People Can Afford To Wait In Florida
The Sun Sentinel reports from Florida. “Many were left out of the market during the housing boom of 2000 to 2005 because homes were too expensive. But now, even with sellers desperate and prices plummeting across South Florida, first-time buyers still can’t realize the American Dream with property taxes remaining too big a burden and lenders tightening credit standards. Having moved six times in seven years, renter Stacy Bailen of Palm Beach Gardens would like to buy a little starter house and start building equity.”
“But the 31-year-old administrative assistant worries about obtaining a mortgage and the still-hefty home ownership costs, particularly property taxes. In the end, Bailen decided to postpone buying.”
“‘When I hear that I should look to buy something, I say, ‘With what?’ she said.”
“Real estate agent Douglas Rill said he has a three-bedroom listing in West Palm Beach that was just reduced to $149,900 from $179,000. It does need work, but the house has a new roof and would be ideal for a first-time buyer, he said.”
“‘I don’t have a lot of action on it,’ Rill said. ‘I thought people would be breaking the door down.’”
The News Press. “In 2005, two Naples companies joined forces to purchase four lots in Lehigh Acres, and built houses on them. But by late 2006, when the homes hit the market, the housing bubble had burst, leaving W.M. Development and Wilson & Wilson General Contractors searching for buyers.”
“‘It’s a little gut-wrenching,’ said Wilson & Wilson VP Greg Soriano. ‘You spend all that money on that property and pretty much have to wait it out.’” “The partners’ plight is not an uncommon one in the section of southwest Lehigh designated by the U.S. Census Bureau as tract 403.04.”
“Porter Davis is the listing agent for a four-bedroom, two-bathroom home on Lowry Avenue, built in 1972, that has a short-sale asking price of $145,900. He said the home was purchased for $96,900 in 2002 and refinanced for $217,500 in 2005, and was assessed at $192,870, last October.”
The Tampa Tribune. “At Lago del Rey, the grass is green and columns of water spout from the lion-headed fountain just outside the gates. But something’s missing from the 39-lot subdivision on Hale Road - residents. Save for a single house under construction, Lago del Rey is empty.”
“With Pasco County’s housing market in a shambles, residential developers have hunkered down to await the economic turnaround they hope is coming soon. In the meantime, dozens of projects scattered all across the county - from small ones like Lago del Rey to giants like Wiregrass Ranch - are largely idle.”
“‘It’s as bad as I’ve seen it,’ said Clearwater lawyer Joel Tew. ‘It’s really frightening.’”
“Wiregrass Ranch still has more than 12,000 residential units approved for the future. Had things gone as planned at Lago del Rey, the community would be filled with family-friendly houses by now.”
“Lago del Rey developer John Nugent Jr. of Hudson, and business partner Gary Blackwell of New Port Richey broke ground on Lago del Rey in 2005 just as the housing market was reaching its peak. Interest in the community was strong at the time, Nugent said. ‘Given the market we were in, it should have sold out in about 12 months,’ Nugent said.”
“Three years on, the developers have sold about a fifth of the lots in Lago del Rey, county property records show. ‘We’ve had quite a few cancellations - people who couldn’t go through with it,’ Nugent said.”
My Fox Tampa Bay. “The call of the auctioneer filled the air at the Tampa Convention Center on Saturday. About 150 homes went up for auction on Saturday, but over an eight day period, another 1,000 homes in Florida will go; and all of them are foreclosures.”
“For some, the bidding started as low as $1,000. Others, like a condo on Harbour Island, went for a little more. Bids on that one in particular started at $139,900—about a quarter of its original price.”
“Like many others, Goddy Daudu wasn’t burned in the real estate crash. Saturday was his first auction, and he came to play. ‘I’m here to buy as many as I can buy,’ Daudu said.”
“And that he did. Daudu saved more than 50 percent on an East Tampa home, paying $63,000 for it. Then, he hunted for more.”
“Don Melitich had his eye on a few homes in the Bay Area. Specifically, he wanted something under six figures with about 1,000 square feet. Don spotted one in Holiday, but it went to another bidder. For him, though, it’s all about cost.”
“‘There are others,’ said Metlitch. ‘There are plenty.’”
The St Petersburg Times. “It’s a no-brainer among property owners confronting the relatively bleak home sales and prices in places like St. Pete Beach and Clearwater.”
“Now the National Association of Realtors has confirmed what everyone knew in their gut. In a recently published survey, the association said sales of vacation homes have declined at triple the rate of first-home sales.”
“Florida’s complex property tax rules that punish second homes and out-of-state buyers aren’t helping things, Realtors say. Add the cost of coastal hurricane insurance, mix in market turmoil from the higher-than-normal foreclosures, and you’ve created a lot of hesitant buyers.”
“‘They think they’ll pick it up at rock bottom prices,’ said Martha Thorn, a top Clearwater Realtor. ‘These people can afford to wait.’”
“The sales slowdown is palpable at upscale Clearwater condo buildings popular with vacation home buyers. Think Mandalay Beach Club, Belle Harbor or Sandpearl Resort.”
“Even if the developer did well initially selling the condos, the resale rate has been sluggish. The biggest problem: homeowners sticking to high asking prices the market no longer supports.”
The Herald Tribune. “Orion Bank grew and prospered as one of Florida’s most aggressive real estate lenders during the boom, so it comes as little surprise that the Naples-based financial institution is suffering from the bust.”
“Orion reported $91.7 million in non-current loans in its December quarterly report, a 4,267 percent increase from the $2.1 million in problem loans it reported during the same quarter a year earlier.”
“Orion, however, did not increase its loan loss reserves by a similar amount. In September, Orion’s reserves of $12.77 million exceeded its $11.4 million in problem loans. But just three months later, its $12.39 million in reserves represented only 13.5 percent of its $91.68 million in problem loans.”
“One explanation for the discrepancy, analysts say, is that Orion did not want to report a serious drop in profits by setting aside more money to service loan problems. ‘Banks often like to have minimal reserves to show profits,’ said Ken Thomas, a Miami-based economist who specializes in analyzing financial institutions, adding that bank regulators need to sign off on that strategy.”
“‘Loan loss reserves are meant for rainy days,’ he said. ‘And excuse me, it’s raining now. When you have a bank with that much of an increase in non-current loans without a commensurate increase in loan-loss provisions, that raises questions.’”
