If You’re Willing To Take Less, You Should Be Able To Sell
The Palm Beach Post reports from Florida. “The same issue that forced sellers to pull their properties off the for-sale market now dogs them in the rental market: inventory. There are nearly 35,000 residential properties for sale in Palm Beach County alone, according to Illustrated Properties Real Estate. That’s a staggering four-year supply at the current pace of sales.”
“But even homes renting for $3,500 a month, as in ritzy developments like Wellington’s Versailles or West Palm Beach’s Terracina, might not pay enough to cover the owner’s monthly costs. ‘In many cases, owners are renting for half their monthly costs,’ said Jack McCabe, president of McCabe Research and Consulting in Deerfield Beach.”
“In Palm Beach County, more than 3,500 units have been pulled out of the for-sale condo market and put back into the rental pool, McCabe says, including Mizner Court at Broken Sound in Boca Raton (450 units), Aventine at Boynton Beach (216 units) and San Merano at Mirasol (476 units) in Palm Beach Gardens.”
“Of course, not all renters are frustrated wannabe homeowners priced out of the market. Many can afford to buy a home - 20 percent have incomes above $60,000.”
“They choose to rent to avoid financial risk in an uncertain housing market, says the Joint Center for Housing Studies at Harvard University. Renting also gives them an urban lifestyle at a lower price - certainly lower than home prices in Palm Beach County.”
The Tallahassee Democrat. “Some lenders and mortgage professionals see a tightening of mortgage rules in response to the millions of risky loans made the last few years and the rising tide of mortgage defaults and foreclosures.”
“‘There is certainly a major effort to tighten restrictions on granting credit in the mortgage industry,’ says Ritch Workman, president of the Florida Association of Mortgage Brokers.”
“The proverbial pendulum, he adds, had swung too far toward easy access to home loans. At the height of the credit craze, there were plenty of cases where people were denied credit cards but then could turn around and with the same credit profile qualify for a mortgage.”
From Hernando Today. “Drive down any subdivision and the sea of ‘for sale’ signs swim across your vision like a row of landlocked vessels. If you’re one of those homeowners trying to haul anchor and set sail, you might be wondering what you have to do to get that home out of dry dock.”‘
“Builders and Realtors say it’s still possible to sell homes in a tough market – as long as sellers are willing to make concessions and get out of the ‘make a killing’ mind-set. It boils down to two things: curb appeal and lower prices.”
“Maybe two years ago, you could inflate the asking price for the house, Not anymore. If you’re willing to take less, you should be able to sell. In real estate terms, it’s called ‘realistic pricing.’”
“‘There’s no reason why a nicely prepared home is not going to sell,’ said Harry Willett, president of the Hernando County Association of Realtors. ‘We have a better market than, let’s say Tampa, (because) those homes are really overpriced.’”
“And what the price was even six months ago may not be where that price needs to be today, said local Realtor Mary Ann DeWitt. ‘We’re considerably busier right now than we were 60 days ago,’ DeWitt said. ‘I have a very optimistic outlook for the next year. Every month that passes, we’re another month away from the bottom.’”
“Local Realtor and developer Gary Schraut agrees that while the housing numbers are not good, ‘they’re not as bad as people would want you to believe.’”
“People are comparing the current market to that of 2003-05, when the investor-fueled real estate boom was at full steam, he said. Home prices were artificially driven up by the wild speculation, and it is unfair to use those years as a yardstick and say that the home market is a complete disaster, he said.”
“Hernando County is now reaching the point where it was before the boom hit. ‘We’ve done the (market) correction, and we’re waiting for it to level off,’ Schraut said.”
“‘I think all the speculators are gone. The homes we’re selling now are people looking to put a roof over their family’s head. Some investors are trying to pick up foreclosures, but there aren’t that many of them because they have no one to flip it too fast,’ he said, referring to quick resales.”
“‘It’s not that they can’t sell them, it’s just taking longer and it takes more marketing and more realistic pricing,’ he said. ‘You can’t put a real estate sign out front and say, ‘Buy me,’ at any price. That is over now and we’re back to a real market where it takes real negotiating skills.’”
“Dudley Hampton, president of the Hernando Builders Association, agreed that people cannot judge the housing market by 2005’s standards because ‘that was an anomaly year.’”
“Despite the gloom and doom, Hernando County still boasts some of the lowest prices in the Tampa Bay metropolitan area, he said. ‘People who can afford to buy a home can buy one and get it for an excellent price and get good value for their dollar,’ he said.”
“To get people to buy, some are offering to pay closing costs or even the first year’s mortgage payments, he said.”
“Hampton believes much of the negativity comes from so-called analysts who continue to preach grim housing news. ‘A lot of that has to with the pundits on TV who I personally feel don’t know the difference between a hammer and a hat rack,’ he said. ‘Right now the sexy thing to do is preach doom and gloom about the housing market.’”
The St Petersburg Times. “Big private money from places like New York and Los Angeles has decided our carcass of a Florida housing market is ripe for some plucking.”
“If you’re a home builder, they’ll pay about 70 cents on the dollar to take that excess inventory off your hands. If you’ve lost your house to bank foreclosure, they’ll snag your humble abode for as little as 40 cents on the dollar.”
“One local builder, Dave Seidenberg of Bayfair Properties, said one fund totaling $750-million approached him as it scavenged for quality homes up and down the Gulf Coast of Florida.”
“Seidenberg said the deal is attractive only if he’s closing out a community. Otherwise he risks ticking off regular home buyers who pay more or less full price.”
The Post & Courier. “The overbuilt Florida condominium market got the best of a local development company.”
“James Doran Co., based on Daniel Island, conveyed about 45 acres of land in Orlando back to an investor after officials couldn’t get additional equity funding.”
“The lender, a pension benefit fund for the International Brotherhood of Electrical Workers union, accepted the property’s deed as part of the sale agreement that the two groups worked out before the transaction took place.”
“‘As we all know, Florida is going through a housing downturn,’ said CEO Bob Doran.”
The News Press. “Land preservationists throughout Southwest Florida are suddenly able to go after major properties they couldn’t have touched two years ago when prices were high.”
