January 22, 2008

Buyers Failed To Materialize In Florida

The Sun Herald reports from Florida. “Arthur Broslat of Re/Max Palm Realty in Port Charlotte said there is a sizable local inventory of ‘relatively new’ homes, especially in North Port, selling for 40 percent of what they went for three years ago.’ ‘I’m showing a three/two (bedroom/bathroom), 1,500-square-foot home in North Port that was selling for $250,000 in 2005,’ he said. ‘Now, you can get it for $130,000 to $150,000.’”

“Jason Painter of Program Realty LLC in Port Charlotte, who specializes in Cape Haze real estate, said home prices there ‘are off a good 35 percent.’”

“‘We are seeing a $300,000 house in August 2005 sell now for $200,000,’ he said. ‘It is,” he said , ‘a buyers’ market if there ever was one.’”

“In April 2006, all five of the nation’s largest homebuilders, Pulte, D.R. Horton, Lennar/US Homes, Centex, KB Homes, were building homes in Charlotte County and North Port.”

“‘You have builders who continued to build and now have quite an inventory,’ said Al Mitchell, president of the Punta Gorda-Port Charlotte-North Port Association of Realtors. ‘On my little street, I have four houses that are brand, spanking new. The builder has water and cut the grass. Nobody is buying them.’”

“In early January, there were 6,448 homes for sale on the local Realtor association’s MLS, including 2,694 under $200,000 and 87 under $100,000.”

“Meanwhile, the area’s condominium market is stagnate. ‘They just aren’t moving at all,’ Mitchell said.”

“Painter said the resale market for condominiums along Placida Road is nonexistent. He said investors often paid $300,000 for preconstruction condo units. One recently sold ‘for $190,000,’ he said.”

“Painter said when Town Homes of Cape Haze ‘originally came out, guys were talking about selling units for $500,000. Now the price is in the $250s — and not a single resale yet.’”

“Most new condos, he said, were purchased to generate rental income. ‘They’re getting $1,200 a month in rent, tops,’ Painter said. ‘It’s hard to keep a cash-flow property when you paid $500,000 and can only get $1,200 a month rent.’”

“Broslat said price cycles are more extreme for vacant land than other types of real estate. ‘We’ve had a drop on land prices, in standard lots, 80 percent — $50,000 lots are now $10,000 lots,’ Boslat said.”

“He cites Northwest Port Charlotte lots with access to the Gulf and/or the Myakka River as an example. In May, Broslat said, four such lots sold for $108,000 each. The same lots sold for $340,000 in 2005, he said.”

“It’s a similar story in South Gulf Cove, Painter said. ‘I saw one go for $72,000 — a dry lot. Now that same lot can be purchased for $10,000,’ he said.”

The Herald Tribune. “Another bank seized another apartment complex through foreclosure last week, driving home the fact that Southwest Florida’s condo conversion market is as dead as dead can get.”

“The Turnbury Park at Palm-Aire apartment complex is just the latest casualty of a once overheated market, which saw investors paying multimillion-dollar premiums for apartment complexes around the state in the belief that the units would be worth far more for sale as condos than for rent as apartments.”

“But when buyers failed to materialize and condo converters were unable to pay their debts, it became clear that apartment complexes would have to revert to their original purposes and that premiums paid would have to be written off as losses.”

“‘Tarragon Corp. bought a ton of apartment complexes at the height of the boom and recently resold five of them for what amounted to a 40 percent haircut,’ said Jack McCabe, a Deerfield Beach-based real estate consultant.”

“McCabe added that other condo converters are defaulting on projects all around the state. He said seven went down in South Florida in the past 90 days, and many more will follow.”

“For Coconut Grove-based condo converter Peter Wenzel, who has completed a dozen condo conversion projects in Florida over the past 25 years, the collapse of his Southern Manatee conversion came as a complete surprise.”

“His 354-unit Courtney Palms condo conversion project in Tampa sold out in nine months during the height of the boom. But the Turnbury Park conversion project went bad almost as soon as the partners closed on the complex in November 2005.”

“‘No one understands why we hit the wall so fast,’ Wenzel said. ‘We thought the Sarasota market would be the last to be affected by a downturn. It really took us by surprise.’”

“A lot of smart people were taken by surprise, agreed Stan Rutstein, a commercial agent who invested in a Bradenton conversion project during the boom.”

“‘The problem is that our market attracted a tremendous amount of weekly workers oriented toward construction. The minute these apartment complexes started to convert, these people got up and left. They didn’t want to go through the hassle, and there was no one to replace them,’ he said.”

“Southwest Florida is not economically diversified enough to sustain employment during a housing downturn, Rutstein said. ‘There is a high vacancy in conversions and in apartments because we are not attracting out-of-town people to come and work,’ he said.”

“Wenzel said…he is still smarting from the loss of a project that could have worked given more time.”

“‘Our price point of $210,000 for units and our arrangement with the golf course community made this a very attractive proposition,’ Wenzel said. ‘It would have provided a very nice second home for people up north. What happened to the market has left us all shaking our heads.’”

The St Petersburg Times. “Are we in a recession or just teetering on the edge? Economists are debating the point as conditions deteriorate. The little picture is a whole lot clearer. If you’ve lost your job or your income has fallen, the recession has arrived.”

“In the real estate business, the recession is more than a current problem; it’s a long-running nightmare. Vernon Taylor has tapped his home equity to keep the doors open at VET Realty in Lutz. After handling about $12-million in deals in 2006, the company saw business drop in half last year.”

“‘It’s a real struggle to pay the bills,’ Taylor said. A single part-timer has replaced his two full-time employees, and four of his 15 agents have dropped out of the business.”

“‘You can forget the ‘retire at 62′ stuff,’ he said. ‘It gets scary when you start dipping into things you spent so many years saving for.’”

“Business started going downhill in April, said Larry R. Holly, an independent insurance agent in St. Petersburg. ‘The whole industry is down,’ he said. ‘It’s the worst I’ve seen in 25 years.’”

