‘Buyer’s Dream, Seller’s Nightmare’ In Central Florida
Some reports on Floridas’ housing bubble. “Some U.S. retailers have seen a slowdown in sales recently that could be a response to higher interest rates and a slowing housing market, a top private equity investor said on Tuesday. ‘It’s been so sudden that it could just be a temporary blip, but from a consumer’s standpoint there could be some noise out there,’ said Michael Kalb.”
“Boca Raton, Florida,-based Sun Capital’s retail holdings include Bruegger’s Bagels, Mervyns department stores, Levi’s Outlet and Wickes Furniture. ‘I question whether there’s an appreciation in the retail market of what would happen if there’s a real (economic) slowdown,’ Kalb said. ‘If we don’t come in for a soft landing there are going to be a lot of problems because of all the leverage that’s out there,’ he said.”
“Four more insurers that cover thousands of homes in Florida want to charge much higher rates, and one of them intends to nearly double customer premiums. ‘The reinsurance market is in a panic because of the storms of the last couple of years,’ said Mel Russell, senior VP for United Property. ‘The market is very volatile right now,’ Russell said. ‘Ultimately it’s going to hit everybody right in the pocketbook, because it’s starting from the top down.’”
“Magna Entertainment Corp. said it’s agreement to sell residential real estate in Palm Beach, Fla., has been cancelled by Toll Brothers Inc. Under the terms of the $51 million deal, which was announced in November, Magna was to sell 157 acres to Toll Bros. Magna said it is considering its options with respect to the property.”
And one central Florida realtor already has March sales numbers. “The March numbers are in, and they don’t make comfortable reading for the many short term rental home owners around Walt Disney World, Florida, who are looking to sell up and take a profit. There was a further massive increase in the number of homes listed for sale during March, and no sign of any more buyers to mop up the inventory.”
“The Hightower Index jumped into new territory in March to 273, up from 222, and now well within reach of the 300 ‘meltdown’ level. Hopes of more buyers coming into the market as spring approaches have so far not materialized.”
“Based on the latest figures, Hightower Realty is now predicting a further substantial drop in prices before the market can start to level out. Prices have already dropped by close to 10% from their peak of last summer, and an eventual drop of 20% in home values is a real possibility now. Serious buyers are still very thin on the ground, and they will be tempted only by the very best deals.”
Thanks to the readers that sent in these links. From the Toll link:
‘Magna said it is considering its options with respect to the property.’
This is some of that optioned property the homebuilders brag about. As these deals are cancelled, this land returns to the inventory and should drive prices lower still.
‘Magna said it is considering its options with respect to the property.’
Hey Ben,
Maybe Toll should reconsider building some commercial property on it. Say… a FB Headquarters, a Bankruptcy Court, or ????.
As long as they put in tons of parking, it should be a flying success.
I don’t get it. Why would Toll back out of buying land in FL? Don’t they know that “they are not making any more land?”
Yuk, Yuk, Yuk.
I currently live in orlando and the inventory is about 15,000(it was 10,000 in December)
Nope, real inventory in Statistical Metro Market, Olando is 40-50,000 units for sale. Oh yeah man….I counted them….don’t believe MLS…..the true area covered by Orlando is East Polk, Orlando, Lake, West Volusia, and Osceola. That will show you about 30,000 listings. Now go count FSBO’s and Discount brokers in relation to MLs and you will find another 20,000 easy. Been at it 30 yrs and we are tanking……This time next year……bloodbath…..and economic armegedon….I had a broker explain these ARMS we are seeing. The deal is simple math. In each arm there is a prepayment penalty which the investor counts in his return as each home will refi every year or two. It is a giant ponzi scheme and someone, the last one, won’t have a chair at the end. These guys are all “just trying to make all we can till it crashes”. That is a direct quote. This is the fee earning crap we saw with junk bonds and with loan origination prior to the S&L crash. Stand by folks, it has only begun here in Florida.
“Magna Entertainment Corp. said it’s agreement to sell residential real estate in Palm Beach, Fla., has been cancelled by Toll Brothers Inc.
