August 19, 2008

Right Now You Don’t Know Who To Trust In Florida

The Atlanta Journal Constitution reports from Georgia. “The anemic housing market should be a boost to Atlanta’s apartment market. But the emerging shift in living arrangements is creating an unusual set of challenges for the industry. Leasing agents are having to contend more with the ’shadow market,’ an industry term that refers to the glut of unsold homes, condos and townhomes that have become rental property.”

“Terry Smith recently leased her two-bedroom townhome in Vinings after she was unable to sell it. ‘Rather than give it away or lose what once was equity, I decided to rent,’ Smith said.”

The Times Herald from Georgia. “While foreclosures nationwide increased by a shocking 50 percent, Coweta County has an even higher rate. Foreclosures advertised in The Times-Herald almost doubled year-to-year, from 70 in July 2007 to 136 in July 2008. That’s an increase of 94 percent.”

“Dr. William Joey Smith, an assistant professor of economics with the University of West Georgia in Carrollton, said that prognosticators were wrong when they predicted that the housing market had ‘bottomed out’ months ago. Last summer, he said, many were saying that the housing market would rebound within nine months. That clearly hasn’t happened, he said.”

“‘It’s been 12 months, and in some areas it’s actually worse than it was 12 months ago,’ he said.”

“Local Realtor Frank Barron said he was clearly wrong when he said back in a March Times-Herald report that he hoped the market had ‘hit the bottom.’ ‘Obviously, we were wrong,’ Barron said.”

“Dr. Smith said that he doesn’t have any statistics to back it up, but he is seeing some ‘anecdotal evidence’ that things are beginning to turn around. ‘I’ve started to see some investors go into housing because they believe it’s just so undervalued right now that they can’t lose,’ he said.”

The Orlando Sentinel from Florida. “A couple of years ago, real-estate investors were so hot on Orlando that hundreds of buyers from around the world paid an average $300,000 — triple today’s prices — for old condos on a run-down corner next to a truck-driving school.”

“For Cay Club buyers, the privileges of ownership were supposed to include access to a charter jet. ‘It was the greatest thing since peanut butter,’ said Colorado resident Robert Shaeffer, who bought a two-bedroom, two-bath unit with about 1,100 square feet for $374,900 sight unseen.”

“Shaeffer, who had retired from IBM, has had to go back to work driving delivery trucks. ‘I invested everything I had in my retirement, and now I’m stuck with a big payment and an apartment that’s no good.’”

“Orlando appraiser Jack Connor reviewed several appraisals in Cay Club and said units were actually worth about one-third of the appraised value — ‘and that was during the good times,’ he added. ‘Ludicrous is a pretty tame word for it,’ Connor said.”

“Dozens of Cay Club buyers are now suing. Investors from as far away as Hungary paid an average $300,000 in the development, while similar units nearby cost less than half that amount, appraisers reported. One Cay Club unit that sold for $510,000 two years ago was appraised recently for $90,000, said Chris Cantrell, a Birmingham, Ala., attorney for several buyers who are suing.”

“Airline pilots, scientists and others who invested in Cay Club said it has been one of the biggest disappointments of their lives. Ventura, Calif., resident Yindy Chow is still reeling from paying the $4,300 property-tax bill on a unit that was supposed to supplement her retirement but has provided none of the rental income promised by sales agents.”

“‘I don’t know what to do,’ she said recently. ‘Some people want to get rich fast. We’ve been saving 20 years, and we wanted to do something wisely and plan on our retirement. It’s really sad.’”

“On Oak Ridge Road, renters who live in what was supposed to become the Cay Club said they have no hope the golf course will reopen. Parts of the walls around the complex are broken down. Neighbors from a low-income area nearby walk through the property and use the pool.”

“Meanwhile, just outside Denver, Shaeffer laments that he cannot pay his income taxes because of the financial burden of buying in Cay Club: ‘Quite frankly, right now you don’t know who to trust in Florida.’”

The Palm Beach Post. “The developer of Tesoro, arguably Port St. Lucie’s most upscale community, is weathering some high-end financial woes. Two affiliates of Celebration-based Ginn Resorts missed principal and interest payments on a $675 million credit facility from Credit Suisse earlier this summer and, so far, they haven’t been able to restructure the debt.”

“Because Ginn still owns 359 lots in Tesoro, owners of the 600 or so other home sites could see their posh clubhouse languish if the company stops paying its association fees - something executives concede is a possibility.”

‘The developer ‘may have to discontinue the payment of certain dues and (property owners association) assessments on the lots that they own, which will put stress on the operations of the Clubs at Tesoro and Quail West,’ Robert Gidel, president of the developer’s holding firm, The Ginn Cos., said in a statement.”

The St Petersburg Times. “The problem with the Tampa Bay area’s rising stock of vacant homes goes far beyond overgrown yards, piled-up phone books and fliers dangling from doorknobs. Deborah Farmer, president of the Greater Tampa Association of Realtors, said she notices the spike in vacant homes firsthand. ‘Over half of the homes I show now are vacant,’ Farmer said, ‘and I bet that number is much the same throughout the area.’”

“Farmer and others also say that what was once an urban problem has spread to the suburbs.”

The Herald Tribune. “During the 12 months ended July 31, lenders issued 7,905 ‘lis pendens’ filings — the first step in a foreclosure — against borrowers who failed to make their mortgage payments in Sarasota County, court records show. During the same period, the 25 lenders with the most foreclosures in Sarasota resold 918 properties that they had seized from borrowers.”

“James Slocum, for example, bought a house at 2210 McTague St. in North Port for $251,9000 in December 2005 and borrowed $226,700 to finance the deal. Deutsche Bank foreclosed on the loan in June 2007 and won a $246,576 judgment the following month.”

“Deutsche Bank then sold the three-bedroom two-bath house to Matthew White in December 2007 for $138,500, or 44 percent less than the giant German bank was owed.”

