The Year Of The Great Meltdown In Florida
The Tampa Tribune reports from Florida. “Hundreds of peculiar home sales and foreclosures clustered in low-income neighborhoods in south St. Petersburg have attracted the attention of the Florida Department of Law Enforcement. The deals involved unusual mortgages uncovered last summer in a Tampa Tribune investigative report. The sales are tied to a real estate investment program run by a local businessman. Several buyers complained to police that they bought the properties at inflated values.”
“Buyers said they looked past unusually structured settlement documents that allowed third parties to collect thousands at their closings in order to make money in Florida’s real estate boom.”
“Some said they signed stacks of mortgage documents in parking lots and restaurants, such as Dunkin Donuts. Some of the buyers said their documents were blank when they signed.”
“Jay Pasqualichio said he now thinks he paid too much for his 12 properties. Since the real estate market has tanked, he also owes much more on the homes than their current value.”
“‘I’m not trying to put all the blame on other people,’ Pasqualichio said. ‘I know I signed the documents. But I hope people who see these ads and hear these types of pitches, will really do their homework. … I now see I was clueless.’”
“A handful of buyers interviewed for July’s story said at the time they were reasonably happy with their investments, but that has changed. Three of those buyers are now in foreclosure on a combined 18 properties.”
“One of the buyers, Marisol Napoleon, said renovations did not meet her expectations, and one of her houses ended up ‘falling apart.’ She couldn’t keep the homes rented, she said, because they needed more improvements than she could afford to complete. She said she now thinks she paid too much for the properties.”
The St Petersburg Times. “One in 20 homes in the Tampa Bay area is vacant, ranking the region second-worst in the nation. Orlando, with a 7.4 percent vacancy rate, trumped the bay area as the worst market for vacant homes among the 75 biggest metro areas in the United States.”
“The recent U.S. Census Bureau report was disheartening to St. Petersburg Realtor James Tuten, but not shocking. Whether it’s his four investment homes sitting empty for lack of buyers or customers who were forced out of houses by unaffordable mortgages, Tuten has seen ample evidence of the ranking.”
“‘You’ve had all those boom developments over the years. Now you’ve got all this housing and there’s nobody to take it,’ he said.”
“The foreclosure epidemic is only partly reflected in the vacancy survey. That’s because many homes in default remain occupied until the bank repossesses them. And for the government to count a home as vacant, it has to be for sale.”
The Naples News. “Lee County had the most foreclosures in its history last month. In February 2,461 foreclosures were filed, up from 2,297 in January.”
“‘It’s the highest it’s ever been,’ said Charlie Green, Lee County Clerk of Courts. ‘The bottom line is, the court system is slammed.’”
“‘They were burned,’ said Keith Gensor, a mortgage broker with Florida Sunshine Mortgage, of the sub-prime lenders. ‘They were burned big time. Now, it’s almost nearly impossible to get a sub-prime loan. If you have bad credit, good luck to you. I don’t think it’s going to come back any time soon.’”
“Those who make their payments on time and increase their credit-worthiness may want to look to the future. ‘The flip side of the coin, they’re going to be golden,’ he said. ‘When it turns around in the next few months or next few years, they’re going to be the cream of the crop.’”
“The flood of foreclosed — or even short-sale — homes on the market affects everyone’s market value by lowering it. ‘On the micro-level, it hurts. It absolutely hurts,’ Gensor said. ‘I have approximately 10 houses on my street sitting here (empty).’”
The Miami Herald. “From atop any gleaming, half-sold condo project, South Florida’s housing market looks bleak. Viewed from abroad, it looks brighter. International shoppers from Europe and Latin America to Canada and South Africa are again scoping out bargains, agents say.”
“Some are looking for a vacation home; others see an investment opportunity.”
“‘All of them are looking for bargains,’ says Michael Schnabel, a Miami-based Realtor…who has seen low-ball offers of 65 percent to 70 percent of list prices. ‘They’re all aware of what’s going on: a lot of construction, a lot of supply.’”
“Despite the foreigners’ strong appetite for a place in the sun, Realtors see many hurdles to closing deals.”
“Sophie Mavroleon, a Realtor in Bal Harbour, markets $500,000 to $1.5 million properties to Europeans, especially the French. She says she has watched many potential sales evaporate over taxes and maintenance, which have spiraled upward because of insurance costs.”
“‘Foreign buyers will buy beautiful views on the ocean; it’s an easy sale — until people realize how much taxes and maintenance costs are,’ Mavroleon says.”
“Though foreigners are more likely than Americans to pay cash for U.S. homes, an estimated 69 percent rely on mortgages, the NAR says. Banks ‘are making it more complicated and more difficult for foreign nationals to obtain loans,’ says Tony Acquaviva (who) owns U.S. Mortgage of Florida in Boca Raton.”
“‘Banks are saying they’re not sure what values are anymore, and instead of a loan-to-value of 80 percent, they’ll do maybe 60 percent or 65 percent,’ says says Philip Spiegelman, a principal in International Sales Group. ‘Offshore buyers felt 20 percent upfront should be sufficient, and now this is causing a whole new level of difficulty.’”
The Broward Palm Beach News. “Jack McCabe, one of the first real estate pros to predict a catastrophic ending to South Florida’s housing boom, is now working full-time advising hedge funds and other vulture outfits that await some bottom-feeding deals.”
“McCabe says he’s seen only two such deals so far, both involving townhouses on the west coast of Florida. Given that, he doesn’t believe we’re halfway down the dangerous slope yet.”
“He told a group of Fort Lauderdale real estate agents last week that, contrary to what they may be hearing, 2008 will be much worse than last year, the year of ‘the great meltdown.’”
“McCabe backs his prediction with numbers that are almost impossible to refute. Like 38,582 and 1,063.”
“Those are the number of homes that were for sale in Broward County in December versus how many were actually sold (the figures in Miami-Dade are even worse, while those in Palm Beach are slightly better but still dire). The massive inventory, more than three years’ worth, is only growing, according to recently released government statistics.”
“‘The year 2008 is going to be the worst,’ McCabe says. ‘People’s credit cards are maxed, and they aren’t buying anything. People have stopped spending money. They don’t have houses to use as piggy banks. The piggy bank is closed.’”
“If you really want to gauge the South Florida real estate industry, just talk to a real estate agent. ‘It’s not a good time,’ says Kimberly Spitnale, who specializes in beachfront properties. ‘Nothing’s selling. There’s not a lot of buyers out there right now. The most inquiries come from Canada and people overseas.’”
“Ah, foreign buyers — another sign of how bad things are.”
“‘There’s not going to be any turn in this market in the immediate future,’ says Marvin Kessler, an agent in Coral Springs. ‘There are too many foreclosures each and every day and not enough buyers.’”
From TC Palm. “Thomasville Furniture of Jensen Beach is the latest casualty of the Treasure Coast’s slumping housing market.”
“Kathy Devereux, VP of marketing, said ‘challenges’ in home sales impacted furniture sales at the store and the company has shuttered the upscale furniture retailer’s only Treasure Coast location.”
“This isn’t the first major furniture retailer that has departed from the Treasure Coast. Palm Beach County-based Skeffington’s Furniture closed its Stuart location. In April, Modernage Furniture mailed letters to households along the Treasure Coast stating that, after 67 years, the Stuart and Vero Beach locations were closing.”
“The Springmaid-Wamsutta store at The Outlets at Vero Beach also shut its doors last month.”
“Brad Hunter, director of Metrostudy’s South Florida division, which follows housing trends on the Treasure Coast and in South Florida, called the trend alarming.”
“‘The bad part of this is that it puts people out of work, which further depresses the market,’ Hunter said. ‘In a way, it’s a vicious cycle. When people lose jobs, that lessens the number of people that can afford homes, which further reduces home prices, which then reduces the demand for furniture and other retail services.’”
“The civil division of the St. Lucie County Circuit Court is adding a night shift to handle a huge backlog of home foreclosure filings.”
“Starting Monday, from four to six clerks from various divisions of the circuit court will work from 6 to 9 p.m. Monday through Thursday to file new cases, said Clerk of Courts Edwin M. Fry Jr.”
“‘The case load has become just horrendous,’ Fry said, ‘and we’re trying to find a solution. Going back to 2005, we typically would have 40 to 45 foreclosures filed in a month. This January, we had 715 foreclosure cases filed. It’s just killing us.’”
“Fry said he doesn’t know how long the night shift will last. ‘The number of foreclosures doesn’t look like it’s going to slow down this year,’ he said, ’so we might be doing this for a long time.’”
“It’s assumed that housing construction is in a slump, but that’s not the case for Holiday Homes. The builder has projects in St. Lucie and Indian River counties, and sees this time as a good opportunity. Genelle Cooper, VP of operations in Florida, talked about the company’s plans and market conditions.”
