The Crash-Boom-Bang Wasn’t A Soft Landing
The News Press reports from Florida. “Homeowners threatened with foreclosure could get a 30-day reprieve under a Bush administration initiative announced Tuesday. But people in Lee County, where the number of foreclosures jumped to a record 1,833 in January as prices have plunged over the past two years - had little good to say about the proposal. ‘This new plan doesn’t address people like me who can’t or won’t just walk away, people who feel a sense of responsibility but who are stuck in a bad loan due to unforeseen circumstances,’ said Kathy Reed, a former real estate agent.”
“Now she finds herself paying two mortgages: one on her old house in Alva that she’s unable to sell and another on a house she bought in November 2006 in the Cascades subdivision in east Lee County.”
“Reed is unable even to refinance the new house because banks tightened their credit standards and won’t lend to a self-employed person. The situation is aggravated by the bankruptcy reorganization filed Nov. 9 by the builder of Cascades, Levitt & Son, she said.”
“‘I’m one of the lucky ones - they finished my house,’ Reed said.”
“Ed Bonkowski, a Fort Myers-based real estate broker, said the initiative will have little effect and is targeted at helping the wrong people. ‘It’s not going to do one iota of good,’ he said. ‘What’s 30 days? The people are in, they signed it and they should pay.’”
“If anything, Bonkowski said, ‘It’s just going to forestall what’s going to happen in the marketplace.’”
“Banks need to take back the houses and put them on the market at a deep discount, he said - as little as 10 percent of the loan value. Then, he said, ‘The investors will absorb the inventory and the crisis will be over. The money’s on the sidelines waiting for this to happen.’”
“Prices have fallen steeply in Lee County since the market peaked in December 2005. Zillow.com, which tracks home prices, released a report Tuesday saying that the median price of all homes in Lee County was $201,723 in the fourth quarter of 2007: down 20.1 percent from a year earlier.”
The Sun Herald from Florida. “Less than a week after Sarasota County spokesman Bob Reddy helped reporters prepare articles about layoffs, he became part of the story. In mid-August of last year Reddy was telling the media that remaining employees would have to pick up the slack. Reddy’s last day was Aug. 21.”
“Five months later Reddy is still looking for a new full-time position — and local governments are still reeling from property tax cuts.”
“‘I had never heard of anybody getting laid off from government before, until I did. It’s been terrible,’ he said of his job search. ‘There are jobs out there but there are thousands of people applying for single jobs. I’m willing to relocate anywhere.’”
“North Port City Manager Steve Crowell says the state cuts in property taxes and the national economic slowdown have created the ‘perfect storm.’ When Crowell began his tenure in North Port in July of 2005, when ‘the revenues were strong, the local economy was strong. We were hiring people.’”
“Before Crowell arrived, in 2003-04, ‘Things ramped up pretty quick,’ he said. After his arrival the real estate bubble burst, revenue from building permits plummeted and city officials reevaluated their plans.”
“‘I didn’t expect there to be a dramatic decrease in building permits,’ Crowell said. ‘It happened pretty quick.’”
The Miami Herald from Florida. “Aldo Roldan, an economist with a prominent investment firm, spoke to about 450 members and guests of the Executives’ Association of Fort Lauderdale on Tuesday at the Broward County Convention Center.”
“He said this recession is being led by consumers, who represent two-thirds of the economy and whose confidence is at its lowest point in years. The housing market remains flooded with homes no one is in a hurry to buy, consumers have virtually no savings, banks have little money to lend, and what they have they’re reluctant to part with except for the most reliable of borrowers.”
“Meanwhile, with house prices falling, millions of homeowners will find themselves owing more on their homes than they’re worth, Roldan said.”
“‘A consumer-led recession is a nasty recession,’ he said.”
“Ralph A. Marrinson, president of the Marrinson Group of retirement centers and assisted-living facilities, called the speech ‘realistic’ because real estate, in particular, has been overvalued.”
“‘We’ve been nuts paying some of the prices we’ve been seeing,’ he said. ‘But I do see lights at the end of the tunnel.’”
The Orlando Sentinel from Florida. “Florida is most likely already in a recession and will see a net loss in jobs this year, the top economist for the Portland Cement Association said in a report that will be circulated this week during the International Builders’ Show in Orlando.”
“Edward Sullivan, chief economist for the nation’s leading cement industry trade group, said the housing crisis and general economic slowdown ‘is expected to spread to nonresidential and public construction in 2008 and 2009 — adversely affecting cement consumption.’”
“‘PCA believes that Florida has already entered a recession or soon will,’ Sullivan said in a report completed last week in preparation for the National Association of Home Builders’ annual convention. ‘The housing crisis has temporarily put Florida’s economy into reverse.’”
“He said the cement association projects that Florida will see as many as 40,000 net jobs lost during the year, with net growth of only 20,000 jobs in 2009. The last time Florida recorded a net decrease in its total employment was the recession year of 2001, when 28,000 jobs were lost.”
“Orlando’s resale housing market continued its downward spiral in January, as sales fell to a 12-year low. The 756 single-family homes and condominiums sold by members of the Orlando Regional Realtor Association last month was the smallest monthly total since January 1996.”
“The sales count was down 30 percent from December’s revised total and 48 percent from January 2007.”
“The median price of the homes sold in January slipped to $222,250, down 1.2 percent from December and 11 percent from January 2007, the Realtors reported Tuesday. Meanwhile, the number of homes on the market through the Realtors’ listing service rose by 1,426 properties to total 25,724, a record 34-month supply at the current, slow sales pace.”
“‘It’s the law of supply and demand. This is a down market, a buyer’s market,’ said Steven Moreira, president of the Orlando Regional Realtor Association.”
“January’s median price was the lowest since the $215,000 recorded in April 2005, when prices were moving upward at double-digit annual rates. In terms of sheer volume, the local sales frenzy peaked in August 2005, when 3,134 homes and condos changed hands in a single month in the Orlando Realtors’ core market.”
“Homes in mid-2005 spent less than a month on the market before selling.”
The Sun News from South Carolina. “With the housing market lagging, Georgetown County expects a $600,000 to $700,000 shortfall in projected revenue and is working to balance its budget, Finance Director Scott Proctor said. That slowdown also has Horry County making budget trims.”
“In the Grand Strand area, sales fell 45 percent for single-family homes and 55 percent for condos in 2007 compared to 2006, according to statistics from the MLS released in January.”
“The drops follow the 2005 housing boom, when condo sales jumped 48 percent and single-family home sales rose 27 percent.”
“‘Building permits are down, documentary stamps are down, recording fees are down,’ Proctor said. ‘It’s not just for 2008. It will affect our fiscal process as we look toward our next budget. We’d love for it to turn around.’”
“Already the County Council has made several budget reductions. In January, the council cut the appropriations to the general fund by $180,000 because of the possible shortfall from building permit fees, decreased the Midway Fire fund by $100,000 because of expected shortfalls in impact fee revenue and lowered the environmental services fund by $150,000 because of projections of less landfill-tipping-fee revenues.”
“‘Even since then, it looks like we’re going to need to reduce it even more,’ Proctor said.”
The Star News from North Carolina. “Marcia Threewitts took a different route from most newcomers to get to Brunswick County: She drove north. This retail sales consultant moved from Sarasota, Fla. Actually, she’s staying in Little River, S.C., and working in Calabash, but she hopes to buy a home north of the state line soon.”