“Deutsche Bank is further up the foreclosure list than local heavyweights like Bank of America, SunTrust and Wachovia because it got into the region’s housing boom late, said Ken Thomas, a Miami-based economist who specializes in analyzing the banking industry.”

“‘Local banks are usually the first ones in a market, and when they see problems building, they are the first ones out,’ Thomas said. ‘Lenders like Deutsche Bank and HSBC were the last ones in and the last ones out.’”

The News Press. “Lee County’s unemployment rate jumped to 8.4 percent in July, the highest mark in at least 18 years, as the county continued to lose construction jobs. The rate means that just more than 24,000 people were out of work, according to data released Friday from the Florida Agency for Workforce Innovation.”

“The rate is the highest since 1990, when state and federal officials changed the way they measure unemployment. The figures mirror numbers usually seen in the Rust Belt.”

“Patricia Alzate, of Cape Coral, lost her job as an assistant project manager for a painting contractor in April. ‘This is the first time in my life that I have been out of work and I don’t know what to do because I have never been in this situation,’ Alzate said. ‘I’ve applied and applied and applied for jobs, but I’m not getting anything.’”

“The massive fallout from the construction sector underscores how badly Florida, and Southwest Florida in particular, needs to diversify its economy, said Ray Kest, an associate professor in the MBA program at Hodges University.”

“‘It has hit every single sector,’ Kest said. ‘There are no jobs and no jobs being created. Our economic development people sit around and talk about all of this, but they should have been doing something about it a long time ago. We are used to hearing these numbers from Ohio and Michigan, but we are right there with them.’”

“It sounds like a winner: upscale, high-rise shops and condos right on the waterfront in downtown Fort Myers. But a nationwide slump in real estate - which has hit Southwest Florida particularly hard - has forestalled a lot of development.’

“‘Fort Myers is not an island. We are affected just like anyone else’ said Jean Sanders, a high-rise specialist for Remax International in downtown Fort Myers. ‘Any new construction just doesn’t have a chance in this market.’”

“Downtown Fort Myers won’t sell yet because of simple math: too many condos on the supply side and not enough demand for them.”

“‘If you have 100 apples in a barrel and you only have to eat an apple a day. Are you going to worry about the apples near the bottom? No,’ said Sanders. ‘Some of the killer deals that are already out there need to get sold before any new sales pick up.’”

The Naples News. “More buyers are reaching into their wallets to purchase homes in the Naples area. Sales continued to rise in July. There were 361 home sales, up 31 percent from 275 a year ago, according to a monthly report by the Naples Area Board of Realtors.”

“In some communities in Southwest Florida, such as Bay Colony, Pelican Bay and Bonita Bay, there is less than a year’s worth of inventory for single-family homes, said Dottie Babcock, chief operating officer for John R. Wood Realtors Inc. in Naples. Her company’s own market report found that in the Naples, Bonita Springs and Estero markets, there is a four-year supply of homes, compared to a five-year supply a year ago.”

“‘I definitely see the market turning around,’ said Babcock.”

The Miami Herald. “A lawsuit filed by creditors in Puig Inc.’s bankruptcy blames Ocean Bank for contributing to the collapse of the Hialeah condo converter. Ocean Bank has blamed Puig’s collapse largely on the developer’s aggressive expansion and the downturn in the real estate market. The bank lost more than $20 million lending to Puig entities.”

“‘They are trying to blame Ocean Bank for market losses that they experienced because of the collapse in the condominium market in 2006,’ said Joel L. Tabas, a Miami lawyer representing Ocean Bank. ‘The creditors’ committee’s efforts to pin the responsibility for the market collapse and for other people’s bad investments on Ocean Bank is going to fail.’”

“Six defendants have pleaded guilty to participating in a $17 million mortgage fraud scheme in Miami-Dade County involving inflated property values and falsified closing statements, Florida’s attorney general announced Monday.”

“The six were among 15 people arrested in July. The arrests stemmed from an investigation of Miami-Dade County’s mortgage fraud task force. The task force was set up last year to combat the crime, which became epidemic in South Florida during the real estate boom.”

“When the money was disbursed, the defendants would take the difference and share it among themselves, funneling it through a bank account or shell company operated by a coconspirator, the attorney general’s office said.”

“Retail real estate follows residential trends, so Florida shopping center developers fear a spreading credit crunch will turn their current headache into a hangover.”

“‘It’s going to get worse before it gets better,” said Robert Smith, senior VP of a Houston developer planning to rebuild the old Crossroads Mall in Largo as a mixed-use project. ‘The days of just building a center and waiting for the market to catch up to fill it up are gone.’”

“‘There is money to borrow if you are willing pay the price and put up 10 to 35 percent,’ said Raul Valdez-Fauli, chief executive of CNL Bank in Coral Gables. ‘This credit crunch is for real.’”

“Stanley Tate, a Miami developer who left the board of Fannie Mae two years ago and chaired the Resolution Trust Corp. cleaning up the excesses of real estate lending in the 1990s, added ominously that developers face an easy-money, subprime loan crisis of their own.”

“‘The residential market has not bottomed out yet, but $1.4-trillion in distressed loans will start to hit the commercial real estate market next year,’ he said.”




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106 Comments »

Comment by aladinsane
2008-08-19 06:32:59

Truss, but verify.

Comment by Mormon_Tea
2008-08-19 06:40:26

Never Trust the Truss- -NYC firefighter Sep 11.2001

 
Comment by LM
2008-08-19 08:11:49

Ronald Reagan: “Mr. General Secretary. Though my pronunciation may give you difficulty, the maxim is: ‘Doveryai, no proveryai! Trust but verify!’”

Gorbachev: “You repeat that at every meeting!”

Reagan: “I like it”

http://www.youtube.com/watch?v=As6y5eI01XE

 
Comment by Muir
2008-08-19 09:51:21

I can verify from Jupiter Island, Palm Beach that a hurricane really is passing across FL as I type.
The fraud, or attempted fraud will be great; many am sure left the windows opened and prayed.

