Selling Make-Believe And Sunshine In Florida
The Miami Herald reports from Florida. “The nation’s largest home-loan lender, Countrywide, told its brokers in a memo last week to immediately raise the down payment required for all loans made in the tricounty area by 5 percent. For a median-priced $362,500 home in Miami-Dade County, this requirement means buyers have to cough up an additional $18,125 to obtain a home loan.”
“Countrywide and other lenders’ directives likely come in response to new lending guidelines from government-sponsored mortgage giant Fannie Mae that took effect Jan. 15. Others like Chase and Citibank, brokers say, enacted similar policies months ago.”
“For Coral Gables investor Efrain Osorio, desperate to sell three condos bought in 2005, the trend spells more bad news.”
“‘I’m not going to be able to find buyers for my properties,’ Osorio said, adding he had dropped the price of one condo in South Miami from $347,000 to $299,000 in recent months. ‘We haven’t even gotten an offer, so how are people going to finance that property?’”
“But Ralph Peña Jr., a Miami-based appraiser who has been watching values drop, said banks are now just behaving responsibly.”
“‘Was it fair when they gave borrowers 120 percent’ of the sale price? Peña asked. ‘No one was putting any money down, so they could walk away and let the property go into foreclosure.’”
The Naples News. “They signed for homes costing hundreds of thousands of dollars two years ago, and then the market went bust. Now…buyers who signed contracts for pre-construction condos and homes in the booming market are suing developers under a federal statute to avoid closing and to get their deposits back.”
“Others are just walking away from the deposits, usually about 20 percent of the purchase price.”
“‘Buyers want out … because the economy is bad,’ said Richard Inglis, a lawyer (in) Fort Myers, who has handled many such cases. ‘It’s hard to think about buying a second home if you’re laid off or if your economic situation has changed substantially, … especially in Southwest Florida where we’re selling make-believe and sunshine.’”
“‘Two and a half years ago, it was just the opposite,’ Inglis said. ‘It was developers trying to get out of deals and stiffing customers because they wanted to sell (the homes) for more. It’s so incredible what a sea change there has been.’”
From WBBH-TV. “It is early in the year for such a high number of foreclosures and Jeff Tumbarello, of the Real Estate Investors Association, says the group never saw it coming. ‘I don’t think the legal system was ever prepared to do this many foreclosures,’ said Tumbarello.”
“Of those 1,833 foreclosed homes, not every house had a family in it. In fact, only three of every 10 foreclosed homes were owner-occupied. Most belonged to what Tumbarello calls ’speculators.’ He says most speculators never even made a payment.”
“‘The delinquencies are really coming down, but what’s left is getting through the people that have quit paying,’ said Tumbarello.”
“For example, we found on Cape Coral house that neighbors say has been sitting empty for years and the bank just recently foreclosed on it.”
“‘Southwest Florida is affordable again. We were always affordable and we’re back to that. It’s quite affordable to live in the North Cape now,’ said Tumbarello.”
The News Press. “Foreclosures in Lee County surged in January to a record 1,833 - and some home buyers are reaping the benefits as banks increasingly put the foreclosed houses back on the market at fire sale prices. The foreclosures in January eclipsed the previous record of 1,538 set in October.”
“‘I’m smiling all over,’ said Diane Keene, who just bought a three-bedroom, two-bath foreclosed house with a pool in Cape Coral for $135,000.” “But as lenders sell the houses they’ve taken back, experts say prices are likely to plunge even further after a long slide dating to January 2006.”
“Keene’s agent, Christine Million, said the bank sales are going fast because they’re realistically priced - lenders want to dispose of the houses and are willing to take what the market will bear. That’s not always true of individual sellers who still hope for the lofty prices of two years ago.”
“‘You’ve got 300 properties in a category and only the lowest three or five are getting any action,’ she said. ‘What are the guys at the top of the market even doing there?’”
“Cape Coral real estate agent John Valdespino saw the housing crash coming in 2006. He got out while the getting was good. Valdespino went through a 10-week ‘boot camp’ training program to become an Embarq telephone system installer. He now works for the company in Naples.”
”People were buying $500,000 homes in middle-class neighborhoods, that doesn’t add up to me,’ he said. ‘I said, ‘This isn’t going to keep going.’ I said, ‘You know, before all these other out-of-work Realtors jump, I’ll beat them to the punch.’”
“He’s not alone. The number of Realtors in Lee County dropped 16 percent in the last year, from 5,157 to 3,959 members of the Realtors Association of Greater Fort Myers and the Beach, Lee County’s largest association.”
“And it’s down 28 percent from the record 5,993 two years ago, when median price of a single-family home shot up 47 percent in a year’s time and real estate was a burgeoning profession.”
“Elizabeth Casella came here with her husband 16 months ago, after Hurricane Katrina clobbered her real estate brokerage in New Orleans. But Casella soon realized the market wasn’t the vibrant one that had existed even a few months earlier.”
“‘I went for an interview with a real estate agency and I was there 40 minutes,’ she said. ‘The phone didn’t ring. I asked them about it and they said, ‘It’s a slow day.’ I said ‘A slow day means it rings every four minutes.’”
“As a result, Casella stopped the process of transferring her license and is now pondering her options.”
“Gordon Koschtial, an agent in North Fort Myers, came here from Detroit and got his license in ’05, just at the peak of the market. He also started Odyssey Homes, which is finishing up some partly-built homes for financial institutions.”
“But after that, Koschtial said, there’s likely little work for him here. Home permits are at a crawl: Only 57 were issued countywide in December. If nothing else comes along, he said, ‘I’m heading back to Michigan in five or six months to a job that’s waiting for me.’”
“There’s no sense in waiting for the market to come back. ‘I’ll be dead and broke by the time that ever happens,’ Koschtial said.”
The St Petersburg Times. “Supersized Tampa Bay area houses are going on a steady diet. Decades of gigantism in housing sizes have struck head-on the reality of the housing slump.”
