The Cup Isn’t As Full In Florida
The Times Union reports from Florida. “Northeast Florida homeowners applying for home equity loans - also known as second mortgages - are finding the cup isn’t as full as it was during the real estate boom. Instead of making such loans based on 100 percent of a home’s equity, most lenders have become more cautious by dropping the maximum amount to 90 percent or less, said Donny Griffin of Liberty Mortgages Inc. in Jacksonville.”
“Homeowners might be able to find a loan for the full amount, but the odds are against it, he said. ‘It’s not impossible, but it’s the next level to impossible,’ he said.”
“Tom Morcum, president of Coastline Home Mortgage in Jacksonville, said lenders are reacting to forecasts that home values will fall, leaving lenders vulnerable if borrowers default.”
“‘I think all financial institutions are going to be constantly evaluating the performance of their real estate loan portfolios,’ he said. ‘While we’re in the businesses of making loans, we’re also in the business of making good loans in expectation of being repaid.’”
The Sun Sentinel. “Some took notes frantically, as if in a college classroom. Others sunk their heads in their hands as if to hide their confusion and desperation. But all who attended a forum Saturday at Boynton Beach High School hoped to learn something to keep foreclosure at bay.”
“Jose Varga is trying to hold on to his house in West Palm Beach. His problems started when he lost his job in October. After two months of unemployment, he fell behind on his payments.”
“‘When I call, they tell me to pay or they will take my house,’ he said. ‘I want to make some kind of arrangement so that I can pay and keep it.’”
“Vargas’ credit wasn’t strong enough to qualify for a mortgage with a low interest rate. On top of that, his home’s value declined from $330,000 to $250,000 last year.”
“‘I’m trapped,’ he said. ‘I can’t even sell it to pay my mortgage and move to a more affordable place farther north.’”
The Palm Beach Post. “How do you make a small fortune? Start with a large fortune, then invest in Florida apartments in late 2005, with plans for a condo conversion.”
“BH Capital Group of Miami in 2005 paid a total of $59.7 million for Waters Edge and the Fountains, both in Delray Beach. BH Capital this month sold the two properties to companies affiliated with Goldman Sachs for $36.75 million, according to deeds recorded this week.”
“‘I know they were selling them at a large discount,’ said Jay Jacobson, South Florida director for apartment developer Wood Partners. ‘They bought them at the height of the condo craze.’”
The St Petersburg Times. “John McRae watched as weeds took over the yard of the house across the street, 3223 Hibiscus Drive. In an otherwise peaceful neighborhood, deputies began to show up regularly to stop fights between renters. A crew of vagrants moved into a crawl space underneath the house.”
“Meanwhile, the home on Hibiscus, valued for tax purposes at $416,476, repeatedly sold for much more: $560,000 in April 2005, $810,000 a year later and $835,000 six months after that.”
“‘Once it went above $800,000 - that’s just totally, absolutely, catastrophically out of proportion to what that property is worth,’ McRae said. ‘We thought somebody was putting a lot of money in their pockets.’”
“By analyzing property records, the St. Petersburg Times found dozens of what the FBI calls indicators of mortgage fraud. These include houses, such as the one on Hibiscus, that began to slip into foreclosure almost immediately after their purchase.”
“Dishonest investors apparently targeted Hernando Beach because its waterfront houses were expensive enough to hide inflated prices, said county Property Appraiser Alvin Mazourek.”
“The larger problem was distant mortgage companies making loans with no knowledge of local markets, said Frank Gregoire, a St. Petersburg property appraiser and president of the Florida Real Estate Appraisal Board.”
“Many of these companies were too eager to grant high-risk, high-interest loans, said Jay Newton, an administrator with the state Bureau of Finance Regulation.”
“‘It’s a matter of greed, and it affected everyone from buyers who knew they couldn’t afford a $650,000 home to lenders who saw the opportunity to give out a $650,000 loan at 8 or 9 percent interest,’ Newton said. ‘Lenders were crawling all over themselves to lend money.’”
“Jim Bourgoin…a Spring Hill real estate broker who only represents buyers, says he can no longer tell clients whether asking prices in Hernando Beach are fair because he often cannot find legitimate sales for comparison.”
“‘Fraud just totally messed up the market,’ Bourgoin said.”
“He blames not only investors and Realtors, but the county Realtors association for also failing to address the problem.”
“He explained why in a letter to the paper in December. Dishonest investors and real estate agents, he said, ‘are doing an injustice to our community by selling houses knowing these properties will eventually go into foreclosure and become a burden and an eyesore. … These Realtors need to be exposed and their licenses revoked.’”
From Tampa Bays 10. “Sandi Staskal remembers the day she closed on her Clearwater home. ‘I specified at the time of buying this home, which was 3 years ago that I would not accept an adjustable rate mortgage. I would not accept a prepayment penalty.’”
“But in the rush to sign all the paperwork and get her house keys she did something she says she never intended to do. ‘The man there said, ‘By the way, I do have to give you this piece of paper that you’ve got an adjustable rate mortgage.’ And I knew better but for some reason you’re in such turmoil and the pressure. I wanted the house and I signed it.’”
“It was a move Staskal says she regrets because her mortgage payment goes up every three months.”
The News Press. “Because waterfront — especially Gulf access — is king, $700,000 to $800,000 will usually buy a bigger home inland than it will along the Caloosahatchee. However, in this topsy-turvy real estate market, more and more exceptions can be found to that rule of thumb.”
“Broker associate Alicia Galante said the price of waterfront homes has dropped drastically from the days when real estate was at its height. She said that houses with direct Gulf access generally carried a pricetag of $1 million or more and it’s now possible to find them for $700,000 to $800,000.”
“‘That’s where I think we’re seeing the biggest drop because everyone paid so much for them when the market was high,’ she said.”
The Miami Herald. “Homestead City Manager Curt Ivy watched fretfully as the results from Tuesday night’s property tax vote trickled in on his television. Last year, a state-mandated $3.5 million tax cut forced Ivy’s South Miami-Dade town to eliminate 21 positions and cut back on services like lawn maintenance in its $42 million budget.”
“The Jan. 29 vote means another $1 million in lost revenue to the hardscrabble town that leads to the Florida Keys.”
“Tuesday’s vote will surely cut into their budgets, leaders say, but most also express fear over an expected decrease in property assessments in June, which would curtail revenues. ‘It’s like a double whammy,’ Aventura City Manager Eric Soroka said.”
