March 16, 2008

The Greatest Speculation In The History Of Housing

CBS News reports from Florida. “Home appraisers Pam Crowley and Joyce Potts knew the roof was caving in on the housing industry four years ago, CBS News correspondent Sharyl Attkisson reports. That’s when they noticed their profession being turned on its head. Instead of letting them do their job and figure what a home was worth … bankers and realtors started telling them what dollar number to hit.”

“‘The appraiser is not to accept any orders where it’s pre-determined what the value should be,’ said Crowley, a Florida certified real estate appraiser.”

“More and more, appraisers have been told that, to get hired, they have to guarantee a high appraisal - sight unseen. One lender emails appraisers, ‘I need at least $210,000.’ Another writes: ‘I want to know if we can hit a value of 280K.’”

“Some lenders even send out blatant mass e-mails putting appraisers in a bidding war. To 77 appraisers for a home in Arizona: ‘whoever can provide the highest [appraisal] will receive the deal.’ ‘We were blackmailed,’ Crowley said.”

“We didn’t have to look far to see the fallout. Joyce Potts had just been called by a mortgage broker who wanted a high appraisal to refinance this tiny house in disrepair.”

“Attkisson asked Potts: ‘What was the number they wanted you to appraise this house at?’ ‘Well, it started at $210, then he says, ‘what about $175.’ Then, ‘how about $150. can you get $150?’ she said.”

“Potts turned down the job. But while we were there, another appraiser came by. He decided not to look at the house with CBS News cameras there.”

“Now under scrutiny, bankers and lenders are starting to adopt new rules to ensure independent, reliable appraisals. The changes are too late for many, including Crowley who’s lost her business.”

The Herald Tribune. “Foreclosure action in the first two months of 2008 was nearly three times greater than at the same time last year in Manatee, Sarasota and Charlotte counties. Distressed properties now account for roughly a quarter of all residential transactions, says Mary Howard, president of Lakewood Ranch’s Cornerstone Title.”

“‘It became prevalent toward the latter part of last year,’ Howard said.”

“County appraiser Web sites around Southwest Florida are burgeoning with lists of lender-owner properties. ‘You can find a list of the properties they own, and I guarantee they want to get rid of them,’ said Erik Sconberg of Manatee County’s Horizon Realty. ‘There’s anything you want from Longboat Key to the east side of any city.’”

“Many banks were freely lending during the real estate boom to people without the wherewithal to carry through on their purchases long term. ‘You’re dealing with many people who weren’t truly qualified to begin with,’ said real estate analyst Lou Goodkin. ‘You had no down payments, you had stretch buying, and we basically had the greatest speculation in the history of housing.’”

“‘It was such a distortion, where the appreciation was really artificially created,’ Goodkin said. ‘Even now, prices are still well above what most people could afford before.’”

“On Thursday, Sconberg was on Longboat Key checking on two properties he has listed, both foreclosed on by Brasota Mortgage, and both formerly owned by the same investor. ‘They’re both R.E.O.,’ Sconberg said, meaning ‘Real Estate Owned.’ ‘Big time flipper got caught.’”

“One is a four-bedroom, three-bath in Country Club Shores with a deep-water dock and a pool. It is five minutes from Sarasota Bay and the price is $1 million.”

“‘$1.5 million will get you 8,500 square feet, a monster of a place,’ Sconberg said of the house. ‘Dock on a canal that is hidden from the bay. Huge swimming pool, with a jacuzzi.’”

“‘The neighbors are for sale on Bayou for $2.5 million,’ Sconberg added. ‘Five years from now you will be sitting there going, ‘Wow, did I make a killing.’”

The Miami Herald. “For the second consecutive year, Florida ranked No. 1 in the country for mortgage fraud, as the stalled housing market quickly pushed both prevaricating borrowers and seasoned criminals into foreclosure.”

“In Miami-Dade County, more than 1,500 cases of suspected fraud have been reported to police since the fall, said Glenn Theobald, chief legal counsel for the department and chairman of Mayor Carlos Alvarez’s Mortgage Fraud Task Force.”

“‘We can’t get through them all — one case turns into five,’ Theobald said. The department, he said, has 10 investigators dedicated to mortgage fraud, representing a ‘tremendous commitment.’”

“Florida’s latest ranking comes despite a new mortgage fraud law passed last year that made mortgage fraud a crime and established stringent criminal penalties. The Florida law mirrors a similar measure passed by Georgia in 2005, which served to dramatically button down fraud in that state.”

“‘If the [Florida] law is followed diligently and people are pursued and caught and prosecuted, it is going to have an impact because the word will get around. That’s what happened in Georgia,’ said Merle Sharick, Mortgage Asset Research Institute’s national manager of business development.”

The Sun Sentinel. “Four kids, three dogs, one bathroom, 900 square feet. This adds up to a problem every weekday morning at Luci and Danny Brito’s tiny house in Pembroke Pines. ‘There’s literally a line, with each one holding a towel and a hairbrush, in our pajamas,’ Luci Brito says.”

“The value of their small home has shrunk and it is now less than their mortgage. They’d like to refinance their mortgage, but they don’t qualify, even though Luci and Danny Brito have good jobs in and good credit.”

“The Britos bought their home for $270,000 at the peak of the housing boom and appraisers say now it’s worth $250,000. No lender is going to give them a new loan large enough to pay off their current mortgage.”