“Builders are doing what used to be unthinkable: They’re shrinking home square footage and cutting amenities for the first time in decades. ‘People are rethinking whether they need an indoor swimming pool in the bathroom,’ said Joe Narkiewicz, executive director of the Tampa Bay Builders Association.”
“Such streamlining is happening with a vengeance at KB Home, which is returning to its roots as a provider of homes for first-time buyers. After inching up to 2,200 square feet in 2006, KB’s average home size in Tampa has shrunk to 1,800.”
“The company even reintroduced two-bedroom houses scaled not much larger than apartments at 1,033 square feet. Such downsizing allows the builder to offer attention-grabbing prices ’starting from the 130s’. ‘It’s really helped us get to a price point people can afford,’ spokeswoman Cara Kane said.”
“The size reductions stem from a confluence of two factors. Locked into pricey land deals negotiated in many cases during the housing boom, builders can’t chop prices much more without going broke. At the same time, buyers can’t get the big-money mortgages they once could.”
“‘Many, many builders sold at a loss last year,’ said Marvin Rose, who’s monthly newsletter Rose Residential Report is required reading for the area’s top builders. ‘They’re cutting each other’s throats to get a sale.’”
The Pensacola News Journal. “In concept, Bob Montgomery’s plan for a downtown condominium on East Gregory Street has a lot going for it. Beautiful view of Pensacola Bay? Check. Convenient to downtown restaurants and entertainment? Check.”
“Right time to sell it? Not so much. ‘Two years earlier, it would have been done and gone,’ Montgomery said.”
“Investors who once jumped into a lively housing market are now waiting for prices to bottom out and inventory to diminish. ‘You just have to wait,’ Montgomery said, adding he has shelved at least three strong local projects.”
“There are nearly 6,800 homes listed for sale in the Pensacola Bay Area, not including for-sale-by-owner homes. Before the local housing market improves enough to make way for projects planned by Montgomery and others, that inventory must come down.”
The Times Union. “It was supposed to be the ‘forever home,’ as Kelly Estes called it. The 3,600-square-foot, five-bedroom, three-bathroom, two-story model in St. Johns County would be the nest for the stay-at-home mother of two and her husband to grow the family.”
“But now the dream is an empty lot. A returned check. And yet another snapshot of the nation’s slumping housing market.”
“The home was to be among 350 single-family units and 100 townhomes in a neighborhood in Ponte Vedra Beach’s massive Nocatee development. Centex Homes, which was building the village, confirmed rumors Friday that the company is pulling out of Northeast Florida.”
“‘We, as an organization, looked at Northeast Florida and determined it’s not a community we need to invest in,’ said division sales manager Brian Martin. ‘It’s a market thing.’”
“At first, Estes said she thought she was getting a good deal. She said she talked the price of her Willowcove home down $120,000 to about $446,000. When she found out Centex was ceasing Northeast Florida operations, she said her jitters about the economy became worse. She asked for her $5,500 partial deposit back.”
“‘We were fortunate in that we had not broken ground yet,’ Estes said. ‘We thought it would be a risky proposition to build. We didn’t want to wind up living in a ghost town.’”
“St. Johns County Commissioner Ben Rich said he doubts Centex’s decision will take any pressure off the county’s housing debate. County officials have been criticized for poor planning and over-permitting.”
“‘Depending on who you talk to, we have anywhere between 64,000 and 70,000 homes approved for construction,’ Rich said. ‘This won’t really give any relief.’”
‘The size reductions stem from a confluence of two factors. Locked into pricey land deals negotiated in many cases during the housing boom, builders can’t chop prices much more without going broke.’
An interesting development. IMO, these houses will be undesirable, when the vacant lots get sold off for pennies on the dollar and nicer houses are built. Who cares what the builder paid for the land?
Isn’t why the builders are writing down land values, to show a lower cost basis going forward? Effectively, allowing them to build cheaper houses and show a profit.
You are exactly right, IMO. This strategy has only recently become apparent. The big write downs have been done carefully with regard to location. When they start to build, they can undercut resales and show a paper profit to Wall Street. In other words, these writedowns are future new house price cuts.
But it still involves hoping that prices will stabilize at some level not too awfully many per cent below where they are now; that is, above a long-term average price-to-rent ratio.
Since it’s almost a certainty that prices will overshoot on the downside before this is over, I still say it’s game over for most HBs.
I pointed out at work last week that I think we are at a point where starting a homebuilding company may be a good idea. You will be able to buy land on the cheap. You will be able to get supplies on the cheap. Contractors will be working for far less. There is no exposure to lawsuits for a new company like so many of the current HBs.
A clean slate will be a beautiful thing in a lot of businesses in the next few years. Builders, banks, mortgage dealers might all get a fresh start. Isn’t that what a recession is for, to wipe away the weaklings? The system should be able to flush itself as long as the politicos don’t screw everything up. Opportunity will abound as assets become cheaper.
I can’t imagine there will ANY need for new homes to be built, for quite a long time.
Just one thing missing: Customers!
The real problem today is the homebuilders have not written down to market value for lots. I believe they have another 40% to writed down from the current values (100% value in 2005, dropped 30% to 70% of ‘05 value, now must drop 40% more to = 42% of ‘05 value.) and maybe they can hold it there. However, consider that the homebuilders might want to hold the 2007 values, so when they do sell some houses in ‘08-’09, they get some cash flow, but no taxable earnings. It is way too early to think the homebuilders will “show a profit” before 2010 at the earliest.
The builders were loading up on land as early as 1999. They probably have many lots they could cherry pick to show profits. Combined with the writedowns, who knows? It doesn’t mean they are solid, just that they can show a paper gain.
IMO, this is an interesting survival game for these guys. Billions at stake, they are stuck in the post-bubble market and trying to be one of the few that make it.
The idea that they are trying to sell a 1,000sqft home for 130+K as a good deal tells you everything you need to know about how this is going to work out for them, imo.
They are too clever by half - just pumping and dumping more inventory like that. As Ben points out, who will want the econ-boxes once the big stuff really starts plunging? The bottom pickers are going to get creamed on this one.
