Will The Irony Never End In Florida?
The St Petersburg Times reports from Florida. “More than a couple of e-mailers to the newspaper can’t discuss the recent housing plunge without cackling with pleasure. They’ve got some support for their schadenfreude. In the past 18 months, the Tampa Bay area’s median home price has dropped 21 percent, from $239,600 to $189,100.”
“Naples, where median prices topped $500,000 in the fall of 2005, watched prices plunge to $415,000 a year later before shell-shocked Realtors stopped publishing the data.”
“But don’t expect a steal of a deal on every block. Subtract the speculators and inflation runs about 3 percent a year. Incomes have climbed over the years in Tampa, albeit slowly. Tens of thousands of people are locked into homes bought at boomtown prices. They won’t give away their money without a struggle.”
“I have a name for house hunters counting on a return to 1998 prices: lifelong renters.”
The Orlando Sentinel. “With four mortgages and six mouths to feed on one shrinking paycheck linked to the weakening Florida real estate market, Amy and Randy Rainey need to make dramatic money moves fast. Like a lot of families who were swept up in the real estate boom, the Raineys are faced with a need to sell some assets at a time when property values are falling.”
“And their situation is compounded because Randy is a construction worker who has seen business drop off sharply. ‘We need a way to survive and it looks like we have no options,’ the couple wrote in a letter requesting a Money Makeover.”
“Central Florida’s economy will be tested in 2008, and the battleground is close to home — in fact, is the home. Home sales, home construction and all the ancillary businesses and job generated by both, will shape much of the outcome of this pivotal year.”
“The trend lines coming out of 2007 are not good. ‘The eagle has now become an albatross around Florida’s neck,’ said Orlando economist Sean Snaith, director of the University of Central Florida’s Institute for Economic Competitiveness.”
“Central Florida’s housing market will continue to snooze and wait in 2008. That’s the sober forecast from a number of local experts, including Frank W. Herring, one of the area’s veteran community developers.”
“‘We have a lot of inventory to work through,’ Herring said. ‘We’ve built more houses than we need.’”
“He predicted that, at least until 2009, the region’s home markets will see ‘lower prices, slower sales and more multi-family rental communities.’”
The Palm Beach Post. “For the second quarter in a row, Ameribank, which has an office in Palm Beach Gardens, received a two-star problematic rating from Coral Gables-based BauerFinancial.”
“Troubled loans at the bank showed no sign of easing. They increased from 11.2 percent of total assets at the end of the second quarter to 24.5 percent of total assets at the end of the third quarter, or from about $15 million to about $33 million in a three-month period.”
“Bank spokesman Tom Hartman said Ameribank’s problems stem from making one-year home improvement loans to investors who would renovate a house and then ‘flip’ it for a higher price to a seller in a short time.”
“Hartman said the practice only worked in a booming real estate market. As the real estate market declined and house prices dropped, the flippers were unable to make a profit on the houses they renovated, he said.”
“‘We made a bad investment,’ he said, but added he is confident Ameribank can work through its problems and persuade many borrowers to pay back their loans.”
“It seemed a good idea at the time: rent their house because the market wasn’t yielding buyers, and then move on with plans to move on with life. But it backfired because of delinquent renters and artificially inflated home valuations.”
“Now, facing foreclosure, David and Yvonne Hill are willing to sell the house they’ve owned a dozen years in Royal Palm Beach for just about anything - a short sale, as it’s known.”
“The Hills saw an opportunity in rising real estate values to use their home’s equity to pay for life’s surprises. Despite having bought low and long ago, the market fall still left them in a lurch because they speculated on the boom too - in this case, after they had bought the house.”
“‘We gambled on the fact that the house value would go up,’ David Hill said. ‘They dangle this money in front of you, and you need this money. It’s like a downward spiral once you get stuck into it.’”
“The house went on the market in early 2006 for $380,000. All year, not a nibble worth entertaining came in,They found renters who signed a two-year lease for the Royal Palm Beach house.”
“But the Hills never ran a credit check on their tenants. The future unfolded badly from there. Rent came late and only twice. Code enforcement visited a few times. The Hills tried to evict the renters, but it took months for that to go through.”
“Now the house is for sale for $248,000. Real estate agent Marianne Cojocar said she showed it about a dozen times in December. ‘The market is really soft,’ Cojocar said. ‘It has nothing to do with their house.’”
“During the housing boom, home builder Standard Pacific snapped up commercial land to build townhouses. Now the troubled builder is dropping those projects and selling land to - will the irony never end? - commercial developers.”
From Florida Today. “Regular customers of Mark Kirschner are accustomed to having the owner of Melbourne’s Magick Movers regale them with classical arias while moving their furnishings. Kirschner doesn’t have much to sing about these days, however.”
“‘People are staying put,’ Kirschner said.” “With the housing slump, Kirschner knew that many people wouldn’t have need for moving services. But he thought at least some customers might need a mover for help with downsizing. It hasn’t happened.”
“‘We expected a lot of moves from houses into apartments, but we haven’t seen a lot of that, either,’ he said.”
“‘In 18 years in the business, I’ve never seen it like this,’ said Chris Foti, dispatcher for Suddath in Palm Bay.”
“At Brevard Movers in Melbourne, manager Doug McClure seems to be fielding as many calls from job-seekers as from customers. ‘We get a lot of calls from people looking for work,’ he said. ‘The problem isn’t just in Florida. It’s everywhere.’”
The News Press. “Supporters say it’s the magic ingredient that will put back the fizz in Florida’s stagnant real estate market, and ultimately, the state’s economy. Portability, the catchphrase in Florida’s latest taxpayer revolt, is the great unknown.”
“But critics say the theory is shaky at best. Portability applies a solution to the wrong end of a real estate transaction, said at least one expert.”
“‘If the market is depressed and there are homes for sale and nobody’s buying them, you can’t simply expect that offering more homes for sale will make a difference,’ said veteran Florida economist Hank Fishkind.”
“Fishkind isn’t a professional pessimist. He predicted in August the real estate market had already bottomed out and was showing signs of a turnaround. He has since revised that prediction, in light of the subprime mortgage lending crisis, and now predicts the turnaround will begin later this year.”
“Most of the media attention related to the real estate debacle focused on stratospheric pricing, speculator greed, unfair tax burdens and an insurance crisis, creating what some would call the perfect storm.”
“I’m convinced the cleanup will take longer than most category 5 hurricanes. I believe the reason, and the one most often swept under the rug, is the egregious debt level of most individuals and families.”
“I recently asked an owner who was losing his house how the job market looked, because he said he was out of work. His reply, as he took a drag of his $4-a-pack cigarette, was ‘nothing has come my way.’”
“Remember the ads: No money no problem, bankruptcy OK, repossessions, ‘Come on down.’”
“There used to be a stigma against bankruptcy. Your signature was something you took pride in. People that get ahead in life have, and keep, good credit. They do not have credit card debt. They do not buy ‘toys’ unless they can pay cash. They understand depreciation and inflation. They save 10 percent a year. They have a rainy-day fund. More importantly, they defer gratification.”
“The glut of available homes in Gateway has increased the need for Realtors to prevent cases of TMI — too much information — among home shoppers, according to Jennifer Buffington, a Realtor in Fort Myers.”
“Q: What advice do you have for sellers?”
“A: Lower the price or take it off the market. Think like a buyer. If you were out looking for a home to buy, you would try to get the deal of a lifetime. Most sellers are also buyers — once they sell they will most likely become buyers. It’s a buyer’s market. Think like a buyer.”
“Construction of the 104 Prentiss Pointe coach homes in Phase One was completed in July, said Mark Naumann, president of the Fort Myers-based Carlton-Naumann Homes, the development’s builder. He said work on the 36 homes in Phase Two is slated to begin in the second quarter of 2008 and be completed by the third quarter of 2009.”
“Sales have gone well at Prentiss Pointe, especially after prices were reduced over the summer, according to Patti Testa of Coldwell Banker, the listing agent for the development.”