“Court records show that Orion has started 51 foreclosure lawsuits against borrowers since the beginning of August in seven Florida counties. Only four of those foreclosures were filed in Collier County, which analysts say is not surprising given that the bank is based there.”
“‘When you leave a territory where you have operated for years and go into unfamiliar territory with unfamiliar borrowers, your risk increases,’ said Benjamin Bishop, chairman of a Jacksonville-based investment bank that specializes in advising banks and financial institutions.”
“Thomas echoed that sentiment: ‘Out-of-town lenders are usually the last to know what is going on.’”
“Real estate is not selling the way it did just two years ago, but that does not mean there are not people making money off the bursting of the housing bubble. Sign companies that cater to Realtors and their customers’ swollen inventories of houses, condominiums and businesses are having a field day as orders skyrocket.”
“‘We are off the chart. My inventory is totally shot,’ said Pat Neligan of Sign Service Co. in Sarasota. ‘I’m doing more in a week than I used to do in a month.’”
“The Sarasota Association of Realtors sells those little ‘pool,’ ‘price reduced’ or ’sale pending’ signs that sit on top of the larger for-sale signs, as well as those that stick into the ground and direct buyers to an open house.”
“Kathy Roberts, the association’s executive director, said the organization buys the signs in bulk. Roberts said sales of the so-called ‘rider’ signs increased almost 95 percent in 2006 compared with 2005.”
“The for-sale sign phenomenon is not limited to Sarasota, Manatee and Charlotte counties. Bob Stephens owns Bargain Sign Inc. in Clearwater, and he said for-sale, for-lease and foreclosure sign orders have risen 30 percent.”
“‘We’ve done quite a few in the last year and a half in for-sale signs,’ he said. ‘The for-sale or for-lease market is great.’”
“There is one type of real estate-associated sign that has fallen off, he said: Those ‘We Buy Your House In Any Condition’ signs.”
“‘We probably had six or seven out of those guys who would come in and buy 1,000 of those signs and they’ve just disappeared,’ Stephens said. ‘They all used to drive Hummers and now they are working at Wal-Mart.’”
“‘I don’t have a lot of action on it,’ Rill said. ‘I thought people would be breaking the door down.’”
They are. Some kids are throwing a rave tonight in that house.
“They are. Some kids are throwing a rave tonight in that house.”
Wouldn’t be anything new with all of the vacant homes. This 3BR 2BA if it’s in the city probably should be priced at $99,900. If it’s in the better suburbs, the price would have attracted a buyer already.
You hit the same number I was thinking.
He said the home was purchased for $96,900 in 2002 and refinanced for $217,500 in 2005, and was assessed at $192,870, last October.”
So the value of that house in 3 years went up 225%. I’d say when all is said and done, it’ll be worth less than the $96,900 they paid for it. Also wonder what toys they bought with the $120,000? Poor, poor victims.
“Also wonder what toys they bought with the $120,000? Poor, poor victims.”
Probably another ‘investment’ house.
Indeed, since “housing only goes up!”
Ugh… When the dim-witted masses wake up and realize that housing should only cost about 2 to 2.5 times household income, the crash will really be underway!
Has YOUR salary doubled in 3 years? Not unless you’re a hedge-fund manager or C-Level executive!
Still some knife catchers but prices dropping nicely in some parts of Florida. Doesn’t matter as many people can’t wait in Florida and just leave the state.
They are. Some kids are throwing a rave tonight in that house.
Nah, the copper wiring bandits’ll beat them to it.
I checked Douglas Rill’s webPage, for the listing address…
It’s just north of Palm Beach County International Airport, in a industrial area off Florida Mango…You can probably sit in the back yard and watch the airplanes take off…I’m familar with the area, as I had a storage locker down there years ago….
NOT the best of neighborhoods….Nothing like the smell of jet-fumes in the morning…
“‘I don’t have a lot of action on it,’ Rill said. ‘I thought people would be breaking the door down.’”
To steal the copper plumbing and appliances, maybe.
“Now the National Association of Realtors has confirmed what everyone knew in their gut. In a recently published survey, the association said sales of vacation homes have declined at triple the rate of first-home sales.”
Welcome to the future for vacation homes. I expect that one of the after effects of the unwinding of the bubble is that sales of owner occupied primary residences will be suppressed for quite some time, possibly decades. People who don’t own one home won’t own a second, though there could be some small percentage that owns a vacation home, but not a primary residence. Factor in the impact of much higher gas prices for those who might go to that vacation home for the weekend every week or two and it’s not hard to imagine that sales of vacation homes could take a tremendous hit, more so than the housing market at large.
I’m sure some figured they’d rent them out, when they weren’t using them, to help with the mortgage. But less and less people can afford vacations. I don’t know how people do it. We make good money, have a paid off house, and still I think it would strap us to pay utilities, taxes, insurance, & maintenance on 2 places. I’d also be willing to bet that the 2 home people didn’t have a paid off 1st house either. Maybe they had it paid down halfway then heloc’d it to buy the 2nd or they used it for collateral to buy the 2nd. Now both houses have depreciated considerably and they’re sitting there scratching their heads, wondering what happened.
Most of these “vacation” homes were only nominally for vacations. These were speculative real estate purchases, pure and simple, with the vacation label used for window dressing. When I lived in Bozeman these constituted a large majority of all home sales. THere were a lot of “2nd” homes in our neighborhood that sat vacant for years between owner visits. I always wondered, if everyone really wants to live here, why don’t they actually, you know… live here?
I made the statement here in early 2006 that the 2nd/vacation shack scheme will get obliterated in this correction. And considering the mentality and number of the typical idiot buyers of 01-05, I’d estimate that 40% of all shacks fit the 2nd/vacation “home” category. And it ain’t just Florida. Delaware, NJ, Maine, VT, NH, NY, Idaho, Oregon, NM, AZ. The vacation “home” scam occurred in every place where some spider-headed dingbat realturd made the statement, “everyone wants to live here”.
Welcome to the future for vacation homes. I expect that one of the after effects of the unwinding of the bubble is that sales of owner occupied primary residences will be suppressed for quite some time, possibly decades.