Don’ quite agree. Smaller houses will ulimately be more attractive than a bloated, energy sucking McMansion. Costs for reroofing, repainting, and furnishing a smaller house are appreciably less. Rather live in a nicely appointed small house, than a McMansion with bedsheets for drapes.
In the early 70s in the Midwest, there was very little demand for huge older homes. Partly because they didn’t have central air conditioning for the most part, and had little insulation (although many of them had steam heat, which was pretty efficient) and partly because family sizes had dropped, and increasing numbers of women were working full time, so few people were interested in six-plus bedrooms, or a ballroom, or outdated bathrooms and kitchens.
The houses which will be desirable post shake-out in my opinion will be quality-built houses in walkable neighborhoods with good commute times to wherever the jobs are. The houses with brick on the front and crappy siding on the other three sides with the garage facing the street an hour or more away from downtown are going to be a tough sell, partly because there are millions of them.
I also think that the idea of public schools has passed its peak. Some school districts are spending $17,000 per child per year and cranking out illiterates while nearby parochial schools do a decent job for a third the cost. I would be very careful about paying a premium for a “house in a good school district.”
My guess is that the $130,000 1000 square foot homes are cheap crackerboxes being put up as fast as possible so that the builders can reduce their inventory of vacant lots. The people buying these houses will never be able to unload them for what they paid.
If it’s a good school district, then it wouldn’t be cranking out illiterates.
“Of those 1,833 foreclosed homes, not every house had a family in it. In fact, only three of every 10 foreclosed homes were owner-occupied. Most belonged to what Tumbarello calls ’speculators.’ He says most speculators never even made a payment.”
In other words, the lenders were direct RE speculators on 70% of these home sales. So how is your FL RE speculation working out for you now, CountryFried?
‘Buyers want out … because the economy is bad,’ said Richard Inglis, a lawyer (in) Fort Myers, who has handled many such cases. ‘It’s hard to think about buying a second home if you’re laid off or if your economic situation has changed substantially, … especially in Southwest Florida where we’re selling make-believe and sunshine.’”
What a load of crap!
Buyers want out because the EASY MONEY is gone.
NO Flip profit. NO reason to buy. It’s that simple.
Business is slowing down, but not the 40-60% cancellation rates we’ve been seeing. We all know the reason they want out, and it’s personal finances, allright. But it’s the lack of cash flow from the property, not into the property.
We need more personal finance trainers, in this country.
They would really have their work cut out for them!
Don’t think you could pay me enough to deal with Ma and Pa MaxedOutOnWorthlessBling-WalkingAdsForBariatric and their feckless seeds for it to be worthwhile.
I’d makem’ do numbers crunchies.
Government legislation could make that happen. As part of the high school curriculum, each school district will have a certified personal finance trainer. Voila.
The very first thing I would do, if you’d allow me to be your Eduction Czar, would be to not allow ANY electronic devices in classrooms of grades 1 through 6.
The first thing I would do, would be to teach people how to spell “Education” in the edumacated way.
Too fast, pussycat.
Look up “eduction”
That is pretty funny. I think your days as Education Czar are limited, Alad, if you can’t even spell “education”. Maybe you could be our Nukular Czar.
“If laughter is an intoxicant, I am perpetually tight.”
Adlai E. Stevenson, Jr.
How about teaching people to read write and speak English, and to communicate without swearing. That alone would kill the rap hip hop music business.
“You tellin’ me you don’ like Fitty-Cent?”
Yes, the rap hip hop music business makes Lady Liberty cry. Rap hip hop music has made our children stupid and murderous and driven down property values all over America, bankrupting millions. Rap hip hop music has made it impossible for consumers to consume. Let us declare war on the rap hip hop music business before we become so weakened as a nation that the French invade and start murdering our babies with their devil-courting angry Algierian songstylings. In other words, y’all nigra kids git off my lawn, you are distracting people from my elegant fsbo sign with your jungle gyrations.
NYCdjlad or whatever your name is, I never heard such ignint yammering. Lucky for you little lord Tu Pac is up in heaven right now asking for mercy for you, for you do not know what you are talking about.
It can’t happen. You see, the monetary system we operate under would cease to work if the masses understood it’s operation. You can’t start explaining finances and how to conduct your financial affairs without first understanding what money is and where it comes from. Once you start down that road, it becomes hard to stop short of exposing the fraud. Best summarized by asking what law allows some unknown bank owners to print money and charge interest on it? Is this law in conformance with our constitution or was the constitution amended to allow this system? Bring that question up one more level and the question becomes why folks are forced to work in order to pay taxes so that the gov’t can pay interest to bankers on money created out of thin air? The whole flim flam would unravel by a bunch of 5th graders asking hard questions. Can’t have that now, can we?
“You see, the monetary system we operate under would cease to work if the masses understood it’s operation.”
Auger, call me crazy, but I do think people are beginning to understand at least a little about the monetary system we operate under. I, for one, understand a whole lot more about it than I did before the bubble, much of it learned here through various links and from some of the bloggers directly. Also through Ron Paul. Maybe the “masses” don’t understand, but they do know something’s wrong. So I think we’re seeing the beginning of the end of this current monetary system, IMHO. It has become unworkable for the majority.
A good read from Robert Reich of the Financial Times:
http://www.truthout.org/docs_2006/013108B.shtml
“The fact is, middle-class families have exhausted the coping mechanisms they have used for more than three decades to get by on median wages that are barely higher than they were in 1970, adjusted for inflation.”
Unfortunately, part of the solution Secretary Reich wants to implement is to import more tech workers, teachers, and nurses from lower wage countries in order to combat the “shortages” in these fields.
I guess if we import enough guest workers, we will solve all of our economic problems. Well, maybe if we force them all to buy houses as a condition of their visa.
Agreed. I think anyone who has the right to vote should also be forced to take Econ. 101; i.e., money doesn’t grow on trees. People want gov’t to cut spending at the same time they vote themselves new taxes through bond measures. Pathetic.
