It Seemed Like The Sky Was The Limit In Florida
The Nightly Business Report on Florida. “Whether the owners of modest homes in working class suburbs or condominium towers still under construction, Floridians are being squeezed by decisions of their own making, as well as economic circumstances beyond their control. The impact can be seen in cities like Lauderhill, a Fort Lauderdale suburb.”
“Dale Holness, a realtor and Lauderdhill town councilman, says the city has seen its share of foreclosures and steep price declines.”
“‘In Lauderhill, in a condo development called International Village, last January, we had a sale of $192,000. Today, there’s a property on the market there for $89,000,’ he said. ‘That’s a big drop and it’s all over. I handle quite a bit of (inaudable) now for Freddie Mac and it’s sad to see how much foreclosure there is out there and how it affects peoples’ lives also.’”
“You wouldn’t call Sandra Sanchez a real estate speculator. Two years ago, with a daughter headed off to college and the real estate boom in full swing, she purchased this house as an investment property. It seemed like a good idea at the time.”
“‘I’m looking at the ins and outs. Maybe this would be a good idea. But unfortunately, of course, the market took a dip not for the better, but for the worse,’ Sanchez said.”
“Sanchez, struggling now to make payments on two homes, thinks the GOP and Democratic candidates are beginning to pay attention. ‘I think they’re seriously thinking about the matter…You cannot sit back and let things happen to people.’”
The Orlando Sentinel. “International buyers have become the best hope for Central Florida’s beleaguered condo-hotel developers, many of whom have truncated or indefinitely delayed their once-ambitious building plans.”
“Projects totaling nearly 15,000 rooms were proposed throughout the region, and developers launched upbeat sales campaigns that promoted hotel rooms and suites as second homes with cash flow attached. But only a handful of the projects have broken ground.”
“‘We had an incredible window open for 12 or 18 months where it seemed like the sky was the limit,’ said Larry Cohen, VP of Lake Buena Resort Village & Spa. ‘It used to be you could get people to just walk in and sign a contract. Now it takes two or three visits and a lot of questions.’”
The Tampa Tribune . “Live Oak Preserve developer TOUSA on Tuesday joined a growing list of South Florida homebuilders to file for Chapter 11 restructuring. The company, which operates in 10 states, lost $818 million in the first three quarters of 2007.”
“Spokesman Tom Becker said its subsidiary, Engle Homes, plans to continue building and selling homes and pledges to honor new home warranties for 10 years, but those decisions are up to a bankruptcy court judge.”
“Live Oak homeowner Sheldon Cohen said residents are unsure of how to take the news. ‘I see a lot of positives,’ he said. ‘There’s active construction; they’re selling houses. Are we going to get stuck paying the bills? I don’t know.’”
“Florida’s new property tax amendment should give a boost to the state’s housing market and economy, but won’t spark a major turnaround, economists and real estate professors said Wednesday.”
“David Denslow, an economist at the University of Florida, said some people may be encouraged to move now that they can transfer their property tax savings under Save Our Homes. But, in a down real estate market, many of them may fear that they won’t be able to sell their homes.”
“‘Now you know you can take it tax savings with you, but you remain insecure about whether you can sell your house,’ he said.”
The St Petersburg Times. “For all the hoopla surrounding tax relief, St. Petersburg Realtor Nancy Riley compared it to the joy of giving birth, few view Amendment 1 as a magic elixir for a housing market sickened by plunging sales and prices.”
“Typical of industry opinion was Jim Knetsch, owner of Tampa’s RE/MAX Realty Associates. ‘It’s not perfect, but it’s a start,’ Knetsch said. ‘Is it going to be a dramatic enough boost to see the benefits through the static of the negative market we’re in? The question’s still out on that.’”
“Opponents of Amendment 1 vow to challenge the measure in court, arguing it discriminates against out-of-staters moving to Florida, who can’t use portability.”
The News Press. “Don’t expect to see a turnaround in Southwest Florida’s housing market for at least two years, a business data expert said at a construction forum in Estero.”
“‘It may be into 2010 by the time the single-family-home market turns around here,’ said Cliff Brewis, senior director editorial for McGraw-Hill Construction. ‘The single-family home market got way out of line’ in terms of prices and the numbers of homes built here, he said.”
“Metrostudy said the inventory of finished, vacant houses declined slightly from 2,096 at the end of the third quarter of 2007 to 2,066 at the end of the year. By the end of 2007, there were 1,181 units under construction.”
“In Lee County, the inventory of vacant developed lots declined from 8,228 in the third quarter of 2007 to 8,207 at the end of the year — a 50-month supply of lots, according to Metrostudy.”
“Collier County’s vacant developed lots decreased from 5,444 to 5,437 in the same time period. That’s a 39.5-month supply.”
“Some of those attending the conference said the foreclosure crisis has already hit home. ‘Don’t even talk about a profit margin right now,’ said Dianne Miller, who works in sales at Fort Myers-based Meridian Construction, the lack of work has residential contractors competing at rock-bottom prices with commercial builders like Meridian.”
“In the long run, Brewis said, the construction industry won’t recover until housing is priced more realistically. ‘Prices have to come down — they shot up too dramatically.’”
“TOUSA Inc., the Hollywood-based parent company of Engle Homes, is seeking to reorganize under federal bankruptcy laws. Engle attracted some attention late last year with its advertising campaign and attention-grabbing slogan — ‘The End is Near.’”
“The message, on billboards and television commercials, was that the days of declining prices for homes were reaching an end.”
“TOUSA, the largest builder to file bankruptcy and at least the 14th since June, missed three interest payments this month as home sales and prices fell in Florida, where the company does most of its business.”
“Cookie Shepard puts a face on the housing market’s brutal impact on local government. The 27-year Lee County employee wheeled personal belongings from her office to her car in downtown Fort Myers.”
“With a co-worker’s help, she stuffed her SUV’s trunk, one victim of 29 layoffs within the Community Development Department announced that morning. ‘It was kind of like a public hanging,’ Shepard said, fighting emotions as she climbed into the driver’s seat. ‘I am raw right now. I really feel like human garbage.’”
“‘It is a difficult day,’ said Joan LaGuardia, department spokeswoman. ‘These are our co-workers; some of them have been with the county for such a long time. I don’t know what the alternative is. We don’t have the revenue coming in to pay them because things aren’t getting built. There just isn’t work.’”
“LaGuardia said 51 single-family home permits have been filed this month in unincorporated Lee County, Bonita Springs and Fort Myers Beach. That includes North Fort Myers and Lehigh Acres. ‘At our peak we were doing 1,000 a month,’ she said.”
The Naples News. “In 2005 — the peak year for Lee County building — the county issued 45,026 permits, 10,221 for single-family homes. By 2007, those numbers fell to 27,769 total permits, 2,393 for single-family homes.”
“‘It’s with a heavy heart that these layoffs have to occur at all,’ Commission Chairman Ray Judah said. ‘But it’s with the understanding that these particular jobs are fee-supported. Because of a significant decline in permit applications it is necessary. The work is not there.’”
“‘We’re looking at people working directly for the building industry,’ said Mary Gibbs, community development director, who must deliver pink slips to employees today, some of whom worked for the county for 25 years. It’s the first county layoffs Gibbs remembers for over a decade.”
“‘It’s terrible to have to lay people off,’ said Michael Reitmann of the Building Industry Association. ‘The building industry had to lay off 50 percent of their workforce in some cases.’”
The Herald Tribune. “Countrywide Financial Corp. says Manatee, Sarasota and Charlotte counties are among the riskiest communities nationwide in which to make mortgage loans. The nation’s largest mortgage brokerage listed the three counties, along with nearby Collier County, among 22 communities with serious mortgage problems.”
“‘If you’re a lender, this data is telling you that these are the weakest housing markets in the nation,’ said Ken Thomas, a Miami-based economist who specializes in analyzing the banking industry.”
“‘If you know they are the weakest, you won’t want to lend at 6 percent, you’ll want to lend at 6.25 percent,’ Thomas said. ‘Instead of 20 percent down, you’ll want 25 percent down. It will definitely make it more difficult for people in these markets to get credit, and those trying to sell will find it more difficult to sell.’”
“The Sarasota-Manatee real estate market now has a 2.4-year supply of homes on the market and a three-year supply of condominiums. Until those numbers drop to six- or seven-months’ worth, builders will not start building again, and Southwest Florida’s main economic engine will remain in the doldrums.”
“‘Things will not return to normal until 2010 or 2011,’ Thomas predicted.”
