Down To Free In Florida
The News Press reports from Florida. “The Fort Myers/Cape Coral metropolitan area ranks third nationally in foreclosures, a position not likely to improve with 20,000 homes on the market and another 29,000 in foreclosure. An estimated 40 to 60 percent of homes purchased during the boom went to speculators or investors. Problems also arose when individuals who didn’t have the means to own a home took ill-advised financial risks. ‘It was clearly a pace we couldn’t keep up,’ said real estate agent Steve Koffman. ‘Every waiter and waitress in town was buying a home.’”
“Now, the backlog of homes for sale is 22 months, and those in foreclosure would take another 24 months to sell. ‘We weren’t the only epicenter, but if you want to pick the poster-boy case, it is Southwest Florida,’ said economist David Jones.”
The Naples News. “Home resales in the Fort Myers area rose for the 10th month in a row in October. The median price fell to $119,000 last month _ 22.6 percent lower than it was in 2003. Brett Ellis, part of the Ellis Team for RE/MAX Realty Group in Fort Myers…said banks are selling single-family homes for less than $60,000 in Cape Coral and Lehigh Acres. In Cape Coral, Ellis recently sold a single-family home for $52,000. He has another one pending for sale in Lehigh in the mid-$40,000s.”
“Denny Grimes, president of Denny Grimes & Co. in Fort Myers, said about 60 percent of the sales made in Lee County today are bank-owned homes or short sales. He said prices continue to fall too because there are still so many homes on the market. He doesn’t see an end to the trend any time soon. ‘Are we close to the bottom now? We are not close to the bottom with the level of inventory we see,’ Grimes said.”
“But it’s got to stop somewhere. ‘It can’t go down to free,’ Grimes said.”
The Herald Tribune. “Alexis Wittrock stood in her front yard recently amid racks of her children’s old clothes, dishes, a small couch and other household items. She is slowly selling off a garage full of goods, downsizing for a move that she and her husband see as inevitable. They are planning to leave North Port, a Southwest Florida construction and growth boomtown that has fallen hard since the housing bubble burst.”
“In the most pronounced sign of the decline, North Port has issued fewer new home construction permits for the year — 119 — than it did during some weeks during the housing boom peak Wittrock’s husband, Mike Brooks, helped out at the yard sale before leaving for his job delivering pizzas, the only work he has been able to get in the past year. It is not enough to sustain the family of eight, which has had to drastically cut back since the days when Brooks made six figures as a construction manager and Wittrock managed contracts for a national home builder.”
“Jim Rahill, was laid off from (a) Venice window and door maker a year ago, and has managed to stay in North Port, though it has not been easy. Rahill has watched $62,000 in value bleed from his house. He took a two-thirds pay cut at a local manufacturing job, and rented out a room in his house to help cover the mortgage. He describes North Port as being ‘on life support and just won’t die.’ ‘I’ve got a lot of acquaintances that just don’t have jobs,’ he said.”
“Brooks and Wittrock say they cannot wait for a turnaround here. If Brooks finds a good job outside Florida, he will leave with plans for the family to follow later. He is not putting much stock in government efforts to spur an economic rebound. ‘If nobody’s working,’ he said, ‘it doesn’t matter.’”
The St Petersburg Times. “After about $1-million in renovations, the old Victoria Lodge has a new tin roof, turquoise shingles with white trim and a tropical landscape. But the only traffic Friday flew by: an egret, an osprey and a flock of small birds. Just inside the building, built in 1903, a photo of three smiling developers hangs near the door. And a big ‘Marina 200 Main Street’ sign hangs near an empty sales desk.”
“But now, another big sign has gone up on the Main Street side of the 1.6 acres: ‘Great Dunedin waterfront site available.’ Jim Egnew, Richard Gehring and Bill Kimpton are advertising for buyers or investors for their much-ballyhooed $30-million Marina project. After spending more than $2-million of their own money, the developers of the Main Street project are being sued by their bank for defaulting on nearly $5.7-million in loans.”
“Only someone who can afford to buy it and hold it will buy now and they will pay 30 cents on the dollar, said Mark Klein, a Clearwater real estate broker who’s familiar with the project. Klein said the real estate market took a similar dive in the late 1980s to early 1990s during the savings and loan banking crisis. ‘Banks took properties back … and finally let someone buy them for pennies on the dollar,’ Klein said.”
“Klein said his company also has vacant land for sale where condos were planned. ‘There is no market because supply has outstripped demand,’ he said.”
The Daily Business Review. “Corus Bank, one of the most active lenders to developers during the condo construction boom, is taking title to the twin, 26-story Tao Sawgrass condominium buildings in Sunrise in lieu of foreclosure. Although there have been no closings on the complex’s 396 units, purchase deposits are in place on about 80 percent of the project, according to John Barkidjija, a Corus senior vice president in Chicago.”
“Since buyers have not closed on any of the condos, ‘the project is worth less than the capital loaned on it,’ said Tom Bartelmo, CEO of J.I. Kislak in Miami Lakes.”
“Corus Bankshares president Robert Glickman described the ‘current housing calamity’ as worse than even the severe downturn the company had expected. The overall credit market collapse, and Corus’ focus on condo construction loans, have led to significant increases in bad loans and operating losses, Glickman stated. ‘Unfortunately, we anticipate these difficulties will persist for some time,’ he said.”
The Biscayne Times. “According to statistics from the Miami-Dade County clerk’s office, as of the end of September, there were 40,342 foreclosures filed countywide, compared to less than 27,000 the year before, and fewer than 10,000 in 2006.”
“Condos are a problem, no doubt, because that market was driven to a large degree by speculation. ‘That’s still the $64,000 question,’ quips William Hardin, director of real estate programs at Florida International University’s Department of Finance. ‘Who will be the end-user in the condo market?’ (Of course, the joke, courtesy of the Daily Show, is that ‘thanks to Lehman Brothers, Morgan Stanley, AIG, Freddie Mac, and Fannie Mae, the $64,000 question is now worth $1,324.86.’)”
“‘The risk in some of these large buildings is that they aren’t all sold, or you have a number of units in foreclosure and they aren’t paying their assessments,’ he says. ‘So you may get a good deal but you’re buying into a management problem. Some of what we built is too large.’”
“He sees tough times for a mega project like Midtown Miami because it’s too big, too isolated, and a little too far from the Boulevard and Biscayne Bay to compete in this market. That’s why much of the sales effort there has turned to the rental market. ‘It’s a great project,’ he says. ‘The question is the scale of it. Can you draw in literally thousands of people to that area? In ten years, it will happen. The question is what it will look like between now and then.’”
The Associated Press. “It took John Cicero and his wife an appraisal, some convincing by their real estate agent and some hard-to-swallow facts to get them to lower the $525,000 listing price on their five-bedroom home in Valrico, Fla. They closed two weeks ago for about $380,000. ‘We didn’t really understand the severity of the market,’ Cicero said. ‘We lost close to $100,000 in equity so we were walking away from real money.’”