“Stagnation in the real estate market is one reason. Where he was giving 20 to 25 quotes a week for new homeowners insurance a year ago - and selling about half of them - this year he’s lucky to be asked for two or three quotes a week and sell one or two policies.”

“Another sign that people are feeling the pinch is the growing number of Holly’s customers who fail to renew their auto insurance until they get a threatening letter from the state.”

“‘Then they make a payment, but let it lapse until they hear from the state again,’ he said. ‘It’s a never-ending scenario, but when money is tight, that’s where you cut.’”

The News Press. “Foreclosures and bankruptcies, unfinished homes and subdivisions, plummeting prices and lease rates, layoffs and market saturation were much in the news in Lee County and nationally, throughout the year.”

“On the residential side, 2007 was a time when a terrible threesome left their mark, according to Ron Carpenter, president of the Realtors Association of Greater Fort Myers and the Beach.”

“‘Home sales slowed to a crawl in 2007, due in part to real estate investors with more money than common sense, mortgage brokers and banks willing to give homebuyers more money than could possibly be paid back, and homebuyers who did not take the time to read the mortgage terms associated with the biggest financial deal of their life,’ he said.”

The Orlando Sentinel. “A new subdivision is stirring in west Orange County. Castle & Cooke Florida, the developer of Oakland Park, is building 10 homes in an exclusive project that overlooks the south shore of Lake Apopka. And none of the 10 homes has an owner or buyer in sight.”

“Several custom-home builders in that community are also busy erecting houses without buyers in hand.”

“With excess inventory of unsold new homes blamed in part for the nationwide slump in housing last year, it might seem strange that builders would be adding to the unsold inventory. But in growth-oriented Central Florida, it is still happening and even picking up speed, spec homes rising from bare ground.”

“Anthony Crocco, an analyst who tracks the new-home market throughout much of Florida, said Monday the days of building homes without a confirmed buyer are returning, for sound economic reasons, to this part of the state.”

“One reason that speculative home construction will increase in percentage terms in the coming months, he said, is that more buyers will demand a finished home, an ‘inventory home,’ rather than wait for one to be built from scratch.”

“When the real estate market was hot a few years ago, Crocco said, people could count on their existing home selling quickly, so they felt they could buy a new, unbuilt home and make the move fairly easily on a timetable of their choosing.”

“Now, however, sellers are uncertain of when, or if, they will be able to unload their existing home, so they are reluctant to buy an unbuilt home. They are waiting until their existing home sells, then moving quickly into a finished home pre-selected from the region’s new-home inventory.”

“So now the balance has tipped to the point that the construction side of the ledger must begin to creep back up or risk a more serious imbalance, Crocco said. ‘Some builders are having to take a bit of a risk,’ he said, by starting homes without buyers.”

The Palm Beach Post. “With the condo market deader than the Miami Heat’s playoff hopes, the apartment market is struggling, too.”

“Just ask Kyle Riva, president of Winter Park-based Epoch Properties. The developer recently landed a $150 million loan and began construction on Las Ventanas, a 494-apartment complex in Boynton Beach.”

“While Riva is optimistic about the apartment market’s long-term prospects, he worries that homeowners who can’t sell are flooding the market with houses and condos for lease. ‘That is having a negative effect on rental housing,’ Riva said. ‘The market is not the best right now.’”

“At least for landlords. Tenants, on the other hand, can find deals. The first tenants at Las Ventanas won’t start moving in until 2009, and Riva hopes the glut of homes for sale will shrink by then. Monthly rents will range from $1,300 for a one-bedroom unit to $3,000 for a three-story townhouse with garage.”

“If you want a ground’s eye view of local economic trends, you can cruise on down to Fast Eddie’s Pawn in Riviera Beach. ‘Last week, I took in five or six Rolexes,’ says proprietor Brian O’Brien.”

“Fast Eddie’s has been in Riviera for 21 years, so there’s plenty of local perspective. And since the economy started to tank, says O’Brien, ‘it has been a whole different level of customer.’”

“There are contractors, for instance, and insurance agents whose clients have stopped paying monthly premiums. And they are not bringing in junk - witness the wave of Rolexes.”

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Comment by Ben Jones
2008-01-22 06:23:15

60% off houses, 80% plus off land and still sales struggle. And we’ve now seen these sized drops in parts of Florida, Arizona, Nevada and California.

And to think less than a year ago, posters that claimed to believe there was a bubble in housing, would lecture us that 30% off was unrealistic….

BTW, I ain’t buying the Orlando Sentinels line. Inventory is off 25% they say. But how many thousands are left? This stuff about needing to have finished houses is a rationalization, IMO. These guys are building to keep money coming in, and will almost certainly continue to undercut the resale market.

Comment by auger-inn
2008-01-22 07:03:54

At some point I would think that REO’s and short sales will take the market lead because builders will not be able to continue to build at a loss and they can only reduce costs so much. That point can’t be too far off with the banks rapidly expanding their inventory of repo’d homes. Used homes can sell below their replacement costs since the bank is sucking up the losses. New homes either have to break even or the builder is on a unsustainable path that HAS to end with BK at some point, which I’m guessing is sooner rather than later given the fact we just heard anecdotal evidence from a poster that mentioned his banker friend would lose his job if he originated a loan that went bust.

Comment by Michael Fink
2008-01-22 07:29:29

That is true, but remember 2 things. Most of the land in FL is, effectively, worthless; there is a gross oversupply of buildable land in FL, the days of these builders paying 500K an acre are over, try 25K an acre. That will dramatically reduce the cost of a new home.

Also, the huge profit margins for the builders (and all the contractors) are also at an end; further reducing the price of a home. Housing in my area was (at the peak) selling for about 300 a sq/ft. That can drop to 100-125 a sq/ft and the builders can still make money (assuming they control their costs).