“Q. Why is Holiday putting up homes at a time when many builders have stopped projects and others have gone bankrupt? A…We’ve been able to work with our trade partners, and lower our home prices. Land prices have come, dropped down drastically. As a matter of fact, we are taking advantage of subdivision opportunities every day.’”
“‘We are able to negotiate the contract terms and the flexibility of those terms, especially when it comes down to the lot takedowns. The interest rates are down. We’re trying to take advantage of all of those options, and provide the customer with a good value home, and for the lowest possible price.’”
“Q. How much have prices come down? A. ‘In Port St. Lucie, we have a home that’s 1,200 square feet that’s starting at $104,990. That’s the base price of that home. It does not include the land. That home, similarly two years ago, was much higher.’”
“Q. As a percentage, was it at least 20 percent higher? A. ‘Even more than that. It was probably, that same home, maybe in the $150,000s.’”
“Q. That’s a huge change. As to the land, it looks as if those prices have come down from 40 percent to 60 percent. A. ‘Yes. We were purchasing lots in Port St. Lucie from $70,000 to $80,000 each, and now we’re able to purchase them for $20,000.’”
“Q. Along with land prices, have material costs dropped?”
“A. ‘Labor costs, material costs, everything has dropped. We’ve been able to partner with our suppliers and subcontractors, and bring the cost of building our homes down. A lot of these subcontractors have worked with us for a long time, so we’re trying to keep it going for a lot of people. We pass those savings to the consumer.’”
I saw on the news last night that in the Orlando/Central Florida area they will be starting the foreclosure bus tours starting at the end of the month.
I wonder what’s going through the minds of long haulers, the ones who can afford to hold on but cringe every time prices drop. What are they saying to themselves today?
“Mabel! Pull down them blinds!”
I can’t speak for any other long haulers, but I’m saying I should have waited for the 75% off fire sale. I bought for 66% of peak, or 2002 value in 2006. Seemed like a good idea. I got the housing bubble, but didn’t get the credit crisis. Houses in my neighborhood are listed as low as $150K. I purchased at $221,500. My exact model home starts at $199K and goes to $250K these days. I’m right in the middle, but I don’t think I’ll be there too much longer.
My brother bought in the summer of 2003 in Leesburg FL (yes Virginia, there is a Leesburg in FL), and experienced his neighbors’ 60%-80% runup in asking prices thereafter. Since my brother bought for cash, and that cash was about 7% of his net worth, he chortles and cackles every time prices come down. Schadenfreude pure and simple. He has never believed in RE as a medium of money-making. He doesn’t fancy himself much of a business/econ head, but he did tell me over and over again that there were not enough tenants in the world to fill up all the “investment” properties being built and bought in FL.
Since my brother bought for cash, and that cash was about 7% of his net worth,
Must be nice.
My mom used to live in Leesburg, FL in a gated community. She used to tell me that she went outside in the morning to check out the flags to see who checked out (died) overnight. Retirement living communities are not to my taste.
Salinasron, you may change your mind when you get to that age. I felt the same way when I was younger. But the support you get by having all your neighbors in the same predicament (aging, getting less mobile, losing a spouse, etc.) is wonderful. Many widows and widowers continue to live here after their spouses die, even when kids are far away. It’s almost always a long term or permanent loss of independence that causes folks to move.
Yeah, we all die. But here, the chance that a widow or widower will die and no one will know it for a week or more is zilch. It’s a community, and we all look out for one another.
For now we’ll be golfing, playing tennis, using the fitness center, boating on the lake, taking lifetime learning classes, and blogging more days than not.
Tell your brother, that I am related to him.
Will be a really nice relative to him.Christmas cards and everything.
Just was there last week…marktmaven..they are saying, “Things are depressing in Florida..”
I am able to look on the MLS..a community will have 12 or 13 homes for sale, 3 will be foreclosures, 5 will be short sales and the others have had price reductions of 30-40%….the ones that do have price reductions are the ones who bought the homes before 01..and still stand to make a nice profit(since they didn’t HELCO)…
Do you have access to national MLS?
ga and fl
This last article puts a fine point on the supply/demand and price relationship. As overbuilt and foreclosed as Florida is, these guys are going to continue to build until they can no longer undercut existing houses. So the longer prices stay up, the worse the situation will get. Wake up Washington.
So the longer prices stay up, the worse the situation will get. Wake up Washington.
That is clearly starting to show up in the Tampa Bay area based on the latest numbers.
Watch for the article coming out soon in the St. Petersburg Times pertaining to how realtors were driving up the home prices by buying up the inventory and then relisting the property at higher prices. Typical of some realtors trying to reduce demand and then reselling the demand at higher prices.
“So the longer prices stay up, the worse the situation will get. Wake up Washington.”
The best plan I’ve heard floated was the “forgiveness” to new market values. I think it’s in the bank’s best interest to take a small write down now rather than a large one later. My best guess for foreclosure rates when we finally start to see a bottom is 25% for prime borrowers that bought from 2003 to 2006 and as much as 70% (yes more will default than will stay if nothing is done) for the subprime and/or no money down borrowers.
Is this “forgiveness” for everyone or just for those who can’t afford what they bought and thus face foreclosure?
“Is this “forgiveness” for everyone or just for those who can’t afford what they bought and thus face foreclosure?”
I don’t have the answer to that. I’d assume that it would be in the bank’s best interest to offer it to everyone. If someone has a $500,000 loan on a home that’s worth $300,000, that person is likely to figure that their credit rating is worth less to them than a $200K hit regardless of affordability.
Only for those who file bankruptcy. It hasn’t gone thru congress and Bush has said he will veto it.
“This is going to change a bunch of it and I could not be happier.”
That was a different plan from the one proposed by Bernake which is the one that I speak of. I don’t agree with the man often, but this time it seems to make sense.
What I am worried about is that in essence by you putting money into a checking/savings or money market account, you are in fact lending money to the bank…. With that said, it is a short slippery slope to laws being enacted to lower EVERY loan by X% in order for the banks to remain solvent. After all it is in the best interest of the economy that the banks not fail, and who will care that the minority of savers on this blog lose a small percentage of their hard earned money in order to bail out the big banks and the FB’s?
/sarcasm off
The best plan I’ve heard floated was the “forgiveness” to new market values.
This won’t happen for many reasons. One of the reasons is the actual loan does not belong to the bank and is in a bond located somewhere in the world.
The main question to be asked is why would the bondholder want to give their investment or monies to help out a struggling homeowner who probally should never had received the loan in the first place.
“The main question to be asked is why would the bondholder want to give their investment or monies to help out a struggling homeowner who probally should never had received the loan in the first place.”
Better to lose 25% than to lose 60%…
Good point, Fuzzy. How would principal forgiveness work if the bank doesn’t actually own the loan?
That is one of the big reasons this crisis occurred. Not only did the FBs not have any skin in the game with NINJA loans, but neither did the banks when they turned them into CDOs.
I’d bet that the paperwork covering the servicing and secruitization of those mortgages anticipated the occasional foreclosure or workout, and provides for them. I’d also bet that that there is NO provision for the best way to deal with systemic across-the-board declines in RE value. This means that any systemic solution is likely to benefit some tranches and harm others. That says class action suit to me. THIS, IMHO is why the banks are frozen like deer in the headlights.
If you’re right about class action suits, wouldn’t they be going after the gov’t and not the banks? I would assume the banks can’t impose a systemic solution.
Well I think that’s WHY the banks can’t really pursue any kind of broad, systemic solution.
But ,this practice of buying RE inventory and marking it up was clearly a widespread practice during the boom times by the real estate professionals and speculators . With hit the mark appraisals and the lenders refusing to question price mark up’s within months of the last sale ,you can see how the prices soared .
From around 2003 onward the MSM was publishing weekly the next great real estate investment spots . People were buying houses and reselling them before they closed escrow . Real Estate people were advertising that they would buy your house if they couldn’t sell it in 30 days ,and guess what ,they would buy it and put it back on the market at a increased priced (forget about the fact that the professional had a duty to get you the highest price the market would bear .)In other words , it was a ponzi scheme ,where houses were used as the means to obtain the money with no regard to a arms length transaction ,whether the value was really solid with the house ,or if there was a reasonable basic for a increase in price .Lenders in a lot of cases didn’t even know that there had been a prior sale and the transaction was a “double-escrow “. They were teaching people how to make money by not even closing escrow .While these double escrows are a material fact that the lenders and appraisers should of considered in the underwriting process ,in large part these material facts were hidden from the lenders and appraisers .
