Another Sign Of Desperation In Florida
The Sun Sentinel reports from Florida. “Almost every street has one: a vacant house that sold a couple of years ago for a jaw-dropping price. Appraisers so commonly pumped up house values to meet demands of developers, real-estate agents and lenders that complaints against them tripled in Florida in recent years, the largest complaint increase for any profession regulated by the state.”
“Cheryl Oliphant of Santa Monica, Calif., bought a house that lenders shopped to appraisers as being worth $550,000. A novice real-estate investor, Oliphant said she used her retirement savings and bought at the top of the market, thinking she had a great deal and instant equity in the house because it appraised for $50,000 more than the $450,000 sales price.”
“‘The appraisal was wishful thinking,’ said Oliphant. ‘I became a little suspicious later when I went to refinance and the next appraiser was having a hard time finding the value.’”
“Oliphant has been trying to sell the house at a $100,000 loss and plans to file for bankruptcy, losing her $50,000 down payment. She said she might ultimately have to abandon that house and four others she bought in Florida.”
“Mortgage and real-estate brokers, appraisal-management companies and banks usually choose the appraiser. ‘The manner that they use to game the system now is either mass faxes or mass e-mails,’ said Frank Gregoire, former chairman of the Florida Real Estate Appraisal Board. ‘Loan originators around the country will send out a notice: ‘We’re going to do a loan…can you get me $500,000? If you can… you’ll get the assignment.’”
“One ‘blast’ message sent in December 2006 offered Gregoire and others $350 for an appraisal of a St. Petersburg house. It cautioned appraisers about photographing the house: ‘Photos CANNOT contain pictures of any person OR UNFINISHED/CONSTRUCTION/DAMAGE PICTURES!!!’”
The Miami Herald. “Another sign of desperation in the South Florida housing market: banks tired of paying taxes and upkeep on foreclosed homes put 200 up for auction Saturday in Fort Lauderdale.”
“Ranging from the most modest one-bedroom efficiency condos to five-bedroom houses worth close to a million dollars at the height of the market, these once-dignified symbols of the American dream were reduced to tiny thumbnail photos in an auctioneer’s guidebook.”
“‘It’s very bittersweet,’ said Realtor Renee Dworkin, who accompanied several clients to the sell-off. ‘Each one of these homes represents heartache for someone.’”
“A three-bedroom house in Miami Shores that sold for $460,000 two years ago, went for $177,500. A two-bedroom house in Coral Gables that sold for $670,000 in September 2005, fetched a bid of $300,000. The buyer declined to give his name, but said he plans to rent it out.”
“Most of the deals struck on Saturday are contingent on the bank accepting the bid. Buyers will find out sometime mid-week. But about 20 percent of the sales were ‘absolute,’ said Dave Webb, co-owner of the auction company.”
“Brian Trujillo, a real estate investor from Miami, said prices had fallen even since the last auction he went to, about a month ago. ‘Condos are selling about 15 percent under the last time,’ he said. ‘Houses selling for about 10 percent less.’”
The Daily Business Review. “On-site auctions, where the bidding is staged in the front yard of a property, are becoming more popular in South Florida as sellers and lenders with ballooning real estate portfolios struggle to dispose of real estate assets in a sluggish market.”
“Minutes before the auction on a foreclosed house at Southwest 142nd Court began, Richard Caso saw signs promoting the auction and checked it out. At 6:30 p.m. the auction started with an opening bid of $100,000. The house, which is owned by Chase Home Finance, last sold for $305,000 in July 2006, according to Miami-Dade County property records.”
“‘$105,000,’ Caso offered. ‘$110,000,’ countered the second bidder, Robert Perez. The two traded bids until Caso dropped out after Perez made a $130,000 offer. Perez signed the contract and wrote a check for $6,500 — the required 5 percent deposit.”
“‘It was a good price,’ said Perez, who plans to rent the house. But…Chase has the right to refuse the offer, said Troy Fowler of Miami-based Investor Realty & Auction Group.”
“Caso, who is taking advantage of the market to acquire several distressed properties, said he wasn’t disappointed at losing the bidding. ‘There are plenty of [lender-owned properties] out there,’ he said.”
“Caso said in the last two months he has bought two houses out of short-sale. ‘I usually try to get to the property before it is foreclosed,’ said Caso, who said he has seen properties selling for about 40 percent off their 2005 prices and about 20 percent less than the property’s loan principal.’”
The Naples News. “The tables have turned in the local real estate market. A few years ago, it was tough to find a home under $300,000, let alone under $250,000, especially in the Naples area. Now, they’re in the hundreds.”
“In 2004 and 2005, a frenzy of investors snapped up homes, pushing prices sky high in Southwest Florida. Community leaders scrambled to try to deal with what became known as an ‘affordable housing crisis.’”
“The median price for a single-family home in Collier County peaked at $592,500 in February 2007. Now, it’s down closer to $400,000, as sales have slowed and housing inventories have grown.”
“In January and February, the Cape Coral-Fort Myers area had the highest foreclosure rate in the country, according to RealtyTrac Inc. Lee County broke a foreclosure record in February with 2,461 filings, up from 2,297 in January.”
“These days, it’s much more common to see these phrases on a listing in the MLS: ‘Short sale, bring all offers’ or ‘This property has just entered foreclosure.’”
“A few weeks ago, Realtor Mary Catherine White got a call from a couple from Chicago looking to buy a retirement home in the area where they could spend part of the year. She took them out the day they arrived in town, and by the next day they had made an offer after finding a great deal on a two-bedroom condo at the Brooks, a gated community in Estero.”
“They got more than they wanted and paid $180,000, a price that even seemed to surprise White. The home was once listed at $369,000.”
“‘Nobody can believe that we got something for that price in the Brooks,’ she said.”
The News Press. “Lee County’s inventory of unsold homes has swollen to record levels, depressing prices and discouraging the construction of new homes - and the glut may be even worse than it appears.”
“The inventory of unsold homes swelled to almost 16,000 _ seven times what it was in 2005 at the height of the market when buyers outnumbered sellers. Nearly 5 percent of the total housing units in the county are for sale.”
“Because of the glut, contractors find it impossible to compete in price against existing homes - and any dwelling in less than perfect condition has little chance of being sold.”
“High as they are, the MLS numbers may not tell the full story. There’s a ’shadow market’ of houses not officially for sale even though they’re owned or soon will be owned by lenders who took them back in foreclosure, said Jack McCabe, a Deerfield Beach-based real estate consultant who tracks the area’s home market.”
“‘It’ll probably take federal regulators to tell them to get this stuff off the books,’ he said. ‘The lenders are the most unrealistic of the bunch right now’ - many banks still aren’t putting their repossessed houses back on the market priced to sell.”
“‘The MLS doesn’t really give us a full picture of the supply,’ said Michael Timmerman, a Naples-based senior associate with Fishkind & Associates. ‘It’s very difficult because there’s no one good source that allows us to get a handle on the total supply.’”
“For example, Timmerman said, a builder generally doesn’t put all the houses available in a new community on the MLS. ‘But he may have three or four sales from a development on MLS just to entice people,’ Timmerman said. ‘The MLS can be used as a system to generate leads for that particular builder.’”
“There’s no way to know exactly how much of that is going on, or how many houses are being held by a lender who ultimately will have to put them back on the market.”
“The median MLS sales price has fallen 34 percent from its peak of $322,300 in December 2005 to $211,900 in February 2008, the last month for which statistics are available, according to the Florida Association of Realtors. Permits for new houses have slowed to a trickle: only 74 in March compared to 1,558 two years earlier.”