“Big property owners are coming hat in hand to offer their land to the property tax-funded Lee County Conservation 20/20 Land Program — spurred by the disappearance of speculators and builders who had been buying at a fevered pace.”
“When the home-building industry collapsed, prices plummeted for undeveloped land because builders had no need to start new projects. But the economic slump brings with it a sliver of good news.”
“The lower prices paid off when the county was able to buy the 105-acre Orchid Isles parcel adjacent to the Six Mile Cypress Slough Preserve in Fort Myers for $16.1 million three months ago. The owners had originally asked for $30.4 million.”
“‘We have a plethora of options’ for future purchases, said county Commissioner Ray Judah.”
“The falling value of the county’s real estate has devastated Lee’s residential construction industry, with only 85 building permits issued countywide in November compared to 402 a year earlier.”
“The median price of an existing single-family home has fallen 26 percent from $322,300 in December 2005 to $239,300 in October, the last month available, according to the Florida Association of Realtors.”
“This year, Conservation 20/20 has been swamped with applications, said Lynda Thompson, program coordinator: There’s now a backlog of 49 properties under consideration, of which 11 are in negotiations.”
“‘I’ve never seen this many nominations come through,’ Thompson said.” “One of the most valuable parcels acquired this year was a 400-acre property off Corkscrew Road near State Road 82, purchased for $5.85 million in May,”
“Fort Myers-based real estate broker Ed Bonkowski, who negotiated the sale, said the 20/20 program had been interested in the land for years but hadn’t been able to close the deal until now.”
“The property went for about $15,000 an acre, compared to the $40,000 or $50,000 similar property was going for two years ago when major builders like Beazer and Pulte were going after them. At those prices, ‘and 20/20 probably wouldn’t have gone into that bidding war,’ Bonkowski said.”
“In Collier County, which also has a land-buying program, owners of the 2,500-acre Pepper Ranch bordering Lake Trafford had planned to build houses on the property but recently approached the county about selling it for preservation, said Jennifer Hecker, national resources policy manager for the Conservancy of Southwest Florida, which advises the county on purchases.”
“No purchase price has been reached, but the property is ‘loosely estimated to be worth $40 million,’ Hecker said — much less than it would have gone for during the boom.”
‘Greed, says Webster’s, is ‘excessive desire for getting or having, esp. wealth; desire for more than one needs or deserves.’ The dictionary doesn’t specify who gets to determine what is excessive and what is deserved. But the court of public opinion is happy to oblige.’
‘Last week, for instance, a contributor to the Herald-Tribune letters page used the G word in conjunction with real estate speculators and people who bought ‘more house than they could afford.’ Those caught in foreclosure are ‘victims of their own greed,’ the letter writer charged.’
‘Hold on a second, I thought. Some of the bad actors could rightly be called greedy, but many of the folks caught up in the mess were simply trying to make an honest buck in a market that appeared to be rock solid.’
‘I agreed with the letter writer about one thing: He said of real estate investors that ‘they gambled and they lost.’ That’s the stone-cold truth. But we gamble, too, when we buy insurance, build up our 401Ks and IRAs…We make an educated guess and hope it pays off, because we can’t afford to do nothing. Is that greed?’
‘Few people knew, in 2006, that a real estate bust was imminent. Take my house painter. He and his wife, hard-working go-getters with cash to invest from earlier real estate successes, bought several more properties. Then the slowdown hit. Here’s a guy — an ex-Marine — who worked his butt off maintaining and improving those homes so his wife and kid could have a better future. You could say he misgauged the market. You could say his timing was off. You could say he was fooled into believing that the bubble was real. But greedy? Save that word for someone who deserves it.’
Dang! You’re early, Ben.
He and his wife, hard-working go-getters with cash to invest from earlier real estate successes, bought several more properties… You could say he was fooled into believing that the bubble was real. But greedy? Save that word for someone who deserves it.’
It was exactly people like him - who purchased multiple houses in expectation of capital gains - who were responsible for the absurd runup in prices and the subsequent bust. They are the authors of their own misfortune. I don’t really care whether anyone thinks they deserve to be called greedy, but they do deserve to lose their shirts.
Nobody should ever purchase RE in expectation of capital gains. Just a place to live if you’re a homeowner, cash flow if you’re an investor. If you buy a property with negative cash flow, you’re a speculator, and if you get burned it’s your own fault.
because we can’t afford to do nothing
And therein lies the sophistry and falsity in the author’s reasoning. Her house-painter COULD AFFORD TO DO NOTHING.
There was no risk to doing nothing. He would lose nothing unike not having insurance or not saving the money and putting it safely in an account.
He CHOSE to take a risk, get money from nothing more than letting property sit there ($$ for 0 work kind of idea) and found out there is no free lunch.
Old rule of thumb is never put more into a business venture than you can afford to lose. Here, the guy chose to risk the money for the properties (cash he had) and his credit rating (borrowed funds.)
What makes him ‘greedy’ is the trying to get money but not doing any work - buy it and wait a few weeks or months. That is gambling and gamblers always think they are going to get the big score because they are entitled to make easy money.
‘I agreed with the letter writer about one thing: He said of real estate investors that ‘they gambled and they lost.’ That’s the stone-cold truth. But we gamble, too, when we buy insurance, build up our 401Ks and IRAs…We make an educated guess and hope it pays off, because we can’t afford to do nothing. Is that greed?’
Saving for retirement and buying insurance are risks? They are concepts that were designed to hedge or mitigate risk. This moron was buying on margin to buy houses with the Bank’s money, at a time when any due diligence at all would have revealed that appreciation already outstripped historical norms for reasonableness. I may not know much, but I always thought the goal was to buy low, not high. This must be a hoax, or satire. No one is this dense.
I agree with Tim,
If you want to invest, its your duty to know the risks. They bought into the philosophy that its always a good time to buy. Honest hard working people get greedy too.
Actually, a house painter could have made a nice buck during the flipping mania! He could charge high rates for working through the night, etc, to get a house ready for flipping fast.
Take your cash up front, and you can make some great extra $$$ on the boom with little risk.