“‘It’s laugh or cry, you pick,’ she said. ‘We can’t go looking for anything bigger.’”

“‘I don’t blame the lenders,’ said Gene Petrino, a mortgage broker in Pompano Beach. ‘But they’ve gone from one extreme to the other — from everybody gets a loan to nobody gets a loan. There has to be a happy medium.’”

The Orlando Sentinel. “The national mortgage crisis continues to hit close to home as Lake County homeowners keep defaulting on mortgages at a record pace, circuit court figures show. Following 2007, when a record 2,080 mortgage foreclosures were filed in circuit court in Lake County, banks and other lenders have sought to reclaim more than 700 properties since the new year began.”

“The county didn’t pass the 700 mark last year until late June.”

“Dale Purcell lost his home in Astatula to foreclosure Thursday, said he couldn’t keep up with mortgage payments after they jumped suddenly last year from about $900 a month to $1,700. He said he has painted the house, landscaped it and tried to sell it to save his credit rating.”

“‘You can’t even rent a DVD without a credit card,’ he told Circuit Judge G. Richard Singeltary during the court hearing.”

“The foreclosed properties range from modest homes to mansions. Just last week, judges in Lake County issued final foreclosure rulings on properties valued together at about $2 million.”

“Three other properties, with a combined value of nearly $700,000, were sold at a foreclosure auction Friday at the courthouse. Shannan Buttner, who stood as the lenders’ proxy, was the lone bidder. She said she was authorized to drive up the bid to within 85 or 90 percent of the debt.”

“She bid just $100 for each, meaning the homes remain the property of the lenders.”

“Life was coming at Sam Butler fast last year. His career was going strong, and the time looked right for a bold jump into Chicago. Butler had already found a house for his family in an Illinois suburb, so he placed his Orlando home on the market for just more than he had paid in 2005.”

“Then reality hit. The Butlers waited for prospective buyers to arrive. They eventually showed up, but with offers way below the $310,000 the Butlers had thought would materialize. And financing that new home no longer seemed practical.”

“‘We took the house off the market when we figured out the house in Chicago wouldn’t work,’ Butler said last week. ‘So for now, we are staying here.’”

“Mike Colpitts, editor of a Destin publication that follows housing-market trends, thinks any rebound in housing is still off in the distance and those hoping to get their hands on the equity they thought they had in their homes will have to wait.”

“‘A lot of people will be stuck in their homes for a lot longer than they ever thought they would be,’ Colpitts said recently. ‘This situation will probably last until the middle of 2010, and it will be horrible for a lot of folks — as bad as it gets, really.’”

“Central Florida’s supply of unsold dwellings has grown from a one-month inventory in 2005 to more than 28 months’ worth as of a month ago.”

“Mike and Katie King have discovered that the real-estate market is far different than they thought it was last summer, when Mike King accepted a new job in Vero Beach and the couple put their Apopka house up for sale.”

“Nine months later, they are living in a rented town house in Vero — and their Central Florida residence is still unsold. ‘I knew things were kind of bad, but not this bad,’ King said. ‘We were down here in Vero for three or four months, and nothing was happening with our house, so we lowered the price by $17,000.’”

“That hasn’t worked. Now, King said, he is considering leaving his new job and returning to Apopka to live and work. ‘Yes, I might consider moving back to Orlando if the house doesn’t sell,’ King said. ‘Right now, we are waiting. I’m committed here until our lease runs out in June. We just keep hoping the house will sell and the noose will be loosened from around my neck.’”

“Renting is another option. But the expanding supply is limiting what they can charge.”

“‘The downside of renting [is that it] might only cover 70 or 80 percent of a loan payment,’ said Bill Murphy, president of Remarc Homes, an Orlando custom-home builder who is renting out some of the properties that he built in the Orlando area during the housing boom.”

“‘I have about 16 houses that I built and couldn’t sell,’ Murphy said. ‘Like every other builder a few years back, I got up in the morning and just said, ‘Let’s build.’”

“Murphy has decided that it’s better to rent his houses for now than to sell them at deflated prices. ‘I think the market has bottomed out,’ he predicted, though ‘the places I used to be able to rent for $2,200 a month now go for $1,900.’”

“‘It used to be no problem selling; if you had a pulse, you could buy one,’ he added. ‘Now the banks are a lot more careful.’”




RSS feed | Trackback URI

104 Comments »

Comment by Ben Jones
2008-03-16 07:22:48

‘Celebrity developer Donald Trump won international attention in late 2005 when he put the sprawling oceanfront estate at 515 N. County Road on the market for $125 million. With the mansion still for sale, Trump has a new idea for the property: He wants to transform the site into a high-end hotel.’

‘Meantime, Trump also changed listing agents for the home at 515 N. County Road. It’s now listed for a mere $100 million, a 20 percent price cut from 2005. Trump downplayed the $25 million reduction, saying he has received ‘many offers’ for one of the most expensive listings in the nation. ‘I’m in no rush,’ he said.’

‘Trump said he has not asked the town of Palm Beach for permission to build a hotel on the property. Not so enthusiastic was Palm Beach Mayor Jack McDonald. He worries about traffic that would be created by a hotel in an area of posh mansions. ‘It does not sound like a good idea to me,’ McDonald said. ‘It’s a residential neighborhood.’

Comment by Professor Bear
2008-03-16 07:45:58

‘He wants to transform the site into a high-end hotel.’