“She said aspects of Brunswick County’s growth remind her of the tremendous boom she saw on Florida’s west coast. But she hopes that this area can avoid the pitfalls she saw down there.”
“Threewitts is a consultant for Portrait Homes, selling homes in a new development called Calabash Lakes. With the nation in a well-publicized housing slump, she said sales aren’t as brisk as she’d like to see. ‘Many people who come fall in love with the community, but they have a home up north that they must sell,’ she said.”
“She said Brunswick County’s current real estate market is far more active than Florida’s, where a land rush from the mid-1990s until 2006 abruptly ended.”
“‘When the crash-boom-bang happened, it wasn’t a soft landing,’ she said. ‘It was a crash.’”
The Chattanooga Times Free Press from Tennessee. “In 2007, John Buechner bought into what he thought would be a dream retirement home in a condominium complex off Mountain Creek Road.”
“Instead, Mr. Buechner and the other 27 buyers at the Village at Greenway have found themselves surrounded by unfinished condominiums and empty lots.”
“Although he says he is happy with his own home and his neighbors, Mr. Buechner and others in the stalled complex say they are eager for the other 49 planned units — and a neighboring 100-lot subdivision that has only cleared lots and dirt streets — to be finished and occupied.”
“‘The people here are great, but we obviously hope that the rest of the project can get back on track,’ Mr. Buechner said.”
“The Village at Greenway, a 76-unit project begun two years ago, was one of a record number of properties faced with foreclosure in Chattanooga during 2007. Last year, Hamilton County Register of Deeds records indicate home foreclosures rose by nearly 11 percent to a record high of more than 1,000 houses.”
“The slowdown in home sales has hit home in Chattanooga with several projects stalled by financing or foreclosure problems. Sales at two downtown condominium projects stalled late last year, and each face lawsuits in Hamilton County Chancery Court from condo buyers upset that the projects didn’t provide all that was promised.”
“The Clark Centre was forced into an involuntary bankruptcy in December. An auction is scheduled for March 22 to help sell the rest of the unsold units, auctioneer Henry Glascock said.”
“‘The market has certainly slowed, and some of the inflated prices are coming down,’ said Mr. Glascock, who also appraises real estate.”
“With more sellers than buyers, another condo development next to the Village of Greenway — Wellstone Creekside — had its development loan yanked out last year by the lender and site work halted, said developer Rusty Criminger. The lender, which Mr. Criminger declined to name, decided it had too many outstanding loans on its books.”
“‘The public doesn’t need failed housing projects,’ Mr. Criminger said. ‘All the banks are taking such a hit. It’s not just subprime loans but banks that were faced with reduced limits on how much their portfolios could make.’”
“First Volunteer Bank, which provided some of the construction financing for the Battery Place condos, is offering special loan incentives to qualified buyers at the March auction, Mr. Glascock said.”
“‘Lenders are being more innovative,’ he said. ‘Flippers aren’t able to turn properties for quick profits like they did in the past.’”
“One real estate agent said she blames the mortgage crunch and foreclosure fallout on lending practices in recent years.”
“‘In all honesty, banks were willing to give money and were not concerned about how they (clients) could pay it back,’ said broker Teresa Boyer. ‘People got in over their heads and couldn’t make payments.’”
“Homeowners threatened with foreclosure could get a 30-day reprieve under a Bush administration initiative announced Tuesday.”
Isn’t a 30-day reprieve, something a condemned man gets from a political leader, but 31 days later…
Time’s up.
“We’d love for it to turn around.’”
We’d love to see home prices crash.
Then we can buy a house w/o a loan.
Need some help here please, I’ve forgotten my US History, which amendment is it that guarantees the right to refinance?
“Reed is unable even to refinance the new house because banks tightened their credit standards “
Simply 30 days free rent, nothing more.
My feeling is that the banks don’t have enough staff to handle the forclosure tsunami that is about to hit them. So they try to slow it down by 30 days. This way the FB gets to watch the house for the bank while living rent-free. It is a win-win situation for the time-being. However, it will cause bigger losses for the bank.
I don’t understand what right our Government has to step in and interfere with a contract made between two fully-informed adults.
“I don’t understand what right our Government has to step in and interfere with a contract made between two fully-informed adults.”
Because that’s what goverments do!
It has no right whatsoever. I think the proposals were “voluntary” and more window-dressing for the political shills. You must remember, BUSH is the “ownership President”. Under his watchful eye more Americans own homes than in the history of the country……….nearly 70%, but falling fast.
Having allowed this finance fiasco to continue unbridled, while Banksters pockets hundreds of millions of dollars, Bush is trying to relieve some of the stresses for the sake of his posterity (pun intended).
And always remember………anytime something bad happens, you can count on someone in government to ride to the rescue with more regulations and more burdens for you and I to bear.
The crooks will be made victims of their own success……we get to clean up the mess.
Wait to till you see President Obama Government will be in everything!!
But Obama will help the economy by increasing govt employment. His first new cabinet-level organization will be the Department of Hope and Other Meaningless Platitudes.
“in everything” — you mean like starting credit bubbles and wars? That would be terrible!
Bill in Carolina,
You and I are on the same wavelength. He is nothing but “Meaningless Platitudes”. This whole cult of personality is kind of freaking me out.
“you mean like starting credit bubbles and wars?”
*GASP*! NO!!! Not our beloved W!! He restored honesty and integrity!!! LMAO.
BP, it might not be bad if he were elected because once he moved into the Oval Office he wouldn’t have a clue as to what to do except spout more meaningless platitudes.
Can’t stand it when people on this site and other sites can only post “it’s Bush’s fault” or Cheney/Halliburton, over and over and over. Not saying they have’t made mistakes. Just saying PLEASE PLEASE PLEASE come up with something original or just shut up!
OK, it’s all Jay in Md’s. fault. You voted for him. Suck it up.
Kind of similar to a “stay of execution”
“‘The market has certainly slowed, and some of the inflated prices are coming down,’ said Mr. Glascock, who also appraises real estate.”
An appraiser who admits real estate prices are inflated. Inflated at the request of mortgage brokers who then sold loans few could actually afford to repay.
See my post below. Seems a few people in this article, in the professions that have, up till now, been sworn to lie at every single turn by their respective professional organizations, are turning over a new leaf? What the heck is up with appraisers talking about “inflated prices”, and REturds talking about “let them go down with the ship”? Seems that FL is leading the charge into the realm of financial responsibility?
Nahh; can’t be.. That’s just impossible, I better drink my coffee faster!
Imagine the situation on the other side of this?
“‘I had never heard of anybody getting laid off from government before, until I did. It’s been terrible,’ he said of his job search. ‘There are jobs out there but there are thousands of people applying for single jobs. I’m willing to relocate anywhere.’”
Employers have never had such an opportunity to pick and choose, whom they want to work for them.
Yeah, but that guy sounds like he’s mobile. Many won’t be that mobile with a $700k ball and chain - the shackle made all the stronger courtesy of a “reworked” loan.
That is why it sad to see many young couples owning expensive homes by stretching their finances. They received bad advice from family and friends. The young need to be mobile and be prepared to relocate in search of hot jobs. The emphasis on homeownership generated inefficieny in our economy.
They received bad advice from family and friends.