Scholastic instruction in personal finance would probably be party-line claptrap. You know, if there’d been a Personal Finance curriculum in place in 2002, it probably would’ve started with Rule One: Own Your Own Home. No chance it would be Real.
Yep. It would be sold to the highest bidder.
Yeah, the text books would be sponsored by BoA and Countrywide. Infommercials, no doubt.
Financial knowledge will not stop manias. This is about FEAR and GREED, not about mathematics.
When emotions take over, even sensible people lose track of reality.
No, my friend, education would not have helped this. The FEDERAL RESERVE had a responsibility to provide price stability. They used “core inflation” and threw out every other metric so they could game the system in favor of their Wall Street friends and Banksters.
We need LEADERSHIP in government and ENFORCEMENT of our laws. Putting people in jail for lying on loan documents (fraud) would be a good start.
This is about FEAR and GREED, not about mathematics.
The sheeple have been living beyond their means for some time now and have depleted their last bank of money that was in the equity of their homes.
I don’t think this is about fear and greed, but more along the lines of understanding the math involved in budgets for the consumer and not living pay check to paycheck. It’s about being responsible and not keeping up with the Jones. It’s about not being infuenced by special interest groups or marketing that says buy buy buy or home prices will always go up.
Bottom line, people need to wake up and live within their means and nothing more! Remember the old saying, CASH is KING! Getting cash by means of borrowing is not being the KING.
Our superintendent just announced that the work study program is obsolete and the teacher would now be teaching a personal finance class. All seniors must take it for a semester, starting next year.
“‘Two and a half years ago, it was just the opposite,’ Inglis said. ‘It was developers trying to get out of deals and stiffing customers because they wanted to sell (the homes) for more. It’s so incredible what a sea change there has been.’”
And yet, developers insist their buyers honor their contracts when the situation is reversed. What’s good for the goose is good for the gander.
Yeah! A Florida thread! Game on!!!
Can we just rename Florida, “Upside-Down”
Florida is the “Under water state” (hurricanes and global warming)
California is the “Upside Down state” (earth quakes and forest fires)
My thoughts exactly. I thought Ben had stopped posting FL threads because it has become apparent to absolutely everyone with 2 brain cells to rub together that FL is heading off the cliff (or already off the cliff) and now it’s just waiting for the loud thud at the end.
Anyway, FL seems to bring out the best in everyone on this blog, even those that don’t live here. It’s just such a great microcosm of everything that is so wrong in many ways with this country. Housing bubble, living SO far above your head, stupid people, crooked govt, horrible tax/growth management… Etc, etc, etc…
As you said.. Game on!
as someone who moved to Florida in the peak of the bubble, I met so many people who had no education or real career skills whose wallets and egos where massively swollen with heloc money, it’s been amazing watching it deflate
Dee,
I also moved here as the bubble was really picking up steam (04), and can mirror your statements almost to the letter. The number of times that people down here told me that RE was going to keep the climb up forever would make the down payment on a 1M dollar home, no doubt about it.
There’s really something different about FL; and the manias that it seems to have from time to time. Yes, this certainly did go national, and, in fact, some areas might be worse off the FL. But the “scam artist” attitude that seems to permeate FL seems to still remain centered here.
The HELOC and bubble money down here was just without compare.. It seems, in FL, if you get 100K out of your home, you then go apply for more credit based on that 100K, and then leverage that up to another 500K in spending. It’s just amazing to behold, and, unfortuantely, is going to be terrifying to watch deflate.
I think that many will just leave FL; pack up the dream of easy riches and quick money, and move back to where ever they came from. FL is a different monster, and as someone on here said once, if you don’t respect her, she will send you packing broken, poor, and emotionally destroyed.
Florida’s manias are famous.
1925/1926
1974*
2003-2007
* My family was in construction through that 1974 boom. However, thanks to his education, my dad was able to get a job in another state as the boom went bust in 1975. Mostly they shut down their business due to teamsters action (unions typically get aggressive at the end of a bubble).
FL is a different monster, and as someone on here said once, if you don’t respect her, she will send you packing broken, poor, and emotionally destroyed.
Good quote. If you don’t play Florida right… it bites back.
Got popcorn?
Neil
Theory: hot humid weather makes people a bit looney, especially when they’re from a colder clime and their blood hasn’t acclimated. Though you’d think A/C would have dealt with this phenomena.
I think the hot weather ATTRACTS the loonies. Just think of all the weird stuff that happens in Florida.
Excellent Quote Mike;
FL is a different monster, and as someone on here said once, if you don’t respect her, she will send you packing broken, poor, and emotionally destroyed.
I witnessed many a developer in the 1980’s pack-up and head back….Even ‘The Donald’ bite the bullet in WPB
We should of known with the hanging chads that Florida would be a problem area . Florida was a big problem in 1926 also regarding a fake value speculation market . What is it about the Sunshine States that bring out this sort of speculation madness ? Course this time the speculation madness went Worldwide . Buying to sell to a greater fool caused this mess.
I’m wondering if the seriously low home prices that my husband and I encountered in Fla in the early 1970’s were somehow a hangover of the 1920’s bust. I am not aware of Fla having had housing bubbles in that long mid-century interval. If I am right about that, it bodes well for my prediction that the latest HB will not repeat for 50 or 75 yrs.
My co-worker and I both moved to FL in 2000. He bought a house in a Tampa suburb for $110,000 (3/2/2 typical ranch style home). I thought that was reasonable but I rented an apt. for $550 for a 1/1 (about $300/mo less than I was paying at old location). We were both ecstatic about the weather and environment. The only exception being car insurance, everything was cheaper here than in the midwest.
He sold his house for $111,000 in 2001 to return home. At the height of the mania, I saw it for sale again for $170,000 in 2005. By then with the high amount of construction, it wasn’t so nice anymore. Just six months ago I was paying $800/mo for a 1/1 apt.
Floridians’ without a clue used the ‘we were underpriced’ argument to justify the outsized gains in 2002-2005. I was just in Miami, the home of the place that is ‘running out of land’. Ironincally, there was TONS of empty space in the Miramar area, and lots of dark condo towers downtown. I thought Miami was running out of land?
