Sellers Trying To Catch A Slinky Going Down The Stairs
The Naples News reports from Florida. “The Cape Coral-Fort Myers area had the highest rate of foreclosures in the nation in January, a mortgage research firm said. Charlie Green, the Lee County Clerk of Courts, said there were 2,297 foreclosures in the county during January. During the first four months of fiscal 2008 — from October through January — there were 7,766 foreclosures.”
“‘For the first third of the year foreclosures were up 2,100 percent,’ Green said. ‘It’s insane.’”
“Tom Moss admits buying a condo in Estero was an ill-advised investment. The Naples resident bought the property two years ago with thoughts of turning a profit. He paid $232,000 for the two bedroom, two bath, 1,416 sq. ft. unit with a third-floor view of the sunsets. Now, Moss will be ‘happy’ if he can sell for $180,000.”
“‘I got caught,’ Moss said. ‘After years of complaining about the growth, I decided to buy into it. But I got in too late and now I’m getting smoked.’”
“He listed his condo on Craig’s List, and wants to limit his losses to just over $50,000. ‘I don’t want to pay someone else money that I’m already losing,’ said Moss about resisting to list the property with a Realtor.”
“You could hear the despair about the market in Ray Garvey’s voice. The Realtor/investor has two homes in the foreclosure process and is trying to salvage a condo investment. Garvey admits the $239,000 asking price on his South Fort Myers condo might need some adjustment.”
“But having plunked down $220,000 for it a year ago, he’s faced with a losing proposition.”
“‘I’d take any reasonable offer but I’m not getting even that,’ said Garvey. ‘Someone offered $160,000 via e-mail but that means I’m going to have to come up with $55,000 at closing and I don’t have it.’”
“‘I don’t think you can find an enthusiastic Realtor right now,’ said Garvey who moved to Southwest Florida four years ago from New York.”
The News Press from Florida. “Lee County’s residential real estate market is in recovery as bargain hunters snap up great deals — but prices are likely to fall further before a huge backlog of homes is absorbed.”
“That was the word Tuesday night from real estate broker Denny Grimes of Denny Grimes & Co. at The News-Press Market Watch annual real estate symposium. ‘We are in recovery but that does not mean the bottom of the market,’ said Grimes.”
“Grimes said the sales price for houses is declining and likened a seller’s situation to somebody trying to catch a Slinky going down the stairs. Get ahead of the falling prices so you can sell the house, he urged.”
“‘It’s almost impossible to catch from the top,’ Grimes said.”
“He said there’s a silver lining to the cloud of falling prices, however: ‘Lee County is becoming affordable again’ with almost 3,000 houses for sale at $225,000 or less with at least three bedrooms and 1,500 square feet.”
The Herald Tribune from Florida. “January home sales in Southwest Florida gave further credence to Realtors who contend that the market is ahead of the rest of the state if not the nation in recovery. The 4 percent increase in sales for Sarasota-Bradenton and the 13 percent increase for the Charlotte County-North Port marked 2 of only 3 sales gains for Florida’s 20 largest markets.”
“But the sales gain came at a cost, with the median sales price dropping — 13 percent in Sarasota-Bradenton and 21 percent in Charlotte County-North Port.”
“Robert Milligan, a 26-year-old broker in Sarasota, says he is convinced that the market has hit its nadir, a notion shared by some Florida economists like Hank Fishkind.”
“‘We have hit bottom in Sarasota,’ Milligan said. ‘I am eating my own cooking by purchasing property now.’”
“Milligan has bought six houses and plans to hold them as rentals. He has found single-family homes in Sarasota that sell for $150,000 or less, and can finance them as rental property for $1,200 to $1,300 per month to cover his expenses.”
“‘Rentals are more favorable in Sarasota than in Charlotte or North Port since they had such a huge building boom there,’ Milligan said.”
“Pricing remains the focus for most of the region’s agents, said Brandon Kekich, a Lakewood Ranch-based team leader for Keller Williams Realty, who added that the current environment is testing the skills of Realtors, separating the ‘the pros from the Joes.’”
“‘We are having a big push of proper-pricing clinics because a Realtor is not not doing his client any good by wearing rose-colored glasses,’ Kekich said. ‘He should be telling his sellers to drop the prices’ to a realistic point ‘or get out of the market.’”
The Sun Sentinel from Florida. “Prices and sales of existing homes plummeted last month as South Florida’s housing downturn stumbled into a third year. Palm Beach County’s median price fell 12 percent in January, to $343,200 from $388,000 a year ago, the Florida Association of Realtors said Monday.”
“Sales tumbled 26 percent, to 369 from 496. It was the fewest homes to change hands in any month countywide since the Realtors’ group started releasing monthly housing statistics in 1994.”
“Last month, 1,746 Palm Beach County homeowners were notified by their lenders that they intend to take back the properties, more than double the 634 from a year ago, according to Realestat.com.”
“Palm Beach County’s existing condominium market also is in free fall. The median price slid 26 percent in January, to $157,700 from $213,100. Sales declined 20 percent, to 303 from 381.”
“Ken and Mindy Rohlman recently sold a Boca Raton condo for $300,000 and bought a four-bedroom house with a pool nearby for $375,000. The house was priced at $450,000 after the owner had turned down a $550,000 offer last year.”
The Atlanta Journal Constitution from Georgia. “Home sales in metro Atlanta have slowed to a trickle and likely will remain sluggish until sometime next year, according to Roger Tutterow, professor of economics at Mercer.”