“Steve Koffman of Cape Coral-based Century 21 Sunbelt Realty, said about 40 percent of homes sold in the city are foreclosures or short sales. The enormous inventory means that only the ones priced the lowest and in the best condition will sell, he said. Otherwise, an agent won’t bother to show them to a client.”
“‘There could be 500 like it on the market,’ Koffman said. ‘How do I pick the eight I’m going to show today? They have to stand out.’”
“That’s bad news for the houses that are half-finished or in bad shape, of which there are large numbers in areas where a lot of inexpensive homes were being built in Lehigh and the Cape during the boom, he said. Many have been vandalized by thieves or even by subcontractors who weren’t paid and illegally came back to take back items such as bathtubs, Koffman said.”
“With prices at rock bottom for existing homes, builders are offering great deals on the houses they’ve already finished - but don’t expect it to last forever, said Kevin Clark, Southwest Florida division president of national developer Beazer Homes.”
“Builders are throwing in amenities such as granite counter tops and high-end flooring to lure buyers without cutting prices further, he said. That way they won’t have to raise prices when demand picks up.”
The Herald Tribune. “The energy level was high as the auction unfolded at the Longboat Key Club and Resort, with bidders fighting it out for at least 35 of the 49 properties up on the auction block.”
“How many of those properties ultimately sell is still up in the air. Only eight were sold ‘absolute,’ leaving the rest of the high bidders below the seller’s reserve, or minimum price.”
“Prices also stalled out on some of the auction’s signature properties, demonstrating that while buyers might be back in the Southwest Florida real estate game, they are looking for deals — some to the extreme.”
“While bids subject to a reserve ended up totaling $31.3 million, many of the winning offers amounted to only a fraction of previous asking prices. For auctioneers, the work was tough at times.”
“Take 529 Putter Lane. Sky CEO Chad Roffers touted the home as the ’signature property,’ not just of the auction (it graced the cover of the auction materials), but of Sky’s entire portfolio.”
“‘This is probably the finest home we have in the Sky Sotheby’s inventory right now,’ Roffers told the crowd, saying the owner had previously turned down an offer for $4.3 million. Even so, the bidding only got started at $1 million, and despite Daniel DeCaro’s best efforts only managed to reach $2.3 million.”
“Jeffrey Roberti’s well-known, four-story Siesta Key house — complete with a rooftop pool — had not previously been offered for sale, but was assessed in 2007 at $4.6 million. DeCaro tried to open the bidding at $6 million, then $4 million, then $3 million, but no one raised a paddle.”
“Finally, someone bit at $2 million, and then other bidders jumped in, creating a small frenzy. Bidding went back and forth across the room, but only increased the amount by incremental steps. The bidding ended at $2.65 million.”
“The most strenuous effort by the auction organizers came when the so-called ‘Sugar Bay’ estate came up. Gerd Petrik’s two-parcel estate received a $14.1 million bid at Sky’s November auction but the deal later fell apart. The smaller parcel was sold off to another buyer in February, but the larger main parcel — still the subject of arbitration proceedings — was back.”
“Both Roffers and DeCaro crisscrossed the room feverishly as bidding started at $4.5 million, well below the $9 million offer received in November and a third of the $15 million list price, and bidders fought it up to $5.85 million, where things stalled.”
“After a few moments and some effective persuasion, a shout came from across the room, and things picked up again. But after some more back-and-forth between two remaining bidders, things stalled again at $5.92 million.”
“The bidder who was hesitating was in the back of the room, a cell phone in his hand. He was on the phone with his wife. DeCaro came over and gently put his arm around the man’s shoulder.”
“‘5.95?’ DeCaro said, almost in a whisper.”
“No dice; the answer was no. The auctioneer returned to the stage. ‘Folks, the reserve price on this is $8.2 million,’ he said.”
“The rustling continued for a few more moments, as the auction employees continued to work the crowd. ‘Get that guy’s wife back on the phone,’ DeCaro joked. ‘We’re not taking no for an answer.’”
“But it was not to be. Bidding was closed at $5.92 million.”
The first link is full of examples of what has gone on in the appraisal biz, but all of these reports still show banks, builders, UHS, etc, playing games and colluding on prices.
When the senate thing was going on a few days ago, a reporter called me and asked what I thought. (The article didn’t run, BTW) I told her and she asked incredulously, ’so you think we shouldn’t do anything?’
I replied that there was lots the senate could be doing. First, that what they were taking about would only make the bust worse. And second, where are the reforms that we’ve been promised? The GSE reforms have supposedly been just around the corner ever since they were found guilty of billions of dollar of fraud, years ago!
Has one single law been passed to clean up the appraisal business? The NAR lying and collusion? The Wall Street MBS fraud? And I also pointed out the need for some leadership on the economy. This bubble isn’t coming back and we better start figuring out what our business landscape is going to look like in the future.
Come to think of it, I know why the story didn’t run…
But, but, the Senate wants to give home builders billions in tax incentives and as a sop to the little guy, a tax credit or some such thing for buying foreclosed homes. LMAO!
These builder tax items aren’t incentives nor are they any loss to you or me. They are losing billions and it’s an extension of the carry back. I don’t have any problem with cutting taxes, personally. But this is the thing. Builder defaults are an important part of establishing equilibrium in the housing markets. (Just like individual foreclosures, as I told the reporter).
This will drive the cost of raw land lower and help the remaining (most mid to smaller) builders stay in business. Keeping these national builders going will only increase the over-supply and make the bust worse, and possibly mean more builder defaults in the end.
Of course, laws usually make any situation worse, so no surprise there.
Thanks for the clarification, Ben, I confess, I don’t understand completely how these tax items work. I just don’t like to see anything that assists the national builders in holding out any longer, because like you, I want to see equilibrium sooner rather than later.
Of course, having said that, I’m all for an incentive to buy a foreclosed home, after the knife-catching stage.
Of course, having said that, I’m all for an incentive to buy a foreclosed home, after the knife-catching stage.
Palmetto: Watch out for the false appraisals that are still going on in the Tampa bay area. I am finding many properties that have been appraised, but are not worth the appraisal price.
Well I’m offended, not that it matters. The carryback loss provisions wouldn’t be so offensive were it not for the fact that the losses could have been dramatically reduced by even half-assed leadership demonstrated by the CEO’s of these builders.
The Motherf*ckers at the top were too busy making sure that the stock prices remained high so they could continue cashing out their options to bother with managing their companies. Any moron could have seen what was coming and stepped back from the bar. Now, these same inept/criminal managers want to somehow lessen the impact of their terrible decisions by asking for tax breaks? F*ck them, let em BK.
I like your anger!
“Of course, laws usually make any situation worse, so no surprise there.”
LOL
Almost lost my brunch on that one!
If I studied all my life, I couldn’t think up half the number of funny things passed in one session of Congress.
Will Rogers
Actually, the tax incentives being proposed are a subsidy for the reckless. A builder who proceeded cautiously during the boom, and as a result now has no losses to off-set past earnings, gets nothing. The result is that the reckless builder gets a lower effective tax rate on earnings during the boom than the prudent builder.
So basically she just wanted a printable excuse as to why it’s ok for everyone to do another line of coke seeing as how that made everyone feel go for the past few years, though the tolerance level has gone up and the effects aren’t as pronounced.
LOL.
And, btw, this is perhaps the most horrifying FL thread I have seen in quite awhile. There are many homes mentioned above that couldn’t even come CLOSE to 50% off previous sales. Although I am living in this market, at watching it all around me, it’s just shocking to see it in print like that.