“Copy that, says Ivy, whose city was in a nation-leading home-building frenzy before the market collapse last summer. ‘We forecasted a softer landing. We didn’t forecast a nose-dive,’ he said.”
“Karen Azari wasted no time after Florida voters overwhelmingly approved the property-tax amendment last week. Azari, who owns a Miami granite countertop business, promptly put her longtime home in Bay Harbor Islands up for sale.”
“She figures that the portability provision, which allows homeowners to transfer tax savings to another home when they move, will help her out.”
“How much the amendment will help jump-start the sluggish real-estate market overall is another question. Most analysts say it will boost sales only modestly in the short term.”
“‘There’s not going to be a running of the bulls,’ said Richard Barkett, chief executive officer of the Realtors Association of Greater Fort Lauderdale. ‘But now, people are not chained to their homes, and now they have the freedom to trade up or trade down and take their tax savings with them.’”
“But a bigger roadblock is that many potential buyers are waiting for signs of a market bottom. Nobody wants to buy a house when prices are on the way down.”
“‘It certainly will have some effect,’ said Ron Shuffield, president of a real-estate brokerage firm in Coral Gables. ‘But will it eat up all the excess inventory of homes on the market? No. We still have the market we’re in. If someone wants to move, they still have to sell their home before they will buy another one.’”
“Indeed, Azari — the eager seller in Bay Harbor Islands — said that if her house sells, she’ll scour the market until she finds a sure bargain, ‘maybe a foreclosure.’”
“The amendment ‘helps some, but it’s far from being the answer,’ said Martha Gomez, who owns several rental properties in Miami-Dade.”
“The $8,500 tax bill for one home on Southwest 63rd Place, which rents for $1,900 a month, ate up more than four months of income, she said. ‘When you couple the taxes with the insurance and maintenance, we’re losing money on these rentals.’”
we’re also in the business of making good loans in expectation of being repaid.’”
Repaid? What a great idea the banks just came up with since the housing boom.
Some of the comments being made show a desperate and frantic revisionism. My favorite remains last weekend’s reference by the Bradenton paper to a walk-back made by captive local economist Hank Fishkind, characterized as Fishkind’s “trademark brand of stand-up forecasting.”
Hety, it’s a new economy! The old rules don’t apply!
Now, loans have to make sense so they will be repaid!
What a concept!!
“‘When I call, they tell me to pay or they will take my house,’ he said. ‘I want to make some kind of arrangement so that I can pay and keep it.’”
Give it to them, you tool!
They’ll make you an offer you can’t understand, if history is my guide.
But, but, but… the interest rate has been cut! What does my house payment keep going up? (Overheard at Fat Tuesday celebration at local bar.)
‘Though Schmidt did not return several telephone calls to her house and business in Spring Hill, Soni vice president Annabelle Verity took the same stance as Sutter during an interview in early January: Soni never knowingly did anything wrong, she said.’
‘She and Schmidt began buying and selling houses in Florida in 2002, when they lived in New York. They made so much money so quickly, she said, they soon decided to move to Spring Hill as full-time investors.’
‘That’s what I do. I buy homes for cheap and sell them for more,’ she said. ‘I don’t see where I did any harm.’
The SPT article covers a lot of territory. I recall that in early 2005, when I started finding mortgage fraud stories (most were in Ohio and Michigan), I wondered out loud about how indistiguishable they were from the news out of the main bubble markets. IMO, a lending frenzy makes it impossible to stop mortgage fraud. Many here ask why law enforcement doesn’t stop this. After reading these reports for years, I can see that the FBI etc, don’t have the resources to look over RE closings except after something goes wrong. And even then, they aren’t set-up for hundreds of thousands of cases. The industry is supposed to have checks and balances.
And when the appraisal business became a rubber stamp, what else could be expected?
“The industry is supposed to have checks and balances.”
I think things worked out just fine. The industry does have checks and balances. Aren’t the lender-investors suffering these days? Big banks and the bond insurers are bleeding. They are learing not to cut themsleves again.
Things are working out exactly the way they should. It will take an unbelievable miracle for the existing particpants in the bubblemania to come out unscathed. We just need to watch patiently.
Who would have ever thought that the FBI would be investigating FB’s?
FBI = “FB Investigators”
I hope that every one of the sumbitches who committed big-time fraud during the bubble loses a lot of sleep, wondering if the knock on the door means they were found out and pursued. I’m not mean enough to wish it on the people who overstated their income to get into a house they really wanted to keep, but for those who did it to make a profit and knew they were committing fraud, there can’t be enough Paladins out there to chase them down, IMO.
Chip, I agree with the above poster. There are bot enough law enforcement and court personel to handle all the cases.
Most will get away with it.
You can however, be content with the thought that most of the crooks stayed in the market and kept turning and burning. Most are now broke.
I had lunch with a close friend last week. We had done many deals together. I dtopped in late 04, he kept going. His het worth in 2004: 2.2 mil. His net worth today: -1.3 mil.
A very common tale. He is a strait up guy and not a defrauder, but his is a common tale.
NEILT’s comment above, absolute truth. The market is acting like it should. If we can only keep the federal government from “helping”
Local mtg brokr who used to be with Calfed in 90’s knew our territory and went to bat for me in 95 for a prop that underwriters long way away did not understand. But this guy who had integrity in his field, probably saved more loans than most would do today. But that was in the early 90’s. For one thing, the National corps do not know an area like a long time local.
That is one thing for sure that should have never been overlooked. Unlike most areas, the desert could have a desert shanty house and a really upscale house next to it and neither would pulldown or pull up the other. Other towns, cities not quite so much, but again that was in the 90’s.
I said a long time ago, national banks were going to blow up. They sit in their NYC offices and have NO CLUE what’s going on outside their little wall street world. The analysts read their reports and think all is fine. Had the banks still been regional, the analyst for Barnett, NCNB, First Union, Suntrust… among others would have seen what was going on in Florida and put a stop to the madness long before it blew up! At the very least, they would have known something was drastically wrong with the housing market long before it showed up in the numbers. Large, greedy national banks consolidating everything to one major headquarters has been their downfall.
Weren’t the S&L’s regional?
After reading these reports for years, I can see that the FBI etc, don’t have the resources to look over RE closings except after something goes wrong.