“Monthly housing permits in metro Atlanta for single-family homes were 31,029 in December, a nearly 50% drop-off from June 2006. There were 3,244 housing starts in north metro Atlanta in the fourth quarter, down 49.4 percent from a year earlier. In south Atlanta, the tally was 1,661, down 65.8 percent.”
“Builders have watched with concern as the region’s inventory of unsold houses has swelled to almost a year’s supply in some areas. But Tutterow said the glut is partially responsible for a brighter consumer outlook.”
“‘It means there’s tons of property for them to choose from,’ he said.”
“Consumers are beginning to feel empowered because of their bargaining power and wide selection, ‘They know they have the upper hand in negotiations,’ Tutterow said.”
The Index Journal from South Carolina. “For home buyers, the time is now, but sellers might want to hold off putting their property on the market, officials said Tuesday in the wake of three reports showing large drops in existing-home sales.”
“‘I think this is a continuation of what we’ve seen in the past 18 months. We continue to see inventory increase and prices go down,’ said Walter Todd, portfolio manager for Greenwood Capital.”
“‘I think all the areas around the lakes are going to continue to grow rapidly,’ Tripp Whitmire, co-owner of Whitmire Real Estate Agency, said. ‘The problem is all the people in Florida can’t sell their places down there. We see a lot of people who come here and say, ‘This is where we’re going to retire as soon as we sell our house.’”
“Whitmire also said the coast is seeing a much larger price gap than the Upstate.”
“‘I do a little development down there (on the South Carolina coast), and it’s almost like the whole place is for sale,’ he said. ‘You just didn’t have the same number of investors down there that you had for a while. The prices on the coast spiked so rapidly in the ’90s and again in 2003 and 2004, so it’s in the middle of a price adjustment.’”
“‘I do see a lot of the prices dropping, but I think they were artificially high,’ he said.”
“Most local officials said the Greenwood market will continue to favor buyers as long as the supply of for-sale homes continues to grow. ‘We’re seeing a significant decline in housing starts, and that’s a positive thing,’ Todd said. ‘We need to stop building houses before we can stabilize. It just takes time.’”
The Sun News from South Carolina. “The cost of living on the Grand Strand is rising, and some residents are getting squeezed at both ends by paying higher prices for necessities while their paychecks grow less. Staples such as groceries, gas and housing costs have risen over the past year and forced people to dip into savings or cut corners.”
“Average wages in South Carolina grew 3.5 percent in 2007 to $37,246, according to Schunk. The most recent data for Horry County show average wages in 2006 were $27,905; the statewide average was $34,281; and the national average was $38,651.”
“Home prices driven up by the housing boom of 2005 and 2006 are fueling the cost of living increases, said Coastal Carolina University research economist Don Schunk. The median price of a condo rose $7,148 in 2007 to $192,148, according to fourth-quarter statistics from the Coastal Carolinas Association of Realtors. And single-family houses rose $9,455 to $216,500.”
“That makes for a $93,648 spike in condo prices and a $79,550 increase in single-family house prices in the past five years.” “‘Homes are much more expensive,’ Schunk said. ‘We have problems with a lack of affordable housing in our area that feeds into a higher cost of living.’”
“‘I basically turn [the electricity] off as much as possible,’ said Christina Pullen, who lives in Carolina Forest. She said she had to find a way to curb the $50 to $75 per month increases she saw in her bill recently.”
“That and pay cuts in her job as a flight attendant have made for tough times, she said. ‘It’s ridiculous. I took a home equity loan, and I’m living off my equity in my home. That’s not right,’ she said.”
‘Robert Milligan, a 26-year-old broker in Sarasota, says he is convinced that the market has hit its nadir, a notion shared by some Florida economists like Hank Fishkind.’
‘Milligan has bought six houses and plans to hold them as rentals. He has found single-family homes in Sarasota that sell for $150,000 or less, and can finance them as rental property for $1,200 to $1,300 per month to cover his expenses.’
This makes a good test case. Sarasota is ahead of the rest of Florida, but heading into a recession, I question whether he will be able to get the rents he projects. And what about carry costs, vacancies, insurance, etc? It also shows you that financing is still too lax, IMO. Unless he’s loaded, who in the heck is loaning a 26 YO enough for 6 houses?
And his price to rent is off. It’s more reasonable to price in a 15-20% recession drop in rents, even from current levels, and a 20% vacancy expectation.
Well, at least we are getting into the ballpark in Florida. There are getting closer of fair value that most of the rest of us.
“He listed his condo on Craig’s List, and wants to limit his losses to just over $50,000. ‘I don’t want to pay someone else money that I’m already losing,’ said Moss about resisting to list the property with a Realtor.”
I wonder if the bust will finally bring about structural changes in the way houses are sold. I was surprised when Foxtons/Your Home Direct went under.
RE: He listed his condo on Craig’s List, and wants to limit his losses to just over $50,000. ‘I don’t want to pay someone else money that I’m already losing,’ said Moss about resisting to list the property with a Realtor.”
“‘I’d take any reasonable offer but I’m not getting even that,’ said Garvey. ‘Someone offered $160,000 via e-mail but that means I’m going to have to come up with $55,000 at closing and I don’t have it.’”
Edging closer and closer to seller’s needing to bring six-figures to closing…and as Mr. Moss notes…he doesnt’ even have half.
Much, much different than the bust of ‘90/’91 when most distressed seller’s could bail themselves out with $10/15k.
