosely translated: dick
Heh!
Thanks to this blog … I’m the family real estate
Idiot Savant!
“The knowledgeable people here convinced me to not buy in Tampa in 2006. I passed this information on to others in my office and now everyone thinks I ‘knew’ what they didn’t. Thanks to everyone.”
Give yourself a pat on the back for taking the time to, at least, look into the situation from a ration point-of-view.
They fact that you found this site is testament to doing some “homework” (no pun intended).
I was being conned by Realtors(tm) for about a year when I began my research (2002). Prices had already begun disconnecting from fundamentals here, and they were telling me it was all fundamentals. I shopped into 2003 and the bid-wars before I just quit and took a seat on the side-lines. Been waiting 4 years now. Another 1.56 years to go, when ARM resets peak a year from now and 6 more months pass as people try to “get their price”.
Congratulations on not being a sucker.
–
‘It seems that as history repeats itself, it costs more each time.’
There is a very good explanation for this:
Crooks are bigger crooks in the succeeding long-term cycles (they DO learn from history!).
Dupes are bigger dupes and are made easier to dupe thanks to the propaganda machine.
Jas
Jas, I thought you believed more in deflation than inflation
“‘The good news is that the housing market hasn’t had the economy pulled out from under it. Just look at Detroit. A lot of the fundamental drivers are in place, you just have this excess supply,’ Snaith said.”
After a storied career in eCONomics in Stockton and the right corner pocket, Snaith throws away his chance at ever lying his trade, in the Motor City…
p.s.
“The only function of economic forecasting is to make astrology look respectable.”
John Kenneth Galbraith
Supposedly, the astrological forecast for the USA starting in at the end of January ‘08 and lasting for the next 16 years is very similar to what occurred during the American Revolution. (I can say this because I have an Econ degree.)
Yeah, but did you stay at a Holiday Inn last night?
Detroit has good fundamentals?
I would interpret his statement as pointing to Detroit as an example of a market that has had the fundamentals pulled out from under it as opposed to Florida which has not.
So much of Florida’s boom has been housing-related. It’s a self-fulfilling, self-fueling market on the way up AND the way down. They still have tourism and retirement living, and, to a lessening extent, agriculture — but I’m not sure these are great pillars on which to sustain Florida’s boom.
Detroit fundamentally has no jobs.
“If the merger is rejected, Bradenton-based Coast Bank could become the fourth U.S. bank failure of 2007, and the stockholders would be left empty-handed.”
Coasting into oblivion…
Reading that article makes me wonder why anyone would want to take over coast… If the FDIC is making good the losses, I can understand it. Its best for all of us to keep the banking system functional.
But coast as an institution is gone. Best to slap a new name on the buildings.
This is, unfortunately, only getting started.
Got popcorn?
Neil
“Polin said she is the innocent victim of a ’smear campaign,’ which she says may have been started by a jealous rival. ”
They’ll love that story in Florida State Prison.
Polin is probably involved, but as an interesting bit of information, in Florida, it is not uncommon for realtors to file complaints against each other with the Florida Real Estate Commission and they do it all the time. Usually it is prompted by such things as one realtor “stealing” a deal from another or stupid stuff like that. Mostly it is about competition and very petty stuff.
“‘I don’t have the heart to put them in a loan that I know they can’t afford. I can’t morally do this,’ Nugent said. ‘But at the same time, I know they can go down the street and get the same deal from someone else in 20 minutes.’”
“But being finicky about ethics can hurt in the pocketbook, he said. ‘It’s been over a year since I took my kids to Disney,’ said Nugent.”
Oh the kids will suffer so much - No Disney!
So I guess with her kids suffering so much she will (has done) the shady loans?
Its funny how some people’s “conscience” can fold if it means they won’t get their commission. I knew a guy who worked at a new car dealership as a sales trainee, and quit in disgust after only 2 months.
But was he disgusted with the ethics or the lack of pay?
“‘It’s been over a year since I took my kids to Disney,’ said Nugent.””
In Florida, the intensity of a crisis is measured by the length of time since you last visited Walt’s Pleasure Palace.
quality of life for me is measured in the number of months that I haven’t been dragged to Orlando et environs
armpit doesn’t even do it justice
Since I lend for the interest, not the commission, I turned down quite a few supplicants in 2003-2006. They would tell me they could get a better deal from a Real lender. (By which they meant, a commissioned loan-originator.) I would say, “Fine!” and half the time, they would be back at me a couple of weeks later, having discovered the points-fees-BS involved in the “Real” world of mortgage loans. I did require large down payments, but it had nothing to do with conscience. Totally self defense. Today, my few dozen mortgage clients are all still entirely up to date in their payments.