The thing that is definately NOT captured by these articles is the disparity in pricing for current sales. There are identical home, across the street in my development that are 30% apart in asking prices (both, BTW, right at the MTG balance). This kind of pricing (I call it desperation pricing) is helping maintain the illusion that FL prices are not falling that far, or that fast. However, the auction results seem to indicate more of what is to come; these people are getting skinned when going to auction.
The really expensive home (in the final article) that sold once for 9M dollars? That home is losing 500K dollars a month in value (Nov until today, price went from 9M to just under 6). That’s just staggering.
My only hope is that the market here finds the bottom more quickly. I have so many friends who have bought in because “prices can’t go any lower”… Many are now down 30% from where they bought. The sooner we find the bottom, the better for everyone involved.
These articles are full of happy knife catchers.
BTW, I spoke with a lady yesterday who has a son in FL. He recently called her and was freaking out because ‘there are no jobs and people are hurting.’ He told her that there aren’t even Walmart type positions available. Remember when we used to joke that so-and-so would be a greeter someday? Looks like that was optimistic.
Ben, you’re right (if I recall your position correctly)–the jobs issue is going to supercede the housing issue by the fall.
Yes, the “game” has changed. It’s silly to talk about housing only being in the 2nd or 3rd inning now; it’s way beyond that in Florida, and has been for quite awhile.
But there’s a new game in town.
No, it’s still just the second inning.
As bad as the score is for ‘the home team’, there’s no 10 run “Mercy Rule” in the house price game.
Actually, turns out, it’s a double-header. Anyone for another beer?
A friend of mine worked for a staffing agency in SFL for several months. She left the job a month ago due to job stress. She said it was awful. People coming in with years of experience begging for a job, any job….and there weren’t any to offer.
She has a knack for drama, so I often take with a grain of salt what she has to say about things. Maybe this time she was right on the money. Said it was like a depression down there. Reminded her of Western PA whenever we were young and the steel mills shut down. This affected coal, railroads, trucking and the whole Western PA economy.
And for quite some time many areas have flourished on nothing more than building, selling, lending, appraising and flipping homes. Once that stops where do these people make their living? And where do the people that make their living off of these people make their living?
Some areas are in for some rough times.
Well, being a full time resident in FL, I think that I can give a quick comment on your friends experience. There are big job cuts going on in FL, and many people do seem to be cutting back and looking for work. However, in my personal experience so far, I haven’t seen anyone but “useless” people getting cut. People who actually produce/do something for a job seem to be doing OK. It’s those that make their livings off the fat in the system that seem to be getting pinched. Salesmen of all types, worthless consultants, interior decorators, etc, etc. Not trying to single anyone out here, but where I am seeing the biggest weakness is for the higher paying (50-75K) do nothing jobs. Those that have valuable skills seem to be doing pretty well, imho.
However, it is my opinion that, unfortunately, many of the “workers” in areas like FL (and the other bubbly areas) really don’t produce or provide much positive value to a company, they were just leeching off the bubble teet for their incomes. Those jobs are done, and will not be back for many years. That is going to put a huge hole in the economy, easy come (money) easy go. For those that are highly skilled and work hard for the cash; they seem to be a bit less willing to drop 5K on a Louis handbag, even if they can afford it.
“There are just no jobs out there.”
“Yeah, unless you are willing to work 40 hours a week.”
- Dumb and Dumber
This is the not so subtle point that is missing in most RE projection articles that I read…. Jobs and wages !!! The correction we’ve all seen so far has been due to the collapsing credit bubble and the popping of the pipe dream that houses only appreciate in value. We’ve barely started to see the price drops due to rising UR and economic slow down..
RE: Remember when we used to joke that so-and-so would be a greeter someday? Looks like that was optimistic
Even the limo and truck drivers are losing their jobs around here.
These were always the type of jobs, employment counselors would advise downsized white collars to take to tide them over until something better turned up.
USA, no more Numba #1, GI!
BTW, I spoke with a lady yesterday who has a son in FL. He recently called her and was freaking out because ‘there are no jobs and people are hurting.
I hear the propaganda all of the time about how Florida is the best job market in the USA. People from up North get caught up in the propaganda and forget to do their research and often move to Florida and end up finding out the hard way that the jobs are just not what they expected.
The Tampa Bay area has lost over 50,000 jobs so far this year and that is only part of the picture. Sure, there are jobs, but they pay less than $10 an hour, but there is one big problem, you can’t afford to live in the area on the low wages!
…banks, builders, UHS, etc, playing games and colluding on prices…
I dont have any problem with this stuff because it’s just another part of the natural cycle.. of the great unwinding.
People and business entities should be expected to resist taking losses… to climb atop one another to keep their own heads above water.. to scheme, bribe, lie, cheat, steal..
Anyone with skin in the game will do whatever they can do to resist, and whoever might want to get involved (like buy something) would be wise to expect it and prepare for it, imo.
Come to think of it, I know why the story didn’t run…
Thank God we have bloggers like you, Ben, who have bypassed the controlled and censored corporate-owned media to bring real truth and raw information to those perceptive enough to seek it. If there’s anything even more satisfying than reading about the pancaking flippers and FBs, or the collapse of financial pirates like Bear Stearns, it’s seeing each new report of plunging subscribership for MSM mainstays like the NYT and Washington Post, or the pathetic ratings for the Big Three network “news.”
Collusion is a crime. Where’s the outrage?????
RE: Collusion is a crime. Where’s the outrage?????
There’s no outrage because the FB “victims” were all part of it, with their acquiesence to rubber stamp appraisers and originators who would lie about their incomes on their applications. As dumb as all the whiners like to portray themselves on the MSM, these people knew the score.
I remember asking the guy who fixes my chainsaw one time why he went with XYZ Mortgage Company. He said word on the street was that “every deal went thru-no fuss-no muss.”
It’s only now that everything’s coming unglued that ethics and honesty suddenly matter.
“A three-bedroom house in Miami Shores that sold for $460,000 two years ago, went for $177,500. A two-bedroom house in Coral Gables that sold for $670,000 in September 2005, fetched a bid of $300,000. The buyer declined to give his name, but said he plans to rent it out.”
Watching Florida’s real estate market crumble is like looking one light year ahead, @ California…
Speaking of California, if appears this Californian had less than a positive experience: “Oliphant has been trying to sell the house at a $100,000 loss and plans to file for bankruptcy, losing her $50,000 down payment. She said she might ultimately have to abandon that house and four others she bought in Florida.”
Thanks, Cheryl Oliphant, for your help pushing prices out of reach for those of us who live here. Did you ever visit the houses you bought? Did you ever even leave Santa Monica?
No kidding! And how about this winner of a quote…from an agent of course:
‘Each one of these homes represents heartache for someone.’
B.S. She bought five buildings clear across the nation, as you say - most likely sight unseen, there’s no heartache there - only gnashing of teeth over not becoming shamelessly rich.
One important facet about this housing bubble, as opposed to earlier ones, is how the internet enabled people to buy real estate elsewhere, very easily…
I wonder if for every “heartache” felt by the “stuggling” home owner, there is offsetting “guilt” by someone in the mortgage and/or RE business that played a role ?? .. doubt it..
I have a bellyache from laughing so hard at such “heartaches” as Oliphant’s.
“A novice real-estate investor, Oliphant said she used her retirement savings and bought at the top of the market, thinking she had a great deal and instant equity in the house because it appraised for $50,000 more than the $450,000 sales price.”
With special emphasis on the word “novice”!
Bee-yatch, you just got fleeced for your $50K, and you don’t even know it.
I bet you she still thinks RE is the path to riches.
This is so freakin’ hilarious it’s hard to keep up these days.