“They built the stucco home four years ago for $380,000 and poured more than $80,000 into it, putting in hardwood floors, granite countertops, ceiling fans, blinds, drapes and a built-in surround-sound stereo system. They also expanded the deck by the pool, turning it into what Cicero called an ‘executive entertainment area.’”
“‘You think you have this wonderful home and people will want to buy it,’ he said, ‘but you’re wrong.’”
The Palm Beach Post. “Known for preaching the power of positive thinking, Realtors heard an uncharacteristic outpouring of pessimism during the four-day gathering of the National Association of Realtors that ended Monday. In educational sessions and news conferences, the 23,000 people in attendance heard speaker after speaker use downbeat tones to describe a still-cratering housing market.”
“There was National Association of Realtors Chief Economist Lawrence Yun saying 2008 will be the worst year for home prices since the Great Depression. And there was Gary Keller, head of national chain Keller Williams Realty, invoking another d-word. ‘It is dire,’ Keller said. ‘Make no mistake about that. These are tough times.’”
“St. Louis broker John Mayfield summed up Realtors’ quandary during a session on keeping agents motivated. In this boom-to-bust market, agents gripe about the lack of business, while brokers lose money and consider closing offices. ‘We’ve got all this stuff running through our head, but we’ve got to sound excited,’ Mayfield said.”
“‘Property Crisis,’ the headlines read in 1950. In 1982, it was ‘Analyst warns of big bankruptcies.’ The year 1991 saw ‘Washington is crippling the economy.’”
“History repeats itself, and America will emerge from the current economic fiasco to one day suffer another, real estate expert Michael Cannon told members and guests of the Developers and Business Alliance at Mar-a-Lago last week. ‘Each decade, we have the same crisis that’s the worst crisis that we’ve had since the previous crisis,’ said Cannon, executive director of Integra Realty Resources in Miami.”
“Most of the speakers shared positive views and hopes for the economy, including DBA Honorary President Evangeline Gouletas, who encouraged the international audience to invest in South Florida real estate. ‘This is not the time to sell,’ said Gouletas, CEO of Skyline Equities Realty in Miami. ‘This is the time to buy. I wish I had a zillion dollars and I could buy, discreetly, as much as I want. The prices will never be lower.’”
“When it came time to answer perhaps the most pressing question - when will this dismal decline end? - Cannon covered all bases with a cautious prediction. ‘We’ll probably see this period to further expansion - I’m not going to say ‘boom’ again - take place probably in the next 36 to 48 months. That’s the optimistic side,’ he said. ‘The pessimistic side? It could take 10 years. I don’t believe it will take 10 years, because this country is too antsy to do that.’”
‘The median price fell to $119,000 last month _ 22.6 percent lower than it was in 2003. Brett Ellis…said banks are selling single-family homes for less than $60,000 in Cape Coral and Lehigh Acres. In Cape Coral, Ellis recently sold a single-family home for $52,000. He has another one pending for sale in Lehigh in the mid-$40,000s.’
Notice the posters who went on about how it was impossible for prices to fall below construction cost have disappeared. Who’s dreaming now?
‘Brooks is not putting much stock in government efforts to spur an economic rebound. ‘If nobody’s working,’ he said, ‘it doesn’t matter.’
I could have posted 2 or 3 more articles about people in FL losing their houses because of job loss today, but I think you get the point. Washington would do well to forget about housing prices, because they are going to find equilibrium no matter what. The problem this country faces is how to turn the economy away from building and selling each other houses.
Proof? Listen to one of the biggest idiots in this country:
‘Robert I. Toll, chairman and chief executive officer, stated: ‘Until the last month, our FY 2008 fourth quarter net contract total was shaping up to be about the same as FY 2007’s fourth quarter total. Unfortunately, the preliminary signs of stability we had discussed in early September, during our 2008 third quarter earnings call, were upended by the past month’s financial crisis.’
‘We believe the government’s attention should be focused on shoring up the housing market, which is the root of the current financial crisis. We believe the government’s efforts must concentrate on stopping the decline in home prices by bringing potential buyers back into the market: stabilization of home prices will help stem foreclosures, shore up the value of mortgage-backed securities, and, ultimately, stabilize the balance sheets of the world’s financial institutions.’
‘Congress has allocated hundreds of billions of dollars to reset mortgages, help people who are in foreclosure, and protect those who have been the victims of rapacious lending practices. We believe all of these goals are very worthy. However, we believe that, if home prices are not stabilized, these efforts will be for naught, more mortgages will go under, and the taxpayers’ money will have been wasted.’
All this money has been wasted congress. Wake up….
The problem this country faces is how to turn the economy away from building and selling each other houses.
How to do that when we outsource our jobs, subsidize corporate malfeasance, and fund entitlements and needless wars at the expense of infrastructure? In particular, I’m concerned about the substandard education we receive relative to other countries. This doesn’t bode well for future job creation and competitiveness.
Even if we offered good education, who would sign up?
I ask because it seems that everyone that I meet believes that making big money should be easy and not require any education. Which is why everyone is clicking their ruby slippers and praying that the bubble will come back and bring with it all those easy, gravy train jobs that paid 6 figure incomes.
Even if we offered good education, who would sign up?
Especially when the people who bother to get a good education find themselves being outsource or replaced by H1-B visa holders.
Education is just another bubble market, like housing or health care. The economy is being buried by a sand money system.
The more you produce of something, the cheaper it should get. Supply up, demand the same, lower prices. But government trying to “stabilize” prices just signals, hey prices not going down, keep making more. Result: Bubble.
The people in charge of economic policy, for all their “education”, are capital ‘M’ Morons. And thieves.
In Colorado,
( You have no idea how long I’ve beaten on ‘that’ drum…)
Not just reward without education, reward without any particular effort either. Just look at all the FlipperVision shows. Sure, even the most stuck up and useless of employees will breath drywall dust ( if it’s only for 3 weeks? )
At the rate people were knocking down the big bucks they’d be adjudicating a lot more time counting it and spending it then they ever would have “earning” it.
When to a school board meeting where the parents were all riled up about all the math testing little Johnny is being put through to meet NCLB. Board member told me on the side, they want the basics! They want well-rounded students! Music, art, social studies, science! One of the trustees said I’m a scientist, but I wouldn’t have got anywhere without math and reading…so some moron in the audience tried to finish her sentence “yes so we need well rounded students…” Huh?
The superintendent said fact is, math scores have been going down 9 years and they have to take drastic measures now before they’re put on a math/reading-only diet.
There seems to be a lot more poor and “special needs” kids than I remember. What is going on, anyhow? Why is all this so difficult now? This is one of the best schools in the state supposedly.
“Special needs” used to mean just the kids that rode on the short bus.