That is so true! I sold a Lake front home which my brother and myself owned. His wife and her family kept saying prices would neverfall and would always keep going up. I disagreed and they were angry at me for having to force them to sell. Now, four years later, the property value plummeted and their comments changed to “boy are we glad we sold at the higher price”. Time changes perspectives on issues such as the housing market, but nobody remembers the past conversations!
“generated inefficiency” - yes - Last August, some bright journalist reported some homeownership statistics from various countries, esp in Europe, and pointed out that things work better when people can easily follow job opportunities.
Is he employable by anyone other than the government?
too much hope from the real estate locusts. south florida is just too slow to realize the train has just crashed into the front door. i am still waiting for the banks to let go of properties. the untold story down here is the massive amount of inventory in poor and working class areas. these areas will create the greatest problems. no one is going to move into poor areas with high crime rates, bad schools and unrealistic rise in values any more. i see a minimum 25% of homes in areas of south florida that will go rock bottom in sale price by the end of 2008. it is just way too much inventory and sellers dont realize that the #1 problem is affordability. once low and working class people lose homes or move out of the area, there is one less buyer. these people wont be able to pay 1,000 a month for rent. and no one is really moving into south florida because it cost too much to live here. south florida is known for scam artists and when people are paying 280,000 for a 2/2 condo and the appraised value is 135,000 with 30% of the condo development empty and the neighboring condo property is 80% empty, there is alot of criminals in the real estate / banking system that need to their a** kick.
SOUTH FLORIDA “AKA” NEW ATLANTIS
Your numbers hit my cousin’s situation pretty accurately. He was a 10th grade dropout, around 1965. Went into construction and eventually into rehab/flipping. He did pretty well, and when harder times came a couple of years ago, he was in “waiting” mode because both his PA house and his FL condo were owned outright, and his wife had a Real Job (hospital admin). I respected the fact that he was willing to do other kinds of work, but the noose is tightening now that he is employed up north and the FL condo will not rent out for any more than the ins/tax/HOA. In fact is is NOT rented out right now, he and his wife haven’t really moved out yet. They have just realized that their new $299K price isn’t going to move the thing (2/2, as in your example). The condo development is not new, is almost beachfront, so was all sold out, but who knows how many owners are “investors” trying to dump these things. I visited fall 06 and found it pretty empty, but perhaps a bit pre-season.
RE: There are jobs out there but there are thousands of people applying for single jobs. I’m willing to relocate anywhere.’”
LMAO…
As long as you’re not shackled to the white elephant of an unsellable single family detached home you’re upside down on.
Instant mobility….the new paradigm of personal wealth
‘It’s not going to do one iota of good,’ he said.
Yes, but it’s a helluva campaign point for the Republicans.
For the Democrats, too. Senator Clinton proposed a government-imposed 5-year freeze on interest rates, and a 90-day freeze on foreclosures.
Ain’t it great to be in the sunshine state?
It is if your renting; or if you bought 10 years ago and have a huge SOH exemption. Otherwise, no, it sucks.. Really, really bad..
The one thing I am likely never going to do is blast FL; I love living here, and I accept it for what it is. It’s crowded, it’s hot, many people are “fake”, living on borrowed time, and it’s very ethnic. But that’s what I wanted, and that’s what I got. Doesn’t mean it’s a good, or a bad place, just that it “is what it is”.
Michael Fink, you have a very good attitude toward Florida and are telling it like it is. Although, don’t forget, it is a fairly sizable state and there are still parts of it that aren’t crowded. Can’t argue with the fact that it’s hot, though.
Isn’t that the truth (still parts that are not crowded)!?
I did the drive from Palm Beach to Tampa a few months ago; that’s just unreal; you go 60 miles without seeing ANYTHING; just trees and the occasional house every few miles. It’s just unreal; especially when you think about how different that area is compared to, say, downtown Miami or Orlando!
People who say that FL is crowded need to drive west; once your more then 10-15 miles off the coast; there is NOTHING there; it’s just empty land (or swamp/lake). Really amazing, and very, very pretty in some spots as well. When I say FL is crowded, it’s not really that we are out of room, or built out. It’s just that everyone is compressed into a 10 mile strip around the ocean. IMHO, FL is probably close to 90% undeveloped (which, given how crowded the roads are today, is a very good thing), but, almost 100% of the people live in that 10% that is quite built up.
I read somewhere that FL is like a toxic lover; you treat her bad, and she will Lorena Bobbit you. You love her tender, and don’t try to pilfer/take advantage of her, and you will have a “hot” lady on your arm at all times.
I think the comparison is rather apt; too many people come down here to swindle/lie/cheat their way through this state. If you come here to work, and bring a professional demeanor and solid skill set, this is a wonderful place to live. Hopefully, after this bust is finished, we will have more professionals and less swindlers.
However, for whatever reason, it seems that FL does, and always has, attracted the scammers and swindlers like moths to a flame.
My uncle (and now my cousins) live on a lake about 45 minutes from Tampa. From my childhood experience we had a fantastic time in the warm small lakes sailing, water skiing, fishing…exc.
Lots of nice areas inland, IMHO. No crime, mild winters, agonizing summers.
Not a lot of industry though. Never sure why that is so.
Michael, the real professionals won’t stay if the swindlers drive them out. We need to fight, not kick back and down another margarita while we wait for them to come to their senses, of which they had none to begin with.
Nothing worth having is ever worth not fighting for - even the disobedient adolescent that is Florida.
And even though we’ve had our disagreements about taxes in Florida, you’re one of the good guys, because you care what happens here.
You too Palmy!
One mark of an adult (imho) is the ability to agree to disagree; I think that we both have valid positions, you have the benefit of more experience with the FL tax and spenders then I do, and I have the benefit of having worked for a govt body and seen it from the inside. However, both of us have valid, and factually correct, reasons for supporting our side of the issue.
Either way, I do care what happens here, and I do love the state, and love living here. I hope to someday buy a home here; that day seems to grow closer and closer with each passing moment!
I have nothing to say today except that Florida will always be wonderful no matter how godawful the development gets and despite the fact that her population of morons and sociopaths increases every year. Thank you all for sticking up for her.
Oh! And I need to report the promising news that I had a roach encounter yesterday. When you sight the state bird, you know spring is on its way.
Can’t argue with the fact that it’s hot, though.
It’s not hot inside my car, house or office, but it is very hot come July, August and September which makes it difficult to leave the car, house and office!
Happening quietly everywhere. Friend from Merrill Lynch confirmed this morning that she got the hit…Friday is her last day. She’s didn’t volunteer numbers on the layoffs, and I would not ask.
What location? Billions and Billions of loses - you knew that heads would get chopped. I have some friends who work for them in NJ.
Head office, Manhattan.
Who posted the other day about the bus driver who saw a sigificant decline in ridership NJ-NYC?
Another “man on the street” observation beats the BLS.
Can I ask which dept.?
I have a friend that’s an accountant with them.
two mortgages: one on her old house in Alva that she’s unable to sell and another on a house she bought in November 2006 in the Cascades subdivision in east Lee County
This is one of those things I just don’t understand. My wife and I have been looking for property for the last five or so years. It seemed during that time that things were always more expensive than it should be, so we never bought.