To get to the point, Florida was reasonably priced from ? to 2000 based on a vector of variables including weather (+), hurricanes (-), wages (-), taxes (+), services (-). Florida was a relaxing low cost, low wage place to live. in 2008 Florida is a high cost, low wage place to live because of the bubble.
I hope and pray that Florida again becomes the place I moved to in 2000, and not a wanna-be New York place.
What is it about the Sunshine States that bring out this sort of speculation madness ?
Yankee Carpetbaggers. There is a long tradition of people migrating south in Buggies and Flivers to fleece the locals. New Yorkers lead the pack, with dreams of easy living.
Thank you for saying that. It’s a theme I’ve worn out. If the virulent Yankees stayed home, instead of finding places to appropriate and destroy, Florida might still be relatively pleasant. I don’t blank Yankees for wanting to escape the cold, but when in “Rome,” they should respect the “Romans,” not trample them in a frenzy to build another New York.
Same prob here in the Southwest For years folks from back east have demanded lush lawns and English gardens, in the middle of a desert! Thank god Xeriscape has become more popular. People are actually replacing their silly postage stamp front lawns with drought resistant plants.
There is a long tradition of people migrating south in Buggies and Flivers to fleece the locals. New Yorkers lead the pack, with dreams of easy living.
As someone who recently moved from NY to Florida , I kind of saw it as the opposite, it seemed like there where a lot of people in Florida whose dream was to somehow fleece out of staters.
I mean really what is Florida economy based on , other then paving stuff and selling it out of state people?
Oranges?
Half the state doesn’t even speak English does it?
I don’t blank Yankees for wanting to escape the cold, but when in “Rome,” they should respect the “Romans,”
lol
The reason half the population doesn’t speak English is because it has moved here from somewhere else and tried to make it home-like. Most of the developers I’ve encountered moved here from up North, to build houses for other Yankees. The hideous heavy, ornate architecture that has taken over is not local in the slightest.
About ten years ago, a bunch of retired New Yorkers who had moved to Key West tried to get open containers banned along with drinking on the sidewalks, and the annual Halloween festival (in which many of the local exhibitionists parade naked), because none of these things were acceptable back home.
This goes on all the time, to the chant “This isn’t how we do things up North.”
I have to disagree with the Yankee part at least in Broward and Miami Dade. We lived in S. FL for over two years and we moved just this past June. Everyone was from somewhere else but it was mainly Latin America and the Caribbean. And they did try to re-create what they left which usually wasn’t pretty. We never saw such racism in our lives. Cubans disliked the Colombians who disliked the Venezuelans… Haitian against Jamaican against local native blacks… It was tribal. Whenever I expressed dismay at the crummy schools, the rude people, the selfishness, the crime, the terrible drivers, the corrupt politicans and police departments, the high prices (except for housing, everything else in FL was MORE expensive that So Cal where we had just come from) inevitably I got the same answers: “Well it’s worse in Miami…” or, “What are you gonna do, it’s like this everywhere.” No, no it’s not. We thought it was the most God-awful place ever to try to live as a middle class family. Even the weather is really overrated but we did go through hurricanes Katrina, Rita and Wilma one right after the other. But the unbearable heat, ridiculous humidity, torrential rain and vicious killer lightning every afternoon made us scratch of heads when folks would tell us that that was the price for living in paradise. Are you kidding me? We could not get out of there fast enough, even took a cut in pay to do it. If that’s “paradise”, y’all can have it.
“It’s just such a great microcosm of everything that is so wrong in many ways with this country. Housing bubble, living SO far above your head, stupid people…”
I’ll see if I can get a picture for the gallery of my neighbor’s tacky, vulgar pink Hummer. No, I’m not kidding.
I am seeing, pretty broadly, the “resignation” phase moving in, here in central Florida. No one I talk to thinks things will get better and virtually all of them now believe prices will continue down. About the only disconnect from reality that I find is most folks believe that next summer will be the bottom. I think that once the tightening of the HELOC screws hits home, that timeline will move out into the future.
The only optimists I find are the RE agents outside of Florida who both want to believe that their area is different and who *most importantly* are not stuck with flip properties themselves.
“‘Southwest Florida is affordable again. We were always affordable and we’re back to that. It’s quite affordable to live in the North Cape now,’ said Tumbarello.”
Huh?
I was just going to jump on this when I saw your post Palmy. What a friggin moron. You can tell the guy is grasping and wants to find a way to squeeze a positive line into an absolute debacle. Dolt.
If by North Cape he means the area with few trees, many drainage ditches (what some call canals) bugs galore and, oh yeah, its out in the middle of nowhere. Many, many, many empty speculator homes are located here. Most of them are for rent. Look at a few in the Gator Circle area last year. They all looked the same…and it was very out of the way. Some may like that…but I don’t want to drive 15 minutes before hitting a gas station or grocery store.
“For a median-priced $362,500 home in Miami-Dade County, this requirement means buyers have to cough up an additional $18,125 to obtain a home loan.”
So in the land of a negative savings rate, coupled with the fact we have been raised on zero down where will the extra dough come from?
Forget the “additional” 18K. The first 18K was the real stumbling block, imho. If your a saver, you know that you can save as much money as you need given enough time. However, to most people, saving 18K for a down payment seems like an absolutely impossible task, regardless of the time frame. 36K just seems like (infinity * 2), still a totally unreachable number.
Plus aren’t the banks once again asking for 6 months savings, even if its a 401k?
Oh gawd in heaven, if so, it’s just totally game over. Just forget about it; coming up with the 20-40K in cash was enough of a hurdle, now they need to also have another 40K+ in savings/401K. Oh he** no; if those standards come to be the new “min”, prices could seriously drop over 50% in the big bubble areas.
I have said it many times, but if we even went back to 10% down, verified income that will support less then 25-28% spent on all housing expenses, and no negative AM/IO loans, it’s just game over in these crazy areas. There’s just NO way to maitain a 400K median home price with a median income of 50K. It’s not gonna happen.