This points right to the reason the supply is so out of whack and will take 5-7 to reach equilibrium with demand. A significant portion of people associated with housing (painters, realtors, mortgage brokers, carpenters, hard wood floor guys, etc…) made money on one house so they used this profit and additional leverage to buy 3 or 5 or 10 more. The homebuilders responded to the “demand” by building about 4 million houses too many (that until one year ago were sold but sat empty or were occcassionally rented). Now, with prices collapsing, these people will stop making payments and the houses will come back on the market. With demand limited due to the changing mindset that real estate is the worst investment, it will take a long to absorb the mess and get back to a historically normal enviroment.
Here in Tucson, there are quite a number of unsold houses that have become rentals. However, they’re not exactly flying off the rental market. Just like homebuyers, there are only so many tenants out there.
He said of real estate investors that ‘they gambled and they lost.’ That’s the stone-cold truth. But we gamble, too, when we buy insurance, build up our 401Ks and IRAs…We make an educated guess and hope it pays off, because we can’t afford to do nothing. Is that greed?’
In my gambling days playing blackjack, when I had 19 and the dealer showed a 20, I lost all of my bet. Not 22%, or 44% of it, I lost it all.
Saving money can hardly be associated with the excesses in the green felt jungle of gambling, on real estate…
He said of real estate investors that ‘they gambled and they lost.’ That’s the stone-cold truth. But we gamble, too, when we buy insurance, build up our 401Ks and IRAs…We make an educated guess and hope it pays off, because we can’t afford to do nothing. Is that greed?’
In my gambling days playing blackjack, when I had 19 and the dealer showed a 20, I lost all of my bet. Not 22%, or 44% of it, I lost it all.
Saving money can hardly be associated with the excesses in the green felt jungle of gambling, on real estate…
Is that greed?’
I would not call investing in insurance products or 401K’s, 401B’s greed. Investing in single family homes for anything but living is what I call greed! We all know now what happens when sheeple get caught up in bubble chasing!
“Hampton believes much of the negativity comes from so-called analysts who continue to preach grim housing news. ‘A lot of that has to with the pundits on TV who I personally feel don’t know the difference between a hammer and a hat rack,’ he said. ‘Right now the sexy thing to do is preach doom and gloom about the housing market.’”
Ah… so the smart ones (that know the difference between a hammer and a hat rack) only see a bright and sunny outlook for housing.
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The Hampton guy is a huckster in action!
Jas
When I read Hampton’s comment, I thought of going downstairs to look for a hammer and a hat rack to see if I could tell the difference, but then I realized that I probably wouldn’t find the hat rack because I would fail to recognize it was not a hammer.
I may not know the difference between a hammer and a hat rack, but fortunately I am able to calculate how much money I am saving by renting as opposed to buying.
Snake Charmer. Best post this week. I cant stop laughing. Excellent. Spot on.
“Hampton believes much of the negativity comes from so-called analysts who continue to preach grim housing news.”
Or it could have to do with reality, ala econ 101: supply and demand? Why was the news from the TV correct on the rocket ride up but not now when gravity takes hold and the velocity back to reality gains speed? Don’t lose heart Hampton the NAR will continue to spoon feed you your daily dose of delusion.
That’s why NASA builds the heat shield tiles on the space shuttles when then return from orbit. To protect the ship from the plasma burn fire.
No difference in the housing market on re-entry into the normal atmosphere. There is a burn there as well.
These specuvestor types just don’t like that reported. They love the glory of the launch and liftoff, but would prefer no coverage of re-entry.
Everybody feelin’, um, sexy?
‘Right now the sexy thing to do is preach doom and gloom about the housing market.’”
I just spent an hour on the phone with the IRS. “Sexy” would not describe my current mood
Too bad you’re not one of those poor FB victims who will be able to NOT PAY TAXES on forgiven debt–sometimes 100s of thousands of real dollars that they spent on hummers and boob jobs! Then the IRS would have given you a big hug.
WeSo Sexy.
If gloom and doom is sexy, I’m Eva Longoria.
“If You’re Willing To Take Less, You Should Be Able To Sell”
If only people can come to terms with reality. Wish and hope play big role in most people’s lives. For many it takes a protracted period of misery to give up unrealistic hope.
The HB and its aftermath are reflections of participants’ beliefs and habits.
Jas
“Big property owners are coming hat in hand to offer their land to the property tax-funded Lee County Conservation 20/20 Land Program….”
That’s an interesting program.
Very smart, use taxpayer money to take a whole lot of land off the tax rolls. I’m all for having some public green space but I wonder about the wisdom of these purchases.
Me, too. There might be money right now to purchase land, but at some point that tax money has to dry up.
Also, I’ve seen how local civic leaders get dreams of empire building at taxpayer expense.
*sigh* - It should read - “Also, I’ve seen how local civic leaders get dreams of empire building at taxpayer expense with these types of programs.”
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Unfortunately, tax deduction for charities get turned into fraud often enough. I am for tax deduction for charities because of the abuses, especially, by the wealthy. The truly charitable people are mostly middle-class and even some poor. They do make sacrifice. Vast majority of the so-called philanthropes are mis-anthropes!
Jas
I hear you, Jas. I’ve worked for fund-raising outfits, both as a volunteer and as an employee. Among the wealthy, I met many people who could be called “donors.” Only a handful deserved to be called “philanthropists.”
Reminds me of Leona Helmsley, who’s toasting marshmallows as we write.
Goes on everywhere. I don’t know if I like it, either. They’re trying to save it from the developers, but who takes care of it 20 or 30 years from now? Seems like they want to lock everything up tight, so we’ll be like Europe with castles on the hillside and land mostly out of reach for people.
And they bought far to early in this unwinding of the bubble. Lots of wasted taxpayer’s money if they are buying in the now. They should be buying a year from now, or longer!
It makes you wonder how well connected these big property owners are with the people in county gobmints.
Got 10% down?
Yep. If the market won’t support bubble prices, the government will.
I’m all for PRIVATE COMPANIES *buying* land to prevent development on it.
(And, as the owner of some “wetland” in Florida, I am very opposed to the usual practice of merely declaring someone’s land to be “wetland” and essentially confiscating all the rights to it from the owner)
But I don’t trust the GOVERNMENT holding the land. They’ll sell it to a developer as soon as the opportunity presents itself. So EVERYONE loses in the end. Let an organization like the Nature Conservancy own it.