“‘All the regular conventional loan products are still there,’ said Amanda Painter, an agent in Port Charlotte. ‘The only ones that have been hurt by all this are the creative mortgage companies. The days of creative financing are over.’”
“Also on the list were six counties from California, four from both Arizona and Nevada, and one from Michigan. They were all communities hot during the housing boom.”
“‘They are where the bubble got the biggest and where it has deflated most,’ Thomas said, adding that Countrywide’s data might offer the most complete picture of the speculator-driven run-up. ‘There is no better database than Countrywide. It has the biggest market share in Florida and the nation.’”
“During the boom, Community Bank of Manatee was unwilling to compete with companies that were offering 100 percent or 120 percent loan-to-value and no-document loans. But now that rationality has returned to the market, the bank can compete, said Chairman Bill Sedgeman.”
“‘We will make loans on owner-occupied homes. But we’re not going to loan on someone’s fifth home,’ Sedgeman said.”
“Loans that are more than 90 days past due rose to $80.5 million for the 16 largest community banks in Southwest Florida during the three months ended Sept. 30, from $14 million during the same period a year earlier, a 474 percent increase.”
“At the same time, those same 16 banks wrote off $7.9 million in bad loans, an increase of 1,162 percent from the $630,000 in loans they wrote off at the end of September 2006.”
“‘The time line shows loan problems getting worse and not better,’ said Ken Thomas, a Miami-based bank analyst. ‘Chargeoffs are increasing. Foreclosures are increasing, and the fourth quarter will be worse than the third. We’re still on the downside of the economy and all signs point to recession.’”
The Sun Sentinel. “‘At 16, I was making mistake after mistake,’ Laura Richards said in the living room of her two-bedroom Boynton Beach apartment. ‘By the time I was 21, I had three children and was on public assistance. A drain on society.’”
“Richards’ voice shook. I wasn’t certain whether it was from anger or sadness. ‘I turned it around,’ she continued. ‘Did everything I was supposed to do. And now, I’m back full circle — at 37 — right back to where I started. Being a drain on society.’”
“Richards has spent most of her adult life working in the real estate business. In 14 years she had gone from receptionist to processor, and finally, a senior mortgage loan underwriter/analyst.”
“She had hopes that perhaps she’d survive the unraveling of the housing market. ‘I knew it would affect me,’ she said. ‘But I had 14 years ..’”
“The company she worked for began laying off workers in stages, in the hopes that the market would turn around before they had to make the next round of cuts. It didn’t. Richards lost her job in the next-to-last wave of cuts.”
“She and her three daughters had grown accustomed to a lifestyle based on yearly earnings of $80,000 to $100,000. ‘And that wasn’t enough,’ she said, an ironic smirk briefly flashing across her face.”
“Now Richards survives on $1,100 a month unemployment. She moved out of a $1,700-a-month three-bedroom apartment in Delray Beach to a two-bedroom place in Boynton that costs $1,100. No health insurance. No immediate prospects for another high-paying job. Her car, a Ford Freestyle, is about to be repossessed.”
“She knows all too well how money works. And that’s exasperation No. 1 for Richards. ‘The irresponsibility of the government waiting this long to do something,’ she said. ‘I saw it coming. They had to know.’”
“She can’t go back to school because she defaulted on her student loan. She has an idea for a small business: pooling other unemployed mortgage people into a group that would process loans. But she can’t get a loan because her credit is shot.”
“‘And when I say ruined, I mean ruined,’ she said. ‘The next bit of money I borrow will be to file bankruptcy.’”
“The past week has been particularly galling as presidential candidates criss-crossed the state, making promises. ‘They’re spending millions and millions campaigning and I’m sitting here wondering how I’m going to pay my rent.’”
‘You cannot sit back and let things happen to people.’
‘‘It used to be you could get people to just walk in and sign a contract.’
‘We will make loans on owner-occupied homes. But we’re not going to loan on someone’s fifth home’
‘Don’t even talk about a profit margin right now’
‘Until those numbers drop to six- or seven-months’ worth, builders will not start building again, and Southwest Florida’s main economic engine will remain in the doldrums.’
‘They’re spending millions and millions campaigning and I’m sitting here wondering how I’m going to pay my rent.’
IMO, what we are seeing in Florida is a classic recession. Recessions reallocate resources to more productive endevours. Sure it’s painful, but trying to keep the bubble going or to prop up prices only makes it more so.
Come on mainstream media and Washington. This stuff isn’t that hard to understand.
A question was raised in the Bits Bucket about investing in Florida after prices become low enough. But given Florida’s tax policy, who would want to? Who would want to move there? Who would want to open a business there?
The plan is always to stick it to the next generation. I think that the state that drops that plan is the one that will attract business and jobs.
Yes, and the recently passed Amendment 1 makes the bad situation even worse. I really wonder if there is any chance for first time homebuyers in this area, then I remember.. We have a massive inventory oversupply. And Amendment 1 just locked out most first time buyers; and gave the big “FU” to all non-residents.
So, I rejoice in some ways because, in my mind, this is going to help push us to the bottom even faster (although, as expected, volume of sales will pick up). However, FL needs to wake up and stop trying to f**k everyone else for taxes; that kind of system will NEVER work long term.
Buying a home in FL is pretty crazy, but as prices fall, I’m getting my powder dried out.. However, buying for investment purposes? You would have to be OUT OF YOUR MIND given the tax structure in this state.
Amendment 1 just locked out most first time buyers; and gave the big “FU” to all non-residents.
The two ingrediants that drive the housing market are now locked out and unfairly discriminated against by amendment 1. Florida’s housing market was a cat. 4 storm which is now being upgraded to a cat 5 + due to amendment 1. The amendment was driven by the state realtors associations and certain political leaders. That is who you can thank for this mess!
“However, buying for investment purposes? You would have to be OUT OF YOUR MIND given the tax structure in this state. ”
Which I think is GREAT!!
We don’t need to compete with house-flippers for homes. We should never have had to do that.
Houses should not be viewed as “investments’.
This should make living here, and moving around alot easier, and certainly more affordable.
I don’t want to see any outside “investors” pulling houses off the market so they can sell them back to me at a $100,000 mark-up. That’s what started all this crap. When mortgage companies started providing loans for 2,3,4,5 houses, the building boom and price increases jumped astronomically. Now, we can absorb the excess inventory and get prices in-line with incomes.
This solves the affordability crisis.
What a relief!! I can only hope out-of-state buyers completely disappear.
Diogenes,
Excellent response! My thoughts exactly.
Signed: A Florida native (62 years)
Bravo! And that’s true everywhere, not just Florida. The notion of a SFH as an “investment” is beyond laughable.
I am not sure he was talking about flippers. Many ppl in the north buy second homes there and rent them out during the off season or until they retire, and thus, such homes could be catagorized as investment property. As long as everyone that supported this amendment realizes they are going to have to give a bigger haircut on any future sales price to compensate for the higher taxes for out of state buyers, it will all work out. Those of us in cold climates dreaming of sailing in warm waters will just pay Fl sellers less. Im agreeable to that. I just dont know that ppl knew what they were doing. Most dont really grasp the consequences of their actions.
This brings up the question of why there are so many people in colder climates who are so obviously dissatisfied with where they live and only dream of moving somewhere warmer when they retire. That suggests that many live north of the Mason Dixon for mere financial reasons. If that be the case, then that’s kind of sad.
Personally, I view retirees and ’snowbirds’ as a bigger threat to local and state stability in states like FL, NC, TN, GA and so on more so than flippers.
I dont really see anything sad with focusing on one’s career during working years (some actually thrive on a high paced NYC job) and having access to the best restaurants, night life and culture that cities like NYC and DC provide, and then wanting to sail or read by the pool sipping margaritas when you retire. Priorities change, as do energy levels and tolerance to extreme weather. Such is the cycle of life.
I don’t see a problem with it either, as I myself am probably also guilty of doing the whole money thing out here in California. I’m originally from TN. But as someone who has lived in both ‘places’ I think it is a mistake to assume that one area has the ‘best’ of anything over another region or area. I suppose I am a bit irrate over what I am seeing near my parent’s place, which is a large number of out-of-staters moving in who somehow fully expect the area to change to their liking, or whom know nothing about the intact cultural identity or value already in place. I’d say if you’re going to FL, then the original culture has long since been eradicated.
I guess my whole take on it is that a house and pool are only a tiny part of the whole picture. I know quite a few people who fully believed that retiring to a place that was totally foreign to them would be fine, only to find that it was the complete opposite of what they expected. I tell anyone moving to a totally new area that they NEED to live there, renting a place for at least a year… then decide if it is really worth it.