I see lots of For Rent signs around my hood these days. Seems like lotsa wannabe sellers have decided to rent out their homes until prices rebound…

 
Comment by GotRocks
2008-03-16 07:54:49

I think that Donald will have to eat dozens of his millions (or potential millions, not sure) in this particular case.

Comment by Bye FL
2008-03-16 08:29:43

He paid $40m for that at auction and put another $20m in upgrades. He got an $80m offer back in 2005 which he should have taken! Anyone that pays over $60m are rich fools.

 
 
 
Comment by Ben Jones
2008-03-16 07:26:31

I wonder if the ‘bubbles just happen’ crowd here (where oh where did they go?) would care to comment now that just about every level of the REIC and government are acting to ‘prevent this from happening again.’ Which BTW media people, this blog was predicting long ago.

Comment by Scotty
2008-03-16 07:46:48

I’ve seen a bunch of stories about pending federal and state legislation to “avoid problems in the future.” I’ve been calling them “Barn Door” laws. In this case, not only is the horse gone, but Ol’ Paint ran out onto the interstate and got smacked by an 18-wheeler.

Comment by NYCityBoy
2008-03-16 09:44:08

Ol’ Paint now forms the glue that seals the envelopes notifying the sheep of their governmental “rebate”. So his death was not in vain.

 
 
Comment by crispy&cole
2008-03-16 07:48:06

The FED has approximately $400 billion worth of bullets left. Not much to go around if the unwinding continues at its present pace.

With the BSC downgrade after the close on Friday, Monday will be very interesting…

Comment by Faster Pussycat, Sell Sell
2008-03-16 08:32:17

Sunday night will be very interesting if Bear doesn’t get a deal done before the Japanese open.

This is more exciting than the Superbowl (for me, at any rate.)

WHEEEEEEEEEEEEEEEEEEEEEE

Comment by Ann
2008-03-16 08:46:50

I know..running out with hubby to pick up some chips and dips…

(Comments wont nest below this level)
Comment by edgewaterjohn
2008-03-16 09:18:10

Yeah, way better than the souper bowl. This calls for a Sunday afternoon buzz before the Nikkei open. Tomorrow being St. Patrick’s Day means everyone will have a hangover here anyway.

 
Comment by NYCityBoy
2008-03-16 10:38:53

Think any of my Wall Street neighbors will be partaking in the St. Paddy’s Day parade? I would guess not. Bwahaha.

 
Comment by Faster Pussycat, Sell Sell
2008-03-16 14:21:02

Picked me up some Dogfish Head Raison d’être.

Appropriate, no?

 
 
Comment by KenWPA
2008-03-16 10:30:27

Watching this all unravel is sort of like reading a so-so book. The foreshadowing early in the book makes it obvious that things won’t end well. The close calls seem so contrived that you know in reality it couldn’t really happen this way.

And yet here we are watching it all play out just like so many on HBB thought that things would progress. Sure there have been some near misses and last minute saves, but for the most part it is progressing as expected.

Now the scary part starts to kick in for our entertainment…. The actual melt-down.

Hopefully the melt-down won’t take too many of us down with it. Once truly unleashed, this thing will take on a life of it’s own and will touch almost everybody to some degree or another. Hopefully we will all be in the situation to take advantage of the opportunities when it comes time to sift thru the ashes.

(Comments wont nest below this level)
Comment by Faster Pussycat, Sell Sell
2008-03-16 11:01:07

True, in a way.

But this is better. For one, the endless arguments are a good thing. People here have a far better than average chance of not just survival but coming out ahead. :-D

 
 
 
 
Comment by crispy&cole
2008-03-16 07:52:02

Also just announced the Chinese backed out of the BSC deal they announced some time back (3 months ago or so). $1 billion of capital GONE!

http://www.marketwatch.com/news/story/chinas-citic-wont-guarantee-completing/story.aspx?guid=%7B6869FE4B-9000-4F23-9E47-6D9AF4CA8938%7D&siteid=yahoomy

 
Comment by diemos
2008-03-16 08:12:26

After the great depression a number of rules were put in place to “prevent this from ever happening again”. Then in the 90’s these “silly,outdated and pointless” rules were eliminated in the name of “encouraging financial innovation”. Now those rules will be put back in place again.

The only thing we learn from history is that we never learn anything from history.

Comment by Professor Bear
2008-03-16 08:44:39

Thanks to a general failure of our public education system’s history department, we need to relive history in order to relearn history’s lessons.

Comment by GH
2008-03-16 08:57:34

Our school system has been hallowed out by corrupt administrators and has nothing left to give. It is up to parents to take control of their lives and the lives of their children.

(Comments wont nest below this level)
Comment by aladinsane
2008-03-16 09:37:14

Computer and electrical doohickeys have their place, but not when they corrupt young minds into being lazy and having no yen to learn, and no ambition higher than to be a barista @ Starbucks.

It’s time to get back to basics…

 
Comment by tuxedo_junction
2008-03-16 09:48:54

The school system has been hollowed out by parents who demand huge expenditures on such things as olympic/professional calibre sports facilities and auditoriums capable of presenting touring company productions of Broadway musicals. The parents also insist that homework be limited in time and difficulty and that tests be easy enough so that their kids can get a B without having learned anything. Plus in the bible belt parents don’t want their kids to learn anything that may contradict their minister’s take on scripture. The administrators simply give the majority what it wants.