Ben you hit it exactly right when you mentioned “except after something goes wrong”. Have you ever noticed a new traffic light or stop sign is installed after numerous fatalities and injuries or traffic enforcement is stepped up at any given intersection. The reason this happens is the public or the police begin to complain and the local political people begin to do something to counter the problem.
The same is true in the housing market. The resources are there in these law enforcement agencys, but they must be reallocated and that requires a political head to speak up and get the ball rolling.
People need to speak up and be noticed to make change happen!
Sorry, the feds are too busy raiding medical marijuana stores and going after porn producers to bother with this stuff.
Sorry, the feds are too busy raiding medical marijuana stores and going after porn producers to bother with this stuff.
Your incorrect, Narcotics and prositution/porn investigations are done by the narcotics division. Mortgage fraud, etc, investigations are done by the economics crime unit with law enforcement personnel that have the accounting background.
RE: And when the appraisal business became a rubber stamp, what else could be expected?
Government regulators-despite continual complaints from honest appraisers never set up a system for whistle-blowers.
The legistlature in the state I was practicing refused to establish laws which would protect appraiser’s from civil suit for reporting know acts of fraud to the Appraisal Standards Board.
And no matter where you practiced-everybody knew who the number hitters where. But report a crooked appraisal company and/or individual-be prepared for an intimidational type counter-suit.
Eventually the honest and legit people got tired of the BS and simply moved on or went broke.
Now the world has got what it’s got…
A local appraiser reported fraud to the AG in NY. The rest is history as criminal investigation is underway. Oh yes, and she is being sued for doing so.
Ha ha. When it becomes a common joke - we are really making progress. An earlier version of this joke was about billionaires investing in airlines.
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The Palm Beach Post. “How do you make a small fortune? Start with a large fortune, then invest in Florida apartments in late 2005, with plans for a condo conversion.”
“BH Capital Group of Miami in 2005 paid a total of $59.7 million for Waters Edge and the Fountains, both in Delray Beach. BH Capital this month sold the two properties to companies affiliated with Goldman Sachs for $36.75 million, according to deeds recorded this week.”
You know what would have solved this problem in Atlantis, create a real plan for affordable housing, so there wouldn’t such a hard crash. admendment 1 is a joke because it doesn’t solve the problem with affordable housing. people expect to sell prices at 2005 levels are out of luck. everyone wants an easy way out. now with lower taxes and one day lower apparisals on homes, it is going be very interesting swimming up and down US 1
SOUTH FLORIDA “aka” NEW ATLANTIS
Now Lennar and probably others will build POS boxes with same POS fawcets etc low grade crap, just cause they want to build low priced homes. I tell ya, I wouldn’t want a POS box with crap “fawcets’ etc just cause CORPS want to make a BIG bundle. I would just as soon rent. Save.
How insulting. But most wouldn’t see That insult while paying through the nose.
What amendment 1 left out were the home buyers moving to Florida from out of state, the renters who decide it is time to buy and anyone who sold their house prior to 2007. This group happens to be the ones who would be buying up the secondary market while the current homeowner buys a new home.
Big mistake and I think it discriminates and is unfair to the rest of the population that do not own a home!
I am part of that group. I was told that it’s people like me that are hurting the market. If all us stupid, lazy renters would just get off our butts and buy a house we wouldn’t be inthis mess! Ha, at this point I’m just waiting for my Landlord to foreclose and I can live rent free for awhile and then buy it for true value!
Even though amendment 1 is unfair, it’s serving the purpose of not enticing me to buy anytime soon. Over the last year I’ve been close to buying! Thank God for Wachovia and Chase for not wanting to take my short sale offers! What seemed like a fair offer for those houses is now way more than they will ever see! Now I’m a contented renter with lots of money in the bank!
“But in the rush to sign all the paperwork and get her house keys she did something she says she never intended to do. ‘The man there said, ‘By the way, I do have to give you this piece of paper that you’ve got an adjustable rate mortgage.’ And I knew better but for some reason you’re in such turmoil and the pressure. I wanted the house and I signed it.’”
Who pressured this woman?? Why was she in a rush to close the deal??
This is the emotional atmosphere of a MANIA. The Realtor’s lines that you better get in now or you’ll be priced out were driving people to make illogical decisions. I witnessed the sheer desperation of people trying to outbid me to “get the house” in 2002-03. I didn’t go for it. I said, “the price is already too high.”
While I can sympathize with the irrational exuburance, buying a house for a long-term commitment is not like buying a dress for the prom.
Back when I was house-hunting, I read up on the various types of mortgages. Even then, an ARM seemed like a bad idea. So, when it was time to apply, and the little loan wizard tried to talk me into one, I said N-O.
It wasn’t that hard. All I had to do was utter an one-syllable word, and insist 30-year fixed. And 30-year fixed is what I have.
Oops. I meant to say, “insist on a 30-year fixed.”
ARMs only make sense when interest rates are extremely high - e.g. the early 80’s. Even then it’s questionable because you don’t really *know* the rates will be coming down.
Contrary to popular belief - they *don’t* make sense when you “expect your financial situation to improve” or that kind of nonsense. No one can say for sure if they’ll get a new job next month, or if they’ll get laid off, etc.
And of course as well all know - they *definitely* don’t make sense if you’re planning to use one to flip your house - i.e. sell it before the rate resets.
In other words - IMO ARMs are a spawn of the devil, and are to be avoided like the plague.
ARMs are a spawn of the devil, and are to be avoided like the plague.
This is nonsense.
There are certain limited uses to them, just like I/O-loans. They are useful instruments just not for Mr. and Mrs. Jackass.
ARMs are a decent play if you are know (and not guessing) you are selling prior to reset, especially if you are bought to do a rehab and resell (although i clearly dont suggest flipping), but the initial ARM rate should never be used as the basis for qualifying. If i had my way, I would say banks would have to use the max rate when determining whether buyers qualify.
ARMs can work fine if you know what you’re doing and go in with your eyes open. So can interest-only options. However, if you’re buying a house to live in, and stay in, you’re usually better off with a fixed-rate. An ARM can be appropriate, though, if you can get the right annual and lifetime interest rate caps. A good guideline is: if you don’t know what that means, don’t get an ARM.