Hey with a $50k tax exemption for Florida residents(takes two years if from out of state) and the way house prices are dropping, one will be able to score a nice house for under $100k and pay under $1000 a year in property taxes. This makes the taxes competitive with Tennessee’s low taxes and in fact is much lower taxes than Pennsylvania where a $100k house will set me back $3000 a year in taxes.
I am in the public service sector in coastal FL and the number of snowbirds/ condo commandos is way down this year. We have estimated 30% (unless people are suddenly healthier) Recession is in full swing and business here are hurting across most sectors but we do have a dead cat bounce in used house sales right now. Local mantra is the RE price drop of 15% last year was the bottom —-after the 100% appreciation in 2 years …..Idiots are everywhere.
Ben, what is it with you and the MSM? Here I will help you out: the MSM has its own prioritie$. There- now you can relax and enjoy life.
Heyzues H Chritos, enough with your “Where are you MSM?”
It reminds me of FB’s asking “Where are you govt- come save me”
Do you actually have a high standard that you hold the MSM to? Now that would be funny.
I have to agree, i was visiting a friend last week in SWF, i saw a little 3/2/2 on very very nice canal, 270k probably could have got it for 240 or so. I thought that was pretty cheap compairing to a couple of years ago. I called the realtor and asked what the taxes were, 7800 dollars, last year with a homestead, i laughed. Insurance has to be at least 3-4, so you’re paying 12k before you buy yourself a box of mac and cheese. I moved out at the peak of 05, that state is in a huge mess.
It’s not hard to understand. It’s hard to communicate.
Thank you Ben, for providing this forum, and educating literally millions of folks at a time when the Main Stream Media is seemingly a propaganda machine for the PTB (Powers That Be, for the newbies).
IMHO the misallocation of resources over the past 8 years is what will put us in the New Depression, a more severe downturn than most in the MSM are willing to admit at this time.
Good Luck to All
not so newbie but I never understood PTB - thx for defining
IMO, what we are seeing in Florida is a classic recession.
I think you are 100% correct!
Last night I stopped by a department store on the way home. I was approached by four employees, all but three were past realtors and all four were seeking jobs due to pay cuts because consumers were not spending and they were not making their quota. The store was empty and there was just no way these employees could make there quotas without customers, yet the company cuts their pay.
Costco was just the way I like it: quiet
Even with the celebration on Sunday, it was dead.
Arizona Slim here with a news flash: It’s no longer fitting to call them real estate agents. Now they’re real estate counselors. I met one at a business networking event last night.
I was tempted to ask him if he provided therapy to failed flippers, or support groups for people who just can’t lower their wishing prices, but I restrained myself. Barely.
I’ll use Ben’s motto: Used House Salespeople
creative destruction is a key aspect to captitalism- something we’ve ignored since 1906 or 1913
“Sanchez, struggling now to make payments on two homes, thinks the GOP and Democratic candidates are beginning to pay attention. ‘I think they’re seriously thinking about the matter…You cannot sit back and let things happen to people.’”
Lady - you made a bad investment. The government has no business bailing you out. Take the loss. It the way business is done in a capitalist society.
You cannot sit back and let things happen to people.’”
If she would just rephrase it as an admission “You cannot sit back and let things happen to idiots.” I could get behind helping out a little more.
“the market took a dip not for the better, but for the worse,’ Sanchez said.”
Reading this phrase, you can see why “s**t happens” to people like her.
Samll note, if she was making 80-100k a year, why did she default on her student loans? As a mortgage processor, I’m guessing she didn’t go to Harvard, but to the local community college.I guess paying back loans was never part of the picture.
Also, Gross, head of Pimco, and Sanchez, the mortgage broker FB both share the same viewpoint, values….
“The irresponsibility of the government”
Yeah, that’s it. Not Gross or Sanchez, naw, never the players in the action, who made their profits on the mania.
Sanchez, struggling now to make payments on two homes,
If you have two homes lady, suck it up. You’re an investor. Look at the inventory. (Plug for my latest blog artile, click on my name.)
Seriously, as we noted a long time ago. Each foreclosure is a tragedy. A million is a statistic.
Got popcorn?
Neil
Boy you nail it there. She doesn’t even know the meaning of the word “dip”.
“Buy high, sell higher” instead of the much more historic proven “Buy low, sell high” is what people think is the norm now.
For sure she never knew the meaning of “Save something for a rainy day.”
This lady thinks that the government should have known 2 years ago that the bubble would pop and the country will enter a painful recession (depression?). Why? Because she knew and so should the government.
If this lady was so smart, why didn’t she prepare for the recession (save a lot for the rainy days ahead). Answer, she expects someone else to solve all of her problems. I won’t feel sorry for here when she is hungry, and begs for food.
You’re assuming we have a capitalist society. With the way Wall Street manipulates the Feds, sure not seeing much capitalism. Perhaps capitulation society would be more like it.
Sanchez, struggling now to make payments on two homes, thinks the GOP and Democratic candidates are beginning to pay attention. ‘I think they’re seriously thinking about the matter…You cannot sit back and let things happen to people.’
This line poped out at me right away. What an arogant and ignorant dolt. I think the GOP and Dems should buy all of my JDSU stock. How could the governmemt let that happen to me? Someone should do something about it! (sarc off)
Now, either we are screwed as a nation if this has become the prevailing attitude that wins out, or there is going to be a massive and painful flushing of the system where people become more aware of the finances and less consumed by materialism. When that day comes I will smile and know that I don’t have to hear what crotches panties the celebrity du jour is wearing since I will know the greatness of this nation will be back.
Wall Street only reaps fabulous riches if American citizens abrogate prudence and responsibility, and therefore behave irresponsibily and against their own interests. Why else encourage us to go shopping in the face of a national security crisis? Therefore, this bail-out attitude trickles down from the top. Our economy would tank if we actually spent only what we earned. They don’t WANT us to live within our means. Also, household income is a bubble at the top level, and those 1 percenters are going to hold on to their investment incomes, since they sure don’t have to worry about earning a wage.
“You wouldn’t call Sandra Sanchez a real estate speculator” - NBR
On the contrary, I WOULD call SS a RE speculator. Exactly the sort of RE speculator whose entry into this market was a good clue that the weakest hands would soon be all played out.
In the last 3 days I have heard,
Nancy Pelosi say how the stimulus package will help PROP up housing prices.
Pimcos Gross say we cannot allow house prices to fall anymore.
Shiny head guy on Fast Money say the Fed needs to stay out of the way on the way up and be there on the way dow.
Is this so rigged that house prices may never go back to the mean??
All of these people were completely wrong about the housing bubble. If people can’t afford the things, what can anyone do? Double everyones pay?
Like the one guy above said, prices went too high. What’s so hard about this?
IMO, this Pimco guy has finally proven a complete idiot can move in high circles of finance.
Gross is painful to listen too.
Double everyones pay?
That is a question I ask the media. Which do you think is going to happen first, employers raising employees pay to keep pace with the inflated housing prices or housing prices dropping?
When people can honestly answer the question, you will determine which way the housing market is going.
Dwelling prices are small ‘taters compared to the globalista’s crusade to equalize (suppress) worldwide wages. Why does old joe think the PTB will prop dwelling prices just so that joe’s boss will have the pleasure of propping joe’s wages?
There’s a bigger agenda here than joe’s castle.
House prices will drop way before salaries go up. Wages aren’t even keeping with inflation!
Wages aren’t going to rise.
Propping up housing prices will only stall the price drops. When more and more houses sit on the market longer and longer, the prices will drop even more than if they’d kept their nose out of it and let things occur naturally.
Pay will have to more than double to afford housing prices today.
s
Ben: Doesn’t Gross really know what time it is? I think this is just for public consumption and he’s playing his hand without tipping it.
I saw that PIMCO interview and I almost fell off my chair. SInce when does someone who makes his living managing people’s money say something like that. I understand that he must have some vested financial interest, but could the interviewer at least challenge him?
Someone who invests in mortgage securities and is worried about their decreasing value says “we can’t allow house prices to fall anymore”.
it’s kind of sad because Bill Gross had a fairly good understanding about what was going on and wrote some good articles about that years ago. But about a year ago (when he made some wrong bets in PIMCO?) he started lobbying in his articles and interviews for the benefit of his company. Lobbying for what some of us call a ‘bailout’ (as in bailing out big speculators by keeping rates artificially low or providing special government guarantees for speculators). Something similar happened to Roach about a year ago; maybe there was too much corporate/political pressure on these guys?