“First-floor residences now start at $339,900, down from $399,000, Naumann said. Second-floor units…were as high as $489,900 roughly one year ago and now sell for $389,500, he added.”
The News Journal. “Home builders and city officials in the Volusia-Flagler area are riding out a slumping real estate market in hopes demand for new homes increases some time this year. ‘Obviously, we all hope the market will get better,’ said Bob Razler, president of Orleans Home Builders’ Florida division.”
“‘We’re hoping for a couple of hundred homes coming in, but I don’t know if that will happen,’ said Mark Rakowski, New Smyrna Beach’s development services director.”
“Razler said Orleans’ inventory peaked around July 2006, but has been worked down a bit since then. It will take increased demand from buyers to lower inventory levels much more. ‘I would imagine inventory levels will stay elevated through 2008,’ he said. ‘We just have to get used to lower levels of demand, and we’ve done that by cutting our overhead.’”
“‘We’re still seeing a lot of construction going on, but I don’t know what to expect,’ said Dale Arrington, DeLand’s community development director. ‘I think probably we’ll continue to hold steady because we’re still permitting new houses and new subdivisions.’”
“‘Certainly, sales are down . . . and margins are less,’ said Jerry Johnson, CEO of The Johnson Group and developer of the Venetian Bay community at New Smyrna Beach. ‘We’re not eating filet mignon, and maybe we’re eating chopped steak, but at least we’re eating.’”
“Johnson said sales have dropped from five or six units a week during the ‘crazy period’ to two or three units.”
“SeaGate Homes, which builds in Palm Coast, Daytona Beach, Edgewater and St. Augustinem has been successful because of its ability to offer a lot of value and to be flexible in its pricing, said Mike Sawdai, VP of operations.”
“‘A lot of builders have come and gone in this market,’ he said. ‘But we’re a local builder, and we really try to focus on affordability and quality.’”
“SeaGate will build more spec homes once it determines what the market will be able to accommodate. SeaGate has models that start as low as $99,900, not including a home site. And the company, which recently bought additional land in Palm Coast for future development, has some lots under $30,000, Sawdai said.”
“‘We’re optimistic we’ll be able to sell more homes in 2008,’ he said.”
To the DC-area HBBers:
We will have our first outing tomorrow, Tuesday 7pm at Capitol City Brewing Co on Capitol Hill (2 Mass Ave NE). More details are in the BitsBucket, please post any followups there.
let me know when the party comes to N VA
DC is Northern Virginia
VRE to Union Station, there you are.
“I have a name for house hunters counting on a return to 1998 prices: lifelong renters.”
I have a name for FB’s waiting for prices to go back to 2005 levels: lifelong debters.
1998 prices are too high. I can wait.
1998 prices too high? Where are you located? You might want to just relocate
I’m not the OP, but I’m an apartment dweller in the DC area. My rent + utilities is 25-45% what my friends and coworkers are paying for PITI for the houses they bought in 2005. I make more money than most of them, as well. I’m saving way more than 10% of my income annually, and much of that comes from paying low rent.
(25% is completely accurate - I pay $1300 for 1000 sq ft with utilities, while a friend pays $5000 for a 1700 sq ft SFH plus utilities, the results of an exotic teaser rate option ARM.)
I can’t predict the future, but I’m currently not the slightest bit interested in buying a house unless you’re showing me 1998 prices. If we never get there - fine with me. See above. I’ll retire young while the rest of my demographic works until they’re in the grave trying to afford the house they bought way back in 2005 (or maybe 2008?).
Part of me agrees that 1998 prices are too high - compared to the financial freedom of renting. The first house I buy might be my retirement home in some tropical paradise, and pay cash. It might not happen for 20 years, but that makes my retirement age 47. Someone please pity this poor apartment renter! Price me out forever? Yeah right.
The disparity between rent and mortgage is IMMENSE. 1998 home prices would be a good start.
Hear, hear. I’m in the same situation in Boston. I’m paying almost the exact same in rent (1350). My wife met a couple this weekend paying 3 times that amount per month to “own” an almost identical unit. That adds up.
I’m paying $1200 a month for a 4 bedroom apartment in Watertown. It’s going to take quite a price haircut for us to be convinced to buy a place.
Think of how those rent vs. buy calculations look in Florida, where many people are only here 4 or 5 months. Rent a condo on the water for four months at $3K/month ($12K/year), or buy it for $5K/month x 12 months = $60K/year.
We haven’t even discussed the upcoming WTF(?) insane interest rates. Those FBs will be wishing for even 1998 prices they’ll be so underwater.
Hmm, as someone who is looking to buy a condo in FL (I know, no bashing until I explain later on), what I have seen is this: $1100 - $1200 a month on the low end to rent a beachside condo in Daytona Beach, and about $180K - $200K to buy one on the low end. At $180 to $200K, mortgage + carrying cost maybe about $1700 - $1800 per month based on my FICO, not taking into account any tax deduction from interest & tax.
If I can find a beachside condo selling for more than 50% off the prices 2 years ago, I am interested. If I see 60% off, then even better. For times not there, rent it out to vacationers. I just spoken to someone who sold his condo in South Beach in 1 day by pricing more than 40% off the average asking price in that neighborhood, which itself is off from 2005 prices for a more than 60% off in total. So I think if the price is REALLY, REALLY good, there are still buyers out there looking for such opportunities.
Your research appears accurate, and if you get the prices you are looking for, I am sure you will be OK. But they won’t be the bottom.
“Your research appears accurate, and if you get the prices you are looking for, I am sure you will be OK. But they won’t be the bottom.”
Overall, this is not the bottom by any means, I agree. That’s why I am short several thousand shares of RYL and Hombuilder ETF since last spring. So on one hand I am interested in buying a FL beach condo if discounted more than 50%, but on the other hand I have a big bet against homebuilder stocks. Contradictions indeed.
let’s compare a ‘lifelong renter’ with a ‘lifelong debtor’
renter:
can move with 30 days notice.
can save the difference between rent and mortgage each month
can save the money not spent on a new roof or appliances
debtor:
-moving involves finding real estate pimps, listing a house, praying someone looks at it, and continuing to pay for an empty house until it sells, and then going through a bartering ego-fest if someone actually wants to buy it.
-if you tough times hit, you can’t move somewhere more affordable and will either have to live horribly or declare bankruptcy
-you get to flush more than the cost of rent on interest payments alone
-you get to spend $18,000 just to let johnny the realtor find someone who will buy your house
tough choice.
I’m paying USD 1300 a month to rent a 2000 sq ft 4/2 SFH. Any home-moaners buying an identical house at the going price of USD 450k with a 9.19% teaser rate 2 year fixed ARM would have PITI over USD 4000. Even the 1998 price of USD 180k would be 138 months rent. I’m waiting for a price of 120 months rent or less.
In 1998 I was living w/ a group that jointly paid $2500/mo for a sizable house that then went on the market for $595,000. This shows that 1998 prices were already too high, relative to 1998 rents. Today that same house would possibly rent for $3000 but would be on the market (if at all) at $900K or more. The 1998 price ($595K) would still be too much, relative to rent.
Was that your San Marino house?
At 20 times rent, that’s way too much. My sister’s house in Princeton, NJ rents for $4,500 a month currently and is worth about $750,000 for almost 14 times yearly rent, which is a little high by traditional standards but for that zip code & school district, not so bad (they bought in 2002). Trenton, NJ, on the other end of the spectrum, is 6-8 times the yearly rent, but you need a bullet-proof vest just to go collect your rent.
“I have a name for FB’s waiting for prices to go back to 2005 levels: lifelong debters.”
Oh, that is just too good of a comeback. Bravo.
Technically not correct. Their debts will attach to their estates. One other great aspect of this is that hopefully we will not see as many spoiled trust fund kids. While it was annoying to hear ppl tell us how brilliant they were from buying when they did, seeing such windfalls passed to lazy, spoiled kids would have been much worse.
I still love you Paris!
1998. 1928. 1958. What is the significance of 1998? Pick any flat year, add 3%/yr up to 2007 and thats all you’re gonna get. Why? Because that’s all its worth and even then, I’m not interested unless you’re already down for the count.