I TOLL ya. Remember when I said that a lot of the inventory of developable land was actually “under option” and not actually being held? This is how the HBs are going to “retrench.” They really did learn some lessons from the last time. Don’t get me wrong, rough times, tight belts and all that. The market is going screw the stock price twice what is justified if that’s any consolation. Besides, this isn’t like last time. Faster and far deeper this time even these defensive moves are not going to be enough. Just don’t look for bankruptcy. If you were the commercial bank and TOL told you that your choice was BK and take over the properties or restructured debt what would you do? Restructure. The question remains whether TOL can complete and dump the considerable pipeline of inventory before the buyers wise up.
“Hopes of more buyers coming into the market as spring approaches have so far not materialized.”
Not weaker than expected, not slow to materialize… “failed.” The Silent Spring is here.
R Cote etal…
Yes, the early signs of the falling doninoes ..Let’s see Magna paid cash for the land or do you suppose someone lent them funds — REIT or “hard money”…?..
Land banks are first to
IMPLODE!
As for Toll I believe I read, they had just completed a major refinanicing of their bank revolver Or they hit the corporate bond market…Surely the ongoing train wreck described in Ben’s post was not disclosed at the signing.
I TOLL YA TOO…..Too much jibberish on the demise of the BIG biulders…Cote is correct…They are going to get many layers taken off their rear ends before its over but they are in bed with the big commercial banks that will do anything to help them un wind there deals including something that I have mentioned before; “Discounted Doe”…You will see them offering 4.5% fixed rate money while everyone else is @ 6%+……How does Joe Shmoe seller/flipper compete with that ??
You guys way be right, but I still dont think ANYONE in the real estate sector will escape without some serious pain!
*may
“How does Joe Shmoe seller/flipper compete with that ??”
DUNNO. Joe Shmoe, John and Jane Doe… their friend Joe Sixpack and others in their investor club will definitely have to put their heads together and come up with sumpin.
Buuuutttttt…. wasn’t Spring supposed to be the KILLER SEASON for FLIPPERS? I thought we were just in a lull… having an unseasonably warm winter, which put a damper on sales.
Funny how all the outside news sources report the TRUTH about the crash that is happening all around me down here in Central Florida.
But No….Not a mention of the gory details in the Lakeland Ledger, The Orlando Sentinel, The Tampa Tribune, the St. Pete Times or even the lowly Winter Haven News Chief.
Not a single mention.
Seems like one of the local reporters would grow some Kahunas and tell it like it is. It would be easy enough top compile all the reports refenenced in this blog entry and give a summary of the facts.
Please write a letter to the editor of one of those local papers!
I think most of these local papers are so afraid of losing adverting $$$. They shy away from presenting the facts.
Well said Crispy + Cole.
Remember, the Santa Barbara Association of Realtors stopped providing the News Press with “facts and figures” on the local housing market once they were not flattering and could no longer be used as INFOMERCIAL material. Now the Prez of the Association writes his own column and puts it in the Sunday PAID ADVERTISING section of the Real Estate insert.
That way, Maria Zate (the only newspaper writer that has the guts to tell it like it is) can’t question or edit anything he’s writing about.
Yeah, if you look at the St. Pete Times or the Tampa Trib, they have 4 SECTIONS of real estate ads on Sundays. Full-page color ads from Mercedes and Centex, and for all of the ridiculously priced high-rise condo developments scheduled to be built. They certainly don’t want to bite the hand that feeds them. Although I’ve noticed that the ads for some projects are getting smaller–maybe they blew through their advertising budget because they were expecting to be “sold out” by now. Ha-ha.
Uh, Oh!!
“…If we don’t come in for a soft landing there are going to be a lot of problems because of all the leverage that’s out there,’ he said.”
Looks like there are going to be a lot of problems. There are so many people that are leveraged to the eyeballs, with multiple properties thinking they were going to ride that wave into early retirement. With all the overpriced first mortgages, HELOCs and maxed out cards with huge credit limits, even a soft landing spells doom for thousands and thousands of folks. This is so much worse than the S&L meltdown and most of us know how that ended.
i’ve read about the S&L debacle, but i don’t know what happened from a practical standpoint. what banks went bust, where did they go bust, and what happened to the properties they wrote loans against?
thankfully, i’m up to speed and positioned to take advantage of the carnage that will happen when their ARM resets force people or banks to sell.
I remember it. The federal government had to pick up the tab, and was selling off many properties at ten cents on the dollar. A lot of it was commercial real estate (stip malls, office buildings), but there were tons of condos. Here in Tampa, waterfront condos were sold at about 75% discount.