Comment by DinOR
2008-01-22 07:36:37


I’ll have to agree. It’s a LAND bubble! (Always has been). Robert Schiller noted the same recently. Even here in OR we’d seen buildable lots go for as much as 200K. When you’re paying that much for a damn lot there simply isn’t a way to deliver affordable product. (No matter HOW MANY corners you cut as a builder). Right now in Las Vegas homes are being advertised as being UNDER $100 s/f!

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Comment by auger-inn
2008-01-22 08:39:34

I see your point Mike but what I’m saying is that the REO’s will be selling for way below $100/sqft or whatever the builders set as their break-even price. This because REO’s will be forcibly sold into the market (IMO) and of course used houses are normally priced below new housing to begin with and why would someone buy a REO if they could get a new one for the same price? Assuming this is correct, that means that the REOs will undercut any possibility of builders to breakeven and service loans. Therefore, I stand by my earlier comment that REOs will set the market shortly and it won’t make a tinker’s damn whether the builders get the land for free or not, they won’t be able to lower the other costs enough to compete with REOs. Obviously this all hinges on how aggressive the REO sellers get. Who knows how bad the scramble for cash will be?

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Comment by Michael Fink
2008-01-22 09:06:02


I see what your saying, and I agree. It will make less and less difference what the “cost” of creating a new home is (land + construction) as this crash goes forward, because, as many of us have said before, the REOs and auctions will be the primary drivers of market value. There’s simply no need to build new homes in this country for the foreseeable future (probably could stop ALL construction for 2-3 years and have no shortage), and, because of that, the prices are, as you said, going to be set primarily by the short sales and foreclosures.

The REO sellers will get as aggressive as it takes; they have to unload the properties, and they will be the ones setting market price. 100/sq/ft is probably where most of the builders will define as “breakeven”, but, even so, they will be undercut by the REOs that continue to flood the market.

Comment by DinOR
2008-01-22 09:16:05


Over the long-term your assessments are accurate. I think though in the short-term the price reductions (and diminished expectations by the builders) are key. I’ve looked at some of the REO’s and thus far, I don’t see any bargains. However!! Once we reach the intersection of REO’s/SS’s under-cutting even the lowest prices builders can function at, there will be no looking back!

In the meantime I’m cheering for the builders to add more cheap inventory.

Comment by Dan (from SoFla)
2008-01-22 10:50:48

The REO/auction carousel is just beginning. The further it goes, the more steam it’ll pick up.

Much like the 10/20/30% sequential growth that you saw on the upside, you will see on the downside.

Comment by James
2008-01-22 10:54:31

Seems that ole CH Smith was correct on his econoblog. A good number of places the value of real estate will be zero and can not be sold or given away. Back woods Fl, Cali and over tax burdened places like Detroit.

BTW great Star Trek like headline… Materialize, as in through the transporter… beam me up.

Comment by Carbonator
2008-01-22 15:52:28

Thing is, builders HAVE TO build. It’s what they do, and if they don’t build, they are out of the market.

A no-win scenario for many, many builders, who have to add to built homes inventory, or build to “value-add” overpriced land inventory.

It’s going to get ugly, and my guess is that the only survivors will be the small builders, who are able to suck in their testicles and hybernate for the next five years or so.

Comment by aNYCdj
2008-01-22 08:51:56

WELL golllly gee willikers batman…..who would have thought 2 years ago,that holding someone responsible for bad loans was a good idea.
his banker friend would lose his job if he originated a loan that went bust.

Comment by Cobradriver
2008-01-22 07:38:34


I will put the 25% drop into perspective. I noticed a lot of signs pulled right at the end of the year with the listings also pulled. A lot of the drop off is because people are trying to reset their listings. Not to mention the end of the snowbird selling season.

As for Charlotte County and Port Charlotte we had roughly 10400 lots and resi listings in Nov. Dropped to 9100 after the first of the year. Already back up to 9600. So they are loco that the market is picking up.

Quick stats…
Jan 2006…Resi under 100k - 67
Jan 2007…Resi under 100k - 450

Jan 2006…under 10k - less than 10 and selling at that price.
Jan 2007…we rocketed thru 200 listings with NOTHING selling.

Sarasota still has the “It will not be all that bad here” attitude,at work anyways…
I am trying to come up with some accurate sales numbers but for Jan they have fallen off a cliff so far…


Comment by ghostwriter
2008-01-22 11:00:00

One small town I’m watching had 444 listings before the holidays. Then it dropped to 407. Three weeks into the new year and it’s already at 440 again with no end to the ceiling in sight.

Comment by ghostwriter
2008-01-22 10:51:45

Problem is with building spec homes in the higher end, people who have that kind of money want to have a home built to their specifications not some builders. Probably 1/3 of every house built will not suit what they want. He’ll be stuck with them.

Comment by Will
2008-01-22 12:11:01

My guess is that with land prices off so sharply, sharp contractors can build profitably for less than the wishing prices still in place on most existing homes. New homes will likely continue to keep downward pressure on the market until prices reach 1998-2000 levels plus cummulative cost increases–say 20-25%. We don’t seem to be there yet in most of FL, excepting perhaps Cape Coral, North Port, and such obviously undesirable areas where prices must fall well below replacement cost just to eliminate the inventory overhang.

Comment by Bill
2008-01-22 18:43:29

Strangely enough with all the FL nonsense, I’m trying to book a reasonable hotel for this coming weekend in Tampa and finding rates more than twice what I paid last year.

Comment by dennisd
2008-01-22 06:44:35

“These guys are building to keep money coming in, and will almost certainly continue to undercut the resale market.”

Won’t their financing eventually dry up?

Comment by Ben Jones
2008-01-22 07:41:02

Not as long as they can show the lender a paper profit. When builders fail or sell lots at a loss, chances are the new owner will want to do something with it, but now has a lower basis. This process could go on for years.

We’re apparently seeing a crash in parts of Florida, but prices could fall just as much at a slower rate.

Comment by Neil
2008-01-22 09:21:57

If anywhere is going to crash, South Florida will be the place. Vacant housing exceeds demand by multipiles that are staggering.