“You can say we’re neither California nor Massachusetts, so those rules don’t apply to us. True. But neither are we Flint, Mich., or Midland, Texas, where our fortunes are tied to the fickle fortunes of an automobile or oil industry.”
He’s correct. Luckily, St. Pete is tied to the more stable industry of realestate speculation.
lol
I like how the REIC loves to take jabs at rentors… but at the same time is screaming there are no sales as people cannot trade up do to the inability to sell their previous home.
Until homes become affordable based on local incomes… we will have prices drop. Wait for 1998 prices? Not me. Oh, they could get there… But wait through 2008 and 2009. We haven’t even begun to see price declines. Bottom? Much later.
As others have already noted, its possible to save more as a renter than as an ‘owner.’
Got popcorn?
Neil
Notice that Ben rarely has an article written for the So Florida reader (Broward and Miami-Dade counties). There the markets are falling slowly, but still resistent. There not building anymore land, are they?
being in south florida, it is going to get worse because people wont drop the prices and no one is buying. this year many housing projects are being cancelled or scaled down. there is alot of land in miami dade and broward, but not in the best neighborhoods. sooner or later, prices will drop slowly as more inventory and lower-middle class families continue to lose homes. the only way miami can hang on is immigration and the elephants want to shut down (legal) immigration.
Get Real.
No there is no need for more land in Miami-the comprehensive development master plan once again this year stated that there is plenty of urban infill land left so that no westward expansion for building will need to be even looked at until 2015. And they didn’t even consider that there are some 50K condos languishing empty in the downtown area and foreclosures abounding in the sprawl areas(1 in every 30 homes according to a realtor friend).
Prices are dropping and houses are sitting empty-take a drive down to south dade and look at all the empty (of people) subdivisions.
The house across the street from me is empty and in foreclosure,another is down the street,and three houses for sale on my block in the past month.
TWO houses have mysteriously burned in my parents upscale neighborhood in the past month.
A friend from work has FIVE foreclosures in her neighborhood and another friend has seen three families move in the middle of the night from his NEW development and leave their homes empty.
Yeah, its different here, if you are a fool.
“I have a name for house hunters counting on a return to 1998 prices: lifelong renters.”
Just to funny. Already a 21% drop and now we are going into a recession and the Tampa area’s foreclosures, and homes for sales continues to climb.
I have a name for people like him, ‘out of work in 2 years because he was an idiot’.
Do you suppose these crack pots really believe that if they repeat the same thing over and over again it will come true? Not going to happen homeboy.
“I have a name for house hunters counting on a return to 1998 prices: lifelong renters.”
I give that answer a C+. Other, acceptable, and preferable answers, would have been (A) intelligent, (B) informed, (C) knowledgeable about economics and history, (D) early retirees, (E) visionaries, etc., etc.
I believe the reason, and the one most often swept under the rug, is the egregious debt level of most individuals and families.”
“I recently asked an owner who was losing his house how the job market looked, because he said he was out of work. His reply, as he took a drag of his $4-a-pack cigarette, was ‘nothing has come my way.’”
- You have to understand that JoeJuan Sixpack needs things to “come my way.”
He is not a self astarter, his steady diet of TV tells him what he deserves next.
What a waste of $4 a day as well as $$$$$ for future health problems. I heard cigs could oneday go to $10/pack in order to encourage people to quit smoking, they simply won’t be able to afford it
Mind your own business. Some of us are glad to be able to buy cigs in NM for $1.20 per pack. Our health becomes your business only if the govt subsidizes health care, which we wish it wouldn’t. (That’s what drives up the cost.)
Well, if you have health insurance paid for by an employer, then you ARE driving up the health care costs of others. Do you think you live in an isolated bubble and have no effect on others?
“Do you think you live in an isolated bubble and have no effect on others? ”
That thinking is all part of the warped mantra of “I got mine, piss on you”.
Wrong again. Monopolies drive up costs. And HMO’s have a monopoly.
How do HMO’s have a monopoly? Are there no PPO insurers, indemnity insurers, or other HMO’s? And if there are, these are competitors, which are kind of required to be missing in a monopoly.
“How do HMO’s have a monopoly?”
You’re joking right?
Many of the uninsured smoke and get their healthcare on an emergency basis (not) though the local ER. Ave collection rate from the ER is 40%. The ERs are subsidized by those who have insurance (higher fees) and by the county
governments and state…esp in the county hospitals. Tampa general hospital is only one such example.
Translation of medical jargon.
HMO really means “helping make obituaries” or “has minimal options”.
If people quit smoking at $10 per pack where do you suppose the tax they collect on the $4-9.99 will come from? This is a cash cow for the tax collector and they may squeez the smoker for more but they will be loath to have him quit for loss of money. Yea people smoke and they do alot of other stupid stuff that may impact the cost of health care. How about a tax on human procreation?……….the source of many of the worlds problems.
Non smokers with a “longer” life expectancy are much more likely to tax the health care system for many more of thier golden years. I personally won’t mind quitting like my grandma, at 78 she took on alzheimers and forgot she smoked. Went for another 5 years. Not a bad run.
Cigs are $10 a pack in Canada, and a lot of people, especilly kids smoke.
I’m thinking back to Colonnade days in high school, and standing around in groups between classes “hot-boxing” cigarettes. Yecch.
However, having said that, I must say that it’s inconceivable to me that anyone in Canada smokes, since it is a well-known fact that Canadians would never do anything to harm health or environment, unlike Americans.
Imagine if your addiction costs $400 an ounce, instead of $4 a pack?
But an ounce lasts longer than a pack
My wife’s addiction costs about $835 per ounce. Good thing I bought a bunch at $575 per ounce.
Chuck Ponzi
PS, her addiction isn’t illegal yet. It was during back in 1933, will likely never be again.
“But don’t expect a steal of a deal on every block. Subtract the speculators and inflation runs about 3 percent a year. Incomes have climbed over the years in Tampa, albeit slowly. Tens of thousands of people are locked into homes bought at boomtown prices. They won’t give away their money without a struggle.”
I expect a few to struggle, as their houses of worship are foreclosed upon…
I always thought I was giving my money away at the time I bought. When I sell, it’s the other guy who’s giving up his money.
The realtor “lower the price or take it off the market advice” is correct - but it’s also self-serving. I’m sure any realtor with some listings (or pretty sharp ones that have built a solid business where they get a good stream of listings/referrals) would love to see overall inventory reduced - even overpriced, stagnant listings.
Of course - if there were a lot of investors/flippers who could be induced to take properties off the market and carry a rental loss - that’s just inventory that would released consistently over time (as people finally stopped the $500/$1,000/whatever a month bleeding) or, inventory that would flood the market at the first sign of a recovery.
Some realtors like to make the false argument that there will be “pent up demand” when supposed patient buyers finally sense the market has bottomed - but, there’s no doubt in my mind there will an equivalent continued release of supply for quite a while to come.
I was staying at the Marriott timeshare on Singer Island/Palm Beach Shores during the holidays. I could not help but notice the huge condo right before the bridge on north side of Blue Heron that seems to be basically a few blocks from lets say an area that is less than desirable. Does anyone know if most of those units are sold to speculators or there are just alot of unsold units because that building appeared to be pretty empty at night. Why would anyone in their right mind by a condo in that area because I am sure they were not cheap.
Pretty sure that’s one of the places Mike Fink is amazed someone would buy, right behind the one in the parking lot of the Gardens Mall. We had great weather over the holidays, hope you had fun.
I feel the same as Mike about the condos at Gardens. Riviera Beach might be worse, but hard to understand the placement. Maybe they thought that the owners would walk to the mall. Not.
“Does anyone know if most of those units are sold to speculators or there are just alot of unsold units because that building appeared to be pretty empty at night.”
Both. There are still vacant units (last I checked) and a ton of specuvestors bought into the “dream.”
Rents right now are in the $1,000 to $1,500 range. This is likely not even 50% of the carrying cost. I would not advise going out at night if you lived in this particular development.