“Special needs” now includes all the “gifted” students, whose parents feel that their fellow taxpayers should ante up and pay for all the advanced schooling (in whatever subject their little angel is gifted in). lest their little precious be held back, and not live up to their true “potential”.
If this fails, they start lobbying for “vouchers”. Essentially, different means to the same end.
I suppose you prefer that all kids be held back by the sytem instead?
In Florida the schools you WANT your kid to be in advanced schooling. The regular classes are so dumbed down and lazy it is incredible, they are truly geared towards the lowest common denominator. The only way to squeeze a better education out of the system is to get the kid placed in advanced classes and get them back up to a normal level of education.
For example my son is repeating stuff here he already had last year in Colorado. The only way to get anything out of this year is to get him moved up.
The only upside is that his writing has improved, since they now have to write on the standardized state tests the teacher are putting a lot of emphasis on that. I hate how they are teaching for the test, instead of just teaching.
My experience is that the “special” (advanced and/or varsity athletic) students get a disproportionate amount of attention/help from teachers, counselors, and administrators, while the average kids get thrown under the bus.
I’m not talking about dumbed down curriculum. I’m talking about school boards being sued for not hiring special counselors, teachers, etc. for the
“gifted” kids only.
Every class my wife teaches has several “accommodated” or “modified” students. Accommodated means they have the regular curriculum but, for example, may get extra time to write exams. Modified means the curriculum is changed (aka dumbed down) to meet their level. One of the students my wife has had marks in Gr 9 of something like 0,0,0,5, and 12. The kid was placed into grade 10 anyway and my wife is supposed to teach him French …it’s OK he could have a future in real estate.
J.H.C! … and I’m supposed to teach this kid Physics when he gets to University? Please no!
Roidy
Special needs probably brings in more dough per head to pay for education system bureaucracy. Wall Street firms were sued for outrageous management fees of a couple percent. What are the school system management fees? 70%? 80%? With the remaining percentage being teacher salaries.
Incompetent and corrupt government interference in the education market is what is going on. The graft is truly astronomical.
Crook County,
Excellent point! Actually here in OR about 85% goes to teacher’s pay, benefits and retirement, a stipend to building maint. and even less for frivolous things like books.
By the way Kathy Griffin does a wonderful bit on “Gifted children”!
Really..? How can you tell the child is “gifted”? Oh s/he’s been “tested”. I know but she’s only 2 months old? Oh.. wait a minute she just grunted, I think I found your “gift”.
BTW……don’t bother donating books to your kid’s schools library. Nobody reads them.
Four years ago, I donated 3-4 thousand dollars worth of books to the local HS library. (Aviation, American and World History, some novels, some science titles primarily).
Found out recently that most of them haven’t been checked out ONCE. Seems that, since they are tested against information in the textbooks, all they teach is what’s in the textbooks.
As a guy who had a high school classes requiring that I read guys like Steinbeck, Richard Wright, Joseph Heller, and Kafka (among others), I find this terribly sad. The reason nobody can think for themselves anymore is that nobody wants anybody to think for themselves.
Somebody help me I’m reaching here. American TV sitcoms are analysed for comprehension. The rules are very strict: no words beyond a Grade 8 reading level.
prices to fall below construction cost ??
Not a good sign for the construction trades for the foreseeable future…I think, as a nation, we are going to blow through the 10% “stated” unemployment rate…Dej-a Vu 1982…Damm it I feel sorry for the twenty something’s right now…Its going to be very discouraging if not down right depressing…
I don’t feel sorry for the twenty something because they can learn a valuable lesson from the moms and dads who raised them to think they were upper middle class when they weren’t…they will get the benefit of living in a time when you have to have good credit, money to put down on a home and are being FORCED to buy within your means since the lender will not qualify you for more..if anything the 20 somethings will benefit the most from the mistakes of their parents…hopefully they will become something their parents weren’t..savers!
I lived through 1982. I was young but I still remember it. Nobody needs to feel sorry for me. I’m in much better shape than many around me because I lived through that hard time AND I remembered its lessons.
What I learned in 1982: The importance of family and friends. They really stood by me as I struggled to find a job.
At first, I had hopes of using my college degree and finding something professional. Then, when reality started biting hard, my focus changed to finding a job, any job. The job I finally found was in a kitchen. Washing dishes. Part-time at the minimum wage.
Had that job for the first six months of 1983, and, boy, did I learn about being frugal and resourceful. It also provided me with bucketloads of motivation. As in, remember this experience and work like hell to ensure that it never happens again.
Very few of the construction jobs in Texas appeared on the books, so I don’t think those losses will appear on any unemployment figures in this country.
“It’s a lifestyle choice,” he continues. “We’re all better off if we block out this idea that buying a house is an investment. Housing is ultimately consumption. The reason people make money on their home is that they got a 30-year loan and paid it off and the home value went up over time, so it’s their biggest asset. It was basically forced savings. But now that we refinance every three years, we think we can consume our way to wealth? It’s a fantasy. In the big picture, if you like that house, figure out if you can afford it, buy it, and move on with your life.”
-
Biscayne Times(above)
Muir,
Yeah but nobody in the REIC Cartel (TM) gets PAID with that kind of thinking!
You know what’s funny is that for… ‘awhile’, it actually worked. People -were- consuming their way to wealth. Wait till they go through all those busted 720k loans and find there was zero down payment? Hell, they’d just pay off all your old bills and then you could restart the clock on appreciation only know with a bigger number.
Of course it worked for a while. That’s how Ponzi schemes (of which the real estate boom was an example) work.
Well, he does have a point. Even if you bail people out and prices continue to drop, they will just walk away later instead of sooner.
He’s a businessman, what else can he say? He’s trying to prop up his own bottom line.
You know its funny in all this Ben. We were able to build way more houses than we need. There are just such tremendous resources out there.
Pricing and deflationary phenomena aside.
Economics…
An aside regarding deflation. I’m looking for a resale cosmetic laser/ipl systems for my medical practice. It seems every MD/nurse/esthetician and their mother has opened up a medical spa/botox/filler/health/lipocure clinic around her in the past 2 to 3 years. Sure enough this was not going to end well. I thought I’ll just bide my time and several will go out of business and I can pick up a machine on the cheap. These systems that I am looking for sell for about 125,000 to 150,000 new. They sold like hotcakes a few years ago. Not anymore. About 4 months ago, I was finding resale systems for 60,000-65,000. Now in the past one month, many systems have been repossessed by banks all over the country and I found one for $40,000. There’s very limited market for this except me and a handful others - I’ll wait and maybe in several months it can be had for under 20,000. We’ll see.
Ravi, I think you’re on to something. But I do hope that you remember that there are patients who need you for your medical skills, not just for what you can do to make them look prettier.
Backgrounder: I just had to leave the practice of a dermatologist whom I’d patronized for 16 years. He went the cosmetic route a few years ago, and this included moving into a fancy new office that looks more than a spa than anything else. He also cranked up the rates on those of us who self-pay and need him for medical reasons. For example, I just had a procedure done last month that was three times as expensive as the same work done in 2002.