Darn, I did not stock up on popcorn, my bad.

 
Comment by baabaabooie
2008-08-19 12:41:16

I don’t know what to do,’ she said recently. ‘Some people want to get rich fast. We’ve been saving 20 years, and we wanted to do something wisely and plan on our retirement. It’s really sad.’”

Hugh… saving for twenty years and squander it on a fly by night get rich quick real estate scheme. It is sad and now you did it too… BAWWAHAAHAAHHAAA!!!!!!!!!!!!!!1

 
 
Comment by DIMEDROPPED
2008-08-19 06:47:57

The appraiser cited in the Orlando article is yours truly. I don’t recall using the word ludicrous, more along the lines of “f#*king nuts” is my recollection.

Comment by SFC
2008-08-19 08:07:19

Buying a place for $374,900 sight unseen. Can you imagine? Well, it is difficult to get to Orlando - there’s only two billion flights a day into that airport. Maybe they were waiting to be picked up by the charter jet.

Comment by diogenes (Tampa)
2008-08-19 13:07:03

why would you do that?
It’s Florida. It’s real estate, and besides it would cost money. This was a no money down deal.
125% financing…..how could you lose??

 
 
Comment by cougar91
2008-08-19 08:29:54

Ha ha, that would not have been appropriated for a newspaper to print, no? :-D

 
Comment by Houstonstan
2008-08-19 11:59:47

Hey you’re famous. :)

 
 
Comment by aladinsane
2008-08-19 06:48:27

Old Black Market: Desirable consumer goods

New Black Market: Undesirable consumer goods

=========================================

“The anemic housing market should be a boost to Atlanta’s apartment market. But the emerging shift in living arrangements is creating an unusual set of challenges for the industry. Leasing agents are having to contend more with the ’shadow market,’ an industry term that refers to the glut of unsold homes, condos and townhomes that have become rental property.”

Comment by CarrieAnn
2008-08-19 08:51:35

Would Atlanta also have a shadow workforce that now is leaving the area and its housing inventory behind?

Comment by aladinsane
2008-08-19 09:11:43

Dark Shadows…

 
Comment by gttim
2008-08-19 09:28:34

Yes, Atlanta would have a shadow workforce that is leaving the area. Illegal aliens can no longer register vehicles in the state, so it is hard to own them. There are also few construction jobs. People are leaving for greener pastures. You can get very good deals moving into apartments right now.

Comment by bink
2008-08-19 09:58:58

This won’t be good news to the Atlanta waiter/housing-speculator who told me a few years back while serving me dinner that Atlanta was the next Phoenix.

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Comment by gttim
2008-08-19 11:12:23

Lucky for him there are still waiting jobs available!

 
 
 
 
 
Comment by Mike in Miami
2008-08-19 06:52:04

“Robert Shaeffer, who bought a two-bedroom, two-bath unit with about 1,100 square feet for $374,900 sight unseen.”
I don’t even buy a $2 carton of eggs unseen. This clown buys a “unit” for $375K unseen. Unblievable how many suckers are out there.

Comment by Tim
2008-08-19 07:12:56

“Shaeffer, who had retired from IBM, has had to go back to work driving delivery trucks. ‘I invested everything I had in my retirement, and now I’m stuck with a big payment and an apartment that’s no good.’”

More like he threw everything away in a few minutes to participate in some stupid get rich quick scheme. I dont understand why anyone would think they could profit from buying properties they did not inspect. If it was, or expected to be, a money maker, why would the seller be seeking out of state suckers to invest rather than keeping it or privately selling it with no transaction costs to a great friend. If something has to be advertised, it’s not a sweet deal. How hard is this to understand? Advertising is just someone trying very, very hard to make it “look” like a sweet deal.

Comment by Tim
2008-08-19 07:21:34

By adverstising in connection with real estate I mean listing outside the MLS. If something is below market, you need to go no further except in extremely rare circumstances. If you need to advertise to out of state investors during one of the hottest markets in US history, then red flags should have been waiving and bells should have been sounding.

 
 
Comment by snake charmer
2008-08-19 08:00:51

Note to out-of-state people: “buyer beware” could be, and should be, the Florida state motto. At the peak of the bubble in the Tampa Bay area I saw $700,000 townhouses across from a half-empty strip mall and a Circle K, and $500,000 condos overlooking a RaceTrac, adult businesses, radio transmission towers, and a mangrove swamp. But I don’t think you can get much worse than dilapidated condos across from a truck driving school being bought sight unseen by highly-educated professionals from Colorado and Hungary. These people might as well have played three-card monte or the shell game. Use of a charter jet? Are you f_____g kidding me?

Comment by tampaesq
2008-08-19 11:56:38

Didn’t some poor schmoe fall from that highrise off of Gandy while it was under construction?

I don’t know…close proximity to “Bedtyme Stories” and the Goodwill store might be a selling point for some people. :-)

Comment by snake charmer
2008-08-19 15:05:53

I don’t know about the construction accident, but you know exactly the place I’m talking about. It looks like a pink prison.

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Comment by snake charmer
2008-08-19 12:07:56

More on the unfortunate Mr. Schaeffer, from the article. He was so convinced of his prospective windfall that he likely ruined his sister too. What a transfer of wealth that was!
_________________________

“Shaeffer, one of the first investors in Orlando’s Cay Club, was part of the mad rush. He was captivated by the promise of two years’ worth of rental income upfront. He bought one unit and persuaded his sister to use her late husband’s life-insurance proceeds to buy two more.”

 
Comment by Skip
2008-08-19 12:17:11

Well, to be fair, he did get a job as a truck driver, so being next to a truck driving school isn’t always bad.

 
 
 
Comment by mikey
2008-08-19 07:09:42

“Airline pilots, scientists and others who invested in Cay Club said it has been one of the biggest disappointments of their lives. Ventura, Calif., resident Yindy Chow is still reeling from paying the $4,300 property-tax bill on a unit that was supposed to supplement her retirement but has provided none of the rental income promised by sales agents.”

