The Party’s Just Getting Started In Florida
The Daily News reports from Florida. “The slumping real estate market of 2007 took a dramatic toll on sellers, buyers and everyone in between. ‘There are a lot of people who are just walking away,’ Realtor Ray DiTirro observed in April. ‘They do their cash-flow analysis and they say, ‘It’ll cost me less to walk away than to carry this condo.’”
“Veteran Realtor Debbie Gericke…does not expect to see significant improvement in 2008. ‘There’s a lot of unrealistic stuff on the market,’ said Gericke. ‘Until we chew through that, we’ll continue to mutter along.’”
“The year started with more than 4,500 condos, town homes and houses on the market — an all-time high for the Emerald Coast. Current records from the Emerald Coast Association of Realtors show 5,977 single family homes and 4,090 condos on the market.”
“‘If you do not have to sell your home, now is not the time to put your house on the market,’ Gericke said. ‘It’s just diluting it.’”
The Palm Beach Post. “It’s not just schoolteachers, bartenders and other real estate amateurs who got burned by the condo crash. Some big, seemingly sophisticated investors are taking hits, too.”
“Condo converter Tarragon Corp. of New York just unloaded the 311-unit Floresta Apartments in Jupiter for a hefty 28 percent loss.”
“Tarragon bought the complex for $83.95 million in February 2006, just after the condo boom ended. It sold the apartments this month for $60.25 million, according to property records.”
“Tarragon has been in the midst of a nationwide fire sale. It said last month that it expected to write off $350 million as a result of the falling values of its properties.”
“More evidence of a slowing commercial real estate market: An $80 million deal for Vista Business Park west of West Palm Beach has fallen through. When owner Steve McCraney contacted institutional investors this summer about selling, the offering was expected to be a home run that would net $100 million, thanks to a white-hot industrial market. What a difference a few months make.”
“‘We’re back to a real market,’ McCraney said last week.”
“The winning bidder’s financing recently fell through, and McCraney said he’s talking to other bidders. With residential real estate faltering, brokers say potential bidders are taking a harder look at McCraney’s tenants and realizing that many of their fortunes are tied to the housing market.”
“The housing slump ‘is affecting everybody,’ said Randall Greene of Palm Beach Gardens-based Catalfumo Construction and Development. ‘There’s even a spillover into the Class A office market.’”
The St Petersburg Times. “The days of dueling with land speculators and getting squeezed by orange growers, are mostly past. John Ryan is at a place he can call home. The housing market is sputtering into a tailspin. And John Ryan’s sitting in the cockpit with the bailout plan.”
“He wants to buy your lots - tens of thousands of them.”
“‘You planned to be a land baron but ended up with just barren land,’ reads the Web home page of Ryan’s Metro Development Group. ‘We won’t leave you with barren pockets.’”
“Lennar, the Miami builder limping along with the rest of the industry, sold Metro 8,300 lots in central Florida three weeks ago. The Lennar deal brought Metro’s lot total to 30,000, a huge number for a 4-year-old company. But Ryan’s hunger is unabated. Expect him to go bargain shopping and close on other lot purchases with cash-depleted builders by the end of the year.”
“Ryan’s calculation is that home builders will churn out new homes again in 2010. He’s got the charts and graphs to buttress his position.”
“Private equity funds financing most of his lot purchases trust him with their cash. ‘That money is looking for an operator,’ he says. ‘And I’ve got the experience.’”
“Neither Ryan nor Lennar would disclose the sale amount on the 8,300-lot deal, but Ryan said developers like himself like to pay between $9,000 and $13,000 per Florida lot.”
“Others say Metro got a steal of a deal, something closer to $6,000 per home site. In central Pasco, where Ryan scooped up 3,900 Lennar lots at the Epperson Ranch, undeveloped lots once fetched about $30,000.”
“Ryan’s investment deals rest on the assumption he can start construction in late 2009 and deliver lots to builders in 2010. ‘If the recovery goes to 2011 or 2012,’ says Ryan, ‘guess what? We made a bad bet.’”
The News Press. “Builders are snapping up thousands of lots in Lee County at fire sale prices — and experts say the party’s just getting started.”
“The big land sales are being driven by necessity, said Jack McCabe, a real estate consultant based in Deerfield Beach. ‘This is not a surprise because right now, for most of these home builders, it’s survival of the fittest,’ McCabe said. ‘They have to get lean and mean.’”
“As prices continue to deteriorate, he said, investors — not just other builders — will be looking to come in and scoop up bargains at the bottom of the market, McCabe said. ‘There are some hedge funds that are specifically planning on land acquisitions at highly distressed prices compared to the highly inflated prices’ that prevailed at the top of the boom in late 2005, he said.”
“Lots in Cape Coral and Lehigh Acres, for example, went ‘from 5 and 10 grand to 50 and 80 grand, and now they’ve gone back to where they were,’ he said. ‘Things just got too expensive and the demand was artificial. That means prices have to come down.’”