Anyway, one of the issues was what to do with our current house. The idea of buying one place before the old one was sold terrified me. Am I the only person that thought doing that was a bad idea (besides others on this blog)? And by the way, my PITI is less than 600 and we make close to 100k combined. Anyone who gets stuck doing that gets what they deserve I guess…
Anyway, we’ve sold our house now and will be moving into a rental in a couple weeks. I hope to find a reasonable deal in the next 1-1.5 years. But I’ll be danged if I’m gonna be tied to two houses…I just can’t understand how that ever seems like a good idea.
“Anyway, we’ve sold our house now and will be moving into a rental in a couple weeks. I hope to find a reasonable deal in the next 1-1.5 years. But I’ll be danged if I’m gonna be tied to two houses…I just can’t understand how that ever seems like a good idea.”
People may not want to forced to buy a house they don’t like because they are under pressure to buy a house in a certain time period before they are forced to move out of the house they had just sold. This considering you will have to live with a house buying decision that was made under pressure or duress or time constraints.
I think foreclosure brings more pressure than renting for a bit. But to each his own I guess…
Our old house is dirt cheap and is paid off. We could get 20 percent back in rent before expenses vs what we could sell it for so we are going to just turn it back into a rent house which is what it was before we purchased it. Also we put 36 percent down in cash on our new house. Now, would I carry 2 mortgages? Helllllllllnoooo.
She planned on holding the first house and reaping a windfall on it when the value jumped another 15%; after all real estate could only go up. Conservative personal finance philosophy is apparently so 60ish.
A couple of former neighbors decided that this area just wasn’t where they wanted to be. So, they bought a house nearby, but didn’t sell their existing house first.
However, their real estate agent, who I’ll call Robert the Wonder Boy, said that they’d have no problem selling their existing house. Reason: It was on a double lot that could be subdivided. The perfect investor bait!
Well, the existing house took eight months to sell, and it finally sold to an investor who paid too much. He subdivided it, built a cheapo house in the back, and it took him almost a year to get both houses occupied. We, the neighbors, are pretty sure that he’s cash flow negative on the property. We also think that the property will be sprouting a “for sale” sign later this year.
As for the former neighbors, the lady of that house had to come out of retirement and take a job. She’s cashiering in a local grocery store.
Having to come out of retirement like that just has to suck, unless it’s for fun. There’s so many other things one should be doing at that age.
She doesn’t appear to be the happiest of cashiers. And, what’s worse, she has a law degree. She could be doing a lot better for herself and her husband, who’s not in the best of health.
Well Blanco has a point. I got tired of having hubby underfoot and told him to go find something to do - get a part-time job, anything.
He took a part-time job at a little local store in the village that is literally ‘gossip central.’ Everybody in town is in and out all day. It was going to be 2-3 days a week. Then it turned into 3-4, then 4-5 and now it is 5. At this point when anyone asks me where he is, I just shrug and say ‘the store.”
Having practiced uber-high stress law for nearly 30 years, he is having a ball playing store-keeper. He gets to see everyone and hear every bit of gossip. (And I get to hear about ‘margins’, and ‘forced shippers’ and ‘display merchandising’ and other odd and curious things.)
So there may be a reason that highly-educated people go out and take low-skilled jobs when thy get into their late 50s-early 60’s.
The woman in the post may be unhappy for reasons other than the job - perhaps her husband’s health and the stress of caring for him.
Real estate salespeople always try to get the seller of a house to find another one ,(so they got you where they want you ,desperate to sell the old house ).
If you do purchase another house, it should be subject to your old house selling and closing escrow or you get out of the new deal without penalty . I refused to buy another house until my house sold and I was protected on it closing escrow also .
I remember one time I was involved in a RE deal in which 4 escrows were tied into one house closing . At the last minute the wife of the buyer said she refused to take off work to sign the loan documents because she would lose a day of work .The real truth was that she never wanted her husband to buy this investment property . To make a long story short ,the realtors paid her for a whole day off from work to sign loan docs.
But my point is that anything can mess up a escrow and buyers /sellers need to be protected in the event that they can’t sell or close a escrow . During the boom and even now ,the real estate professionals could of cared less about the contractual needs of the buyers or sellers . It just scary that the Real Estate professionals would put people in these desperate situations that end up costing people alot of money ,(just because they want to make that commission ). If Realtors write up binding ‘Sales Contracts” ,they should be held to a high standard of fidiciary realtionship, or they should change the laws accordingly that only lawyers can write up real estate “Sales Contracts”. Many a escrow officer has cleaned up the Contract mess these unqualified real estate sales people write up .I’m just saying ,you got to protect yourself and don’t expect commissioned sales people to be operating in your best interest ,(THEY WANT TO MAKE A SALE ).
“If you do purchase another house, it should be subject to your old house selling and closing escrow or you get out of the new deal without penalty . ”
These days if a seller puts that contingency, the buyer’s interest in the house will be much diminished. There is a huge, unsold inventory out there.
It’s the buyer who puts on the contingency, not the seller. Why on earth would a seller make the sale contingent on anything? All they want is the money.
agreed, and as I’ve stated before, one sure fire way to castrate the greedy commish driven agents is to only pay ‘em over time with structured payments. NOT a huge bag ‘o cash at one time.
ie: as the deal works out to be a success, all parties earn larger paychecks, culminating in a most excellent pavlovian balloon payment.
question: if w-2 wage earners, which drive most deals, accept their wages every other week, why should real estate agents receive a paycheck all in one large lump sum . . . !?!?
complete BS is what it is, and is what makes possible the out of control greed.
That really jumped out at me, too. What is with the buying a new house before selling the old. Why would one do that in a new community? It would be prudent to rent for a year before you buy anyway.
Because real estate always goes up, silly.
“who are stuck in a bad loan due to unforeseen circumstances”
This is what Paulson, the ibanks, the regional banks, the investors, the FBs, everyone is claiming. No one could have foreseen that a mania would be unsustainable. But if you asked them if they would have invested 30 or 40 years of their future labor in tulips, I suppose they would be insulted.
All the same, are corroding cars, fraying clothes, and long forgotten vacations really any better than a tulip - which as a flower - at least brightens up the world - unlike an H2, designer socks, and screaming kids on cruise liner?
The number of bad loan victims these days is virtually unlimited.
I love this “unforeseen circumstances” garbage. The unforeseen circumstance was property prices not continuing to climb, not if they were actually able to make the loan payments. The other unforeseen circumstance was getting caught lying about income on the mortgage application, but I hardly hear of this in the media, only how they are “poor victims” who need a bailout.
Riding that train, numb on loan pain
Housing bubble is aboard, watch your speed
Trouble ahead, trouble behind…
“‘We’ve been nuts paying some of the prices we’ve been seeing,’ he said. ‘But I do see lights at the end of the tunnel.’”
And you know that auction just crossed my mind.
People,
All these workouts do not solve a fundamental problem. Prices are way too high in relation to income and income growth. Incomes growing are going to be harder to come by in light of globalization. If employee pay as an expense is to high, it will just get sent to a 3rd world country where its cheaper eg GM.
If the income is not there to support house prices it will come tumbling down to the trend-line as it always has.
Now there is another perceived problem with bottoms or proposed bottoms. The first wave of boomers are retiring starting in 2011.
THey will need to sell house to unlock equity and dump a oversize house they don’t need for a condo or apartment. This will further depress prices for years to come and subsequent retiring boomers will keep it going for the better part of the decade or longer.
“Now there is another perceived problem with bottoms or proposed bottoms. The first wave of boomers are retiring starting in 2011.