Builders were setting up these ponzi schemes on many a project also . So don’t tell me that the wonderful real estate community and builders didn’t have a hand in pushing this ponzi -scheme when they discovered that lenders and appraisers were asleep on the job,or worst when they discovered they could get away with withholding material facts about the sales history on the home or it didn’t matter to the lender .
At my old neighborhood , I saw a listing broker get a straw buyer to buy this old couples house ,than they double escrowed it at a higher sale ,(60k more) while they helped the old couple move out quick while they told them they would take care of everything .
So, don’t tell me that the real estate community weren’t the set up artist for this foul play that priced everyone out of the market ,while they were hiding the lower comp sale .Ask the real estate people if they submitted the entire escrow papers to the lenders on their double escrow BS .
And here we have the Fed Chairman and Congress wanting to bail out and reduce principal on home loans that were the by-product of fraud and a crime wave . Everybody saw people making big money quick and you get the snowball of borrowers being willing to commit loan fraud and go on creepy loans ,just to get in on the bandwagon . Will there be any justice concerning what happened ?
RE: While these double escrows are a material fact that the lenders and appraisers should of considered in the underwriting process ,in large part these material facts were hidden from the lenders and appraisers .
For appraiser’s the galling thing about the reporting process, was that there was no financial renumeration attendant to the increasing complexity of sorting what were bogus sales which were not.
As a professional there’s the expectation of being paid for your time. However, the originators could have given a ratz azz WTF your situation was. They’d pay a flat $250.00 no matter what the situation and tell ya in no uncertain terms they could turn the business spigot off, any time they wanted.
In fact anybody diligent enough to prepare an accurate report with properly investigated comparables was quickly “black balled” because any threat to the rubber stamp sales gravy train couldn’t be tolerated.
A thorough, truthful honest appraiser? Quick-get the fook rid of this guy as quickly as possible.
The system got what it paid for.
The great karma part of this equation is the number of realtors who didn’t see the “housing crisis” coming, and are stuck with homes that they thought they could flip. Ultimately, they screwed themselves.
Your right…intheknow…many of the homes going or in foreclosure are realtor owned or real estate related as well…many realtors adjusted their lifestyle to a few good years..bought the McMansion…just like the mortage brokers…
Heard from a friend at mine that Chase is now doing sub prime loans for Fl at 70% LTV with min score of 620…They are giving themselves a cushion as they expect prices to fall even further in Fl…
What if the Fed Chairman rewards these people or people like them by getting lenders to reduce the principal balance on their gamble so they can laugh at how their greed paid off . Or how about the equity extractors who had a ball on equity money get rewarded by having it all forgiven at no doubt some cost to the taxpayers .
My point is why not get new stable qualified buyers into these foreclosures bound properties . The speculators and unqualified buyers never wanted the property as a home anyway ,it was a investment ,or a ATM ,or they depended on real estate going up so they could refinance . I can’t help it if people bought into all the real estate investment lies and bought overpriced property that they couldn’t afford or needed to sell for more within 2 years of buying or go bust . While I have some sympathy for some homeowners that bought for the sole purpose of having a home , and they thought that they had to pay the going rate or be priced out forever , they should be mad at the speculators and unqualified buyers that created this false price market and all the people that contributed to making the ponzi-scheme possible .Does anybody have any question as to why lending have to be regulated (as well as sales people )and why lenders have to underwrite loans and appraisers can’t be under pressure to hit the mark on made up values in order to survive .
Because 70% (and falling) % of the pop are homeowners and a democracy is two wolves and one sheep voting on what’s for dinner.
Yeah, in 2007 my husband’s snobby sister lost the overpriced TH she bought in 2005. She had to list those $2000.00 chandeliers and $5000.00 entertainment center on craigslist for half what she paid. What a moron - less snobby now, though.
I believe I made that point back about 2 years ago when I said that the NAR should be sued under the RICO Statutes, as they were a racket that was controlling the inventory and prices.
As prices were rising, they were taking inventory off the market and re-pricing it upwards. This created a “shortage” of affordable housing and started the Panic Buying. Buy at any price, so you don’t get priced out.
Problem was, like any Ponzi scheme, you need to have ever inflated prices for the game to keep going.
We all knew it had to end, even as G. Bush was taking credit for the great housing “ownership” expansion.
Some analyst on CNBC was just pimping NVR a home builder around D.C….Says they are the best or the worst and get this, he says that they have a lot of stability in their market because “The Goverment NEVER Lays People Off”…..
or = of..Gotta start proof reading..
Thats funny. One of our good friends is a service manager for NVR in MD. He was just telling us last weekend how bad its getting. They cut a bunch of projects and have been laying off construction managers.
Regarding that last article, this is a move I’ve seen coming and have hoped for. Builders buying lots at today’s prices, building smaller at today’s costs and selling at profit margins just big enough to survive will start the long-awaited price adjustment downward. The market will be forced to accept new comps from these newer and less expensive home sales. The only trend to stop that is a mass dumping of bank-held properties at even lower prices, which is a move that such new developments may trigger.
“Some said they signed stacks of mortgage documents in parking lots and restaurants, such as Dunkin Donuts. Some of the buyers said their documents were blank when they signed.”
Then what are they bitching about? They assumed the risk. It’s not rocket science. Some of these same ppl spend hours at the mall trying to find the best deal on a $50 item, but sign blank mortgage documents. WTF?
Because you you buy a $50 item generally it’s not going to be worth more than $50. However when you sing a blank doc that has the potential to be worth $10,000 more buy the time the ink drys then one may take that risk. I got hurt in the 2000 Tech Stocks. It was a no-brainer where this was going.
If ppl dont know that in business the most important rule is to trust no one (especially “friends”) and watch your own back, they have no business entering into transactions involving large sums of money.
“‘In Port St. Lucie, we have a home that’s 1,200 square feet that’s starting at $104,990.”
It’s great to see affordability return to some of these markets. Two years ago cities all across Florida were considering raising taxes to subsidize housing for firemen, police, and teachers.
Maven - I agree, in that $105K can be managed by many (but not all) budgets here. However, I think that even this price, for this house, likely is not a “bargain” unless the house has special features or trim or is on a “relatively” prime lot. In depressed areas like that, I’d be looking to buy tolerable, undamaged used houses at $40-50/foot right now. With the volume that is for sale in that general area, it should be do-able.
In Realtor dot com, search Port St Lucie for $200K and down, SFR, no other specs and sort by descending price. The first listing, R2855461, is a 4/2 new, foreclosure, looks 95% completed, tile roof, etc. 2,900 sq. ft. I think this is the “new pair-a-dimes.”
Read the article. That price does not include the lot, which could add as little as $20K.
Marketing scam, like computers not including monitor.
But my CPU needs replacing more often than the monitor does.
Maven - I agree, in that $105K can be managed by many (but not all) budgets here and will have (once again) police, fire and teaching personnel living closer to work. I wonder if this particular house is a bargain at this price, unless it has special features or trim or is on a “relatively” prime lot. In depressed areas like that, I’d be looking to buy tolerable, ordinary, undamaged used houses at $40-50/foot right now. With the volume that is for sale in that general area, it should be do-able.
In Realtor dot com, Port St Lucie for $200K and down, SFR, no other specs and sorted by descending price. The first listing, R2855461, is a 4/2 new, foreclosure, looks 95% completed, tile roof, etc. 2,900 sq. ft. I think this is the “new pair-a-dimes” in many of our most distressed housing markets.
Whoops — long, long time since I double-posted. That’s why I’m not often on her much before noon. Sorry about that.
You want to see what some of those homes really look like, Maven? Crap-shacks and s#itholes with enough mold to start your own science project.
‘mrktMaven, You are correct! I almost forgot about this! Back in 2005 Sarasota didn\’t know what to do as nobody in the service sector (waiters, waitresses, maids, even firemen and teachers) could afford to live there anymore. People were moving to lower cost housing places like Venice and North Port and commuting. Now, its much easier for these folk to rent and/or buy in the future. This is a beautiful thing!
Reminds me of the story many years ago about how the mayor of Aspen Co. had to commute to work.
However, they are no longer needed!
‘In Port St. Lucie, we have a home that’s 1,200 square feet that’s starting at $104,990. That’s the base price of that home. It does not include the land. That home, similarly two years ago, was much higher.’”
Try to “read” btween the lines…
Yes, it was much higher, because it was then actually on LAND, not UNDERWATER. Sinkhole houses are the new trend, dontcha know. Also it’s a lot cheaper house because of the money we save on construction. “It’s in a carton. Some assembly required.”
“Actual results may vary. Void where prohibited”
“Jay Pasqualichio said he now thinks he paid too much for his 12 properties. Since the real estate market has tanked, he also owes much more on the homes than their current value.”