Honestly, this is mostly for my family and friends and myself who want procedures done. If I get a few patients from it, great, if not, no big deal b/c I didn’t spend a lot. Main practice is always general ENT and always will be. I think the docs that went into this are unfortunately a lot of FP’s and IM’s who were getting screwed by insurance companies, Medicare on one end and by malpractice costs on the other end. This was their way out - sadly I knew that it wouldn’t work out for them and it hasn’t for many.
Methinks that a lot of the “demand” for cosmetic procedures was driven by mortgage equity withdrawals and credit card debt. Both of which are harder to pull off these days.
I worked for Cynosure for a while and I installed hundreds of their medical lasers all over the country. The company would finance them for their customers. It was all very convenient. I wonder how many Cynosure service engineers are now doing repo’s instead of installations?
That is correct James, we have a tremendous ability to produce. And, it’s getting cheaper. Production costs on just about everything have been going down for about 10 years. Companies can operate much more efficiently now due to better information systems, better machinery, and more energy efficiency.
That’s price deflationary.
Unfortunately, the Federal Reserve has been interpreting all of this as deflationary through Hedonic adjustments, and been pumping more and more money into the world to counteract the falling price of goods. Unfortunately, they cannot control where it goes, and therefore we have significant asset bubbles.
This asset bubble would have been fine to crash except that it infected ALL credit, not just housing. Some worse than others. The result is panic and deleveraging. That’s deflationary again.
I could see some inflationary pressures mounting in the mid to distant future (2 to 5 years) in the form of another asset bubble, but the wage-price-spiral has not reared its ugly head for a long, long time.
Chuck
“……thr root cause of the current financial crisis.”
The root cause of the financial crisis is that nobody has any money.
From my personal experience, over the past 20 years or so, my REAL take home is 20-25% less than it was in 1990, when you figure pay raises vs. inflation, tax increases, “user fees”, etc., etc.
This, despite the fact that I have a lot more training and experience than I had in 1990.
The loss of personal income has been obscured by the fact that more women, most with college degrees have entered the workforce. All these two income families supported a bunch of support industries, like child care, restaurants, automobile sales, etc.
The doubling of gas prices earlier this year was the straw that broke the family budget’s bank.
I did not write this but found it enlightening.
Get ready to be amazed.
The following comment should shed some light on just how we arrived at the MORTGAGE /FINANCIAL situtation we are in.
According to a good friend of mine who has been a Realtor for 31yrs and recently promoted to Branch manager at a local Real Estate office told me the following last June 07. PLEASE keep in mind youll see things that are listed on the credit side where they should be the debit side but that will end up being the point. –>
Would you believe he saw a loan application cross his desk for a house worth $275,000 and was filed for approval with the following credentials…
HE - worked as a dock loader/offloader for Home Depot.
She- worked as a waitress for IHOP for 5 yrs.
Combined income was STATED as $75,000 (later, he found out it was closer to $40,000- imagine that) “Assets “- 2 somewhat new cars - leased, engagement Rings, and other pieces of bull (these are not assets whatsoever as they were still paying on them , but lets continue) Us Savings bonds worth $5000 in 2015.
Current debts: 15,000 in credit card debt, $35,000 student loan for 3 yrs of uncompleted college on her part if I remember correctly.
Dependants : 2 yr old girl with Asthma
Well thats enough to make the point. Oh yea, they had just $1,000.00 down. Sound like a good deal so far?
Read on.
My friend (the branch mgr) saw the loan app come thru on the deal and he immediately called the Realtor who originated the paperwork and told her there was NO WAY on God’s green earth would this loan be approved. But she insisted he process it as is and see.
The loan was made in just a few days and had no stipulations other than payroll deduction attached.
Less than a year later the house is in foreclosure.
For those of you who took a class or two in accounting and maybe if you didnt - its easy to see that this was a deal that shoul dhae NEVER EVER been processed for $275,000 much less one for $125,000.
The BANKS are as much responisble for what has happened in the last few years as well as those who wanted the house they couldnt afford. They approved the loan based on the info supplied with no problem. They even got a good rate on the deal. The salary/wages weren’t even close but no body did their due-diligence.
We are bailing out financial INCOMPETENCE on all levels folks. Period . I blame our dysfunctional educational system as many of us in those positions are either too dumb to be there (being taught fuzzy math) or too greedy to understand the consequences.
“Proof? Listen to one of the biggest idiots in this country:”
Calling Bob Toll a f—ing idiot is an insult to f—ing idiots the world over.
Bob Toll dumped hundreds of millions of dollars worth of Toll Bros. stock during the summer of 2005. Right at the top. Idiot? That would be too kind. Cynical prick is more like it.
I’m a twenty something who lost his job through this and the people I feel sorry for is the people who listen only to the MSM, I couldn’t imagine how blindsided/T-boned they feel. Fortunately I was prepared and am changing careers to align myself for a good industry. I am very grateful for this blog and alternative media like Financial Sense Network for telling it how it will be, not what makes you feel good. Thank you all!!
“Notice the posters who went on about how it was impossible for prices to fall below construction cost have disappeared. Who’s dreaming now?”
Yeah, that argument never made any sense, Ben. The only thing that would happen if that line is crossed is that builders would stop building—-just as soon as they ran out of credit to build with.
It’s not a line of support. Preventing prices from going below construction cost would require a market force that pulls inventory OFF the market at that line. What force would that be? None.
“All this money has been wasted congress. Wake up….”
Ben, the money has not been wasted. The one useful outcome of it will be that congress-critters can say very convincingly after things gets REALLY bad that they tried real hard.
Yes, that is the point of most government programs. Look good by posing as generous (with other people’s money), while ignoring whether the outcomes are positive or not.
Remember that as the big spending really gets underway in January.
Nice jpg of Case Schiller and Miami market:
http://www.miamicondoforum.com/images/casel.jpg
Detroit is the first market to return to 1999 prices…
And my hometown, Rochester, NY will be the first to reach 1982 prices.
Heh. I’m from there too, but moved away when I was barely old enough to remember anything other than snow.
Yup, A LOT of people are from there.
It’s hard to discount free.
Sure you can.
You’ve never paid anyone to cart away some cr@p that you didn’t want to deal with?
LOL, YES, when I made my first RE purchase back in the Volcker days, there was an old trailer in the yard that had been rotting away there for years. It had even been used as a crash pad for druggies. I had it dismantled and carted away. Cost me $150.00. The neighbors watched as it was taken apart and then started clapping when the truck went off to the dump.
Had the same experience with dilapidated kids’ playground junk and dog run in the backyard of my last house. Had to pay to get rid of it all and the neighbor came over and thanked me for beautifying the neighborhood, even though he was the only one who could see the junk.
Did you tell him he could beautify the neighborhood by keeping his wife and kids indoors? That line always brings neighbors closer.