THey will need to sell house to unlock equity and dump a oversize house they don’t need for a condo or apartment. This will further depress prices for years to come and subsequent retiring boomers will keep it going for the better part of the decade or longer.”
I think your absolutely correct, and I think that this is one of those long term trends that nobody seems to want to talk about. The boomers are coming to FL/AZ/NC/etc, etc, etc.. However, for most of them to come, they need to sell their homes in NJ/NY/PA/etc, etc..
That’s going to put lots of homes for sale in the northern markets, and push prices down. As those prices fall, the price the boomers can pay for homes in the sunbelt also falls. It’s not like they are going to go back to work; they are just looking at what they can afford from the sale of their northern home, and what it will cost them to live in the sunny areas of the country. As this migration picks up, I anticipate that this will push prices down in both locations; the north because of inventory problems, and the south because of inability to pay problems.
And, of course, your absolutely right about the trend line; that’s a no brainer (although seems nearly impossible for the REtrards to figure out).
Another notion is that people really do believe that they’ll downsize when they retire…I hear this continually, that they’re going to reduce their house size, their standard of living, their cars, etc. The reality of it is that they don’t. People will not voluntarily give up their good life unless forced, and forced 98% of them
will be. It’s going to be ugly.
RE: Another notion is that people really do believe that they’ll downsize when they retire…
These people are largely stuck.
Who do they think they’re gonna sell their inflation jacked properties to? The new workers at GM and Ford who are scheduled to be making half the income of their bought-out early retirement comtemporaries?
Enjoy the skyrocketing property taxes on your white elephant to pay for all those public employee pensions.
My parents still live in the same house they raised me in. The house is rather small by modern standards, but they’re not about to sell. Reason: Their house is paid for.
The older you get the more (generally speaking) you resist change…I live in a neighborhood where I am the only working adult…May neighbors are in their mid early 60’s to mid 70’s…There are about ten households…NONE IMO, will move…Even though some have very large residences…They have been there 40+ years and they are going out of the house one way only…Feet First…Several have already lost a spouse and refuse to leave…This may be the exception and not the rule but I believe it shows there resistance to change at this point in their lives…
SCDave - I suspect that what happens most often is a combination of all the observations here. For 90-95% of retirees, those who move will downsize. Those who do not move to a different area will not, at least until they have to due to physical requirements or the death of a spouse. My mom hung onto her too-large house in Orlando until after she’d had a stroke and we forced her into a retirement home. Having grown up in Orlando, this is what I see — the old neighborhoods have a lot of old people in them. The new neighborhoods of similarly large houses do not attract a large proportion of retirees. If I still owned a house in an old neighborhood here, I’d probably remain in it.
Boomers started downsizing before they reached 65. The people who borrow money from me to buy RV-park lots and “park models” (small mobile homes) in AZ include quite a few boomers who were using me as a bridge to the sale of their house in Michigan/New Jersey/whatever. But, these people, now in their early late 50’s or early 60’s, have now sold their Mich/NJ/whatever places. They succeeded in beating the rush. Part of the current problem is, the rush has already begun. A 62-yo losing work is more likely to take SocSec and try to go on living, than to find a new job. Downsizing the house would be part of the plan.
We did downsize once kids were gone. Don’t need big house and don’t want to spend money on heat/cool, don’t want to spend time on cleaning and don’t want to spend money on decorating. Also intend to downsize car next time into what someone told me the other day is now known as a “selfish” car - 2 seater - no room to transport grandkids. We want to spend our time on travel and relaxation, so home will become just a home base.
Are children are gone also and now its our time but its very hard for me to get the Mrs. to even consider moving even though we live delightfully in our 30 foot Motor home with two dogs for weeks at a time and our residence is 20 X bigger….Hard to uproot when you have spent 30 years in the same house with the same neighbors..….
Some proportion of the elderly do move…but a lot may be like my folks, who upgraded all the systems in their house, and installed a full bathroom on the first floor, so that as they got older, they wouldn’t need to use the stairs. All their neighbors, with a few exceptions, are folks they’ve known for 40 years. They continue to take their vacations, but move or relocate, no way.
We specifically searched for a low cost area when we retired. Our current house cost less than half what we got for our old house. Property taxes are about 25% of what they were. Utility costs are about 60% of what they were. And there’s more of the ‘good life’ here than we had in Florida.
Bill - I’m surprised that you save so much on utilities, given the need for heat there. I worry that “cheapest area” is a moving target - the areas you read about in the Top 10 lists change every year.
Yes, cheaper areas are a moving target. But you can’t know the future; you just have to make decisions on what you know now.
As far as utility savings go, I’m including the “required” utilities (gas, electric, water, sewer) but not phone and cable TV, which are always optional.
The boomer trend will put a lot of inventory on the market. And there probably will be a lot of them going out feet first.
Then we are fighting the inrush of population from Mexico to keep population growth positive.
So it should be strange days for everyone.
I dont think the point is to solve the fundamental problem. I think they are trying to stop massive foreclosures and rapid depreciation in the hopes that wage inflation will save us eventually if we can just hold it together (i.e., flat prices for 10 years may be less disruptive to the system than an immediate 40% drop with appreciation = inflation going forward). Not saying it will work or that I think its in our best interest, just saying I think that is their intent.
Umm…with all due respect, what wage inflation?
“First Volunteer Bank, which provided some of the construction financing for the Battery Place condos, is offering special loan incentives to qualified buyers at the March auction, Mr. Glascock said.”
We talk on here, about the fragility of the big banks, but the smaller piggys seem to be made out of glass, as well.
Bad loan ju ju, everywhere…
ENTERTAIN fanciful ideas about your home’s value, why sellers still in denial
1. You don’t know the price until you sell.
With a few minutes of spare time and an Internet connection, you can find out the share price of every stock and stock fund you own. But you don’t really know what your house is worth until a buyer makes an offer.
This leaves ample room for mental mischief. You can happily imagine that your house is a wonderfully stable investment, because — unlike your stocks — you aren’t receiving continuous price updates. You can also happily imagine that your home sports some grand valuation.
But if you are a seller in today’s rocky housing market, a happy imagination can be a big drawback. If you insist on getting a lofty price, you likely won’t find a buyer. Indeed, if you have already moved and your house is sitting empty, your stubbornness could cost you big bucks.
2. The expense ratio is huge.
What big bucks? Think of your home as a stock fund with an exorbitant expense ratio. Each year, between maintenance costs, property taxes and homeowners insurance, you might be paying a sum equal to 3% or 3.5% of your home’s value.
In addition, you will have utilities and probably mortgage payments. These costs don’t seem so dreadful if you’re getting good use from your home. But if you have an unoccupied house you are aiming to unload, these costs mean you’re bleeding money every month that goes by without a buyer.
3. You will pay a hefty commission to sell.
Real estate isn’t just costly to hold. It’s also moderately expensive to buy — and horribly expensive to sell.
Purchasing a property can involve home-inspection costs, lawyers’ fees, title insurance, moving costs and mortgage-application fees. Selling can also mean moving costs and lawyers’ fees. But the big hit is the real-estate commission, which might snag 5% or 6% of your home’s selling price.
4. You can’t get a margin call.
It’s common to take out a mortgage to buy a house, while only aggressive investors use a margin account to buy stocks. This isn’t a big surprise. Buying real estate with borrowed money is a whole lot safer than buying stocks with borrowed money.