 
 
Comment by spike66
2008-03-16 10:35:27

“Thanks to a general failure of our public education system’s history department, we need to relive history in order to relearn history’s lessons.”

Let’s not forget the adults who voted Republican, and supported the “free-market capitalism, no-regulation” mantra of the current administration, and watched happily as Glass-Steagall was demolished. Aren’t those adults responsible as well?

(Comments wont nest below this level)
Comment by CrackerJim
2008-03-16 12:59:38

BS!
The deterioration of public schools began with the “Great Society” era and has continued through multiple administrations. The current administration may have contributed but did not cause this phenomenon nor will the next administration, Republican or Democrat correct it.

 
Comment by cayo_ron
2008-03-16 17:51:16

Let’s not pretend that greed knows any party boundaries. That’s just a bunch of crap.

 
 
 
Comment by smathis
2008-03-16 09:01:59

Those who remember the past…are condemned to repeat it, too.

 
 
Comment by aNYCdj
2008-03-16 09:10:11

Ben:

Maybe you will finally believe me, the media Does NOT hire people like me today. Its nearly impossible to get a job if you are smart. Even entry level you must be a 23 year old chicky-poo airhead.

So how are these clueless Paris Hilton wannabees going to have the intelligence to have your blog on their daily read list? Yet how many were “Loan officers?”

Ill keep saying this we need to vastly upgrade HR in America, get rid of the clueless airheads and hire ADULTS to read the resumes, answer telephones and e-mails, and maybe this wont happen again, because people like me would get multiple job offers.

I got into a nasty e-mail exchange with Mark Cuban, because i asked Am I too old to be Dan Rather’s Production Assistant. Now it Fox Business News am i just too old for the job, or maybe too smart…or both?

Comment by Vermontergal
2008-03-16 09:27:39

So…no job yet??

Comment by aNYCdj
2008-03-16 09:47:32

Nothing serious, just a St Patrick’s day party and some mickey mouse paralegal work…and a few corporate video shoots

We are so Dumbed down in America, i am begging to meet anyone smart who can offer me a job.

Honestly, It’s the insane refusal to think outside the box which is killing me. Its not a skill in demand anymore …and boy it shows.

Click on my handle, i think zydeco music is ready for a major breakthough, good fun clean danceable music yet nobody wants to take chance in NYC, even if i offer to dj for FREE….its not ghetto rap and hip hop…..I even offered to work for nothing with a music pr firm if they help me promote my nigh…nope…must have a clueless 23 year old INDIE chick with tats and piercings

But this all ties into why it took the media so long to get it.

(Comments wont nest below this level)
 
 
 
Comment by Vermontergal
2008-03-16 09:24:21

I wonder if the ‘bubbles just happen’ crowd here (where oh where did they go?) care to comment now that just about every level of the REIC and government are acting to ‘prevent this from happening again.’

Huh? I know I’m tired, so hopefully you’ll excuse me here if I’m missing something big.

I don’t really see what one has to do with the other. Politicians are simply doing their usual knee-jerk reaction to the crisis du jour.

Bubbles are a product of a combination of greed and herd mentality. They happened way before the Fed and I have no doubt will continue well beyond the existence of the United States.

The only thing that governments can do is put a damper on the size of them. They also have the power to increase them, as we have seen during the last 2 bubbles here.

The idea that governments can prevent bubbles is a bit like saying that the government can remove poverty from the planet or completely prevent child abuse (or any number of social ills). It can encourage or discourage them but there is a limit to any government’s power.

Comment by lazarus
2008-03-16 09:39:20

“But there is a limit to government power”

Exactly. So why do people have this almost mystical belief that the Fed can rescue the economy from the consequences a credit binge, after it has admitted that it cannot prevent a bubble in the first place? Hello.

Comment by lazarus
2008-03-16 09:49:36

Another take on the limits of government power is what to make of a man who tells you:

“I cannot prevent you from having an auto accident but I can prevent you from crashing.”

(Comments wont nest below this level)
 
 
 
Comment by aladinsane
2008-03-16 09:33:00

When you see things like: ‘prevent this from happening again.’

It’s all over, dig?

 
Comment by ahansen
2008-03-16 15:29:35

We used to have these laws in place…put there after the Great Depression to avoid just such a mess as we are seeing today. They were systematically dismantled by Bonzo Reagan’s cabal…not coincidentally many of whom are beneficiaries of our current state of affairs. Funny how that works.

“Deregulation,” I believe they called it.

Comment by CrackerJim
2008-03-16 19:06:23

Bet you like the $99 RT airfares though. Thank deregulation.
I would trade to go back so I have a place to put my feet and a seat wide enough for my big a** while traveling by air.

 
 
Comment by Patriotic Bear
2008-03-16 23:53:30

Here is an update on Naples. In Aqualain Shores there are 35 houses priced around 3.5-4.5 million. Only four sales so far this year one for 2.2 million and the other for 2.15 million. The one for 2.15 was from an estate priced at 4.6 million in 2005 and appraised for estate tax purposes for 3.6 million. If the estate was 2.5 million plus this house the heirs paid around 1.98 million in taxes on the house. Selling the house for 2.15 less commissions and closing cost leaves hardly any money to the heirs for the house sale.

 
 
Comment by palmetto
2008-03-16 07:33:29

“Murphy has decided that it’s better to rent his houses for now than to sell them at deflated prices. ‘I think the market has bottomed out,’ he predicted, though ‘the places I used to be able to rent for $2,200 a month now go for $1,900.’”