But even homes renting for $3,500 a month, as in ritzy developments like Wellington’s Versailles or West Palm Beach’s Terracina, might not pay enough to cover the owner’s monthly costs. ‘In many cases, owners are renting for half their monthly costs,’ said Jack McCabe, president of McCabe Research and Consulting in Deerfield Beach.”
Got one of those unlucky homeowners that I know..owes $5 Mill in loans and renting them out and still carrying the cost. On his last equity line and still won’t abandon the sinking ship..
Oh by the way, he was one of the ones calling us “old fashioned” for not risking it all in big boom…
Well, I am just sitting back, enjoying the show!
Some people never saw the crash coming. Some are still stuck in a delusionary fog.
I was trying to imagine how many people in Florida can afford $3,500 per month in rent. Perhaps double-income, no-kid professional couples, but even that might be pushing it if they have student loans.
What they don’t mention is that is seasonal rent . I’m serious. Its quite possible to rent November through March (maybe April). That rate is suspiciously close to what my friends in Florida say a six month rental, prime season, is currently going for. Except… they’re cutting the April rent to $2,500 (notice, its an even $20,000?).
So you have an inherent time delay before Florida continues its implosion. Once all the ’seasonal rentals’ flop… get out of the way.
Got popcorn?
Neil
To add insult, 99% of seasonal rents in Florida are furnished. At $3,500 they’d better be very nicely furnished — with the possible exception of peak-season rentals of large-ish beach houses.
I have two friends in Sarasota Florida. Each one is a Doctor. One pays 3,500 a month to own and the other pays 4,500 a month to own. Each bough his house about 4 years ago. Each has adjustable rate mortgages too. Both reset in 2008.
In many cases, owners are renting for half their monthly costs,
Almost… as if… prices need to drop 50% to make renting a break-even investment.
“Renting also gives them an urban lifestyle at a lower price - certainly lower than home prices in Palm Beach County.”
and this is exactly why Florida housing prices have so much further to fall. The cost of renting is much, much lower than the cost of owning. Why would anyone buy a $500k condo in West Palm if they can rent the same condo for $1500/month? Where are the jobs in WPB that can support $500k condos to begin with?
Median income in PB county is $45k, median home price was around $380k at the peak. Still have a long way to go (and still a ton of new inventory under construction throughout South Florida)
my mom rents a 1400 sq ft w pool and all utilities for $ 1200 in SE FL
and it’s new on golf course 1 mile from the beach
I can show you a 2 year-old, 2700 sq.ft., 4 bedroom, 3.5 bath, direct ocean corner unit on the top (5th) floor that is being rented for $1695/mo. That’s just enough to cover condo fees and taxes. Nothing left over for mortgage payments.
So economically speaking, the unit should sell for for about 10k. Priceless.
Given the risks involved (hurricanes, degredation of building/neighborhood due to vacancies and foreclosures, difficulty of selling, certainty of tax and HOA increases, etc.) I would value that condo at zero, and would not “pay” zero myself.
Good point. I dont know what caps will be imposed, but I would be really nervous to buy in Fl. Worst taxes and insurance in the US, and local governments are not handling it very well. The Carolinas are much cheaper and I find the weather more preferable.
” Worst taxes and insurance in the US…”
I’ll give you the insurance situation, but taxes by comparison are A LOT less expensive than other parts of the country. On newer construction, or older homes with newer features you can’t even hold ground on the insurance argument. I don’t know too many places where you can insure a brand new $250K home for under $1,000 AND THAT’S PALM BEACH COUNTY!
There is a difference between the condo’s rent potential and its true sale value, even fire-sale. Even with taxes and condo fees of $1,700, that place would sell this afternoon for $300,000. Direct oceanfront condos were running about $300-400/sq.ft. at the peak, as I recall. At $150/ft it will sell quickly enough and below that, all but the old moldy places will sell in a heartbeat. But we’re still talking 50% or more off peak prices, which is the heart of the matter.
Many of my friends have owned condos at Ormond, Daytona, New Smyrna (the favorites of north Orlando people) and at Canaveral/Cocoa Beach through Melbourne Beach (for S. Orlando and Kissimmee people). Only one owned his as a cash-flowing investment and he was able to do so only because it was one of the relatively rare condos that allowed weekly rentals. Anyone else who buys an oceanfront condo there loved it for its own sake, because renting never made them money, it just helped with the bills.
is it already rented???
I have not owned property in FL, but I know those that do, and they tell me that hurricane insurance is outragous and is a requirement with most lenders. When they tell me their total taxes and insurance no., it’s higher than anything I’ve seen in other states. I not sure what the beak down is, but would be interested to know.
“I have not owned property in FL, but I know those that do, and they tell me that hurricane insurance is outragous and is a requirement with most lenders.”
Hurricane insurance is required by most lenders. Homes built post-2002 are very inexpensive to insure due to building codes. Many homes built pre-2002 qualify for the same types of building code discounts if the owner is willing to get their home inspected.
My home insurance is about $1,600 per year in Palm Beach County built in 1987 with $200,000 in replacement cost coverage on the home. It’s all about bringing your home up to code and documenting what’s already there (like the roof). There are a lot of private companies writing new policies right now.
So to answer the question, it’s probably the insurance…but there’s reasonable prices out there. Taxes on my home in Palm Beach County are under $3,000 per year. The same house in my hometown would have cost nearly $5,000 yearly in taxes.
What would the taxes be if someone purchased your home tommorrow? or what would the taxes be without save our homes? Talking about taxes in FL is like comparing apples to oranges. If Tim bought your home, what would the taxes be for him?
In my county you can figure roughly 1.6% of the selling price for annual property taxes for the new owner.
I hate to admit that I’m holding a note on a trailer lot in Lee County. Initially the LTV was maybe 60% (May of 2004), but the term is longer than most of mine (Sept 2022). If things go wrong, I guess I could redo my tax returns and credit to principal the 1/3 of loan value that has so far reached me as interest. Borrower occupies this property and is totally punctilious at this time.
Of course many speculators can’t afford to lower their asking price. Falling prices have left them insolvent. They just haven’t realized that they’re dead yet.