My old neighborhood wasn’t like that…..
Ahhhhhhh, I remember it like it was yesterday….every Saturday, between June and September.
“Neighbor’s wife washing the cars in a bikini” day…..
Actually, it could’ve been done even better by HIM staying inside. He was a piece of work, as they say, whatever it means…
Nice guy, though.
“This is not the time to sell,’ said Gouletas, CEO of Skyline Equities Realty in Miami. ‘This is the time to buy. I wish I had a zillion dollars and I could buy, discreetly, as much as I want. The prices will never be lower.’”
Note to self: short Skyline Equities Realty of Miami.
Hey, Gouletas - Prices of Miami real estate relative to traditional sources of demand such as Colombia, Brazil, Mexico, Euro zone, Great Britain, etc., were in fact much lower just a few months ago, having magically increased 15-25% in the past few months thanks to the surging dollar.
This guy has figured out how to make a small fortune investing in Miami real estate. Genius!
He started with a large fortune…..
“But it’s got to stop somewhere. ‘It can’t go down to free,’ Grimes said.”
Really? Which law of nature would that violate? Supply and Demand supports “free” if demand goes to zero, so what else ya got?
This is what these people have never understood:
‘The risk in some of these large buildings is that they aren’t all sold, or you have a number of units in foreclosure and they aren’t paying their assessments…you may get a good deal but you’re buying into a management problem….The question is the scale of it. Can you draw in literally thousands of people to that area? In ten years, it will happen. The question is what it will look like between now and then.’
Between now and then; the key. The housing bubble caused economic distortions that resulted in projects being built where they made no economic sense. So in the next few years (maybe longer), the value is actually negative. Ask people in Michigan and Ohio what the bottom is. $1 houses if you’ll just take it.
The true worth is negative ’cause you have to keep paying property taxes and there are no jobs to be had there.
This is going to end badly in most parts of the country including NYC and the Bay Area.
Which brings up the question of how soon deflation starts hitting big-ticket consumer items, like automobiles.
What happens to automobile sales when the typical mid-size family sedan costs as much as the typical single family home? There are already many places in the country where you can buy a pretty nice house for the same money that a mid-range BMW, M-B or Lexus costs.
Short the automakers……even Toyota.
It already has. Walk into any refurbished or used-car lot.
I’m getting inundated in coupons from any business that I ever bought some $10 item from even if it was 10 years ago. They are just carpet-bombing the motherf*ckin’ cr@p out of their clientele list.
Maybe I should hire one of those “home organizer bunnies”?
What does this tell me?
Inflation? I don’t think so. In inflation, people are desperately trying to buy something, anything.
Listed my pickup and camper on Craigslist, had a guy from Colorado Springs call and ask if I’d trade it for a BMW.
I was speechless, the thought of anyone even asking such a thing was incomprehensible. A BMW? Me driving a BMW??
(Cue the Puddytat’s BWAHAHA…)
A piece of eurotrash for mobile living quarters? Sumpin tells me theirs trouble in Mr. BMW’s life. Offer to accept his turd-mobile so long as it includes a couple bushel baskets full of twenties.
He offered to add cash, but what would I do with the thing (the car, not the cash…)???
Sell it for scrap? I’m not sure what one does with EuroTrash.
If you bought a home at a price of $0, would there still be property taxes?
If it assessed at negative value, would they pay you?
“$1 houses if you’ll just take it.”
SOLD to the Palmster for $1.00. Sure, it can go down to free. As in squatting. Which I am seriously thinking about doing. It’s legal, it’s just a hassle. So if I can get it for a buck without all the complications, that’s Ok with me.
McDonald’s Dollar Menu, circa 2010
Apple Pie
Cheeseburger
Homes
By 2010 Mickey D’s Cheeseburgers and pies will cost $2.
Don’t know if there will be a halo effect on the $1 houses though.
Baseball, hotdogs, apple pie and Chevrolet.
Anyone remember that one?
I miss the Hamm’s Beer bear. “Land of sky blue water, water.”
The buck also brings you all the “joys” of property taxes. Which are capped at some minimum figure.
Still may be worth it.
I believe that if you buy your house for $1, you’ll be in a heck of a position to challenge your property tax assessment.
I heard from a friend that in the Depression his relatives lived for free. They had few possessions, would sign a lease from a desperate landlord with one month free, and then move after one month to another similar deal.
It might be hard to pull that off today, IT being better at keeping track of people, but rents will almost certainly fall.
Believe me, it can be done, and with panache.
(Disclaimer: I’m not doing it.)
Honest. Just designing the terms of my own lease, length of time, price, and number of pets.
4 dogs, multiple cats, currently in a beautiful custom home on acreage at less than 75% of asking. And I hope my LL doesn’t read this blog…
Have you been following all the layoffs at the Tampa Tribune? In the latest batch, the editorial page editor has been axed, as has Daniel Ruth, who whether you like him or not has been a fixture for as long as I have lived here. Will the last person please turn out the lights?
I did not expect the housing bubble to cost me my local newspaper, but that clearly is the way we are headed, especially if auto advertising dollars decline too.
It isn’t the bubble that is costing you the newspaper but technology.
The bubble prolonged their life to beyond its expected length because of RE ads. That’s over.
Note the Christian Science Monitor and other newspapers that are going “online only”.
Couldn’t happen to a nicer columnist.
That’s not just a Florida problem and it isn’t symptomatic of the bursting bubble. Newspapers everywhere are seeing declining circulation, declining ad revenue and declining relevance. They’re all circling the drain.
Yah, saw that on the news last night. Daniel Ruth, 36 years at the Trib, a fixture, or so we thought. Poof! He’s gone. Wonder what kind of package he got, if any. Oh, well, look for him on Rob Lorei’s show. Only one thing he wrote really stuck with me, was when he called Bush “Pistol Pete of the Pecos”.
I stopped taking the Tribune and the St. Pete Times about 20 years ago when I saw more and more “stories” that were pure propaganda pieces.
Almost all major print papers in the U.S. are leftist rags. I won’t read their opinions about what the truth is. They have very little fact-related reporting, and don’t provide much information, anyway.
We just finished the National Elections.
Did you find ANY paper that listed the past votes, legal opinions, and records of the candidates, so you could make an informed decision? I know you didn’t. Screw them.
This blog has made me realize that the future of “news” will be blogs devoted to one subject that draw the fastest and sharpests minds linking and commenting…
It’s the most democratic, efficient thing going.
Diogenes, I like your posts, but to say the Tampa Tribune is left-wing is wrong. The paper endorsed McCain, takes the GOP point of view on everything from Iraq to climate change, and at one point seriously considered dropping Doonesbury.
Ben,
This is an insult to the people of Ohio. They can still get $2. In Michigan, the governor (soon to be promoted) thought that a tax increase of 15% would help the economy.