Lets assume he buys the house for $150,000. If he is buying 6 of them, I doubt he is putting that much down. On top of that, add in high taxes in Sarasota and really high insurance prices. There is no way he is renting them out cash-flow positive at $1,300 per month. Now if he put money down and he has skin in the game, then he is still going to end up eating his own cooking. He’ll end up eating a ton of losses.
Things in Sarasota continue to get worse, not better. Tons of people are looking for work. Everyone I know is cutting back. Gas prices are really starting to hurt. I just don’t see how this guy is going to make it. Most likely he is going to end up with vacancies or tennants who are late or miss mortgage payments and who will probably tear up the place.
Good Luck Mr. 26 year old real man of genius. This Bud Lights to you.
And why buy 6? Why not buy the one single best deal and try to make it work? There isn’t any point in trying to nail the exact bottom of the market. If you want to buy bulk and get a better price, get a 4-plex or something.
Because when you’re betting with other people’s money, why not swing for the fences? The whole crux of the housing problem; if this idiot had some serious skin in the game I can almost promise you that there is NO way he would be purchasing 6 houses at a time. Head he wins, tails the bank loses. Why not play?
Why? Because you end up like this dumb FB:
‘You could hear the despair about the market in Ray Garvey’s voice. The Realtor/investor has two homes in the foreclosure process and is trying to salvage a condo investment. Having plunked down $220,000 for it a year ago, he’s faced with a losing proposition. ‘I’d take any reasonable offer but I’m not getting even that,’ said Garvey. ‘Someone offered $160,000 via e-mail but that means I’m going to have to come up with $55,000 at closing and I don’t have it.’
Plus he will have blown his money and credit for the real buying opportunities.
It’s amazing that people still think there is no risk in speculating in Florida SFRs.
Dumb Realtor FB.
Poetic justice.
Ben,
You are mistaken in that you assume that they understand the “real business opportunities” (like you do.)
They are all playing the “heads we win, tails the bank loses” game. This is their only chance to come out economically ahead. When you have very little to gain in life, you take any gamble that you are offered.
To state it in a slightly more complicated way, most people in this blog have a better than average chance of doing well in life. They are unlikely to p*ss that chance away by “swinging for the fences”. However, if you know you have no chance at all, you might as well do so.
He’s 26, has already broken into the biz as the market falls. Few will have the opportunity he could. It’s like being a newbie on Wall Street on Black Monday.
I have consistently observed in people that young that you cannot tell them anything; that your experience means nothing to them, and they know it all. This idiot will be back flipping burgers before this is all over.
I thought the cooking quote was ironic. He’ll probably be eating his own mac n chz and cooking up fries with those burgers.
I think he is the smartest guy in the room. He is playing with the banks money not his. Probably also incorporated as S-corp or something so it won’t even hit his credit as he walks away. Whats his downside?
Personal guarantees?
‘Whats his downside?’
Like I said, even today and even on this blog, some people think speculating in Florida SF houses is risk free. Unbelievable.
Go to town cowboy.
‘Whats his downside?’
If you think a chapter S incorporation will protect his personal credit, then you need to go back to business school and learn about starting up a business. In fact try it and see what happens to your credit, experience is a good teacher!
Blog was hungry, seemed to eat my last post.
Anyway, the answer to your question Ben, is why NOT buy 6? Swing for the fences, you’re using someone else’s money anyway, why not? Heads I win, tails you lose.
If he had to put down 30% on each one (because they are all obviously investment properties), something tells me the number he would have bought would be dramatically different… Like 0.
I’d like to know which bank (or gse) is going to eat the loss.
Looks like WAMU may be on the hook for these loans (I looked at four). The strange thing though - all of these homes young Master Robert says he has purchased appear to be in his father’s name (Richard). There are no homes under Robert’s name. So he’s a poseur anyway.
And another bit of info to add - the WAMU loans are ARMS starting at around 8.5% and capped at around 9.5%. All neg-am loans too, somehow.
What a businessman he is!
He borrowed from his father or is he using him as the strawman?
If you guys think that someone is going to just give hime 900k you are out of your minds. I’m sure he had some other collateral like his house. and i’d bet he put a bunch of cash in too. The kid is a moron that will be in the unemployment line soon. I spent 4 out of the last 6 weeks touring florida to see what the RE was really doing first hand. It’s a disaster, without fixing the taxes who knows how far it will fall, but it isn’t stopping anytime soon. Throw the tax rippoff and it kills any chance of a turn-around or bottoming for at least a couple of years.
Daddy is on the hook for the loans. I don’t see young Robert’s name on the documents at all.
Of course, it could all be a coincidence; maybe his dad just happened to buy six rental houses in 2007 and Robert’s just don’t show up in the public records yet.
Robert’s daddy also spent $2.85 million on his personal residence in 2006. He owns Shells Property Management with gross sales of more than $10 million a year.
Sonny is pretending to be a real estate mogul with daddy’s money.
The internet is a bad thing, man. You can’t lie about anything anymore.
Typical of his generation..daddy is rich so that translates into I am rich too…so daddy worked hard, built up his own little empire and this idiot who thinks investing in 6 $150K houses, that by next year will be worth $100K each is a good thing? Could it be that daddy wants to keep him busy? Or better yet does Shell Property Mgmt need to filter some “cash” expenses through these homes and other properties? Could be a nice loss to carry over on the old tax returns? I love how we only got half the story…
Agreed. This dope found someone to lend him the money somehow. 5 homes @150K is 900K if my memory serves. Heck, I think 99.99997% of us on this blog would find much better use for that money. In fact, I know if AB Dada had it in cash, it would be in the 500-lb. safe in the floorboards.