While my house is 100% paid-off, and this is all moot, I’d use an ARM under some circumstances. All three things would have to be true:
1. Interest rates are NOT at at a historic all-time low
2. The real estate market is stable. (Not in the middle of a period of rapid price fluctuations either way)
3. I had enough cash in the bank to simply PAY OFF the mortgage if the interest “adjusted” to a point that was no longer a good deal
In short, it’s a tool for WEALTHY people, not some strawberry-picker trying to get a house she really can’t afford.
One house I was watching in 2005 was listed (in Braintree, Massacusetts) at the time for 369,900. Was sold for 384,000. Must have been a mini bidding war. This month I find that the lender is putting it up for auction. IMO, they’d be lucky to get anything above 280K.
lol, Braintree. Where you have to pay an extra subway fare just to get the h@ll out of there.
I did a refi in 2003….They set the closing for 4pm and expected me to just sign and leave in 20 min. The lender had to stay until I was done reading all 20 pages and was pissed. They kept pressuring me to “just sign it” and if you change your mind you can cancel it. Most amazing was that they say that this had never happened before …meaning no one had read the documents before signing. incredible.
It has happened before. I did the same thing while they pressured me and told me if I didn’t sign I would forfiet all monies I had already paid and I would have to start from zero again to refi (i think i had 250 in for various fees). When I finished, i looked at the amount. They were trying to give me back 20k at the close. I said, “what is this?” They said, just take it, it’s free. I told them I didn’t ask for money back as i reached over and crossed out the amount and wrote in over it what I was requesting (i thought they were going to come across the table). They then repeated their mantra, “start from zero, lose money, etc.” So I pulled out the initial loan request and slapped it on the table. They said, “what is this?” I said I brought my original paperwork in case I needed it. There were a lot of blank stares as I held it up and said, “see here what I requested and signed.” It took them less than 5 minutes to fix the documents.
After that, I’m surprised you gave them any business at all. I think I woulda walked.
I think they need to come up with moron-proof loan docs in this “new” age of tighter underwriting, kinda like how voting is supposed to be foolproof after the butterfly ballot debacle. I envision little pictograms in the docs like stacks of money getting eaten by alligators, people getting booted out of their houses, and of course, a healthy supply of Joshua Trees. Any other ideas?
The other day at Publix (Tampa) I discovered that the cashiers all have flat screen computer terminals that can pull up little pictures of every food item, so if they don’t know a price, they can just find the appropriate picture and tap the screen. Same thing at fast-food drive-throughs. Your loan-agreement pictograms may be the wave of our increasingly-illiterate future.
err, with 500000 items in an average grocery store you expect them to know what every fruit and vegetable is ?
err, with 500000 items in an average grocery store you expect them to know what every fruit and vegetable is ?
Yes, I do. When I worked at a grocery store I was expected to know. Although in the 9 years since I’ve worked there, I admit the possibility of an exponential rise in the varieties of fruits and veggies grown around the world. Food science and genetic modification is crazy like that.
Back then, when the seasons changed and new stuff came in, examples of all the new stuff was set up in the cashier’s room. “This piece of fruit is called X and the product code is Y. You will be quizzed on this in 3 days.” The grocery business in the US is extremely competitive and the profit margins are extremely small. If your cashiers are constantly needing to refer to the guidebooks, it’s going to kill your productivity and you have to pay more cashiers and have more registers or you’re going to lose customers to the other grocery stores that don’t make the customer wait in line so long.
The guidebooks are for reference. Nobody is going to remember every single item, and there are going to be days when you can’t remember anything. But your cashiers have to try to remember it all or your competition is going to kill you.
your good old days story doesn’t impress me… I mean, yeah, but really…
At all the other grocery stores they have a wheel or cheat sheet for cashiers to help them ring up produce. I like to buy weird things, and inevitably I have to wait for a price check or I get asked what it is I’m buying. At Publix the system is so seamless that I never even notice. Everything gets rung up in the time it takes me to fumble for my ATM card and remember my PIN.
I think they need to come up with moron-proof loan docs in this “new” age of tighter underwriting, kinda like how voting is supposed to be foolproof after the butterfly ballot debacle.
They don’t need moron-proof loan docs they need about 50 pages less. You go in to sign for your loan and if you’re astute you’ll read the docs. Oh by the way…don’t forget to take your lunch; you’re going to be there for awhile.
Better way is to give you the docs a couple days ahead so you have time to read and decipher them or get a lawyer to read them for you.
Perhaps you and I, being smart HBB’rs, would do that, but for these FB “victims”, the little pictograms might actually do some good. No one could say, “but no-one told me the loan was going up” when their signature is right below the pic of the Joshua Tree.
I’ve done the same thing at every one of my closings. After the first one, and after listening to the sighs of the title agent while I literally read everything, I learned to plan for 2 hours for closing and to bring my original GFE and any other docs with me. A good test for a mortgage broker is if they can send you a copy of the note in advance of closing. I once worked with a broker who insisted on marking “This note has a call option” on the TIL — I told him to send me the note, because I certainly wouldn’t be signing anything with a call option. He couldn’t produce it (or didn’t want to). Turns out he was wrong (I knew he was, because it was a FNMA/FHLMC conforming doc), but I had gone so far as to line up hard money financing in case the note was unacceptable. I finally found a mortgage broker who could produce the note in advance of signing, and have stuck with her ever since.
“Karen Azari wasted no time after Florida voters overwhelmingly approved the property-tax amendment last week.”
This is exactly what the SF RE market needed — more inventory!
Do you think this amendment will have the reverse effect? It looks like the only thing that’s increasing is supply. If everyone wants to sell and get a better deal, who’s going to buy?
Looks like Fl voters will get what they so richly deserved. I voted against that holey and mis-stitched amendment, but I guess everyone just figured “my taxes will be going down”.
And I’m sure they will–property valuations sink like a stone, assessments eventually will come down … we’ll see if they can raise millage rates to compensate (unlikely).
The St Petersburg Times. “John McRae watched as weeds took over the yard of the house across the street, 3223 Hibiscus Drive. In an otherwise peaceful neighborhood, deputies began to show up regularly to stop fights between renters. A crew of vagrants moved into a crawl space underneath the house.”
Call - 1-800-HOBO-BE-GONE…
The next bubble: crawl space condos.
Florida Save our Home Question.
“Tuesday’s vote will surely cut into their budgets, leaders say, but most also express fear over an expected decrease in property assessments in June, which would curtail revenues.