I would not even fill up my car one night in that area, I am from DC and know a bad/crime area when I see one and that area is a bad/crime area.
“I am from DC and know a bad/crime area when I see one and that area is a bad/crime area.”
And I’m from Detroit…so I think we can both offer a pretty educated opinion about this place. You have to know that the city of Riviera Beach saw these monster projects as saving the neighborhood. The real issue is what’s still surrounding these condos. You can’t save the neighborhood without making changes outside of the new construction. The city of West Palm Beach is well aware of this from previous attempts to do the same.
“Fishkind isn’t a professional pessimist. He predicted in August the real estate market had already bottomed out and was showing signs of a turnaround. He has since revised that prediction, in light of the subprime mortgage lending crisis, and now predicts the turnaround will begin later this year.”
The subprime problem was well known in March when mortgage lenders significantly tightened certain types of credit. The next major hit came in July with more general tightening of credit due to CDO losses and the August increase in jumbo rates. All of this was known to him, or should have been known to him if he was paying attention, BEFORE his August forecast. He either doesn’t understand or doesn’t want to understand what is happening and will continue to be wrong.
Fishkind is a captive intellectual who demeans the word “professional” every time he opens his mouth. He is as independent as a pet dachshund.
“I have a name for house hunters counting on a return to 1998 prices: lifelong renters.”
I know people who would rather rent for life at half the cost of “owning” a house. Those who don’t want to rent or tire of renting simply pack up and relocate. Theres still affordable areas that weren’t hit hard by the bubble, many in TX, OH, PA, TN, WV, and several other states. TXchick could buy a nice house for under $100k at this point
House prices in Dallas were down 0.1% YOY 2007. The economy might be more diversified and robust in TX than other states, but supply of houses has increased exponentially in the last 10 years. Why buy a house for under $100k today when you can buy it for under $95k tomorrow?
I wouldn’t want anything you can buy that low. I don’t want cheap, I want a very well designed and built place for a FAIR price. Fair is not what we have right now.
A mansion will never be cheap. Instead of $2m it could drop to $1.3m. What is your price point? $100k? $150k? $200k? There already are nice houses for that price. The cheap houses are $25k to $75k
Fair is not what we have right now.
Your right on the money! One would be financially stupid to buy at these high prices!
Things in Florida are not getting any better.
A friend who is a specuvestor owns about 6 homes. She recently rented them out for the price she wanted (she says)… but 2 of the tennants are 2 months or more late and the other moved out after she had to evict them after 3 months. The place is trashed, carpet is ruined, and she said it’s about 15-20k worth of damage.
I wanted to say to her, you should have sold, but her thinking was rent it out till the market returns and sell it. She says she refuses to take a loss.
Refusing to take a loss on your primary, is one thing, refusing to take a loss as an investor is suicide. Holding on to stock investments can hurt. Holding on to six homes in FL can bleed you dry.
Here in Tucson, there are quite a few “rent it out until the market improves” houses on the market. The rental market, that is.
And I’d even go so far to say that it’s a buyer’s market for tenants.
Those types of responses give me chills on what is to come. WOW.
I know a guy like that..$5 mill in the hole and swearing things will get better..
“She says she refuses to take a loss.”
What does she call that $15K-$20K worth of damages - just the “cost of doing business”?
does she have renters insurance? She should just walk away from every house
She says she refuses to take a loss.
She is still in the denial stage!
She refuses to KNOWINGLING take a loss. At the moment, she’s losing a bunch already.
She says she refuses to take a loss.
Now she will be forced to take a loss!
The time to refuse the loss was back when she bought properties 2 through 6.
I am interested in seeing some input from housing bears on HBB on a condo I found in South Beach (near Flamingo Park) Miami: 2/2, 1240 SF, for $230K ($185 per SF). From what I have seen in South Beach they usually go for $250-$300 per SF and this unit is valued at $410K on Zillow and topped out at almost $500K 2 years ago.
How many of you would buy a 2/2 1240 SF condo for $230K in South Beach today? I am not saying I am buying it, but I find it interesting and want to know what other people think.
How many times do we have to say this? 120x rent.
Don’t you mean 12x rent, not 120x rent?
Ah ok I see you didn’t take monthly rent and multiply by 12 as I did. But I think the 10x monthly rent is too general and can’t be used for different type of neighborhood. In Trenton, NJ, there are plenty of houses going for 60-70x rent by your method, but those are hardly cheap since it is a terrible neighborhood. Seems in S. Beach the rent for a 2/2 at 1240SF can be rented for $2500, so $230K/$2500 = 9.2.
Pretty sure that Flamingo Park is where you could walk to buy your drug fix.Still interested in that condo?
Well in NYC Washington Square Park is also known as a place where you can score drugs, but real estate around that area is expensive nevertheless. I don’t think one necessarily means another.
I think your question is a little general; South Beach varies all over the map just like anything.
I’m looking for condo deals myself, they are popping up but i haven’t found the deals to be compelling, yet.
One of the major things i’d look at is the overall health of the building and the condo association. Is it an established building with a high percentage of owner-occupants? or is it a buildng with a lot of renters, or ever worse, flippers? “investors” and flippers won’t want to spend any money on the proper maintenance of the building, which always leads to problems. Plus those are the people likely to get foreclosed on, which will just drive down values in your building.
Are there alot of units for sale in that particular building? that’s another warning sign.
if the monthly cost is cheaper than rent, or around the same, i personally would seriously consider it, especially if it’s a neighborhood or view or complex you really like. But i’d stay away if it’s a “problem” building unless ownership costs are REALLY cheap relative to rent.
I live on the east side of Orlando. For the first time I am seeing half built out subdivisions with no equipment or people there. It has come to a complete stop here now…Of the homes built, only half are occupied and some have stopped in mid stream. I wouldnt want to be one of the families that did buy and move in there.
“…east side of Orlando.”
Snaith works at UCF, that’s over there by Siemens on the east side. I wonder what he thinks when he drives past those unfinished subs?
“Of the homes built, only half are occupied and some have stopped in mid stream.”
Median income in the Orlando metro area could never sustain prices in the $300’s or higher as they became. I could see them bringing in the upper $200’s when we hit that point in Palm Beach County with dual income but never in central Florida. I don’t think it will be long before we go back to the days of central Florida being the affordable retirement mecca that it once was. In 10 years we’ll look back on this boom/bust cycle and see it for what it really was…tech stocks version 2.0.
I’m over here on the SW side of Orlando and things have definitely slowed down here.
I’m also an economist (FSU grad) living on the East side of Orlando. Just a couple months ago I saw signs for Oviedo Woods (which, coincidentally, was actually there before the development) in Oviedo change “from the 400’s” to “from 299,990″ on the sign overnight. At least 80% of the development is roads leading to empty dirt lots.
If prices drop 15-20% further over the next 12-18 months, I may try my hand landlording in the UCF area. Decent 2/2 townhouses are $130-$180k, 3/2 houses average in the $190-$220k range. If I can pick up a nice townhouse for $110k, it’d be roughly $800/month fixed 30 yr mortgage/ins/taxes (not factoring in repairs, upkeep) and today rents for $900-1000. Keep in mind the mortgage is fixed and insurance and taxes rise slower than rent.
Comments welcome.
Why bother? You can earn 8% by sticking the money in the S&P500. If you have a lot of spare time to chase down renters and do the maintanence and repairs yourself you might just break even on residential housing. Rents will not rise faster than maintenance, insurance, and taxes — why on earth should they? Insurance covers the cost of rebuilding which, like maintenance, rises with in line other prices and taxes are growing relative to the rest of the economy to feed ever growing governments. By raw land if you want to speculate and save the deperciation on housing units.