How so? If the stock market plunges and you own shares on margin, you could receive a margin call from your broker, asking that you add more cash or securities to your account. If you don’t pony up, part or all of your holdings will be sold, locking in your losses.
By contrast, as long as you make your mortgage payments, your neighborhood mortgage banker can’t force you to cough up more cash or sell your home, no matter how far your home’s price plunges. This ensures you won’t be bulldozed into a snap decision. Still, because homeowners don’t receive margin calls, it makes it easier to procrastinate over selling and to entertain fanciful ideas about your home’s value.
“Ed Bonkowski, a Fort Myers-based real estate broker, said the initiative will have little effect and is targeted at helping the wrong people. ‘It’s not going to do one iota of good,’ he said. ‘What’s 30 days? The people are in, they signed it and they should pay.’”
“If anything, Bonkowski said, ‘It’s just going to forestall what’s going to happen in the marketplace.’”
WTF is this? Is this a new campaign from the NAR? It’s called “Tell the truth” instead of “Now is a good time to buy”. This guy is going to lose his membership for saying something like this.
You mean we actually have to wring the excesses out of the system? God no, the horror!
I have a hard time believing this guy is a REALTOR.
I suspect they finally figured out that with no transactions, they cannot eat. Hunger brings out the truth, tout suite. The only way to generate closed sales is to tell sellers the truth and hound them to lower their prices.
Reminds me of when my buddy was shopping for a weekend condo almost ten years ago - he ran into a pompous old bag who said she only handled listings, that is, she only worked with sellers. Well of course - at the time that was easy money. Now I hear that the same old bag only works with buyers.
And didn’t several of the major franchise brokerages offer to buy your house if it didn’t sell within X days of listing? Bet that offer is nowhere to be seen now, unless the guarantee price is about 50% of the listing price.
“Banks need to take back the houses and put them on the market at a deep discount, he said - as little as 10 percent of the loan value. Then, he said, ‘The investors will absorb the inventory and the crisis will be over. The money’s on the sidelines waiting for this to happen.’”
Hear, hear! This is EXACTLY what needs to happen, but in the eCONomy of spin, where decision makers are unwilling or unable to confront the inevitable, it seems we’ll have to wait for this to unwind more slowly, until every single scheme is exhausted and the inevitable occurs.
My money’s waiting on the sidelines. The solution to this, for local governments, is to force the lenders to take Mr. Bonkowski’s harsh medicine, the sooner the better. This will reward the deserving savers who have suffered through this debacle, by getting them into the affordable housing they have prudently waited for. In turn, because they have the money, they will keep these homes up and contribute to the community by paying taxes and improving the neighborhoods.
Government decision need to realize that the days of big money flowing into the coffers are gone. I’m sure one reason they don’t force the lenders to take the medicine is that they don’t want to lose revenue through the devaluation of the homes for tax purposes. But that’s happening anyway. Not only that, but the houses sit there, further deteriorating and then the governments have to spend even more money to police them and even demolish them, in many cases. It would make far more sense to take the hit on the assessments and get people into these homes who deserve them and contribute to the community. Stop the bleeding.
“Government decision need to realize”
I meant “Government decision MAKERS need to realize”. Sheesh.
This will reward the deserving savers who have suffered through this debacle, by getting them into the affordable housing they have prudently waited for.
Which is exactly why this won’t be allowed it to happen. The last thing the debt peddlers want to see is a return to saving and frugality. Spend spend spend! They would abhor anything which re-enforced the value of saving.
The boomers formed their spending habits during the high inflation of the 1970’s. That’s proven to be a windfall for the banks… well, up until quite recently. There’s a a whole new generation waiting to be programmed.
“Threewitts is a consultant for Portrait Homes, selling homes in a new development called Calabash Lakes.”
OMGROTFLMFAO!!!
His brother, Halfwitt, is probably the developer.
HER brother
Retail Sales Post Surprising Rebound in January Following Dismal December
http://biz.yahoo.com/ap/080213/economy.html
“As the consumer goes, so goes the economy,” said Joel Naroff, chief economist at Naroff Economic Advisors. “It appears the consumer may have slowed down, but not left the field of battle.”
The consumer won’t surrender until that last credit card is maxed! Too bad that the battle seems to be occurring mostly at the gas pump.
I’ve started riding a bike to work for health reasons, and wish I’d have done it 20 years ago. Others could do the same, except that I’m afraid that Americans are so broke they will not be able to afford the bicycles.
Have I got an event for them:
April 20 (SUN): EL BIKE SWAP DE TUCSON. On 4th Avenue. Free to all vendors & buyers! Details at http://bikegaba.org/2008_Calendar.htm
Well done, WT. You’re lucky to be living in an area where you can do this. Biking in certain parts of Tampa and Orlando is like taking your life into your hands. Very unfriendly to pedestrians, even more to bicycles.
Took the words out of my mouth…I ride my bike every day unless it is pouring rain…Even though illegal, I try to ride on the sidewalk as much as possible…I don’t want to die or worse, crippled….It just shocks me at some of the bike riders I see who refuse to yeild to cars, ride outside the bike lanes to demonstrate their “right to the road”…Pretty Ballzeee…
Yeah, I have nearly gotten hit several times in Tampa. I only ride my bike for exercise now, which isn’t too frequently. If it were safer, I would happily take my bike for the 10-min. ride to the grocery store to pick up dinner. Too bad I’d get run over by some moron in a Yukon talking on their cell phone if I tried…
Or they live 30 miles from work, in a place that has “winter”.
Your better off jumping off the Sunshine skyway to get your exercise than riding a bike in the Tampa Bay area!
In the long run the economy is based on the health of the producers. It’s like rats in the grain bin. They may not be aware of the farmer, but their windfall is not due to their own consumption.
Sales excluding automobiles and gasoline were unchanged. Today’s report showed sales at automobile dealerships and parts stores rose 0.6 percent after a decline of 1.1 percent in December.
That contrasts with industry figures that showed cars and light trucks sold last month at a 15.2 million annual pace, down 6.7 percent from December. Auto industry sales this year are forecast to drop to the lowest level since 1998.
ie - A dead cat bounce in auto sales and rising gas prices accounted for the rebound.
“…and parts stores…”
It’s January, people need new car batteries, windshield wipers, tire chains, blue juice - probably all deffered purchases too. Hardly a “rebound”.
The denial and arrogance still reign in S.FL. Hard to believe but many are completely oblivious, don’t think there is a housing bubble, and think prices will rise this year. I have given up any thoughts of reasoning with these people. The only thing left to do is step back, stop talking, and let the crash happen. It is every man for himself down here.
I don’t see any way that the “you walk away” movement doesn’t pick up steam here. Depending on the depth of the recession, I easily can visualize some of our completed condo developments sitting almost totally abandoned.
Well, I have plenty around me that are sitting empty already. All they need to do is give up the ghost and stop staffing the sales trailers/centers.
Too bad they couldn’t consolidate by moving residents of partially inhabited condo developments, filling up some developments and demolishing others.