“expected decrease in property assessments”
a decrease will not hurt the revenues as everyone with SOH will still experience a 3% rise in property taxes unless they boughtin the last year or 2????
Does that seem correct?
That’s my understanding. People who owned pre-bubble have about 50% of “appreciation” to burn through at 3%/yr. Their taxes may be going up for several years, even if prices have steadily decreased. They can take it at the front end, or pay later, but eventually it will catch up. The SOH cap really just caps the assessment at a normal rate of appreciation. Theoretically, once assessed and market values meet, their taxes will stop increasing.
lol, sometimes people get exactly what they deserve …
renting and loving it, suckas!
Clear sign of recession in South Florida
We are hiring some new staff and every single candidate has shown up early for their interviews. Unheard of in Miami - Dade!
Things must really be hitting the skids
They’re also showing up early at the Giants’ ticker tape parade.
I’ve noticed cashiers, sales people who wouldn’t give me the time of day two years ago, waitress and other service personell are much nicer. Nothing like a good recession to bring out the best in workers!
“Broker associate Alicia Galante said the price of waterfront homes has dropped drastically from the days when real estate was at its height. She said that houses with direct Gulf access generally carried a pricetag of $1 million or more and it’s now possible to find them for $700,000 to $800,000.”
“‘That’s where I think we’re seeing the biggest drop because everyone paid so much for them when the market was high,’ she said.”
Another Broker idiot with a misconception of reality.
NO ONE has paid a million dollars for a house here.
Many have signed papers claiming they are willing to pay that. That’s the whole problem here.
Phony mortgages that allowed people to take possession of a house, as a tool in a ponzi scheme, allowed phony valuations.
These idiot brokers believe this is the “real price”. They haven’t got a clue. Now, with prices falling, everythings a “bargain”. How many people who didn’t sell their home in New England for a million dollars have the money or credit to buy these?
I know the area well. NO homes there are worth 1/2 that price.
“Now, with prices falling, everythings a “bargain”.”
And that is the sentiment on main street in a nutshell. I was even asked by an RE mobster (street thug, not your boss type mobster) if I “was going to scoop up some bargain priced real estate”. I told him there are no bargains…….. yet. He didn’t like that.
I see the RE mob is still using the Madison Avenue contrived word “home”. A friggin’ home can be a hotel room, RV, refrigerator box, tent……. It’s a damn house.
Interesting. In the 60’s my impression was, upper-middle class people had Houses, lower-middle class people had Homes. Whether I got that impression from usage or whether from the marketing of s-boxes as Homes, I am not sure.
Whenever I heard that phrase, “Buy a hommmmme,” I say, “You buy a HOUSE. Then you MAKE IT a home.”
Interesting. In the 60’s my impression was, upper-middle class people had Houses, lower-middle class people had Homes.
It’s like that for many people. When I travel and don’t want to drive myself between a number of destinations, I “hire a car”. Low-class folks “rent a limousine” (but they say “rent a limo” to sound like an insider).
Sometimes they wear a “tux” while upper-class folks wear a dinner jacket, etc.
or they fish with a “bait”, wheras I fish with a “lure”
I came across this recently:
An immigrant family was shown pity by an American who commented how terrible it was that they didn’t have a home.
“Oh we aready have a home,” was the response. “We just need a place to put it.”
Hi Neighbor…
Can I borrow a cup of Heloc?
Regarding waterfront property:
“‘That’s where I think we’re seeing the biggest drop because everyone paid so much for them when the market was high,’ she said.”
But wasn’t the argument in the past that there is only a limited amount of waterfront property, and so there is no WAY that prices on those would be going down? Hmmmm… looks like another variant of the “It’s different here” argument being smashed.
And that is why the ‘high end’ areas nationally will fall the hardest. Too many bought with easy money to ’screw the rich’ a la Florida 1925. Now we’ll see a decline a la Flroida 1926 in far too many areas.
I’ve seen high end areas drop 40% due to the phonies on neg-Am loans running away. That was back in the 1990’s when neg-Am was as common.
We’re hearing news already about the Option-ARMs, but they really don’t start hitting their caps in numbes until May. Then we have 18 months of brutal resets. 18 months where the elephant under the rug will be dancing on the furniture flinging its dung at anyone who interupts its slam dance into the Tiffany lamps.
In other words, the ‘high end’ ‘not building any more land’ is going to get spanked. It will take a long time, but we’ll watch it happen.
Got popcorn?
Neil
the elephant under the rug will be dancing on the furniture flinging its dung at anyone who interupts its slam dance into the Tiffany lamps
LOL. Hilarious image, and an accurate metaphor for the coming sh*t-storm.
Ron Shuffield, the infamous boss of EWM, author of the ‘permanent plateau’ theory, now sued by Tibor Hollo….how salacious.
“The $8,500 tax bill for one home on Southwest 63rd Place, which rents for $1,900 a month, ate up more than four months of income, she said. ‘When you couple the taxes with the insurance and maintenance, we’re losing money on these rentals.’”
Ahhhh, and you probably thought you could make it up on volume too. Jeez people, pencil it out before committing financial suicide. Check that . . . use a calculator, don’t trust your addition skills with numbers this high.
And the numbers actually presented here don’t coincide with the point the owner is trying to make. The annual rent is $22,800. The $8500 tax bill is for an entire year. The insurance and maintenance COULD total $14300 for the year, but it’s not at all likely. My guess would be that owing money on the property is a big part of the problem!! Cash is king.
The rent to price may well have penciled out before the real estate bubble. If they bought the place when it made sense the taxes could easily blow the plan out of the water. I’m in CO where the bubble was less severe but my property taxes still went up 40% the first year I lived there. That’s a big change.
“The $8,500 tax bill for one home on Southwest 63rd Place, which rents for $1,900 a month, ate up more than four months of income, she said. ‘When you couple the taxes with the insurance and maintenance, we’re losing money on these rentals.’”
Brilliant! Raise taxes to the point that a rental business cannot possibly pencil out. Then all we have to do is rent some bulldozers, see, and then we can clear the land and turn it back into a swamp. Then we can tax the alligators…
Wait a minute. Never mind.
Actually, if they did tax SF out of existence, it’d probably be cheaper than the gov’t plan to restore the Everglades!
When mkt was at its low -90s in the desert, after my house burned down, used some money to buy two condos for 20k each. to rent out. Penciled out, except for renters were difficult to come by=no jobs in economy, One renter was good. DJ, just like the NYCDJ they are the good ones to have. DJs are out all night making parties elsewhere- not at your condo/rental!!