“‘I don’t know what to do,’ she said recently. ‘Some people want to get rich fast. We’ve been saving 20 years, and we wanted to do something wisely and plan on our retirement. It’s really sad.’”

“Hey…YOU rolled the DICE in RE Retirement Craps and pulled a CRAP OUT! Think about ALL the Entertainment Enjoyment Value of your Play. Stand Back…NEW SHOOTER COMING OUT !” :)

Comment by Mike in Miami
2008-08-19 07:17:23

“wisely and plan on our retirement …”
What retirement? If you keep pissing your money away on risky financial schemes you’ll never retire. Maybe you should invest your money more wisely, like in PETS.com for example.

Comment by Curt
2008-08-19 07:25:40

Pets.com, thanks for the tip. I’m selling all my Dr Koop.com ASAP!

 
 
Comment by DinOR
2008-08-19 08:14:44

mikey,

By and large I agree but “I” happen to think Yindy Chow may be a vastly different story ( screwed to beat hell ) but different nonetheless. When she says “We’ve been saving for 20 years” ( I’ll take that to mean Mr. Chow as well ) Please notice she didn’t say “We took equity out of our Primary Home ATM because we figured we’d better cash in on the boom”.

Also notice one of her primary motivators was the “income” this infestment was supposedly going to generate?

Comment by In Colorado
2008-08-19 10:47:02

Like there is no shortage of hotels and vacation rentals in Orlando.

Heck, even Disney has unfinished hotels on its property that have been that way for years.

Comment by DinOR
2008-08-19 11:28:30

Looking back it’s altogether too obvious these “developments” were built simply because there were construction loans to be had! The “demand” was either trumped up or non-existent. We know that.

But as we’ve noted here many times, it hasn’t exactly paid off to be a saver. That’s what Yindy Chow was. Probably 10 of those 20 years she was getting absolutely awful int. rates. Now I have no idea what someone from Ventura, CA was messing w/ FL RE but it certainly sounds like she did it for i-n-c-o-m-e, not a quick flip.

I think we’re glossing over critical mass here? Not everyone can go into their ETrade account, short a stock and walk away with basically “income”. She may not have had enough liquidity to support her ( or granted, her “lifestyle” ) so she opted for some infestment she saw on C/L b/c the ROI was so much better than anything she’d been getting in CD’s etc. Again I think this is a case in point where ever lower int. rates allowed the bubble to feed on itself. Unfortunately for Yindy she got caught up in it too.

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Comment by aladinsane
2008-08-19 07:19:37

Such posh languish!

“Because Ginn still owns 359 lots in Tesoro, owners of the 600 or so other home sites could see their posh clubhouse languish if the company stops paying its association fees - something executives concede is a possibility.”

Comment by SFC
2008-08-19 08:23:15

I wonder if the manager of these clubhouses and the receiver of these association fees is a subsidiary of this developer. If so, they will essentially be raising association fees for existing owners, to make up for the fees Ginn isn’t paying to itself.

Comment by Skip
2008-08-19 12:36:33

I bet the club house is not owned, but leased from a corporation run by the developer. They are probably paying themselves.

 
 
Comment by Doug in Boone, NC
2008-08-19 08:58:12

I’ve mentioned this before, but my house sits at the proposed entrance to a +6000 acre resort called Laurelmor, Bobby Ginn plans to build in the NC mountains. The county commissioners in my county went ape-shit over the millions of dollars in property taxes this Ginn development was supposed to bring in. The commissioners, in a classic case of counting their chickens before they hatched, went on an out-of-control spending spree. Now, however, it is starting to look like the Ginn development is on the verge of going belly-up like his Florida developments. If this happens, it’s going to be interesting to see how the county commissioners plan to pay for their new toys without significantly raising the property tax rate for us ordinary “smucks.”

Comment by diogenes (Tampa)
2008-08-19 13:14:42

it’s going to be interesting to see how the county commissioners plan to pay for their new toys without significantly raising the property tax rate for us ordinary “smucks.”

Let me give you a clue: Taxes need to be raised.
Who do you think is going to pay the bill??

Anyone? Anyone?

Buehler!………….

 
Comment by Jeooooo
2008-09-25 08:24:16

Live in Boone. Ginn Company is out of their office space in town, told everyone they are moving to Blowing Rock. Gimme a break. Spoke to a builder that has built in Laurelmor and Bobby Ginn is totally out, no say in anything. Not only is Bobby Ginn going down, everyone who came into town that worked for him bought high end homes and looks like they will be loosing their homes too. Trickle effect. Sucks for all involved. Wonder what is going to happen to the tax base now here in Watauga with the new high school being built with the anticipation of all the revenue from the Laurelmor project gone????

 
 
Comment by tampaesq
2008-08-19 11:58:38

My father-in-law uses the word “tesoro” to describe the little surprises the family dog leaves on the kitchen floor when you leave him alone for too long.

 
 
Comment by Tom
2008-08-19 07:28:50

Look at this email I got. Looks like Banks are trying to unload, especially retail property loans.

“A good friend of mine , in investment banker field is looking for an investor who has money and interested in loan with real estate in the south as collaterals. Do you know anyone who maybe interested?”

Loan Name: Apollo Portfolio
Property type: 11 Malls with major anchors
Geography: Southeastern US
Market Value: $190 million
Amortization: 1st: Interest Only
Existing Debt $130,000,000 (LTV: 68%)
Origination Date: 07/11/07
Maturity Date: 07/11/12
Rate: Mortgage: 30 day Libor + 250 (Libor capped at 4%)
Recourse: Non-Recourse
Loan Status: Performing

“A major banking institution wants to sell the above loan, no idea why since is performing well. The loan can be re-serviced or serviced by the existing lender.

In order to purchase the loan (interest only, same duration,4 yrs) an interest only loan at a rate lower than the current loan is needed (30 day LIBOR + 250).

