The Bubble Mentality In Florida
Florida posters discussed what part of the state would be the best place to see the housing bubble. “Miami or Ft. Myers? Largest inverntory and steepest declines.”
A reply, “Palm Beach (island) isn’t really a condo haven. West Palm Beach is where the condos got out of control, they probably have 10X units for the ‘real’ demand for the product. Even worse are some of the condos that were built OUT of downtown! There’s less then no demand for those units; they will never sell (tear them down, or convert to section 8). WPB is good (and if we all met up there, we could go see my favorite buildings, the million dollar condos in the mall parking lot, and the condos that require a bulletproof vest to enter).”
An observation from New York. “The only reason I’m interested in Palm Beach is co-workers keep buying condos there… Although some have invested in Miami, and some in other parts of Florida.”
“Personally, I’d never buy a condo in Florida. A house, yes (a cheap one). A condo, no.”
The Sun Sentinel. “Sales of existing homes rose 47 percent in Broward County in March, to 680 from 463 a year ago, the Florida Association of Realtors said Thursday. The median price plunged 30 percent, to $219,500 from $311,400 last year. In Palm Beach County, sales rose 20 percent, to 685 from 572 a year ago. The median price plunged 29 percent, to $228,100 from $320,200 last year.”
“Broward County has 28,898 homes, townhouses and condos for sale, down 19 percent from the end of November, according to a Bal Harbour-based real estate consulting firm. Palm Beach County has 26,808 properties, a 10 percent dip.”
“Lewis Lopater recently bought on a three-bedroom house in Palm Beach Gardens. He paid $174,000 for a home that was listed last summer for $229,900. Lopater and his wife, Dawn, have a monthly mortgage payment of about $1,400, only $200 more than they paid in rent.”
“‘It’s well worth it to have a fenced-in back yard and a piece of the pie, so to speak,’ said Lopater, 48, a father of two and a food service employee at Boca Raton Community Hospital. ‘I really lucked out.’”
The Palm Beach Post. “Myles Minns, head of Continental Properties, was reluctant to say the market finally has turned. ‘We had a great March, but we’re down 20 percent from March to April,’ Minns said. ‘If I could have three really good months in a row, I could say, ‘Yeah, we’re there.’ We’re still not there.’”
“Minns worries that lenders, who paused foreclosure proceedings late last year, are poised to flood the market with foreclosed homes. ‘We’re going to see hundreds if not a few thousand foreclosures hitting the market instantaneously in May,’ Minns said.”
“‘You’re seeing increased volume, but it’s coming at the expense of price,’ said Mike Larson of Weiss Research in Jupiter. As chaotic as the housing correction is, it is proceeding logically from the irrational prices of three years ago, he said.”
“‘The message there is that markets work,’ Larson said. ‘The reality is that falling home prices are what’s going to get us out of this, as painful as that is for people who are upside down on their loans.’”
The News Chief. “Sales of existing homes in Polk County were up again in March, making it six months out of the past seven that gains have been shown in year-to-year comparisons, according to the Florida Association of Realtors. ‘These sales (in Polk County) are a lot of first-time home buyers and a lot of FHA (Federal Housing Administration) loans that had gone away for a while, as in not popular, but now they are,’ said Sarah Armstrong of ERA Merline Parker Realty of Winter Haven. ‘It is because it is less money down - only 3.5 percent down on an FHA loan than on a conventional bank loan. They are not as strict as they used to be.’”
“Tony Fridovich, the owner-broker of Remax Paramount Properties in Winter Haven, tracks home sales and reports the statistics to the federal government every month. He said that short sales - sales in which the agreed-upon price for real estate is less than balance owed to a bank or mortgage company - and foreclosures are forcing everyone who is not a foreclosure situation to drop their home prices to compete.”
“‘In the next couple of months, we are going to see an increase in the foreclosures, and some of the lenders we represent say that that is coming,’ Fridovich said. ‘They have held off and held off due to the administration (of President Barack Obama), but the floodgates are going to open.’”