I seem to recalled the name “Silverado Savings and Loan” in Colorado and yet another really dumb Bush (”I didn’t know anything about it; I was selling my name to the coorporation for its letterhead, I wasn’t REALLY on the board of directors” — a practice he, apparently still follows with other companies even now), but I may be misremembering the bank (not the Bush).
Here’s a link to an FDIC chronology:
http://tinyurl.com/eda7w
I remember the following scenario while living in Dallas in the late 80s:
1987–Losses at Texas S&Ls comprise more than one-half of all S&L losses nationwide, and of the 20 largest losses, 14 are in Texas. Texas economy in major recession: crude oil prices fall by nearly 50%, office vacancy is over 30%, and real estate prices collapse.
Could that explain the current administration’s reluctance to push domestic refiners to increase capacity?
Before the bust, every major Texas bank was at least 51% owned by Texans, per state constitution. After the RE and oil crash, the constitution was changed and after all was said and done, not one major Texas bank was owned by Texans. I consider that all the ig banks folded or were bought out. I can’t remember a major S&L that made it in Texas, either.
I’d sure like to see a comparison between the current economic situation and the circumstances surrounding that crisis. I imagine that many of the variables that existed in the 1980s crash are quite different than what is currently at work, but it seems there are many parallels, at the very least, the appraisal fraudulent activity and the huge amount of flipping thanks to artificially inflated prices.
I remember that many of the convictions in Texas involved the fraudulent inflation of prices and flipping which ultimately doomed the bag holders (S&Ls) when they held the mortgages on completely worthless condos in and around Interstate 30 just outside of Dallas.
I was shocked by the amount of greed that existed in Dallas in the mid to late 80s as well as how much folks flaunted their ill gotten riches. Many high profile, wealthy folks lost everything in the subsequent crash. And yet, for some reason I get the feeling that this time it is much worse and the economy is on the cusp of implosion.
Don’t you think the television programs “Dallas” and “Dynasty” had a lot to do with this? That was the beginning of the Yuppie/Dink era, when everyone had to wear designer clothes with labels sewn on the outside, and pyramid schemes were all the rage.
Now the Yuppie children have grown up, and are even more pretentious and obnoxious than their parents.
I don’t think the tv shows started the self centeredness….they reflected what was already out there. Many historians have reflected how Watergate/Viet Nam changed how people felt about authority, structure and the rebellion’s been going on ever since.
In the early 1980s, regulators loosened up on S&Ls (which were having a hard time competing with banks) and allowed them to invest in more risky assets (mortgages used to be their bread and butter). At the same time, there was lax oversight.
Today, I think a similar story is happening with mortgage lenders and exotic mortgage products. Things have changed so quickly, that regulators and investorys buying MBS are not aware of the new risk. One big difference is that the government is not required by law to bail out people this time (as they are with S&L deposit insurance). However, many people think that Fannie and Freddie have an implicit guarantee. That’s what I’m scared about.
Out of print, but you can get it used on Amamzon.com for about $5.00:
The Greatest Ever Bank Robery: The Collapse of the Savings and Loan Industry
by Martin Mayer
I had remembered reading it when it first came out (around 1990). I have been seeing some parallels in the current mortgage, appraisal, and accounting industry, so about two weeks ago I bought another copy and have been (re)reading it ever since. A bit choppy, but still a very interresting read!
amazon.com…sheesh.
Re: S&L scandal…Seems Neil Bush was one of the bankers..Lent his buddies 10s’ of millions that was never repayed…Well, not by the borrowers. It was the taxpayers. Guess who will be paying again?
…..Just watch the fat cats slink away with their gain. My bet is they will get away again, and good ol’ middle class will take it again….Always works that way. Of course they will all parade around ,and ask how this was allowed to happen ,and it will never happen again……
The S&L’s were subject to a one two three punch:
First, Prior to the 1970s there were unbelievably generous tax rules for commercial property owners (to the point that you could build a building for the tax loss and not need leasees to make money). They were changed retroactivly which wiped out a ton of investors who had over built. (This resulted in weaker balance sheets but was limited to commercial real estate which was not as prevalent at most thrifts).