The question is, how much will rents drop to fill all of the units? It can be the failed condo conversions you quoted above or purpose built condo towers that open as rentals.

I also wonder how many steel skeletons will persist in Florida? With the knowledge that a recession is coming/here, its going to make selling vacation property that much tougher.

Years of fun ahead… sigh… I really wish we didn’t have to witness it, but it has to happen.

Got popcorn?

Comment by Ann
2008-01-22 09:44:37

I agree with you Neil..SFL..has its way share of problems..I have seen homes reduced by 200-300K and still no buyers..gated communities where you couldn’t get in for less than $750K now at $500K..still not selling..

Even with the feds cutting rates..it isn’t going to do much for SFL..since so much of that area is already underwater..

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Comment by Fuzzy Bear
2008-01-22 10:06:28

I also wonder how many steel skeletons will persist in Florida?

I talked to a banker friend who last night informed me that his bank had over 60,000 homes they now own in Florida and none of these are on MLS or have hit the market. That is just one bank!

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Comment by Dan (from SoFla)
2008-01-22 10:56:16

SoFla rentals - and I asusme this is true throughout the entire state - are still running off the pre-reset ARM’s.

If you’re making small payments, you can ride it out for a while, especially if you think that the “bottom” is near and 2009 will bring a turnaround in sales.

So, one has to wait for these loans to reset at full pop or, as more likely, for the owners try to get anything that they can.

But this will take a while.

Let’s not forget that there’s plenty of construction still to be finished, with thousands of units coming on the market in the next 6-18 months.

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Comment by tuxedo_junction
2008-01-22 10:31:55

Desperate bankers are making construction loans for fee income and to recognize accrued, but not collected, interest. This is done by banks that are already dead but through this foolery can be kept going for another year. I think the idea is to buy time for a larger bank to acquire them. For the executives, rank-and-file employees, and shareholders being acquired sure beats being placed into an FDIC receivership.

Comment by aladinsane
2008-01-22 06:55:02

“If you want a ground’s eye view of local economic trends, you can cruise on down to Fast Eddie’s Pawn in Riviera Beach. ‘Last week, I took in five or six Rolexes,’ says proprietor Brian O’Brien.”

I know the pawn shop biz very well, and 5 or 6 Rolexes getting hocked in one week is not normal.

When Fast Eddie accumulates a few dozen of them and finds that an item that used to be in demand, isn’t anymore, is when he stops loaning on them.

Time is fleeting…

Comment by Michael Fink
2008-01-22 07:36:12

Hmm… That’s right down the street from me, maybe I will cruise down there and get a “on the ground” view of that pawn shop. Also, for those that don’t know, walking by Fast Eddies with a Rolex on your wrist is pretty much committing suicide. Rivera Beach is one of the most dangerous cities in this country; I wonder why on earth someone would go there to pawn a Rolex?

Comment by edgewaterjohn
2008-01-22 08:31:14

“I wonder why on earth someone would go there to pawn a Rolex?”

Because they don’t want their neighbors to see them do it?

Comment by Michael Fink
2008-01-22 09:08:12

Or because they are hoping to get shot/robbed to take their minds off the 1M dollar condo they bought (right down the street) in the middle of the ghetto?


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Comment by Brian
2009-01-26 09:48:11

Take your rolex to the bank they will laugh at you !
pawnshops provide a service to those not a fortunate as you !
The folks that use pawnshops work for a living most
of the time with there hands and sometimes cant
make it to friday.

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Comment by Brian
2008-06-02 08:51:53

ever try to take your rolex to the bank, a smart seller will shop his item all over town and go with the highest price and when you have low over head and good business sense and are happy to buy a watch for $4000 and sell it for $4800 which is 20% profit in 30 days

Propritor fast eddies pawn
Brian OBrien

Comment by KayLaw
2008-01-22 07:40:43

This caught my eye because I seriously need a watch. Right now I’m using my cell phone to keep time. Is it possible to get good deals at pawn shops? Should I dicker?

Comment by Ben Jones
2008-01-22 07:47:11

If the Texas bust is any indicator, pawn shops will be buldging with this stuff. I remember $10,000 watches going for a grand or less. There is a lot of fluff in mink coats, etc. Check out the St Petersburg article. People lossing their livelyhood because it isn’t a ‘neccesary’ thing. Very telling, IMO.

Comment by aladinsane
2008-01-22 08:06:33

I know a few pawn shops that are only loaning on Gold, as the owners know what happens when you accumulate a backroom full of stuff, you can’t sell.

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Comment by aNYCdj
2008-01-22 08:56:15

EBAY EBAY EBAY….lots of FLA pawnshops dump their stuff on EBAY

Usually the starting bid is what they are owed, or just slightly above, so all they need is 1 bid on each item to get their money back.

Comment by aladinsane
2008-01-22 09:16:37

Meg Whitman is retiring as CEO and i’d suspect that eBay sales have fallen through the roof, as most transactions are done using credit cards…

“Ms. Whitman’s retirement would come at a critical point for eBay. The company’s auction business, which allows individuals to buy and sell items online to the highest bidder or at a fixed price, accounts for more than two-thirds of eBay’s nearly $6 billion in annual revenue but has experienced slowing growth rates for the past few years. Any efforts to reverse the slowdown could involve drastic changes that may be more palatable under a new CEO. EBay has already warned Wall Street in recent months that it may alter how it structures its fees for listing and selling items by collecting bigger fees once sales close.”


Comment by Tom
2008-01-22 09:34:37

Ebay got to greedy. They kept raising fees as they were losing users. Profits climbed because the fee hike more than offset the number of users they were losing… till finally… they hit a tipping point. Now sales are flat and users are leaving in droves. They need to lower fees to attempt to get users to come back.

They killed the goose that laid the golden egg.

Comment by Blacque Jacques Shellacque
2008-01-22 09:46:26

“…by collecting bigger fees once sales close.”