“‘I’m not trying to put all the blame on other people,’ Pasqualichio said. ‘I know I signed the documents. But I hope people who see these ads and hear these types of pitches, will really do their homework. … I now see I was clueless.’”
Clueless? I think that is a mild term to use.
Somebody please tell me that Jay is not breeding…..
The time has come to seriously consider selling FL to Cuba..
You really crack me up Joey .
I’ll pitch in $20 if it helps the deal go through.
Could they get $100/sq. ft.?
Florida is about 66,000 square miles .. that’s about 1.8 trillion sq ft. (unless i misplaced one or more zeros). $180T seems a bit steep.
However, at $5,000 an acre, which seems more than fair to me, it’s only gonna cost Raul a measely $210 billion or so.
I know it’s a short sale but sometimes you just gotta cut your losses and forget about it…
Even a Scarier thought…….
What if the Miami Cubans can legally to move back to Cuba? ….WHOO HOO 100,000 jingle mails..
I wouldn’t be surprised if a lot of them moved back to Cuba. Many of them seem to be waiting for the day that Fidel kicks off so they can go back home.
IMHO, Raul doesn’t have the cojones that Fidel did. So, when the old man dies, look for some very interesting times in the Caribbean.
The Cubans are pretty much the old guard in Miami, and most are second- or even third-generation. Most of them aren’t going anywhere.
“WHOO HOO 100,000 jingle mails..”
You’re being kinda soft on your estimate. If Cuba opens, I dare say there will be more than 100K vacancies. Organized crime money will go were the profit flows….never mind the masses emmigrating to their homeland.
Could we (Canada) buy it? With all the ice floes melting due to global warming, we need somewhere to put our seniors.
Just kidding, there mostly all in Florida already.
Well with the looney doing so well, we’ll just sell it to them a lot at a time.
“‘I’m not trying to put all the blame on other people,’ Pasqualichio said. ‘I know I signed the documents. But I hope people who see these ads and hear these types of pitches, will really do their homework. … I now see I was clueless.’”
If it sounds to good to be true, it usually is. What part of that statement do people not understand? Is it their greed that clouds their better judgement? People in the USA need to wake up to the reality and stop falling for these get rich gimmicks!
it wasn’t his dough.. some lender(s) shoved several $$million into his pocket, pushed him into the casino and wished him well.
And if he doesn’t do well, the penalty is they won’t lend him more money.
“‘People’s credit cards are maxed, and they aren’t buying anything. People have stopped spending money. They don’t have houses to use as piggy banks. The piggy bank is closed.’”
South Florida is indeed working off an entirely new economic model. It’s a disaster area.
“South Florida is indeed working off an entirely new economic model. It’s a disaster area.”
Well said. If you’re in the market for a luxury item, now is the time. $100,000 boats are being sold gently used for $30,000 and the high-end used vehicles that normally hold their values well are being sold for next to nothing. It’s not uncommon to see a BMW 5 series that are a year or two old well under $30,000.
Really? On the used car prices - it has absolutely not hit seattle. Is there a business for buy cars in FA, CA and shipping them here for resale
That only indicates they haven’t been shipping many cars to your area or Car prices would be coming down. Also many used or damaged cars are bing shipped to other countries where they fetch a good price and can be repaired at a reasonable cost.
If someone can make a buck doing it, then it’s already happening or soon will be.
“Really? On the used car prices - it has absolutely not hit seattle.”
There are MANY dealers that specialize in export out of state. There is one that I know of that has as much as 50% of their business from out of state. When you sell your cars less than private party value, you can do that I guess.
I highly recommend FedEx’s custom car shipping service. I sold a collectible to an out-of-state buyer and the delivery service was outstanding - buyer though a brand-new car was arriving. Fully-enclosed 80-footer. Price was not bad, something like $1,300-1,400 from Orlando to mid-Texas.
Andy
Where are you seeing huge reductions on boats prices? I’m looking on Yachtworld.com and have seen 15 - 20 percent reductions but not huge price drops yet.
Yeah me neither. I live in South Florida, and If I could buy a boat that NADA listed at $100K for $30K, I’d do it today. Same thing with a one-year-old 5-series at less than $30K. I think these markets, especially for cars and trailerable boats, are national.
“Same thing with a one-year-old 5-series at less than $30K.”
Auto Trader and Credit Unions. The Credit Unions sell their repos directly in many cases.
I feel like everyone in S. Fl is in a bubble and they only see the expensive. You have to LOOK for the values.
“Where are you seeing huge reductions on boats prices?”
Look on the boat trader within 100 miles of West Palm Beach zip code 33401.
Can’t find any that have been recently discounted from $100K down to $30K. Can you give me a specific example? Or are you just saying that there are boats that cost $100K new 4 years ago, that are now $30K? ‘Cause that’s normal for boats.
“Or are you just saying that there are boats that cost $100K new 4 years ago, that are now $30K?”
No, I’m saying boats that were selling on the used market for $100K back in 2003, 2004, and 2005 are now on the used market for $30,000. I’m talking about comparable age, not literally the boats that were for sale in those years. Maybe the book value has just dropped that substantially and I’m in la la land about it.
Please someone, dredge up that old chestnut of a quote again…I’ve got to see it in print just once more.
Oh, what the heck. Why not?
Here’s the link.
And here’s the relevant section:
In Miami, Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors, predicted that a limited supply of land coupled with demand from baby boomers and foreigners would prolong the boom indefinitely.
“South Florida,” he said, “is working off of a totally new economic model than any of us have ever experienced in the past.”
Ironically, that statement is true today. Very few are alive today who remember the great Florida RE crash of 80+ years ago
When is the West Palm Beach area going to start looking like Port St Lucie?
Sellers remain with heals firmly dug in denial here.
Sure there has been some price drops but a spit in the bucket compared to other areas. What makes some areas go faster than others?
I am anxiously waiting and waiting and waiting……
I think I have posted here before about my cousin the rehab-flipper whose place in Jupiter is in a condo complex where people are lucky if the rent they can collect is anything more than the condo fees, insurance, and taxes. Never mind any kind of ROI. This guy and his wife are about to move back into their PA house and become LLs. This was after dropping their wannasell price by maybe 25% which, as SKB indicates, does not take care of the huge runup. Maybe the answer to SKB’s question is that WPB is just more fun than PSL!…at least I would think so.
“What makes some areas go faster than others?”
Based in PHX and what I am hearing from CA, my observation is that it is based on the amount of new construction.
The sellers that drop first are the builders. They lead the way down in the areas with lots of constrction. In areas with less construction, it will tak a long time for FBs to capitulate.
“When is the West Palm Beach area going to start looking like Port St Lucie?
Sellers remain with heals firmly dug in denial here.”
Not all sellers have their heels firmly dug in denial in Palm Beach County. Currently resales in Olympia (not a fan of that development personally) are starting around $295K. That’s less than the pre-construction prices from 2002. Sure, there may be some still trying to get $600K for that same house, but if you’re serious about finding a low price you will.
Also, take a look at some longer established neighborhoods. Homes in the older areas of Wellington are listed in the $90 - $110 per square foot price range. Palm Beach Gardens has homes on ocean access canals running in that same range. The developments like Wellington’s Edge, Winston Trails, and Nautica Isles that were built in the late 90’s and early 00’s all have homes listed for sale right now for less than $100 per square foot. Stop paying attention to the media who spouts median prices, and PLEASE don’t tell a real estate agent to only search up to your price range. Do the searching on your own.
Bad Andy…you are right…in many communities the sellers don’t want to face the music even though a beautiful foreclosure is sitting for sale 200K less than theirs right down the block…
I heard last night that the number of homeowners that are upside down in their mortgage is around 10 million! How many years is it going to take them to get their head above water..if ever????
Tons of empty BEAUTIFUL foreclosed homes/short sales..but the property taxes and insurance will kill you!
Well ISTR it took ~50 years for Miami to recover from the 1920s bubble….
Naah, dude, there were no Europeans, South Americans, Baby Boomers back then.
This time it’s different fo’ shure!
“…but the property taxes and insurance will kill you!”
That’s the part any potential Florida buyer ought to repeat like a mantra. Retirees will only buy here if they can afford the monthly nut. So what if they buy for all-cash? If the taxes and insurance are so high that they can’t play a round of golf or eat out, they’ll consider alternatives in a hurry. Their disposable income has long been the engine for a huge amount of the employment here - admittedly that is lower-paid work, but work nonetheless. Tourism, tech, old folks, hospitals and funeral homes, plus a decreasing amount of agriculture. That’s about it.
I should clarify, I am looking in Loxahatchee, Royal Palm Beach. I want 2 acres.