Rent was low, but couldn’t continue to hold on while paying mtg on house that burned down while rebuilding.
Too bad, those condos went from 20k to 279 at highest. Kaching. Darnit.
Ahhhh, the BB 125 bp rate cut rally is dead in the water. Great day to be short the market. Pretty soon, he’ll be out of bullets and the real fun will begin.
Oops, sorry for the threadjack. Thought I was in bits. Later!
When he hits 1% rates, that means he just floods the market with dollars. It’s not linear. To hit rates that low or lower, the money supply has to increase exponentially essentially making it worthless.
They are pushing on a string. Companies are still hesitant to lend and many who borrow will just default and go BK. Pretty soon you will have 100 banks and 5 companies that qualify. Talk about competition to lend those worthless dollars.
A one-percent Fed fund rate, if it goes that low, will be an offer, not necessairly one that will be accepted.
The banks will restrict the re-lending of Fed fund money to those who will most likely pay it back; In these days of questionable collateral those folks will be hard to find.
Homestead is hardscrabble? I never thought I’d hear Homestead described as such, especially after the transformation it’s received since the early 90’s. It used to be *somewhat* rural, with a good amount of agriculture. (Rural in the sense it was a rural edge of the Miami megalopolis, a forgotten corner of Dade County.) Some suburbia, and the rest of it low income ghetto. Ever since Hurricane Andrew in ‘92, it seems, most of the ag has been turned into housing, and most of the housing that was there before has been rebuilt. Do they still have Keys’ Gate there? I remember when that development was young. I’ve since heard the whole area around Keys’ Gate, Florida City, etc., has been suburbified.
When I think of hardscrabble I think more of one of those towns in the hills in Utah or northern Arizona. Not Homestead. I’d say it’s more “softscrabble”.
I don’t go to Homestead much anymore, but I have a soft spot in my heart for it.
they still have keysgate there, the prices on the condos in the area have dropped by 30% or so off peak
my girlfriend owned a place in homestead, she sold it for about 155k, the same unit sell there now for about 95k
the place is a dump in my opinion, but I hate suburb stuff
As transplanted Californians living in south Florida, we loved Homestead because it was the only place to get decent Mexican food in the state. Because of the ag, there were lots of Mexis in the area and some opened restaurants. Que suerte por nosotros!
are you talking about the restaurants over on chrome ave?
Yeah, Krome Ave. And the Miami Metro Zoo is in Homestead. Not a bad zoo at all (and we used to be member of the San Diego zoo) and my family enjoyed it a lot.
ROBERT IS HERE
~_^
So I’m on my way back to Fort Lauderdale this week and hope to see how much further the carnage has progressed since I was there a few months ago. Should be interesting.
Going over my investments, it’s amazing how all my gains in SKF, SRS, and select shorts in the banks have round tripped since November. Even FBTX–an overlevered Texas bank with tons of HB exposure has spiked. Any thoughts out there on companies particularly exposed to the frauds that are in the short-to-zero category? I’ve got a couple banks that I think are in this position (NCC, FBTX) but would love to get more ideas out there.
“of HB exposure has spiked”
- The market is totally oversold, just like the homebuilders. I would be scared to hold any financials at the present. I look at a company like Lehmans that has yet to report any ’significant’ write downs at all …..what is to come?
well, gotta say I took some nice profits in SKF, then reinvested (but was impatient, I think, and bought back in too soon)…
not buying this rally … seems like there was some hope that the monolines would be bailed out. Not bloody likely! Nobody has the cash.
Right now we’re in one of those technical snap-back rallies, which may be coming to an end.
As for the HB’s, I think there was some unwinding by very big players (essentially short-covering) although I don’t know why they didn’t roll over and die again. Some nudniks out there are going to lose a lot of money very soon, that’s all I have to say about that…
“‘We forecasted a softer landing. We didn’t forecast a nose-dive,’ he said.”
Why in the world would a huge frenzy result in a soft landing? I always got sick of hearing the phrase “soft landing”. It was nothing more than wishful thinking. If you look at a graph of real estate prices over time, and the graph has a sharp increasing slope for a short period of time, it would have no choice but to come back down to the mean (adjusted for inflation). A soft landing would imply that after the huge irrational run-up (the sharp upward slope), the graph would pretty much flatten out or decrease a tiny bit and then flatten out, never to return to the mean line. That, of course, is impossible.
I think they mean that theoretically wage inflation over an extended period could correct us to the mean if prices remain flat (unadjusted for inflation) for enough years. The recession and foreclosures resulting from rate resets should speed things along though.
Well, Dave, your concepts are good, but there are a number of factors to consider.
The rise in prices was not the result of increases in wages or family growth, things that would push prices up. They are the consequence of CHEAP MONEY. IF the FED can keep money cheap, then prices can remain high. This includes negative interest payment mortgages…..These are going away, slower than I would like to see, but are still holding up the market.
You can see the reaction of the FED, already…..push rates lower….Make borrowing a zero cost. This will help support prices in the short-run…or indefinitely, if money costs nothing.
IF we get back to “normal” lending and avg. cost of money, then you are absolutely right. Prices must fall.
Alternatively, the Government could print lots of money and pass it around to raise wages by about 30%.
diogenes,
a couple more factors to consider: The mania is over. Fear is taking the wheel. Popping a few antidepressants on the way down won’t keep psychosis aloft, only soften the despair. It takes a long time for those meds to kick in. The meds only make you euphoric on the way up.
‘Fear is taking the wheel’.
And he’s all cranked up on meth, besides being a crappy driver to begin with. So buckle the seatbelt and start praying.
I’ll add some fuel to the Florida fire:
http://www.palmbeachpost.com/state/content/gen/ap/FL_Construction_Fraud.html
no surprises there…
gack … can’t believe the idiot parents who think they’re making a good decision buying condos in Gainesville… I think there’s a term for that … oh, yes … suckers
“Of all the offspring of Time, Error is the most ancient, and is so old and familiar an acquaintance, that Truth, when discovered, comes upon most of us like an intruder, and meets the intruder’s welcome.”