That’s why the real bargains and price slashing will be at the huge bank liquidation auctions in 2009. Im not talking about reserve price auctions that exist today. I’m talking 1000s of properties must go regardless of price.
“‘There’s no reason why a nicely prepared home is not going to sell,’ said Harry Willett, president of the Hernando County Association of Realtors. ‘We have a better market than, let’s say Tampa, (because) those homes are really overpriced.’”
OK, just for some perspective here, for people unfamiliar with the area. There’s a reason Hernando County housing costs less than Tampa housing. It’s at least an hour (more like an hour and a half) commute to Tampa. Hernando is riddled with sinkholes in the Spring Hill area. Brooksville is a nice, rural town. But unless you’re willing to commute to Tampa, there’s nothing much up there to do to earn some bux unless you’re in the ag business (and not a picker or field grunt). And even then. Hernando is very pretty, with rolling hills in areas. And it is true that a number of properties have already reverted to 2000 pricing. But do you want to get slammed with some of the highest insurance rates in the state? Do you want to risk finding a yawning sinkhole in your yard one fine morning? Do you want to spend the gas money on that commute to Tampa?
Does a hat rack have a handle on one end and a heavy thing on the other??
Lane
Take a look at those new “weight forward” hat racks. Much easier to use…
“Builders and Realtors say it’s still possible to sell homes in a tough market – as long as sellers are willing to make concessions and get out of the ‘make a killing’ mind-set. It boils down to two things: curb appeal and lower prices.”
That’s funny… I always thought it was “location, location, location”.
‘We’re considerably busier right now than we were 60 days ago,’ DeWitt said. ‘I have a very optimistic outlook for the next year. Every month that passes, we’re another month away from the bottom.’”
Looks to me she’s pointed in the wrong direction.
‘We’re considerably busier right now than we were 60 days ago’
Translation: Before we just sat around wondering what was happening. Now we are desperate and busting a gut doing everything possible to conjure up sales. Nothing is selling, but I just know that with all this effort things will pick up soon.
“Every month that passes, we’re another month AWAY from the bottom.”
Yeah, DeWitt is quite the optimist. Things are worse than anyone could have imagined!
Lol
With four years of inventory (although… my math says five…) and we’ve somehow turned the corner? Chuckle. Maybe for sales rate in her little suburb or maybe, due to another Realtor ™ office closing, her office has more sales (like… two). But not for all of Palm Beach.
Notice one thing about con-artists? Sales are *always* great and improving. They are *always* doing better than anyone else. It doesn’t matter if they didn’t close one deal a month last month. If normal business is to close four deals, they’ll claim twenty. Its just how con-artists work. Cest la vie.
Florida is toast. Florida will drop below rent supported values due to the HUGE overbuilding.
When you can make 7% ROI on a unit after paying everything including a 15 year mortgage payment, they you hit the floor. Then I’ll believe the Germans or whomever will ’swoop in and buy.’ But not before. Note: you know as well as I do rents will drop. So we’re looking at a 60% to 70% drop in Palm Beach!
Got popcorn?
Neil
People like DeWitt say, ‘We never imagined the market would get so bad,’ then follow up with, ‘We’re moving away from the bottom.’
If he was clueless about the top and the fallout, why would his bottom prediction hild any water.
DimWitt!
“I have a very optimistic outlook for the next year. Every month that passes, we’re another month away from the bottom.’”
Who made this person the hall monitor? Are prices really at the bottom and beyond?
Renting: it’s the new black.
RENTING: Home Ownership - 30 days at a time.
Home ownership: renting from bank….plus carrying costs AND being able to paint whatever color you want for [fill in the blank]days/years at a time.
BayQT~
It’s looking more and more like the FB’s in Florida (and Califonia I suspect) are holding on by the fingernails by renting and dipping into and using up any assets they have, hoping that the market will turn around in their favor in 2008 or the government (tax payer) will bail them out.
In my area, I’m seeing more and more For Sale signs coming down or should I say the numbers are leveling off. They are not being sold. Some are replaced by For Lease signs, others (I suspect) are taken down by owners who probably have plenty of equity but have now woken up to the fact they missed buying a ticket to climb aboard “Mr. Magoo’s Free Money Train” and have decided to stay put.
So, assuming I’m correct in some instances, it’s simply a case of those who are using up any assets to stay afloat, to wake up, throw in the towel, walk away or lower the prices big time. One thing is a 100% watertight guarantee. The market will NOT turn around in 2008 in any substantial way. Note the word “substantial”. We might get a dead cat bounce in the spring aided and abetted by the obviously coming NAR, “Now is a good time to buy,” media blitz but then, as spring receeds, the price trajectory will continue south. Of course, “Now is a good time to buy,” will NOT be a good time to buy if we are in a recession and the TRUE inflation and unemployment numbers are revealed.
Is there any hope for FB’s? One flickering candle. It’s an election year. The whores in Washington will be looking to garner votes. If they think bringing in legislation will help them (the politicians not the FB’s) they will bring in a government program to bail them out. Probably via Freddie or Fannie but, seeing as they are so tainted with incompetence and corruption, it might be a new (yet another) government department. Of course, if the politicians can get their dirty little fingers into the coffers of the NAR and other concerned entities like the big box builders, mortgage brokers, etc, that could do it.
However, this bail out is not popular. There are a lot more home owners who didn’t jump on “Mr. Magoo’s Free Money Train,” and they will not be happy campers if ANY political party starts throwing confetti money at the FB’s.
The wild card is Godfather Paulson and how much he can influence this administration to help his Wall Street Financial Gangster families and, in turn, how much political influence they can buy. Probably a lot.
“We might get a dead cat bounce in the spring…”
I doubt it. I thought maybe this year, but it didn’t happen. Not even close!
Banks aren’t going to open the money tree for John Q Public with poor credit and no down payment to climb any time soon. A majority of eligible homebuyers are already in homes. Those who are eligible but renting are the smart 20 and 30 somethings (for the most part) who will wait until the deals are everywhere and make sellers pay the price before they jump into this market.
I’m ready to call the market again…take notes people…we’ll see 2008 drop even more than 2007 as sellers that must sell realize they must take a lower price and banks take those who don’t have any money in the game. The first 1/2 of 2009 we’ll see prices finally hit the bottom and stay there as we enter our 5th consecutive quarter of recession. The 2nd 1/2 of 2009 we’ll see the economy begin to pick up and prices will begin to go back up…VERY SLOWLY. With prices at 1999-2001 levels, inventory will begin to shrink and we’ll be in a normal supply and demand market.