500K in Santa Monica wouldn’t even get you an outhouse at market peak. This one has to be a real dog. Even at 100K loss I’m not surprised it’s not selling.
The Cheryl Oliphant story was one of my faves this morning, too. Her problem is, only half of the letters in her name appear in the phrase “Donald Trump.”
Hey lender, rearrange the letters in her name and you can get “phony rich tale”. Sure there is an “l” left over but it should be obvious that the extra l stands for “loser”. Bwahahaha.
reading this blog is like looking one light year ahead too.
You mean “one year” ahead.
Light years measure distance not time. If you want to see “one light year” out, just look up at the starry sky. Unfortunately, nearest star (not counting the sun) is about 4 light years out.
And California was more overpriced at the peak than Florida. Over-regulation will prove very damaging in the coming years, too, in those states in which it is difficult for a man, his tools, and his pickup truck to scratch out a living on his own. The bleak, cold mountain and prairie of Wyoming, Montana, and North Dakota is looking more inviting.
In order to scratch out a living with a pickup someone still has to have the money to pay you.
Unless you plan to eat the pickup…
Just an FYI…I know Miami Shores very well…saying that this house sold for what it did isn’t saying much…Miami Shores butts up against a high crime area that for a while was in turn around mode as developers bought the cheap land in the hood with plans to make it the next HOT spot…well many empty buildings later..not much happening…there is really only one good area in MIami Shores and that is against the backdrop of Biscayne Bay..other than that you take your life in to your own hand 6 blocks south..
How come everybody that lives in Florida almost always mentions that a given city there is next to a high crime area?
Why do you all live there, anyway?
On a boat
Because it’s warm! All the time!
I should know - it’s practically the first thing out the mouths of my in-laws almost every time I talk to them. After that, of course, they complain about having no friends and family (moved down there 4 years ago now) and are freaked out about the crime.
But hey, it’s 50 degrees in December, 80 in March, and approximately 3000 degrees in July. What’s not to love?
A lot of the high crime comes from Cubans that Castro released into this country. I bet he got a good laugh emptying his prisons onto our shores.
You are correct on California.
Florida’s bubble came into effect in 2003 - peaked in 2005 - starting falling in 2006 - and is collapsing in 2008.
As an example, I bought my first house in Florida (3/2/2) with 2 acres of land in 1997 (new) for $79K. Nothing fancy, but a great deal for a someone who was 24 y.o. The price to build that home and buy the land stayed pretty consistent until 2002. In 2003, the vacant land prices doubled and then doubled again… and then commodities went through the roof causing construction costs to shoot up.
To demonstrate the vacant land pricing. In Jan 2002 I bought 3 lots for $11K each to have nice plot of land to build a new house. In late 2003 I got a phone call from a realtor. She wanted to know if I wanted to sell at $30K EACH. I sold them and took the profit. Those same lots were sold in Mar 2005 for $45K each. Similar lots in the same subdivision could be had today for $20 to $25K each.
Prices of houses where I live have come down, but mainly because the value of the land they are on was bid through the roof by vacant land speculators. Most of the people around here own their homes and we are not flooded with Centex, KB, etc. Houses only get built when people pay for them and buy their land. There are no package deal builders here…. massive retirement area.
California’s bubble has been growing since 1998 (dot boom money) and are at levels that no SANE person would pay. 1500 sq ft house, 80 years old, NO LAND, and tons of changes made without permits = $1mil @ peak. Insanity.
“They got more than they wanted and paid $180,000, a price that even seemed to surprise White. The home was once listed at $369,000.”
I had a casual conversation with a realtor who sells “high end” properties on the eastern shore of Tampa Bay. She just sold a property for $450,000 and it sold for $800,000 at the height of the bubble. Major haircut. She said she’s been selling stuff, but it is all “higher end”, mostly waterfront property at pretty deep discounts.
But my former mortgage broker buddy keeps telling me, “you can never go wrong with waterfront property”. Could he really be wrong?
During a hurricane, sure he can!
And Versace went wrong with his waterfront property, right?
We’re getting pretty close to the start of hurricane season and I’m guessing insurance will be pretty hard to come by after that, all the way to late October.
“Brian Trujillo, a real estate investor from Miami, said prices had fallen even since the last auction he went to, about a month ago. ‘Condos are selling about 15 percent under the last time,’ he said. ‘Houses selling for about 10 percent less.’”
This quote is also pretty amazing. Condo’s have fallen in price by 15% in ONE MONTH. The reporter doesn’t make much out of this number, but this is shocking as well. 15% in a month? God, if that happened in the “volatile” stock market people would be jumping out of windows. How could that possibly have happened in the “always goes up” RE market??
I would love to see the expression on these knife-catcher’s bovine features when they realize their “great deal” netted them an “asset” whose value is dropping by 15% a month with no end in sight.
This housing vulture has got his gimlet eye fixed on the future “Second Wave Carrion” - the GFs/Knife-catchers who will be dining on rat kabob around trashcan fires in another year or two. THAT’S when the auctions will actually be worth attending.
Face features are probably more porcine-like than bovine-like.
Deer caught in the headlights…….it’s ok Bambi honey….it’s only a Greyhound
RE: Appraisers so commonly pumped up house values to meet demands of developers, real-estate agents and lenders that complaints against them tripled in Florida in recent years, the largest complaint increase for any profession regulated by the state.”
Boo fookin’ hoo…cry me a river.
These same snivelers filing the complaints would the first to scream and bitch when an appraiser would render a value which came in short on some bogus purchase price cobbled together with all sorts of hokey financing concessions by scheming originators and sales agents.
JQP can @/%* me.
And just because it’s a FL thread, I will post up a crazy listing:
http://rmlsfl.mlxchange.com/Pub/EmailView.asp?r=1938994714&s=RML&t=RML
This unit last sold for north of 400K (check out the tax assesment), and is now down at 280K. It will soon be 1/2 priced, and likely fall further (as we all know). The thing really shocking? Check out the HOA fees!! 800/mo for HOA?? Oh my god, that unit has to sell for about 100K to rent out cash flow positive!
I’ve seen condos with $1000/month in taxes and $800 HOA fees. Then the place rents for $1800 if they’re lucky. So the place has to sell for $0 to be cash flow positive, a far cry from the $600K asking price.
Don’t forget about insurance.
And your absolutely right, I am sure if I looked hard enough, I could find some condos that would have to sell for a negative number to make ownership pencil out over renting. 1000/mo in tax, 800 in HOAs, and 600 in insurance; renting for 1800/mo; the sale price on the condo would have to pay you 600/mo to make buying make sense.
What is going to happen to buildings like this (and trust me, there are tons of them in S. FL)? Will they just give the condos to someone who promises to live there and pay the HOA?
Also don’t forget about the “special assessments” that are going to be levied on condo and co-op dwellers to make up the shortfalls from all their deadbeat neighbors or absentee “investors” who simply stop paying their HOAs along with their mortgages.
Some will eventually be taken over by the city or quasi-governmental authorities. They will be sold for tax lien values, or less. It will be a cash market; there will be no mortgages or insurance. HOA fees will be drastically restructured. The city will collect some low taxes/fees; with their other hand they will be subsdizing the owners by paying knockdown rents for the indigent to live there. Very quickly the buildings will rot, decay, and burn down or be torn down.
What’s that futuristic movie of about 15-20 years ago with the lonely urban warfare in burned out cities?
The listing now says $205,000.
“With prices at rock bottom for existing homes, builders are offering great deals on the houses they’ve already finished - but don’t expect it to last forever, said Kevin Clark, Southwest Florida division president of national developer Beazer Homes.”
No, the great deals won’t last forever. They’ll only last until the inventory of 16,000 empty homes has been sold off.