If most mortgage lenders had been like you, there would have been no housing bubble or bust, just business as usual in a stable economy.
ie, they HELD THEIR OWN NOTES
amazing what kind of discipline that engenders!
Yeah, I hear Barry Bonds is going to use that argument, too.
“When the city decided to redevelop 860 acres in the Midtown district five years ago, officials estimated it would take until 2025 to complete the job. But the housing slump threatens to delay the project’s completion by five years, City Councilwoman Diane Veltri Bendekovic said.”
Ode to Z&A…
In the year 2025
If Redevelopment is still alive
If the Dollar can survive, they may find
In the year 2025
Ain’t gonna need to tell the truth, tell no lies
Everything you think, do and say, is in the pill you took today*
*(side effects include side effects)
In the year 2025
Ain’t gonna need your teeth, won’t need your eyes
You won’t find a thing to chew
Nobody’s gonna look at you
In the year 2025
Your arms hanging limp at your sides
Your legs got nothing to do
Some machine doing that for you
In the year 2025
Ain’t gonna need no husband, won’t need no wife
You’ll pick your son, pick your daughter too
From the bottom of a long glass tube. Whoa-oh
http://www.youtube.com/watch?v=ZPd2KqRRLoE
“Coast’s troubles will not simply vanish if it becomes part of First Banks. Some shareholders have filed a federal lawsuit seeking class action status against Coast, claiming they were defrauded when the company lied about its financial condition.”
They lied to us about what condition, their condition was in…
http://www.youtube.com/watch?v=0z7nAvxF_mI
For folks living in the Tampa vicinity, I would appreciate any input on getting something in Springhill.
I am working with 2 FB craiglister’s who are going the “Short Sale” route. One house built in 2003(2400sqft living) is being offered at $179K. The other, built in 2005 (2850 sqft) is being offered at $209K. I am thinking about putting in a offer of $120K (this is what it sold for new in 2003) and $150K (it sold for $265K in 2005) to the banks.
Both these houses were built by Maronda homes which is a worry. I haven’t heard great reviews about their quality. In addition, Spring Hill being the “sinkhole capital” is another worry factor.
Are these reasonable values for SpringHill? (as the per sqft rates would be quite good( in the vicinity of $50-60/sq ft), if the banks agree to the offer).
I am obviously in no hurry to pull the trigger on either one, am just toying with the FBs/banks to get the best out of the deal.
Any input will be greatly appreciated.
I wouldnt buy, but if you can get it for less than 125 times monthly rent your risk will be limited (100 is a prudent investors prefered max). If its still more than 150 times rent, major warning sirens should be going off.
“In addition, Spring Hill being the “sinkhole capital” is another worry factor.”
If you know how bad the sinkhole situation is in Spring Hill and want to proceed with buying anything there, I’m afraid I can’t comment. You can get a property for a real cheap in Spring Hill and sinkholes are the reason why.
I don’t have any idea about Tampa, based on what you are saying the builder does not have a reputation of building good quality houses. Avoid it, I bet you, that you will have similar opportunities to buy good quality houses.
My rule of thumb, avoid houses that were built after 2002/2003, the reason being, this is the time period when the bubble started and the quality of construction went down.
Personally, anywhere in FL I wouldn’t look beyond 2000 prices. I think it’s going to correct farther back pricewise than the start of the bubble. That’s just my opinion.
Be patient. Don’t be tempted by the 1st somewhat reasonable deals you find. What is the employment outlook for the area ? If the market will drop and remain flat for a long time as many predict, are you willing to live or hang on to that house for ten years ? Will the neighborhood hold up ? That is are there many more foreclosures ahead ? When I buy, next year or within 5 years - can’t predict the market, I plan to buy only in a blue chip neighborhood. A cheap suit or sneakers or lawnmower is ok. Junk them when you’re done. For the money RE cost - think quality.
I know Spring Hill, and I would say the first thing you should do is check the insurance rates because the area does have a big sink hole problem and insurance runs higher there. Maronda is a middle of the road builder, but here in Fl in 03 the contractors were so busy that all new homes were built like piece of shit. I think that your offer on the house built in 03 is about right at todays interest rates, but will depreciate more if rates go up.
“The Bradenton Herald. “When moving to this peaceful paradise, many new residents are faced with the nagging question: Is it better to rent or buy?”