Atta way to piss people off and drive off business. Kinda like how Comcast operates…

Comment by dennisd
2008-01-22 08:24:48

IMO, if a watch costs more than $20 new then it costs too much. My mind cannot begin to comprehend spending thousands of dollars on a watch. To each his own, I guess.

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Comment by Tim
2008-01-22 10:06:21

If you never wanted to feel good about yourself by believing that your watch is worth more than another’s life, Rolax may not be the brand for you. You are also the type of person that never thought of owning a grill.

Comment by Inland Empire
2008-01-22 10:12:05

I bought a beautiful 1963 Omega Seamaster for $125.00 on eBay. The original cost (it came with the manual and box) was $64.00. I then proceeded to spend another 1,000.00 to restore it to its original glory. Wow, what a sucker I am, but I love that watch. The most expensive thing I have ever bought for myself (besides a car and house).

Comment by Lane from s.c.
2008-01-22 11:15:51

At least watches don`t have much of a bubble. You have a great watch. I have a rolex gmt that I bought it in 1985 back when I was 19 y/o. 23 years later I love it more. And i could sell it for about $3000 more than i paid. But nice things a aren`t for every body like someone said. I`m still a tight wad though, but I also like nice things. Not trying to impress anyone either, cause It only shows when I wear my beach bum cloths and most people prolly think its fake.

Comment by KayLaw
2008-01-22 08:37:49

Wow, thanks. I read the story and find it really sad. I sure don’t want people to lose their jobs so I can scoop up their stuff. My husband and I do all right but prices on many things have risen to the point that we can’t purchase things we once could. For example, despite our income and savings we can’t afford a value resort when we take our boys to Disney. We used to easily afford a moderate resort but now use Hotwire or Priceline.

I have to seek bargains or we won’t have money much longer.

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Comment by aladinsane
2008-01-22 08:56:15

For whatever reason…

The quartz watch that comes free with a happy meal @ Mickey D’s, tells exactly the same time as a Rolex.

Comment by dennisd
2008-01-22 09:12:34

I think I’ll go get a happy meal for the watch, then throw away the happy meal (or feed it to my dog).

Comment by NoVa Sideliner
2008-01-22 10:07:29

Poor dog.

Comment by ghostwriter
2008-01-22 11:10:10

We too used to stay at moderate resorts with our 2 boys. They are grown now and a Disney stay for the two of us is more than it was for 4 before. We stay at the value resorts, but they are even fast pricing themselves out of the market. It’ll be interesting to see what kind of deals they offer this year. That’ll really tell how the FL tourist trade is doing.

Comment by DC in LBV
2008-01-22 12:44:08

We have been antique shopping on Craigslist for the past few months, and I have been really amazed at the deals out there right now. A lot of people moving out of FLA, or needing cash to pay bills. If you have cash, you can walk away with very nice stuff right now. We have a queen-sized, chippendale style, mahogany poster bed with an almost brand new set of Tempurpedic mattresses that only cost me $400 cash. Someone took over a $3k haircut on that one, and I was all too willing to provide it.

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Comment by dennisd
2008-01-22 08:31:04

I would recommend that you just buy a decent but inexpensive watch at a discount store. If you’re looking for deals, perhaps buy from a reputable seller on e-bay. My 2 cents.

Comment by jetson_boy
2008-01-22 10:20:37

The best watch I’ve ever owned is the watch I have now. Bought it for $12 at Wal-Mart two years ago. The thing is waterproof, has a 10 year battery, and actually looks decent. I bought it because I do a lot of welding/fabrication on weekends. I even took it to Hawaii and took it 20 feet underwater. So far its really taken a beating.

My classic watch is a 1967 Acutron Spaceview. You can see all the guts of the watch and it ‘hums’ because it uses a weird electromagnetic tuning fork. I only wear it on special occasions.

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Comment by ghostwriter
2008-01-22 11:04:53

Don’t bother with the watch. I have several laying in a drawer. I still use my cell phone to tell time.

Comment by Spacepest
2008-01-22 21:39:42

Now if I could get a cell phone small enough to fit in the face of a regular sized woman’s watch, I’d be ecstatic. Not only would I bother to wear a watch again, but I could leave my cell phone at home. (Plus I’m one of those weenies who ALWAYS leaves her cellphone behind on a countertop at home, or in her car drink holder. It would make my cell phone so much more findable when it rings and I’m at the opposite end of the house).

And call me a vulture, but…mmm…good stuff is starting to trickle down to the pawn shops again? Hot damn, I haven’t killer deals in pawn shops since my early college days. And I’d like to replace some worn down furniture soon….

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Comment by Cobradriver
2008-01-22 07:42:42


A friend lives next door to a pawn shop owner in Naples,Fl.
Never asked the name but he mentioned his neighbor has not bought a single item in over 3 months. I guess the storage area is packed full…Also lack of resales is killing him.


Comment by aladinsane
2008-01-22 07:55:46

When you can’t sell the stuff people didn’t redeem, @ really cheap prices, you just might have a pawn shop crisis.

Comment by edgewaterjohn
2008-01-22 08:36:42

All those FBs pawning their stuff need to realize something. Many savers have had an entire lifetime to buy the kinds of things they are now pawning - and chose not to do so. Most that stuff is out and out garbage, the good stuff will sell but it won’t be enough.

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Comment by tuxedo_junction
2008-01-22 10:35:29

Times are tough when pawnshops appear in strip centers located in middle-class neighborhoods. Usually, pawnshops are where the payday loan outfits and St. Vincent de Paul outlets are located. Also the “we buy blood” places.

Comment by ghostwriter
2008-01-22 11:15:20

I live in a small city of 5500. This town will not even allow a bar, has no rundown housing & yet we now have 2 check cashing stores and a tatoo parlor. Years ago the city council voted down a tatoo parlor and a pawn shop. The check cashing stores tell it all, they have large plate glass window and we can see they always have people in line inside.

Comment by Quirk
2008-01-22 06:59:54

Breaking news — Bernanke cuts by 0.75%!