The uppercut was Volker’s large rate increase and their unhedged balance sheets. Both short and long term rates. This exposed a major risk that thrifts had never dealt with before duration risk. Thrifts owned fixed rate mortgage products and funded themselves via deposits. When rates rose their mortgage products continued to pay 6%, but their deposit rates rose from say 1-2% to 7-10%. Now suddenly their income was negative, and the market value of their balance sheet assets had declined (while their liabilities was essentially unchanged), so they could not sell assets to raise capital).
Finaly, there was a huge oil based building boom in Texas. When oil prices crashed Texas equity was wiped out compeletely and it took years to recover.
It didn’t help that when the government came to look, most of the operations were making loans to their buddies with the main underwriting guidline being the number of rounds you had with the bank president that night before or rounds of golf played that week. The final one gets most of the blame because most people understand cronyism but bond duration is a bit more complex, but it was their absolute lack of hedging for an unexpected rate move that did almost all of the damage.
Total tab to taxpayers was $500 billion via Resolution Trust.
Most damage was in FL, TX, AZ and CA.
One of the long term effects of the S+L Crisis was the consolidation of the Banking industry. It went something like this. Most banks were able to operate in one state only, under old laws designed to prevent a few New York banks from taking over the entire banking industry in the U.S. When the Feds were saddled with a bunch of insolvent S+Ls, rather than liquidate the most of those thrifts, they sold them. ISTR there was an exception to the laws on instate banking allowing the feds to sell these insolvent or marginally solvent thrifts to banks in a different state. The only good reason for somebody to buy one of these S&Ls was to get the right to operate in another state. This became rather Byzantine. ISTR that for one local banks ATMs you could withdraw money from branches in any state, but if you deposited a check in an out of state ATM, they had to mail it to the state where your branch was before it could be processed. This process became cumbersome enough the the in state only banking laws were repealed, paving the way for the Sovran=>Nationsbank=>Bank of America=> And One Bank to rule them all mergers.
When the current crisis unwinds, I wonder what the long-term unforseen consequences will be.
OT but we all know what banks are holding home mortgages. Question, we don’t know what our local credit unions have been doing. Anybody checked on theirs lately. I know in Bakersfield the teachers federal credit union was giving members loans like things were going up forever and I am wondering how many of these institutions are holding their own paper?
I can confirm this, I know someone who couldn’t get a HELOC approved until they went to a credit union and out came the rubber stamp.
There’s a local credit union in town offering a 5 month CD at 6 percent that I’m thinking of going for. It’s so much higher than other CDs in the area that I’m a little leery of joining and going for the rate. I feel like something must be wrong that they’re offering such a good rate. Any comments?
I’d be careful. Might be one of those “negative amortization” CDs.
Michael,
Don’t know about your credit union, but I have found a lot of great information on bankrate.com You have to navigate around to find what you are looking for, but they have ratings on banks- how strong and “safe” they are compared to others, as well as comparison rates on what you can get on various CD’s offered by a variety of banks across the nation. Might be worth a looksy.
You can check the rating of your credit union at Bauer Financial (Google it… it comes up first). I learned that on this blog, so it must be true. Before I roll over a CD at a very good rate, I’m going to visit a branch manager to ask what RE exposure we have (member owned, of course) to NegAm, ARMs, NoDoc’s, etc.
They have to lend to someone, and what else is there? Used cars? Nearly anything productive is now financed in the capital markets.
Most of us are very bearish and are predicting the housing crash. The signs are everywhere. We think this will create the downfall of the US consumer and create real headwinds for economy, this in addition to ALL the other micro and macro problems discussed here.
QUESTION: Why is the stock market soaring? I want to understand!
the stocks that are moving generally aren’t housing related. they are commodity or technology driven. i think some of it can be accounted for by money moving out of real estate and back into the stock market.
YEP!
i left one thing out–the u.s. market is somewhat of a laggard versus international markets, especially when you take into account currency adjustments.
Because the Fed is expected to stop raising rates soon (in part because of softening housing), which would be “good news” and therefore cause for a rally. So folks are front-running that. Probably means when the Fed does stop, the market will fall instead - buy on mystery, sell on history.
But Libertas,
Some believe that the Fed is NOT going to stop raising rates soon… in fact, Mr. B has hinted that the housing bubble is causing problems for the economy- and has indirectly suggested that the Fed will CONTINUE to raise rates. At least this is my feeling and interpretation. Take it with a grain of salt.