I would agree with you since the aging population of baby boomers are now downsizing and dumping either their primary or vacation home as they move closer to retirement. I think there is going to be a significant downward preasure on property values for vacation homes and larger homes as more and more of the baby boomers downsize in the years to come.
And since the morons built their “vacation” house in the middle of nowhere-land, they’re doubly screwed. Miles away from services, family and can’t get out of it what they got in it.
SDGreg,
I very much wanted to be part of the small percentage that owned a vacation home but were perfectly content to rent their “primary” home! (Even if it was just a luxury apartment) When we sold our home in early 2004 I was in my mid-40’s. Now in my late 40’s (and real estate looking radio-active for the next 10 years) what’s the point of “trying to build equity”? Any equity (for me) over the next 10 years would have to come from our making payments. Well since the first 10 years in a trad. mortgage are basically all interest ANYWAY we’re now down to “the tax advantages” argument. Well… whatever, it’s a time when we should pumping up our savings and IRA’s anyway.
Since our old rent payment barely covered the owners prop. taxes, HOA’s + Maint. it’s like, hurt m-e..? We would have been happy to pick up a modest and very affordable place in Vegas/Palm Springs and have it paid off WELL before retiring altogether. Vegas IS… trending nicely and we hope PS follows suit. I think our ranks will grow.
“Well since the first 10 years in a trad. mortgage are basically all interest ANYWAY we’re now down to “the tax advantages” argument.”
You might want to consider that if inflation runs at 7% and your fix rate loan is at 6.5%, your real (inflation adjusted) monthly mortgage payments will drop every year if your hold period is 10 years and longer. Reported inflation from 1978 to 1982 was 6.2% to 13.5%, With the current price of gas and government spending, we should be breaking 10% inflation any day now.
Dave, using your assertion, wouldn’t you have to assume that your salary kept pace or exceeded inflation?
Middle of nowhere like NW PA? Those houses should cost the same as those in NW PA. The other rural locations shouldn’t be “different”
Fuzzy….no no you have it all wrong. Didnt you hear. Baby boomers are retiring, cashing in their 401K and BUYING loads of vacation homes. It’s shiek, trendy and hip. How could you ever think that aging populations would be downsizing…….
they’re upsizing for sure….trust me….suzanne reasearched this……..
jasper,
Even by the mid/late 90’s Harry Dent estimated that boomers would be net sellers of RE. Early on that didn’t seem to be holding water but he must be laughing now. With the MEW advantage it seemed boomers couldn’t get their hands on enough RE. Shut down the MEW Machine and it doesn’t look as appealing now does it? I estimate that 2nd/vacation homes will begin to look a LOT more like they used to, modest, functional, small.
About time isn’t it?
I remember a couple years back when the MSM was hyping the housing BOOM in the SF Bay Area there was a spot about an elderly woman cashing in her retirement to buy a condo down by the Emeryville water front. She believed that there were better returns in real estate than in the stock market.
I wonder if she’s working at McDonalds now…..
Catfood isn’t just for cats, you know.
Well, there goes W. Colorado down the tubes, dang!
A huge majority of homes in ski areas are second homes. I’m also watching my old town of Moab, Utah, which was infected by the same disease. I would die happy if I could see some of these places return to the good old days when people actually lived in these houses more than two weeks a year. It has a tremendous effect on the entire town. When I lived in Moab I had houses on three sides that were essentially empty. The condo complexes by the golf curse (whoops, I mean course) were a ghost town part of the year. This leaves a smaller number of townspeople to carry the load in terms of volunteer work and that sort of thing, though there are other benefits (less traffic, etc.).
Well exactly. This mass equity locust infestation meant that there were but two choices when looking at 2nd/vac. home property. Pay nose-bleed prices for a bunch of amenities you don’t all that much care for or get a single-wide repo in a park. Very little in between. When lots in Pahrump, NV were going for 200K you felt like you could pretty much kiss your dream of an affordable (and sunny) retirement home good-bye! Again it’s the “rolling bubble” that annoyed me the most. Even if you looked on Craigslist, places in El Salvador were asking ridiculous prices! (Well if they can get “X” in Mexico we oughta’ at LEAST be able to ask “Y”!?
With all the Filipinos that lived in CA ( like other Cali’s) they benefitted from the run-up in CA prices and as result even prices in the Philippines were getting out hand! (Of course now it’s as much about the devaluation of the dollar) but these places were being built with inground swimming pools and balconies, tons of marble flooring etc! WTF? Whatever happened to getting a block bungalow or bamboo place and drinking yourself to death? Where was all this money coming from!? Oh….
Hey Lost,
We’re over in Torrey (by Capitol Reef NP) and it’s much the same as you describe in Moab. We joke that it must be a “reverse Truman Show effect”. Remember in the Truman Show where there were always a full cast of characters around wherever Truman was at the time, but then they disappeared? My wife and I joke that all the folks must disappear when we’re around but then come out when we’re gone. Surely all those houses can’t just be sitting vacant all of the time!
We’re not seeing the property values drop at all in the Central UT vacation towns just yet, but that’s because development has been slow with the exception of the SE and SW corners of UT.
I wonder what’s happening over in Western CO, prices went berserk the last few years. It’s like one big sprawling suburb everywhere you go, except without any urban hub or anchor anywhere to be found. It’s wierd.
Has Torrey been built up then as well? Last time we were there (2002ish) it seemed pretty darn sleepy. It’s so far from anything that I would be shocked to hear it’s full of crapboxes.
It is a beautiful area.
Nope, it’s still sleepy as ever. There was a price runup in the mid-late 90’s, because it was being “discovered” at that point. But we missed the 2002-2007 bubble entirely. Slept right through it. I didn’t even know the bubble was happening, until I had a nice job offer in Flagstaff two years ago, and was jolted by the fact that I couldn’t afford to live there (or any other city, for that matter) any more. That’s when I discovered the HB blog.
It’s hard to make a living here, there’s no economic critical mass, and the tourist season is only 6 months of the year. Winters are cold and blustery. No golf courses in the county. So it takes an unusual type of retiree to want to come here. Which suits a lot of us just fine, at least most of the time.
Hey, Shoe, I’ve seen you post before from down there in Wonderland. Are you getting any rain? Saw a big flashflood cloud sweep across the Swell and across the face of the Reef and is now where I’m at. Very nice.