Comment by not a gator
2008-01-22 07:03:17

that goes in bits bucket dude–this isn’t slashdot

Comment by DinOR
2008-01-22 07:14:58

Right, not important.

Comment by JP
2008-01-22 07:39:52

I, for one, welcome our new renting overlords.

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Comment by edgewaterjohn
2008-01-22 08:38:27

Preach it, Kent!

Comment by SanFranciscoBayAreaGal
2008-01-22 12:27:31

Childhood’s End?

Comment by Quirk
2008-01-22 08:04:42

Hey, it affects Florida. Everyone here has fake money and they live and die on interest rates.

Refinancing is the biggest no-brainer in the history of earth, after all.

Comment by not a gator
2008-01-22 07:00:12

Did the Sun Herald fire their editor? “has water the grass”? “market is stagnate”?

Okay, I know it’s Southern dialect, but unless we’re writing newspaper articles in “dialeck” now–!

Comment by tuxedo_junction
2008-01-22 10:36:48

I think we only teach English to immigrants.

Comment by DinOR
2008-01-22 07:08:07

For all the Real Estate Perma-Bulls out there that said there would NEVER be a singular day we could point to as the “tipping point” I offer:

22 January 2008.

Mark that on your calendars as “The Day the REIC Died” (and your career ended)

Comment by crispy&cole
2008-01-22 07:13:58

I dont know rates on 30 year mortgage are now below 5% AGAIN. Lets creat another bubble - joke. THey meet next week.

Comment by DinOR
2008-01-22 07:19:39

We’d heard rumors that a lot of Hedge Fund mgrs. were doing their typical end of year window dressing but this time they were going to get to cash as quick as they could in Jan. I think Wilbur Ross said it right. “For the longest time no one was afraid of anything (now they’re afraid of EVERYTHING!)”

Comment by Michael Fink
2008-01-22 07:33:44

It’s too late to make reflate (my made up word) the bubble in RE. The problem is psychology, people ALL know now that prices of homes can, and do, drop. Once the “guarenteed” 20% appreciation is wiped from the table, the only thing that matters is the price/rent ratios (and, to some extent, the price/median income). Why buy when you can rent cheaper; especially when there is a GOOD chance that the price of the asset will fall in the future. There are going to be so many horror stories of people “under” their homes in the next 5 years that the entire psychology of home buying will change.

IMHO, until rent and prices fall in line, the crash will continue. It’s inevitable at this point, the FFR can drop to 0; it will not push the money back into RE.

Comment by DinOR
2008-01-22 07:50:21

“Reflate” works for me. Even with this morning’s frantic string pushing, there’s no incentive to lend on a depreciating asset. Why tie up capital for 30 years @ 5.5% (especially when rates are almost assured of going MUCH higher long before THAT mortgage will ever mature!) Obviously that paper will become worthless in the secondary and most banks already have enough of that. Rather than looking for ways TO do the loan now lenders are looking for any excuse NOT to do the loan?

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Comment by Arizona Slim
2008-01-22 08:39:49

If banks aren’t doing loans, then how will they make money?

Comment by Evil Capitalist
2008-01-22 14:05:56

Service fees

Comment by Mike
2008-01-22 08:51:24

Y’know, Michael, I agree with you but never underestimate human “greed” factor. I’m sure there are plenty of financial advisors (lol) out there and organizations like the NAR who are 100% certain to launch a campaign to suck in those who missed the boom, with the old “Prices have bottomed and there has never been a better time to buy.” b.s. Even as I speak, the shills are being paraded on the CNBC Comedy Business Show, touting the theory that even if we are not exactly at the bottom, there are a lot of bargains to be had.

Of course, The CNBC Business Comedy Show is a joke and only worth watching for the comedy factor. My favorite comedy actress being Maria Bimbolini. I get a kick judging how much collegen she has injected into her lips on a daily basis but the shills are already coming out in full force, totally twisting the true financial situation. I actually heard one shill say it’s getting near to the point where FB’s can re-finance at much lower rates. Have no fear - there are plenty of suckers who will buy into it.

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Comment by Michael Fink
2008-01-22 09:15:13

Will their be any banks willing to re-fi these idiots, that’s the real question, imho…

Yes, the rates will be lower; but, at the same time, do you want to take on a massive amount of risk (asset depreciation, consumer inability to pay, coupled with propensity to walk away as the prices fall to a certain level) for 5% interest? No way in he** I would lend money in that situation; I have a feeling the banks are going to eventually come to same conclusion. If you don’t have a rather large stake in the game (20+% equity in the home) they aren’t going to want to talk to you. And, in the really bubbly areas, they might not want to do the re-fi no matter how much equity you have…

The 2 driving factors are fear and greed. I think that fear has taken hold, and will continue to drive the housing market for the next 3-5 years. People just want to protect themselves from this downdraft; and, frankly, anyone who still listens to the NAR; after their string of monumentally bad calls over the past 2 years, absolutely needs their head examined.

Comment by hd74man
2008-01-22 08:51:58

RE:are going to be so many horror stories of people “under” their homes in the next 5 years that the entire psychology of home buying will change.

Not if they can convince the courts to pawn off their purchase decisions. $100k up-I’m a genius…$50k under-sue the broker-it’s his fault.


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Comment by Dan (from SoFla)
2008-01-22 11:12:16

Reflate is an old and well accepted term.

And you (meaning the Fed) can’t reflate the existing bubble. It can only try to inflate some other one and ability to do so falls lower and lower as the overall debt levels go higher and higher.

At some point, you’re reflating Weimar.

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Comment by ghostwriter
2008-01-22 11:21:16

It’s too late to make reflate (my made up word) the bubble in RE.

Come did you really make this word up or did you steal it from Bush

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Comment by simplesimon
2008-01-22 08:07:50

this would have been the right way to build a stronger economy. low rates, stable products. i’ll say it again. The products/prices jammed everything in to 3-5 years instead of 10-15 years of steady, unspectacular growth. The wrong peeps are running the show.