Heck, there is no way this guy has more than 10-20K in the game, if that!
Meant to say, six homes @ 150K. Sorry, the cold caffeine (snapple) has not kicked in yet.
And why buy 6?
Why stop at six, Garvey should buy up all of the houses in this range so he can corner the reental market. Mr. Garvey, it’s not a good time to buy, but a GREAT time to buy since you are an RE broker and follow the RE hype.
If he buys six or more properties, we will be reading about him being in foreclosure by the end of 2008 and him blaming his woes on everything but himself.
If he can really buy at 150K and rent at 1300/mo… However, I seriously question those numbers. I don’t know the Sarasota market as well as east FL, but I have a buddy over there renting a 1M dollar (last sale was something like 1.1) home for 2750/mo. Now, I realize that the price/rent ratios get more skewed as you reach the high end, but, still… You get 2 people on the lease for the mansion (it’s about 5K sq/ft) and your cost is the same as this 150K sh**box that this guy is trying to rent…. I think he’s drinking the kool aid again, rental prices in all of FL will be depressed for years because of the competition from the McMansion rentals (investors or banks).
Also, you have to be nuts to buy investment poperty in FL unless it’s grossly underpriced. Why? Tax and insurance uncertainty. Investors are targeted as the “cash cow” of FL, lord knows what they will come up with next to further tax that class of people. And insurance is just a total unknown; who knows when the next hurricane is hitting. It’s a risk thing; and FL is just a much riskier investment environment then most other places in the country. Prices must reflect this increased risk.
By the way, I thought that Fishkind had crawled back under his rock. Hasn’t he been wrong about… Oh… 10,000 times already about this bubble?
I think the Bradenton and Sarasota dailies quote or refer to Fishkind more than any other Florida newspaper does. Cue the seal!!
This kid is trying to rent small houses for $12~$1300/mo against similar homes in the area renting for $950~$1100. Two or three months of vacancy will eat his lunch for him.
I don’t know Florida but isn’t $1200 a month a bit high? As in quite a bit high? Even for the more economically viable areas? $1200 can get you a nice 2bedroom apartment or small house with a long commute into NYC.
Methinks Milligan is going to be wishing for a mulligan before long.
Robert is going to get eaten alive. He is betting price rebounds after sales volume bottoms. Price typically falls more as volume increases. What’s more, after price bottoms it stays flat for several quarters.
I’m just astonished that someone is lending him money.
RE: I’m just astonished that someone is lending him money.
Probably laundered drug money from the Mob.
In that case, if he walks away, he might be walking in cement shoes.
Yep. It’s all about two things:
- Price
- Inventory
Both are still way too high in all of west Florida. Prices still have quite a ways to go down.
Sales volumes have nothing to do with calling a bottom. They *did* actually properly indicate when the top happened - sales volumes had ramped up to incredible levels, and when they started falling (mid ‘05) that did indeed indicate the price top had been reached. But the reverse is not true - a “bottoming” of sales volume does not indicate a bottoming in price - it only indicates that the speculators are now completely gone from the demand side of the equation. They’re still trying to sell en masse, as indicated by the current record inventory levels.
I’m looking to eventually buy in west Florida. My trigger will not be price, but when inventory gets back to historical norms. I’m quite certain that won’t happen until *after* prices are back down *below* historical norms - I am expecting a price overshoot on the downside.
“If he can really buy at 150K and rent at 1300/mo… However, I seriously question those numbers.”
I guess the risk is a year from now someone will buy the same house for $80K, and be able to pencil at a rent of $800 per month.
Not one, but six alligators waiting to be fed. And when he runs out of food for them…
I was in Sarasota last week and visited friends in a nice development off of University PKW (Trivoli Ave.). Their house is a very nice 2200ft2 and all the other houses look about the same. They have been there for 12 years. Lots of for sale signs on the street. I asked about the one across the street which was for sale. They didn’t know the asking price but said last year one went for $350 but one motivated seller (divorce) had to drop to $275K to get the deal done over the winter.
When every fourth house is for sale, you are not at a “nadir”.
“We have hit bottom in Sarasota,’ Milligan said. ‘I am eating my own cooking by purchasing property now.’”
I need to know how employment is doing in Sarasota before I would commit to reenter the real estate market. If employment is going down, if more people are becoming unemployed..
and the Trend is certainly toward higher unemployment everywhere.
I can’t feel too good about people affording even affordable housing.
When in doubt, stay out
Milligan’s acne may have been the only thing to hit bottom. I ain’t trustin’ no dimwit college dropout with my financial future.
“We have hit bottom in Sarasota,’ Milligan said. ‘I am eating my own cooking by purchasing property now.’”
The only thing this guy is eating is the pure BS Hank Fishkind put out to the press. I am tracking Fishkinds predictions and to date, he is very incorrect. The Sheeples are suckers for the Fishkind stories!
And his price to rent is off. It’s more reasonable to price in a 15-20% recession drop in rents, even from current levels, and a 20% vacancy expectation.
You also need to factor in the high insurance and tax costs in Florida. I currently pay $1,195 for an 1800 sqft home I am renting in the Tampa Bay area. The realtor/landlord in Sarasota is incorrect he will be getting $1,200-1,300 per month since incomes in that area do not support this range in rental costs.
sarasota is a joke. “nothing to do” if they think they are better or not in the bust, they will see blood this year too!
“Robert Milligan, a 26-year-old broker in Sarasota”
Doesn’t this tell us everything we need to know?