“Mike Brooks, helped out at the yard sale before leaving for his job delivering pizzas, the only work he has been able to get in the past year. It is not enough to sustain the family of eight, which has had to drastically cut back since the days when Brooks made six figures as a construction manager”
Does anyone need anymore evidence that Northport, Lehigh Acres and Cape Coral was the centerpoint of ground zero???? Go to realturd dot bomb and see for yourself. Brand new shacks <$70k. I have no idea if they’re worth that. Proceed at your own risk.
Granted, Mr. Brooks is doing what he has to do to survive but what you had 3 years ago was a pizza delivery guy posing as a “construction manager”, not the other way around like the article would have you believe. Mike Brooks is employed in the very job he would have been performing if it weren’t for the historically unprecedented housing fraud.
This is powerfully deflationary.
Think of all the false demand that was created due to Brooks’ “fake salary” for the few years. Now multiply that by all the numbers all across the country.
“Mike Brooks, helped out at the yard sale before leaving for his job delivering pizzas, the only work he has been able to get in the past year.
I know an auto mechanic that works part time delivering pizzas, he tells me that business has fallen way off in the last month. At least in our area.
Jeez, North Port just can’t catch a break. It’s the second time around for boom and bust in that area. It’s sort of a godforsaken sprawl of palmetto scrub and houses between Sarasota and Ft. Myers. Not much business to speak of. That’s where they’ll be giving ‘em away, but who would want them? so, you got your dollar house. Now what?
My wife has started picking up pizzas to avoid the delivery fee and fuel surcharge (and tip).
I’m salaried, but about 20% of my income is bonus and other incentive pay. I just lost a fairly lucrative program for writing articles, lost about $5k per year. Since we want to keep our savings rate stable we cut back on expenses.
I’m an engineer, unemployment between jobs averages 1 year savings is not optional.
Picking up is standard during recessions.
Talk to NYC restaurant owners. Lot more picking up rather than delivery. The best restaurants at the cheaper end are having record business. The worst ones are getting crowbarred.
I know a guy who was laid off earlier this year from a “construction manager” job. He must have been raking it in at the time, as he has all the toys (except for the Harley).
Last year he was saying that he was “safe” because his employer built very high end homes and that the rich would not be affected by the downturn. Knowing that there was already a glut of high end homes in Larimer county I bit my tongue, knowing that his days were numbered.
Have the same thing with a mortgage broker friend..every month he was saying, “Its going to get better…its going to get better.”
Told him about the foreclosures going on..he replied, “Things like that don’t happen in my KIND(million dollar plus homes) community…
Well update..his kind of community has the most amount of foreclosures in the area, alot of spec homes going back to the bank and are being slashed by 50% in price..still can’t get sold!
Now…I haven’t heard from him! Guess he doesn’t want to hear..I told you so!
Friend in Glenwood Springs, Colorado, caters to the rich with a facial/custom organic makeup biz, was making enough to actually qualify and buy a 500k house (under the old rules), is now tanking fast and very worried.
From 6 figures to tips……man, talk about deflationary.
Here is the problem in FL..you can buy that property at $42K…but your insurance for the home and your property taxes will be done based on the COMPS in your area…so if that $42K foreclosure has comps around it at 200K..then your taxes will be based on 200K not what you paid for the house! Same for the insurance, which is expensive in Florida…it will be based on REPLACEMENT COST of the property from the comps in the area..
On a 42K home I would not buy insurance.
I would also be a nuisance at the property appraiser’s office.
Yup. Go bare and be a first class pain in the *ss of an overworked (after layoffs) government employee that has better things to do (looking at internet websites) than preparing to defend their appraisals. After a while, EVERYONE, gets tired. Just ask the IRS. They used to refuse to settle tax debts. How long ago was it that you saw a TV commercial about settling your tax debt? Certainly no further back than yesterday even if you don’t watch TV.
When I was growing up, my family lived out in the sticks. So, pizza delivery was not an option. Matter of fact, we seldom went out to eat pizza. It was that exotic.
So, no one is more surprised than I am when it comes to how ubiquitous pizza has become.
exeter,
I haven’t seen the guy’s resume ( but I suspect you’re right ) Perhaps he had ’some’ construction experience but I’ve never seen ‘that’ much of a career free fall, unless it was warranted.
It goes double for the mortgage broker crowd. We’re also left to wonder if “lending” ( or borrowing ) hasn’t been hit by the same disintermediation that travel agents and stockbrokers were?
I mean, through outfits like E-Loan and Lending Tree borrowers have had more of a direct hand in the process than ever before! Since anyone could ‘get’ the money it was really all just a matter of what ‘price’ you could get it at? That’s all I recall from 2000 to 2006, people talking about what their rate was.
I’ve seen that kind of fall in hi-tech, particularly after the dot.com meltdown. Lots of good software developers delivering pizzas, checking cash registers, etc. for a year or two..
“St. Louis broker John Mayfield summed up Realtors’ quandary during a session on keeping agents motivated. In this boom-to-bust market, agents gripe about the lack of business, while brokers lose money and consider closing offices. ‘We’ve got all this stuff running through our head, but we’ve got to sound excited,’ Mayfield said.”
And wasn’t it this sunny optimism that led the sheep through the gate of the slaughterhouse? When the REIC voodoo priests begin telling the truth instead of the same old lies is when they’ll establish a smidgen of credibility with me. IF I buy a shack, I will do everything possible to cut the REIC out of the transaction. These people need to abandon their phony optimism and assess just how they want to be a part of the new RE market reality.
‘Each decade, we have the same crisis that’s the worst crisis that we’ve had since the previous crisis,’ said Cannon, executive director of Integra Realty Resources in Miami.”
No Mike each decade we do NOT have the ’same’ crisis. It’s apparent you haven’t a clue just what this one entails. However… you will.
“However… you will.”
I have a banking industry friend of mine who estimates that 1 in 3 mortgages will go into foreclosure before this is all said and done. This is beyond subprime and alt-A lending. I would discount it if he was simply a teller. Unfortunately he sits on the board of one of Florida’s largest banks.
Does your friend have no faith whatever in the weekly announcements of new bailout measures (the latest due in 40 minutes or so, from Cash-Carry and company)?
wait wait!
The wealthy are still going to come to Sarasota Fl!
Just when everyone is desperate to see the economy rev up, a group of developers got approvals needed to start construction on an upscale mall that will generate jobs in the building industry — keeping architects, designers and construction workers busy for the next two years.
http://www.heraldtribune.com/article/20081104/ARTICLE/811040351/2055/NEWS?Title=More_luxury_ahead
Actually this would fill quite the void if we were only looking at a housing market problem. Unfortunately the whole economy is tanking and many consumers aren’t spending on anything, let alone luxury goods. Maybe by 2010 when this thing opens we’ll be in better shape. Taubman better hope so.
I always thought Sarasota was relatively short of shopping malls. The one on 41 a few blocks south of the hospital is quite small, the one way south on 41 by Palmer Ranch was like a funeral home last time we went, and the big one is Bradenton is overrun by, well, let’s just say the “unruly” younger set.