“sell in May and go away” always works. its april 4 today. weve already seen this years highs
When housing in Australia tanked its stock market took off.
Magna Entertainment…..foreign company into horse racing, golf courses, and soon to be back into the auto parts business…..
I heard on one of the financial channels that a housing bubble burst would create a 40% decrease in retail sales…..
And toilet seats can give AIDS. I heard it, heard it someplace…
Come on. Take a breath. 40% is more than a quarter of the entire US GDP.
along those lines, I heard a hack (rep) from the Nat’l Ass of Homebuilders squawking about the immigration bills. Essentially saying they need the labor and pointing out that homebuilding (with the multiplier, I’m sure) = 15 to 18% of GDP.
If that’s the case, I’ll be in the Grand Salon, cause we’re definitely on the Titanic & I need a drink!
Penina,
a good indicator is the DOW. It is what is soaring, not the other indexes. They are lagging.
The Dow always picks up when the fed is pumping money into the system, despite the rate increases, total Fed credit has been expanding.
The reason many stock traders monitor Fed M3 money suppy is that the DOW always goes up on M3 increases.
With the M3 numbers missing, it makes it harder for traders to jump in on the uptick.
That is my theory. I also think the general public believes it’s safe to get back into the water, but sharks are everywhere.
Ok, housewife here….wondering if someone can tell me what M3 is? (Countries propping up our dollar?) Also is there an economics for dummies type book I can read? (Aced in college but that was 25 years ago) Thanks
M1, M2, and M3 are different measures of the total amount of US$ or “money supply” If you google “money supply” and M3 you can probably find a good, accurate definiation, but off of the top of my head, and probably therefore somewhat wrong:
M1= all currency and coin in circulation and demand (checking) acounts.
M2= M1 and savings accounts with ballances of up to $100,000
M3 =M2 and savings accounts > $100,000.
These are useful as an inflation indicator because they’re half of the equation of how much money is chasing how much goods
The Federal reserve has recently said that it will stop reporting the M3, and many doombloggers are convinced that this indicates that they want to greatly increase the money supply on the sly to monetize debt without spiking inflation.
Ouch. I think there is a helluva lot more to go in Central Florida. My former landlord (a doctor and idiot investor) was talking about how last summer he had to spend 300k for a condo in Orlando as he was moving down there. The price had started at 240k in the morning but they were selling out and he had no choice. I asked him why he just doesn’t rent down there since he is moving his family in a years time. No answer. I guess he’s too rich - or thinks he’s too rich - to rent.
You can be right a lot of the time in real-estate/investing by the combination of luck and leverage, but eventually that luck runs out and basically wipes you out since most people are highly leveraged at just the wrong time.
You might tell your former landlord that in the end, we’re all just renters!
Amen.
Another thing: if this realtor if we’re already close to danger levels for home sellers in Central Florida, and the Fed hasn’t finished raising rates, where will be when they do finish and/or if there is an interest rate spike due to a dollar run?
“if this realtor if”
meaning, if this realtor is saying we are…
Penina…It is in the M3…..It’s the same question any rational person must be asking themselves…
The FED has no clothes, we know it, they know it and soon the majority will know it.. That day of “recognition” is fast approaching, known to “elloitt wave observers as Wave 3 down. A massive unrelenting down trade that ALL the king’s men and all the Fed’s horses can’t put together hum-P-ty dum-P-ty or preven-T (PPT)!
Who - PPT- “humpty dumpty aka -Plunge Protection Team..for the “kings men”
Why - so they can get out whole and then Sell to us. All major exchanges and NYSE seats have been sold.
When - imminent before 4/12/06 last sucker has returned to speculate in long term in stocks>
Where - Global sell off….1st in london
Purpose -In ORDER to form “more a perfect Earth” with a new “basket of FIAT currencies” - see http://www.BIS.com
I agree Inspired. The run up in the stock market is related to M3 and
some monies flowing out of Real Estate. I think both are short lived.
Real Estate for obvious reasons and M3 as our creditors will not put
up with their vast holdings of our currency being devalued.