Astrologers might be interested in his soon-to-occur Saturn return (within the next two or so years), which according to tradition could arrive with major lessons/revelations/shocks. An egotistical 26 year old smart ass is not a reliable voice for our Florida economy.
I know a kid (19 or 20) who thinks he is going to buy foreclosures at 2k and sell them for 200k. That is, when he gets some money to buy them. I don’t think he plans on taking out a loan to buy them since he doesn’t seem to have a job at the moment.
wolfgirl
hows ol’ Casey Serin doin these days? he should really try to stick with the FBI witness protection protocol & not return to his old habits . . .
Is that Milligan or Gilligan?
“Lee County’s residential real estate market is in recovery as bargain hunters snap up great deals — but prices are likely to fall further before a huge backlog of homes is absorbed.”
Wait. The market is in recovery. Okay. But…. prices are likely to fall and there’s still a huge backlog.
Hold on….
(sound of match strike - crackle of small flame)
puff, puff, puff…. COUGH COUGH COUGH…. exhale…. choke… wow… dude…. good sh*t….
Ahhhh,… okay, now I understand….
I’m so glad I read this comment before I came off of telephone hold. Otherwise, my credit union would have been treated to gales of laughter.
OMG laughingboy,
I am so glad I wasn’t eating or drinking. I’ve hadn’t laughed so hard in a long time. The tears in my eyes and the workout I got with my stomach muscles from laughing so hard felt great.
It took me about two minutes to read this to my sister and Mom (was laughing during the whole time)
Ahhhhh, who needs the weed to feel good.
I’m off to Florida for a week (business). A couple of years ago, I’d hear Florida colleagues talking about the “killing” they were making in real estate, or bragging about the condo they “bought” with an Interest Only mortgage.
One poor sap I know put all his money in polk county real estate. Why? Because he planned to sell it a couple of years later to pay for his kids college education. His kids will get an education, but not what he had in mind!
The don’t say a word about these things now!
In my neighborhood, there are several sets of college kids getting a real-world education right now. Seems that their parents bought houses as “investments,” and the idea was that appreciation would bail the kids and their parents out when selling time came.
Well, that gambit worked up until the summer of 2005. Then our local market hit the brakes.
Nowadays, houses are selling slowly, if at all. And houses that have endured several years of college-kid abuse are not at the top of buyers’ wish lists.
Polk County real estate? Isn’t that called crops, trailer parks, and shacks. Who could resist!
I live here in Polk County in Winter Haven.
The mantra was “the Baby Boomers are coming !!!!”
Mean income in this county is about $ 30,000 /yr. A 3bdr / 2ba that was going for $90,000 in 2006 is now around $200,000.
Hurry up, Baby Boomers ! Your glorious home awaits you in the palmy shade of Polk County !
Correction : A 3bdr / 2ba that was going for $90,000 in 2006 is now around $200,000.
Should read : A 3bdr / 2ba that was going for $90,000 in 2000 is now around $200,000.
Need more caffeine !
On a side note, I love your user name.
“He said there’s a silver lining to the cloud of falling prices, however: ”
Yep, I’m familiar with that -
http://tinyurl.com/2pfsyx
“The 4 percent increase in sales for Sarasota-Bradenton and the 13 percent increase for the Charlotte County-North Port marked 2 of only 3 sales gains for Florida’s 20 largest markets. But the sales gain came at a cost, with the median sales price dropping — 13 percent in Sarasota-Bradenton and 21 percent in Charlotte County-North Port.”
Notice how just a little, relative, sales increase at this stage of the game DRAMATICALLY lowers the median price. What’s happening here is what will, eventually, signal the bottom of the market elsewhere (not that the actual bottom is in site). When there are enough, financial healthy, buyers (with sufficient confidence) coming back into the market activity at the bottom will occur disproportionately to sales above the median thus driving down the median significantly.
Counterintuitively, this will be a healthy sign, not a sign of “disaster” and the faster we get to this point, the better (for buyers and the stability of real estate at least).
It also screws up comps. Get ready for more writedowns from the lenders and more people walking away now that they owe more on their homes than they are worth. They are “upside-down”.
Notice how just a little, relative, sales increase at this stage of the game DRAMATICALLY lowers the median price.
Classic end of desperation. It appears the first markets in Florida are leading the investment emotional states. What will happen is that as the selling volume increases sellers will be emboldened to stop lowering prices… and then sales almost stop.
That’s the predecessor of Capitualation.
Got Popcorn?
Neil
That’s the predecessor of Capitualation.
Very well put Neil! I might add that a lure has been cast out by the realtor associations and Hank Fishkind to fool the sheeple into believing now is a great time to buy. Now is a great time to be suckerd into buying someone elses Housing nightmare!
“But having plunked down $220,000 for it a year ago, he’s faced with a losing proposition.” ‘Someone offered $160,000 via e-mail but that means I’m going to have to come up with $55,000 at closing and I don’t have it.’
So, in reality, he “plunked down” maybe $5k - doesn’t sound so impressive that way does it?
OK, not that I agree with the bottom callers that now is the time to buy in Florida. But sometime in the next few years I think there will be a buying opportunity. So I would like to know if any locals have a recommendation for an agent in south Florida. Or maybe just recommendations for neighborhoods in south Florida that are worth looking at? I’m interested in good schools, a SFH with a yard, somewhere between Miami and West Palm Beach. Any suggestions?
No offense to anyone here, but I’d stay away from Miami unless you’ve always wanted to live in Latin America, or the sound of English being spoken makes you gag. Palm Beach county and Miami are less than 50 miles apart, but are different worlds. Also, need more information - price range? Elementary or high schools? Will you need to drive to work, and if so where? For example if your job was in Miami, it would take FOREVER to commute from WPB during rush hour.