P.S.: many economists, politicians and business managers in Netherlands say that we cannot afford falling home prices, so government will do anything they can to prop up home prices(= spending a huge part of the national budget on homeowner subsidies, more zoning restrictions, limiting new construction and demolishing as much cheap housing as possible). Of course that is all primarily for their own benefit (and not even for the benefit of most homeowners themselves).
Gross made some seriously bad bets…to bad he’s not a capitalist, he’d understand how the market works. Nice catch, nhz, on noting the Roach 360..now that he’s running the shop in Asia, he’s back to pointing out the disaster…even John Mack hasn’t got it in him to argue against the obvious anymore.
I remember when Roach changed his tune as well.
I think Bill Gross is scared ****less about the Fed trying to do a Japan Zero percent interest. Or bailing out “homeownahz” with 0% 30 year financing for their homes
What is $1 Million MCMansion at zero percent each month for 30 years?
This is one time I’d take an interest only loan!
$2,777.77
Gross had or has the world’s largest bond fund. PIMCO. Bond’s are tied to mortgages. Mortgages are tied to housing.
Yes, Bill Gross is severely impacted by the housing market. He needs the collateral that he took for the bonds to be held up. More downgrades and he can’t trust the valuations of his investments.
He probably took the rating agencies AAA seal of approval on some of the funds he is holding in his accounts.
“I saw that PIMCO interview and I almost fell off my chair. SInce when does someone who makes his living managing people’s money say something like that. I understand that he must have some vested financial interest, but could the interviewer at least challenge him?”
I see that question asked a lot on this board. The answer is - in most cases the interviewer is even more clueless about the situation than the interviewee. These are talking heads we’re talking about.
Sometimes I think like that; but, remember, this bubble was driven primarily by psychology, and, now, thank god, that mentality is gone. People know that houses can lose money, and in some cases, really really big money. More people have been totally wiped out (lost all equity) in the past few years then perhaps at any other time in history. They are trying to rig the game, that’s for sure. But, honestly, I don’t think that they can effectively stop this; it’s just too late, median home price was 10X+ median income in my area (Palm Beach County) there is nothing that can stop that from correcting.
They might get it only to correct to 5X median income. But they will NEVER be able to keep it at 10X. At least not with the moves they are making thus far. The only thing that can keep the home prices that high is money from helicopters. And just because the Fed prints it; does not mean that any of the banks are necessarily stupid enough to lend it.
This is the inevitable endgame scenerio for the housing market. We all knew where this was going; and now that we are finally into the bust, we just need to sit tight and keep the powder dry.
There’s a foreclosure in my community listed at 30% off the price paid 2 years ago (which is 200K below the comps, but the comps will NEVER sell at their wishing prices), I am honestly thinking of offering 100K under the current asking price and seeing if I can get the bank to take it.
100K off would put the price around 125/sq/ft, btw (which, of course, includes the land).
I agree about the inevitability. What we should reflect on from time to time, is how far overboard this went, and to distiguish from a cycle and a financial mania.
How many times did we hear greenspan or some other higher-up say ‘we are in uncharted waters’ in 2005? Over and over. They don’t say that anymore, but they did then.
Well this is what uncharted waters looks like.
“Well this is what uncharted waters looks like”
“Here be Dragons”
Didn’t the old maps circa 1600 have this phrase written around the edges where no ship had yet sailed and returned?
Yes. Either that or “Here be Sea Monsters”
Just so we don’t get to the gate which says, “Abandon all hope”
Arbeit macht frei
Michael Fink,
Keep the powder dry. Florida will revert to fundamentals. Has to. There is waayyyyyy to much vacant land available.
Heck Myakka Land Co. just bought 65+ lots at 22k ea,from a previous purchaser at 45k. Frankly 22k is overpriced because it doesn’t include the counties 15k “development fee”. So you are into a lot for 37k before a home is built…I still have vacant unbuilt lots from 50 years ago on my street…These traded in 2000-01 for 1k-3k. This was a worldwide runup and the unwind will be very ugly.
Chris
cape coral is bizarre - especially from the air
where is the house located? I am looking at a similar situation in Mirasol where I want to make a low ball offer to the bank.
One just sold in the Shores in Jupiter for $205,000 neighborhood was at $500,000 to $600,000 during the boom.
The home is located in Evergrene, which is where I currently live (but, of course, in a rental). I am going to see it this weekend, and will see if it’s all torn to heck by the FBs that sucked all the equity out and let it go to the bank.
Either way, I think I am still far premature, this thing has a LONG way to go in FL, and may very well fall below my 125/sq/ft cap.
if lots are so cheap…. have you considered building? I mean that is one way to avoid the appreciation. Hasn’t building labor and material gone down already… and you start with a lot.
Seems like renting a house next to your construction site would be ideal?
Mike have you seen this one in Evergreene, 878 Taft Court 3417 sq feet $399,900 which is $117 a sq foot. Listed as a short sale. Paid $469,810 in June 2005.
http://www.pbcgov.com/papa/aspx/web/detail_info.aspx?p_entity=52424125110000220&geonav=Y&styp=general&owner=&city=&zip=&method=address&cidx=&sdiv=&sdivnam=&stno=&pdir=&st=taft&strnm=&sufx=&ptdir=&cty=&rng=&twp=&sct=&blk=&lot=&book=&page=&tangid=&condo=&condoname=&use=&usnam=&sloc=&prd=&pedir=&podir=&famt=&tamt=&fsqft=&tsqft=&srt1=&srt2=&srt3=&stpage=0&adlfilter=
$125/foot is a ripoff. I stand by my prediction of $70/foot. I am already seeing some bigger houses on tiny lots going for $125/foot!
Pelosi & Co. can say all they want that a $600, one-time gift from Uncle Sugar will “prop up housing prices.” Doesn’t make it so. They’re just making happy talk until November.
They’re probably a little late on that one, anyway. The house of cards is already tumbling.
“‘It’s terrible to have to lay people off,’ said Michael Reitmann of the Building Industry Association. ‘The building industry had to lay off 50 percent of their workforce in some cases.’”
And the unemployment rate hasn’t changed? Riiiight…
This situation reminds me of the oil industry in the 80’s. At first, most people thought it would come back. Just wishful thinking, which I guess is natural.
That slowly gave way to ‘there’s no work, we better come up with something else to do.’ Cities that had turned down public works like prisons, actively fought each other for them.
Eventually, what happened was folks drifted off to where the jobs were; maybe out of state. Over time, new industry gains traction and we approach full employment.
A big difference; everyone else in the country was elated that oil prices were down. There was no thought of boosting it. We should be similarly elated about more affordable housing.
Another difference; this is a lot bigger.
“We should be similarly elated about more affordable housing.”
I’m elated, just impatient. It is not that there are any kind of actual bailouts, but people have the perception that they are happening. This causes things to correct more slowly on the basis of false hope, IMO.
This causes things to correct more slowly on the basis of false hope, IMO.
It’s precisely what is happening. Sellers are hanging on to their wishing prices, believing the money spigot is ON again. Meantime, inventory builds all around. (But growing house supply doesn’t affect the seller because his/her house is “special”.)
Good luck to them on that. A lot of them have to sell. I don’t have to buy.
Why would people purchase a home if people like OV are stashing money away just to pay bills?
Saving is a non event in the next fed rate cut.
“Eventually, what happened was folks drifted off to where the jobs were”
Job losses in the oil patch did not affect the whole country. Job losses related to RE paint a broad swath across the country. Where are a lot of those displaced people going to migrate to for new employment?
Nordstrom?
“Florida’s new property tax amendment should give a boost to the state’s housing market and economy, but won’t spark a major turnaround, economists and real estate professors said Wednesday.”
This property tax amendment (which, by the way, is not exactly a done deal yet) is Gov Crist’s version of a stimulus package, or a Fed rate cut. The real reason he did this, IMHO, was to cover up the fact that the government deal with the insurance companies totally screwed the people. So to keep the restless natives quiet, he threw a little sop to the masses. Average $250.00 savings. Wowie zowie. People can apply it to their thousand dollar increases in insurance.
The 250 dollar savings is not the “big” part of the amendment, IMHO. The big part is the ability to port your accumulated below market tax rate from one home to another. Frankly, we just have no idea what this will do to the market, because it has never been attempted before. I think there is no doubt it will temp boost sales volume, but after all those buy/sell that have a huge tax break, who is going to come in a sop up all the inventory? To use the tax break, you need to own a home already, and you need to sell that home to buy another home in the state. Net effect, no inventory removed from the market.
This is good for RE agents (who make their money on churn), but does nothing to fix the fundamental problem. The problem is no net new buyers, and massive foreclosures from those who never should have been net new buyers. This amendment does nothing to fix/correct either of these macroeconomic factors.