Not saying that this would be bad, or that this won’t happen. But, if and when it does happen, it will mark the end of the bubble, and the time to actually start looking seriously at homes. How many buyers are out there that can meet the above criteria, and, most importantly, DON’T have another home to unload?? Lots of homeowners could get the down payment, but they need to SELL their primary home first. This ponzi scheme can only go on for so long before someone needs to sell to someone who doesn’t already own a home……
How many people still have equity in their homes after the falling prices, HELOCs and refis of the past 5 years? If they sold their current home, would they have enough money to put down 10% on the next home?
“How many buyers are out there that can meet the above criteria, and, most importantly, DON’T have another home to unload??”
NYCityBoy has his hand raised but please don’t tell anybody. I’m just a bitter renter.
As do I NYC; however, I don’t think that the 2 of us can save the FL housing market.
There certainly are some out there ready to pounce. The problem is that the “pounce” price for most of us is SO far below the current wishing prices (and what they NEED to get) that we remain at the current impasse until capitulation occurs for the sellers.
The problem really is; imho, that there are not enough of us. The number of people not already “all-in” on this housing market that have significant capital; stable (and high, if we believe that the current prices are justified) incomes, and want to buy is just incredibly small compared to the scope of this problem.
“…36K just seems like (infinity * 2)…”
Michael - great way to put it.
Something we haven’t talked about much lately is the effect comps are about to have on selling prices. I think we’re at the point where a couple of sellers in each neighborhood will cut and run - or their lenders will do it for them. Then comps are torpedoed for the entire neighborhood and prices will be in free-fall.
Saving 36K isn’t that hard. Bubble sitting renters have that much or more in savings and are just waiting for prices to stabilize. Meanwhile you could have doubled that shorting Countryfried etc.
“I don’t think the legal system was ever prepared to do this many foreclosures,’ said Tumbarello.”
Let’s see… Housing is in a free-fall… Ah, Yes! Let’s say housing “takes a little tumbarello.”
Calling Carl Hiaasen!
LOL, Muggy, I wonder what Hiaasen would title a book about the housing crash in Florida? He must be laughing bitterly, he hates the developers with a passion.
I was surprised to read one of his editorials about the quality of life in Florida. He’s a very level-headed guy, sincere, and does take all of this seriously. I wonder if he and Dave Barry sit around the water cooler at the Herald saying things like, “holy $hit Dave, we live in Miami.”
When I saw Barry speak a few years ago he was even joking then that he, “just flew in from another country.”
As for a title, I’ll throw one out: Pipe Dreams (with a photo of a wave cresting over large, yet-to-be installed concrete pipes - like the kind you see when developers are just getting started).
“Pipe Dreams”
Good one, Muggy. That’s exactly what a Centex development looks like around here right now.
When I saw Barry speak a few years ago he was even joking then that he, “just flew in from another country.”
As the line goes: “Miami’s great. You just drive 20 miles north and you’re in the United States, and you don’t even need a passport.”
LA feels like that as well.
Try Utah. At least coffee’s still legal here (and there are actually quite a few espresso shops all over the place).
don’t forget Elmore Leonard
get short - eeeeeeeeeeeeeeeeeee
Hiassen bailed out of Miami years ago.
He relocated to Vero Beach. Bet he regrets that move with all the hideous development up there.
On the other hand, it IS probably more like America…
LOL, Muggy, I wonder what Hiaasen would title a book about the housing crash in Florida? He must be laughing bitterly, he hates the developers with a passion.
That shows how smart he is. I have most of Hiaasen’s books; they’re great. I just re-read ‘Sick Puppy’ last month, and was energized by wrath all over again.
Ben should rename this blog, “The Housing Crash Blog” since everyone now knows there was a bubble–some still doubt the crash is here.
“Cape Coral real estate agent John Valdespino saw the housing crash coming in 2006. He got out while the getting was good. Valdespino went through a 10-week ‘boot camp’ training program to become an Embarq telephone system installer. He now works for the company in Naples.”
While I applaud his move, I have to wonder why he didn’t see it coming a lot sooner, considering summer/fall 2005 was the peak.
I have to admit, I really didn’t pay attention until early 2005 myself, mainly because that’s when development really exploded in a noticeable way in my neck of the woods. I wasn’t in the market to buy, since I already had a house. I was just going about doing my business, which was seemingly unrelated to real estate. In about the spring of 2005, we decided to sell. Given what’s happened in Florida since, a wise decision.
Give the guy a break. He must have gone through h3ll with his friends and associates, who probably then spent many hours trying to figure out how to get him involuntarily committed to Happy Valley - considering that EVERYBODY (we don’t count) was sure that the market was going Up, Up, and Up.
In addition, this guy is now a productive member of our society, serving a critical function, as opposed to, say working for a lawyer. On top of that he’s even using his hands, and probably getting them dirty and calloused - extremely rare these days…particularly for someone from a pampered profession.
This is a man that I definitely respect.
“considering that EVERYBODY (we don’t count) was sure that the market was going Up, Up, and Up.”
Makes me wonder how many formerly silent people will come forward now and say they saw it coming.
Palmy - I wondered that, too. What I’m finding so far is that people are not claiming they knew - even those who didn’t “invest” and who just continue to live in the place they’ve owned all the way through. I’m a little surprised I don’t hear more, “Gee, I should have sold near the top,” but I guess there are a fair number of people out there who are so attached to their nests that they didn’t care. Even more surprising, my good friends accept that prices will come back to year 2000 or earlier levels and it doesn’t seem to phase them. Granted, these people also didn’t pile into day trading during the dotcom era, either.
“Granted, these people also didn’t pile into day trading during the dotcom era, either.”
Got a good laugh out of that, Chip. I didn’t pile into day trading, either, but I knew a number of folks who did, I sort of stood around with a dumb look on my face listening while they talked about it. Never heard another thing after dot.bomb. No one much talks about day trading these days, which doesn’t surprise me, because it was all a bunch of wanna-be amateurs at the time.