Know any foreign lenders?”

Comment by Tim
2008-08-19 07:36:49

I’ve done work with Apollo. No comment.

Comment by aladinsane
2008-08-19 07:41:03

Loan overboard!

 
 
Comment by Mike in Miami
2008-08-19 07:54:43

How many cents on the dollar?

 
Comment by climber
2008-08-19 08:05:48

Retail is bombproof in a recession. Ha ha ha.

Retail space has been growing at 2x the rate of population growth. It’s a trend that probably will reverse soon. Maybe they can repurpose malls as detention facilities for convicted mortgage brokers and bank executives.

Comment by max4me
2008-08-19 09:03:38

I have a buddy in urban planning in sacramento, he explained that for planning purposes, the tax income to local and state is greater than residential, thus it gets favored for zoning, whether its really needed or not

 
Comment by Lane from s.c.
2008-08-19 14:57:35

No. Turn the malls into indoor motorcycle parks, I`ll be all over that. Sling some dirt on the stairways put in some woops… put a jump over the fountain…it will be great. Turn all the jewelry shops into MX parts stores. Maybe a hooters or two. A couple of tatoo shops. It will be great!

Lane

 
 
 
Comment by Backstage
2008-08-19 07:55:08

“‘It’s been 12 months, and in some areas it’s actually worse than it was 12 months ago,’ he said.”

Gee, Mr. Economist, thanks for the brilliant insight. As they say, economics the art of predicting the past.

 
Comment by aladinsane
2008-08-19 07:57:35

Potemkin Villages in St. Petersburg?

The St Petersburg Times. “The problem with the Tampa Bay area’s rising stock of vacant homes goes far beyond overgrown yards, piled-up phone books and fliers dangling from doorknobs. Deborah Farmer, president of the Greater Tampa Association of Realtors, said she notices the spike in vacant homes firsthand. ‘Over half of the homes I show now are vacant,’ Farmer said, ‘and I bet that number is much the same throughout the area.’”

Comment by reuven
2008-08-19 08:27:46

Polk County, FL, is FILLED with empty housing developments. Blocks and blocks of identical 2000 sq/ft houses, maybe 50% owned by “investors” and the other half empty. These developments look like ghosttowns.

Comment by aladinsane
2008-08-19 10:21:48

“These developments look like ghosttowns.”

“Bush Leagues” is the term I favor…

 
Comment by milkcrate
2008-08-19 13:05:11

I always wondered how Lakeland, birthplace of my child, was doing, compared to those housing clusters you mention.

 
 
 
Comment by climber
2008-08-19 08:01:43

We looked at a soon to be bank owned property. It had standing water in the back yard, a corroded and bulging window well, SUV damage in the garage and severe drywall cracking plus it was listed as being larger than it really was. The house has been on the market since October and has had at least one deal fall through. Still the bank is firm on the price.

There are still personal belongings in the house too, stuff just left everywhere. For $500 they could get a dumpster, clear the place out and vacuum it.

The bank is in total denial. In Fort Collins fairly priced houses sell in a month and bargains go in days. Our prices are just a bit down from peak values (~ $100 per square foot).

Comment by John
2008-08-19 15:21:53

Wait a couple months and drop the bid to $90. Every day they hold out you make more money. Sounds like a no-brainer…

 
Comment by sleepless_near_seattle
2008-08-19 16:01:33

If you’re really interested ask to see it again, this time with camera in hand.

Photo all the bad stuff. Determine estimates on the repairs, call Loss Mitigation at the bank/lender, and sell the fear. They hate that stuff and might move lower.

 
 
Comment by dumbo
2008-08-19 08:12:14

“Dr. William Joey Smith, an assistant professor of economics with the University of West Georgia in Carrollton, said that prognosticators were wrong when they predicted that the housing market had ‘bottomed out’ months ago. Last summer, he said, many were saying that the housing market would rebound within nine months. That clearly hasn’t happened, he said.”

There must be something wrong with you computer models.

 
Comment by reuven
2008-08-19 08:20:11

Ahhh Orlando! One of my favorite topics because I own some acres of swampland there. (Don’t worry! I paid very little, cash, for it.)

There’s another negative factor there (which is true in many other parts of the country). Orange County (FL) government MANDATES an HOA and certain CC&Rs for any new development. Even on a SFH, you’ll be paying a few extra hundred $$$/month, or more. (That’s really “cash in the trash”)

And if other people don’t pay their dues, YOU will just have to pay more.

Then, if you want to put up a clothesline to save some $$$ on your electric bill, or put up a basketball hoop so you kid can play, or paint your house a little different color than the “approved” ones, you’ll have to fight some old biddy on the review board, or face fines.

Single-family detached homes that are ruled by an HOA aren’t worth sh*t, in my book. Who would want to live in a fascist regime?

Comment by gttim
2008-08-19 09:33:53

People who do not want to see your laundry hanging beside you orange house with a car on block in the front yard.

Comment by Arizona Slim
2008-08-19 10:21:27

There’s no HOA in this neighborhood, but you know what? I’m of the mind that if I’m hanging my laundry outside, I’m going to put it where passersby don’t see it.

Why? Because I know people who’ve had their laundry stolen, and I’m danged if that’s going to happen to me.

Comment by mikey
2008-08-19 12:38:15

So right Slim.

A person could lose more than their shorts in this housing recession :)

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Comment by silverback1011
2008-08-19 09:58:45

at least with our Disney World Vacation Club Villa points, which is the only thing we own in Florida, (cash), we can have some fun for 10 days of the year, or trade it out for another vacation. Taking 83 1/2 year old Dad & stepmom to DW this year, and then next year we’re going to either Scotland or Hawaii. Beats looking at peoples’ laundry and their cars up on blocks in the deserted subdivisions.

Comment by In Colorado
2008-08-19 10:49:38

Disney is really pushing the Vacation Club hard in Anaheim. Too pricey for my blood.