“It’s easy to believe there’s nothing but gloom and doom in the housing industry these days. In Lee County, the number of permits pulled has plummeted.”
“National builders and developers are paring the payroll to the bare minimum. Deep discounts and unheard-of incentives are being offered to tempt cautious customers.”
“But local builders and the Lee Building Industry Association are putting their best foot forward to convince consumers that there’s never been a better time to buy. The BIA has just launched a comprehensive ‘Buy Now!’ campaign to educate consumers about the pluses of purchasing in today’s market.”
“‘We’re emphasizing how incredibly economical building is right now based on building costs that we haven’t seen since the 1970s,’ said Heather Young, purchasing manager for Bloxham Homes in Fort Myers.”
“With experience in the construction industry going back to the 1980s, company founder and president Norm Bloxham has seen market peaks and valleys, although admittedly none as deep as this one.”
“Today, not only will it take less time to build a home, but materials also cost far less. For example, Bloxham noted that prices for plywood and lumber are the lowest they’ve been since the 1970s. Similar drastic reductions have been seen in concrete and masonry costs”
“And there’s no more scarcity of materials such as plagued the industry during the first half of this decade. Roof tile that took 16 to 18 weeks to obtain during the boom is now available for delivery in two to three weeks.”
“‘A few years ago,’ Bloxham noted, ‘it was difficult even to get subcontractors to bid because they were stretched thin. Now they’re motivated to bid as tightly as possible, lowering margins to get the work.”
“Claudine Wetzel, Stock Development’s vice president of sales and marketing., added that right now, Stock can promise to build a home in six months - an unheard of commitment just a few years ago.”
“Palm Beach County lost 1,400 construction jobs in the past year.The state’s job growth has cooled considerably, ‘We’ve seen a real slowdown in the past year as the housing market has come apart,’ said Mark Vitner, an economist at Wachovia Corp.”
“The weaker job market is good news for employers like Rex Kirby, head of Suffolk Construction in West Palm Beach. A year ago, contractors complained they couldn’t find enough quality workers for projects. ‘We’ve seen the caliber of people available going up dramatically,’ Kirby said. ‘That’s an upside.’”
“Traffic dropped on a half-dozen major Lee County roads last month compared with November 2006. ‘At first blush, I find that difficult to comprehend,’ said Robert Wagner, a Realtor with Evans & Wagner Commercial Group in Fort Myers. ‘Have some people left? Yeah, I guess some people have left the area to find work. But those are significant reductions.’”
“The biggest drop is on Daniels Parkway, at Metro Parkway. Last November, 54,510 cars traveled daily on this stretch of Daniels. This November, the count was down to 46,160, county counts show.”
“Lehigh resident Lou Gremani, 78, believes traffic has dropped, and not just since the start of the housing slump. ‘I’d say it went down after the last hurricane,’ Gremani said referring to Hurricane Wilma. ‘With the real estate market belly up, people are moving to other states and even Canada.’”
‘With the real estate market belly up, people are moving to other states and even Canada.’
So much for 1,000 people a day coming to Florida, huh?
How many are leaving? FL is a mess right now. High insurance and taxes, low wages, and uncontrollable crimes. This is not paradise anymore.
MERRY CHRISTMAS to everyone!
What’s a good indicator that many people are leaving? Lemme check Ol’ Faithful:
U-Haul 26′ truck Sarasota –> Knoxville: $1829
U-Haul 26′ truck Knoxville –> Sarasota: $368
Soon they’ll be paying people to rent their trucks going from Knoxville to Sarasota.
Good Riddance…you fouled our culture…maybe we can recover once your gone you nasty NY/NJ a$$ wipes… I feel sorry for Tennessee!
‘There’s a lot of unrealistic stuff on the market,’ said Gericke. ‘Until we chew through that, we’ll continue to mutter along.’”
Me thinks she meant to say “muddle along” not mutter. Of course she may be muttering under her breath as she shuffles along!
Ah yes, Mutter along:
http://tinyurl.com/yev92r
For MSM types here this morning, it is worth pointing out that the correction is moving much faster in Florida because they are allowing prices to drop and move toward affordability. Compare that to Massachusetts, which actually turned down earlier, but has state officials trying to prop up the markets with tax money and industry bail-out schemes. These only provide false hope to the FBs/landholders and cause prices to drop more slowly.
2 points. FL is one of the bubbliest markets, almost nothing could prop up the prices at this point. Also, FL is trying to manipulate the market (though the tax system changes), which may have a significant impact on the course of this correction.
FL, AZ, Las Vegas are, imho, the craziest markets out there. They totally lost touch with reality; and, as such, will see the fastest drops. But I am not sure if it’s because of lack of govt intervention; I would attribute it more (in all these areas) to the fact that homes were 10X the median income for few years.
On a less adversarial note, thank you so much Ben for running and mataining this wonderful site. It has been an absolute joy to be a member of this community; looking forward to another year of news and interaction with everyone here!