I work from home so I’m not concerned about a commute. My kids are currently in elementary school but they are growing up fast, so I want schools that are good all the way through high school. As far as a price range is concerned, I’m not planning on buying now so I’m not sure how relevant the answer is, but let’s just say under $417,000.
Thanks for any tips.
In Miami El Portal, Miami Shores and Biscayne Park are nice and relatively inexpensive. $400 - $500K for a 1930’s 2/2 with 1400 sqft. Check out property taxes and insurance, its like a whole other mortgage payment, seriously. Taxes are out of control. They get reassesed every August. I wouldn’t touch any real estate with a 10 foot pole unless taxes retreat to reasonable levels. Otherwise you’re at the mercy of the county’s tax assesor.
Still not sure why you want to live in Miami, there’re much nicer places for much less.
Everyone I know with elementary school kids in South Florida sends them to private school, including me. So that may tell you something. If you work at home, I would definitely expand my search to Jupiter and Stuart/Palm City. Stuart is in Martin County, which has better schools, on the average. West Naples is nice, over on the West coast, and prices should be affordable soon. All of those places will have nicer people, again on the average, than Dade/Broward/Palm Beach, and are just as warm.
My folks are retired and live in Jupiter in the winter. Jupiter and Miami are worlds apart. Jupiter is very quiet and the people are very friendly. Very low-key culture compared to Miami IMO…
You may want to consider Martin County, just north of Palm Beach County but worlds apart. I am a FL native and mad the move a while ago for a better standard of living. It’s a little outside your desired locale but, like I did, you may find it a better choice than areas further south.
I wouldn’t just say “Consider Martin County or this county or that county” just yet.
You have to realize that this bubble is going to reshape a lot of areas that seemed desirable and make them undesirable. The reverse, too. Keep an eye on EVERYTHING before you make a decision. The roaches are scattering now. You had better be aware of where they choose to nest next.
Ditto. I was there 10 years, will never go back. We sold our house and took the last train out March 2005.
There are nice places in Florida, but you’re not safe from hurricanes anywhere and the insurance and taxes are insane.
There are few places in this country that are safe from hurricanes.
We almost had one come through here (meaning Tucson, Arizona) back in 1996. Fortunately, Hurricane Nora decided not to pay us a call. But it dropped big buckets of rain on Yuma, and caused quite a bit of damage.
We even had tornados and extensive flooding here in Ohio from a couple of your FL hurricanes. They have a long reaching arm for damage
thank you for the tips everyone
“Home sales in metro Atlanta have slowed to a trickle and likely will remain sluggish until sometime next year, according to Roger Tutterow, professor of economics at Mercer.”
I wonder upon what data Roger Tutterow bases that naval-lint assessment. It’s always “sometime next year” that the big turnaround will come. Because 12 months is enough time, right? Give or take? It’s a whole year.
Slinky theme song from memory:
They go up the stairs without a care
They shoot so high in the sky
They hit the ground without a sound
Everyone loves a slinky!
KINKY KINKY everyone knows its kinky.
Complete slinky song audio file and lyrics!
http://www.4physics.com/phy_demo/slinky/song.htm
‘It’s ridiculous. I took a home equity loan, and I’m living off my equity in my home. That’s not right,’ she said.”
You’re only living off of your home if you have a boarder. She’s living off of borrowed money which she will have to pay back. After she exhausts the loan proceeds she won’t be able to service her debt. Another sob story coming up soon as to how she is “losing her home to foreclosure.” Her problem is she has a house she cannot afford. The solution to her problem is to “rollover” into cheaper housing.
It’s “not right”? Hey, at least she can live off of SOMETHING. All the people who thought the home was a store of value which could be cashed in on later are now finding that sometimes their wish has come true! Just not in the way they thought, though.
If she had been a renter, she wouldn’t even be able to tap that alleged equity, eh? Uh, then again, if she were a renter, she’d maybe still had the down payment safe and secure in the bank, and she could be living off of that instead of ringing up more debt.
and she is worried about a measly $50-75 electric bill? oh brother … I bet she could easily save that &more by:
taking a bus now & then (never happen)
NOT buying Starbucks now & then (HA)!
eating @ home more often (oven? uhh)
a few less prem cable channels (maybe)
a few less trendy mag subs (Jane, etc)
in short, just live a real life & not so much the jet setting stewardess .. err “flight attdnt” image. or marry/shack up with the first officer on the Shangai route.
If she winds up without a home, she could follow this guy’s example.
I flew for American for 15 years. In 2003, during our “restructuring” the flight attendants reluctantly agreed to take extreme paycuts. I know I personally lost $1000 per month in pay.
The smart “stews”, restructured their lives to accomodate the cut. That’s what I did.
The even smarter “stews” got the hell out of the industry all together. I wake up everyday and thank the heavens above I am no longer flying!
Sounds to me like this particular flight attendant isn’t using her noggin.
The REIC never talks about how the fake inflated housing prices raise the cost of living for everyone including rent (in spite of the fact that rents and home prices are deflating now ).
Finally the Lender showed up at the foreclosure across the street from me . I was taking care of the property for 6 months or so so you couldn’t tell it was a foreclosure . Sure enough ,the prior owners left the house in a mess inside . When I think about how people were priced out of the fake market ,and these gambling FB’s were let in and just looked at homes as easy money ,I get upset .Now the stupid foreclosure comp. across the street from me is going to throw my house value down a bundle (not that I didn’t expect this ).