I despise those gated areas and I need room for my horse.
Friends of mine has now lost 65,000 of their 113,000k down payment in one of those caged, I mean gated areas. They bought one year ago against my advice.
I am looking to spend 200,000 but do not want a crap shack, right now in that price range that is all you get.
I am sure by spring 2009 I will get what I want, just being impatient and sick of keeping my horse in my friends pasture.
“I should clarify, I am looking in Loxahatchee, Royal Palm Beach. I want 2 acres.
I despise those gated areas and I need room for my horse.”
Even less expensive in the acreage now! You can find homes built between 1995 and 2003 in the acreage for under $100 per square foot including the lot. A standard acreage lot is 1.25 acres. Throw on another $50K for a double lot. There are over 100 listings in the acreage for less than $235K. I don’t know what affordable means to you either though…
“Caged communities”, I’m gonna steal that. brilliant.
I like caged commumites. They keep in the in-laws out.
Have you thought about buying a couple of acres and building on it? Just be sure to check out all “impact” fees first, unless it’s a fully developed lot with no bond for the buyer to pay.
Yes, I would love to build I just think it’s to soon to “go there”.
I know that the impact fees went up to 10,000 last year.
We have looked at all of the model homes available some are so lovely but still WAY TO FREAKING EXPENSIVE.
I am not sure on “the acreage” lots of rednecks, rusty military trucks, barbed wire, goats tied to trees, rebel flags…and then across the street you would see a beautiful home. People built in any spot during the run up.
The best deal I have been offered on a lot is 85,000 for a 1.14. Not good enough for me yet.
RMJ is advertising 66 dollars a square foot for there 3,000 square foot homes. I only want 2,000 under air.
I am waiting for the lots to go back down to 20K again.
If anyone has better sites for me to check out please share. I am using realtor.com
“…like 38,582 and 1,063.”
I wonder how many foreclosed and empty homes are in that 38,582 number. More significantly, how many more foreclosed homes are not yet on the market and therefore not part of that number. I know in our case here, the house was foreclosed and empty for about 10 months before it was listed on the MLS.
It would also be interesting to know the sold statistics. Of the 1,063 that sold, how many were foreclosures, how many were short sales, and how many were “regular” transactions. My guess is 40%, 40% and 20% respectively. Just a guess of course.
Bill - I think that’s a good point. Last night I found a site that would give me foreclosures by street address in an area out-of-Florida that I’ve been following. Two of them are in a small neighborhood in which I had in interest in a third house. These two are listed in realtor.com with no mention of a short sale or foreclosure. Another house in a different neighborhood dropped off the MLS last week , after almost 2 years on the market, and popped up on the foreclosure list.
And in a first-hand account, I called the owner of a house that abuts a vacant lot, the other side of which is a long-on-market house I was checking out. Wanted to know if she is the owner and has plans to build or would she sell half of it so we could keep it natural. Turned out she was very gabby and got into how many of the people in the neighborhood are in financial difficulties and all these foreclosures beginning to happen, etc. Finding just one very talkative neighbor like that is worth a lot, IMO.
If any house goes up for sale near me, well, I’ll be that talkative neighbor.
“My guess is 40%, 40% and 20% respectively.”
Bill, if my business is any indication, I would have to say it’s more along the lines of 75% foreclosures, 10% short sales, and 15% regular transactions.
The problem with short sales is that the lenders try to be greedy in the final sale price of the home. I guess I’d try to be greedy too if someone owed me $500,000 and the most I could hope to recover is $250,000.
So you’re saying roughly 75% of all sales are foreclosures. Since you’re there “on the ground” so to speak, your estimate is probably closer than mine. But… Yikes!
“So you’re saying roughly 75% of all sales are foreclosures.”
Yes. I go into the tax appraiser’s site to see who the current owner is when I get information across on a house, and 3 of 4 come up with HSBC, Citi Financial, WAMU, or the sort. I just took care of a client who bought a house in Pirate’s Cove in Palm Beach Gardens. The last sale was in 2005 for $680,000. The bank took it in 2007. The contract price in 2008 was $295,000 RIGHT ON THE CANAL! The estimated replacement cost for reconstruction on this house came up at $400,000.
Also, let’s not forget that I’m using actual sales and not listings. By the time a client gets to me it’s pretty well a done deal.
Andy - I think yours would be a useful re-post in the weekend Local Market Observations thread.
I keep hinting at the agents in Georgia, for example, that this is “coming soon to a theater near you” (if not quite to the same degree) and they are absolutely 100% oblivious. I guess they have a lot of food saved up or something.
The statistics on Tampa are unreal. There are some empty gigantic spec houses on my drive to work that have had realtor “for sale” signs outside for over two years now. We’ve talked about houses worth nothing on this blog before: because insurance premiums and property taxes are so high, and because electricity and gas will never be cheap again, the places I drive past might not be sold at any price.
And another thing. Anyone buying a house in south St. Pete, even knowingly as part of a scam, needs to have his or her head examined. That might be the worst neighborhood in the entire Tampa Bay area outside of Sulphur Springs.
Try Belle Glade…
LOL. Belle Glade - the Apopka of Palm Beach County.
That area is awful. On that note, my husband came home from a hearing in circuit civil court in St. Pete (Pinellas Co.) yesterday, and said that 2 of the judges he appeared in front of were complaining about how their dockets have quadrupled in the last few months. One judge, who has an 1800-case docket, said that it’s nearly ALL foreclosures. Where she was doing 10 per month last year, she is averaging 38 PER DAY now. The anecdotal evidence is overwhelmingly in favor of staggering price declines yet to come. It’s a good thing they dropped the hairbrained idea to shut down the civil courts this summer in response to budget cuts. Maybe they should just start tagging the lenders seeking foreclosure with some extra court fees for clogging up the docket. After all, they’re the ones who were lending the money to the deadbeats who got us into this mess. Fix the court budget in no time.
The next docket to increase will be in the criminal courts as the exposure in foreclosures process will clearly produce many cases of mortgage fraud, etc.
I hope so. IMO, nothing will give religion to appraisers faster than to see their colleagues and “employers” go to jail. That would ameliorate the delay until 2009 of implementing FHA’s new rule about in-house and affiliated appraisers.
It’s amazing to see the decline in Sulphur Springs, an area that was a retirement and recreation area for Snowbirds in it’s early years.
I lived their for 8 years as it transitioned from a working class, primarily white neighborhood, to a Section 8 primarily black neighborhood. Most of the new neighbors were on government support, which meant they had no jobs they needed to go to.
This gave them plenty of time to break into houses of those who did have jobs to go to. My house was broken into 5 times in 8 years. Each time, they stole most of what I had accumulated the prior 6 months.
We would see them sitting on their porches drinking malt licquor as we went about our business. That was when they weren’t selling Crack cocaine on the street corner.
I sold my house for what I could get and got out, but had been very active in trying to “save” the neighborhood by working tirelessly with the City and Police departments.
Lesson learned: CRIME creates Poverty. Not the inverse. And government handouts create a nation of parasites that feel they are “entitled” to take whatever you own. I was a college-educated liberal when I bought there. I am now a stauch conservative.
I have also been classified as a prejudiced due to my views. I get those comments mostly from people who have never lived in such areas and have television views of the world. It’s a shame the government helped destroy so many neighborhoods with “welfare” programs.
Hear, hear Diogenes. Especially on the matter of what government programs really do in “economically disadvantaged” areas.
That might be the worst neighborhood in the entire Tampa Bay
College park is the worst. If you drive in, you won’t drive out!
Please tell me what all these “neighborhoods” have in common: College Hill, South S. Pete, Sulphur Springs, East Tampa, aside from being “high crime” and run down areas??
I’m just guessing that only Dinesh D’Souza can do that.
Never knew that about St. Pete, as we’d visit there from Clearwater and Largo and stuck to the old-fart high-rise area, where the good restaurants were.
“‘I’m not trying to put all the blame on other people,’ Pasqualichio said. ‘I know I signed the documents. But I hope people who see these ads and hear these types of pitches, will really do their homework. … I now see I was clueless.’”
The old saying, if it sounds to good to be true, it usually is!
What part of the above saying do people not understand? Is it that greed clouds their better judgement? Is it that they get caught up in the hype that the NAR puts out that ends up putting them in financial ruins?
I think some people are desperate to build up a retirement fund and are making common sense mistakes by getting caught up in the hype.
BINGO!! retirement fund, hype, dot.com bubble, housing bubble and soon to be commodity bubble. All tied in together. People becoming desperate when they see retirement moving further away into their ULTRA golden years.
Diogenese - (or anyone else) - if you’re on today, do you happen to know if Florida (or Georgia or Alabama) are recourse states?