I think Florida is correcting faster because most of the run-up was caused by out-of-state non-resident speculators who - so far - have been explicitly excluded from any type of bailout proposal.
Not qualifying for SOH also hurts (most out-of-state speculators - idiots that they are - had no idea they would pay more than the previous owner).
Also, there’s a difference between losing your a$$ on the house you live in versus losing it on one, two, three+ vacant Florida condos/houses you have never seen, never intend to, were never worth what you paid, and never will be. You will walk from the latter much sooner.
Good points.
Agreed. Florida has by far the highest concentration of second homes in the nation. Thus, if taxes, insurance, property costs, etc. get out of hand ppl just flow elsewhere. If they had high paying jobs, or the vast majority actually raised their families there, there would be much more of an incentive to stay. For many there are no job related or emotional ties to the State. Thus, the government has to play this very carefully. Rather, that thinking of ways to gauge ppl moving in, they need to think of ways to attract more to the State.
Tim,
You hit the nail on the head. The investors in Florida have no emotional investment in the state. In areas where people have lived a long time… they’ll hang on a little longer. (Then they’ll throw the keys on the roof.)
The problem with Florida is that its priced itself out of its historical niche as a low cost manufacturing state. In the last few years we’ve read on this blow how Cris-Craft and other boat builders left for the Carolinas or for other gulf coast states. Not much aerospace manufacturing remains in the state (except for some HUGE factories that might have 20 people working specialized welding (laser, spin) or other equipment in one little corner of the building.
But that means hope. Why? Those factories can be humming again if homes within an easy commuting distance ever become affordable to a machinist making $45k to $60k a year. With Europe shifting a huge amount of aerospace manufacturing to the US, I think this puts a nice floor on Florida housing.
About $110k for a 3/2, $130k for a 4bed/3bath. Oh.. you say those homes sold for over $400k in 2005? chuckle.
Got popcorn?
Neil
Hard to believe people would make a major real estate investment and have no idea what their property taxes will be. But, OTOH.
Merrry Christmas Ben.
Ah…for the MSM types here…
Get off your collective butts and wake America up lurkers!
Smiles,
Leigh
HBBers…thank you!
“For MSM types here this morning, it is worth pointing out that the correction is moving much faster in Florida because they are allowing prices to drop and move toward affordability.”
Right on, Ben. Conversely, bailouts and rumors of bailouts have the unintended (or is it intended?) consequence of destroying market liquidity, by driving a wedge between what prospective buyers are willing to pay for clearly-devalued assets, and what sellers are willing to accept for payout when a hoped-for govt bailout might offer them the prospect of a better deal if they hold on long enough.
payouta sale price’state officials trying to prop up the markets with tax money and industry bail-out schemes.’
- HeeHee. Good luck with that, maybe a lucky LepreCON would help that illusion out.
Keep out a weather eye for SoCal, our crackpot US Senators will be leading some hairbrain sure to fail legal bailout of some kind.
“Neither Ryan nor Lennar would disclose the sale amount on the 8,300-lot deal, but Ryan said developers like himself like to pay between $9,000 and $13,000 per Florida lot.”
Does anyone else think this Ryan fellow is chasing the market down? Try $5,000 per lot. And that’s max. More like $1,000.
“Private equity funds financing most of his lot purchases trust him with their cash. ‘That money is looking for an operator,’ he says. ‘And I’ve got the experience.’”
Smooth operator. Here’s some more private equity funding on its way into the vaporizer.
Would love to see the business plan presentation he makes to the PE folks. They’re taking one helluva risk, so the potential reward had better be commensurate.
Business plan in this case should be a pretty easy sell. Buy at a discount and hold relying on the next upturn. He’s counting on being able to build a brand new place at much less than existing prices.
That’s where I think he’s missing the boat . . . when he starts building in ‘09 or ‘10, he’ll be competing with much lower prices on existing homes than what he sees today.
Don’t know what his other holding costs are on these lots, but I would think the PE money would be expensive.
But what’s he going to build? He probably needs to build cookie cutter to make money on those lots, and there’s already enough cookie cutter overhang to last longer than he can — especially if buyers need to save up for a *gasp* down payment. Meanwhile, he’ll have to feed the tax alligator.
If he can get it rezoned….a very very big if” considering the development already done and the obvious intent and If he puts a few goats or orange trees on it, it is ag land and the carrying costs are minimal. Most govt are too money hungry to let that slide.
His pitch is “I’ll use vaseline”
The combination of these lot sales along with the significant decline in both labor and material cost may have a dramatic impact on assessed values of neighboring houses…Sounds like the county purse is going to take a significant hit over the next few years…
Dang Palmy…smmmmoooth a pur a tor (that will be in my head all day)!
Private equity…illiquid investments…yeah, that will end well.
Oh, did anyone school this genius on saturation?
You just can’t make this stuff up!