Will
Check out the “Top Jobs” section to the right of (the media)-”Reckless debt has led to our real estate woes” article. Top Jobs in the area include serving coffee at Dunkin Donuts, and a Health Spa paying $20K. I don’t even want to think about what the non-top-jobs would be. And the guy in the St. Pete Times article has the balls to compare Tampa to SF and Boston, places with real jobs. I love Florida and am fortunate to have a well-paying job, but as so many have stated before we’ve always had a primitive economy based on selling reasonably-priced real estate to restaurant workers and old people. Almost nothing has been done to change that. I don’t see a way out of this without severe pain for the Florida economy.
Don’t worry portability will solve everything. I’m no genius, but FL politicians have to be something short of morons.
I blame the politicians over the past 50 years more that the current ones. They did nothing to diversify our economy past real estate, usually lining their own pockets with developer bribes. Even if the current group in Tallahassee were the most brilliant people on Earth, there’s no way out of this mess. Hopefully most of the speculators about to lose $100,000+ are from out-of-state.
SFC, those pols sound like clones of the ones we have in Arizona.
Oh do you now? rather than lower the tax rates across the board, they chose to pander to the millionaires and SOH’ers as a solution. Even when the solution won’t work? OK, maybe morons is the wrong word, how about gutless, corrupt, shortsighted or stubbornly stupid.
Kirisdad, I’m talking about the much bigger issue of Florida’s failure to diversify our economy beyond real estate and tourism. I’m all for lowering tax rates, but that isn’t going to change the fact that Florida’s “business plan” is the same as it’s been for at least 50 years. I’m not defending the current politicians, their greed during the run-up has contributed in large part to the mess we’re in.
I wonder how much incomes have risen in the area versus inflation. Probably not much.
Yeah, Tampa’s fortunes aren’t tied to the “fickle fortunes” of the oil or auto industries. Tampa doesn’t have any fortunes. Just a bunch of low-paying service industry jobs. And since when is the tourism industry not fickle? Who’s going to be taking a vacation when their house is nearing foreclosure and they just lost their job? And WHY would they ever waste their money to come to Tampa?
Just a little aside to the Florida economy…I recently looked at a project to expand a manufacturing facility southwest of Jacksonville. One of the advantages of the Florida site was that trucking finished goods out of Florida is astonishingly cheap. Florida is all inbound, deadhead out. Trucking companies are willing to pick up your loads at a loss, just to get something on the outbound trucks.
Do you have a link for that information? Interesting.
>> “They won’t give away their money without a struggle.”
Ah, the guaranteed jobs of the permanently employed.
Did you notice in the Orlando Slantinel article, the financial guru
recommends the Rainy family of morons take out an interest only
mortgage.
When I read that article, I had to wonder how much of their “wealth” was in Home Equity. It seems that they do not have either the cashflow, or the life style to put away 180K. specially working as a glorified day laborer.
This is a classic example of peasants living like kings.
Yeah, those folks are not getting cut a whole lot of slack in the comments section, either!
“Naples, where median prices topped $500,000 in the fall of 2005, watched prices plunge to $415,000 a year later before shell-shocked Realtors stopped publishing the data.”
I have noticed Realtors have a tendency to suppress data when it disagrees with their ‘real estate always goes up’ world view. I guess they fail to realize that would-be buyers become more reluctant in the face of uncertainty about market values? (A similar problem is faced by IBs with SIV assets they would like to unload…)
I may be wrong, but I think that before they stopped publishing they attempted to cut out all the lower costs sections so that the numbers would be higher. Legal questions were raised, so they decided best to suppress.
These shenanigans should be national news, IMO.
As usual, good commentary by Peter Schiff.
“As our economic ship continues to spring leaks, the goldilocks crowd still clings to the false belief that the Fed can easily keep us afloat with a few more rate cuts. This comfort has sustained many upbeat forecasts despite overwhelming evidence of an unfolding economic and monetary catastrophe of historic proportions.”
“…with $100 oil, $850 gold, and beans in the teens, Wall Street still feels the Fed has the green light to keep cutting interest rates. Unfortunately on this point they are right. Rather than raising rates on its own terms and accepting the consequences, the Fed will instead wait for a true financial crisis to emerge, at which point it will be forced to raise rates on the much more draconian terms imposed by our foreign creditors.”
http://www.europac.net/
Ya know, I have a bits bucket…
My apologies Ben. Will try to stay on topic in the future.
Ben, if we wake up at 7am in California the bits is already finished.
Maybe we could have an evening bits so westerners can report stuff.
I don’t fish for news I just digest it. Burp.
Second that motion. I’m in Arizona, and the bucket’s already overflowing.
I don’t mind it a little later, but this was the very first post on this thread. I moved it down.
I third that motion. Especially right now, because I fell off a chicken coop and hurt my bum, during Christmas vacation. Therefore I don’t want to sit down like I used to and pore over every single post in a giant thread I already missed.
What are guys complaining about? By the time you raise your weary heads the early birds have already got everything sorted out for ya. Ingrates! LOL.
Wake up at 7AM?? SEVEN AYE - EM ?!?! What are you, some kinda bicycle riding eco health nut? Everyone knows that here in Cali we never rise before the sun. The jacuzzi would be way too cold. And you’d get mowed down by the SUV NASCAR-drivin Starbucks waving moms dropin off the daycare tots. Not to mention the construction crowd Ford350 duallie gettthehellouttamyway tailgaters, or the BMW I own the road move over alreadys, and not to forget the drivelikeafugginmadmen with a coffee in one hand/cigarette in the other I dont care its the company van’ers with the ” report my driving to 1-800-Eat-Shyt “.
I tried getting up early once. You shoulda seen the retirees terror as they drove 12mph in the fast lanecoming back from the Dennys early bird special.
7am ….pshaw … dude … yer harshin my buzz.
From the St. Pete Times article:
“These aren’t selective statistics gleefully gleaned from an I-Told-You-There’s-a-Housing-Bubble Web site. They come straight from Florida Realtors themselves.”
Now who might they be talking about there? Sorry if I’m a little gleeful and full of “I told you so!”
I don’t need 1998 prices. 2001 would be just fine.
I just keep putting my savings in the bank. Who says I am throwing my money away?
“I have a name for house hunters counting on a return to 1998 prices: lifelong renters.”
I’m waiting for 1996 prices.
It amazes me that there are still people so arrogant in Tampa. The market is crumbling and the snowball is rolling downhill. 1998 prices? Without a doubt. People are way more overextended with debt than in 1998. They have much less money to put towards principle and interest now than they did back then.
a fav quote of mine…if you’re stupid you better be tough…in this case if you are financially stupid you better be rich. I see lots of those with disposable capital hanging on even though it makes financial sense to dump the RE. Kinda like watching your house slowly burn and not wanting to call the fire dept.
Its only a little fire. it will go out soon. BURN BABY BURN!
“The trend lines coming out of 2007 are not good. ‘The eagle has now become an albatross around Florida’s neck,’ said Orlando economist Sean Snaith, director of the University of Central Florida’s Institute for Economic Competitiveness.”
Just when you think Snaith is some character out of Atlas Shrugged, he throws a cryptic ‘The eagle has now become an albatross around Florida’s neck’ statement, that sounds like it would have been uttered by a spy, in Vienna in 1948.
Snaith has probably received the usual compensation for his efforts:
30 pieces of silver and 15 minutes of fame.
I’m keeping a few screen shots of some of Snaith’s predictions on my harddrive. I am going to have great fun sending them to him in two years from now with the simple question, “What happened?”
I have a name for house hunters counting on a return to 1998 prices: lifelong renters.
The author of this article is in denial that prices will fall to these levels because he himself bought a house during the boom. Perhaps we need to comment more on his articles wich can be found on sptimes.com, highlight the money section, then click on (Un) real estate to read his blogs. Or you can email him directly at jthorner@sptimes.com. His name is James Thorner.
With an inventory this high in the Tampa Bay area, I think this reporter is incorrect in his assumptions.
“With an inventory this high in the Tampa Bay area, I think this reporter is incorrect in his assumptions.”
Incorrect and still trying to use the media to adjust pricing. What percentage of this boom does anyone blame on the media feeding it?
I’m going to go out on a limb and say at least 50%. A lot of good people wouldn’t have bought without a fear of being priced out forever.