Comment by Mugsy
2008-01-22 07:09:29

Haven’t seen anything on the Keys lately. The Keys News never publishes anything relevant to the market down there so as not to destroy their advertising base. Anybody have an update with recent numbers?

Comment by NoVa Sideliner
2008-01-22 10:19:37

Did you see the HGTV “Dream Home” down there? $2.2 million, or such is the value they assign to it — and probably report to the IRS for the lucky (?) winner.

So how much would insurance cost for such a home on Islamorada? And air conditioning for a couple of thousand square feet? Ouch. And Worst of all, Florida property tax.

But the worst thing is that the IRS would nail you for about $770k, and if you’re a winner from an income tax state, add another $100k (or more) onto THAT! Now where are you going to get the money to finance that, eh? Heck, you’re not even in the ballpark for a Fannie/Freddie mortgage, so you’re looking at high rates and a massive mortgage payment. I’m guessing $4500/month just in interest.

So you end up selling the house, and you pray that you get at least a million for it to cover the taxes and pre-sale maintenance costs. I wonder, though, what it will actually fetch in today’s market.

Comment by Not_In_Montana
2008-01-22 11:05:17

I wonder if they can just opt for net cash-in-lieu like you can with other game shows.

Comment by NoVa Sideliner
2008-01-22 11:51:28

Nope, no cash-in-lieu.

Though in the fine print, you will see that YOU are the one who doesn’t have the choice, but they do! And of course:

“All federal, state, and local taxes on prize are winner’s responsibility. Winner will be issued a 1099 tax form for the ARV of the prize.” (ARV being Approx Retail Value)

And more fine print:

“Real estate transfer taxes, deed recording charges and closing costs, if not the obligation of the Developer pursuant to an agreement with HGTV (the “Home Contract”) to acquire the home, shall be the sole responsibility of the Grand Prize Winner, as will all current and future real estate taxes and all other taxes, costs, fees, and expenses related to the maintenance of the house commencing as of the date the Grand Prize Winner accepts the Grand Prize. Title insurance and homeowner’s hazard and liability insurance shall be the sole responsibility of the Grand Prize Winner. The Sweepstakes Entities shall not be responsible for construction delays and condition of title to home shall otherwise be as set forth in the Home Contract.”

So it might be fun (for a week) to win that white elephant, but 99% of us would have to sell it ASAP before it drove us into bankruptcy.

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Comment by ghostwriter
2008-01-22 11:26:19

You as I’m watching the Keys dream house show last night, I’m thinking the same thing. How would you ever pay the Income tax on that windfall, let alone insurance, property taxes etc. Remember a year or two ago when all those people on Oprah won cars and there was a big mess with them being taxed for their winnings.

Comment by SFC
2008-01-22 11:08:45

If would LOVE to know what the current value of those tiny converted hotel rooms at Cheeca Lodge are now going for. They were what, $500K for 400 sqft or something? Also wonder what happened with those new oceanside townhouses that looked like two single-wide trailers stacked on top of each other, starting at $1 million.

Comment by ghostwriter
2008-01-22 11:29:02

Celebration FL is trying to build a condo hotel. Some rooms are $575k for 714sf and you can only use them 170 days a year. Who’s going to buy them when you can buy a whole condo there now for $123-$175sf and use them 365 days a year.

Comment by Mugsy
2008-01-22 07:11:12

Drives me nuts when posts don’t show up…grrrr!

Comment by Mugsy
2008-01-22 07:13:37

Any Keys news or numbers? Any links to finding some numbers on Keys RE?

Comment by myamuhnative
2008-01-22 10:23:59

don’t have numbers for you but drove down to just north of marathon last week to have dinner. It was amazing that there was no appreciable traffic on the roads-and keep in mind that this time of year is generally a “turn right to go left” traffic situation. The few stores we stopped at were dead as well.
one of my out of town passengers noted several “dead” developments that looked like work had stopped and workers just walked away.

Comment by dave
Comment by ghostwriter
2008-01-22 11:30:58

Love the cartoon on that site. This is what it’s really like.

Comment by palmetto
2008-01-22 07:13:58

‘I’m showing a three/two (bedroom/bathroom), 1,500-square-foot home in North Port that was selling for $250,000 in 2005,’ he said. ‘Now, you can get it for $130,000 to $150,000.’”

Yawn. We’re talking $80,000 for a house in North Port, buddy. Or, how about they pay me for living there?

Comment by exeter
2008-01-22 07:22:50

There is some nice new stuff for under 150k in Northport. Well… It appears nice but construction quality is a ? unless I can be there to get a looksee.

Comment by flatffplan
2008-01-22 08:02:44

how can you screw up ABS on a slab ?

Comment by exeter
2008-01-22 08:28:32

Hmm… lets see. What was the mix design for the slab? Did they actuall provide stated mix? What reinforcing requirements are there for slabs in Florida? Was the subgrade prepared properly? What are subgrade requirements there? Is dialating sand common in Florida? Did the hackers called carpenters run out of 2×6’s and shim out 2×4s? Are the walls square and plumb? Were floor joists full span without beam but there is actually suppose to be a beam there?

What else?

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Comment by auger-inn
2008-01-22 07:31:39

Exactly palmy, get back to me when we get to 1999 price levels so I can watch a legitimate RE crash. Until then, we are just talking about BS wishing prices with no underlying fundamentals going away.

Comment by Ben Jones
2008-01-22 09:52:04

IMO, it is important to the overall market, because it is lenders getting caught in this. These wipeouts like North Port are where those billion $ losses we read about originate.

Comment by Fuzzy Bear
2008-01-22 13:23:38

‘Now, you can get it for $130,000 to $150,000.’”

Ten years earlier, you could have bought that house for $80,000.

Comment by WT Economist
2008-01-22 07:18:07

Today, Florida. Tomorrow, the world.

I get the feeling that what will have is the opposite of, say, 1996 to 2005. The capital cost of housing will get cheaper, and everything else will get more expensive, including the operating cost of housing.