Leigh
I’m gonna back palmetto up on this…Lots ,depending on area should be in the 1-5k range..no higher. Heck my neighborhood was subdivided in the 50’s and it’s only 30-40% built out.
I watch lots like a hawk and the race was to 5k. Some lots sold but now the demand has been filled and it looks like i am waiting for the next leg down.
How bad did it get ??? I found a five acre lot in a neighborhood i would like to purchase. I checked the historical records and lots were selling for half my salary for all 5 acres just a scant 6 years ago. The lot i like is currently listed at 6 TIMES my annual salary…Now how will this not end badly ???
Chris
Chris,
the difference between you and this “operator” Ryan is he’s playing with opm, you’re investing your own. Makes a huge difference. As Ryan says, it’s a bet. You can afford to be casual and reckless with OPM.
Just curious. Are the lots being bought, and the ones you say are only worth 1K to 5K, “finished” lots, with utilities in place? Or is it just raw, but platted, land?
I am getting this story 2nd hand and the lots are not in Florida but a
A few weeks ago a reliable source said a group of investors from my area purchased a entire tract of lots near Phoenix Az. Said that they purchased the lots for $9,000. per lot with “ALL” infrastructure in place…The infrastructure alone supposedly cost around $30,000. per lot and that does not include the cost of the land….
Those lots which are “near Phoenix” are probably in Casa Grande which is 1 hour south of Phoenix and were selling for 5K five years ago. Still way overpriced at 9K.
This is like saying lots in upstate New York are “Near Manhatten” by the way.
These are unfinished lots. Some of them might have been cleared, but nothing else is in place.
Then $5K max sounds about right.
woo woo i sold my home here in sarasota fl
i was asking 339,000 but took 300,000 and i am otta here!
Kuros, can you tell us, in percentage terms, how much your homeowner insurance went up since 2005? I hear war stories about 100%-plus rises for some single-family homes, but friends in Sarasota say their premiums haven’t gone up much at all. They are about 6 miles from the Gulf (still west of I-75). What was your experience? Did they raise your windstorm deductible?
Bill in Carolina: I live in NW Hillsborough Cty, about 20 miles from the Gulf. My insurance (State Farm) has doubled since 2005. When I bought the house in 1983 the insurance was $400 a year, now it is $2500 per year.
Wait! dude, didn’t you read this?
“‘If you do not have to sell your home, now is not the time to put your house on the market,’ Gericke said. ‘It’s just diluting it.’”
‘It’ll cost me less to walk away than to carry this condo.’
OuroVerde math: chalkboard from school years and then multiply this statement times every over valued city in America including this dumb city in San Diego.
Walk Away you dumb phoney invesculators!
Florida is recourse - if they have any assets, they can’t walk.
Are you saying that a purchase money note is recourse in Florida ??
If this is true, watch out!! Know many, fairly well off NY’ers, who are up to their eyeballs in FL RE speculation. I just thought they’d walk away.
Very few will be allowed to walk away cleanly, simply because of all the fraud in the paper-work.
“Until we chew through that, we’ll continue to mutter along, said Gericke.”
Did anyone see Fear Factor Twins, when the those two funny guys from Chicago had to wade through the pit of cow carcasses with gnarly, huge, raw bones in their mouths?
She means chew/mutter like that, right?
“‘If you do not have to sell your home, now is not the time to put your house on the market,’ Gericke said. ‘It’s just diluting it.’”
Transalation: “I wish people would stop putting their homes on the market. Now I have to actually work for my inflated commissions.”
Alternative translation: “I wish people would stop putting their homes on the market. How am I supposed to be able to unload my five hungry alligators with all of this competing inventory?
The ‘nightmare’ before Christmas, and all thru 2008, NOT a sale was stirring, for even a deadbeat…
But, he tumbed up his nose, as he bid them fairwell, as he mounted his Escalade, and flew off in the night!!!
“Ryan’s calculation is that home builders will churn out new homes again in 2010. He’s got the charts and graphs to buttress his position.
“Private equity funds financing most of his lot purchases trust him with their cash. ‘That money is looking for an operator,’ he says. ‘And I’ve got the experience.’”
I think I should be laughing, but this guy must be totally demented. 2010? How about 2020? And he’s paying Florida property tax on all this useless land? We had another genius like this buy up acerage on Tampa Bay at Gandy Boulevard to build luxury condo high rises and townhouses selling for 800 dollars a square foot. He put in new sea walls, and escavated the toxic land next to a boat repair dump, and put up lots of expensive billboards that look like dream images, and he even put a few pilings into the ground. But where is this masterpiece of luxury living? Nowhere. He paid ten times too much for the land, and now he has to eat it.
As for Ryan’s experience–experience at what? Making a fool of himself? He can stuff his charts and graphs up his buttressing.
I’d like to take a look at those charts and graphs. I bet he isn’t including one plotting median Florida house prices against median Florida incomes over time. One positive aspect of recent events is to explode the myth that private equity is smart money.