The brunt of the precip always seems to miss us right here in the valley, at least as of late. The mountains on either side are getting reasonable snow, but our area as a whole didn’t do as well as the rest of So. Utah this winter.
Then again with the wind, it always falls sideways so maybe it would have rained but it just blew all the way to Hanksville before it landed.
You must be over in GR or thereabouts from what I gather?
Yup, out in the GR desert right now, not far from Horseshoe Cyn on the GR RIver Rd., as long as I can see the Sallies I can run off my little cell phone modem.
I’ve been keeping my eye on moving to the resort community of Homer, AK. So far I am not seeing prices come down at all, and an anecdotal conversation with a realtor was that vacation home sales remain brisk… Unfortunately, I’ve seen nothing decent come on the market that isn’t below about $200/sq ft.
Just my luck, maybe it IS different here. This slowdown really isn’t affecting Alaska as much as I had hoped, but I suspect there is a lot of oil money cushioning the market.
Check out MLS #8004186 - $529K, 4,300 s.f., 2 acres, new. Looks like a lot of inventory well under $200/s.f. in realtor dot com.
Sorry…should have qualified more what I am looking for. I am looking for something near or on the Homer Spit (ie within a mile or so), SFH of good quality, and small. I am a single guy and have no idea what I would do with 4300 sq. ft.
“I am a single guy and have no idea what I would do with 4300 sq. ft.”
I have no idea what a family of 5 would do with 4300sq ft. The excesses of the last 7 years are mind numbing.
Homer Alaska is the most beautiful place I’ve ever seen.
The view from the vista point just off the highway is breathtaking.
Mike
That’s what I see a lot here even in central Florida 70 miles from the beach. Vacation Houses for lease on short term for $4,000 a month or $2,000 a week. What in the He11 is here that people would want to rent a vacation house for $2,000 a week when your 70 miles from the beach, and 90 miles from Disney? GOOd Luck with that. What an investment.
Wow! That amount will get you a nice 2/2 condos on Siesta Key in Sarasota in high season (Feb-Apr). Your choice of a beach/gulf view or a ICW view, where you can watch the parade of “mine’s bigger than yours” boats. Always preferred the ICW view myself.
I’ve already posted about this earlier in bits and buckets, but wanted to add a few more observations.
I was one of the many who attended the foreclosure home auction run by the Real Estate Disposition Corp. (REDC) on Saturday. I stayed long enough to observe the disposition of 49 of the more than 100 properties auctioned off which sold for about 45% off the “previously valued to” price.
It was interesting to note that there were no homes auctioned off in the area I would have been willing to place a bid; basically north Tampa, Lutz and Land O’ Lakes. This is a highly populated area with lots of homes for sale.
This indicated to me that there will be a lot more of these auctions in the future and prices haven’t come close to hitting bottom.
Yep, Bob, I didn’t go because I didn’t see anything I was interested in, in my area, which would be Brandon south to the Manatee County line. By the way, try http://www.tampabayreo.com. It’s a real estate company that has specialized in foreclosures long before the bubble. Good folks.
This indicated to me that there will be a lot more of these auctions in the future and prices haven’t come close to hitting bottom.
I agree, we are nowhere near the bottom. Prices in the area you mentioned rose on average 138% from 2001 - 2006. If you use the trend rate from 1982 -2001 which is 4%, one can see that we have a ways to go before home prices reach the “affordability range.
In the Tampa Bay market, prices are now on average at 2005 levels and imo, they will fall back to 2000 levels and further in some cases.
So, when you hear the advertisments, “now is a great time to buy”, you can easily determine that now is NOT a good, great or any other type of descriptive word used to get the public to buy in a declining market!
Having moved six times in seven years, renter Stacy Bailen of Palm Beach Gardens would like to buy a little starter house and start building equity.
Wanna start building equity? Buy after prices have stopped falling. Ballpark: when owning is cheaper than renting by a 10-20% margin.
“the still-hefty home ownership costs, particularly property taxes.”
There’s only one direction for property tax rates,and that’s up. Somebody is going to have to pick up the slack, as more homes are left vacant, and that’s the remaining owners.
Property taxes to tha moon!
“Somebody is going to have to pick up the slack…”
That’s right. Sure, local/state gov’ts will be forced to make some cuts - and will undoubtedly threaten to make even more - but they’ll never cut those taxes in aggregate. They’ll try shifting the burden around awhile - and that might help hide the problem - but it will be temporary. The pension obligations alone are staggering.
local/state gov’ts will be forced to make some cuts ??
Since when ?? They never cut…Hireing “freeze” maybe…Reductions through attrition probably…But real “cuts” ???…No the solution IMO as always will be “revenue enhancements”
Unfunded pension obligations will be the biggest “cash cow” for local govs. They’ll just stop funding ‘em. There eventually (like in the next 12-24 months) won’t be another choice. Everyone will be forced to play the new game of pretending that they have a real pension, that the govs. will make it up when “things get back to normal.”
The state/local government pension plans across America have mostly been insolvent for a decade now. But for whatever bizarre reason, the only fully funded state pension plan was Florida’s, and a lot of FL local governments/school districts/higher ed institutions are part of the state system instead of going on their own.
FRS will be hurt by the property bubble burst, but oddly should come through the downturn better than state government plans for places like Nebraska or Iowa.
Florida property tax is a complex problem. I was looking into buying a foreclosure in Miami as my primary residence, nothing too fancy. The house sold in 9/2005 for $315,000 now offered @ $149K. One of the problems holding me back is an $8K anual tax bill.
I called the county ’s tax assesor and asked what the basis of MY tax assesment would be if I but the place for $140K. “The value we (ie. county) appraise it at…and that has never gone down”. Not particularly happy with that answer so I called a real-estate lawyer and asked the same question… “Your purchase price (ie. $140K in this case) would be the basis of your tax bill.” Me: “But the county told me otherwise…” Lawyer: “For a legal fee of $1000.- we can convince the county otherwise”.
Not sure what to believe here. Does anybody know for sure?
Properties are valued based upon sales of comparable homes. If you pay $140K and the comps are $240K, your taxes will be closer to a $240K basis.