That’s a good point. Almost everyone is critical of something a salesman says, and most recognize that realtors are just sales people. News reports, on the other hand, are believed outright by just about everyone. I’ve learned to never turn my skepticism off.
Florida appears to be such a mess, that i’m going to start calling it…
The Debt-Belt
“Florida appears to be such a mess, that i’m going to start calling it…
The Debt-Belt”
Some of us will come out smelling like roses. The people who didn’t buy from 2002 to 2006 and are either getting in right now at fire sale prices or the people who bought pre-2002 and didn’t HELOC or REFI themselves into trouble are going to be perfectly fine.
As for me? 12/2006 at 2003 prices is where I bought in. I didn’t wait for the true “fire sale” to begin because I didn’t see the mortgage mess that was to be. We owe $180,000 on a house purchased for $225K and would fly off the market for $200K today. Even the responsible types that bought very early in the boom with 20% down will be OK.
God help everyone else. We’re going to free fall for a while.
2003 price? and you think you will come out smelling like a rose? What am I missing here?
“2003 price? and you think you will come out smelling like a rose? What am I missing here?”
Peak price: $380K
2003 price: $225K
2001 price: $190K
1998 price: $165K
1995 price: $150K
Will I take a hit? Maybe…but I’m not moving in any hurry. I put $40K down and I’m writing off $16K in interest and property taxes off each year. That’s $4,000 in real money. In 5 years I can sell at a $20K loss and still be even. That’s how I end up smelling like a rose.
Better sharpen that pencil, Andy. I believe that the standard deduction for a married couple is around 10k.
Youll lose plenty at 2003 prices. At the end of this year, your 20% downpayment will be gone. Your house could be worth half what you paid by the time the market bottoms. Sorry knife catcher
“Better sharpen that pencil, Andy. I believe that the standard deduction for a married couple is around 10k.”
AND
“Sorry knife catcher ”
Thud, you assume that I don’t already have more than $10K to itemize. You assume incorrectly.
ByeFL, if you’re bright enough to call bottom I’m going to challenge you to it right now. 50% of 2003 prices is well below 1995 pricing (which is much the same as 1990 pricing for the same area). If you’re calling for 1980’s prices you’ve been drinking the doomer Kool-Aid which is very similar to the “there’s no bubble” Kool-Aid that the real estate “professionals” were drinking.
I so miss the days of spending $16K to save $4K on my tax bill. All I get now is $12K in the bank. Oh well.
I miss the days when credit card interest was tax deductible too! There’s just no incentive to carry a credit card balance anymore.
“Better sharpen that pencil, Andy. I believe that the standard deduction for a married couple is around 10k.”
But if you itemize it is more than 10K.
““2003 price? and you think you will come out smelling like a rose? What am I missing here?”
Peak price: $380K
2003 price: $225K
2001 price: $190K
1998 price: $165K
1995 price: $150K”
I think you would have been better off to wait until at least 2001 price to buy, because judging from auction sales I have seen in FL 50% off the peak price is the NORM, not the exception. So to buy a truly cheap property, it should be more than 50% off. 1998 prices seems more of a safe bet.
“I so miss the days of spending $16K to save $4K on my tax bill. All I get now is $12K in the bank. Oh well.”
So where exactly do you live Blue? My $16K is 90% of my carrying cost on my house. $1450 covers P&I, taxes, and insurance. 3BR/2.5 Bath/pool…can I rent for that? NOPE! I could probably rent my same home for $1600…but that’s just $150 more…I guess I could put that in the bank…
Andy,
I live in the middle of nowhere NY. Little farm house on 400 acres. Could buy house and 40 acres for 300 x rent. no thanks. When savings intersect with price for something similar I will consider it. I have to admit I am getting spoiled, not mowing or interesting or insuring and especially, not cleaning the pool!
Didn’t mean to dis you, Andy. The standard deduction has been beefed up a lot in the last 10 years or so, and realtors and assorted sheeple are counting way more tax blessings than are available. Renting sucks, and in my mind, owning is worth a premium IF you can afford it. Doesn’t sound like you did too bad at all affordability wise. It’s a house, not an investment.
I am a little surprised that you would have 10k in deductions in a no income tax state, not counting property tax. I live in Taxconsin, and I need income tax(on $90k) and property tax on my home and my cabin to approach the standard deduction. My charity contributions are pretty much not worth listing, though.
“I am a little surprised that you would have 10k in deductions in a no income tax state.”
It’s not hard between charity and unreimbursed business expenses. Those business expenses are pretty much where I have a slight advantage to most…but I’d rather have the cash in my pocket over a deduction…
Remeber, the price pummet will stop, on the day that you buy. Isn`t that what it says in the “Suckers Almanac”?
pummet should be plummet.
“Remeber, the price pummet will stop, on the day that you buy. Isn`t that what it says in the “Suckers Almanac”?”
No one said that prices wouldn’t continue to plummet. They certainly didn’t stop when I bought. I don’t think I made it clear that when I purchased, homes were selling for at least $280K. People on this VERY board agreed with a purchase at $225K. Why? Because it was so far behind the current “market value” and so far below peak value. Most were calling 2002-2003 the bottom at that point. Now the financial gurus with MBA’s in economics are calling 1990’s prices or even 1980’s prices.
The Debt-Belt”
Excellent reference to the state of Florida!
you didn’t supply a critical piece of info: what are rents in your area? median incomes?
determining whether or not you overpaid should be simple math.
that said, if you don’t intend on moving in a long time, there are worse things in the world than spending $225k on a house, especially if it is a house you really like.
–
“I have a name for house hunters counting on a return to 1998 prices: lifelong renters.”
Would that qualify as a scare tactic?
Jas
Just the same old s__t. Portray renting as a socially inferior, fiscally irresponsible, and un-American alternative.
The house next door to the house that I rent is also for rent (man, there goes the neighborhood!) and I have seen a steady stream of young couples around my age slowing by to look at it. They all appear to be DINKS with good jobs. They dress very nicely but aren’t flashy. And they look a heck of lot classier than some of the people who own on my street.
My only complaint with renting is that the wallpaper in the master bedroom fills me with impotent rage. It’s striped. There’s a wallpaper border. It’s from the early 90’s. I see it every morning when I wake up. I refuse to change my furnishings to match it. I wonder what my landlord would do if I just ripped it down and painted it a nice neutral?
just do it. landlords don’t care that much.
Hmm. The situation in Florida is beyond hope. The “lifelong renters” comment is just a nasty, rude, boorish, comment from an frustrated realtor. Florida will recover. It will become host to more retirees and tourists. I’m not saying it won’t require changes to the state outlook and economy to do this. Will it return to 1998 prices? I really don’t know. I do know that the parallels between 2007/2008 and the late 1920’s is making me nervous. Remember that most people in the 1920’s had their savings in a bank. I only use banks for checking and loans. I do not keep my savings in a bank. I have a 401k. Most of these are uninsured by the FDIC.
There could be a real problem there: 1920 banking system = 2008 401k/305b(?) retirement accounts. Both were/are unregulated.
“There could be a real problem there: 1920 banking system = 2008 401k/305b(?) retirement accounts. Both were/are unregulated.”
That is sobering.
Wonder if they will bailout the folks who lose all that money?
No.
“Both were/are unregulated.”
I should say “uninsured” with the FDIC.
Sorry,
Roidy
In my town, Cocoa Beach, you can pick any year from 1989 through 1999 and the price will be the same. I bought my oceanfront condo in 1999 for the same price that it sold for new in 1989. I’m as bearish as any of you but I don’t see prices returning to the $100/sq.ft. level for oceanfront condos in my town which is where they were in 1999. I expect more price erosion but to get to those levels would require another 50% plus drop from here. Seems a stretch. No matter the severity of the drop, I’ll be riding waves and catching fish in my back yard until I can’t hobble to the water’s edge.
“I’m as bearish as any of you but I don’t see prices returning to the $100/sq.ft. level for oceanfront condos in my town which is where they were in 1999.”