Not only will banks not open their money, those buyers who should have had equity have HELOC’d it out. They rode Mr. Maggo’s money train without ever leaving the home station. For example, one of my coworkers is about to take his whole family across the pacific on quite the luxury vacation. Everyone is flying business class. They’ve rented the ‘best rooms’ at a new five star hotel, etc. What a second! I’m hiring a new manager for this guy to report to and he’s doing a trip I couldn’t afford!!! (love the Realtor ™ punctuation, eh?)
How can he do it? Equity extraction. This employ should have been retiring in late 2008 (crosses a pension threshold). He was on track for that in 2002. Now? With his three mortgages on two properties… Quite the stable of cars (one has a car loan too! others HELOC’d), etc. He won’t be able to retire until 2015. Was it worth it? I don’t think so.
Got popcorn?
Neil
‘those buyers who should have had equity have HELOC’d it out’
- I don’t think that people realize all of the ‘Alt A’ and ‘A’ paper that is in jeopardy of defaults. A lot of ‘A’ paper is tied to the heloc from the good days.
Neil,
Perhaps the worst is yet to come for this co-worker. We can only hope that he drains ALL of his financial resources (CCs to the max, raiding all IRAs) nursing his two sick houses as he awaits for his two dying patients to “recover”.
These people deserve to work until they die. No retirement.
And may he live to a ripe old age.
Got 10% down?
I actually like they fact they are renting at a loss. If they walk away, in most circumstances, they have little pain as recourse is limited at best. In this manner, they have their assets drained before they are kicked out. It will teach them a valuable lesson. Watching HGTV, taking a few classes at Home Depot, and listening blindly to realtor and mortgage broker “friends” does not make one an investor. It makes them a mark.
Hey, I watched HGTV and took classes at Home Depot! I just never did anything with it & settled for the vicarious riches.
I watch those shows sometimes as well. Last time I watched Flip this House, the flipper put the doors and cabinets in wrong and the tile work was horrible, and then bragged about how much money he made.
“They choose to rent to avoid financial risk in an uncertain housing market, says the Joint Center for Housing Studies at Harvard University. ”
DING DING DING DING! We finally have a winner! Better not tell the real estate “professionals” that clog up the other blogs who call the renters very bad names.
I don’t rent, but my decision to buy wasn’t based on the desire to own alone. My carrying costs were about 10% lower than the cost of rent when I bought. Made clear sense at the time and probably still does as I’ve not seen too much of a loss yet. Now, with the meltdown and the glut of rentals I’m more like 10% higher than the cost of rent. The tax write off will more than cover that this year. I hate to see what next year will bring.
“The same issue that forced sellers to pull their properties off the for-sale market now dogs them in the rental market: inventory. There are nearly 35,000 residential properties for sale in Palm Beach County alone, according to Illustrated Properties Real Estate. That’s a staggering four-year supply at the current pace of sales.”
Very soon, nothing will sell at any price in Florida.
Palm Beach is one of the wealthiest communities in our country, and it appears nobody cares to live there anymore…
Florida, The Upside Down State.
Palm Beach is one of the wealthiest communities in our country, and it appears nobody cares to live there anymore…
In Florida, whenever there’s a ritzy neighborhood, all the areas around it appropriate the name. For example, in Central Florida there’s only one “nice” (from an aesthetic standpoint–not traffic, etc) neighborhood called “Windermere”. A village that’s been there for quite some time.
However, the places that call themselves “Windermere” cover an area about 10x greater than Windermere itself. And then there are the similar names, like “Winter Mere”, etc.
Similarly, before the housing boom, the “Bay Area” really only meant SF and the Peninsula down to, maybe, Los Altos. Fremont, Stockton, etc, were called the “East Bay” and Berkeley/Oakland was its own little universe.
Then during the “Bubble” places as far out as (un)Pleasanton and Manteca were called the “Bay Area”.
These “extension areas” will collapse even more than the primary areas. So if Los Altos prices will settle by 30%, Manteca prices will fall by 60% (Simply becase there were fewer transactions in Los Altos, and little new construction during the boom).
A similar phenomenon is going on in Palm Springs. The area that most people would have called “Palm Springs” 10 years back has expanded a bit.
(Florida is a real puzzler becasue there are still HUGE swatches of buildable land everywhere. Obviously, prime beach areas are limited. But why anyone would think there’s an urgent need to invest in condos in CENTRAL florida is astounding. One look on a google satellite map shows huge parts of Orange County still empty, and not all of it is protected wetland….)
Palm Beach-adjacent?
I lived in Michigan when East Detroit was renamed “Eastpointe” to more closely associate it with Grosse Pointe.
A number of cities in el lay were renamed to do away with bad connotations of their previous names…
Most of them are in the San Fernando Valley.
Van Nuys- aka Lake Balboa
No.Hollywood - aka Valley Village
Reseda- should be called Rectumexco
Canoga Park - aka West Hills
Since when did the SFV get so pretentious? (How embarrased are those dwellers.)
“They choose to rent to avoid financial risk in an uncertain housing market, says the Joint Center for Housing Studies at Harvard University.”
If you rent, your hard earned money doesn’t go “Up In Smoke”.
There’s some really fancy learnin’ goin’ on up there at Harvard. How much did that little nugget of common sense cost?
Excuse me, edgewater; I believe it is spoken and written as ‘larnin’.’ Not ‘learnin’.
Yeah it turns out that using negative monthly profits to capture negative appreciation is a bad business model. Who’d have thunk it?
“But even homes renting for $3,500 a month, as in ritzy developments like Wellington’s Versailles or West Palm Beach’s Terracina, might not pay enough to cover the owner’s monthly costs. ‘In many cases, owners are renting for half their monthly costs,’ said Jack McCabe, president of McCabe Research and Consulting in Deerfield Beach.”
One of the worst things about trying to rent a house in florida is the very real possibility that the owner will FORECLOSE out from under you and you’ll be evicted.