Do you mean for mortage balance if the house is sold for less?…
I have heard that in Florida…the lenders are coming after the borrowers credit by placing a deficency judgement on the credit report for the balance owed…Don’t know how long that stays on your credit???
Also have heard many cases where the children are having the parents buy the house as a short sale and then they will live in it…cutting down the mortgage owed by several hundred thousand dollars and lowering the payments dramatically with plans to buy it back when the market and credit turns around…
“I have heard that in Florida…the lenders are coming after the borrowers credit by placing a deficency judgement on the credit report for the balance owed…”
This may be true in some cases, but in FL the bank has to sue you in a separate proceeding from the foreclosure to get a dificency judgement.
I’m no attorney therefore I give no legal advice, but no bank would want to go into a courtroom with me to try to sue. There’s so much blame that can be placed in their direction, as well as their broker/loan agent. I’d file a countersuit for acting in bad faith.
People with these judgements likely don’t even show up to the hearing.
This is another scam that is emerging and you can’t consider short sales to relatives a arms length transaction . Now the FB’s are going to scheme on short sales ,as if they and their friendly real estate sales people hasn’t been already . This is why we just have to call this mess a crime wave and foreclose and move on after we purge the system of the con artists .Now the lenders will have to have the buyers and Realtors sign a paper under penalty of perjury or fraud that the new buyer of the short sale isn’t a relative by marriage or otherwise and they agree that they aren’t going to enrich the prior FB by the short sale .Sorry ,I don’t want comps set by fake deals anymore .
In fact I think my neighbor try to execute a fake short sale with a son-in law ,but the bank didn’t accept it ,so they walked . Twice I have seen the cops come to my neighbor door ,(in spite of it being vacant ),so I don’t know what is going on.
Lets just purge the system of all the criminals and call housing tracks a “crime scene “.
“This is another scam that is emerging and you can’t consider short sales to relatives a arms length transaction.”
The only people hurt on this scam are the family members. A short sale right now will get you about 10% below “market value.” 10% is not nearly enough of a haircut. The banks should be pleased about being “scammed” in this way. It’s better than letting it go into foreclosure.
So why didn’t the family member just loan them the money to bring into a refinance escrow to get a new loan . It will become a bigger scam when the short sales are 100 or 200k short of the original mortgage . We can’t have relatives determining market value for God sakes for the purpose of giving the property back to the FB’s at below market . Even in a short sale situation the lenders are suppose to get what a arms length transaction would bear ,or again your cheating the investor that is losing money from the short sale .
At this point I think that the lenders need to take a step back and realize your still dealing with a corrupt REIC and crooked FB’s, and the sooner you realize that the sooner some sanity will return to the market .
So Andy ,FB’s who get short sales are suppose to be distressed people who can’t keep the property and they must sell (job loss,job transfer ,etc., no money )so the lender is forgiving them ,but not for the purpose of them scheming on getting the property back at a discount .Again ,someone will lose more money and the FB scores again . Andy if your saying that this fraud avoided a foreclosure ,I agree with you ,but its the fraud transactions that got us in this mess in the first place and it’s got to stop . The powers have got to stop treating these FB’s like victims.I guess you could say that the cash-back fraud transaction kept the market going for a little while longer also and stalled the lenderrs taking their loss.
If they’re waiting for the market and credit to turn around, a lot of parents are going to be stuck with an extra house.
Florida is a recourse state for first mortgages.
It is also a homestead state that allows the home to be kept if you file bankruptcy, with no limit on the value of the home.
That has been a draw for many years of corporate pirates who stole their company assets, bought a mansion here on 40 acres with the proceeds and then thumbed their noses at the shareholders.
That’s one reason we have so many “rich” people who have moved to Florida. It’s the Lichtenstein of the USA.
Its also the REAL reason you have SAVE OUR HOMES and now PORTABILITY. Don’t kid yourself, the rich own Tallahassee and the peons are just along for the ride. If the rich payed their fair share, there would be no property tax problem in FL. The ride down will be quite a thrill.
Oklahoma is another state that’s pirate-friendly. Also, I believe in OK there’s no limit on the protected amount for gun collections (though I’m not sure).
That’s very interesting. Thanks, Diogenes and others.
“The foreclosure epidemic is only partly reflected in the vacancy survey.”
Foreclosure events should be labeled ‘affordability’ events. It’s an affordability epidemic. It’s an affordability bus tour, an affordability filing. In most cases, on the other side of all these foreclosure events is affordable housing.
“Some said they signed stacks of mortgage documents in parking lots and restaurants, such as Dunkin Donuts. Some of the buyers said their documents were blank when they signed.”
I know many here are critical of buyers who did not know they had ARMs or Option-Arms and who did not carefully read their mortgage documents. Well, there you have it.
“‘They were burned,’ said Keith Gensor, a mortgage broker with Florida Sunshine Mortgage, of the sub-prime lenders. ‘They were burned big time. Now, it’s almost nearly impossible to get a sub-prime loan. If you have bad credit, good luck to you. I don’t think it’s going to come back any time soon.’”
The sound you hear is me playing the world’s tiniest violin for the poor subprime lenders . . .
He’s crying for the borrowers. They won’t get loans.
As you may note, the SUB-prime loans allowed the highest number of “minorities” to get in on the housing ladder. That’s why so many “poor” neigborhoods are in default. Here’s the next stage, aside from all the hand -wringing and proposals to save the borrowers:
Not lending is “Discriminatory”. There will be civil “rights” lawsuits. Mark my words.
Classic case of “Dammed it you lend to them. Damned if you don’t.”
“Q. Along with land prices, have material costs dropped?”
“A. ‘Labor costs, material costs, everything has dropped.”
I don’t get it. If land, labor, and material prices have fallen, then why can’t builders build houses and sell them at prices that people can actually afford with a traditional mortgage? Is it that such prices haven’t fallen enough for builders to still make a profit when selling houses at affordable prices?
Its happening already just very Slowly…One example I know of is several local builders in Bend Or., came together to purchase a foreclosure land deal…They plan on delivering single family product for 180k and for Bend, this is well below the resale market…Its happening..It just takes awhile to come to market…
Several buyers complained to police that they bought the properties at inflated values.
Uhhh . . . selling at inflated values is now a criminal offense?
Not 100% sure, but I believe they’re asking the police to be arrested for wallowing in their own stupidity at having paid inflated prices. I mean, what else could it be?
Actually, they realize now that the “Fees” that got wrapped into the mortgages that allowed them to buy multiple properties for nothing, were probably a bit excessive, like $50,000 too much.
But now, the lender is looking at them to make good on the payments. That wasn’t part of the “plan”.
See the “Heads, I win, Tails, you lose” clause -it’s right there in the Constitution.
Florida has a credit crisis. Lenders are loathe to make loans here. Just as the insurers are pulling out of Florida so are the lenders. Gettin there.
Heaven help me but I am so glad this is happening.
For many years I have hated the way we were headed as a nation. So much of what I observed was blatant over-consumption and plain foolishness. As an appraiser I have been in thousands of houses over 35 years. The change was absolutely ridiculous. Borrow, borrow, borrow. I see it first hand.
IN the HUD foreclosures I appraised for 15 years there were always three components in the shuddered houses. A Satellite dish, water softener and booze/drug evidence. Oh yeah and porn, but I give a pass on that.
I appraised homes with more electronics in them than the shuttle. I appraised houses where the cars in the driveway exceeded the value of the home. I saw multi-million dollar houses in which noone had ever run a vacuum cleaner. I saw mattresses on the kids room floors and a big screen Tv in the living room.
I saw motorcycles, skidoos, and race cars and no computer for learning. I saw cans of food on the table around which the kids were gathered at mealtime.
This is going to change a bunch of it and I could not be happier. I know I am an ass for feeling this way but frankly it is long overdue and I could see no other way for it to end. I am just glad that I lived long enough to be here and tell my children, watch and learn.
“This is going to change a bunch of it and I could not be happier.”
I’m going to agree with you on that end of the spectrum, but I don’t want you to forget the other side. The side where people bought into the buy now or be priced out forever mentality. The new husband and wife who actually saved $50,000 to put down on their $250,000 home and worked hard to afford P&I, T&I on the remaining $200K. These are the people who are watching homes on their block being sold by the bank for $125,000 These are the people I have to feel sorry for. Their parents told them it was a good investment, their real estate “professional” told them it was a good investment, their friends told them it was a good investment, the media told them it was a good investment. You get the picture. Can you imagine the “trapped in your home” feeling they have? Really…imagine saving $50,000 only to have that $50,000 lost and then $75,000 more if you want to move. SAD!