However, over time, as the comps come down, so will the basis for your taxes. I work for a county in Florida. The Property Appraiser’s Office is lowering assessments significantly right now, which will have a significant impact on revenues.
Don’t trust the lawyer. He might be able to help some, but not the numbers you are looking at.
Careful. A county can (and usually does) raise the millage rates to compensate for declining assessed values, even though they didn’t lower the millage rates during the bubble’s inflation.
Forget Miami, its a corrupted hellhole. $8k property taxes for a $140k house explains everything. Even Texas is much cheaper, your taxes would only run around $5k and youd get a far, far, far nicer house.
Thanks for that info. Sounds like I am at the mercy of the tax assesor. I don’t like that! So I will keep on renting until tax valuations are more reasonable…if ever.
“Porter Davis is the listing agent for a four-bedroom, two-bathroom home on Lowry Avenue, built in 1972, that has a short-sale asking price of $145,900. He said the home was purchased for $96,900 in 2002 and refinanced for $217,500 in 2005, and was assessed at $192,870, last October.”
Lets see here…. Bought in 2002 for 96k and assessed in 2007 for 193k?
There’s an appraiser that needs to go to jail.
He said the home was purchased for $96,900 in 2002
It’s worth about $80-85K, perhaps less.
I’ve seen a lot of scary stuff in Tampa recently. A couple weekends ago, my wife and I went to a mattress store, and we were the only people there for 45 minutes. At our next stop, a furniture place, sales staff outnumbered customers. When I went on-line to buy a Dave Matthews Band ticket for this summer’s show at the fairgrounds bandshell, for the first time ever I had no trouble obtaining a covered seat even though I logged on well after tickets went on sale.
Finally, last month we stopped by an open house at a place I’ve had my eye on — using 2000 prices as my reference, it’s still overpriced by about 50%, despite two price cuts. The realtor had set out some drinks and finger food next to a sign-in sheet; we were the only people to sign in, and we arrived 15 minutes before he closed up. I let him know we’d be interested in renting, if the owners was willing. I have to say this: if the price dropped to where I think it should be, I would be tempted, because the mortgage and carrying costs would be right around 3x our income.
LOL! Snake, I had the exact same experience for DMB tix! For the last 7 years I’ve gotten up on ticket sales day, logged in the minute tix went on and always got lawn “seats” for the show at the Gorge Amphitheatre. This year I got row 26 for the busiest night! I couldn’t believe it. The only explanation I can muster is that there is much less competition this year for the opportunity to drive 4 hours to see these guys.
Shill of the week…
“Like many others, Goddy Daudu wasn’t burned in the real estate crash. Saturday was his first auction, and he came to play. ‘I’m here to buy as many as I can buy,’ Daudu said.”
“And that he did. Daudu saved more than 50 percent on an East Tampa home, paying $63,000 for it. Then, he hunted for more.”
This guy really bothers me. Is HB speculation just an unending phenomenon that has replaced actual home ownership in this country? Doe anyone know if the price to rent ratios in Tampa support what this guy is doing?
He “saved more than 50 percent.” Off what? The true value? Don’t think so. “Then, he hunted for more.” But did he buy anything else? And what is he going to do with these “deals?” Sell them? To whom? Rent them? To whom and at what price? Talk’s cheap.
“39,000 properties will have been auctioned off across the country.” Oh, really? To me, “auctioned off [emphasis on 'off']” means “sold.” Does anyone know if all these properties were no-reserve? I’d be very surprised.
If you go to the auction company’s FAQs, there is one question missing: “What portion of these properties is being auctioned absolute, with no reserve?”
If he paid only $63k, he can make big money renting it out, of course provided the tenant pays the rent and doesn’t trash the house…
“But the 31-year-old administrative assistant worries about obtaining a mortgage and the still-hefty home ownership costs, particularly property taxes. In the end, Bailen decided to postpone buying.”
The lack of affordability is the problem in most Florida markets that had housing prices driven up during the boom. The first time buyer has been priced out and even though prices have dropped, they have a long ways to drop before they reach the “affordability range” for many home buyers.
Those who follow the advertisments, “now is a great time to buy” are putting themselves in a position to lose money by the time the market completes the correction.
I thought this from the SS piece about taxes and appreciation was interesting:
‘Under the new plan approved by Florida voters in January, all buyers will benefit from an estimated $15,000 increase to the $25,000 homestead exemption. But first-time buyers won’t be able to take advantage of the more-lucrative “portability” measure, which allows existing homeowners to transfer their accrued tax savings to another property within the state.’
‘First-time buyers would be stuck with the large tax bills that prompted the Florida Legislature to take action in the first place. They would have to hope homes they buy appreciate in value for them to realize a tax savings that could help cushion buying a more expensive property down the line.’
So, basically FL wants to officially discriminate against young homeowners in their tax code. Talk about setting up generational conflict.
Older people have nothing else to do but but vote to maintain their entitlements, and it seems they are passionate about their issues. Young people think it’s cool to remain aloof politically and I know many who don’t vote at all.
I guess you reap what you sow.
Generational conflict?
Nope.
No 1st time Florida home buyers is a simple solution.
They’ll fix the problem by 2012 as Florida watches the boomers retire to the Carolinas, Texas, or anywhere else. Or… property values become so cheap people ignore the high tax rates.
Got Popcorn?
Neil
I would like to retire to FL in a couple of years. All of my immediate family have lived in the Tampa area for 25 years, but I refuse to pay up to 5x the property taxes of similar homes. Most people don’t realize how high the taxes are in FL. I’ll consider it when prices fall to 2001 levels, for property tax reasons only. Diogenes, you’re smiling, .. for now. 2001 prices almost level the property tax playing field.
No, I’m not smiling, yet.
Overbuilding and massive relocations have made traffic unbearable. Paradise was paradise when it was cheap and easy and not crowded.
But I think you finally get my point on TAXES.
TAXES are based on PURCHASE PRICE. IF idiots had not bid up prices to ridiculous levels, taxes and insurance costs would have never been an issue.
If prices all stayed around 100k for the average house, then taxes would have stayed the same, and insurance costs would have risen slightly.
No one would be complaining.
I don’t want an “EXPENSIVE” house. I don’t count myself wealthy with price inflation. I can’t buy a bigger house. I get the same house for more money.