Bwhahah. I hear this all the time from the REshills.
We have somewhere between 3 and 5 years of standing inventory in Palm Beach County. Couple in the building that continues full force, and anyone who is in a “hurry” to buy a home in FL must be an absolute moron.
I would buy tomorrow, but the price has to be right, and I still haven’t seen a home that even has gotten me interested enough to qualify for a MTG to make an offer. Prices are still too high by about 20-30%, and very well will fall below where I expect them to bottom because of the “special” FL forces (taxes and insurance being tops of the list).
We’re not even close to the end of this mess in the really bubbly areas, not even close. I have said a few times, I think that financial situation will sort itself out over the next year (banks primarily, and mtg companies to a lesser degree), but it will be a LONG, LONG time after that that the housing market actually looks to recover.
A big part of the banks sorting out their mess is to go back to standard lending terms. That will crater the housing market even further, leading to more and more restricted lending. Just as it was on the way up, so shall it be on the way down.
No, the great deals won’t last forever. They’ll only last until the inventory of 16,000 empty homes has been sold off.
Trust me, that inventory will see a lot more swelling than selling over the next year or two.
Out of the entire post, this quote takes the cake. Basically another lame attempt at instilling a sense of urgency…. again. And it’s not working. We all remember how great this incitation of panic worked on the way up(even I was doubtful and a bit concerned in 04-05) but aren’t these sniveling pukes smarter than attempting to use the same game on the way down? If it didn’t work on folks like us on the blog on the way up, WTF are they thinking that it will work on the way down?
And then after that the shadow inventory of another 10,000 bank owned properties and then after that, sellers sitting on the fence to pull the trigger and list their thousands of debt traps hoping for a sale.
“Another sign of desperation in the South Florida housing market: banks tired of paying taxes and upkeep on foreclosed homes put 200 up for auction Saturday in Fort Lauderdale.”
Banks seem the most unlikely of knife catchers. Isn’t risk management supposed to be their business?
One would think so, but apparently, not so much!
Banks are just desperate to keep these auctions from happening because it helps establish a MKT value for all their crap Miami paper. Once the comps get established, the market for the crap paper becomes more and more distressed (hence the Fed stepping in to buy it up). As long as nobody sells, everyone is fine.
I see that in Zillow, some areas I am following the properties are still valued at bubble peak, however, nothing has sold at least for the past 8 months.
Yeah, well the Zillow estimate is a bunch of cr@p. I watch two houses here in Seattle that I used to own. One was ‘Zestimated’ at $530k last fall, then sold for $450k in December. Guess what the Zillow is now? Right, not the actual sales price that established market value, but $510k. Go figure. Take those Zestimates with a grain of salt. They seem to be willing to take comps when prices are going up but not when they are falling. I actually wrote to Zillow about this and asked some pointed questions but, of course, never got a reply.
What pricing model can account for no sales?
If there are no sales there are no new comps, and prices can’t be said to be rising or falling.
In hindsight this no-sales period might be useful if it ever happens again.. Perhaps one month of no sales actually translates to a 10% overall drop in values.. 7% .. 12% ? But nobody knows at this time.
Incredulous, if you are reading today, I’d like to take you to task.
“Oliphant has been trying to sell the house at a $100,000 loss and plans to file for bankruptcy, losing her $50,000 down payment. She said she might ultimately have to abandon that house and four others she bought in Florida.”
How can you not enjoy this? An ‘investor” looses it all. How about re-writing this: a greedy nutbag tries to RANSOM living quarters to the middle class in a state she is thousands of miles away from.
Mail in the keys, honey!
ALL YOUR RENTAL ARE BELONG TO MUGGY
Every schmo who could fog a mirror and bought a house in the last 7 years is an astute investor don’t you know… there are many reforms that I’d like to see come out of this mess, but one of them is a MASSIVE warning sign before / during / after all those RE infomertials pumping the latest get rich scheme that “most people who invested in RE the last 7 or so years lost their life savings and shirt”… or something like that..
I agree, that would be a wonderful change!
Shoot, when you sign up for option/margin accounts you have to sign a pile of paperwork that’s all intended to put the fear of god in you (for good reason). However, no broker on earth will let you come anywhere near the level of leverage allowed in housing, and therefore, it’s my contention that the “warnings” for buying a home should be even more stern then those for margin/day trading accounts.
People just don’t understand leverage at all (which is rather frightening), the losses can be devastating when you borrow 100%, a 1% downtick is an infinite loss. Yes, the upside can be huge as well, but there needs to be some consideration for what can/will happen when you bet wrong with the houses money. They won’t break your legs, but they WILL want their money back. At least, until the govt comes in and floods the system with cash to make everyone (except savers) whole again.
Well, I’m not actually enjoying it, but I do think some justice is being served. Florida wouldn’t be swamped with hideous houses and condos (not to mention the ubiquitous “luxury townhomes”) gobbling up every square inch of previously available land, if it weren’t for these clowns “buying” multiple properties at fraudulent prices, and causing sleazy developers to keep building more, more, more. I think for REAL justice to be served, however, the city and county powers-that-be (so called civil servants) that allowed this (ignoring zoning laws or granting preposterous variances), should be forced to make amends. The entire housing bubble seems to have been criminal and unconscionable from the very first intestinal puff.
What, exactly, is a “signature property”? That sounds an awful lot like the real estate industry’s tactic of describing McMansions as “estates.” One thing I draw from this collection of auction stories is that even superrich people are cutting back drastically, and that’s going to cause problems, because one element of our recent paradigm has been that we no longer need to be a mass middle-class society, because very wealthy individuals and their alleged spending habits can keep our consumer economy afloat all by themselves.
Luggg-shury is another one. I don’t want luxury. I want clean lines, no gingerbread, efficient architecture than blends well with the existing ambiance.
Oliphant has been trying to sell the house at a $100,000 loss and plans to file for bankruptcy, losing her $50,000 down payment. She said she might ultimately have to abandon that house and four others she bought in Florida.”
Ignore that blue Oliphant in the corner. She’s a bitter Casey student.
BWHAHAHAHAHAHAHHAAAA!
Oliphant should’ve noticed the elephant in the room, but was too blinded by greed. Words can’t express my pure delight, nay, schadenfredue, at seeing such creatures - the flippers and speculators who pushed up prices for everyone - getting financially splattered like bugs on a semi’s windshield. Not only are they meeting their financial Waterloo, they’re also being culled en masse from the potential buyer pool for about the next seven years, while serving as highly visible cautionary tales for other would-be two-bit Trump Wanna-bes.
Thanks for a rich thread, Ben. The wailing and lamentations of flopped flippers like Oliphant is rising in a crescendo, a veritable symphony of woe to the ears of this contentedly roosting housing vulture.
Agreed, this thread is like music to my ears; watching these idiots get crushed under their 100 to 1 leveraged investments is just so satisfying; especially after having to hear them brag for YEARS about what a great idea this all was, and how I was an idiot for not jumping on board.
As soon as I read this article this morning I knew that it was going to be like throwing gas on the fire; this thread was destined for greatness. 50%+ off sales, idiots with 5 houses, banks dumping properties because of the taxes.. It was almost too good to believe!
Amen, Michael Fink, my brother from a different mother. This is one of those threads that had all the elements needed to cause a full-blown HBB feeding frenzy. If only Ben could’ve found a way to work in Lawrence Yun or one of those “I’m not giving it away” Greedhead matrons, there would easily be 600 vitriolic comments and amusing quips on here by the end of the day.
The only thing missing is a “we’re at the bottom” quote from Fishkind. Cue the seal!!!