HA, HA! The “unruly” younger set. I have never been to that mall but have gone to other stores in the area. When I leave them I am so stressed out. I can’t imagine what the mall is like.
The idea that one needs a DBA to be Honorary President might be a clue that this evang doesn’t realize that no cargo-cult of foreign buyers is forthcoming, but blind faith is like that…
“Most of the speakers shared positive views and hopes for the economy, including DBA Honorary President Evangeline Gouletas, who encouraged the international audience to invest in South Florida real estate.”
I’m almost Dr. Bad Andy and I can tell you that a DBA doesn’t make you any more qualified to be Honorary President.
I was ABD once and let it all slip away…
I made the same good choice way back when, Losty…
Ahh, a comrade in lost credentials. It made my brain hurt (linguistics).
Add me to the list of ABDs. In my program, 2 out of 3 ended up as ABD — many after years of struggling to defend. Luckily, I quit right after comprehensives.
The Biscayne Times article, “Bear Market Meets Biscayne Corridor” is the BEST article I’ve ever read on the South Florida housing market.
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Great find Ben.
I sent them an email congratulating them on the article.
I could quote from it, but I would end up quoting the entire article.
This one is a must read for those looking to buy in that market at some point, or even thinking about it.
thx again Ben.
That article, essentially a dialogue with two local academics afraid to question the real estate development paradigm that has fed them, has a little too much cheerleading in it for me. One example: “On the upside, Miami is a unique place in that real estate doesn’t correlate with jobs or employment data. The assumption is that people from Europe and South America will come. So there’s a disconnect there that’s unusual for a metro area as large as this one.”
I think you missed a little of the sarcasm.
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But this is Miami, where the normal rules of real estate don’t necessarily apply. We wondered if there was anyone — anyone not currently trying to sell us a distressed condo — who could open for us a window into the near future of the communities along the Biscayne Corridor. This is, after all, where the gold rush became emblematic, as the glittering glass-and-steel towers jutted out of downtown’s scorched earth and began to march up the bay, leaving us with a half-finished and unruly gentrification project now uncertain in its momentum.
-and-
“In the big picture, we are in a recessionary period,” Hardin admits, sipping coffee at the Upper Eastside’s Starbucks. (I cashed out what was left of my 401k to join him.)
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I’ve read a ton of stuff in the last years, from St Louis Fed papers to FT, IHT to this blog. And, more importantly, I’ve seen a ton of other stuff.
This is a great article.
I think you missed the sarcasm.
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“In the big picture, we are in a recessionary period,” Hardin admits, sipping coffee at the Upper Eastside’s Starbucks. (I cashed out what was left of my 401k to join him.)
and
But this is Miami, where the normal rules of real estate don’t necessarily apply. We wondered if there was anyone — anyone not currently trying to sell us a distressed condo — who could open for us a window into the near future of the communities along the Biscayne Corridor. This is, after all, where the gold rush became emblematic, as the glittering glass-and-steel towers jutted out of downtown’s scorched earth and began to march up the bay, leaving us with a half-finished and unruly gentrification project now uncertain in its momentum.
I eventually will be buying in this market. (South Fl, Miami-Dade)
This is the best article I’ve ever seen on the Brickell-Biscayne corridor.
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Condo Conundrum
Condos are a problem, no doubt, because that market was driven to a large degree by speculation. “That’s still the $64,000 question,” Hardin quips. “Who will be the end-user in the condo market?” (Of course, the joke, courtesy of the Daily Show, is that “thanks to Lehman Brothers, Morgan Stanley, AIG, Freddie Mac, and Fannie Mae, the $64,000 question is now worth $1,324.86.”)
The predicament is a vast oversupply. Heuson says it took about seven years for the 1980s condo glut to be absorbed. She figures it will take less time to absorb today because economic cycles move faster now. People are looking for the market “to become something other than vulture-condo buys,” says Heuson. “With the condo boom, there were so many nearly identical units that they defied the usual logic in real estate, that location [makes a property] unique. People were trying to sell condos as a commodity.”
On the plus side, falling condo prices will attract buyers at a certain point, just as undervalued stocks attract investors. “That will add some liquidity, which is good, and pricing transparency as well,” Heuson notes.
Hardin says many Miami condos are a good investment long term because the infrastructure for urban infill is there. Eventually people will come. But in the short term, the savvy buyer has to weigh whether it’s better to invest in a fire-sale unit at one of the big new buildings, or pay a little more in an established building.
“The risk in some of these large buildings is that they aren’t all sold, or you have a number of units in foreclosure and they aren’t paying their assessments,” he says. “So you may get a good deal but you’re buying into a management problem. Some of what we built is too large. I think there’s more of a market for smaller buildings, say 8- to 10-story buildings, rather than 40- or 50-story buildings.”
He sees tough times for a mega project like Midtown Miami because it’s too big, too isolated, and a little too far from the Boulevard and Biscayne Bay to compete in this market. That’s why much of the sales effort there has turned to the rental market. “It’s a great project,” he says. “The question is the scale of it. Can you draw in literally thousands of people to that area? In ten years, it will happen. The question is what it will look like between now and then.”
“The infrastructure for urban infill” - that’s a good one!
The only infrastructure around the north downtown Miami condo boom is bums, crackheads, and ramps to gridlocked highways.
John Cicero should be eternally grateful that he sold his stucco Valrico box and its granite countertops and “executive entertainment area” for $380,000 and got out while he could. Unless I have the wrong couple, according to the county property appraiser’s website, Mr. Cicero and his wife also own an almost 4,000 square foot house in Lutz, as well as a condo in the Westchase area that they purchased at the absolute peak of the market in 2005. They are nothing but real estate speculators and deserve no sympathy whatsoever.
Also from the AP story is this hilarious tidbit about appraisers having “come-to-Jesus” conversations with homeowners:
“One homeowner Herndon did an appraisal for refused to lower her listing price for the third time, insisting that such features like a raised roof and more space between two windows in an upstairs bonus room set her house apart from others just like it.
The homeowner originally asked the builder to move the windows another foot apart and raise the roof by 12 inches so the wall could fit her big-screen television. She also spent $15,000 in extra landscaping and exterior lighting, and $2,900 on designer fans, Herndon said.
‘You could have put $1,000 worth of fans in the house and blown just as much air,” Herndon said. “Owners are very concerned about how much they paid for particular changes, but buyers out there don’t value them.’”
Please, someone, dig up that pithy Wall Street Journal quote again about South Florida’s economic model, if you could.
Here you go, Quirk:
“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.’”
New York Times, March 25, 2005
The first line from that article:
“Real estate-crazed Americans have started behaving in ways that eerily recall the stock market obsession of the late 1990’s.”