You’ve got the “not going to happen to me” syndrome. With the HUGE amount of overbuilding in cocoa, I don’t see a 50% drop as being unheard of. That’s the same as someone who paid $1 mil for a condo in Miami saying his/her condo wouldn’t drop to $500K. It’s already there!
Andy, “Cocoa Beach” not “Cocoa”. Our population is the same as it was in 1990 quite unlike Cocoa. We ran out of land in the 80s. Only building that we had was old motels torn down to build million dollar condos. Far from “HUGE”. That part of the market is, however, in serious trouble. This little beach town can only handle so many million dollar units. We’ve already had 30 to 40% haircuts on some properties. To count on another 50% might be foolish. To follow your example of the million dollar condo; figure the already baked-in price cut of 40%. That puts it at $600,000 today. Another 50% would put that condo at $300,000. Not impossible given Armageddon but pretty unlikely. I don’t have the “not going to happen to me” syndrome. Quite the contrary. I have the “saw it coming, made plans and still surfing and fishing while the world crumbles around me” syndrome.
I bought a sfh in volusia cty in 1986 for the same price that it was new in 1977. It was, basically, worth the same in 1997. My new 2008 tax bill (based on 2006 comps) says its worth four times as much. Ya think FL had a bubble?
If prices can regress 10 years, would this mean 2002 prices in 2012 or will prices regress more like 15 years this time?
Hey Cocoa Beach:
“I’m as bearish as any of you but I don’t see prices returning to the $100/sq.ft. level for oceanfront condos in my town which is where they were in 1999.”
I will be testing out this theory soon. I will be soon submitting a bid for a 1300 SF condo across the street from the beach just south of Daytona Beach for about $165K for about $125 per SF. I have no idea if it will be accepted or not but if it is, then it is getting close to that $100 per SF line.
“I’m as bearish as any of you but I don’t see prices returning to the $100/sq.ft. level for oceanfront condos in my town which is where they were in 1999.”
“”I will be testing out this theory soon. I will be soon submitting a bid for a 1300 SF condo across the street from the beach just south of Daytona Beach for about $165K for about $125 per SF. I have no idea if it will be accepted or not but if it is, then it is getting close to that $100 per SF line.”"
You can already get that price across the street from the beach but not for direct ocean. We had a 2 bedroom townhome 1 block from the ocean with garage close for $125,000 last month.
“We had a 2 bedroom townhome 1 block from the ocean with garage close for $125,000 last month. ”
So I’m assuming this has to be around $125/sq ft. And you don’t think oceanfront condos can go to $100?
I certainly don’t think you’re as bearish as anyone on this blog. Also, before this is over, people will be looking at condo prices as price + fees. What have fees down in the last 10 years, tripled? They must average $25/sq ft. At $100/sq ft, this place would already be as or more expensive than the townhouse that just sold.
$100/sq ft is a done deal for a decaying old monster with still-increasing condo fees, high taxes and insurance - and that’s what every single one of them is.
BTW, I like Cocoa Beach. But there’s nearly 400 miles of beautiful coastline in Florida, and that’s just the Atlantic.
Cocoa Beach, show your true colors—you are just another realtorwhore posing online trying to convince others that “now is a great time to buy” vomit he even has his own blog linked.
Given 3% inflation, and the assumption that the 1999 price was reasonably attuned to market conditions, $100/sq ft. now equals $125/sq. ft. Expecting much beyond this is speculation.
Florida is fine, don’t get me wrong, but I don’t see why people would be drawn to it more today than they were 8 years ago. I prefer growing vegetables and having four seasons to fishing and chilling at the beach. My point is there is nothing inherently super special about Cocoa Beach or Los Angeles that means its real estate should be valued at more than 1999 + 3% inflation per year.
Expecting condos to appreciate rather than depreciate is speculation.
cocoa beach is a touris sh__thole with ron jon’s as red neck central. It makes Daytona seem like beverly hills.
remember that brevard county was the ground zero for 2nd highest appreciation according to NAR whores in 2005-6 with over 50% in one year. We have had a 15 % drop since then. Waterfront went up over 100% in 2 years. Yes the slide will be more than you think cuz it almost always overshoots, esp when there is a lag time for correction.
Here in Tampa. A headhunter recruiter called our office a few weeks ago and the first thing they asked was if any of us here were non home owners as they wanted to talk about a job offer(they knew anyone with a home now a days cannot relocate). Just as was predicted on this blog a couple of years ago, highly mobile workers will be in demand for higher paying jobs and the poor slobs who need the dough the most are jailed in there homes.
Funny. I never saw that prediction, but I experienced it just today. This morning, I met with a headhunter here in South Florida. Their eyes lit up when I told them I was renting and could relocate anywhere in the country at a moment’s notice. They then went on to explain that some people in South Florida are stuck with homes they can not sell. I just nodded and said, “So, I’ve heard. I sure am glad I sold in 2005.”
That’s one reason we are thinking about selling.
Too bad we cannot search our old posts, but a lot of the predictions a couple of years ago that our now comming true were considered “CRAZY” and ignored as tinfoil hat stuff.
This article in the WSJ about horses starving in Florida because folks can’t afford to feed them is a tragic aspect of the fallout of the housing bubble.
http://tinyurl.com/2f4y76
dude, don’t get all 1965 on us.
“There used to be a stigma against bankruptcy. Your signature was something you took pride in. People that get ahead in life have, and keep, good credit. They do not have credit card debt. They do not buy ‘toys’ unless they can pay cash. They understand depreciation and inflation. They save 10 percent a year. They have a rainy-day fund. More importantly, they defer gratification.”
It is reaching into the top tier in Florida.
I have three contractor friends of many years. All three are true artisans who can lay out an octagonal room if you desire it. All are trained in the old ways, two from upstate NY and one from Boston. These guys are quality people and hard workers as well. All are in their 50’s and have been custom builders for many years.
We get together every so often and discuss our work and what we see. Tom is now finishing out a church installing windows the last contractor fouled up. Vinny is looking for pickup work as three custom homes he was scheduled to build were all canceled in the past two weeks. Dean is renovating for owner occupants.
Each of these fellows is hand to mouth at this point and not one of them has any prospects. We had a few drinks the other night and the topic turned to the future. I am the only one who really has the time and limited information to GUESS about what we are facing.(most data from here)
I put it simply. “Guys this thing is out of our hands and is evolving like a virus. I think it is going to get worse and there is nothing we can do to stop it or even slow it without hitting absolute bottom.”
It is simple, we are all going to have to do what work there is and endure the pain. If I were 35 I would change career paths but in your 50’s there isn’t a hell of lot you can do. Suck it up and get moving.
In Florida there are simple choices. It ain’t pretty but most of the struggling with options is past. Once the rest of the community gets on board with this perhaps movement will follow. The quicker we go down the sooner we will be working at digging out. I, for one, would rather dig than await a cave in.
I do not want to sound too morose but the issues here are beyond anything I could have imagined in the past. People are desperately seeking the answers to our self inflicted wounds.
Floridians bear some of the blame for sure but we got hammered from all over the world with speculation. The tax rolls read like a UN convention. You will find very few Smith’s and Jone’s and a lot of names tough to pronounce.
There will be no synergistic workout within the community but there will be destruction from without. We will be left to hammer out some sort of logistical workout scenario and the asshats who contributed to it will be long gone.
For several generations I expect that the result of this foolishness will lay heavy on my children and their children. I only hope it is not wasted as a life lesson for them all.
I intend on writing a paper to my children addressing what led to this and how it all played out. I will do this to hopefully point out to each of them the responsibility that each of us has to do our small part in seeing that this kind of foolhardy life management does not continue. It can end with more than individual issues but the more serious societal problems such as those we are facing.
The fall these children are facing is far more precipitous than that of the depression era folks as the scale of the drop is so much deeper. My Dad never got over the depression and stored beans, just in case.
I think I will give each kid a bag of beans along with my letter.