Here’s another idiot calling a bottom. I call it wishful thinking. And, he’s waiting for the market to come back, because he’s not gonna “give it away”. Wait until his $1,900 rent becomes $1,500.

Comment by Ben Jones
2008-03-16 07:42:46

IMO, these guys were the biggest speculators of them all. National builders down to the little guys. Here he is with 16 specs!!

And for a contrast, check out the SLO builder in the local market obs post. He got approval in 2006, but turned cautious in 2005, didn’t charge ahead and now postpones the project, without a single empty house to his name.

Comment by palmetto
2008-03-16 07:57:54

‘Like every other builder a few years back, I got up in the morning and just said, ‘Let’s build.’”

That says it all, and this operating basis of “Let’s build” is STILL ongoing, up until this moment, as I watch two projects continue on the eastern shore of Tampa Bay, one a commercial project to service Mira Bay (at least 50% speculators, by the way, according to one mortgage broker I know) and Hawk’s Point, a Centex project that appears to be stalled, and which is right across the street from a KB/Toll Brothers joint venture that also appears to be stalled. But now, I think, with all the financial turmoil, this “Let’s Build” will grind to a halt and thank God for it. Call it a forced moratorium on building.

Comment by ACH
2008-03-16 10:18:40

Is that near Apollo Beach? I heard something about “… under served by retail. We need to give retail a chance to catch up.” or some kinda crap like that. It was in relation to a project near Apollo Beach.
Roidy

(Comments wont nest below this level)
Comment by palmetto
2008-03-16 11:01:07

Hi, Roidy, yes, that’s near Apollo Beach. And you are exactly right, there’s all this perceived need for residential to be served by retail. There’s also another commercial project coming on line between Apollo Beach, Ruskin and Sun City Center. What I’m seeing is that the two commercial projects still seem to have activity, but the residential projects look stalled. Partially built, nothing happening.

 
Comment by Kirisdad
2008-03-16 12:36:24

Yahoo real estate site has brand new 4/2/2 in Pasco county going for $185,000 and 15 year old 2/2/2 asking for $215,000. Two years past peak and reality has still not set in. Why even list this stuff?

 
 
 
 
Comment by Bye FL
2008-03-16 08:31:51

This means the rent was also overpriced, although not nearly as bad as owning. Of course by the time rents bottom out, itll be much cheaper to just buy instead.

Comment by Faster Pussycat, Sell Sell
2008-03-16 09:07:20

Like DUH!!!

Haven’t we been saying this all along? :-D

 
 
 
Comment by GotRocks
2008-03-16 07:45:02

Before you get too teared up about the Brito’s, consider this sentence from the article:

“The housing glut and tougher lending rules have reduced the pool of potential buyers for their home and for a rental townhouse that they’d also like to sell.”

Comment by palmetto
2008-03-16 08:07:54

I’m tellin’ ya, the realtors must be pitting their shants right now here in Fla. I remember, a few months ago, listening to one realtor have a meltdown over the media “causing” the buyers to dry up. She was screaming that the media ought to just “shut up”, because “they” were causing potential buyers to hold back. I found out later that she owns a couple of properties. I’d like to know who she blames now for the drying up of financing. She must be WILD!

Comment by Bye FL
2008-03-16 08:34:39

Gee and one must wonder why realtwhores are shouting “now is a good time to buy” they want to unload their houses!

 
 
 
Comment by Ann Gogh
2008-03-16 07:47:09

‘We were down here in Vero for three or four months, and nothing was happening with our house, so we lowered the price by $17,000.’”

Was he trying to make a juicy profit, or get out alive?
Ben, its time to go MainStream and educate the masses.
Tell it.

 
Comment by Lou Minatti
2008-03-16 07:50:09

My Dad and his wife paid for a “carriage house” in Estero in 2004. We don’t talk much, but I found out recently that they paid cash for it. Waste of money.

Comment by Bye FL
2008-03-16 08:36:59

Yea they threw away tens of thousands of their retirement money. My parents also did they same by failing to sell, I begged them for a year to sell.

 
 
Comment by DIMEDROPPED (Orlando)
2008-03-16 07:51:29

Never underestimate the stupidity of people in large groups. It ain’t so great in the sunshine state.

Comment by GotRocks
2008-03-16 08:01:40

Hey Dimedropped, that’s quite a sister you have, and if people follow the (assumed) premise of her book, this country might just be around in 30 years.

 
Comment by NYCityBoy
2008-03-16 11:03:32

“Never underestimate the stupidity of people in large groups.”

I have not found their stupidity on an individual basis to be much less.

 
 
Comment by DIMEDROPPED (Orlando)
2008-03-16 07:54:46

Ben- You are right, builders where head down and tail up to build. The other group of stupids were the Realwhores who contracted for multiple houses during the peak. Due to the backlog, builders are just finishing up orders placed as early as late 05′.

No mistaking the lack of activity now. Ghost town comes to mind.

Comment by implosion
2008-03-16 14:05:58

Was using the Lee County Property Appraiser website for some research. Pulled up some sales history for a random Cape Coral house.

2/02 $122.3k Sale
3/06 $259.6k Sale (20% down, Mortgage ~$208k)
10/07 Foreclosed
1/08 $99.9k Sale

Comment by JohnVosilla
2008-03-16 16:06:44

‘Was using the Lee County Property Appraiser website for some research. Pulled up some sales history for a random Cape Coral house.