Agreed, Seems they are dumping their dollars faster, 10y jumping. Interesting tension today on CNBC regarding bonds, and questions whether Snow may be leaving also…Seems the behind the curtain fear was apparent..Anyone else see any hints? Totally gut feeling here, but something is amiss…end of week should be interesting
To robert cote,
40% was what was quoted and I took that as another early sign of panic setting in not for face value….
But this is what people will read as being posted here and use it out of context to paint the entire community with crazy labels.
Crazy like a fox.
>and use it out of context to paint the entire
>community with crazy labels.
So?
Why shy away from 40%. Robert is smart and all but he doesn’t know everything… For a couple of years know it has been known how retail has been phenomenal, luxury items have been going thru the roof. Who has been buying when salaries have not gone up and overall economy has not seen any gaings? Maybe it is not so far fetched to say it has been HELOC money and the retail could go down 40%. The only people I know shopping like its going out of style (which it is) are people who are shopping with borrowed money and they aren’t worried cause their property is gaining in value faster than they can say BLING BLING…
Gotta love that spelling…
You’re forgetting about the growing wealth divide. The median consumer is going to get whacked, the wealthy will still buy Fendi, etc. if things go south.
True, but many median consumers have been buying Fendi and stuff because they have been able to, possibly for the first time, shopping beyond their wildest dreams…
What Say You,
errrrr… I mean, Say What-
I agree with your thread. I think a lot of folks are purchasing on borrowed money. Ever notice how many luxury vehicles are on the road these days? Leases have become very popular, but so too has been borrowing from the HELOC COOKIE JAR.
Actually say what, I think the top levels of business are still getting healthy raises. Many of my friends husbands have been getting promotion after promotion. And here where housing is relatively cheap, that means there’s an awful lot left over for fun and spending even after your investments. (painfully we’ve not enjoyed that same situation but it has been nice to have my children’s father in the country more than 5 days a month.)
Foregive my if this has already been mentioned, but a good article from Yahoo:
Buyer [And Seller] Beware
http://tinyurl.com/psyxm
“Rent-vs.-buy decisions are a perfect example of what the housing market can learn from behavioral economics. If financial efficiency were all that mattered, more people would be renting nice houses instead of buying them, even taking into account the home mortgage-interest deduction. But there’s something comforting about owning the place where you lay your head on the pillow each night. “It’s worked out so phenomenal,” exults first-time buyer Obrey M. Minor, a 27-year-old special education teacher who bought his first house last year with his wife in the Houston suburb of Katy.
…
Especially in upscale communities, social pressure to buy is intense. Jonathan Miller, CEO of real estate appraiser Miller Samuel Inc., recalls that when he and his family moved to upper-crust Darien, Conn., 15 years ago and rented for a year, “we were absolutely second-class citizens. It was very unpleasant.”
Call it “castle thinking” — the notion that a home is a fortress against a cruel world. And it’s perfectly defensible. But in many markets the total monthly costs of renting are far below the total monthly costs of owning the same property — 62% cheaper in San Diego, for example, according to Boston-based Torto Wheaton Research, a unit of property manager CB Richard Ellis Group Inc. So you owe it to yourself to be aware that your castle thinking can be a costly predilection.
Neuroscientists have even discovered the place in your brain that makes you spend too much on a house. Far from behaving perfectly rationally, real people are pushed and pulled by signals emanating from below the neocortex — the primitive “lizard brain.” That may be why there are so many homes with empty marble foyers, faux Roman columns, dust-collecting Jacuzzis, and exotic drooping conifers on the lawn.”
There’s a premium paid for the “prestige” of buying and a discount received for “shame” of renting. I’ll take the discount.
Speaking of inventory and a crazy market, we just put up new numbers for New York City. It’s wild:
BubbleTrack.blogspot.com
Bubble-x
Fun to read your blog entry. One of the excerpts was:
“A lot of the new listings that come on the market are overpriced” “Buyers are looking for a deal, and sellers aren’t budging for the most part. If sellers don’t come to terms with the new market, then I would think in the third quarter there would be a sharp drop-off in new transactions.”
Yeah, yeah… so this was a quote by a New Yorker- but it might as well as be from ANYTOWN U.S.A.
That’s what’s so fascinating about this NEVER BEFORE SEEN housing bubble TIME BOMB waiting to go off. These quotes can be heard in NYC, Coastal Florida, Coastal California, the deserts of Phoenix and Las Vegas.