My bet is on Section 8 - at some future point when folks will have bigger concerns and no time to get all NIMBY.
ej, that’s my main concern about the bust. I suppose you could say I’m a NIMBY, in the sense that I am concerned about the neighborhood I’m going to live in and what will happen to it in the future. Even if the price was right and I could pay cash right now for a little block home here in Florida, I might hesitate for fear of the future of the area in which I’ve purchased. Back in 2000, we could have purchased a great piece of property, 6 acres of land with a very nice four bedroom house in a semi-rural area near here, for $89,000. Sounds good, but when I was looking at the property, I looked next door where a run down trailer had a bunch of surly looking immigrants on the front porch playing checkers. Drove two blocks over and there was a large trailer camp for agricultural workers with toddlers outside waddling around in diapers. I had deep concerns what would happen if I was ever stuck in that house during a downturn. I think at the height of the bubble, that house was valued close to $300,000. The problem with certain parts of Florida is, there are areas where you find some very nice properties alternating with squalid housing. And it seems the squalid housing always wins out by bringing down the area where it is located.
In one downtown Orlando condo, so many “owners” have stopped paying condo fees that the utility company was shutting off power to all the common areas. Imagine being an owner was was paying and you’re trying to sell and a buyer walks into the hot, sweaty lobby that smells like mold. “How much did ya say you ya want fer this place, buddy?”
“Now she finds herself paying two mortgages: one on her old house in Alva that she’s unable to sell and another on a house she bought in November 2006 in the Cascades subdivision in east Lee County.”
Ben, are all the MSM article on the “victims” like this, or just the ones you select?
I think most of us agree there are few real victims here. But surely there are unsophisticated young couples who just wanted a modest home (not two, not a McMansion) in a place where people like themselves have traditionally lived, but overpaid due to bubble prices are were put into an exploding mortgage in the rush to buy before it was too late.
Yet I haven’t seen articles like this. In every case, you have people with two houses, with investment houses, and people who have HELOCed their home equity to live large. So the very people the MSM holds up for sympathy tend to be unsympathetic, unless they admit their mistakes.
Perhaps that’s the deal. The MSM can’t find real victims to interview because those sorts of honest folks don’t want to Jerry Springer their problems.
My family fits this category - we “overpaid” due to the bubble. I don’t really think we’re “victims”, though. Even though we overpaid for what we got we, only got what we could afford. We used a large down payment and have a 15 year fixed loan. We overpaid by about $30,000 which is a large amount, but not enough to push our finances into trouble. In the meantime we eat out less, keep our cars longer and keep on with life. Our story is not noteworthy.
Thank you. We really dont hate owners. We hated the greed and fiscal irresponsibility that consumed many, and were concerned with the disparity in wealth distribution and inevitable collapse we knew would result.
well said, Tim !
I have often wondered what percentage of readers/posters here are owners. I suspect our population is not too much different from the general population (~60% owners?)- maybe even higher given the education/income level that’s present. So, no… I don’t think “we” hate owners ;-).
Hear, hear!
My wife and are in our late twenties, early thirties, and all we want is a modest home we can afford.
Any MSM reporters that want a great story, feel free to interview us. We are out there, and, yes, we are the true victims.
My standard answer to the “when are you gonna buy” questions that friends and family used to always ask is - “when I can buy a resonable home for a reasonable price. Not a moment sooner. I’ll know it when I see it.”
“North Port City Manager Steve Crowell says the state cuts in property taxes and the national economic slowdown have created the ‘perfect storm.’ When Crowell began his tenure in North Port in July of 2005, when ‘the revenues were strong, the local economy was strong. We were hiring people.’”
North Port’s a mess. Here’s what I’m talking about:
http://www.ocwen.com/reo/residential/res_reopropdetails.cfm?LoanNumber=34932434&stateChosen=FL&propid=1
I’ve been watching this property since about late 2005. I think when I first started watching, it was around $90,000. Just a couple of weeks ago, it was at $60,000. Now $40,000. Which is probably a fair price. That’s actually the sort of house I’m looking to pay cash for, except it is in North Port, which is Nowheresville. The lipstick has worn off the pig. When I start seeing homes around here in the South Shore of Tampa Bay, I’ll bite.
mary’s really knockin herself out w that description
post an ad on craigslist and go direct
It’s from the Ocwen REO site. They take back the homes and parcel them out to RE agents to manage. If Mary had been able to convince Ocwen to drop the price to $60,000 back in 2005, or even $70,000, I’ll bet it would have sold. Now they’re begging for $40,000. You might say they’ve been dropping the falling knives with strings attached. However, at $40,000, it will probably finally sell.
I was at a Sprint cell phone store in the Boston suburbs last week.
It was not difficult to overhear the painfully middle class mom in line in front of me, with her thick North Shore burbs accent, griping about how her two boys had cajoled her into buying them Blackberries! At over $400 EACH (various accessories plus the phone).
This lady forked over almost a grand for cell phones for two dimwit teenage flunky burger flippers. You could see the ADD in these kids eyes as they whirled in circles sucker punching each other. They couldn’t have been more than 15.
Around here, you can tell the real money from the painfully middle class posers living on borrowed time. These were not real money people.
We live in a scary, sad nation of zombies in a frantic race to the bottom. Retail sales numbers will probably continue to surprise you for quite some time.
This was supposed to be a reply to bizarroworld’s earlier comment about retail sales and spending.. not sure what went wrong.
A relative of ours bought his teenage daughter an I-Phone, and transfered her old phone to the pre-teen (9 or 10 year old?) son. He didn’t really want the son to have his own phone yet. The relative told me “what was I to do when my son asked me for her old phone (and the monthly phone service)?”. I told him, if you didn’t really think he needed the phone, tell him this:
“No.”
SIMPLICIO REDUX
The current central banker characteristic mistake is to think that if crashing housing prices lead to a recession, then the government can step in and make it a shallow recession.
The reality is, that whatever the government does now, will insure a depression.
The lessons you think you learned from history, ala Bernanke, may be irrelevant when you decide to use them, ala 2008.
Heres a little Naples update. I just reviewed a house in the Port Royal/Aqualaine Shores area on the water. Ten years ago it was built/land for around$1.1 million. The owner had it for sale two years ago for $4.3 million. He has since dropped it to $2.3 million and my guess would jump on a $2 million offer. It will be interesting to see if the price for a comparable house drops back to the $1.1 million level before it is over.
Heard the local tax accessor speak. He said that he does not consider foreclosures to have the weight of a regular sale. In other words ten broker sales at $1 million and 10 sales of similar type property in foreclosure for say $600,000 are not weighted equally.
Just BS to attempt to hold the tax base up. The government in this county has spent so much money and has such high overhead that it would not surprise me to see them do an Orange County in a few years.
Query. Is he talking about the price the lender is deemed to have paid on the date of foreclosure sale which is usually the mortgage amount, or the subsequent sale from the bank to get it off its books? I would think the former probably is not indicative of FMV but the later, which should be the lower number, is.
same here in fairfax co ,va
off 18% and the tax basterds are offerring 2% off
> have to keep doling out the raises an such
The slide to the bottom is officially on in the Miami-dade condo market. Daily Biz Review has an article about lenders refusing to make loans for respective buildings. They even posted BankUnited’s list. It is a who’s who of buildings. This is going to scare the crap out of every investor who is on the fence about closing. Where does this end?
http://www.dailybusinessreview.com/images/news_photos/47126/BankUnited.pdf
That’s HUGE, ress. And look at the reasons for not lending: High infestor concentration and declining market value. Wow, that says it all.