Only flippers and speculators win in this environment, and it should have been contained LONG ago. I wasn’t, so why should I pay 3x taxes, because some Yankee Carpetbaggers jacked up prices to skim off some easy profits. Now, prices are getting back toward “normal”. Without SAVE OUR HOMES, all the natives get caught in speculative bid wars, making housing more expensive for everyone.
The makers of this bubble should be in prison for mortgage fraud. Instead, Martha Stewart gets jailed for illegal trading and “Hank” Paulson gives away hundreds of Billions of our tax dollars to the real INSIDE TRADERS who made bad bets, drove their companies to bankruptcy and still get to keep all the money the got by selling their own companies short. What a mad, mad world!!
I believe Martha Stewart was jailed for perjury, not insider or illegal trading. They couldn’t make that stick, that is no evidence.
All first time buyers are stuck with large tax bills; some just happened to buy twenty years earlier. The tax rates have not gone up, the alleged property values have. Every generation will be behind the one in front, and screaming bloody murder.
The tax cap protects home-owners; without it, their taxes could triple in a single year, forcing them to sell. This happens in other states. The same cap that wannabe buyers call discriminatory will be their best friend when they finally do buy, and the portability thing is perfectly reasonable. If you want to buy a new house appraised at a higher “value” than your current one, you’ll still have to pay the full rate on the difference.
The homestead excemption should have been raised to at least 150k years ago. An examption on the first 40k of house’s price doesn’t amount to anything given today’s prices. The only 25k exemption worked very well when most houses didn’t cost more than that.
Florida counties and cities, and the state itself don’t need more money, they need to stop wasting money.
Here’s a real inequity, not an imagined one: In Hillsborough County there are something like thirty different property tax millage rates, so that someone buying a million a new dollar house in one neighborhood may get stuck with a 10k a year tax bill, while someone buying a new million dollar house in another neighborhood can get stuck with a 25k a year tax bill. Since both houses costs the same, shouldn’t the property tax bill be the same? We don’t charge different sales tax rates from one neighborhood to the next within the same country, so why should property tax rates vary? I’m surprised someone hasn’t challenged this in court.
I am sure you attract legions of out of state buyers by maintaining such abusive tax laws. Most first time buyer remain priced out of the market or simply have enough sense not to buy into such a scam (like myself). Florida real estate will be declining for a long time to come and with it the state’s economic fortunes.
I think you answered your own question.
The DON’T cost the SAME.
The older house buyer probably paid $250,000, and now some idiot thinks houses in the neighborhood are worht a million dollars.
Let the Million dollar buyer pay the taxes based on the price he paid.
Why should the 250k buyer get stuck with 3-4x the tax bill??? He is living in the same place he bought 10 years ago.
What’s fair about that?
Your entire concept of justice is totally perverse.
It’s like Rent Control in New York. Everyone seems to think that’s great, as way of controlling costs, saying without it housing would be unaffordable to most people. Those same people bitch about other folks trying to contain their costs.
Taxes should be paid based on some fair “appreciation” model, which THEY ARE. My taxes have increased EVERY YEAR.
The SOS bill just kept them from going up 100% in 5 years. Now that prices are falling, I don’t have to fight the tax assessor that I am grossly over-assessed which I would have been.
NO 125% loans, NO no-doc loans, NO no-income loans….That means REAL income prices. That means LOWER prices, resulting in a new “tax basis”.
This will all sort itself out when bid wars are a memory, not a cause for a re-assessment of property “values”. The real values are just starting to show up.
Diogenes, I’m glad somebody else here gets it. Realtors and others screaming about high taxes in Florida are ignoring that they are so high because the house prices are ridiculously inflated. They never whined about taxes were prices were nomal, even though the millage rates were too high in many areas. They also made a point of lying to buyers by telling them what current homeowners were paying in property taxes, instead of what they, the new buyers, would be paying. The buyers, most speculators, are screaming and kicking, but they were incredibly stupid to check in advance.
Forgive my typos. Exemption, not excemption or examption.
Each county has its own tax rates, so you can find one with low rates. But whatever the rate, it’s the cost of the house that becomes the starting point. Without Save Our Homes, most Floridians would have to leave, because the counties would re-appraise their homes at imaginary bubble prices. The cap just prevents them from increasing the appraised taxable value by more than 3% a year (i.e., the normal rate of inflation).
A builder told me that here in Florida the tax assessor has the authority to assess a re-sale property higher than the selling price (in a declining market), but must assess a brand-new property at the selling price. Can anyone here confirm that?
Yes, they can assess higher.
The basis is supposed to be “fair market value”.
But that was supposed to be the basis all along.
When people agreed to “buy” the same houses at 2x the price, that was the NEW market value.
It’s all been very unsettling. The Assessors are idiots.
They used speculative buying as “comparable sales”.
They never considered the loan terms. 120% LTV?
Is that a “sale”??? How could it be??
Now, they are trying to re-adjust, but don’t want to kill their tax revenues. They are used to spending all the money.
However, NEW CONSTRUCTION is not a comp, unless comparing with other new construction.
The LAND BASIS has changed substantially in the past year.
Diogenes - thanks. I was hoping that all the short sales around here would torpedo the comps for taxes, but it looks like there might be a large and growing divergence between valuations by a lender’s appraiser and those of the tax assessor. Think I’ll buy stock in the companies that make pitchforks.
Seems easy to deduce that used-house sellers are even more screwed than they thought, because their price cuts will not reap proportionate tax cuts and that fact will not be lost on many prospective buyers.
Oh, I forgot to mention, that applies to ALL property here in Florida.
I bought several cars in the Florida Keys when I was working there. Being the longest dead-end road in the world, and being there is only one junk-yard on the island, a lot of cars end up there that need repair and are abandoned instead. I bought a couple of 280Z cars for $50.
The “fair value” was $1600. Guess what that meant? Right. They said I owed taxes on $1600, unless I could prove by notorized bill of sale and affidavit from the seller that we REALLY, really truely made the sale on the terms listed. Unable to recontact the seller, I was forced to pay the “real tax” on a non-working vehicle.
They can also decide that you paid too little, ignore the selling price, and up the supposed value of your property.