And later:
“Nobody can know whether the housing boom of the last decade will end as the dot-com frenzy did. But the parallels are raising alarms among many economists, even those who acknowledge that there are important differences between homes and stocks that significantly reduce the chances of another meltdown.”
And:
“Adding to the parallels between stocks and housing, some of the doomsayers from the 1990’s have returned with new warnings.”
No one could have seen this coming, the masters of the universe keep saying. Wrong. Some of us couldn’t imagine how it could have happened to start with.
I hope Shiller is feeling some vindication. Sometime in 2005(?), a news station had a special debate-like show on housing, with a panel of experts and a studio audience. Shiller was trying to warn people about the bubble, and the rest of the panel (I think one of them was Lawrence Yun) were laughing him off the set. Who’s laughing now?
I am guessing it was David Lereah, not Yun. You remember David, don’t you?
I think that was on CNBC. Self delusions were very strong that day.
I remember that show. It angered me so and really helped me get out of my home and rent. I felt bad for Shiller. He was outnumbered by builders and other so called experts. Even the CNBC host’s were all bubbly. Gee, what a surprise.
David Leliar’s great qoute, “you can’t live in a stock” was the light bulb moment that things aren’t right. Thanks to that show I found this website! Yahoo search of “housing bubble” the next day.
A quote from Ron made it into the local news back in September of this year.
“There’s no question people are getting values today better than they could have dreamed of getting two years ago,” said Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors Inc. in Miami.
He said sellers have finally come to terms with the market and are pricing to attract serious buyers.
If anyone would like to remind Ron of his 2005 quote, here’s his email address, courtesy of the EWM web site.
shuffield@ewm.com
done.
thx Bill
Its ridiculous that homebuilders are still clinging to the idea that by saving home values, it will save the economy. Many in Washington are saying the same thing.
The housing crash is clearly in the second phase, which is a general overall recession. I know MANY people who are losing, or have lost their jobs. My company laid off 50% of the staff. My friend’s Dad lost his job after being there for 30+ years. My Wife’s company is laying off people. In this environment, who cares about houses? Seriously.
We’ve had to change our plans. We have enough to buy a home in anywhere except the classic bubble states like CA and NY. But the job market is now worsening in our field. So either we will move, buy small, and get Joe jobs, or we will tough it out and save some more until the economy improves. Could be years before that happens.
Bottom line- housing has even more reasons to crash, and it will continue to do so.
We’ve shifted plans ourselves. I have enough cash to write a check for a house just about anywhere but the forecast is a bit hazy in terms of work. After the current project I may just hitch up the 5th wheel and haul my ass to the highest paying project I can find. There is much talk about an FDR-esque works program focused on bridge/highway and utilities and I plan to be a part of it. Heavy construction and big contracts require detailed babysitting.
“They built the stucco home four years ago for $380,000 and poured more than $80,000 into it, putting in hardwood floors, granite countertops, ceiling fans, blinds, drapes and a built-in surround-sound stereo system. They also expanded the deck by the pool, turning it into what Cicero called an ‘executive entertainment area.’”
“‘You think you have this wonderful home and people will want to buy it,’ he said, ‘but you’re wrong.’”
You can get any kind of house you want — you can even get stucco!
–Groucho Marx–
This is a line I have not quoted in over a year, from the first Marx Brothers movie, The Cocoanuts. The movie came out in 1929, on the heels of the Florida land market bust, at the onset of the Great Depression. Groucho played a real estate hawker who tried to convince greater fools to buy homes in a falling price environment (akin to the situation at hand today). Though he saw the humor in greater fools ‘getting stucco’ by purchasing homes during a period of severe home price deflation, that did not stop him from soon losing his personal fortune on Wall Street by purchasing overpriced stocks.
Try not to catch yerself a falling knife, in any kind of overpriced asset.
During the Great Depression, my grandfather worked as a securities analyst. His office was in lower Manhattan, just a few steps away from The Street.
Grandpa had a couple of things going for him, the first being that he really knew how to pick women. (Grandma came from a wealthy family.) The second thing was his ability to pick stocks. During the Depression, he did well by investing in railroads, which, despite the dark times, continued running.
Railroads also provided steady employment during those years. My mother can attest to that. Her dad was a railroad detective. Which means that one grandfather threw the bums off the trains that the other grandfather invested in.
My (maternal) grandfather was not wealthy, but he did buy stocks right through the Great Depression, which helped my grandmother survive to the age of 97 without running out of money. He viewed the new Social Security plan as folly, as he believed it would undermine incentives for private saving and self reliance.
My great-grandmother had a simliar story. My great-grandfather was liquid enough to buy stocks during the Great Depression, and she ended up very comfortable into her late nineties. I believe some of the stocks he bought during that period ended up being household names/S&P500 companies.
Saw that in PBS last night on the 1929 stock crash.
That’s fantastic, GS—-thanks for the reference. I always liked your catchy GS handle, but I never realized that it was a Marx tribute. Nice. I’ll have to watch that movie now!
I could see living on Brickell Ave or Key Biscayne. However downtown Miami is has real problem with bums and crackheads. The banks make a show of giving money to the homeless shelters. They look like good guys while it destroys the desirability of the area so they can buy it up cheap for redevelopment. The homeless shelters then get moved a few more blocks away and its starts all over again.
The NRA capitulating to the negative? Never thought I’d read that.
I guess some of those South Florida speculators will have to return to their regular income source: dealing in illegal drugs and fencing stolen goods.
Make that ‘NAR’ not ‘NRA’. Acronym confusion? Better check if I took the right meds this morning (~:
“There was National Association of Realtors Chief Economist Lawrence Yun saying 2008 will be the worst year for home prices since the Great Depression.
Then on the other hand, the NAR puts out advertisments that say Now is not a good time to buy, it is a great time to buy. All along the NAR has known that property values were declining at the sametime the NAR was putting out advertisments to fool the public into buying.
So much for the truth in advertising!
Yes, still see those NAR ads on TV saying it is a great time to buy and on average home prices double every 10 years.
Bunch of lying sacks of sheet.
NAR doublespeak? Co-mingling today’s realities with yesterday’s BS - how very Orwellian of them.
“There was National Association of Realtors Chief Economist Lawrence Yun saying 2008 will be the worst year for home prices since the Great Depression.”
He aint seen nuthin’ yet. The layoffs are just getting started in earnest.
Norman reduces by $17.5 million asking price of Jupiter Island home
Click-2-Listen
By NADIA VANDERHOOF
TCPalm.com
Wednesday, November 12, 2008
JUPITER ISLAND — The housing slump is affecting even the most luxurious properties on the Treasure Coast.
Professional golfer Greg Norman has slashed the price of his famous barrier-island estate that gained worldwide fame when then-President Bill Clinton injured his knee there in 1997.
these people all make me ill, the goddamn realtors — why should the media follow their childish demand to capitalize the word — and the economically retarded sheep who signed up for completely unaffordable mortgages?
Hey Ben, nice work you do….keep on keepin’ on.