I overheard Grampa telling a bean story when I was a kid. He said to take an empty coffee can and drop a bean in it everytime you have ___ (I missed what he said there) for the first year of your marriage. Then take one out every time for the rest of your life. It’s a lucky man that dies with an empty coffee can.
I think Grampa was a thrifty fellow, and saved beans also.
old joke.He wasn’t being thrifty, he was talking about about ,um, marital assets that decline once you are married.
Excellent post.
Thanks for this post, Dimedropped. While a lot of chaff is getting blown away - especially the cowboy builders with their illegal-immigrant crews - it’s sobering and saddening to think of conscientious craftsmen also left adrift.
I agree we are headed for hard times. It might kill us, or it might cure us. Time will tell.
Chin up Dimedropped. The housing bust will bring its own opportunities for hard-working craftsmen who understand what is going on. Change is not all bad.
McMansions will have to be converted into seasonal rental apartments. Business models to efficinetly rent single family houses in outposts like Northport, Cape Coral and St Luce may evolve and need managers. Many of these houses will end up taken over for back taxes, torn down, and turned into pocket parks –more work for an ambitious contracter/landscaper. New houses will remain cheaper than the existing stock as the most efficenct builders learn to cut costs further. And of course, the conversion of condos into apartments will provide more work.
Prices must fall a lot and you won’t go back to the early 2000s model for FL construction and real estate, but construction will certainly continue and coastal FL will remain a relatively attractive place to live and visit and construction will certainly continue. What your gang needs is to put on their thinking hats about how they can work into a new model of Fl real estate.
Will
“Now the house is for sale for $248,000. Real estate agent Marianne Cojocar said she showed it about a dozen times in December. ‘The market is really soft,’ Cojocar said. ‘It has nothing to do with their house.’
I mean…really soft….. like…..putting a Milky Way bar on your dash in the summer.
For the Raines family in Orlando, there was a discussion yesterday about kid’s responsibility. I agree the kids should not be responsible for parent’s stupidity. But the family needs to band together and all do their part for the family good, including all working and contributing to household expenses. As for the boat and toys, they need to go. I make far more money than this clown. I wouldn’t consider owning the money pit. In Albuquerque, no place to put a boat. If one is lucky, they could get a rowboat in the mud puddle called the Rio Grande river. When I was in CA, a few times I spent $20 and rented a small motorized boat to ride on Lake Chabot (near Oakland) for 30 minutes. To save the $3 parking, I walked an extral 100 yds and parked on the street. Then we had dinner at our favorite pasta place for under $20 for two. WTF for $200 each time they yank that money pit out?
Here is my response to the St. Petersburg Times that I posted on their blog site:
I have a name for house hunters counting on a return to 1998 prices: lifelong renters.
James:
I cannot say in words how disappointed I am at your unprofessional comments you have made in this article regarding the lifelong renters. It clearly shows that you are not looking at this from the financial standpoint or global economy perception.
There is a large disparity between the price of homes and the cost to rent in Tampa Bay. That is the financial gage used much like the P/E (price to earnings) is used for stocks.
It is clearly known that wages in the Tampa Bay area have not kept pace with inflation and the huge increase we have seen in home prices since 1998. It is also clear that unemployment in the state of Florida increased 1% point in the month of November and continues to tick upwards. Tampa Bay simply does not have the jobs or wages to support the high home prices. In fact, in the next 3 years, 50% of businesses will be offshoring jobs in the USA to lower wage emerging countries. These are not just manufacturing jobs, but professional jobs such as accounting, computer and enginering jobs.
It currently makes no financial sense to purchase now at the high prices vs renting at the lower costs. Which do you think will happen first, employers raising wages to keep pace with the huge increases of housing costs or the price of housing dropping back to an affordable level? That is the question people need to answer and a question that employers have already answered which has lead to moving jobs offshore for lower wages.
To call people life long renters is nothing but an insult to those who are renting in the Tampa Bay area!!!
An interesting comment was made in response to your comment on life long renters on the blog thehousingbubble.com, and that is:
I have a name for FB’s waiting for prices to go back to 2005 levels: lifelong debters.
Let’s show the readers the true financial aspect or rent vs ownership in a the Tampa Bay market where there is a large disparity between rental costs and home prices. I will be more than pleased to show you why I am not purchasing and will never purchase at these high home prices because it makes no financial sense. This is my challenge to you!
Interesting that they feel the need to censor the comments section and post only what they deem acceptable and “thoughtful” comments. I’m pretty sure this idiots article would have drawn some sharp and entertaining comments.
Still people continue not to do their homework case file:
House sold brand new for $975k, same house same block 3 doors down sold for $725 both homes on the market about 75 days the difference, the $975 home had a pool and they were from out of state, i guess the new owners were told a pool cost $250k why else did they over pay by many thousands?
They probably got $200K cash-back at closing and will never make a payment.
Fraud is still running rampant in this country!
Fuzzy,
That was a well-written response to the St. Pete Times guy, but it is likely your clear, analytical thinking is wasted on him. That guy is a real estate writer for a publication that makes nearly all its money on RE advertising, as most newspapers do. Think Harney, Haggerty and Razzi of the Washington Post. All sad little cheerleaders in complete denial. Do they believe what they write or not? Who knows?
I have taken the Tampa Trib on Sundays since 2005, and in that time, the Real Estate section has gone from 4 sections, to 2 sections, and finally recently has shrunken to one measly section. There are very few builders advertising anymore. I also noticed that the “New Featured Development” section of the City Times, which is a weekly publication of the St. Pete Times, mysteriously disappeared a few months ago.
Do they believe what they write or not? Who knows?
The article was directed at me in response to my blog posted on the sptimes.com website back in Oct/Nov. It is also directed at the bloggers on the housingbubbleblog.com per my reference to this site in my post.
Let’s see if this reporter takes my challenge which I do not believe the reporter will publiclly challange.
Who says house prices have to revert to 3-4% annually adjusted? Where is this written? Is this “fact” coming from the same geniuses who told us prices would go up 10% per year forever?
Real incomes have NOT increased over the past ten years and other costs are rising (food, oil, healthcare). There is now less money available for housing and we are recessing. Additionally, we are at record levels of supply and climbing.
All in all, despite all the good news and persistent rosy forecasts from our good friends at the NAR and the White House, house prices will fall much more than historical models predict. It’s harsh, but we need to get prices in line with reality, not with bubble projections over the past five years. It is unlikely that sellers will face the music all at once and as they refuse to sell, we will see more and more pundits claiming that buyers are idiots for that very reason. In reality, most buyers won’t have the money or financing to buy anyway. The result will be a very prolonged depression in housing, much like Japan.
Oh, I know I’m late to this party, but I just had to say something about owning versus renting without being rude or condescending as some posters/renters have accused “owners” of being.
As would-be downsizers, my husband and I are finding it difficult to sell our 4500 sf home in the Houston area… but we’re also having no trouble with payments, taxes, etc. Truth be told, we’re actually saving money (gasp). No doubt, if we were renting now, we’d be able to save even more in current RE market conditions. But what works against us also works for us. The smaller home will be cheaper when we buy it and our cash will have made babies while we wait out the slide.
Now, and when it hit’s bottom is when cash will truly be KING, so saving and finding extra work right now (even if you’re comfortable) is a smart thing to do. Unfortunately, at this point in time, Americans are saving less than they did at any point since the great depression- do a Google on “lowest savings” 2007. This includes all those renters out there who may not be using their economic advantage wisely (as is the case with all our savvy renter/posters).
I’m inclined to view my own situation (in a 15 year fixed) this way if I wax philosophically about the value of ownership. I’ve paid down my 330K mortgage to 130K. I have liquid assets to pay that off if necessary and no other debt. I’d rather have my money making babies than have it in decreasing equity now, but it IS a very nice house, y’all. If I were to lose all the equity I had right now and be forced to start over from this point… 130K for this house would look real good to me- and that is about what renting for the past seven years would equate to… seven years of lost equity, give or take some tax and maintenance bucks. That’s payment for living in a low crime, superb school district, professional community that is just minutes from marinas, lakes, shopping and healthcare. Worth it- in spades.