Here in Apollo Beach we have a number of condo projects along Apollo Beach Blvd, the draw being “waterfront”, with boat slips, etc. One project STARTS at $400,000! Heck, if banks won’t lend on Miami condos, ya think banks will lend on similarly priced condos in Apollo Beach? Sheesh, I run into people all the time in other parts of Hillsborough and Pinellas County who, when they ask me where I live and I tell them, say “Where’s Apollo Beach?”
Oh boy.. That’s not good at all; at least not for those who already own those units (investors or the developer). That will definately drive the prices down dramatically, especially if we start to see more and more lenders doing this kind of “black balling” of entire units. I fully expect that these condos, at some point, will become nearly cash only transactions; with maybe a few lenders out there who will lend no more then 50% of purchase price, and only at prime + 8%, or something like that.
Can’t wait for my favorite 2 buildings to get on that list:
Landmark at the Gardens (1M dollar condos in mall parking lot) and
The Marina Grande (neighborhood is about as dangerous as a military war zone; comp homes are ~20K, condos are 500K)
Apollo Beach would be a good place for Floridians who worry about skin cancer. The smoke from the FPL power plant dims the sun considerably much of the time, so their UV exposure would be less. Of course the cancers they might get from the emissions could be a problem.
Maybe one for the bits bucket, but this “hypothesis” is now posted on MSN:
Having just spent five days in the disaster that is Florida real estate, it makes me wonder: Is it possible that the Sept. 11, 2001, terrorist attacks were the root cause of declining home values?
http://tinyurl.com/2nw9z7
Rudy Guiliani is that you???
I think the 9/11 hypothesis is bunk….as Ben and others have commented before, this housing bubble began inflating in the mid to late 90s, and like all bubbles, it was inevitable that it would someday burst and would end up losing lots of people lots of money.
I do remember remember in 2002 that retailers (BBBY, Pier 1, etc.) were seeing a “nesting” trend among their customers after the 9/11 attacks….in other words, people were focusing more time/money/attention on their homes and furnishings than taking vacations overseas.
But the cause - effect relationship that this MSN.com columnist makes doesn’t hold water.
Right before 9/11 I went thru all my stuff.
I spent a few months tossing out.
After 9/11 I was desperate to find a safe place.
A home would have been great.
The joke was on me.
Here in the Orlando area, the “red hot” housing market had started before 9/11. Seems like it started taking off in 1999, as best I recall, but no later than the following year.
“Banks need to take back the houses and put them on the market at a deep discount, he said - as little as 10 percent of the loan value.”
Let’s see, I can buy your house for $400,000, or I can buy an identical bank-owned house for $40,000. Which one am I going to choose? DUH!
‘This new plan doesn’t address people like me who can’t or won’t just walk away, people who feel a sense of responsibility but who are stuck in a bad loan due to unforeseen circumstances,’ said Kathy Reed, a former real estate agent.”
The greedy realtor now wants to become the victim. She is just one more of the thousands of realsheeples who wants the public to feel sorry for her. I bet she never bothered to understand the risk involved in realestate and just drank the kool-aid handed out by the NAR.
“This new plan doesn’t address people like me who can’t or won’t just walk away…”
Sounds like the price declines in her area haven’t hit her trigger point yet. When they do, she may very well walk herself - sense of responsibility or not.
“If anything, Bonkowski said, ‘It’s just going to forestall what’s going to happen in the marketplace.’”
Kudos to this realtor who does understand what is going on in the market. To bad the other 99% of realtors don’t understand the realestate market.
“The money’s on the sidelines waiting for this to happen.’”
IMHO this is more RE tripe, hype and pipe dreams. Yes, there are those of us waiting on the sidelines to purchase a house but there are more houses then there are of us waiting. Perhaps there are even some with money (if the price is right) that could and would purchase property for rental purpose, but not enough to take up the slack unless property drops below the rental rates and you make them ’subsidized affordable housing’.
I’ll be lurking in the wings for the right property in the right town in the right location at the right price; then no more then $300K, but not for a cookie cutter house on a zero clearance lot.
Ron - your post reminded me of the screwy notion that foreigners are going to snap up our properties because the prices are low relative to their currencies’ appreciation. Why would they do that? To rent them at negative cash flow? To wait for prices to “come back?”
I remember the Japanese doing that here in Florida, a long time ago, and as I recall they got burned and lost big when they finally sold. Golf courses were popular “investments” back then.
The woman paying two mortgages reminds me of a question I’ve had for awhile. How do people ever get approved for closing on a second house while their first is still for sale? A friend of mine did this within the last month; Went ahead and closed on the new house while the first is still awaiting a buyer. Isn’t it pretty stupid for the bank to do, basically approving you for simultaneous mortgages? Is this something that’s only happened lately thanks to loose lending?
TU - that’s a good question, relative to today, as opposed to during the bubble. When prices were rising and we were selling, our lender offered us an insane loan amount for the purchase of a new place, assuming our old one would sell. But that was then and in the current lending and paper-sale climate, I can’t imagine anyone but a builder offering such financing.
I’m still wondering if seller financing, that was popular in the 1970s, will return.
It already has in San Antonio. Look all over Craigslist. Seller financing is spreading like a virus.
My North Carolina relative did just this, and closed on his new house 3 months ago. Amazingly he sold the one, after taking my advice and undercutting the other houses in the neighborhood. At first he was afraid of “giving it away”, but after 5 months of 3-4 showings (total) he lowered the price about 10% and voila! it sold.
While this post my be better for the list, I am posting it here. This guy is interesitng to read, even though a lot of it is over my economic head. He thinks his latest post is improtant, but I am wondering what it all amounts to. Any thoughts?
The Fed has been aggressively draining the SOMA account, with the pace of that drainage stepping up precipitously since December.
http://market-ticker.denninger.net/
The graph in particular looks like a drastic change in fed policy.
That’s a very interesting post, if for no other reason than the passion of the writer. Like you, I have no clue about how believable it is, but PB or Chick or others here should have something to say about it. What a great snooker, if I read it correctly — the rich bet on deflation because all the rest of us consider it an impossibility.
Not to worry. Graph simply shows that the FOMC, the manager of the money supply, reduced its holdings of treasury securities and purchased special TAF securities to add liquidity to the system without increasing the overall money supply significantly. Note that the chart starts at $700billion, not like the Fed is running out of Treasury paper. Recall also that there has been a great increase in demand for Treasury debt as investors have shifted away from morgtage linked securities. Treasury yields are way down, prices way up. Finally, foreign central banks using dollars to provide Eurodollar liquidity, have borrowed from the Fed under currency “swap lines”. This would also have expanded the US monetary reserve base had the FOMC not offset it by selling Treasury securities. Finally, there was a large expansion of overall Fed funds at year end, but this happens every year and the overall base expansion is about in line with the Fed’s inflation “target”. Many of us find this 2-3% target excessive–but that is another issue.
correct that the TAF is not a securities purchase, but a term rediscount facility. They are lending the banks fed funds on the collateral of bank held treasury issues.
“Now she finds herself paying two mortgages: one on her old house in Alva that she’s unable to sell and another on a house she bought in November 2006 in the Cascades subdivision in east Lee County.”
She sounds wealthy.
Today.
Oh man, this would only be yet another incentive for a boom-bust cycle. They’d make out like bandits up market and down. Gods these whiny babies (WATB) make me ill. They are part of the problem. Does that ever not occur to them?