Charles Mackay
“Of all the offspring of Time, Error is the most ancient, and is so old and familiar an acquaintance, that Truth, when discovered, comes upon most of us like an intruder, and meets the intruder’s welcome…
…which is, a face full of buckshot, and a shrill scream of satisfaction from you, who are standing there in your jammies holding a shotgun, until you put down the shotgun and peel off the black ski mask from this fallen Intruder and discover that it’s stupid Truth, sneaking in the window again. Jeeze, you’d think Truth would have learned his lesson from the last time.’
Erick Estrada (I believe)
well, just recovered from a trip to vegas. I have off and on gone to the super bowl in vegas… this year I decided late and tried to see what it would cost me.. I found plenty of deals on friday to leave on saturday.. $300 for airfare and2 nights in hotel from minneapolis. When I got off the plane which was empty.. I could not believe the airport at 4:15 in the afternoon on saturday the day before the superbowl it was dead.. scary dead..
It was the most empty super bowl weekend I had ever seen.. NO long taxi lines.. tables not full.. So I had to bring up Real estate to everyone.. starting with the cab driver from the airport.. I asked him the cheapest way to my hotel he gave me a 5 minute speech about the highway verse the strip route and how it could cost each way.. he had it down to the number of stop lights, time on freeway, one accident to 3 and went on and on.. So he asked what i did and I told him I do real estate and loans in san diego.. He said why did you fly from minnesota then.. I said I sold my real estate holdings and mortgage business in 2004 to hide out from the storm in minnesota but still do business in san diego for my clients of 20 years.. he was stunned.. He said real estate in vegas is set for a big turn around in the spring.. I said not possible.. He said how do you know? I then said could you repeat to me which way is cheaper and the cost break down from the airport to the hotel.. I then said are you sure of that.. he said 100%.. I said ya me too about real estate in vegas..
Needless to say he was not happy. He was down $100k after one year.. I told him to stop paying and live free for a year.. He asked if I was nuts.. I said could you tell me how much it costs to take the freeway route again.. he at least smiled.. Many stories like this all weekend.. the city is upside down and living on hope.. Every cabie asked how about the tip.. I told everyone of them your tip is to stop paying your mortgage and live rent free.. and don’t lose a second sleep over it.. the sooner the better.. starting with this months payment.. and head to HBB blog to say hi to your new friends!- priceless..
Priceless, beachhunter.
beachhunter…
Great account of what’s what in Pavolvegas~
Make that Pavlovegas…
good doggie
The wife and I were in Vegas Saturday (day before Superbowl). We go out there every couple of months to pick up food supplies (Italian, Philippino, Trader Joe’s, etc) that we can’t get in SoUtah. It’s isn’t a bad drive. We spend the day looking around, we eat dinner there and then head home (no gambling).
This time we also went to see a couple of High School friends, from Chicago, of my wifes who were out in Vegas to see the Superbowl and gamble. Nice guys. One of these individuals is a Mortgage broker.
Observations: I was amazed at how empty the Town was. Over the last 6-8 months the number of cars driving around town with CA plates has diminished greatly. If may be because the two teams playing were from the East but I could count the number of CA cars driving around using just the fingers on my two hands. My wife’s friends said that all the cabbies that they talked to complained about the lack of business. “It was dead and has been dead for months”.
Most tables have been minimum $25.00 for the last couple of years. The Chicago friends (along with people that I know who like to gamble in Vegas) told us that there are now a lot of $10.00 and some $5.00 minimum tables at the various Casinos.
I don’t talk about housing and the crash much anymore. I have started asking questions to see what other people are thinking. The Mortgage broker told me that his business is dead. He’s thinking about getting out completely. He has about 1/3 of the number of workers that he had in the good old days. His office was processing 100-300 loans a month. Now the number of loans per month is in the single digits.
He also gets a lot of calls from people that are trying to lock into fixed rates. Most have no equity.
He told me that he knows some Brokers in his area who are trying to break from the larger dealers (or who have lost their jobs because the company folded) and start on their own can’t get storefronts without a huge security deposit. Landlords seem to believe that their financial futures are less than “bright” and they are hesitant to rent to them. He also didn’t seem too positive about the value of his (or his neighbor’s) house(s) in his area.
Later on, I asked the friend who isn’t a Mortgage broker (who lives in the same area, Chicago burbs, as the other friend) about how the home market was going. He told me that some places in the Country may have trouble.
However, I was told that it was different in his neighborhood. Prices will stay high because it is a nice area and he plans on selling it in the next couple of years for a nice profit.
In a world full of eagerly accepted lies, it’s nice to have a couple of spies…
Good work, steadykat & beachhunter
You’ll probably get arrested for crimes against the state, LOL. Nice job.
I was playing poker this weekend, and someone asked the dealer how the sale of his house was going. He said I cant get what its worth right now so im renting it out until we rebound later this year. I bit my tongue. Ah, the salty taste of blood.
The Rebound Later This Year myth is very much alive here in Tucson.
And I really like…I can’t get what it’s worth right now. Priceless.
Hey, beachhunter, can’t argue about what you saw and what the cabbie told you, but the sportsbooks in Vegas broke their all time high betting action for a Super Bowl. Somebody placed those bets.
May I also suggest the actual month-to-month economic reports from UNLV show that employment and new drivers licenses in Clark County for Dec, 2007 was up and the number of gas/electric hook ups was holding steady. That means people are still coming to Vegas and not leaving. Remeber, if unemployement reaches 6%, that still leaves 94% employed, and my friend who parks cars at the Wynn, pulled in $65,000 last year.
Didn’t need college and not a whole lot of skill.
The developmet company for Summerlin (10 miles West of the Strip) reported excellant numbers for high end $700+ houses in their restricted communities, and was on track for their 20 year development plan. Clark County is very big, and lots of housing 20, 30, 40 miles from the Strip is getting killed, and that’s why median prices in this market are useless in trying to come to any conclusions about Vegas Real Estate.
I much prefer a set of knowledgeable eyes, versus statistical lies.
11 of the top 13 zip codes for worst hit by foreclosures are in Clark County NV. Vegas
http://money.cnn.com/real_estate/zip_code_foreclosures/index.htm
Ok david lee.. I can do loans in vegas.. so I will do all your loans for free up to and limited to 10 new properties.. let’s go I’ve got some free time. But we need to move fast with your info I’m worried we might miss out…. get back to me quick as possible- i talked to a number of people who will give us great deals on -if you can believe it one of their vacant homes.. hurry please.. Vegas is dead.. sure bets were up.. but the number of vistors are down.. maybe the average bet was larger then the median bet- remember clark county is huge..