“The BIA has just launched a comprehensive ‘Buy Now!’ campaign to educate consumers about the pluses of purchasing in today’s market.”
I looked at the site and went to a couple builder links and was entirely disappointed. If the BIA is going to argue developer costs are lower, developer sales prices need to be lower. The value message and pricing are inconsistent. Today’s buyers are determined to find a deal. Builder gimmickry just pisses them off. As a result, this campaign will fail.
‘The News Press. “Builders are snapping up thousands of lots in Lee County at fire sale prices — and experts say the party’s just getting started.”’
This is an encouraging sign that the free market works very well, provided the govt bailout corps does not interfere and muck up the works.
Do the economists at the Fed realize that bailouts have the “shooting-one’s-self-in-the-foot” effect of gumming up market liquidity?
‘The News Press. “Builders are snapping up thousands of lots in Lee County at fire sale prices — and experts say the party’s just getting started.”’
Contrast the obvious liquidity of this market to that of financial markets in a state of permafrost, and one comes to the rather obvious conclusion that bailouts and rumors of potential bailouts have the undesirable consequence of destroying liquidity. Why would a seller want to drop their sale price to a level where a buyer is willing to pay if they could hold out hope for a taxpayer-funded bailout to offer a better deal?
“…taxpayer-funded bailout to offer a better deal?”
I need to broaden this definition to include saver-funded bailouts. Central banks bail out financial markets by dilution of the value of their currencies through some combination of inflation / devaluation, which is a tax on creditors (including labor, pensioners and bond owners) who are owed moneys denominated in said currencies.
This dilution tax is pretty much the only politically-viable option in the U.S., where generations of R-can pols since Raygun have demonized honest taxation to the point where the mere suggestion thereof is a form of political suicide. But currency dilution is an attractive alternative, as sheeple have no clue about what is happening.
“Veteran Realtor Debbie Gericke…does not expect to see significant improvement in 2008. ‘There’s a lot of unrealistic stuff on the market,’ said Gericke. ‘Until we chew through that, we’ll continue to mutter along.’”
Interesting statement since its December 24, 2007.
Gee, only one week til the turn-around. I’d better buy now!
Awesome! A big knife-catching corporation, Tarragon, losing $28,000,000. Dumb move by buying in 2006. WTF were they thinking? Did they basically see this loss at the onset and just want to write off losses? Gee Whiz!
Of course, my buddy, a Donald Trump wannabe, would say that his condos in Biscayne Bay and another place keep going up in value. He has been drinking kool-aid for quite awhile. He’s probably 90% into real estate.
“Condo converter Tarragon Corp. of New York just unloaded the 311-unit Floresta Apartments in Jupiter ….Tarragon bought the complex for $83.95 million in February 2006, just after the condo boom ended. It sold the apartments this month for $60.25 million, according to property records.”
At the new sale price, each condo averages to ~194K. Isn’t that still quite expensive? Somebody caught 311 falling knives.
“The weaker job market is good news for employers like Rex Kirby, head of Suffolk Construction in West Palm Beach. A year ago, contractors complained they couldn’t find enough quality workers for projects. ‘We’ve seen the caliber of people available going up dramatically,’ Kirby said. ‘That’s an upside.’”
This leads to an interesting question. Many illegals and unskilled workers still had employment in the construction industry due to insane demand and limited supply of skilled laborers. As these workers are no longer needed, one would expect crime to rise dramatically as they have to get money somehow. I would expect that this would be disasterous for all those that bought in marginal “up and coming” areas. While you give ppl jobs there is some stability in these areas, but as they are laid off and struggle to survive the resentment against those who still have good jobs grows, and I would think its open season on those pioneers. Any reports out there yet about growing crime rates and areas becoming war zones? I have seen some on vagrants, crackheads etc. moving into vacant homes, but im more interested in reports on how low income areas are doing with increasing lay offs.
Interesting that you mention crime. The MSM refuses to tell this story. Here on LI, home invasions have been on the rise for the past year. Nationally, there has been a substanial jump in bank robberies. At the same time, local politicians are influencing the DA’s and Judges to lighten sentences which, of course, just perpetuates the problem. Mark my words, CRIME will become a major problem in 2008.
I agree. The distribution of wealth, and the distinction between hope and dispair, both have a dramatic impact on crime statistics. It’s going to be a major issue in upcoming years. Those that bought in marginal areas will be on the front lines.
There was a reason there were bars on the windows that the flippers took so much time to remove to make the home look warm and inviting to marks. Over the next few years much more time and money will be spent putting bars back up. They were not put their for aesthetics. They were put there for necessity.
In Arizona starting in 2008 the citizenship of workers have to be verified. Many illegals have already left AZ. By now there should be a mass exodus. They are going into the welcome leftist arms of California and New Mexico liberals, much to the chagrin of the few leftover taxpayers in those states.
Don’t forget Massachusetts. The govt is waiting to provide a warm wlecome. Free healthcare is included.