No pity. Sorry. Most people did more research on that big screen TV or that expensive car than they did things like school systems, property taxes, insurance, credit scores and income percentages.
Let’s face it. Buying a home is boring and tedious, and this nation doesn’t do boring and tedious well!
Maybe they could “jazz up” the process by having fancy dressed women bring you each new document to sign in a silver suitcase.
“Jessica, open the case…and show them the escrow agreement.”
“No pity. Sorry. Most people did more research on that big screen TV or that expensive car than they did things like school systems, property taxes, insurance, credit scores and income percentages.”
Quirk, research clearly shows that real estate has a history of increasing, not decreasing in value. The same research will show you comparable sales in the same neighborhood for right around the price you’re paying for. That young couple can’t be faulted for bad information. The fact is those young couples ARE the ones that did their research before buying.
Yes, but if you can’t afford it, you can’t afford it. Also your research isn’t very complete if it shows prices can only go up and that no matter how stupid the comps are you have to go along with them.
It’s better to overpay on a house you can afford than to get a deal on one you can’t. We overpaid for our house, but we also have a 15 year note that will be paid off in a few years. That’s where the “research” fell short recently. People just couldn’t get to the fact that they couldn’t afford what they were buying (and hardly anyone else could afford those houses either, that’s why price have to fall).
“Yes, but if you can’t afford it, you can’t afford it.”
I’m not saying that the person who bought the $250K home and financed $200K of it couldn’t afford it. I’m only saying that the same $250K now would buy them a lot more house. Instead of the first house being a stepping stone, it’s a trap in this instance.
Part of getting good value is knowing when you are truly getting “value”. None of these crapboxes I’ve seen in Florida have been worth the recent prices.
Look, face it, people bought more hype than they bought house.
“Quirk, research clearly shows that real estate has a history of increasing, not decreasing in value.”
I must bring up again that this is a misunderstood concept. The amount of money people spend on housing goes up as a function of nominal GDP. This, however, is not a measure of real estate appreciation.
One’s own house generally depreciates in real terms unless it has unusual features or is in an increasingly desirable location. This is only common sense. Houses are subject to obsolescence and the ravages of time just like other physical assets. Many people are able to achieve positive returns on their housing because they constantly maintain and improve their property - an ongoing significant cost and something that is not required for a stock or bond
We need to show sympathy for the young people who are being screwed by the whining adults. Adults need to grow up.
Andy-believe me I know all about that syndrome first hand. Now I deal with it everyday. I have to give people the bad news regularly. IN most cases they are young folks and will recover but I hope they ever forget this and I suspect many will change their views on debt. The country will be better for it.
Informative insight dimedropped…..
Funny - that is the same advice I got about marriage.
Sorry, but as a young newly married man myself I feel no pity for those who are now underwater. Zero. The reason is plain and simple; there is no shortage a fantastic affordable housing anywhere in Florida in safe and comfortable neighborhoods. Every young family that now is underwater could have easily rented the past 5 years like my wife and I have.
I’m not angry anymore, but it’s simply not true that these sob stories are any different than investments gone bad. A home should be just that, not a slot machine. By borrowing the money to ‘purchase’ it, you are inherently gambling, and admitting that you want to make money (or save money, however you look at it). Otherwise if you actually just bought the home to live in it, you would care less if the value went down, or you should be happy that you’d be paying less taxes. No sympathy at all here. If you weren’t prepared to lose value in the house, or stayin it long enough to get it back, you should have rented like me.
I don’t think you should feel like an a$$ at all. You had a front row view to misplaced priorities, especially as it related to consumption. As you also mention, this whole debacle could end up being a real life lesson for our kids, which I hope they learn from, mine included.
Dimedropped…are you still in the appraisal business? How do you feel about the new agreement with FHA that will not allow brokers order the appraisals?
Ann-I am tickled pink we are getting away from direct contact. I can’t stand the jerks. I never work for them. There is a lot more to it than brokers as it applies to banks and anyone associated with the real estate process.
Things are changing and we are praying that the big dollar guys don’t dilute it. Time will tell.
Dime - my thinking is that if the (belated) 2009 implementation truly protects the appraisers from reprisals without loss of business, that alone will shave 5-10% off market values in all but the least-bubbly areas.
This is going to change a bunch of it and I could not be happier.
How will the credit crunch change people in $$$$$$$$ homes who never ran a vacuum cleaner? Not being contentious, but now that the credit spigot is off all those losers you described will just find another way to be as$hats.
LOL@ Oh yeah and porn, but I give a pass on that.
Dimedropped…I can’t agree with you more. You are not an *ss! I’ve seen the same thing over the years, though probably not as much as you have seen. Its been very sad, but now people will see whats most important in life…and its not big screen TVs.
I think not only are the prices of houses too high and thus the monthly mortgage amount being expensive but the township property tax is rapacious in most places. Are the high property taxes justified or should people be taking township officials to task on this? Should there be an uprising against high property taxes?
“One in 20 homes in the Tampa Bay area is vacant”
Again, forget about “pent up demand” (how many prospective home buyers can meet the income and down payment requirements abyway?)…it’s time for the news media to start talking abiut “pent up supply”.
“it’s time for the news media to start talking abiut “pent up supply”. ”
If we can look to metro-Detroit as an example, this pent up supply will drop off the market when prices go back to what they were in the mid 1990’s. The Detroit area still has a ton of supply and very little demand, except on those fire sale priced properties. I personally know an investor who buys houses in the suburbs for $35 to $60K cash and rents them out for 10% less than a comparable apartment. In that situation it’s the commercial property owners who will start to hurt.
I just want to say that why should the lenders loan on property until they can determine what the real market value of any given area is . While you have a over supply of foreclosures and other listings and over-supply of builder stock ,its pretty hard to determine where a normal market would be (but we can determine it on this blog ). There are reasons why it’s a tight money market right now and the lenders should be requiring higher down payments to off-set the risk of declining values .
Until all this excess inventory is sold ,your not going to get a stable market . How the lenders and real estate community could of thought that giving loans to speculators and unqualified buyers ,who had to sell in a short period of time to a greater fool or go bust ,is just mind-blowing to me .
Investors/speculators usually make up about 10% of the market under normal conditions . The NAR even admitted at the end of 2005 that the demand was speculator driven by a huge % ,yet the lenders kept making bad loans for another 2 years ? Enough of this talk of bailing out gamblers and get the excess inventory sold at mark to market .
“Those who make their payments on time and increase their credit-worthiness may want to look to the future. ‘The flip side of the coin, they’re going to be golden,’ he said. ‘When it turns around in the next few months or next few years, they’re going to be the cream of the crop.’”
_____________________________________________
Are the RE mobsters still lying to the public or do they still believe their own BS? “When things turn around” isn’t months away Cupcake. Wrap your empty skull around that fact.
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People, I don’t know where to begin.
The article references one of the worst neighborhoods in all of Florida.
In 1996, this neighborhood had an all out riot by disenfranchised blacks when a couple of white cops shot a gangsta in the face who tried to run over then in his car. I am here to tell you that the entire neighborhood was put to the torch. Whites were dragged from their cars at nearby intersections, were kicked and beaten, and had their cars put to flames.
Nobody, AND I MEAN NOBODY, in their right mind would want to live in St. Pete north of Central Avenue towards the middle of town. I have some black friends who will not go near the place.
One thing is for certain in this neighborhood, if a woman is out walking she’s a prostitute; if a guy is standing around he’s dealing drugs. Drive-by shootings, daylight homke invasions, and strong armed robbery are commonplace around there.
What in the he11 were the bankers thinking ?!?!
..
“if a woman is out walking she’s a prostitute; if a guy is standing around he’s dealing drugs. ”
Oh dear lord in heaven . . .
Yes aimeejd:
Sometimes telling the TRUTH hurts…but it’s still the truth, not racism
—————————————-
Oh dear lord in heaven . . .
“disenfranchised blacks ” huh? Was the Fifteenth Amendment repealed in that neighborhood? Or the Voting Rights Act of 1965?
It’s quite obvious you don’t understand the concept of radicalization.
yea I do, I am just trying to figure how it happened to you.
If you did understand the concept of radicalization you wouldn’t have quoted disenfranchised blacks as if you’re ignorant of it.
Denial….. it’s not a river in Egypt.
I just don’t buy your bull sh1t premise. I actually went to school there so I know a little bit more about the area than you do. They are free to be crack addicts or free to vote I am afraid the only “radicalization” they faced was from left wing nuts like you who created the welfare state in which they exist. Would you please explain why they cannot vote? Do you understand the word in question is “disenfranchised”? Stop trying to change the subject, it doesn’t service your argument well. Much like your partisan attacks.
Cute kindergarten compartmentalization. Nice try though.