For old times’ sake. You know you want it.
In Miami, Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors, predicted that a limited supply of land coupled with demand from baby boomers and foreigners would prolong the boom indefinitely.
“South Florida,” he said, “is working off of a totally new economic model than any of us have ever experienced in the past.”
BWAHAHAHHAHAHAHHAHHHHHHHHHHHHH!!!
That quote never gets old!
It’s the beauty of timeless classics.
“especially after having to hear them brag for YEARS about what a great idea this all was, and how I was an idiot for not jumping on board.”
Keep on preaching, guys.
Let’s not forget these same idiots with wallets full of HELOC money competing with a hard-working man for staples of life, a vehicle, a nice vacation (hotel room, airline tickets, etc). Took my girl to the Ruths’ Chris for dinner a couple weeks ago - a lot less Hummers and SUVs in the parking lot, no wait for tables, and more business people in there than the J6P.
In my condo complex I have a saying - “You can buy class with money”
Oops - meant to say “You can’t buy class with money” although many of these people seem to be trying.
“DeCaro came over and gently put his arm around the man’s shoulder.”
These slimebags use whatever tactic they can to part suckers from their money. I got involved in an auction once, and it was amazing the psychological tactics the auctioneers will use. The actual auction was in a building in Salt Lake, I couldn’t go, so they took my bids via phone. It was an education. I dropped out very quickly. The guy who owned the land was in bankruptcy due to a heart attack and no insurance.
Doesn’t the Grim Reaper also place a hand on his victims’ shoulders before taking them?
I suppose if DeCaro came up behind the mark, er, buyer, and put both hands on his shoulders and bent him over, it would’ve been more fitting. However, that would also be somewhat inappropriate and off-putting for the other auction attendees.
The Grim Reaper…now that’s a guy that knows how to close a deal
Think they were crying a river over low values in 2005-07, you should hear them now. We are very busy now and it is all refi’s and short sales. I have not done a sale appraisal in 6 months.
We are turning down 60% of requests as they are located in “nests” of fraud. We simply won’t go there.
There are whole projects which are blacklisted. All conversion projects are off the lender lists. They won’t even look at them.
Soon there will be a big red line around the state. Watch!
Which is the bigger roadblock: Appraisals or underwriting? I know someone who has been working desperately for a refi for the past 4 months and it still hasn’t come through.
I wonder if things being held up until the Senate bailout comes…
Ding ding ding.
There already are big red lines in much of coastal FL, I have seen all 3 SE FL counties redlined by some major lenders; along with many on the west coast (and of course, Orlando). So, I don’t think it’s going to be much longer before it’s just harder to get any loan anywhere in the state of FL. The amount/level of fraud down here is at record levels, and the values just continue to fall (15% a month if you believe the auctioneer above). The entire state is going to be considered a “risky” place to lend.
And then, once that happens, the strong will rise up and buy. Those without 750+ FICOs, 20% down and verifiable income > 1/3rd the home price need not apply. That’s what I continue to wait for, because then, finally, the stupid money will be gone and I can bid against other qualified buyers for the home I want.
I always look forward to getting infor from you FL folks. I was reading Chris/Cobradriver’s comment on CR on how rents are dropping big time as well. He believes that some large apt complexes are headed for BK.
dime: We are turning down 60% of requests as they are located in “nests” of fraud. We simply won’t go there.
holy cow!
Dime
what about brevard county?
With prices at rock bottom for existing homes, builders are offering great deals on the houses they’ve already finished - but don’t expect it to last forever, said Kevin Clark
You are right Kevin, won’t last forever. But it will last through many of the rest of our life time’s. Maybe will end in our children/grandchildren’s lifetime. By then, I won’t care. Let see, someone said Palm Beach was at 5 yr supply and growing?
Funny, housing prices have been at “rock bottom” for what ?… 3 years now and counting (and falling)…
that we no longer need to be a mass middle-class society, because very wealthy individuals and their alleged spending habits can keep our consumer economy afloat all by themselves.
So true, this society and entire country economy is going to be saved by Britney, Paris, and Lindsey with their reckless spending habits. And the kicker, Wacko Jacko and his billions (I mean millions, oops, I mean $2 - the creditors took the rest).
The actual auction was in a building in Salt Lake
I wish I could have sent my cousin to that auction. He would have provided a great description. It may not have been printable. But it would have been hilarious.
When all of this is done, and the real bottom has been reached, will FL again become a cheap retirement haven for the few Boomers who had the foresight to save and not get caught up in this Caseyesque madness? Just wanted some other thoughts.
Sammy, loved your additions to my comment about the Oliphant Elephant.
Really late to reply - IMO, Florida will become “sorta” affordable but never again will it be generally cheap. 9/11 and the draconian police-state security laws make Florida less attractive to many foreigners, both tourists and potential property owners. Governmental units at all levels jacked up their spending base big-time, much of it on new buildings and other fixed assets that have to be maintained at higher costs than before. Even if housing prices revert to what they were in 1998, which is what I’ve been waiting for, the cost of living in a 1998-priced home will be a lot higher than it was then, even when taking into account the relatively meager increase in incomes during the decade.
So… as a posted alluded above, selling prices may have to become LOWER than they were in 1998 for the overall inflation-adjusted cost of living here - and rents - to equal what they were then.
Property taxes holding back sales. I was looking at buying a place in Miami. REO property offered at $140,000. 1400sqft on a double lot in a so-so neighborhood. Last sold 6/2005 at $271000. It’s assesed by the county at $291K, taxes are $7169 per year plus around $4000 for insurance. That’s roughly $1000 each month before I would even touch the mortgage payment. I tried to get an answer on how future taxes will be assesed in this declining market. I got conflicting information from the county and several real estate lawyers I contacted. The county said “Whatever we say it’s worth” while some lawyers said the sales price. Not sure what to believe. But I know that politicians usually will not put up with declining tax revenues, so I figure taxes will probably stay close to the current level.
Oh well, I am still renting some dump at $800/month to wait out this entire disaster. Especially with the economy the way it is right now I don’t have the nerve for financial adventurism. No, I am not a bitter renter, just a guy that has no worries and for that I get a good night’s sleep.
Mike,
It’s my understanding that “whatever we say it’s worth” is not the way homes are assessed for full time FL residents. You’re home should be taxed at about 2% of purchase price (if you’re a full timer) or 2% of “whatever we say it’s worth” if you’re a Snowbird. I have heard some instances of the property appraiser not adjusting values downward, however, I doubt a arms length sale could be considered as establishing anything other then “fair value” for the home. If you bought it for 200K, it’s worth 200K, even if the last sale was 600K.
I would consult with a RE attorney before I did anything, but, IMHO, you have very solid footing. How can the property be worth 300K if I bought it yesterday for 150K? That argument will never hold up in court.
Mike, how are the local gov’ts going to get by on 50% budgets? and where did those 2005 tax windfalls go? IMO teachers (schools) did not receive these monies, they make peanuts in FL. I believe rates will have to increase to make up for the coming shortfall (understated).
Well, IMHO, they should get by the same way they did back in 1999. I think they should adjust the budgets for inflation, but, what happened during the boom was just insane. There way no reason/rhyme behind why budgets had to go up 2X just because houses went up that much.
I don’t know how they will get by, but they will. Anything they do to further hamstring the market down here (between Save Our Home and Portability, pretty much cutting off any new buyers) will just serve to push prices even lower. I do anticipate that the mill rate will rise to about 3% of value (which is about the max before they have to rework lots of laws), but, again, that will just push prices lower.