2/02 $122.3k Sale
3/06 $259.6k Sale (20% down, Mortgage ~$208k)
10/07 Foreclosed
1/08 $99.9k Sale ‘

No one has a comment on a 60% drop from the top? Yes this is getting pretty common in parts of Florida with Cape Coral probably ground zero for the entire country. I can’t imagine it getting any worse than fall 2008 there as most everyone who bought or refied in 2004-07 is way upside down and walks from ARM resets all at once after these historic drops since late 2005.

 
 
 
Comment by CrackerJim
2008-03-16 07:55:10

Change thread title from:

To:

The Greatest Speculation in History

Comment by Faster Pussycat, Sell Sell
2008-03-16 07:56:15

The Greatest Speculation in History Worldwide in Every Asset Class

TIA.

Comment by Professor Bear
2008-03-16 09:53:11

Speaking of “every asset class,” I am wondering how the yacht flipping business is doing these days? Any insights from those in the know would be greatly appreciated.

Comment by Faster Pussycat, Sell Sell
2008-03-16 10:26:18

There was a “yacht flipping” business?

Santa Maria, Madre de dios!

You are bending my mind in ways that is scaring the livin’ cr@p out of me.

(Comments wont nest below this level)
Comment by Professor Bear
2008-03-16 11:25:55

Notice I managed to furnish a reference this time :-)

 
Comment by Faster Pussycat, Sell Sell
2008-03-16 13:38:32

Yeah, I noticed that actually (even if I didn’t comment on it.)

You get a gold star. :-D

 
 
 
 
 
Comment by palmetto
2008-03-16 08:02:03

“‘It was such a distortion, where the appreciation was really artificially created,’ Goodkin said. ‘Even now, prices are still well above what most people could afford before.’”

There’s the money quote. Prices are still WELL ABOVE what most people could afford before. We’re only in the second inning of this game here in FLA, IMHO. But, I think this Wall Street debacle will be a nice accelerant. Yep, they’ll be “giving it away” here before long. Just to get people into properties and paying taxes.

 
Comment by Muggy
2008-03-16 08:10:59

“Brasota Mortgage”

What’s with the Florida obsession with name splicing? Orlampa?
It’s stupidiotic.

 
Comment by palmetto
2008-03-16 08:11:50

“‘$1.5 million will get you 8,500 square feet, a monster of a place,’ Sconberg said of the house. ‘Dock on a canal that is hidden from the bay. Huge swimming pool, with a jacuzzi.’”

“‘The neighbors are for sale on Bayou for $2.5 million,’ Sconberg added. ‘Five years from now you will be sitting there going, ‘Wow, did I make a killing.’”

LOLOLOLOL! Aw, lordy, five years from now, they’ll be begging for half a mil.

 
Comment by Muggy
2008-03-16 08:12:28

“‘I don’t blame the lenders,’ said Gene Petrino, a mortgage broker in Pompano Beach. ‘But they’ve gone from one extreme to the other — from everybody gets a loan to nobody gets a loan. There has to be a happy medium.’”

And that medium is total, absolute, financial Armageddon.

Comment by palmetto
2008-03-16 08:29:56

“‘It used to be no problem selling; if you had a pulse, you could buy one,’ he added. ‘Now the banks are a lot more careful.’”

Gawd, this Florida post is just full of gems. Banks are a lot more “careful” because the cupboard is bare. Trust me, if the coffers were full and the spigots still disgorging cheap money, the banks would be lending like there’s no tomorrow.

 
Comment by tuxedo_junction
2008-03-16 10:02:25

Most mortgage brokers are idiots. Credit worthy people who want to borrow only what they can afford to service have no difficulty in obtaining a loan. 30-year rates are about 6.25%, way below the norm of 8%; there aint no credit crunch for home lending. I guess the period of 16% home loans (interest rate, not the down payment) was before most mortgage brokers were born.

 
 
Comment by SeattleMoose
2008-03-16 08:13:34

Up here on the radio there are still ads from hissing snakes advertising “get a loan with us and we’ll even pay to have your house appraised”….which translates to “we have a bought and paid for appraiser” who will put whatever values on your house that we decree.

Yep, it is still happening….Seattle is still “special” I guess.

 
Comment by palmetto
2008-03-16 08:15:22

“Mayor Carlos Alvarez’s Mortgage Fraud Task Force.”

ROTFLMAO! Oh, oh, gasping… can’t…breathe….pounds…chest.

Comment by palmetto
2008-03-16 08:26:03

I wonder if that’s going to be as effective as LA Mayor Villagairosa’s “Gang Task Force”, LMAO!

Comment by aladinsane
2008-03-16 09:54:53

“Gang Force Task”

el lay pee dee is outgunned & outmanned…

Comment by palmetto
2008-03-16 10:06:31

So I hear. I followed a link yesterday to something called “The LA Homicide Blog”, affiliated with the LA Times. It is quite a piece of literature. Even more stunning were the responses to some of the death notices by friends and family of the victims. “He was a stand-up guy”, etc. Geez. It sounded like these people were celebrating a wedding or a promotion, not mourning a death. Very bizarre.