Can’t man up to your argument can you? With every post you provide further evidence of a weak mind.
Who is arguing? It’s evident you don’t understand radicalization or you choose to deny it’s existence. Don’t backpedal from it.
The next thousand residents moving to Florida were sure to gentrify that neighborhood.
Shucks, they didn’t make it in time.
The recent U.S. Census Bureau report was disheartening to St. Petersburg Realtor James Tuten, but not shocking. Whether it’s his four investment homes sitting empty for lack of buyers or customers who were forced out of houses by unaffordable mortgages, Tuten has seen ample evidence of the ranking.”
“‘You’ve had all those boom developments over the years. Now you’ve got all this housing and there’s nobody to take it,’ he said.”
*slaps head*
Jesus, what a tool….. THERE *ARE* PEOPLE THAT WILL BUY, BUT THEY AREN’T QUITE STUPID ENOUGH TO PAY WHAT YOU”RE ASKING, AND THEN PAY CRUSHING TAXES AND INSURANCE BASED ON YOUR “DREAM ON” PRICE!!!!
*four* investment homes, Jim?? you don’t say???? how’s that working out for you every month? that would make me want to put a gun in my mouth,how about you?
wake up, sleepy Tampa Bay Realtors…… i kin haz $50/sq. ft. ??
(ummmmm, North Pinellas - not in St. Pete….thx)
Haw, this housing bust is really starting to enter its stride. Messy, messy. Sure is nice to be a bitter renter!
But you’re throwing your money away on rent. Better to be throwing it away on lawyers.
“The main question to be asked is why would the bondholder want to give their investment or monies to help out a struggling homeowner who probally should never had received the loan in the first place.”
The big question for this bond holder first and foremost is not how much interest am I going to make but how secure is my principle. Two years of a higher interest and forfeiting the principle doesn’t work for me.
“Some said they signed stacks of mortgage documents in parking lots and restaurants, such as Dunkin Donuts. Some of the buyers said their documents were blank when they signed.”
DING DING DING. You’ve just been promted from victim to co-conspiritor.
Jay with 12 houses- all with negative cashflow. What were you thinking? Time to pay up. If you bet on a stock to go up and it goes does down, you have to pay. Most of these areas never had jobs to uphold these prices. Let the market come back down and that average person afford a home and be able to eat at the same time.
Comment by Quirk
2008-03-06 09:42:50
No pity. Sorry. Most people did more research on that big screen TV or that expensive car than they did things like school systems, property taxes, insurance, credit scores and income percentages.
Let’s face it. Buying a home is boring and tedious, and this nation doesn’t do boring and tedious well!
Maybe they could “jazz up” the process by having fancy dressed women bring you each new document to sign in a silver suitcase.
“Jessica, open the case…and show them the escrow agreement.”
I sure don’t do boring and tedious well, either. But I do ‘wasting the money I worked hard for’ even LESS well. So, take a Ritalin and buckle down and read the damn papers, or live to regret it. Is my advice to all and sundry.
I do really like your idea about silver suitcases, though. That appeals to me, and I bet one would go with every single outfit I own.
What a difference an hour will make (from marketwatch);
Americans poorer than a year ago, Fed says
Last Update: 3/6/2008 12:14:00 PM
Considering the impact of higher prices, a bigger debt burden and sagging home prices, Americans were poorer at the end of 2007 than they were the year before.
Better-than-expected sales offer retailers some hope
Last Update: 3/6/2008 11:15:00 AM
U.S. retailers reported better-than-expected February sales, offering some hope that consumers may still have more spending power to put into the economy.
U.S. retailers reported better-than-expected February sales, offering some hope that consumers may still have more spending power to put into the economy.
Nope they’re just finishing spending their Christmas gift cards.
Comment by diogenes:
“Florida..is also a homestead state that allows the home to be kept if you file bankruptcy, with no limit on the value of the home.”
Florida’s Best (not the drink in the carton) aka O.J. the “If I Did It” fellow.
RE: “One of the buyers, Marisol Napoleon, said renovations did not meet her expectations, and one of her houses ended up ‘falling apart.’ She couldn’t keep the homes rented, she said, because they needed more improvements than she could afford to complete. She said she now thinks she paid too much for the properties.”
Tsk…tsk…Maybe next time you’ll avail yourself of an honest appraiser and home inspection guy. For a crummy $1k you’d have saved yourself a whole lot of aggravation.
As the saying goes, stupidity costs…
Lowest homeowner equity since 1940’s. The whole nation will walk.
Here goes nothing
http://news.yahoo.com/s/ap/20080306/ap_on_bi_ge/home_equity” rel=”nofollow”>
Home Equity Falls Below 50 Percent
NEW YORK (AP) — Americans’ percentage of equity in their homes has fallen below 50 percent for the first time on record since 1945, the Federal Reserve said Thursday.
Homeowners’ percentage of equity slipped to a revised lower 49.6 percent in the second quarter of 2007, the central bank reported in its quarterly U.S. Flow of Funds Accounts, and declined further to 47.9 percent in the fourth quarter - the third straight quarter it was under 50 percent. That marks the first time homeowners’ debt on their houses exceeds their equity since the Fed started tracking the data in 1945.
The total value of equity also fell for the third straight quarter to $9.65 trillion from a downwardly revised $9.93 trillion in the third quarter.
Home equity, which is equal to the percentage of a home’s market value minus mortgage-related debt, has steadily decreased even as home prices jumped earlier this decade due to a surge in cash-out refinances, home equity loans and lines of credit and an increase in 100 percent or more home financing.
Economists expect this figure to drop even further as declining home prices eat into the value of most Americans’ single largest asset.
Moody’s Economy.com estimates that 8.8 million homeowners, or about 10.3 percent of homes, will have zero or negative equity by the end of the month. Even more disturbing, about 13.8 million households, or 15.9 percent, will be “upside down” if prices fall 20 percent from their peak.
The latest Standard & Poor’s/Case-Shiller index showed U.S. home prices plunging 8.9 percent in the final quarter of 2007 compared with a year ago, the steepest decline in the 20-year history of the index.
“Sophie Mavroleon, a Realtor in Bal Harbour, markets $500,000 to $1.5 million properties to Europeans, especially the French. She says she has watched many potential sales evaporate over taxes and maintenance, which have spiraled upward because of insurance costs.”
So much for “MIRAGE” (Moneyed Immigrants, Rich Ancestors, Generous Expatriates). Not. Gonna. Happen.
NINJAs, MIRAGES & Funyuns, Oh my!
Crap.
I found a house I like. Anyone want to throw some ideas at me? I don’t even know if I should lowball. The tax/insurance issue really bugs me. Ack.
Life was easier in 2005; It was easy to wait then.
Anyone else getting close to buying?
I just ordered another batch of popcorn. I think this year is going to be a bigger crash than we’ve seen thus far.
That doesn’t mean that there are not good buys out there. I’m just not ready to go looking to much. And, naturally, I wouldn’t take the advise of any brokers.
We’ve seen what kind of advise they give. It’s NEVER a bad time to buy, don’t you know.
Compare prices with 2000-2001, when this mania started with the free money loans. Add 15-20%.
I would expect a 1500 s.f. home in Tampa area to sell for around $125,000 -160k TOPS, in a good neighborhood, in good condition. And that is being generous.
My Sister bought a house in Spring Hill last year. 2400 Sf…………$200k, brand new. Builder closeout.
IT was $100k less than the same model the year before.
Good luck, and be careful out there.
Nope. What’s there today will be there tomorrow and the next day and the next day.
Muggy — here in Florida? If yes, then “No.” I agree with Diogenes and Quirk. It looks to me like a typical and predictable Bell curve. 2005-6 was the peak. We’re quickly passing through 2004 prices on the way down. All that remains to guess at is the degree of slope on the downside and level of the bottom. I think 1998-1999 prices will be the bottom - those are the years before journalists used the term “red-hot” to describe our real estate market. It’s easy enough to learn what those prices were, in neighborhoods that existed then, on the Net.
To my knowledge, no credible poster on this blog, nor other bubble-relates ones, has called a bottom nor said that we’re almost there.
A. You like the house. Tugs at your gut. We found one 18 months ago that we loved. But we didn’t buy it because a greater fool was willing to pay more than we would, having doused ourselves first with Ben Jones’ Sanity Sauce.
B. There will be another house that you like. Probably many. As for me, I have since found three, maybe four houses I really like. Haven”t yet offered on any; might, but only at a super-lowball price.
I think that the only perfect house is the one you have built for you, to your specifications; from what I can tell, a sizable percentage of posters here can’t afford to do that. If you can’t have perfect, then IMO a “great deal” comes in a very close second.