And, with all my heart, I hope this is struck down anyway as unfair taxation. This is a tax on the young, pure and simple, no way to spin it as something other then that. Sad that this is what it comes to; robbing your neighbor to help pay your own taxes.
I don’t know how much of difference this makes, but it’s retroactive to 2007. Anyone that has sold a home (whether they are renting or have bought) is entitled to this benefit until Jan. 1, 2009. I know several people who want to sell and buy as a result of this. I have tried to explain that prices will continue to decrease. They don’t seem to understand. I am in a dilemma as well. I sold in April 2007 and am currently renting. I am closely watching prices. If this benefit isn’t found unconstitutional (which it may very well be), I have to make a decision. My instincts tell me, it doesn’t matter. Prices will eventually fall so low that taxes will be irrelevant.
For the record, I did vote no on Amendment 1. I also unsuccessfully tried to encourage others to do so. I’m thinking of buying all my friends fire extinguishers.
Don’t worry, your no answer will end up winning when the case winds it’s way through the Florida courts.
Interestingly, the counties where the amendment passed by the widest margin were Collier and Lee.
How are you going to port taxes when you can’t sell your current home to even buy another one. It’s not only not going to help sell houses, but it will keep anyone coming in from anywhere else from buying. As population drops, so does the economy in FL. Less people buying things, eating out, paying utilities, and yes paying property taxes. Eventually this will collapse in on itself.
Your dilemma points up a further motivating feature of this bill: to get people like you to buy back in. Well, to hell with it. You escaped the fire. Just laugh at these jerks, don’t get back in there and burn with them.
I agree. I have been tracking some neighborhoods. While they’ve come down about 25%, they’re still way overpriced. If someone is willing to take a low-ball offer, I may buy.
Sounds like a convoluted version of Prop. 13. Who gets to track all these RE tax conversions from one house to another?
I’m curious about that myself. In fact, I called the BCPA yesterday. They weren’t able to tell me my portability amount as of yet. They said they were going to be adding a calculator to their website.
Palmetto,
You and I know,when this is all said and done,it wont make much of a difference. High energy prices,taxes,insurance…What is the ONE variable than can compensate? Yep,home prices. The others high will just make the crash that much farther.
Chris
The $240 savings of amendment 1 equates to $20 per month or roughly 6 gallons of gas per home per month. Wow, what a big savings!
Yeah, it should give a boost (downward) to the state’s housing and economy. Layoffs are coming in city, county, and state governments causing higher unemployment thus more foreclosures.
I believe there will be a small increase in sales due to floridians trading houses. Then word will spread even more that no first time homebuyer or out of stater in their right mind would buy in FL with SOH still in place and prices dropping. Unfortunately for me, FB, FL first to the bottom.
Who said you need to pay insurance? It’s not mandatory if you own the house free and clear or buy one in cash. When decent 3/2 houses become $50k(anyone agree? It was that cheap in 1998) in north FL, I am not going to even bother paying insurance, ill just set aside that money to self insure instead. Alot of savers are doing that and cutting out the middle man.
Bye,
I sympathize with your goals. But honestly, you could not re-build a a 3/2 house for $50k, even in Florida. If this downturn allows people to buy foreclosed homes or other bargain priced homes from distressed sellers, that will be good for the buyers, and they should count their blessings. But a world where the Fed is keeping rates in the basement is not one where I expect construction costs will decline substantially. I would expect that hurricane resistant construction has got to cost close to $100 per square foot today. That would put fifteen hundred square feet at a cost of $150,000.
Wow, 2 x 6 studs are that much more expensive then 2 x4’s LOL
Those metal roof rafter anchors must be made out of solid gold too.
No, Jersey Boy,
Last I checked the 2×6’s weren’t any more expensive, but you have to pay a general contractor. Not to mention the subcontractors. That’s a problem unless you plan to pour the foundation etc. yourself. You have to pay for the labor too. So wise-@ss, what is the cost of construction per square foot in your neighborhood?
Let’s see, some relatives of mine just had a hurrican proof structure built in Florida to Hurricane Andrew specs for $80,000, a 40 x 60 foot structure. You know what’s so great about it, 2 x 6 instead of 2 x 4s. That what allegedly makes it hurricane proof. That, and the roof is strapped on at evey rafter and maybe a few additional footings in the concrete that it’s tighted to, that’s it.
As far as a concrete pads go, every house has a concrete pad, nothing special there, the hurricane ones have rebar ties sunk in them, last I checked home depot carryied that stuff for about $3 for a 6 foot length.
If some builder is charging exhorbitantly for a permit for an additional 5% added to make something hurricane proof your’re getting hosed. The materials and construction techniques are not that expendsive or involved. You seem like the type that would get hosed by the average car mechanic through fear tactics.
Do your homework.
Nyc You are way off. Seriously You could build a 3/2/1 1200 sf with a garage for about 65k, by a builder right now.
People seriously don’t know how much it costs to build a house. I’m getting ready to start a web site, just so people can know what actually goes into building a home and where the money goes.
Lot, Septic, well don’t need to be replaced in a fire. And with concrete You can reuse slab and maybe even walls. Do most of the work myself and I could rebuild a 1200 sf house for 20K.
Damn straight, me too.
Circling the drain…
“Richards’ voice shook. I wasn’t certain whether it was from anger or sadness. ‘I turned it around,’ she continued. ‘Did everything I was supposed to do. And now, I’m back full circle — at 37 — right back to where I started. Being a drain on society.’”
“She knows all too well how money works. And that’s exasperation No. 1 for Richards. ‘The irresponsibility of the government waiting this long to do something,’ she said. ‘I saw it coming. They had to know.’”
This lady was in the RE biz for 14 years, probably living large off the funny money generated 2001-2006, and now complains about the govt. being irresponsible. In the article she even admits that her $100k earnings weren’t “enough” in the boom times.
And you left out “she saw it coming”. If she knew something was going to happen, why didn’t she cut back on her lifestyle so that she could save some money to tide her over during the hard times. Victim? Of her own stupidity, perhaps.
No real skills and is convinced that the “government” must do something to provide her with a $100k a year clerical job.
I’m not sure I should feel sorry for her, but I do. She’s not flipper whose neg-am reset. She basically lost her job to a recession. No matter what her income was before, even with a bare-bones lifestyle and no debt, it’s nearly impossible to live on 1100 a month. I know I can’t.
Then again, when I started making money above a student salary, the first spare 25K (outside the matched 401K) went to liquid savings for a rainy day. Only after that did I start packing into frozen IRA’s and such. On 80K she should have done the same thing.
“…even with a bare-bones lifestyle and no debt, it’s nearly impossible to live on 1100 a month. I know I can’t.”
I disagree strongly.
With a partner (spouse or similar), ~2000 per month can provide a very comfortable life in or near a city. That is $1000 cost per person. Need to rent a 1 bd room apt in walking distnace of one of the partners, keep one car, cook & eat home, etc.
If willing to maintain a bare bones life-style (rent a studio, no car, take public transportation or just walk everywhere, etc) one can do with under 1400 for two people.
My wife & I have done such experiments just for personal satisfaction after kid went off to college. There is much freedom to be gained by properly arranging our lifestyles.
Live simply so that others may simply live!
… apt in walking distance of one of the partners’ workplace..
Hmm that might be workable, if you live somewhere where there IS public transportation.
She has 3 teenagers in the house, who probably watch MTV’s “My Sweet Sixteen”, a high consumption blow-out. It’s one thing to ask an adult partner to live Spartan, another to get the kidlets on board, especially when they’ve gotten accustomed to a certain lifestyle, in Florida no less! Not a defense here, just an observation. As my mom used to say, people don’t change…unless they HAVE to.
Looks to me like they have to.
That show is one of the guiltiest pleasures there is. There have been times when I watched an entire episode with my mouth hanging open in astonishment. The only thing more pathetic than the kids is their parents — like something out of Willy Wonka.
We are retiring to Nebraska and will live extravagantly on $2K/mo and still be able to save. There’s a U-Haul with our name on it come April. Yeeehaw!
Best of luck, I’ve read some good things about the state, though the weather’s a bit extreme at times. We had a number of cattle ranchers sell land in Colorado for premium prices and buy ranches there, quite happily.
Well, Mr. Gross (mutal bond exec) writes in the Post that government (read: taxpayer) needs to stop housing price deflation in order to save the economy and the people Ben’s post talks about. Disgusting.
http://www.washingtonpost.com/wp-dyn/content/article/2008/01/30/AR2008013003211.html
It appears that Mr. Gross feels that dropping the FED rates 1 percent will revive housing.