Comment by silverback1011
2008-08-19 11:45:48

yes, it is a mistake to buy new from disney. there are lotsa slightly used points out there for various nice resorts on disney property that are about 1/3 to 1/2 off from buying new from direct from disney. just google “Disney Vacation Club points for sale” and you’ll probably find plenty. I keep checking on the “value” of ours every so often and they’re going down, down. But at least the initial outlay was way less than some condo or rental. we sold all but one of our rentals before the biggo crash - last one in 2004.

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Comment by Eggman
2008-08-19 09:59:04

Indeed, there are two sides to an HOA. One is they tell you what you can and can’t do. The other is that they tell your worthless neighbors what they can and can’t do.

Comment by reuven
2008-08-19 10:19:12

My current neighborhood has no HOA or CC&Rs. And it bubbled just as much as the rest of the HOA-protected nation did. I don’t think HOA rules do anything to preserve quality-of-life or “property values” as sheeple think they do.

(And I wouldn’t have my white roof or my solar panels if I lived in an HOA fascist community. It would be outlawed)

 
 
Comment by JoJo
2008-08-19 10:15:39

People who don’t want to hear the sounds of a basketball thumping and trash talk all day, that’s who.

Comment by aladinsane
2008-08-19 10:18:35

Nappy headed HOA’s

Comment by Faster Pussycat, Sell Sell
2008-08-19 11:00:59

LOL

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Comment by Rick in Orlando
2008-08-19 10:45:40

I hate the new developments in Orlando.
Hate them. Ugly stucco shacks spaced 6 feet apart, with fascist HOA rules, etc.

But when they reach $50/sf, even I might be tempted. Not there yet. I guess I’ll have to ‘waste’ another $600 on this month’s rent.

Rick

Comment by reuven
2008-08-19 11:13:17

The problem is, if 50% of your neighbors aren’t paying the HOA dues, then you’ll have to pay 2x. (And most likely, other folks will balk at paying extra, so the common areas, streets, etc, will simply rot)

 
 
 
Comment by reuven
2008-08-19 08:26:22

I spend about 1 week out of 5 in Florida. (My company has a lot of contracts with the “Theme Park” industry)

I would tell folks down there that Florida is doomed because the entire economy, other than tourism, is based on people buying and selling houses and condos to each other. Back then (two years ago?) they thought I was making a joke. And now, we see these quotes:

“‘It has hit every single sector,’ Kest said. ‘There are no jobs and no jobs being created. Our economic development people sit around and talk about all of this, but they should have been doing something about it a long time ago. We are used to hearing these numbers from Ohio and Michigan, but we are right there with them.’

Comment by Jon
2008-08-19 09:56:12

People have no idea how much government in Florida is completely controlled by developers. Land developers pay for most people to run for office. The state is the way it is because of that. Every law is designed to move money from the non-developer’s pocket to the developer’s pocket. All other industry is crowded out.

Most county zoning boards won’t allow real manufacturing plants because the plants will reduce the value of neighboring land for residential real estate. The fishing and agriculture communities are dying on the vine as crop land is being concreted over and polluted run-off is destroying the coastal estuaries.

And there will never be anything intelligent people can do about it because the basis of all government is corporate funding, and most people don’t care.

Comment by Arizona Slim
2008-08-19 10:19:21

Jon, this isn’t just a Florida problem. You’ve done a very good job of describing Arizona’s government.

Comment by lizziebeth
2008-08-19 15:17:14

Same type of government in North Carolina. Small towns taken over by developers. Now Waxhaw, Weddington and other areas are over run with vacant mcmansions!

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Comment by silverback1011
2008-08-19 10:01:37

You are so right about this, Reuven. We noticed the same thing when we were down there about 3 years ago. I always get the local real estate listings and pore over them when I’m on vacation, being the real estate hound that I am, but it was scary out there then with $ 425,000 crappy stuccoed townhouses that were worth about $90,000. Whenwe heard from the employees that Disney had really sized-down 3 years ago, I told my husband, “they’ll be giving those things away.” Guess I was right.

Comment by In Colorado
2008-08-19 10:54:57

Whenwe heard from the employees that Disney had really sized-down 3 years ago, I told my husband, “they’ll be giving those things away.” Guess I was right.

I would guess that about 80% of employees (or as the Mouse likes to call them: castmembers) are paid menial wages. OK if you are a funded retiree and just want someting to do, but lousy if you are a genuine wage earner. Also a lot of them are only non-benefitted part timers.

 
Comment by Faster Pussycat, Sell Sell
2008-08-19 11:26:56

I always get the local real estate listings and pore over them when I’m on vacation, being the real estate hound that I am

This is part of the problem. There is no logic to being a “real estate hound”.

Part of the problem of this bubble is how it’s distorted the role of RE in the economy. It’s an expense, folks, an expense. It’s on the wrong side of the freakin’ balance sheet.

And even if you were coming at it from a landlording angle, there is no real utility to looking at “real estate” on vacation.

You’re just as delusional as the FB’s except you don’t apply the same logic to yourself.

Comment by DinOR
2008-08-19 11:46:27

Faster Pussycat,

Real Estate doesn’t have a ‘distorted role’ in the economy. It IS… the “economy”! LOL

If you need any further proof just look up what an RV “space” in LV or AZ costs? Insane. Totally upscale with full use of all the wonderful amenities of course. There’s simply nothing left that hasn’t been exploited to the max and nothing left to “pore” over.

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Comment by silverback1011
2008-08-19 11:51:54

Honeybunch Pussycat, as long as I don’t BUY anything I’m NOT delusional. If I was BUYING, then I would be delusional. People who try to note trends in anything, whether it be finance, real estate, governmental doings, hurricanes, weather for the weekend, the crime weight in their neighborhood, their weight, health, or whether their favorite novelist is coming out with a new murder mystery are not “delusional”. They’re just doing research. And for your information,

1. It’s our balance sheet, so you don’t have to worry about it.
2. We’re looking for a good place to retire, idiot.
3. If I’m not a FB, then I guess I’m still doing okay.