Yeah, David, just like here in Florida, we have a thousand people a day moving here. All is well-NOT!!!
Did you really stiff all your cabbies for the tip? How very proud you must be of yourself. Do you stiff waitresses too? Sheesh.
From Tampa Bays 10. “Sandi Staskal remembers the day she closed on her Clearwater home. ‘I specified at the time of buying this home, which was 3 years ago that I would not accept an adjustable rate mortgage. I would not accept a prepayment penalty.’”
“But in the rush to sign all the paperwork and get her house keys she did something she says she never intended to do. ‘The man there said, ‘By the way, I do have to give you this piece of paper that you’ve got an adjustable rate mortgage.’ And I knew better but for some reason you’re in such turmoil and the pressure. I wanted the house and I signed it.’”
This woman is a LIAR! If she knew enough to ask for a fixed-rate mortgage, she would have had some idea of what the terms would be, what the payments would be, etc. There are many things to notice, not just some piece of paper saying it’s “adjustable”.
What makes more sense: She’s angry that she wasn’t able to “refinance later”.
Geez, Louise! All I had to is fend off the “It’ll lower your monthly payement!” ARM sales pitch and insist on a 30-year fixed.
When you open an account at a stock broker, you are required to explain your expertise in investing. If you are 80 years old, the broker has a duty not to use your money for speculative stocks. Same standards should be used for real estate agents and loan brokers. They should be required to know the experise level of the homebuyer, and should be held accountable in selling and financing a house that the buyer cannot afford. It should be the law.
You need to blame the buyer just as much. It’s actually harder to buy a house than it is to buy stocks. You have several hours just to review this one transaction and you need to sign your name dozens of times.
What bugs me is many of these people were planning to make a living from “real estate investing”. But they wanted these houses counted as primary or secondary residences to the don’t have to be taxed as a business. How many of these people who bought a couple of condos to rent out paid for business licenses? (My small business needs one, even though the primary location is my house.) There’s a ton of money that these specuvestors owe the government, but for some reason they’ve earned “victim” status.
Schadenfreude comparison:
The daily California threads amuse me with all of the clown behavior.
The daily Florida threads frighten me.
Most people aren’t aware of where the word “California” comes from…
“Know that on the right hand from the Indies exists an island called California very close to Earthly Paradise; and it was populated by black women, without any man existing there, because they lived in the way of the Amazons. They had beautiful and robust bodies, and were brave and very strong. Their island was the strongest of the World, with its cliffs and rocky shores. Their weapons were golden and so were the harnesses of the wild beasts that they were accustomed to domesticate and ride, because there was no other metal in the island than gold.”
http://en.wikipedia.org/wiki/Origin_of_the_name_California
Of course, it all turned out to be fool’s good and fake boobs, but there you go…
Saw a repo man trying to repossess some dow cornings the other day, with a slim jim.
The HELOC money had to go somewhere.
“The very substance of the ambitious is merely the shadow of a dream.”
William Shakespeare
Of topic:
Inventory in the South Bay LA has shot up a huge amount in two days. Anyone else seeing this elsewhere? Is it an error in zip reality?
http://recomments.blogspot.com/2008/02/dam-break.html
Seriously, I’ve never seen a spike in inventory like that. Comments?
Got popcorn?
Neil
I bet it is homes taken off the MLS and relisted after the new year. I believe that if they don’t wait 30 days to relist, then they have to pay a $1000 dollar penalty to relist on MLS.
Some of it might be the natural upswing of inventory in the Spring, and some of it people trying to mobilize their finances and sell before the recession hits?
Neil, it’s the post-Super Bowl effect.
“‘Politicians say anything to get a vote,’ she said.”
Coming from a FB, this is very insightful. It sounds like the ‘bailouts for votes’ plan hasn’t fooled everybody…
But, there’s no problem here in Manhattan, right?
Here’s one house in Celebration FL been on the market 283 days.
Price Reduced: 05/12/07 — $550,000 to $479,900
Price Reduced: 05/22/07 — $479,900 to $439,900
Price Reduced: 08/18/07 — $439,900 to $379,900
Price Increased: 11/02/07 — $379,900 to $440,000
Price Reduced: 11/13/07 — $440,000 to $409,900
Price Reduced: 12/17/07 — $409,900 to $389,900
Price Reduced: 01/15/08 — $389,900 to $369,900
Note the jump on 11/2/07 and the chase all the way down again.
Another one was on the market 549 days with one reduction $599k-549k
Another was on the market for 444 days with one reduction to $499,900 on 5/12 and then another one on 9/16 to $379,000
I think they’re holding out on price and chasing the market all the way to the bottom. According the other houses listed in the town, these aren’t even close to where they should be reduced to. This is going to be a long drawn out process.
“The larger problem was distant mortgage companies making loans with no knowledge of local markets, said Frank Gregoire, a St. Petersburg property appraiser and president of the Florida Real Estate Appraisal Board.”
…and this is still going on today. The FBs here in Alaska are refinancing with loans from distant banks, when no local lenders will touch them. I just saw a case where a house was for sale locally and was refi’d by a distant lender that didn’t even do basic disclosure to find out…and the house remains on the market after refinancing (a virtually universal no-no in the refinance world).
I think that they do it with usurious rates, but not sure. Maybe it is a hard money lender convinced of the property’s overinflated value…after all, “it’s different here”.
In any case, it is the financial sector’s equivalent of “a sucker is born every minute”.
From Bradenton (FL) Herald 02/01/2008:
“PALMETTO –Stuck in the rut of the real estate downturn and facing various liens and litigation, the developers of the Bel Mare at Riviera Dunes condominiums are resorting to desperate measures to sell their units.
http://www.bradenton.com/business/story/369837.html
“Indeed, Azari — the eager seller in Bay Harbor Islands — said that if her house sells, she’ll scour the market until she finds a sure bargain, ‘maybe a foreclosure.’”
“Bottom feeder”
“The larger problem was distant mortgage companies making loans with no knowledge of local markets, said Frank Gregoire, a St. Petersburg property appraiser and president of the Florida Real Estate Appraisal Board.”
I shot an arrow into the air,
It fell to earth, I knew not where;
For, so swiftly it flew, the sight
Could not follow it in its flight.
–Henry Wadsworth Longfellow