What you don’t hear in all the Chamber of Commerce blab about Bradenton being a “peaceful paradise” is the time honored tradition of the annual Easter gang shoot-out on Bradenton Beach. The police stand down while the gang-bangers shoot it out. Some of the devil-spawn gangs come from as far away as Plant City. The most the police will do is try to warn families at the beach to stay away, LOL.
For those of you who think I’m kidding or being sarcastic, I’m not. There really is an annual Easter Sunday gang shoot-out on Bradenton Beach. The sub MSM (affiliate stations) here in Florida is disgusting.
Palmetto- This is just another form of natural selection. The best shots prevail. Sweet!
“Devil-spawn from Plant City” would make a great horror movie title. The one time I visited Plant City, the motel’s hot water heater emptied itself across my room’s floor, but other than that I enjoyed the visit.
“An array of dire forces - from soaring inventory to fence-sitting buyers - continued to play havoc with housing markets in Palm Beach County and the Treasure Coast in the July-September quarter.”
I see this “fence-sitting” term used a lot, which implies people are 50/50 on whether or not to buy now. Most people are not “fence-sitting” at all, they’re completely on the non-buying side of the fence.
Yeah, when they say “fence-sitting buyers,” I think they really mean “spectators.” Think Neil and his popcorn. Not a likely purchaser, although he might consider buying a house for a dollar. Personally I would consider buying in So Fla at the really-really right price. I’m thinking of some wish-price $1M houses asking $2.5K rent. The right purchase price is $250K; I might even pay $350K if I were in the right mood. Not worth talking to them when they are still asking a mil.
No doubt. We are tracking the market in Palm Beach Gardens. I see all these houses listing for $400,000-800,000. You can just feel that the prices will be half of that in 2-3 years. The vibe is in the air, and it is just a matter of time.
Not a likely purchaser, although he might consider buying a house for a dollar.
I might bid quite a bit more than a dollar.
But its the right spirit. Its not yet time to do more than spectate. Capitulation will probably happen first in Florida, but we’re still not there. When it does happen, it will be a long term squish down.
Got popcorn?
Neil
“Realtor Jeanette Ward said sellers are ready and willing to negotiate. ‘It used to be location, location, location. Now it is definitely price, price, price,’ Ward said. ‘Renting is certainly a good option because sellers are negotiable, but it is the time to buy.
WRONG Jeanette, IT’s a Housing Recession, Recession, RECESSION
Owners, RE Agents, phoney Comps, Appraisors, Banks, Lenders and Mania WILL NOT deternine the PRICE of a house in the next few years. There is a new sheriff in Anytown, USA and his name is National Recession.
How can it be the time to buy when so many people are obviously convinced it’s time to sell? The firmest principle in economics - revealed preference.
Whoa right there… I thought all Recessions were local…
Having a tough time keeping my realtor-isms straight..
“Right Corner Pocket” is my new name for the state of mind and the boundary, that is Florida.
Off topic here but FB in San Jose, CA. Is this legal?
http://sfbay.craigslist.org/sby/rfs/486982606.html
The evasion of property tax seems clearly illegal, but I’m not sure they wouldn’t get away with it. I wonder, though, how the seller plans to enforce the promissory note, considering that the recorded sale may make it possible for the buyer to “prove” the full sale price has already been paid.
Getting through the poorly written ad was a bore BUT it comes down to this:
Seller will take $730,000 split up:
$50,000 down.
Mortgage from someplace (seller will find lender who will accept the lies listed below) for $610,000
Seller not going to show down payment on the deed. It will look like it was 0 down purchase with loan for $610,000 to buy $610,000 house. Also the $50,000 can go into seller’s pocket and not be reported for taxes as income of any kind.
Seller gets a balloon note for another $70,000 due in 3 or 5 years or whatever. Assume that seller is going to record that as a 2nd mortgage.
Given how much prices are falling out there, it wouldn’t be much of a fraud on property taxes for more than a few months.
This nitwit wants $730,000 for his 1200 sq ft McMansion shack or whatever. The rest is’ puffing’ about he really wants $750,000 without a realtor or $775,- $800,000+/- with a realtor.
Who wants to do a 3/4 mil deal with someone who writes words like paridise, flexiable, hassel, arrainge, financialy, comission, prespective for prospective, etc.? This ad says a lot about California and the housing bubble in general.
and a KOI pond? lol
I think us housing contrarians are remiss to promote the assumption that ALL of Florida isn’t booming. I hate Florida real estate (sold our place in 2004 just missing peak), but I miss having a vacation home there. We’ve been looking, watching, and waiting for 2 years and don’t see anything reasonable in sight.