There’s nothing that they can really do other then cut back services and STOP SPENDING. For those who don’t live here, the excesses of govt in FL for the past 5 years has been breathtaking. New buildings; 150M dollar unfunded projects, fire halls with flatscreen TVs in every bunk and a full movie theater (no, I’m not kidding). The cap-ex has been tremendous; and will have to come back down the earth. The number of employees hired (and salary increases), is, imho, a drop in the bucket. They could keep every single good employee if they would just stop wasting so much money on these huge, unfunded, and TOTALLY UNNECESSARY projects.
I still have some good friends who work for local govt down here, and they are good employees and deserve to keep their jobs. Nothing makes me madder then to see them fired/laid off because of gross mismanagement of resources at the top.
Good catch Ben. I’m a firm believer that the linchpin to this whole RE Fraud has been the Fed and the appraisal system.
I previously posted about a conversation with a bank official I knew at one of the large banks that I use during the RE price run up. He was retiring soon but deep into subprime loan originations and I was just sniffing around about houses. He knew me and that I would only be a cash buyer if I ever pulled the trigger on something in my range.
He said things were going great but he was afraid of one thing…”any housing re-appraisals”
Perhaps he should have said ” any HONEST housing re-appraisals”
I’ve never been accused of being the brightest Crayon in the Box but between that comment and his scent of fear I got was enough of that picture to at least do some more digging.
Been happily renting and visiting here ever since.
Thanks
Oh..in to that addition to previous post , about that time I learned from family that a divorced cousin of mine had become a brand new RE appraiser.
Her previous occupation experience for the previous 22 yrs was as a homemaker and a hair stylist…scarey stuff
There must be a lot of ‘rocks’ under all of the sand these houses were built upon.
We should have a little mercy on Oliphant. Coming from Santa Monica where $1M was a crapshack, everything she saw in FL would have seemed like a bargain. Oh well, hard $50K come, easy $50K go. Pay Casey to be your mentor next time. He knows the system.
Boy do I have a whopper story for you guys.
I’m reading an article about KPMG, and in it they mentioned New Century and how they were cooking the books by not having sufficient reserves to cover repurchase agreements. Basically, this is how they overstated income. As I am reading the article they mention the CFO of New Century when it imploded. OMG! This was my wife’s boss for 3 years in the 90’s. I have been to this guy’s house, had dinner with him. Not super close obviously, but I knew this guy well enough to know this guy had no business being the CFO for New Century. This adds a whole new level of detail to this New Century scandal. First, this guy got stinking drunk the first time I had dinner with him. I am talking so drunk I had to carry him to the restroom at the restaurant so he could throw up. I had to lend him a shirt because he threw up all over his. It was a scene. I was like…”honey, this is your boss?” This guy was a full blown alcoholic. My wife made comments to me that he was a nice guy, but he wasn’t very sharp from everything I saw. I remember her saying he made some mistakes, and my overall impression was he was sloppy and didn’t take his job seriously. Just my opinion, but I had several occasions to talk with him to form this opinion. He also had lots of buddies at KPMG. So how does this guy get promoted to controller and then CFO at New Century? I think it makes complete sense. This guy just wasn’t very sharp, so I don’t see him digging deep to uncover financial mistakes. This guy was over his head IMO when he worked with my wife. In reality, these traits are probably exactly why he was chosen to be the controller and then CFO at New Century. Also, I seriously doubt he was actively cooking the books. He wasn’t that kind of person from what I saw. What New Century did was put someone in a position that they knew would not find mistakes, and when he did such a great job as controller, they promoted him to CFO.
This shows intent on the part of New Century to cook the books by hiring someone that was over their head. Unfortunately the guy was the perfect patsy. The top guys at New Century knew exactly what they were doing. I wouldn’t doubt it if KPMG were somehow involved in making sure the “right” person was at the controls of key positions as well. I cannot prove that, but I wouldn’t be surprised one bit.
The last I read he was cooperating with investigators, and there are a lot of pending lawsuits against him and the other execs. There is also a malpractice suit against members of the company, and I am pretty sure he is included.
Amazing.
Great story. Thanks.
Just my opinion, but I had several occasions to talk with him to form this opinion. He also had lots of buddies at KPMG. So how does this guy get promoted to controller and then CFO at New Century?
Cronyism, the bane of private enterprise and government alike, is running rampant and unchecked in our society, while merit and excellence are viewed with suspicion and hostility in most large organizations. The gross incompetence and dereliction of duty we see in both the government (Hurricane Katrina) and private sector (Enron, Bear Stearns, etc.) are the inevitiable consequence.
It was more sinister in this case, but I hear ya.
That is absolutely correct.
Here is a news release for controller promotion:
IRVINE, Calif., July 12 (2005) /PRNewswire-FirstCall/ — New Century Financial Corporation (NYSE: NEW) a real estate investment trust and parent company of one of the nation’s largest non-prime mortgage finance companies, today announced the promotion of Rodney M. Colombi to Executive Vice President of Corporate Finance for New Century Mortgage Corporation, reporting to Patti M. Dodge, Chief Financial Officer for New Century Financial Corporation. In addition, David N. Kenneally has been promoted to Senior Vice President and Controller for New Century Financial Corporation, also reporting to Ms. Dodge.
Mr. Colombi’s role will be expanded to include broader financial leadership responsibility, which will include corporate finance, planning, budgeting and financial analysis for the entire enterprise, in addition to his prior responsibilities as head of corporate development.
Mr. Kenneally will continue to manage the accounting and treasury departments, and will have added responsibility for financial reporting.
It looks like they were loading him up with more responsibilities making sure he had the problem areas under his control. These guys set him up big time IMO.
“These guys set him up big time IMO.”
Man, he really looks like the willing patsy in this one. Some crime fiction writer could use this as the plot line. Please keep us posted on his this works out…btw, if he smart, he’ll head to rehab pronto, find a sympathetic shrink who will start cataloguing his alchoholic problems and be willing to testify on his behalf should he come to trial. With that background, a good lawyer might strike a deal for him. Being a drunk might be his ticket out of this…remember alcoholism is recognized under the Americans with Disabilities Act. The guys who hired him could get hit with malfeasance if his alkie behavior was publicly noted, and they did not relieve him of his responsibilities.
> also reporting to Ms. Dodge
The name fits.
Exactly what I was saying earlier. These kinds of people are going to have a very hard time replacing their jobs. Those with strong skill sets that can actually contribute something to an organization? I think those people will be fine, may have to change jobs, but there will always be jobs for people who can create a net positive cashflow.
My fear is that there are many, many people like this that I see every day. I look at them and my head just spins.. You can’t even add, how are you the CFO of a MTG company?
“I am talking so drunk I had to carry him to the restroom at the restaurant so he could throw up. I had to lend him a shirt because he threw up all over his. It was a scene.”
Yep, my sis is friends with a hedge fund manager up in Connecticut. I’ve posted about him before on this blog. Major alkie to the point where he’s blacked out and woken up in the street outside a bar, all bruised and having pissed himself. A real miserable character, very contemptuous of people who actually work for a living. Claims he was all hedged against this mortgage debacle. Smartest guy in the room. Sure.
Maybe if she’s got a cute face, Cheryl Oliphant of Santa Monica can shack up rent free as one of OJ’s bitches.
–
First we had suckers who thought no price was too high for a house because it will keep going up 10-20% a year and now we have falling-knife-catchers who are buying at a bargain. Who next?
Jas
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“Because of the glut, contractors find it impossible to compete in price against existing homes - and any dwelling in less than perfect condition has little chance of being sold.”
We used to hear that resellers couldn’t compete with builders who were slashing prices and offering all kinds of incentives. The tables are being turned.