I knew well two people who lost their butts day trading. One was a colleague who lost $1.5M and the other was a relative, the same relative who then snorted and laughed at me in May 2005 when I told him we were selling out and renting because housing was going to crash.
Reminds me of a story purported to be true, about when a section of 1-95 in Greenwich, Connecticut, caved in a number of years back. A trucker who knew about it was pulled over to the side of the road ahead of the breach and frantically tried to flag down a fellow in a BMW. The beemer guy gave the trucker the finger and sped on his merry way, right over the edge.
I kind of think real estate people are just parasites that have figured out a way to get in between a person with a house and person with money.
I am sure some of them do do a great job and all, but the little experience I have had with people involved with south Florida real estate has been terrible.
MSM - nice job on the CW Area Category changes - we had that news last week,try to keep up you are falling behind, AGAIN!
On the ground report from Evergrene in Palm Beach Gardens.. Went “home browsing” yesterday.
Looked at 5 homes that were in the right location, all ~2300 sq/ft under air, and all at the lowest price points for that size in the neighborhood. 3 foreclosures, 2 divorces; every single one a “distressed sale”. Prices were right around 400-450K for these properties.
The first home (divorce) had at least 5 people living in the home, which, could, at VERY best be described as “white trash”. House was a complete disaster area, and the surrounding houses on this street all also looked like there were 4+ people living in every home (a TON of cars in every driveway, and all these homes have 2+ car garages). This house was just a total mess, and although seemed to have nice upgrades, needs to have about 10K in cleaning work done to make it livable again. Oh, and when I inquired about the pool heating (how much it pushed up the bill for gas), the owner replied “We ain’t never turned it on”. Yes, it was that bad.
The 2nd home (divorce) was very nice; kept very well, and the owner seemed like she might actually belong in a 1/2 million dollar home. Good neighborhood, much more upscale (and only a few streets from the first home). That was our favorite home; and was priced about 200/sq/ft, which, although still too high, is starting to get a bit more reasonable.
The 3rd home (foreclosure) we didn’t even go into. The entire house was destroyed; walls ripped out, cabinets ripped out; entire sections of the house with electrical outlets and plumbing ripped through the walls. A total disaster, in a less desirable neighborhood; and the bank wanted more then for the first 2. They are dreaming, if this home sells for over 150K it will be a miracle; this property needs 100’s of K in work to make it livable again. The RE agent thought it may have been used as a grow house.
The next 2 properties (foreclosures) were fine; nothing so much wrong with them, except that the location was much less desirable then the first 2, and the price was higher on both of them. The bank will need to get realistic on these properties quickly; they are chasing this to the bottom even worse then the homeowners are!
Our fav house was definately the 2nd; it was a really nice home, and I would be very happy to live there for the next 10 years. However, this entire neighborhood is making me more and more nervous; it seems that the “higher end” people are moving out, and in their place, we are getting houses with 10 people living in them…..
Oh, the lady in the 2nd house said that her neighbors were never there; she had never met anyone from one of the homes, and the other is owned by a rich couple from NY. So typical.
Sorry for the length of this post, thought others might find it interesting (or funny!).
Large houses turning into what are essentially rooming houses or being chopped up into apartments is part of the economic cycle. Think of all those wonderful old pre-1929 houses when you were a kid that had been turned into rooming houses or chopped up into apartments. We’re about to experience the “meth decade” version of the same thing with the McMansions.
Michael - yes, very interesting. This increasingly-typical scenario should discourage even more potential buyers. IMHO, $200/foot is WAY too expensive in this declining market, unless the house directly fronts a golf course or real waterway (not a fake lake/ retention pond). Personally, the most I’d consider is $100 a foot plus current market for the lot - for a CB house with great build quality and many “upgrades.” I’m facetious about “upgrades” because in a good custom house there is no such thing, to speak of. For $x per sq. ft. you get a specified trim level and it includes the good wood floors, solid surface, appliances, multiple a/c, etc. Only when it gets to specifying a 60″ Viking gas range or zillion-corner roof or the like do I think it goes beyond a good custom build and will cost noticeably more.
I am reading more and more that prices for the garden-variety decently-built houses, that many of us refer to as what we’re likely to live in, will hit $60/ft plus lot on the way down and that used ones may well go lower before we scrape bottom.
As for the multiple cars, I suppose it is as much a reflection of no basements as anything else — people tend to store their crap in their garages and park outside. When I started looking outside Florida, at first I didn’t care about having no basement. But when I realized the difference it makes for storage and therefore for parking, I changed my mind.
As for the multiple cars, I suppose it is as much a reflection of no basements as anything else — people tend to store their crap in their garages and park outside.
My neighbors have a two car garage and can’t fit either one of their SUVs into it. It is stocked full with crap.
Yeah, most of our So FL neighbors’ garages were too full of stuff so cars were parked all over. Only time I ever saw cars parked all over the grass. Plus, in a hurricane, the garage is the only safe place for your vehicle.
“Junk in garages”.
I’m one of the few people in the complex who actually park my car in the garage. People who will store $2000 of worthless junk in a garage and park a $35,000 SUV in the driveway amaze me.
Actually, thx quite good.
> when I inquired about the pool heating
You should have asked about the “cement pond”.
Amazing how many sheeple were sold a BIG house and a tiny yard. People here in Queens have bigger backyards then people in Florida…just wacko!
——————————————————————
After inching up to 2,200 square feet in 2006, KB’s average home size in Tampa has shrunk to 1,800.”
Which is just SO stupid in almost all areas of FL. We have TONS of land, even in Palm Beach, Broward, and yes, even parts of Miami-Dade. And forget about central/north FL, some of those areas are like driving through Montana (make sure you gas up, no other place to get gas for the next 50-100 miles).
Except for beachfront, there’s absolutely no reason for these homes to be piled on top of one another like they currently are. Land is NOT the problem in FL. Finding people to live here who can afford the prices is the problem; and that problem will soon be rectified.
I will volunteer to be one of the peronsal financial trainers. I am qualified to do that.
OT how can you motivate folks to work by paying them NOT to ?