Calm yourself down and go take a nice cool drink out of your water dish. Then, you should probably visit your catbox because I think you just about sh—t there on that last epistle. Geeze.

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Comment by silverback1011
2008-08-19 11:54:01

Make that crime “rate”, not weight. Ha ha ha. Stupid typewriter. Yeah. It was the typewriter. Right.

 
Comment by Faster Pussycat, Sell Sell
2008-08-19 12:10:56

It is always extraordinarily hard for “losers” with no particular skills in a global economy to convince themselves that they’re f*cked.

If the best data you can get is what you observe, you’re one of the “small bidness” types, and you’re pretty much screwed.

Welcome to the blog, troll.

BWAHAHAHAHAHHAHAHAHHHHHHHHHHHHHHHHHH!!!

 
Comment by Tim
2008-08-19 12:24:26

I’m with you silver. Whenever I vacation anywhere I look at the real estate fliers. It’s almost an obsession, and I get a lot of crap about it. Not because I am in the market, but because it interests me and one day I need to decide where to retire. The funny thing is that often a friend or family member will tell me that their house, in a state I don’t live in, is on the market. I usually say I know, it’s listed at X and its closest comparable is Y that listed for Z but sold for AA. It freaks them out.

 
Comment by packman
2008-08-19 12:45:28

“If the best data you can get is what you observe, you’re one of the ’small bidness’ types, and you’re pretty much screwed.”

If the best data you can get is not observable firsthand, you’re also screwed.

IMO FP you’re out of line - but then that’s not unusual for you. Silverback seems reasonable enough - you should get off her case.

 
Comment by Faster Pussycat, Sell Sell
2008-08-19 13:07:09

1-800-BLOW-ME ;-)

 
Comment by silverback1011
2008-08-19 15:00:22

That’s okay - Pussycat - you just like to dig your claws into the furniture while you’re ripping things up. I’ve been posting on this blog for about 3 years on and off, so I’m familiar with the issues. I’m not a troll. I just have a different viewpoint than you do. But I’m “delirious” so that’s okay. You’re just an idiot. And you’re right, I AM “small bidness” middle-class American. Absolutely. Proud of it. I do have some particular skills in the global economy. I collect money for my employer by performing certain actions in my job classification. I then invest various portions of my pay in items or stocks or whatever seems wisest at the time, like most people who have created a successful financial scenario for themselves. I’m probably not at FB no matter what you think - I’ll be happy to get together with you at any time to compare bottom lines. I’m sure you’d chicken out, though. If what I write disturbs you any further, please feel free to write you congressman. I’m sure it’ll be as effective as the rest of your blatherings. Now please retire to your litter box. HA HA HA right back atcha. You are funny.

 
Comment by Bill in Carolina
2008-08-19 16:35:55

Maybe some Midol is in order.

 
Comment by exeter
2008-08-19 17:26:55

hmmm… interesting.

 
Comment by Faster Pussycat, Sell Sell
2008-08-19 17:48:22

But I’m “delirious” so that’s okay.

We’re all rooting for you, tootsie! ;-)

 
 
Comment by lizziebeth
2008-08-19 15:22:17

I always looked at real estate in Florida when I came down. Planned on moving back someday. That’s how I knew not to buy in 2005. I knew that prices were way out of whack. So I found looking at real estate on vacation to be extremely helpful!

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Comment by sleepless_near_seattle
2008-08-19 16:34:39

“I always get the local real estate listings and pore over them when I’m on vacation, being the real estate hound that I am…”

I certainly understand this, but it won’t be until the majority of people stop doing this that it will be time to buy. Too many people are obsessed with real estate.

While I hope I stay employed through this, I’m secretly hoping for an a$$ pounding in the economy that shakes the Chihuahua that is the real estate obsessed masses from the pant leg of real estate investing.

 
 
 
Comment by reuven
2008-08-19 08:32:50

“Dr. William Joey Smith, an assistant professor of economics with the University of West Georgia in Carrollton, said that prognosticators were wrong when they predicted that the housing market had ‘bottomed out’ months ago. Last summer, he said, many were saying that the housing market would rebound within nine months. That clearly hasn’t happened, he said.”

“‘It’s been 12 months, and in some areas it’s actually worse than it was 12 months ago,’ he said.”

And why is this economist surprised?

The “housing crisis” was when the median house price was 10x the median salary. It won’t be over until the median house price is between 2x and 3x the median salary. We still have a ways to go. It’s physically impossible for there to be a “rebound” (unless the Government succeeds in devaluing our dollar so much that $600,000 for a house 20 miles from Sacramento becomes the right prices….)

 
Comment by Arizona Slim
2008-08-19 08:58:06

From the original post:

“Terry Smith recently leased her two-bedroom townhome in Vinings after she was unable to sell it. ‘Rather than give it away or lose what once was equity, I decided to rent,’ Smith said.”

To which I say, Terry, you’re going to find out that landlording isn’t as easy as falling off a log. And, alas, I think you’re going to learn this lesson the hard way.

Comment by Tim
2008-08-19 12:29:36

I’m with Combo on this. Let them throw their life savings away if they want. Less money I have pay to fund bail out plans, and if the market gets any worse, I may have to look for other employment.

 
 
Comment by Gulfstream-fixer
2008-08-19 09:08:48

“Rather than give it away……..”

With no/little down, it was “given to you” to start with…….

“Throwing away money on rent…….”

Heard this again from a relative this weekend. Tried to explain AGAIN that it costs you “X” amount of money to put a roof over your head, whether you buy or rent……when you buy/assume all the risk/taxes/depreciation on the property, you should be paying LESS than rent, as compensation for assuming all the risks.

But that was back in the day when a house was viewed as an inflation-hedge, not an investment.