This will probably further reduce the amount you can get for a rental.
Esp. if the owner, who may supposed to be occupying the home to meet the terms of the mortgage, doesn’t make it know he’s renting. You can come home one day and find your stuff out on the street and the house padlocked.
Some states have good protection for renters with a lease, but Florida doesn’t.
So if you want to rent in Florida hassle-free, find an established property that was intended for rental apartments.
I can see the new pattern to be the Renter running a credit check on the landlord.
I did. I advise all my renter friends to do the same. There are several obvious tell-tale signs a rental is merely a failed flip - not least a decent looking kitchen with, you’ve guessed it, stainless appliances.
This cannot happen…..just call the police and have the landlord arrested. And sue for any losses. If he files BK, then make sure you don’t settle, and drop the lawsuit without some money in your pockets. Jail will do the landlord some good, or at least you get some revenge!
Now if you get legal notices to appear in court or to answer the eviction notice, and you don’t show up, and LOSE by Default, then Yes, a sheriff can toss your stuff to the street…but then again, the sheriff will make a few attempts to contact you in person to let you know what day the forceful eviction will take place.
————-
You can come home one day and find your stuff out on the street and the house padlocked.
My point is the sheriff may have contacted the property owner listed on the deed, and have NO IDEA that the person living in the house is a tenant.
Of course, attempting to file criminal charges and bringing a civil case isn’t a bad idea, but they charges may not stick, and good luck collecting the money.
The only one who will make out is the FB-Landlord who will be coddled, loved, and propped up by our government.
As Revuen point out, there are plenty of ways that this CAN happen. Of course you can sue the FB, but you’re probably in line behind two mortgage companies so, good luck with that.
The big question ,that the government never addresses ,is why the speculators can’t rent out the houses they purchased without being buried monthly .Normally a investor would rent out property to cover their expenses ,and the lender would not be lending on a property where the debt payment is not considered in the borrowers debt ratios .
The fraud of it all is that speculators who had no intentions of owner occupying the property ,not only they didn’t put down the higher down payment required on a investors loan ,but they didn’t pay the higher fees a speculator should pay for a high risk investor loan .So the loan could no be underwritten for its true risk ,and the true debt ration could not be considered . It’s up to the lender to determine if a borrower is lying about their intent to occupy .
These speculator loans were so clearly not owner occupied purchases ,so the negative debt potential on the cash flow monthly was not included in the debt ratios ,so they got a loan and down payment and interest rate they didn’t deserve .
So, again because of the fraud and the lenders refusal to underwrite loans ,the problem exists that the speculator cannot even rent out the house to cover their expenses .
So, the secondary market thinks its investing a bunch of loans to owner occupied people and they are really making loans to people who planned on flipping because the cash flow from rents would insure a huge monthly lost .
Darn,these damn speculator loans really pushed the prices up because they were processed as owner-occupied loans ,which was fraud .Again,enders and builders breached their duty to underwrite loans and messed us all up .A investor loan is the highest risk loan there is .
I can see it now. Every renter with a letter taped to the door saying “Dear Sheriff, I am not the owner of this property, I just rent from them. Please address any issues with the current owner at ……………….”
No the process server usually makes 3 attempts to serve personally, then they nail tape a copy to the door and mail one 1st class to the occupants, from the court
Very unlikely the tenant will not know they have to go to court to keep from being forcefully evicted.
Well in all probability they’re going to get evicted in any case. After all, the FB made an agreement with the bank before he made an agreement with the tenant. And, the amount of money that he’s on the hook for to the bank is more than the tenant is paying. We’re all agreed, you shouldn’t come home to find all your stuff in the street, but the bank has a greater claim on the property than the tenant. Of course it’s perfectly possible that the FB rented the place out AFTER he received notice form the lienholder, so the tenant wouldn’t have seen a notice on the door.
A situation like this was plastered all over the news about a month or so ago. A woman and her children (tenants) had to find a new place to rent within 2 weeks (or some such VERY short period of time) and didn’t know that the landlord was in trouble until an eviction notice was delivered to her.
Here is an article of similar stories:
http://www.nytimes.com/2007/11/18/us/18renters.html
Excerpt below is from here:
http://www.beyondchron.org/articles/California_Tenants_Displaced_by_Foreclosures_5136.html
“Homeowners are not the only people displaced by foreclosures. Banks typically evict tenants upon foreclosure because they prefer to sell the property vacant. The resulting displacement of tenants is a largely untold story of the mortgage crisis.
There is currently no definitive data as to exactly how many tenants are being displaced due to foreclosures. According to a recent survey by the Mortgage Bankers Association, one in seven foreclosures nationwide was property that was not owner-occupied. ”
We may want to consider a potential topic to address this: the unintended victims of foreclosures and the fact that there are not many protections in place (per the NY Times article) for these displaced rentors.
BayQT~
I wonder if Florida is the gawdawful mess that is it is, because of proximity to Wall Street?
Most eastern seaboard types dig Florida, because they don’t know any better, and it’s the easiest warmest spot to get to for them.
I thought the 20’s boom in Florida was in part because of rail lines and the “new”, easy means of car travel to there.
My Dad loves Florida. My in-laws moved there at peak because it’s so warm (they are from the front range of CO, which is already pretty mild). Florida’s a great place to visit but I have to admit that in terms of sheer beauty, I like the west better.
LOL — we (Florida) never claimed to be beautiful. At our best, we were warm, cuddly and cheap. When the cheap part stopped, so did the net immigration.
At least from the north.
LOL - true.
Comment by az_lender
2007-12-17 07:35:15
When I read Hampton’s comment, I thought of going downstairs to look for a hammer and a hat rack to see if I could tell the difference, but then I realized that I probably wouldn’t find the hat rack because I would fail to recognize it was not a hammer.
I thought about going downstairs and finding two implements which were unfamiliar to me, since they would probably be a hat rack and a hammer, and then going to find this Hampton fellow, insist that he identify which was which to me as I took careful notes, following which I would beat him heartily with both items, taking careful notes about that too. All scientificky, see, as is my way.
But then I thought, Florida is too far to drive to today, even for such a good purpose, and then I remembered that I don’t have a downstairs.
So I’m thwarted.