Does anybody have any question about the fact that borrowers need to be put through the ringer to get a home loan . My ex-neighbors bought another property in this project just 3 months before they bought the house they walked on . The lender should of known that they were investors and should of refused to give them 100% financing . I remember my ex-neighbor saying to me ,”If the lender gives us the loan ,than were going for it ,because it must be meant to be .” This is a example of the mentality of the FB’s during the boom ,yet the PR is that they are victims . These FB’s went into projects and towns with a raiding attitude and now they are walking ,or riding away on their camels after looting a area.
______________________________________________
“From the mouths of babes………”
26 years old and he’s out buying houses at what he sees as the “nadir” of the Housing Bust.
Bet he has never shadowed the doorway of a college economics class; and thet he had to look up the word “nadir”.
Where does a 26 year old get the money to buy six houses anyway ?
Oh. I forgot.
You don’t need money to buy a house anymore.
HB Bloggers, meet Florida’s version of Casey Serin
He started a realty company a few years ago it says. He gives all his RE agents 100% commissions but they pay him some fees and he gets the shot to sell them Insurance, Mortgages, and he also does title work.
http://www.shellsrealty.com/careers.html
Wow…. check our their loser list.
http://www.shellsrealty.com/ourteam2.html
These clowns couldn’t pour piss out of a boot if I wrote the instructions on the heel. If you can’t succeed in life, become a RealTard.
Smokes! Have some of those people hold up letters and dates under their faces and you have a booking lineup. Good grief, are some of those people even alive? Wow! I think my 12 year old son looks better when he first wakes up.
Wow $40 E & O Insurance per transaction. You can buy an errors and omission policy for a year for less than $200, so it’s really not 100% commission. It’s the same as Remax that charges $500 and up for desk rental fees.
26-years old… Ha HA he has spent his entire adult life in a housing boom, how in the world would he know when a RE bust is at a bottom?
………..because he is a Realtor(tm). The NAR gives him regular updates on the condition of the markets.
It’s a good time to buy. Interest rates are favorable. There is a very large selection of properties………………..you know the story.
Ah come on now …..didnt you read his little bio/letter?
He is a CEO………………..LMAO
Ben ‘Our Boy’ Bernanke, the idiot waterboy for the financial playa’, sending the dollar deeper in the crapper today.
fxhistory site shows NZD and BRL both at long-time highs against USD, and AUD within 0.7% of breaking November high; ISK way below Nov high but certainly higher than a year ago. Guess I am betting on Ben to keep up his wicked ways.
“‘I think all the areas around the lakes are going to continue to grow rapidly,’ Tripp Whitmire, co-owner of Whitmire Real Estate Agency, said. ‘The problem is all the people in Florida can’t sell their places down there. We see a lot of people who come here and say, ‘This is where we’re going to retire as soon as we sell our house.’”
We live near Lake Murray here is South Carolina and are seeing very slow sales and price reductions. Not big ones but reductions none the less. This fellow is dreaming with his ‘rapid growth’ comment. The vast majority of people really have no idea what is going on and coming their way.We are not immune, like so many think. They expect the half backs to save our market.
Sorry to hijack, but the drop accelerated just a little bit in Massachusetts today. Good look closing on that mortgage tomorrow, Mr & Mrs Subprime Borrower.
Lender ordered to halt foreclosures
Link to Boston.com: http://tinyurl.com/37ln4d
A Massachusetts court, in an unprecedented decision yesterday, ordered the California subprime lender Fremont Investment & Loan to halt all foreclosures…The court said a Fremont foreclosure can be stopped if a subprime loan meets four conditions. The loan must have a low introductory interest rate; after the initial period, the rate must increase at least 3 percentage points; monthly payments must be equal to more than half the borrower’s income; and the mortgage must not have required a down payment.
So, the “buyer” has, so far, paid hardly any interest, put no money down and has not nearly enough income to cover the payments. Who was taken advantage of here? The lender? What will the lender get back - a trashed house and a bunch legal fees?
That judge has an excellent sense of reverse logic.
“In a 29-page order, Justice Ralph Gants said a large share of Fremont’s mortgage loans could potentially be considered “structurally unfair” under the state’s lending laws. The mortgages were unfair, he said, if they met four criteria, including low introductory rates that shot up once that initial period ended.”
Apparently, it’s “structurally unfair” to provide a real estate speculator the ability to pay zero down and almost nothing each month for two years while trying to unload the purchased property on a greater fool.
If that’s unfair, then I hope someone REALLY takes advantage of me.
The News Press from Florida. “Lee County’s residential real estate market is in recovery as bargain hunters snap up great deals — but prices are likely to fall further before a huge backlog of homes is absorbed.”
“That was the word Tuesday night from real estate broker Denny Grimes of Denny Grimes & Co. at The News-Press Market Watch annual real estate symposium. ‘We are in recovery but that does not mean the bottom of the market,’ said Grimes.”
If by “recovery” you mean things are still bad, and will continue to worsen, we are in a recovery. One the other hand, if you’ think it’s not a “recovery” until things start to improve, then you need to broaden your definition a little. Remember up is down, black is white, and now is the best time to buy a house.
Breaking news:
Fannie Mae, Freddie Mac Portfolio Caps Will Be Lifted (Update2)
Phase 2 of the Real Bailout(tm) is now in place.
Phase 1 was raising the GSE CLL to $729,000.
Next up, Phase 3: Eliminating all qualifying “standards” on the type of mortagages the GSEs can buy (no-docs, neg-ams, I/Os, hybrids and NINJAs = ok).