Jas
I was a little surprised to read this one. Here in central Florida, the builders continue to be relatively aggressive in their pricing and re-sellers who are not in distress cling to unrealistic prices - what’s moving is the REO/short-sale stuff and problem properties. By relatively aggressive, though, I’m talking about $100/s.f., not including lot, for average-quality concrete block construction — to me that still is high if you agree that they should be accepting almost zero profit in order to keep their materials discounts and keep their best subs employed.
Almost every street has one: a vacant house that sold a couple of years ago for a jaw-dropping price. Appraisers so commonly pumped up house values to meet demands of developers, real-estate agents and lenders that complaints against them tripled in Florida in recent years, the largest complaint increase for any profession regulated by the state.”
That is so true..and yet many of these home have the nerve to have in its listing, “Appraised for $1.2 last year..blah..blah..blah..” and now that same house is selling for $700K…Do you think it was over inflated?..and by the way the house is still sitting at the “bargain” price of $700K!!!!
Just spent a week in South Florida and Orlando so I can give you an observation about those two areas…
1)In South Florida more shops closing, went to local mall Sawgrass Mills, lots of high end shops as outlets and more..all had major “sales” going on taking percentages off of ALL items in store…mostly foreigners walking around..Went to local restaurants most not filled with people(weekend/evening)…spoke to lots of locals who said the same thing, “you got out just in time..How did you ever sell your house? Things are really bad down here..All were concerned about the local economy..none expressed that things would be getting better soon..housing labeled as “disasterous”
2)Orlando..went to theme park Universal..ONLY FOREIGNERS..in the sense they made up about 95% of the people in the park..hubby spoke to some tourists from Germany..who said it was “So cheap to come here and have fun.” Gave hubby some Euros for his collection of coins…pretty much the same from all the other people visiting..
3)Spoke to the locals at a Friday’s restaurant..no wait to get in..many said they were looking to leave..low pay..high cost of living..I asked what jobs they had..one had own business..said sales down about 30% front last year..another worked for a local business..she said she was concerned about her job.. and so on…One guy worked in Universal and said they are heavily marketing to the Europeans..and that spring break was below target..Universal will be opening up Harry Potter next year and hope it will boast sales..saw housing complexes all around some built next to water towers(reach out and touch it!)..housing also described as “really really bad”
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“2)Orlando..went to theme park Universal..ONLY FOREIGNERS..”
Went to Death Valley, for the first time!, last weekend with friends. LOTS of foreigners (speaking German, French, Italian) and lots of American bikers. We were little late for blooms.
Jas
You can’t live on what the theme parks pay in Florida, unless you’re some sort of higher-up. At least, this was according to a coupla guys who lived next door to me when I spent a few months in Central Fla. One guy had two jobs, one with a theme park and the other in retail. His roomie had one job. And they were still behind on their rent, which wasn’t all that much. I dunno, maybe they were doing drugs, but I didn’t see any evidence of it. It just looked like they could make it.
Good story but NOT unusal.
That’s about when the Chairman of the Board asks you
“Where do you want to be 5 years now?”
And you answer
“Auh….HAPPY…In a small BAR in WISCONSIN”
Comment by mikey
2008-04-13 10:47:49
Good story but NOT unusal.
That’s about when the Chairman of the Board asks you
“Where do you want to be 5 years now?”
And you answer
“Auh….HAPPY…In a small BAR in WISCONSIN”
God’s country Mikey!
BEST,
Leigh
I rented the unit below in Naples, FL in 01/2007 for $1050, now renting for $950, this unit was vacant for three months prior to my leasing it. It has now been vacant since 11/2007. The owner paid 318k for it, similar units were selling for 219K when I left. Also other units in this complex have been for rent for a year with no takers, I was considering moving into a 2/2 w/golf course view for $850 prior to my acceptance of a job offer out of FL, that rental unit has been available for over six months now.
Jobs paying over $10 to $12 hourly are hard to come by in Naples unless your into investment banking or medical.
In 2001 one could by a 85K condo w/reasonable hoa’s and taxes and afford to live there, this is no longer true.
The boom ruined a well balance system where the wealthy and service worker could play and enjoy in harmony.
http://www.stockrentals.com/PropertyDetails.aspx?ListingID=1185
The prices in Naples may have been the most disconnected from incomes in the entire state. As for newcomers, there just aren’t enough retirees with that kind of coin to go around. Much of Collier County was undeveloped and it should have stayed that way.
Before I saw the article on New Century, I was going to post about the discussions I had last night. We had a birthday party for our daughter at the beach and several parents showed up.
The first parent was a real estate appraiser. Nice guy, 5 years experience. We chatted about the industry, and he said that right now the outskirts in So Cal are getting hammered, but that the good places in OC are still holding up ok. He was a bit too optimistic I think, but not overly so. He said he felt a lot of pressure to give inflated appraisals, but didn’t do it because they only get $350 per and it wasn’t worth the risk. We started talking about bailouts, and he mentioned that there are a couple of loan programs starting that should “help” the situation. One has the new loan limits ($700k+) that are FHA.
The other was a government program that allows upside down borrowers to refinance into government insured loans, even though the appraisals are below the loan being insured. I just laughed. He said both were going through, and that he had gotten updates through the industry that they were starting shortly. He also said that for every 5 appraisals he does…”maybe” 1 is not a foreclosure. He also talked about reforms, and said that there was talk about a new registry that would put a firewall between the appraiser and the company seeking the appraisal. It will be an online system that assigned the next appraisal to an appraiser. You would get it assigned to you in some sort of round robin system. He actually had some good arguments for why this was a bad idea. Another possible change is being able to reference other appraisers online to see how the value was determined. It was an interesting conversation.
The second conversation was with a woman that had been a mortgage broker. She has been out of work for 6 months. She said that her office went from 30 people to 2, and that her 2 remaining co-workers say there has been a little recovery due to the new loan limits, but that it is having limited impact and will only be temporary. She has 26 years of industry experience, and says we have at least 2 years to go in this mess. Her take was very negative. Being unemployed will do that to you.
She also said the people she worked for knew the loans were bad. I’m shocked! NOT. She said many times her reaction was “oh you must be kidding”. But the people at the top kept issuing waivers and none of the normal checks were ever done. They just wanted to unload them as soon as possible because the money was awesome. She said she knew several people that got fabulously wealthy, and they all kept their money to this day. Once again this confirms what many of us have been saying. The people at the top of these companies knew damn well they were doing. They took their cut and didn’t give a shit who they hurt in the end.
She also said all the checks are being done today, and in many cases 20% down is now the norm, with few exceptions. She said underwriting is back to the early 90’s. They are checking everything.
The other thing they talked about was how the banks are dealing with the bad loans. She said that in the past the bank would get the used house salesman, fix up the place, and then try to sell it. It was a normal transaction. Now they both said the banks (and investors) are dumping properties en mass. They are just blowing them out. There is no thought of trying to salvage a higher value. They just want out. But they also said that the new FHA program that allows the loans to be refinanced even if they are upside down has made banks less willing to dump, since they can get more once the programs go through. So it looks like the plan is to shift the losses onto the public very soon.
The other thing we discussed at length was regarding the new FHA program. They said the down payment for this special government insured loan would be 3%. So this was the exception to the new tighter down payment limits.
Interesting conversations.
“The other was a government program that allows upside down borrowers to refinance into government insured loans”
did anyone say if they were doing that for people that have loans on more than one property?
That wasn’t brought up.
“She also said all the checks are being done today, and in many cases 20% down is now the norm, with few exceptions. She said underwriting is back to the early 90’s.”
I’ve been telling people for a while that just this alone is enough to cause a massive collapse in prices.