This Bubble is no respector of any town!
Well they are not saying it in my town.
My town = promised land
My people = chosen people
Angel of Bubble Death will pass over ;-D
I wonder how this will affect housing in FL.
Hurricanes send Florida insurance rates sky high
Homeowners policies shoot up 60 to 92 percent for Florida customers.
April 4, 2006: 5:53 PM EDT
NEW YORK (Reuters) - Homeowners in Florida, the nation’s most hurricane-battered state, are being hit with insurers’ demands for rate increases of 60 percent to 92 percent.
The Florida Office of Insurance Regulation said Florida Peninsula Insurance Co., a one-year-old company, has asked for a statewide rate increase of 91.8 percent. That means some areas will pay even more, while others will pay slightly less.
Companion Property and Casualty Insurance Co., a subsidiary of Blue Cross and Blue Shield of South Carolina, has asked for a statewide increase of 60.1 percent, the regulator said. Several other insurers have also filed for lesser amounts.
By law, public hearings are required when insurers seek rate hikes of more than 15 percent, but given recent hurricane losses, both regulators and insurers anticipate rate hikes.
Four hurricanes pounded Florida in 2004 and caused an estimated $27 billion in damage, according to insurers. In 2005 the state was grazed by Hurricane Katrina, then hit from the west by Hurricane Wilma. Wilma inflicted about $10 billion in insured losses on Florida.
“The rising cost of reinsurance, which insurers use to cover their own losses, and new construction are a major factor in the costs of insurance in Florida,” said Jonathon Kees, a spokesperson for the Florida Office of Insurance Regulation.
Roger Desjadon, chief executive of Florida Peninsula, said his company had lost money in its first year of operation, and the cost to buy reinsurance had risen 50 percent to 100 percent.
“We are trying to do a good job in a market that has seen some rough years,” said Desjadon. “The premium dollars we’re taking in are not enough to pay for the losses.
A spokeswoman for Companion had no immediate comment.
oops, here is the link
Hurricanes send Florida insurance rates sky high
I love my renters insurance, $180/year
mine doubled in Orlando….glad i am inland!
For all those that missed it… check out this SNL skit with Steve Martin
SNL: Don’t Buy Stuff You Cannot Afford
http://danwho.net/mp/index.php?id=snl_dontbuystuff
I sent it to a friend, but he didn’t think it was funny. Then I remembered that he and his wife just spent a fortune on new furniture they didn’t need…oops!
>Don’t Buy Stuff You Cannot Afford
Classic!
But I still don’t get it. What if I have a home with some equity still left in it, and I want to buy a boat? Can’t I turn that equity into cash, and then, since I have cash (which everyone knows = money), afford to buy that boat? I’ll just make sure to get the cash out BEFORE I buy the boat, because I wouldn’t want to buy anything I couldn’t afford.
And be sure to get that cash out BEFORE the “value” of your house tanks because you wouldn’t want to “lose” that money and not be able to buy your boat.
Personal income was way up in DC over the 2004 to 2005 period.
This should slow the rate at which prices in the DC real estate market slow.
http://dcbubble.blogspot.com/2006/04/source-of-calm-in-troubled-market-per.html
This would be valid if you assume that purchases in DC (especially the condo market) were overwhelmingly for people to live in. I believe that a significant portion of the DC condo market was fueled by expectations that appreciation would result. Once this expectation of appreciation is gone (which it will), I expect to see significant price drops (20-30%) in the condo market in DC proper. Rowhouses and single family homes (in upper NW, for example) will hold their own very well though, because people who buy them tend to move in and live in them.
OT, from today’s WaPo:
Is Reliance on Real Estate a Crack in the Foundation?
“The U.S. economy is more dependent on housing than it has been in a half-century, as the sector fuels consumer spending and has accounted for nearly three-quarters of the nation’s job growth in the past five years.
“As a result, economists worry that the housing slowdown that began late last year could hurt the broader economy more than past real estate downturns, although other parts of the economy appear to be accelerating.
“What makes the real estate boom of the past decade unusual is that its effects have reverberated far beyond closely related sectors such as construction, driving sales in places as varied as furniture stores and motorcycle showrooms, especially in the Washington area and others where home prices have soared particularly rapidly.”
Yep, and next it will reverberate thru bicycle shops.