5 years from now Detroit will look like paradise to people in southern California and Phoenix if that gives you any indication of how bad things will get.
–
The News Press. “Builders are snapping up thousands of lots in Lee County at fire sale prices — and experts say the party’s just getting started.”
Price Per SqFt (Source: Radar Logic)
01/20/00 $74.09
05/15/06 $208.48
10/19/07 $185.13
Prices went up 181.4% and was only down 11.2% as of 9 weeks ago.
Yes, the Crash party has just started.
Jas
–
The data were for Miami Metro.
Jas
“Traffic dropped on a half-dozen major Lee County roads last month compared with November 2006. ”
- I drive to a lot of job sites and customers here in SoCal. The traffic has dropped significantly in the last year. When you subtract all of the construction workers it really clears out the local traffic.
My favorite ‘leading indicator’ is the local mexican eatery in Redondo Beach called ‘El Burrito’ on Pacific Coast Hwy. I have to pass it continually on the way to the Palos Verdes area. The construction, landscapers, painters, drywallers, plumbers etc used to form a line at 9am - not anymore. One day there were only 3 people in line at 12 noon.
There’re plenty of bargains to be had in Miami these days. Mostly foreclosures where the banks got realistic. Usually around 40-60% of from bubble prices for single family homes in less desirable n’hoods.
The fancy houses in Coconut Grove, Coral Gables and Pine Crest are much stickier on the way down. Losses are pretty much contained to around 10% so far. The $5+ million market is still booming, prices are still going up. The most blood letting will come from condos. So far the losses have only been in the 20-40% range. But there’re still 20,000+ units under construction that will hit the market in the next 12 month or so. 50-story buildings just take a few years to put up. They’ll be lucky if they get 25 cents on the dollar in the end. Most bag holders are walking from their 20% deposits or sueing the builder to get a refund. Even if they win…you can’t squeeze blood from a turnip. Builders are broke.
The tax code further aggravates the situation in Florida. Taxes can only rise 3%/year on your primary residence. So revenue increases by the state rest entirely on new home owners and professional landlords. So it is entirely possible that on 2 identical homes, which sit on identical lots next to each other one owner pays $2500/year while the owner that bought in 2006 pays $12000/year. They want to change this because it chockes off the market. The problem is that is has to be voter approved due to the Florida constitution. Are the long time residents are going to vote themselves a big fat tax increase? I doubt it.
As prospective new home owner in FL, besides inflated prices, you get to pays inflated insurances rates and inflated taxes. You’re really paying the taxes for all the people that been living here for a while.
You have to be a fool to buy property in the God forsaken state of Florida. While we may never run out of fools, it looks like we ran out of fools with money.
Merry X-mas everybody.
Save our homes, the great FL ponzi scheme.
Another hour and I’m off to O’hare. Can’t wait to beat the 20 degree weather here!
My dad just bought in Ft. Lauderdale, after I held him off of doing so for over 2 years. Finally he purchased, and after about 3 weeks of research, it seems like he did get a reasonable deal. Being legally blind, there are only about 10 specific locations that he can vacation at without assistance (and he visits Florida about 4-5 weeks a year total, but his family visits much more). He purchased at about a 35% haircut from 2005’s price (same owner). I think there’s room to fall, but I’ve watched the market in his specific areas, and the budging isn’t very quick. There isn’t even much for sale in the area (Intercoastal canal, near groceries and restaurants, with parking). Considering he sold his previous property in 2004 (or 2005) and made a killing, he picked up a better property at less than he sold his previous place for. At this point, even if his property falls to $0, he’ll still be ahead just on the profit he received in the previous sale — and upgraded to boot.
I, too, am looking at Southern Florida for a residence, but I’m in NO rush. I’m not as particular about location, since I’ll leave a car down there. I’d love to find something within 3/4 mile of the beach, but for me amenities do mean everything. I do a little work in Miami, but my wife loves Florida over the cold Chicago winters. Still, I’m not seeing much dropping more than 25% from peak — and we’re sitting and waiting. I can wait forever, since I could theoretically use pop’s condo, but we entertain guests a lot on trips, so having our own place makes sense.
I’m amazed at the JUNK that _is_ available. New construction condos look terrible. I go to about 1 auction in FLA every 45-60 days, and no one is budging on the prices. My last auction I was the winning bidder in Boca Raton at 65% off the MINIMUM price they were looking for. Of course they passed and took 3 weeks to return my deposit.
I think FLA will really get creamed after the retirees start dying off. Almost _all_ our friends our age have left FLA for the Atlanta area, and I can’t name one person I know with kids down there who hasn’t run away like they were on fire.
Anyway, Merry Christmas to all, see you next year. Here are some gifts for everyone to share:
1. “They’re not making any more land” T-shirt.
2. “Housing always goes up” toilet paper.
3. “NINJAs aren’t just for Japanese anymore” calculator.
4. “Why throw away money on rent” paper shredder.