(Comments wont nest below this level)
 
 
 
 
Comment by palmetto
2008-03-16 08:24:25

Oh, here’s a good one. As I type this, I’m watching a segment on one of the local Sunday morning pundit show about how the vulture (the actual birds) population has markedly increased in West Central Florida, apparently benefitting from all the “human encroachment”. Apparently, they’re chewing the vinyl off cars and ripping tiles off houses. LMAO!

Comment by Muggy
2008-03-16 08:48:15

I saw that too. I had a neighbor who called the Sheriff to chase a gator away. She lived on a lake!

Hellloooooo?

 
Comment by Vermontergal
2008-03-16 09:08:25

We were vacationing in Orlando 2 weeks ago in a vacation home development. Every morning, garbage had been overturned by vultures. There’s nothing quite like watching a flock birds, each the size of a turkey, descend on a pile of garbage. And I thought raccoons were bad. ;)

Comment by ACH
2008-03-16 10:26:03

ROTFLMAO!
I lived in Oldsmar for years. The paper would carry a story every year or so about dogs getting eaten by gators on Lake Seminole. It turns out that vacationers were throwing sticks in the lake for the dog to fetch. I miss Fla. I wish I could go back, but there are just too many people now. I lived there before it became so crowded.
Oh well. N. Louisiana is still not over run.
Roidy

Comment by palmetto
2008-03-16 11:31:30

“I miss Fla. I wish I could go back, but there are just too many people now.”

I understand how you feel, Roidy. Florida, with all its quirks, gets in your blood, like tropical fever. I sometimes think of leaving, but I have hope that the bust will allow Florida to go back to what it once was, a low-cost, laid back state. There are still some relatively unpopulated, inexpensive areas, like Palatka.

(Comments wont nest below this level)
Comment by Ol'Bubba
2008-03-16 17:28:20

I moved from NY to Pinellas County, FL in 1992 precisely because it was an affordable place to live.

The Tampa Bay area, while crowded, was a terrific place to live in the 90’s and earlier this decade.

 
 
 
 
 
Comment by Ria Rhodes
2008-03-16 08:24:25

The Miami Herald: “For the second consecutive year, Florida ranked No. 1 in the country for mortgage fraud, as the stalled housing market quickly pushed both prevaricating borrowers and seasoned criminals into foreclosure.”

No surprises here, and not just in mortgage fraud either. One day in the future the Viva Cuba Libre crowd and their cronies will get their mitts on Cuba again and turn it into a South Beach version of Los Vegas. Yeah, I hate communism too, but I hate corruption just as much, and Miami/Dade County is the poster child for corruption in all its forms.

Comment by CrackerJim
2008-03-16 13:16:47

The ranking is #1 in mortgage fraud DISCOVERED and mabe prosecuted. No one knows where the real #1 is.

Comment by CrackerJim
2008-03-16 13:19:19

mabe=maybe

 
 
 
Comment by Bye FL
2008-03-16 08:26:51

““The Britos bought their home for $270,000 at the peak of the housing boom and appraisers say now it’s worth $250,000. No lender is going to give them a new loan large enough to pay off their current mortgage.””

What a joke! $300 a foot! Even at the peak, you could get a 2000 sf house for $400k They should walk away and rent a house twice as big for less!

Comment by GH
2008-03-16 08:59:09

No they should walk away and rent a home the same size for half.

 
 
Comment by Michael in Pawtucketville
2008-03-16 08:40:56

[The Sun Sentinel. “Four kids, three dogs, one bathroom, 900 square feet.

...

“The Britos bought their home for $270,000 at the peak of the housing boom and appraisers say now it’s worth $250,000. ]

250K for 900 sq ft? Still seems way overpriced to me.

BTW, article on lowball offers here:

http://www.nytimes.com/2008/03/16/realestate/16cov.html

Comment by palmetto
2008-03-16 10:17:49

Very interesting article, thanks for posting.

“People are coming in with offers even 20 percent under,” she said. “People have no shame.”

I’m shocked, I tell you, SHOCKED!

Comment by spike66
2008-03-16 10:39:39

Will the realtors be happier with no offers? Apparently they’d rather starve. So, let ‘em starve.

 
 
Comment by implosion
2008-03-16 10:20:59

“Tami Rapaport, a sales associate in the Tenafly, N.J., office of Coldwell Banker Residential, finds the same thing happening in Bergen County. “People are coming in with offers even 20 percent under,” she said. “People have no shame.”

To be sure, there is an aspect of lowballing that seeks to take advantage of other people’s desperation or misfortune. Some lowball bids are plain outlandish, never mind insulting.”

I can’t even believe this sh*t.

 
Comment by ACH
2008-03-16 10:32:46

Really, it seems overpriced? A 900 sq ft crap box for 270k? That’s $300/ sq ft. I can’t even handle that concept.
Roidy

 
Comment by cayo_ron
2008-03-16 18:10:42

“The Sbarras gambled by offering $287,000 for their house, which was listed at a reasonable $329,000. In doing so, they risked angering the owner and ruining their prospects for negotiation.”

Ooh, they risk angering the owner! I’d have more embarassment low-balling a ceramic piggy-bank vendor on the Mexican border than I would low-balling an FB!

 
 
Comment by hd74man
2008-03-16 08:47:24

RE: “Now under scrutiny, bankers and lenders are starting to adopt new rules to ensure independent, reliable appraisals. The changes are too late for many, including Crowley who’s lost her business.”

Parm Crowley…top flight individual…she deserved better.