Comment by Neil
2008-01-22 09:33:57

I agree, except I expect domestic wages to suffer deflation for ~3 years. In particular, the non-portable skilled will see sharp drops in wages. Those that are geographically mobile with mobile skill sets will be ok.

I do expect the proffesions that saw an income increase during the depression to see an income increase again. Oh wait… that was only dentists (because if you don’t take care of your teeth, you pay big time to repair them and dentists can demand cash upfront).

Got popcorn?

Comment by Fuzzy Bear
2008-01-22 10:37:30

I agree, except I expect domestic wages to suffer deflation for ~3 years.

I agree, wages are already suffering by not keeping up with inflation. I have a report that clearly shows that the jobs being sent offshore, I.E. manufacturing, enginering, computers and accounting are tied to wages being too high in order for corporate America to compete. With that said, home prices, etc. will continue to fall or if wages increase, the pace of offshoring will increase.

For those who do not believe this will happen, just drive through Michigan, Indiana and Ohio and talk to the locals, you will be shocked at the suffering up in these areas!

Comment by ghostwriter
2008-01-22 11:34:57

The one thing I see with the jobs going overseas is that the cheap workers over there can’t afford these companies products and pretty soon all the people over here out of work won’t be able to afford them either, so eventually these companies will cease to exist.

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Comment by James
2008-01-22 11:09:40

We will still be building weapons. We are going to need them soon.

You and I will be OK.

Comment by cocoa beach
2008-01-22 11:04:21

“I get the feeling that what will have is the opposite of, say, 1996 to 2005. The capital cost of housing will get cheaper, and everything else will get more expensive, including the operating cost of housing.”

Visionary statement. We’re getting closer and closer to the edge of a Mad Max world.

Comment by kuros
2008-01-22 07:44:13

i sold my house in Sarasota fl! My agent originally had the house listed at 335.000 which i knew was unrealistic
A buyer came along with 80,000 cash and i settled for 285.000
But i sold!

Comment by Quirk
2008-01-22 08:06:54

But can you close? That’s the real question.

Comment by NotInSarasotaAnymore
2008-01-22 09:16:37

Congrats! I sold in May of ‘06 and it took me 10 months and 2 price reductions. You can buy that house back for under 200 someday.

Comment by Sobay
2008-01-22 07:56:32

“‘You can forget the ‘retire at 62′ stuff,’ he said. ‘It gets scary when you start dipping into things you spent so many years saving for.’”

When you ’start dipping’ into your nest egg / savings - it’s time to shut down the operation.

Comment by DinOR
2008-01-22 09:04:52


Good advice. The funny thing about booms and manias is that they never last quite long enough to script that early exit now do they? What we’ve noticed here in OR is that sellers are as entrenched as ever b/c they were so sure RE was their ticket to early retirement they didn’t bother funding their savings/ret. plan.

Now they seem to have no choice other than to “tuff it out” on the sale of their home as the exits to downsize get crowded fast. We debate inventory, the growth of inventory, DOM etc. til we’re blue in the face but all that aside, I’ve never seen so much for sale at the same time in my life!

Comment by Anthony
2008-01-22 09:40:20


I’m noticing the same in Eureka, Cal (just south of the Oregon border). Prices have barely budged despite all the carnage in the rest of the state.

Comment by Arizona Slim
2008-01-22 10:04:00

Here in Tucson, we’re seeing a lot of houses that fail to sell.

In time, some of them become rentals, but guess what? There seems to be a shortage of quality renters. (Who knew?) But, not to worry. Enterprising REIC types have your back. I just saw a luxury car sporting a rear window sticker for…


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Comment by DinOR
2008-01-22 10:09:25


Now it’s been awhile since I’ve been through there but I love that part of the country! Usually we go through Alturas and Susanville etc. on our way to Reno/Vegas. Just love it.

I have heard a lot of people from the BA and SoCal make the same observations, and I don’t like to hear it! It doesn’t fit my tidy little theory that “rolling bubble” markets will suffer first (and the worst). So far that really hasn’t held true. However we’ve been right about 99% of our predictions and I’m confident in time this will bear out as well.

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Comment by Mike
2008-01-22 08:35:18

FB’s are starting to sue Realtors. Hurrah! Seattlepi.com has a story concerning an FB who is suing the realtor because the realtor “mis-lead” and “hid facts” concerning prices in the area so that the realtor wouldn’t lose out on the $30,000 commission. This is wonderful news. Real estate lawyers and other agents say this will be the first of many such cases.

Actually, the probability is the court will dismiss the case. There are so many angry FB’s out there now that if a realtorwhore were to win, the tsunami of court cases would clog the system for years. However, it’s going to cost realtorwhores a LOT of money just to defend themselves.

When I see these brokers and realtors losing their homes, their marriages breaking up, their credit in shreds, I might even start believing is god….well, maybe not that far but my faith will be restored in poetic justice.

Comment by Fuzzy Bear
2008-01-22 09:23:55

What happened to the market has left us all shaking our heads.’”

It’s the cool aid they drank during the boom that is causing their head shaking.

Comment by Arizona Slim
2008-01-22 09:57:19

The “Gosh-golly, what happened?” media rhetoric is really starting to grate on me.

If they wanted to avoid the market-induce head-shaking, they just needed to come here. We would have set them straight in a New York minute!

Comment by Arizona Slim
2008-01-22 09:59:19

Oops. I meant to say “induced.”

Comment by CarrieAnn
2008-01-22 09:27:48

I’m so jealous of you Floridians. In the towns I watch in CNY although sales are just 10% of last years Oct - Dec, (9 vs 91, 2 vs 21), list prices are actually up. I guess the facts are going to take a little longer to sink in.

Comment by SFC
2008-01-22 11:01:58

That’s because we sent some folks up there from Miami to teach the fine art of cash-out mortgage fraud. Watch out - pretty soon everyone at the Carousel Mall will be speaking Spanish!

Comment by Shawn
2008-01-22 18:05:40

Whoo-Hoo! The Fed cut the rate, time to buy a House! Not!!!

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