The real problem is that housing in many parts of the country is just way way way too expensive. Even with the added help of lower interest rates, housing prices will have to come down. Unless we return to the days where people can qualify for a mortgage assuming 60% of pretax income will go to PI, prices will have to deflate.
The second point he misses is that housing is the new dot com. Nobody wants to buy a house (or a rental property) these days because it seems like such a bad investment. Young people see how hard it is to make the monthly payment (in respect to rents) and how hard it is to sell the place. Many middle class families are beginning to see their houses as a place to live instead of a magical money fountain. Who wants to really struggle to make expensive monthly payments on a new place when the existing place you live in seems to suit your family just fine? Having a slightly cheaper mortgae will not help this situation much either.
“Live Oak Preserve developer TOUSA on Tuesday joined a growing list of South Florida homebuilders to file for Chapter 11″….
“Live Oak homeowner Sheldon Cohen said residents are unsure of how to take the news. …. Are we going to get stuck paying the bills? I don’t know.”
No Sheldon, the tooth fairy will pay.
“Sanchez, struggling now to make payments on two homes, thinks the GOP and Democratic candidates are beginning to pay attention. ‘I think they’re seriously thinking about the matter…You cannot sit back and let things happen to people.’”
‘The irresponsibility of the government waiting this long to do something,’ she said. ‘I saw it coming. They had to know.’
BANG BANG BANG (sound of my head beating against the desk in disbelief) It’s ALWAYS somebody else’s fault. Makes me sick that these people made their own bad decisions and blame everyone but themselves.
sigh….
so, which stage are we entering now? Seeing a mix myself. Still loads of denial. Some guilt, but mostly that guilt is being aimed at someone else. Definite bargaining, though a lot of it trickery (buy my overpriced house and you get a new Camry). Lots of anger, but it seems like here in California everyone’s angry all the time anyway. (Except the cows. I hear we have happy cows) Sigh… I’m angry now. I have to go have more coffee.
1. Shock or Disbelief
2. Denial
3. Bargaining
4. Guilt
5. Anger
6. Depression (economic?)
7. Acceptance and Hope
I think we’re definitely at the bargaining stage. People saying, “if I can get that handout, everything will be ok.” Although a few stragglers in the REIC still profess denial, I suspect that’s more of a PR move than anything.
The anger phase should be amusing, eh?
She says, “The irresponsibility of the government waiting this long to do something.” “I saw it coming. They had to know.”
Is she irresponsible for buying because she thought it was a good idea?
You didn’t mean that final question seriously, but I have to offer my resounding YES, because I do know (non-FB) bleeding hearts who would argue Sanchez is not at fault, she was sold a bill of goods, blah blah blah. It’s easy to blame snake-oil salesmen, but the first defense is an informed populace that doesn’t just lap up the BS.
Who’s more guilty
a) The individual who saw disaster coming and did nothing to protect themselves even though she had the resources (80-100K per year)
or
b) Big stupid government who has repeatedly proven to be ineffective
How will the guilt part work. I don’t get that considering the entitlement mentality of this nation. More than likely we’ll just skip over that to anger. Sounds about right, first the brat tries to sell you snake oil (bargain) then the brat gets all pissy and bitchy when you don’t bite. I think we’ll be skipping Guilt.
Go to the Orlando Sentinel story link, click on the reader’s comments for the article and check out #9 and #10.
can’t find the link to the comments…
I see the field to post comments, but where to read?
This is easier:
Susan
AOL Reply »
|Report Abuse |#11 48 min ago
To the person who says buying a house in Polk versus a condo hotel unit in Orlando is a better deal, you’re missing the point of condo hotels. It’s the amenities. Is your house in Polk going to have a large pool or waterpark, a full-service spa, a state-of-the-art health club, nice restaurants, retail stores, a concierge and daily housekeeping services?
Is someone going to do your maintenance for you and deal with renters when you’re not there?
A single-family house and condo hotel unit are apples and oranges. They really shouldn’t be compared.
Check out http://www.CondoHotelCenter.com to learn more about condo hotels and their appeal as vacation homes.
Retesticled Realtor
Melbourne, FL Reply »
|Report Abuse |#12 30 min ago
Check out http://www.albatrossaroundmyneck.com to learn more about condo hotels and their appeal as vacation homes.
If you need information about these units as investments, go to http://www.catchafallingknife.com for help
If you like the idea of thousands of strangers sleeping and doing the nasty in your bed, then go to http://www.whatthehellisthisfunkyrash.com for complete details.
ROFL That is hysterical
Is your house in Polk going to have a large pool or waterpark, a full-service spa, a state-of-the-art health club, nice restaurants, retail stores, a concierge and daily housekeeping services?
Is someone going to do your maintenance for you and deal with renters when you’re not there?
Two points to this. Number one, anyone who buys a unit will probably not see the spa, restaurants, coercierge, or housekeeping service ever materialize. We have seen this time and time again in half finished developments. Number two, the maintenance fees will probably be so high that you could afford your own housekeeper, lawnservice, and pool boy and still pay less. Plus a lot of them only allow you to live in them 170 days a year and I saw nothing about you collecting rental money. I think a lot of them are planned so the condo/hotel building owner collects rents. Why insist you can only live there 1/2 a year and have the hassle of rentals if they aren’t collecting most of the rent money?
Number two,
@phillygal, I think you clicked on the Sun Sentinel story, Orlando Sentinel link towards top of post.
OK
I’m glad Beer and Cigar copied the links because they look funny.
(can’t see them now, they appear NSFW)
“You cannot sit back and let things happen to people.”
Oh, sure you can! I’ve been doing that for 36 months and it has brought great enjoyment!
I used to worry about ‘things happening to people’. Back when I was a wee lad and hadn’t learned that experience (or, ‘things happening to people’) is the best teacher. In my dotage I have learned that, at some point, sitting back and letting things happen to people is exactly what is needed.
The blunt truth as hard as it is happens to be that there are people who just make bad decisions.
It’s not just a luck thing. They actively do delusional things without any forethought, planning, etc. Some of these people are also very intelligent in other aspects of their life so you are left to wonder why they can’t see the obvious.
But they can’t, and there’s nothing that can be done about it.
80k a year and two properties.
that’s just terrific.
Maybe she’s working the pole at nipple-hut, because she is clearly a dumbass and anyone paying her 80k is even a bigger retard…
“Opponents of Amendment 1 vow to challenge the measure in court, arguing it discriminates against out-of-staters moving to Florida, who can’t use portability.”
There is a tort being filed against amendment 1. The basis behind the suit is the amendment discriminates against out of state buyers and buyers who did not own a home in 2007. The reason is that the new owners will now pay more taxes than the existing home owner which appears on theary to be unfair. It should be interesting since this amendment is now part of the Florida constituation.
Hope the lawsuit goes to the Supreme Court. Florida isn’t the only property tax system that should be subject to an “equal protection” review.
How is this “discriminatory”???
You pay the property tax based on the PRICE YOU AGREED TO PAY for the property. Then, the State limits the increases to 3% for the balance of the time you own the house. That’s what save our homes did.
Now, if you are paying X, you get to keep paying X.
People who paid ridiculous prices are now unhappy that those of us who didn’t, are pay less tax.
Boo-hoo. Stop paying high prices. Stop thinking our houses are “investments”.
I want to discourage yankee carpet-baggers from coming down here to raise my cost of living. This should help, but it’s just a start.
Diogenes,
Once again, right on!
Signed: Florida native (62 years)
Yes, and the fact that it makes it more difficult for young FL families to get a start in life is not important either. After all, they are just high school carpetbaggers.
here in california with have a similar thing with property tax…yeah it sucks to be young…but as the elders tell me when i bring it up. They went through the great depression they sat in pill boxes shooting people, I should go do that then come back and bitch about stuff…*sight* my family…
“How is this “discriminatory”???”
It is discriminatory in the sense that out-of-staters who don’t have homestead exemptions pay more than his neighbor next door who lives in FL year-round, in the exact same house and same house value, but the FL resident obviously uses a lot more services than just snowbirds but more taxes is paid by out-of-staters who don’t vote, so let’s take advantage of them since they can’t vote anyway.
It’s the same thing in the NY/NJ income tax war. NYS/NYC actually wanted to tax NJ residents who works in NYC more than their own citizens a few years ago (heck NJ residents can’t vote in NY so why not?) and that got declared as unconstitutional by a federal court on the basis that if you are doing the same work, at the same company and in the same city you should not be taxed more than the next guy just because you live across the Hudson River.