So did hundreds of other honest, legit appraiser’s who endured 20 years of flat or declining incomes and destroyed businesses during the last 5 years.

Comment by tuxedo_junction
2008-03-16 09:35:57

Since the appraisal assignment goes typically to the least ethical appraiser I have always viewed appraisals about as useful an underwriting tool as credit ratings from the big 3 rating firms.

Even good real estate appraisals (there are some ethical and talented appraisers out there) are of limited value. An appraiser measures market value as of a specific, single date while a lender is on the hook for several years. Property values can change dramatically over the typical 3 to 10 year property holding period. Hence prudent lenders will not go more than 75% LTV on income property loans and 60% on lot and land loans. They will also seek cross-collateralization. How many bankers were prudent from say 2004-2007? I bet not many.

Comment by hd74man
2008-03-16 09:45:43

RE: An appraiser measures market value as of a specific, single date while a lender is on the hook for several years.

A good appraiser will also tell ya if a property is built on top of a toxic landfill or there are a couple of boarded up condemned crack house’s filled with doper’s on both sides of the subject’s property line.

The lending indusrty thru acid in the eyes of those who’s job it was suppose to be the cop on duty who kept things relatively clean and above board.

The result is self-evident.

 
Comment by ACH
2008-03-16 10:35:12

Ok, appraisers have no “skin in the game”. At best, they are an indicator that the house is at least near the transaction price. No, not worthless, but not a whole lot better either.
Roidy

 
 
 
Comment by Mike
2008-03-16 08:49:34

The FBI needs to interview these appraisers named above, find out which realtors and which mortgage brokers told them what they wanted the apprasial to be (or they didn’t get any more jobs) and then charge these realtors and brokers with fraud and deception. Hopefully, it would lead to realtors and brokers losing their own homes. I would dance a jig if I could see the sheriff overseeing these realtors or mortgage brokers furniture and belongings being dumped in the front yard and foreclosed signs being put up. I can always hope. Sometimes poetic justice does happen.

 
Comment by smathis
2008-03-16 08:49:59

“Some lenders even send out blatant mass e-mails putting appraisers in a bidding war. To 77 appraisers for a home in Arizona: ‘whoever can provide the highest [appraisal] will receive the deal.’ ‘We were blackmailed,’ Crowley said.”

Um…no. You were bribed. And most of you took the bribe.

Kinda silly to cast yourself as a victim, then, isn’t it?

Comment by hd74man
2008-03-16 09:38:56

RE: Kinda silly to cast yourself as a victim, then, isn’t it?

Huh?

The johnny-come-lately, rubber-stamp, easy-money hacks put on the street by incompetant state licensing boards took the bribes.

Honest appraiser’s like Crowley got put out of business.

Fookin’ right she’s a victim.

 
Comment by D Pauls
2008-03-16 14:25:10

There were MANY appraisers who signed the Appraiser’s Petition that was started over 5 years ago…right before the boom really started taking off. That petition was sent to elected officials all over the country, but nobody would do anything about it. Read it, and realize that many appraisers have been warning that this was a problem they wanted to have fixed before it got to exactly where we are today. And note: Pam Crowley was one of those who were instrumental in trying to get this petition to anyone who would listen.
http://appraiserspetition.com/

 
 
Comment by Michael Fink
2008-03-16 09:09:15

This is a bit off topic, but I thought that you would find this funny.. From the Wachovia site; the purpose of an FHA loan is:

“Available to most first-time homebuyers, FHA mortgages allow you to move into your new home with less out-of-pocket cash than required with most conventional loans. The federal government insures these loans to make home ownership affordable to people with modest means who can’t afford large down payments.”

The loan limit for FHA mortgage is now 720K in the high cost areas.. So, that tells me that somehow, people who make ~250K a year (needed to afford a 750K home) are now “modest income”? Anyone else take some issue with those numbers?

 
Comment by hd74man
2008-03-16 09:47:41

Anyone else take some issue with those numbers?

FHA/HUD is being set up to be the ultimate bagholder in all this.

Comment by Professor Bear
2008-03-16 09:56:56

“FHA/HUD”

Are you suggesting that a move to spread Wall Street’s gambling losses across the U.S. federal tax base is in the bag? I am wondering how this would work out, given the magnitude of losses relative to a negative U.S. hh savings rate and so many households already underwater on their mortgages? I personally have my doubts that your plan would work out very well.

 
 
Comment by aladinsane
2008-03-16 10:02:31

When I was a lad, you could gamble in Vegas or the racetrack, and that was about it.

Compare and contrast to all the possibilities, today.

 
Comment by Spucky
2008-03-16 16:19:22

“Dale Purcell lost his home in Astatula to foreclosure Thursday, said he couldn’t keep up with mortgage payments after they jumped suddenly last year from about $900 a month to $1,700. He said he has painted the house, landscaped it and tried to sell it to save his credit rating.”

Yes, “jumped suddenly”, out of the bushes with no warning. No doubt there was no relationship to the 3 year interest only ARM that he signed.
Just came up out of nowhere and caught him by surprise. Kind of the the boogey man……..

 
Comment by Shawn
2008-03-16 17:23:42

Trump the Chump, is going DOWN!

 
Name (required)
E-mail (required - never shown publicly)
URI
Your Comment (smaller size | larger size)
You may use <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong> in your comment.

Trackback responses to this post

  • The Housing Bubble Blog