All this nonsense is one big reason me and so many others are leaving Florida. Mike in Miami could buy a $140k shack in Miami but get slapped with an $8k tax bill! Where im relocating to, my taxes will be under $2k a year
$8K tax bill on a $140K condo? No way. The friend who bought in Volusia in 2006 paid just over $500K (comps selling for under $400K now) for his resale, and his first year tax bill was “only” $7500.
a 4,267 percent increase
That is a comma and not a period, correct?
For those that miss the trolls, here’s one we see a lot:
‘el pasoan hunk Date: April 7, 2008
‘come to el paso. People are making thousands of dollar profit investing in housing here.
Do not keep reading the loser blogs about how bad the housing is.
you just lose your opportunity to get rich in el paso.
should we change the name of blog: Losers’ Pessimistic View of US Housing.’
I’m a rollin’ stone
All alone and lost
For a life of sin
I have paid the cost
When I walk by
All the people say
He’s just another guy
On the Lost Highway…
I lost big when I sold my house at the peak for cash, full price. That really hurt. And I cry for shame every time I open the mail and don’t get no bills. Argh… it hurts, Ben, it just hurts. Pour me another one of them Jackie D’s, NYCityBoy…
No, you sold for the artificial Bubble price. And don’t be such a braggert. Wonder why folks got so caught up in RE?, by hearing stories like yours.
Well, it’s real money, isn’t it? Last I heard, it was. I didn’t buy into the mess, I just saw it and sold. I bought my house to live in, not as a speculation. So…all the real losers out there and you’re saying I shouldn’t feel good about not being one? Sorry, my bad…
Not quibbling here about the reality of your windfall, just your attitude, as in your “i got mine, suckers” lack of humility.
It’s called schadenfruede and is bred by watching everyone else flaunt it while I was being quite humble in my poverty. Now it’s my turn, I guess, though I fail to see any bragging in stating the truth. Not meaning to offend anyone.
Hey,
be glad Lost sold her house and moved into her truck and banked the cash. Not only is she smart, but she has a whole passel of dogs to feed. Why not be happy for the folks who wised-up and got into the lifeboats?
I didn’t even read it as though she were bragging…it was a counterpoint to the troll suggesting a blog name change to pessimistic losers of america or something.
I sold my house about six months after the peak in my area, and the timing was a total accident. It wasn’t like I foresaw the peak and cashed out because I’m a financial genius. I’ve read many posters describe how they cashed out at peak and are now renting til they think it’s a good time to buy again. Every now and then one does get the sense that the good luck is being flaunted…so what?
should we change the name of blog: Losers’ Pessimistic View of US Housing.’
This looks like an act of desperation by the poster, ‘el pasoan hunk. Sound to me like the real loser is ‘el pasoan hunk because he/she cannot dispute the truth that is posted on this blog site.
The truth hurts, right ‘el pasoan hunk? But the truth helps those seeking the facts!
So EL Paso is the new hotness according to some 21 year old twit still living in mom and dads basement? This delusion runs deep…
There’s a reason the housing prices were so low to begin with in El Paso. It’s relatively near a few nice places (the Guadalupe Mtns, Big Bend), but so much of that town felt so, I don’t know, 3rd world? Icky. The strip going from the airport east towards the Guadalupes was about 20 miles of junkyard after junkyard after strip club.
Make that a Double Icky.
That view of Juarez is priceless.
I think Ben was just being kind by leaving out the, “of $hit” at the end of his name.
“People Can Afford To Wait In Florida”
I need some help here, I have found a house and I am going to look at it today.
Who would like to help me by giving their opinion of what I should be doing.
It is bank owned, sold for 420,000 in 2006. It is now listed for 239,900.
If I like it, I want to do a cash deal.
I am thinking 180,000.
It is exactly what I have been waiting for, newer construction, built in 2000.
2000 under air, four bedroom.
What do you think?
If someone would like to e mail directly me please do, I really want some opinions/advice and help.
sunkissedbeach@yahoo.com
I am thinking 180,000.
Look up the history of this home and what it sold for in 2000 and offer less than the 2000 price for starters. If the property is 2000 sqft, $180K is $90 per sqft. You might be able to pick it up for less due to the large supply of empty homes and the increasing supply of foreclosures.
Loxahatchee.
the Property Tax appraisers site doesn’t give the sale price for 2000.
You can always say, “I’ll buy it for 180K today or buy it from you next year for 120K. Your choice.”
I am a big believer in the crash but to think 120,000 is a bit more optimistic than I even am.
At 120,000 you have not calculated any appreciation from 2000
My guess this home sold for around 120-130,000 in that year.
I would say if that home sold for 120,000 it would be worth in the neighborhood of 150
I am a big housing crash believer but seriously don’t see that home going for 120,000.
Even if that home sold for 120,000 per bubble it should be worth 156,000 with appreciation.
I hope I am wrong, I spoke with the realtor and she tried to create a sense of urgency by telling me how much interest was generated bla…bla…bla.
I am going to wait more, the property was to small for my horses.
You didn’t say where it is located. There were major building code changes in 2001, that presumably didn’t show up in homes completed before sometime in 2002, that noticeably improved the wind resistance of houses. If way inland, like Orlando, then it may not matter to you, but if you’re on the coast (as implied by your e/m address), you might add that to your list of pros and cons.
I’d say, $100-$125/ sq2 ft MAX….
I like $100/ sq2 ft myself
For those of you that might not know, Jerry Williams of Orion Bank received multiple Bank of the Year Awards during the boom. I bet he could be reached for comment at that time.
He is happily handing out HELOCs to help homeowners in Hialeah.
“They all used to drive Hummers, but now they work at Wal-mart.”
The fate of this nation, summed up in a single telling line, sadly.
Oh, what about “buy now, or be priced out forever?” Hahaha… guess not!
‘Banks often like to have minimal reserves to show profits,’ said Ken Thomas, a Miami-based economist who specializes in analyzing financial institutions, adding that bank regulators need to sign off on that strategy.”
“‘Loan loss reserves are meant for rainy days,’ he said. ‘And excuse me, it’s raining now. When you have a bank with that much of an increase in non-current loans without a commensurate increase in loan-loss provisions, that raises questions.’”
So banks are still trying to lure investors to take over mortgages by playing Twister with the balance sheets? I thought that stuff ended last fall? Is this kind of thing going to be the effect of the Bernanke bailout? Instead of saving the financial system, he’s just keeping the CDO market speculators solvent throught the rainy days.