 
Comment by FP
2008-08-19 09:48:18

“A couple of years ago, real-estate investors were so hot on Orlando that hundreds of buyers from around the world paid an average $300,000″
“as far away as Hungary “, “Ventura, Calif., resident Yindy Chow “, “just outside Denver, Shaeffer ”

I know a couple that own mulitple rental properties. (I just recently spoke to them a few months back) They started back in the 80’s. They pretty much got things down to a science. I remember a few things they told me that made these investment work for them. They only have three properties at a time. Anything more would be way over their heads. The last thing is to make sure the properties are within driving distance. They never bought anything 50 miles from where they live. They don’t trust anyone taking care of their properties. They said it’s hard work but it works for them.

Now these people in Orlando think that buying something thousands of miles away can generate money without doing anything. Typical inexperience investors, they like to make money without working for it. “Out of site, out of mind”

Comment by Arizona Slim
2008-08-19 10:16:33

To any potential real estate investor: Read this part of FP’s comment. And read it slowly and carefully…

They said it’s hard work but it works for them.

 
Comment by Mike in Miami
2008-08-19 10:45:32

I have a rental property in NC, my former residence. It’s a nice home so I didn’t want to sell it. Thanks God I have good tenants.
You must screen your tenants. Employment and former the landlord for starters. Make sure they don’t just give you the address of their drinking buddy.
Self-employed? Sorry, rent elsewhere. No former landlord and no credit score = no deal.
You got to be tough to be a landlord. That also means that you might have to turn away the first guy that shows you some cash. People have a million excuses as to why they can’t pay you. Then they tear up your property. Ever tried evicting some deadbeat tenant? That’s where the real fun starts, when you find out that ALL the laws are on the side of the deadbeat. They move in, but they don’t move out.
You got to be handy with minor repairs and know enough so you don’t get ripped off by various contractors. You got to know some people in the area that are reliable, plumber, electrician, HVAC, etc.
Being a landlord is a hard job. Especially now there’re a bunch of people out there praying on novice landlords. Hey, the check is in the mail.

Comment by In Colorado
2008-08-19 11:00:13

Sounds like my sis’s experience. She thought it would be a cakewalk. Then the tenants didn’t pay and the trashed the place. Her husband must have spent 100 hours making repairs, plus they had to replace the carpet (completely runined) and the backyard landscaping was trashed. They sold it and counted their blessings. Sad thing is that its a nice place.

Comment by Arizona Slim
2008-08-19 12:23:00

Before I moved to the Arizona Slim Ranch, I rented the front half of a duplex. The landlady (who lived in the back half) regaled me with tales of good tenants gone bad, bad tenants who promised to be good, and so forth.

What these stories did was disabuse me of any notion that landlording would be an easy or enjoyable job. And for that, I thank her.

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Comment by silverback1011
2008-08-19 15:04:26

Landlording can be very hard. We automatically carpet anything we have to rent out in what we call ” renter beige ” - the cheapest plush carpet with relatively thin padding. We’ve put in good-quality carpeting before, but had it torn up and destroyed, so it was kind of irrelevant as to how much wear it could have withstood had it not been shredded. However, if you have your ducks lined up, it can also be very financially rewarding.

 
Comment by Lane from s.c.
2008-08-19 15:12:12

I`m not trying to pick a fight with anyone, but there are alot of good stories out there. I have a couple of friends that have done well. The bad stories make a great story but the one`s where people pay on time are boring. I guess my point is there is always big money made in bad times…always has been.

Lane

 
 
 
 
 
Comment by aNYCdj
2008-08-19 11:55:06

You are right think of all the tenants that are getting screwed by DEADBEAT LANDLORDS stealing their security deposit in foreclosure and BK……

Now i see the wisdom of letting tenants pay their own water bill…..Its Illegal if YOU cut off the utilities but if they dont pay how long can they live without water?

—————————————-
That’s where the real fun starts, when you find out that ALL the laws are on the side of the deadbeat

 
Comment by Doug in Boone, NC
2008-08-19 11:58:24

“‘I don’t know what to do,’ she said recently. ‘Some people want to get rich fast. We’ve been saving 20 years, and we wanted to do something wisely and plan on our retirement. It’s really sad.’”

The wise thing to have done was to avoid people who want to get rich fast. Oh well. Like my daddy used to say, “Some people don’t believe shit stinks!”

Comment by Tim
2008-08-19 12:34:12

And why would they save 20 years only to invest when prices were at an all-time high? Nothing could me more unwise. Why not save during bubbles and buy during bursts? Ppl amaze me.

Comment by Crusader
2008-08-19 13:24:13

Not amazed anymore by the sheer stupidity out there. I think it always existed, it’s just the media(Ben Jones, et al) are finally reporting it! We are aware of it now.

 
 
 
Comment by Crusader
2008-08-19 13:22:45

Ok, the part I don’t get is why would construction corps take those “Easy loans” to build up inventory that wasn’t needed? Were they suicidal?

Comment by in Colorado
2008-08-19 19:09:17

As others have pointed out in the past, building is what they do.

 
 
Comment by Nick
2008-08-19 20:03:40

I can only imagine what goes through ever Realtor’s mind when a local newspaper calls to interview them about rising foreclosure rates a month after they predicted a bottom to the market. It’s probably something along the lines of the following.

“It’s always almost the bottom. Maybe we’ve hit a bottom this month. Although we said we hit the bottom last month and were completely off the mark, news reporters will still interview us for our market predictions. Maybe if we call the bottom enough times, we’ll be right one month. Then we’ll be seen as the housing market geniuses we are.”

 
Comment by Fuzzy Bear
2008-08-20 06:59:05

“Shaeffer, who had retired from IBM, has had to go back to work driving delivery trucks. ‘I invested everything I had in my retirement, and now I’m stuck with a big payment and an apartment that’s no good.’”

Excellent example of what not to do with your retirement money! I think this is a perfect example of the greed and stupidity of people during the housing market who were willing to risk it all.

 
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