Phase 4 will be taxpayers assuming/liquidating the portfolios of the soon-to-be bankrupt GSEs.
Can’t happen, you say? Never say “never”.
What are you afraid of? If you really think the GSEs are going bankrupt, you could make a fortune shorting them. Afraid the US $ will collapse? Buy some gold or foreign currencies. Afraid houses prices will go back up? Go out and buy 5 or 10.
Or are you just afraid and will do nothing? Me, I’m not afraid.
Ben,
Actually, the “short the GSEs” ship has already sailed –not much profit in doing it now. RE: buying up PMs and FCs (and commodities too), already been there. Housing? Not going up anytime soon, despite all bailout measures –though these measures *could* drastically slow the rate and nominal magnitude of the decline Japan-style, and provide golden parachutes to Wall Street lenders/underwriters and speculators.
The fact that government cannot restore housing prices to their previous inflation-adjusted highs does not mean no “bailout” is completely impossible. It all depends upon what your definition of “bailout” is.
To some giving me back $300 out of the thousands I pay in every year is a bail out. Give me a break. And I’ve posted a million times that if you are worried that the government is wasting money, you’ve been asleep your whole life.
You posted something about $100 loaves of bread before. If you really believed that, you could go long commodities and be rich beyond your dreams - if you are right. The problem with the ‘we’re screwed’ crowd is they are so frozen with fear that they have no solutions. I have one guy who posts here about debt concentration camps and insists that there is no escaping it. I say BS. At least the gold bugs have an answer to what they think is coming.
I lived through a RE bust. And after years, I had the luxury of reflecting at length. You know what I felt? Regret. I drive by land and buildings that I could have bought for 3 cents on the dollar to what they bring now, and many produced income in the meantime. IMO, all this focus on congress this and GSE that is wasting energy that could be used to get ready for the biggest bonanza most of us will ever get a chance at.
Did you see the Florida thread? We discussed a young guy who just bought 6 houses. We picked the scenario over and most agreed he’s early. But that’s constructive. Something people who read here can take away and use as they size up their own situations.
Ben,
We obviously cannot come to an agreement on the definition of the word “bailout”, so I won’t belabor the point.
Regarding “all this focus on congress this and GSE that is wasting energy”, I disagree. Keeping the pols and bureacrats in charge accountable for their actions and aware of the moral hazards/unintended consequences of awful policies is *essential* to a well functioning government, IMHO. Voters & taxpayers have been asleep at the switch too long, and look where it got us.
BTW, Ben, even when we disagree on a point or two, I completely respect you and am extremely grateful to you for founding this blog. Without patriots like you, I might have found myself in an overpriced P.O.S. with a resetting option-ARM right now.
God Bless Ben Jones and the entire HB blogger community.
100 different people, 100 definitions. IMO, it would take many trillions to make a serious attempt, and it would still fail.
‘Keeping the pols and bureacrats in charge accountable for their actions and aware of the moral hazards/unintended consequences of awful policies is *essential* to a well functioning government’
As one who volunteered in politics for many years, for very well-meaning candidates, all I can say is piss, meet wind.
Dang Ben,
I need to wipe off my rose colored glasses.
It all depends upon what your definition of “bailout” is.
Ben summed it up perfectly! There is no bailout, just political hype! Study the S&L crisis in the late 80’s and that will answer your definition question. There will always be people like the 26 year old broker who bought six properties and thinks he got a bargin. These type of people learn from first hand experience when they listen to the hype the realtors groups put out saying now is the time to buy.
Where is the money going to come from? China isn’t going to throw away money forever.
From Ben’s SC post: “Sellers might want to hold off putting their property on the market, officials said.” Ha ha — the only persons quoted in Ben’s post are identified as a “portfolio manager” and the co-owner of a RE agency. Officials? if they ARE officials, their credibility is belied by their other occupations. What a seller might want to do is lower his price to be aggressively competitive.
You guys will love this one. Making 150K/yr and JUST making ends meet..
http://money.cnn.com/2008/02/19/pf/bachelor_father.moneymag/index.htm?postversion=2008022006
At least this guy has some significant assets.. However, the math just does not work out, there are too many one time expenses to say “I’m scaping by”.. Stop buying cars and home furnishings!
Well Dad welcome to the world of single mothers everywhere. The article says single mothers usually live on 30% less income than before and they still have to handle all the things he’s had to handle. Let’s face it, it’s not easy raising children single handedly, no matter the income, or whether you’re a Mom or a Dad.
Anyone bother to look up Robert Milligan on the Sarasota Clerk’s website? He’s the guy who’s eating his own cooking.
If he bought 6 houes in Sarasota, why aren’t any of the deeds registered with the county?
No one with his name in Sarasota has bought a house in the past several years.
Also, if you read Mr. Milligan’s blog, he claims to have purchased 6 houses back in July 2007:
http://shellsrealty.wordpress.com/page/2/
Market Musings, July 21, 2007:
“What would happen if you set out to buy a half a dozen homes this week? That is exactly what I attempted last week and you’ll find the results quite surprising.”
It has been commented upon already, but I really, really love those ol’ recovering markets which are still going down. Let me know when the market has “recovered” another 25% and I might finally buy.
America is basically broke (on average for consumers and financial institutions). Recession is here. Inflation is here. Real wages continue their ten year decline. Housing inventory is at record levels. Loans are now only done the old fashioned way (10-20% down and justified vs income). The median house price is $201k vs median income of 49k. House prices will fall another 25-40%.