I have a few requirements for FLA: East Coast, within 2-3 blocks of the beach, near amenities (grocery, restaurants, gas, etc), 2br/2ba, condo, 10-20 years old. We’ve been searching, and having the worst time finding anything in our preferred market that has dropped much in value.
This past month, my father bought (I mentioned this before) in Lauderdale, paying about 50% below peak. We’ve been debating whether or not he got a steal, but to his defense there is nothing for sale where he wants and needs it. He uses it, too, for his vacation spot for his family, and he made a killing selling his previous condo in 2005 at peak, so buying this one still left him with profits from the last sale. I’d have waited another 5 months, myself, but he’s right about supply — there is none. I’ve checked craigslist, realtor.com, etc, etc, and just come up dry.
Most of the news here quoted by Ben focuses on the West Coast (ugh), Tampa/Orlando, or the boonies. What is going on in Miami and Lauderdale? I’m not talking about new developments, either. Where is all the info on the price drops in middle-aged, hurricane-resisting, decent-area condos and homes?
I’d have figured that the oversupply of condos would cause prices in my market to drop, but the oversupply of condos seems to be way outside of what I would consider convenient for a vacation home.
We won’t jump the gun ANY time soon. Our recent home purchase in the Midwest is 1X our annual income (paid off), and we’d be happy to pay 2X our income for a vacation home that we’d use 3-4 times a year (approximately 30 days). Hotels for 30 days total are far more expensive than purchasing and maintenance, since we require 2 bedrooms and baths (we take friends and family along regularly). 30 * $300-$500 / year = $14000. $200,000 condo money value lost + taxes and maintenance is around $18000 a year, but we also don’t have to rent a car (throw one of our extras down there), and we don’t have to deal with availability during winter months, when we’ve seen outrageous prices for hotels.
I’m still shocked at the lack of available supply for the market we’re chasing. I’ve been down there 4 times this year, and made offers (that were refused) for properties that were quickly picked up at 20-30% below peak. I hate the term that “real estate is local,” but for high demand areas, it does seem to be the case.
you need to understand that the larger the market the slower the turn. Think aircraft carrier vs canoe.
“‘The good news is that the housing market hasn’t had the economy pulled out from under it. Just look at Detroit. A lot of the fundamental drivers are in place, you just have this excess supply,’ Snaith said.”
In other words, this guy is now comparing the real estate market in central Florida with Detroit’s. Hell, why stop there! Compared to Baghdad, the market in central Florida is just great! And lets all remember, now is a great time to buy! I could get you one of Saddam’s palaces for cheap. Think of all the instant equity you could have!
SubKommander Dred
“‘It’s unfortunate we’re in this temporary crisis, but it is temporary and we’ll get through this. In three years…there won’t be any gloom and doom,’ said the certified building contractor. ‘I went from five supervisors down to none, at this point,’ he said.”
Why, all you people rushing to the lifeboats are just a bunch of nervous nellies. This ship is unsinkable! The owners and designers even said so. I heard it myself. Besides, if things get that bad, I’ll can always take a less crowded lifeboat later…
SubKommander Dred
“The report shows home values in Clearwater Beach have dropped more than 20 percent. ”
And….of course, this is just a good start.
How many years now have I said Clearwater Beach was GROUND ZERO for Tampa Bay, as they grossly overbuilt, and over-priced everything in the area?
Rich foreign investors, rich baby-boomers retiring, a booming ecomony, blah, blah, blah …(Realtorspeak).
All B.S. It’s all about how much INCOME the average American Family has. It has gone up AT ALL.
Who is going to buy these places? Who has the money?
Only way to do it……….NEG AM/ liar loans.
Game Over.
It has gone up AT ALL. Not.!
I guess the Fan and Fred articles are answering my weekend question. Bubble-era underwriting could take down or at least impair the securitization of conventional mortgages. Awful.
No meaning to insult FL, but why on earth would even the flippers pick such a place? The state is hot and muggy for a good chunk of the year and the state doesn’t come across as being economically strong if you ask me. Also, political corruption there is rampant, just look at the stupid stuff Jeb Bush pulls there all the time. Sure up here in the north we’ve got corrupt politicians too but, geez, you’d think FL would have missed the boom like the plains states did. It’s cool to see what’s going on at ground zero though. Thanks.