5. “But I thought the 1% rate was fixed for 30 years” Kleenex box.
6. “It’s different here!” bandana.
7. 1 free subscription to brokeroutpost.com
8. 1 barely used Real Estate agent gold jacket.
9. Print-your-own car magnet to let your friends know you sell homes.
10. Instant-appraiser spreadsheet: enter how much you want the house to appraise for, and it will fill in the blanks for the proper values of amenities.
11. 10% coupon off your property tax bill if you pay it in full 1 year in advance.
12. Ho-Ho-Hoa Homeowner’s Association Approved Lawn Santa Claus, in Pantone Red to meet strict rules and regulations. Please take it down by January 3rd. Not responsible for any fees if you forget.
Please, friends, keep your housing market opinions to yourself at your family’s dinner. It isn’t their fault that they didn’t read the fine print, didn’t understand basic economic rules, didn’t realize that their neighbors were more broke, didn’t know that owning means maintaining and taxes, didn’t realize that it’s not OK to own 4 properties, and didn’t listen because you’re not hired by the media who makes a big income from realty ads.
It’s ok. Things will get better. If we’re lucky, we’ll all own 4 houses — paid cash, 80% from peak, perfect to rent since you bought them at 80X rent.
That was actually pretty funny.
A.B. Dada wrote I’m amazed at the JUNK that _is_ available.
I was in Phoenix over the weekend. Here in Baltimore all morning. Well just an hour ago I looked up on the wall from my kitchen to the hallway. There is a crack 7 feet from the floor that is about 1/8 of an inch thick at the widest. It was not there before I left for Phoenix. I phoned it into Maintenance and also the apartment management. Also noticed cracks in the ceiling of my bedroom. Not sure how long they were there. Out in the hall by the elevators I noticed a few cracks in the ceiling. Maintenance phoned later and said a contractor will be looking at the building later this week. He did mention that the temperature variations could cause the crack. I agree, but still the bottom line is this shouldn’t have happened. 2002 construction. If done properly, I doubt the cracks would show. Now I’m wondering if the cracks appear every year and they just cover them up with paint? I’m glad this is only a rental. Other than that, this is a great apartment - one of my best I ever rented. Very quiet, near I-95, and the right commute direction to work, like against traffic. Takes me less than 25 minutes for the 15 mile drive, and the most time consuming part is local traffic lights at both ends.
‘Comment by crisrose
2007-12-24 08:44:32
I think Florida is correcting faster because most of the run-up was caused by out-of-state non-resident speculators who - so far - have been explicitly excluded from any type of bailout proposal.
Not qualifying for SOH also hurts (most out-of-state speculators - idiots that they are - had no idea they would pay more than the previous owner).
Also, there’s a difference between losing your a$$ on the house you live in versus losing it on one, two, three+ vacant Florida condos/houses you have never seen, never intend to, were never worth what you paid, and never will be. You will walk from the latter much sooner. ‘
True..you will also walk away from a huge montly negative cash flow on investment property you don’t live in with zero equity. Most speculators didn’t stop with just one new construction and were told keep it empty when trying to sell and get top price as a new never lived in unit. The shortage of end users for all these vacant high end condos all along Florida coast and the secondary overbuilt housing markets especially in the SW part of the state is quite different from the large metro areas of this country where people actually live in their homes, work and raise their kids in the community.. Then add in an undiversified local economy with too many jobs and local businesses driven by housing construction and it was a recipe for disaster when the boom ended.. Ben you should know this had little to do with local government invervention if you are writing a book on the subject..
I don’t think you are reading what I posted. And I don’t believe you know everything about Massachusetts’ efforts to prop up house prices. They pooled together $100 million from lenders for some kind of foreclosure fund. They have a moratorium on foreclosures. They are actively trying to force mortgage rewrites. Hotlines, threats of legislation/class action lawsuits against the industry. None of this is being done in Florida. So my point is, Florida is taking the wiser path than Mass.
And don’t you see how this might make the public in Mass. less receptive to cutting prices than people elsewhere? They do have a much more receptive view toward government intervention.
I don’t post a lot of this stuff because this isn’t a prop-up-housing blog.
Ben -
I have not seen a thing out of MA about a ‘moratorium’ or ‘freeze’ on foreclosures being mandated by the state. Bottom line is that if the state tried that, the courts would enjoin it in a nanosecond. (Taking of property interests without compensation, etc.)
BUnch of governors in several states were making the ‘please Mr. Lenders won’t you slow down the foreclosure process and try to work out the loan?” nosies a few months ago but begging the lenders to be nice is a far cry from freezing the foreclosure process.
Bizjournal for MA has never mentioned anything like that.
All that seems to be going on is this:
Banks do a fund to refi ONLY those with good credit, equity and documented loans (all those pesky details about earnings, assets, income….)
http://www.bizjournals.com/boston/stories/2007/12/17/daily45.html?ana=from_rss
AG sues a couple of subprime lenders for deceptive practices
http://www.bizjournals.com/boston/stories/2007/10/01/daily63.html
http://www.bizjournals.com/losangeles/stories/2007/10/01/daily43.html
AnnScott,
A few months go this happened in MA. No reaction from our enlightened judges.