Someone said the same thing to me about elbows and some other kind of holes. I went to see if I could tell the difference but everything just looked like an elbow to me. I was so confused.
You poor man! However, I hope you soldiered bravely on. And took notes which you could share with the rest of us, for our edification.
Is your last name Handy? Do you have an uncle by the name of Jack?
Some Jack Handy quotes.
“One thing kids like is to be tricked. For instance, I was going to take my nephew to Disneyland, but instead I drove him to an old burned-out warehouse. “Oh no,” I said, “Disneyland burned down.” He cried and cried, but I think that deep down he thought it was a pretty good joke. I started to drive over to the real Disneyland, but it was getting pretty late.”
“When I found the skull in the woods, the first thing I did was call the police. But then I got curious about it. I picked it up, and started wondering who this person was, and why he had deer horns.”
“I can picture in my mind a world without war, a world without hate. And I can picture us attacking that world, because they’d never expect it.”
“Once when I was in Hawaii, on the island of Kauai, I met a mysterious old stranger. He said he was about to die and wanted to tell someone about the treasure. I said, “Okay, as long as it’s not a long story. Some of us have a plane to catch, you know.” He told us about his life and all, and I thought: “This story isn’t too long.” But then, he kept going, and I started thinking, “Uh-oh, this story is getting long.” But then the story was over, and I said to myself: “You know, that story wasn’t too long after all.” I forget what the story was about, but there was a good movie on the plane. It was a little long, though.”
“If a kid asks where rain comes from, I think a cute thing to tell him is, “God is crying.” And if he asks why God is crying, another cute thing to tell him is, “Probably because of something you did.”"
“We like to praise birds for flying. But how much of it is actually flying, and how much of it is just sort of coasting from the previous flap?”
Those are good ones. I LOOOOVE Jack Handy.
Here’s some of my favorites.
Instead of having ‘answers’ on a math test, they should just call them ‘impressions’ and it you got a different ‘impression’ so what, can’t we all be brothers?
Sometimes I think you have to march right in and demand your rights, even if you don’t know what your rights are, or who the person is you’re talking to. Then on the way out, slam the door.
It’s funny that pirates were always going around searching for treasure, and they never realized that the real treasure was the fond memories they were creating.
Also, there’s one about potatoes, one of my favorites, but I forgot it.
Here you go.
If they ever come up with a swashbuckling School, I think one of the courses should be Laughing, Then Jumping Off Something.
Here is one of your potato ones.
The next time I have meat and mashed potatoes, I think I’ll put a very large blob of potatoes on my plate with just a little piece of meat. And if someone asks me why I didn’t get more meat, I’ll just say, “Oh, you mean this?” and pull out a big piece of meat from inside the blob of potatoes, where I’ve hidden it. Good magic trick, huh?
Now one of MY favorites.
“Sometimes when I reflect back on all the beer I drink I feel shamed. Then I look into the glass and think about the workers in the brewery and all of their hopes and dreams. If I didn’t drink this beer, they might be out of work and their dreams would be shattered. Then I say to myself, “It is better that I drink this beer and let their dreams come true than be selfish and worry about my liver.”
Here is a whole website of them.
http://www.paultastic.com/show/deep_thought
Don’t worry about it. No need to go all the way to Florida or downstairs to figure this out. We just need to apply the think system, a favorite of lazy bureaucrats and scientists everywhere.
First, both hat rack and hammer have an “h” in them so they must be similar. I recognize the word “hat” (it’s in one of my kids books), so they must both go on your head.
However, they are different words, so they must be slightly different. I sometimes wear different things to go when I go outside when the weather is gets cold or warm (this is assuming I can find the door.) Which ever is heavier must be the one you when when it’s cold outside to keep you warm. Since hat rack has more letters in it, that must be the heavier one.
Please, don’t thank me - I’m here to help.
Don’t forget your hat rack, either - it’s cold outside.
Wow, Vermonter! You are so full of smartness that I about fainted from admiration, and from laughing so hard.
It’s that smartness that’s gotten me where I am today, middle class and posting anonymously on someone else’s blog.
As far as the renting goes, I live in North Miami currently paying 1295/month. My rent is going up to 1550 in February. There are other units in the same building listed for 1250-1350. I would need to hire movers since I work all day every day. Between all the hidden costs (switching phone, fpl, etc) and the cost of movers (which I have no real idea of the ranges) does anyone think this is an obvious decision to move?
Have you considered asking the potential next landlord if they will pay for the cost of your move? In today’s Florida for sale/rent glut, if I were a landlord I’d jump on that.
SOLD -
I inherited my aunts house a few months ago and it looks like it will be sold before even listing with a broker! I asked everyone I knew if they knew anyone looking for a good starter home in a good school district. I priced it exactly 40k lower than the cheapest piece of S**T in that town. The house im selling is better than those. I still think the price I got is a little too high for a young couple but I’m the only game in town for them. Here in Suffolk County, Long Island there are no affordable starter homes in good school districts.
I am PROOF that you can sell quickly even in a “BAD” market!
My former landlady inherited a couple of houses from her aunt. And, quite frankly, she should have done what Liz & Smudge did.
But my former landlady viewed herself as a property manager, so she decided to rent them out. One of them was already a rental, and she had to reassemble it twice. (Two different sets of tenants tore the place up.)
The other house has been unoccupied for over a year. Don’t know why, but it’s as empty as GWB’s head.
Seize the moment! Package up a set of DVDs, tapes, whatever…and tell that story again…only spread it out over several hours and splice in lots of shots of sailboats, fancy cars, and bikini clad women.
When only one person inherits a house, it’s easier then when the house is left to all the children.
Then there’s always one greedy one who wants to price it higher, and the thing languishes on the market for months if not a year.
And when it sell, they still fight with each other.
Even during the peak of the boom, I saw houses sitting for sale for 6 months after the owner died and the kids were fighting over the scraps….
Thanks for lowering comps : )
You know, we’re not hearing the schadenfreude-ful stories that we used to about angry neighbors cursing out capitulators for “lowering the comps.” One step closer to capitulation I guess.
‘Right now the sexy thing to do is preach doom and gloom about the housing market.’”
I’m too sexy to get a loan, too sexy to buy a home…
I’m too sexy for my cat!