““You wouldn’t call Sandra Sanchez a real estate speculator. Two years ago, with a daughter headed off to college and the real estate boom in full swing, she purchased this house as an investment property. It seemed like a good idea at the time.””
Oh wouldn’t I? I am so sick of MSM bias. Literally telling you what to think. She took out a loan for an investment - investing alone is speculation, she’s a leveraged speculator.
When my wife and I can’t buy a decent house for a fair because there are millions of people like her that are “investing” in housing, I gotta say, I’m not too inclined to be told what I will or will not call her.
I’m sorry if this comes off like comment spam, but the ‘non-speculator’ went on to say “You cannot sit back and let things happen to people.”
O rly???? The hell I cain’t!
It seemed like a good idea at the time.
This phrase always seems to come up when someone is in deep in the dung of their own making!
You hit it right, she was indeed a leveraged speculator. Had she bought that house with saved up cash, then she could be called an investor. I wonder how big a down payment she even made on that fine investment house. My bet is little or nothing.
In any case, if it wasn’t a STUPID investment, she’d be running positive cash flow out of that thing and not have to treat the second “investment” home as dead weight. But I bet she didn’t run those numbers, right? At least not without adding in double digit equity gains every year — because if she’d run those numbers properly, she’d have seen that these places were terrible investments once fantasy appreciation was removed from the equation.
Somewhat off-topic question: are you still considered a ‘knife-catcher’ if you buy a foreclosed property you know might not have bottomed yet from a lender, if it is a unique property without any good comps…and you really really like it?
Hmm…I think I’d term it as “catching a really nice knife with a dull blade.”
Posters here tend to get extreme. They won’t accept paying a dime over fire sale prices. That might be true for thousands of identical McCookieCutter dwellings. But if it’s a property you really really like — and it sounds like it is — there is value in your enjoyment of it. How would you feel if you waited for the bottom and the property was sold by then? Is it worth a little bit of overpayment to secure the property? If you really love it, go for it.
(also, I’m assuming you can afford it with a normal mortage: 20% down 30-year fixed, 2.5x income etc.)
Oh, and I’m also assuming you’d want to live in it as your home for 5 years or so.
‘Posters here tend to get extreme. They won’t accept paying a dime over fire sale prices.’
And you’re not generalizing or anything. We have knife catchers psoting here all the time. It always ends with ‘Flame On’
Oh, I’m definitely generalizing. Maybe I should have said “the regular posters.” Almost every time somebody is thinking about buying, the posts come back: “don’t buy yet; we’re not at the bottom; I’m waiting for the fire sale; we’re going to drop another 40%,” and so on. But my opinion is that we (in general) should not lock into the don’t-buy mentality any more than the buy-now mentality. It’s a personal decision and depends on the numbers. Perhaps it truly is a bargain. We don’t know.
I dont know how expecting prices to fall to historical norms can be viewed as “extreme.” It is more appropriately catagorized as “fair” or “reasonable” IMHO.
I think I get what oxide is saying…
I’ll use my area as an example.
There is a 40 point spread between the high and the low of the last real estate cycle in the PHL metro. Do I have the patience and fortitude to wait until the very bottom of the current cycle? Probably not.
So I won’t be purchasing at the highest high, but neither will I be buying my house (or land to build) at the lowest low. I believe that lowest low is what she means by extreme. In my area, it will take a few years to get to the bottom of the market.
Additionally, everyone takes their own personal circumstances into consideration. It’s a given that anyone who takes this forum seriously is not going to use funny money to finance a house purchase, and will probably lowball when making an offer. Most likely, I won’t be financing at all. And I do intend to stay in my house for a considerable time after the acquisition. Do you have pets, or a growing family that needs more space? Do you like to garden in a way that requires more than a planter and a flowerbox on your deck? These are all considerations that would mitigate to not waiting until absolute ground zero.
So, if it means I have to wait til the lowest low to not be a knife-catcher, it looks like I will be catching a dull knife.
It’s like shopping at a retail clothing store. If you feel there’s some value in the regular price, you can afford it, and/or you’re a difficult size to fit, then you take your chances waiting for the sale price. If you don’t mind picking through what’s left over, and don’t have any specific need in mind, than waiting for the blow out sale is the right choice.
It’s a personal financial decision everyone must make individually.
The outrage on this board and similar ones, I believe, is more about the divergence of home prices from income levels and rent levels–the loss of sanity. If the prices get back to those historical norms, then I’m sure most of our outrage will dissipate. (mind you, that’s probably years away)
Another way of looking at it, at least in my opinion, is that if you are getting a fair deal based on historical income levels/historical rents, then that is fair and reasonable and you should be happy.
If you diverge from those fundamental values, then, I suppose you would be a knife catcher, because I think most of us who frequent this board think prices will drop to those true intrinsic values or even worse, depending on how bad the economic downturn is….I think the downturn will be on a catastrophic, great depression level, so I think you will have ample opportunity to buy lower than the fundamental values…
Curious what everyone else thinks…
Yes. The outrage was two fold (i) as you stated, because of the inflated prices, ppl were denied opportunities with respect to home ownership that others have historically enjoyed (im not talking about getting a loan, which anyone could, im talking about the savings and tax breaks that exist with home ownership during “normal” periods including being able to pay off one’s mortgage before retirement without insane tax hikes, etc.), and (ii) we knew the end game and could not stop it (e.g., I always knew that my job and millions of others jobs were at stake, but everyone seemed drugged and confused as to actually what was happening and didnt seem to understand the implicit consequences of excessive appreciation).
My take is that while I agree that the bubble was nation-wide, the severity was far worse in the most populated pockets of the country: Mainly the coasts. If you look at the posts that get the most response, California and Florida come in fairly high as do posts for the Northeast. There’s a reason why posters from these areas are outraged: economic fundamentals were violated.
But at the same time, as someone from TN I can say that even now, a small home on a medium sized piece of land- maybe a 1/2 acre lot can still be found for under 100k. That same house would be pushing a million dollars in the SF Bay Area. So while yes- 100k isn’t cheap in TN, it’s certainly not near as bad as say-700k for the same home elsewhere even if wages are higher there. Secondly, there are plenty of areas that offer prices that are under 100k. For someone like myself, that represents an ‘out’ if the worse comes down to worse and the Fed or Government “Saves the day” and prices remain high. That might mean some sacrifice such as lower pay, or even a change in profession. My game has been to save enough to not only buy outright, but have a healthy amount leftover for retirement. One extreme can be beat with another.
So- yes, there are opportunities, but these involve choice. I’ve found that most people are too stubborn to make any change in their lives, hence the areas that are overpopulated will probably always be more costly and so forth while areas that are ‘less sexy’ will tend to be more affordable.
“But at the same time, as someone from TN I can say that even now, a small home on a medium sized piece of land- maybe a 1/2 acre lot can still be found for under 100k. That same house would be pushing a million dollars in the SF Bay Area. So while yes- 100k isn’t cheap in TN, it’s certainly not near as bad as say-700k for the same home elsewhere even if wages are higher there.”
Good luck getting half an acre in most parts of the bay area for a million. I saw a 3000 square feet lot going for a million in San Francisco. A 3 story townhouse will be built on that lot and it will be touching the other townhouses. There often isn’t enough space between the homes for even a cat to fit.
$100k for a 1200 square foot house on half acre in TN is way too expensive. I just saw a pre-foreclosure 1150 square foot house on 1.15 acres in Loxahatchee for $159,900. I did think about relocating to TN but realized it’s almost as much a ripoff as north Florida.
“expensive” is relative. 100-150k in TN sounds reasonable to me. Why? Because I am very familiar with the region. My whole family lives there. None have ‘fantastic’ jobs. My mom is a teacher. Dad works as an HR manager. They both make less than 80k per year combined. Yet they have 18 acres, a pool, a somewhat large home, two newer cars, and a nice workshop. Their property was last valued at 160k. It is only 15-20 minutes from Knoxville. Most of my friends and family who still live there make close to the same, meaning they are squarely middle class people living in modest homes within their means. They have a mortgage ( my parents paid theirs off years ago) and they have 9-5 jobs.
Compared to the quality of life I have in CA, where I make more than double of anyone back home, Their lives are actually far more secure than mine. So yes- I feel that TN and a number of other states have a more reasonable living and price to income ratio than most of the coastal states.
I have read your posts on here repeatedly and as much as I hate to say this, I think your expectations of a house being 30-40k are unrealistic and makes me wonder if you should be saving and seeking ways to expand your income instead of moving to the rust belt. I’m not trying to be critical, but you have to at least be realistic and realize the economic reasoning behind price in certain areas, as contrary to this blog as that might sound. Good luck.