Top Stories
As of 52 minutes ago
Will More Jobless Benefits Aid Economy?- AP
answer is NO
Jobless benefits aren’t all that great. I would rather work than receive unemployment checks
O/T - when I was in my first job, I was one week reviewing screened applications for meter-reader positions. One of them was by a convicted felon (I think a bank robber) who had served his time and was released. My gut instinct was to skip the app, but I figured that if I did and everyone else did, this fella might end up going back to his old ways. So I was a good scout and interviewed the man. When I answered his question about the wage, he replied that he was no longer interested because it wasn’t enough more than unemployment benefits to be worth doing the work.
Only politicians would think unemployment benefits will spur consumption. Gasoline and food will eat up most of that.
The two parties are moving into full damage control - the only thing more dangerous than a cornered dog or rat is a cornered incumbent.
Can I borrow a cup of make-believe?
“…“For example, we found on Cape Coral house that neighbors say has been sitting empty for years and the bank just recently foreclosed on it.”….
This is so typical. I see subdivisions in Sacramento with houses that were sold to specu-investors 12-18 months ago. They have not been lived in, no lawns are mowed, and clearly no loan, bond or HOA payments have been made since day one….or at least day 180. If you look at the mortgage paperwork, these were loans originated by the shady brokers, then sold to the shady wholesalers like New Century, Bear Stearns, Ownit Mortgage, etc.
I truly believe the loan paperwork has been misplaced and the lenders do not even know they own the mortgages! It would be a joke if it weren’t such a tragedy. It definitely is negligent, if not criminal. Hello Mr. NY Attorney General, this is another tree you might want to sniff around. Woof, Woof!
my friend had his biz in a bank building in early 90’s
no bill for rent for 2 years…………
““‘I went for an interview with a real estate agency and I was there 40 minutes,’ she said. ‘The phone didn’t ring. I asked them about it and they said, ‘It’s a slow day.’ I said ‘A slow day means it rings every four minutes.’””
Everyone please take a moment to realize that this story is of one realtor giving a second realtor a line of BS, and THE SECOND ONE CAUGHT ON!
It CAN happen! We have witnessed it in the wild.
When I was growing up in the 70’s, I wanted it so badly to be the 60’s again. That’s all we ever talked about is how we all wish we were ten years older. - Don’t you think we’ll see this same behavior for the next ten years - Trying to grab onto an illusion from the past?
Houston bumper sticker in the mid-80’s: “Please, God, give us another oil boom and we promise not to screw it up this time.”
Looks like they did, and they did.
Yeah. Yesterday I was thinking about how people in the US in the 1930s must have yearned for the 1920s.
The people who are “credit card rich” are going to have a dramatic change in lifestyle in the next couple of years. I won’t have that problem. I rent an apartment = I’m actually rich.
Yuppie NOVA Renter
I STILL wish it was the early 60’s again - the pre-’Nam part.
“‘Buyers want out … because the economy is bad,’ said Richard Inglis, a lawyer (in) Fort Myers, who has handled many such cases…Two and a half years ago, it was just the opposite,’ Inglis said. ‘It was developers trying to get out of deals and stiffing customers because they wanted to sell (the homes) for more. It’s so incredible what a sea change there has been.’”
Why, it’s like some sort of Carousel of Attempted Befookery spinning merrily around and around! The number one ride in the Circus of Greed, except there’s no bouncy calliope music and cotton candy. Plenty of clowns, though.
People have finally just flat-out given up on Nocatee, at least for the time being. The roads and infrastructure are outstanding, so it will likely get built out eventually, maybe 10 or 15 years down the road, with much more modest houses, after everyone involved now has either taken their hits or gone bankrupt. Same thing happened in Virginia during the first oil crisis, which began in late 1973. By 1975 big projects were mothballed, and finally beginning around 1982-83 began to get built out - there was actually a bit of a boom in the mid-80s.
But for now, at least we have an excellent new set of cycling roads, and I see a duathlon has already been scheduled for March, so some use will be made!
People have finally just flat-out given up on Nocatee.
Sounds like a headline from The Onion!
I’m seeing a lot of houses in Broward going back to mid 2004 prices which in some places is 30% from the peak, and there’s no sign of bottoming out. They’ll definitely go down to 2002 prices in a year or two.
Also, a friend of mine bought a house with no money down and wanted to take advantage of the drop in interest rates by refinancing. She was told that she has to have a 90% LTV to refinance which would require writing a check to the back for something like 50k. Needless to say she doesn’t have that kind of cash, so she’s can’t refinance.
Reb,
Your friends story will be the norm. Fannie/Freddie’s down payment requirement increase just went out across the board. 5% more required in any declining market. Ok, not quite across the board, maybe 85% of the US homes.
Got popcorn?
Neil
I think there’s a darned good chance prices here in Florida will drop below those in our neighboring states for a while.
It will drop for a few reasons. Most of the Construction, Mortgage Broker, and RE jobs are gone. Prices have run up higher here. And wages in other industries are stagnating especially with rising unemployment. It will get worse before it gets better.
I have been so indignant these past few weeks because:
I’m losing my savings to borrowers.
I’m cutting back on shopping.
I’m watching family stocks plummet.
I’m brain dead from listening to these repeated calls to save home owners.
My one light is this HELOC collapse.
Save money people.
Your equity is your debt.
On any given Sunday you can ride the subdivisions with the 3000-5000 sf houses built in the last 3 years and you cannot get through all the cars on the street. Most of the southern areas have a heavy latin population and Sunday is a big family day which is quite nice.
I was weaving through the streets recently in the same subdivision I had been in on Sunday afternoon and amazingly the same cars populated the street. This was about 10 pm when it suddenly occurred to me that these people all live in the homes. There are 3 generations of the family in the same house. I had wrongly assumed that the extended family came over on Sunday for a gathering.
I can foresee this same living situation for generations of us native Floridians. It might be a good thing actually. These are times which will definitely test our ability to adapt.
Interview at Brokerage Operation= Heartbeat
both sides of the desk
“Post-dated cheque on a failing bank”
Mohandas Gandhi