Bernanke will print and transfer enough money, in exchange for worthless paper, to make the “balance sheets” all go from RED to Black.
It’s magic, don’t you know………VOODOO Economics.
“One explanation for the discrepancy, analysts say, is that Orion did not want to report a serious drop in profits by setting aside more money to service loan problems.”
Not in the article, but on the FDIC website, Orion Bank had a net income of $29.5 mil in 2007 and paid dividends of $28 mil, a hefty 94.9% payout and a 229% increase over 2006. In a year when their REOs went from $0 to $20 mil and Non-Accruals went from $0 to $80.5 mil !!
Something’s rotten in the State of Denmark when a privately held bank, dividends out nearly all earnings instead of building capital for what is about to hit. Orion’s next FDIC exam should be interesting.
…and as always…repeated often,but we are not there yet.
” Then everybody simultaneously saw the writing on the wall, and panic selling ensued. With thousands of sellers and very few buyers, prices came down with a sickening thud, twitched a bit, and then crawled down even lower. ”
http://www.investopedia.com/features/crashes/crashes4.asp
The Florida property tax code is set up to (no suprise) favor retirees on fixed incomes. The main way in which that is done is basically through a myriad of state concepts (homestead, save-our-homes) that basically mean your property taxes pretty much can’t go up as long as you stay in the same house and its your primary residence. This is great for fixed income retirees, but the entire tax burden is shifted on everyone else (those who rent, those with second homes and those who move). Voters recently voted to change the law so that you can take your savings “with you” when you move your primary residence, but this still offloads the tax burden on those who have second homes or rent.
So far, at least in central Florida, I think that the landlords have been spectacularly UNsuccessful in offloading their increased costs onto the tenants.
Comment by NoSingleOne:
“He is happily handing out HELOCs to help homeowners in Hialeah.”
Yeah. Helping some HELOC’ers buy more product and cutting agent that goes in those little packets slid in with the media noches, plantain chips, and Pilon shot orders for their special customers. Recession or not, people need their dope.
” Comment by kallie
2008-04-04 13:53:46
You’re right - sorry, didn’t realize that would screw up the rest of the post! Anyway, meant to say price range was $170 - 200k ($70-80psf at 2100-2500sf). We have 20% down in that range and want to be very practical. Unfortunately, because everything is still somewhat overpriced here and I’m not willing to add extra costs for commuting farther, that limits us to 1960s or 70s ranchers. I know what the practical thing to do is, but it’s hard to let go of the “dream house” (same size, but newer, better electrical/energy-efficient/engineering/layouts) when those shouldn’t necessarily be priced so high in Dallas!”
My comment: Umm, where have you been looking? You can now get a Dallas house for $45 to $60/foot and you can get a house built after 1990. Dallas and high price should not be in the same sentence! It irks me that people think a nice middle class 3/2/2 1500 square foot brand new house for $99,900 is “high price” You can’t get a such house this cheap anywhere in Florida(yet)
” Having moved six times in seven years, renter Stacy Bailen of Palm Beach Gardens would like to buy a little starter house and start building equity.””
equity? EQUITY?? *rolls over in fits of laughter*
“The interesting thing is that my second choice- Nashville- has also gotten bitten by the bubble. Just a few years ago, you could find nice old homes there for 50-75k. Not anymore. The same homes are now 250k, all driven up by what I assume are out of state speculators and East Coasters fleeing the cities.”
Jetson boy, this is why I have chosen to relocate to PA instead of TN. The NE part of TN is less bubbly but still not worth $150k for a nice house. As for the cooler winters, I got that figured out, I simply can visit my parents for a few weeks in south FL and skip the worst half of the winters in PA. And with global warming, I give it a decade before the winters are always mild.
“And with global warming, I give it a decade before the winters are always mild. ”
This is my favorite misconception regarding climate change, that weather will somehow be predictable and temperatures will invariably, across the world, increase.
Im looking at a home in lake charleston in lake worth 2540 sqf built in 1992 they are asking 380,000. THe 2007 appraisal price at the palm beach property appraiser is 330,000 and it was purchased in 2001 for 270,000. What in your opinion is the market value of this home? I want to make a offer but just started following the market and whats happening. THanks for your help
Im looking at a home in lake charleston in lakeworth that is 2540 sqf, built in 1992, and the asking price is 380,000. The home was purchased in 2001 for 270,000 and the 2007 property appraisal is 330,000. In your opinion what is the market value of this property now? I would like to place a bid but would like some thoughts before I do.
Thanks again for your help.
Quote: The home was purchased in 2001 for 270,000 and the 2007 property appraisal is 330,000. In your opinion what is the market value of this property now?
Don’t pay more than $270k. That’s $100 per sq. ft. That’s at least fair market value. If you wait, I suspect the bottom of the market will be closer to $80 per sq. ft. I also would be extremely surprised if when the bottom does come, prices don’t flatline for at least 5 years.
#100/ sq ft…..The taxes are going to kill you @ 2.5%….
Even @ $270K, the taxes are going to run you over $6000/yr, and then to top if off, you probably can’t get insurance other than Citizens….That could cost you another $5-8000….
Homes built before 2000, carry a ‘warning’ to insurance companies….Before making an offer, talk to an insurance company…..You’re crazy to buy in Florida….We pulled out cuz we didn’t want to face the on-slaught….NEVER WANT TO GO BACK…THANK YOU…25 YEARS WAS ENOUGH
Im looking at a home in lake charleston in lakeworth that is 2540 sqf, built in 1992, and the asking price is 380,000. The home was purchased in 2001 for 270,000 and the 2007 property appraisal is 330,000. In your opinion what is the market value of this property now? I would like to place a bid but would like some thoughts before I do.
Thanks again
Sorry for the repeat posts my first time posting.
P.S. I forgot to tell you that the City of Lake Worth, is the total PITS….The city governmnet is totally screwed up, and has been for years….down town LK W. is a drug and crime capital….VERY DANGEROUS DOWN THERE AROUND DIXIE….
I would strongly suggest you consider Palm Beach Gardens, Jupiter, or even Tequesta….BUT NOT LAKE WORTH….