Yet they have 18 acres, a pool, a somewhat large home, two newer cars, and a nice workshop.
If I didn’t have a family obligation that keeps me in PA I’d ask them to sell me a couple acres!
(only half kidding)
At the time of the Great Depression, there was no Social Security. Today, we have a large share of the population getting regular retiree or disability payments from the federal government. These payments will soften the downturn’s economic impact IMO.
until china stops loaning us the money.
“Today, we have a large share of the population getting regular retiree or disability payments from the federal government. These payments will soften the downturn’s economic impact IMO.”
Are sales of cat and dog food really that big a part of this economy? (snark off)
“If the prices get back to those historical norms, then I’m sure most of our outrage will dissipate. (mind you, that’s probably years away)”
There are really no “ifs” about it. But you are correct that we’re years away from historical pricing in consideration of the amount of fear and denial out there. Did I mention the pride factor in sellers unwillingness to wrap their empty skulls around the grim reality of housing prices? Some of these dopes trying to sell don’t have to at all but put it out there at an outrageous price anyways just to prove a point. I’m not sure of the benefit of this practice but they do it anyways.
Whether the absolute levels of suffering match those of the GD is questionable — NYCB has a point about SS etc — but I do think the upcoming economic dislocation will definitely mark the end of US economic hegemony. When the US sneezes, the world catches cold, yes; but the world is in a better position to recover. The WORLD is better-educated, less pampered, and (as Ron Paul argues) is not always taking on the White Man’s Burden of international policing.
depending on how bad the economic downturn is….I think the downturn will be on a catastrophic, great depression level, so I think you will have ample opportunity to buy lower than the fundamental values
I have to say:
1. Predicting the future and especially timing of it is very difficult. I think pretty well established if you read here that not everyone agrees on timing.
2. The great depression may not really be the bottom. I think our government doesn’t realize that. It is just one bad thing that already happened. But today we have even more humans on this early, a more global economy, etc. Who knows.
3. People clearly are irresponsible with money, how will play play out in bad times. People just may not be able to cope like drug withdrawal.
4. The rise of Asia is a real thing. The empire of the USA may never be what it once was. We can still exist and be ourselves… but just like England or Germany… we won’t be at the top. Instead of going out with a boom, we may go out with a whimper.
———
The last point I made may be pretty obvious if you really think about it: The Asians have their own language, we in the USA aren’t learning it. High tech is one holdup of the USA that we have not entirely sold to overseas… but the USA software and tech industry does some stupid things to leave the door wide open:
1. High wages in the USA. We basically don’t have a good feeder system for entry level jobs. Why do kids work at McDonald’s for $10 an hour… getting greasy and having to interface with customers directly. Then they go home and play video games. WHY AREN’T THESE KIDS willing to work for $10 an hour doing software or computer [e-commerce] support jobs? I’ve tried to hire them, and they don’t even get it. We have sold the entry-level overseas… and how do we expect to grow the middle skill and high skill people? College is a joke for computer graduates. They want $50K a year and know more about video game strategy than they do about security or system performance.
2. The tech industry in the USA could have started telecommuting in the 1990’s. But no, we LOVE to all drive at 8:00am and go into a cubicle and then drive home at 5:45pm. We spend so much money on petrol, our fancy cars, and our fancy cubicles. This just isn’t how tech needs to be. 70% of tech employees could telecommute 4 days a week and have a rotating meeting day. And creative work often does better in 4×12 hour days than it does with many small 6×7 hour days.
3. 1 out of 10 tech employees has great talent and should be treated like a superstar. They “get it” - but the HR and hiring process don’t understand this. And middle managers are often stupider than the people they manage as a good tech person doesn’t want to be a manager. Companies need to create better ways to let the talented people compete to run internal projects instead of letting old school USA corporate culture figure out who to promote and who has the most value [doesn't work]. HINT: A lot of the truly talented tech people aren’t often motivated directly by salary and such, they like the work! So they get passed over for promotion… and ultimately get saddled with a bad boss who then kills their productivity.
// See it isn’t just the housing bubble. It was the Britney Spears bubble. The SUV [and at peak the Hummer] bubble. It was stupid for us to ignore the true opportunity of technology and global economy. We went and masturbated by building expensive cities like Seattle and San Francisco and made all our expenses go up.
/// Just a matter of time until we are undercut. and I as a USA programmer have no chance writing software in Chinese. In the future, the best hardware and software won’t even be sold in the USA or ported to English.
“You wouldn’t call Sandra Sanchez a real estate speculator. Two years ago, with a daughter headed off to college and the real estate boom in full swing, she purchased this house as an investment property. It seemed like a good idea at the time.”
She’s either a real estate speculator or a greedy dumba$$ begging for a handout - take your pick!
“She and her three daughters had grown accustomed to a lifestyle based on yearly earnings of $80,000 to $100,000. ‘And that wasn’t enough,’ she said, an ironic smirk briefly flashing across her face.”
This woman, who let her student loans default, used her money to speculate on an investment property and probably maintained a set of lovely solar nails, a spiffy ride and has a set of high-priced handbags that she’s still hanging on to for dear life. Bail her out with my tax money… umn, I don’t think so.
“She and her three daughters had grown accustomed to a lifestyle based on yearly earnings of $80,000 to $100,000. ‘And that wasn’t enough,’ she said, an ironic smirk briefly flashing across her face.”
And this just goes to show that savers will get the last laugh. She is the fool for not saving some of her generous salary.
“This woman, who let her student loans default”
Makes $80K to $100K and let’s her student loans default. Tell’s us all we need to know about her character. But I would like to hear from someone in the loan business as to why her income was not attached for her student loans by cross correlation to her IRS tax filing and the recapture of said amount by debiting her tax refunds.
“With a co-worker’s help, she stuffed her SUV’s trunk, one victim of 29 layoffs within the Community Development Department announced that morning. ‘It was kind of like a public hanging,’ Shepard said, fighting emotions as she climbed into the driver’s seat. ‘I am raw right now. I really feel like human garbage.’”
After 27 yrs she should have been able for a golden handshake if they deleted her position. A lot of county workers can backslide into prior positions too or as in CA a county employee can go to anyone of 58 counties and take their retirement with them. Many in CA will work in one county and then move to a higher paying job in another county and their final compensation for the county from which they migrated is based on their highest earnings at their new job.
“Sanchez, struggling now to make payments on two homes, thinks the GOP and Democratic candidates are beginning to pay attention. ‘I think they’re seriously thinking about the matter…You cannot sit back and let things happen to people.’”
Two homes happens.
Houses were like stray dogs or cats to some people. They couldn’t resist.
Or maybe more like pregnancy to some people. The ones who have no money but can’t seem to realize that they don’t need a 9th child.
“‘Things will not return to normal until 2010 or 2011,’ Thomas predicted.”
This economic resergence will be driven by American superiority in the love potion and flying saucer industries.
This economy looks like a repeat of 2001. Lose your job and get $600 stimulus check.
[“She and her three daughters had grown accustomed to a lifestyle based on yearly earnings of $80,000 to $100,000. ‘And that wasn’t enough,’ she said, an ironic smirk briefly flashing across her face.”]
You have got to be kidding 80 to 100k and she didn’t save a penny, shame on her. Now she want’s the tax payers to bail her out. I don’t feel sorry for her.
Indeed. And that not in NYC or someplace where it’s godawful expensive to live. It’s pretty sad if she can’t save anything at that salary level. It even sounds with her remark “and that wasn’t enough” that she might even have been running up credit card bills on top of that!
Ah well, just another fool living beyond their means. I might (maybe) have a tinge of pity if she made $30-40k, but not when she made twice that or more. Give *ME* that chance, says half (or more) of America!!
Interesting stats for Tampa:
Mortgage foreclosure filings in Hillsborough County:
January 2006: 296
January 2007: 477
January 2008: 1,256
“How is this “discriminatory”???
You pay the property tax based on the PRICE YOU AGREED TO PAY for the property.”
But with amendment 1, the SOH break is now portable, if you sell your home and buy another, you take your tax break along. The cements in 2 classes of taxpayers.
I don’t know I’m not a lawyer, but it’s kind of like new residents have to pay out of state tuition which is like double even though they now live in Florida
The Orlando Sentinel. “International buyers have become the best hope for Central Florida’s beleaguered condo-hotel developers…” “… and we’re addressing this opportunity by trying to load as much of the State tax burden as possible on these non-residents” it failed to add.