==============================
[Governor] Patrick ordered state banking regulators to seek delays of up to two months in foreclosure proceedings against homeowners who have filed complaints with the Division of Banks.
The governor’s move should halt the foreclosure clock now ticking for thousands of Bay State homeowners, said national housing activist Bruce Marks, head of the Neighborhood Assistance Corp. of America.
‘The News Press. “Builders are snapping up thousands of lots in Lee County at fire sale prices — and experts say the party’s just getting started.”
Price Per SqFt (Source: Radar Logic)
01/20/00 $74.09
05/15/06 $208.48
10/19/07 $185.13
Prices went up 181.4% and was only down 11.2% as of 9 weeks ago.
Yes, the Crash party has just started.
Jas ‘
Well in the real world in Cape Coral you’ve got newer 1500 sf homes selling under $100k and building lots for $12-14k. These are back to 2002 prices already… The homes priced to sell are now down over 50% and lots over 80% from 2005 peaks. Scary it ain’t over yet with all the inventory still to be moved and foreclosures down the pike another 12+ months..
Ben when people are living in their homes and the economy is diversified with near full employment and there is little speculative new construction in the area the process of price adjustment takes much longer. Yeah maybe it helped a little in MA but notice neighoring New Hampshire even today has near the lowest ratio of foreclosures in the country. Explain to me why prices are down so much more and so much faster in percentage terms in the overbuilt areas of the inland empire and metro Sacramento than the more built out areas closer to the bigger cities of California..
Same thing in Florida. I saw prices for workforce housing already down 30%+ by late 2006 in Ft Myers area where as urban areas in Orlando, MIami and Jacksonville with a more diverse job base and much less new construction of workforce housing had barely budged from the top at that point.
I saw this in California in the 1990’s. The ritzy areas weren’t really hit in 1993 (e.g., ‘Westside LA, Redondo, PV, Santa Monica). By 1996 they were down 40%. Its just a time lag. Florida threw away their diverse job base in this boom. Too much of the state is dependent on Real estate revenue, sales to real estate companies, insuring real estate (e.g, Jacksonville), tax revenue off real estate, cars and other toys bought by realtors, etc. That stable job base you referred to was Florida’s low cost manufacturing. Much of that fled to the Carolinas or other gulf coast states.
Or didn’t you notice Miami is one of the hardest hit markets this downturn? And the closer in cities of California are at 11X incomes… they’re about to see some interesting job flight.
The IE, Lancaster, and outer cities always lead the downturns (this is the 3rd I’ve seen and the cycles have gone on in California since 1849…)…
As for Jacksonville:
15,848 homes for sale.
No update on ziprealty’s market conditions (always an indicator of a declining market):
http://ziprealty.typepad.com/marketconditions/jacksonville_real_estate/index.html
3rd quarter data shows that the $/sqft for Jacksonville is down quite a bit. So how can you use this as an example of a non-declining market?
http://www.dqnews.com/ZIPFLJACK.shtm
Jumbo loans are getting tougher. In a year from now, they’ll be back to historical under-writing. Then you’ll see those core areas go…
Got popcorn?
Neil
“Got popcorn?”
No wonder, the corn prices have gone up more than 50% in the last 1 year, as the housing market started tanking.
‘3rd quarter data shows that the $/sqft for Jacksonville is down quite a bit. So how can you use this as an example of a non-declining market?’
I said it had not declined much by late 2006. This year is a different story.. Forget published figures by realtors too. Find distressed REO’s for sale on Zip Realty then do the due diligence for what it or a very comparable property in the hood sold for at the top two years ago to get an idea where we are going in the near term.. If you can find published reports that parts of Lee County are down near 55-60% which is the reality instead of the 20-30% median drops the media pimps keep telling us is the case so far I’d love to see it. I need some popcorn myself cause so many stats out there are very misleading on the way down..happy holiday
Visiting the sunny state of FL this month and did some checking on the local housing market 2 miles from the Gulf beaches of Anna Maria Island.
1. Confirmed that an elderly couple accepted $250k for a house asking $450k last spring. The buyer was a UK investor.
2. A nearby property is being sold by a bank REO, asking $270K.
3. Similar houses still asking $379k to $449k wishing prices.
4. One is available for rent at $1,200/month
5. My estimate is that property taxes, insurance and hoa fees total about $900/month
6. How can you expect to get $400k for a house when the asking rent barely pays the operating expenses, let alone the mortgage?
I think Anna Maria is where the couple who had the “house plans” blog on the New York Times website are building. There actually are some parts of the island that have a pre-bubble, old Florida feel to them. Of course, the couple is building a hideous, ego-driven McMansion.
how can i get table showing prices of homes at various times for various cities ion florida?