The Orlando Sentinel. “The Orlando area experienced one of the sharpest declines in single-family home prices during March for metro areas across the state. Four-county Metro Orlando’s median price for single-family existing-home sales dropped by about a third — from $222,600 in March 2008 to $151,600 last month. Only four other Florida metro areas had more dramatic declines: Fort Pierce-Port St. Lucie, 58 percent; Miami and Punta Gorda, each 39 percent; and Sarasota-Bradenton, 37 percent.”
“Orlando’s median condominium price dropped more than the median in any Florida metro area, plummeting 57 percent from $130,800 a year ago to $55,700 in March, according to the statewide Realtors group. The number of condo units sold locally also was down, to 104 compared with 364 a year ago.”
“University of Central Florida economics professor Sean Snaith said he didn’t expect values to snap back quickly because many homeowners will try to sell once the prices begin to revive. ‘You need to see these price declines start to level off before you could see a return of that market,’ Snaith said. ‘Right now, we’re clearing some of the casualties from the battlefield. . . . That’s why we’re seeing some of these pretty gaudy prices.’”
The Herald Tribune. “The number of single-family homes for sale in Manatee, Sarasota and Charlotte counties has fallen to levels not seen since December 2005 — the month that arguably signaled the end of the housing boom. Some economists have their own doubts about whether the housing market has hit bottom.”
“‘I don’t think this is the time to start stomping around going, ‘Ding-dong, the wicked witch is dead,’ and the foreclosure problem is over,’ said Sean Snaith, director of the University of Central Florida’s Institute for Economic Competitiveness. ‘Until I see prices level out, I’m not going to look at inventory levels to say we’re on the other side of the crisis.’”
“Jack McCabe, a Deerfield Beach-based consultant who was one of the first market watchers to warn of an impending housing bust…attributes the fall in inventory to: Auctions, short sales and foreclosure sales that have attracted first-time home buyers taking advantage of the government’s $8,000 home-buying tax incentive. ‘The problem is, with the amount of foreclosures coming onto the market, prices will stay at the bottom,’ said McCabe.”
“The economy, tight credit and homeowners struggling to pay their bills drove delinquent taxes in Manatee and Sarasota counties to a record $102 million, as the payment deadline came and went earlier this month. Similar increases in delinquent taxes are being reported across Florida. In Sarasota County, the biggest nonpayers were developers.”
“Working out a deal with the bank is the biggest problem facing many developers, said Lee Wetherington, whose development company’s land is now in the hands of a trustee liquidating assets to pay bills. ‘They may be holding back paying taxes right now,’ Wetherington said of the building industry. ‘I’m guessing their thinking is ‘Why pay the taxes if they’re still negotiating with the banks?’”
From TC Palm. “Organizers for Friday and Saturday’s job fair to recruit workers for Florida Power & Light Co.’s Solar Plant in this rural community expected to receive 3,000 applications over two days. They had no idea that number would be eclipsed before lunch Friday morning. At one point, cars were backed up from the park west to State Road 710 in Indiantown, a distance of two miles, and for several miles east on Citrus Boulevard, deputies said.”
“‘I’ve had people already from North Carolina, New York, Alabama and Maine through here,’ said Florian Mandiche, Workforce Solutions veterans’ representative of Martin County.”
“Tom Bourgault, a Rhode Island carpenter with 40 years experience, said he was visiting Florida to care for his ailing father. ‘I could go back to Rhode Island,’ Bourgault said. ‘But there’s no work there.’”
“Mike Twiddy of Stuart was upbeat and on hand to offer a variety of skills. A veteran who has a Class A commercial driver’s license, heavy equipment experience and a background in aircraft maintenance, Twiddy said he is working temporary jobs ‘and doing about anything you can to survive.’ ‘I’ve got a lot of experience,’ Twiddy said. ‘But right now it doesn’t seem to do a lot of good. We’re all walking wounded.’”
The Gainesville Sun. “After leaving a job fair that featured far fewer employers than in recent years, University of Florida student Ashley Kohler bluntly summed up the frustration of soon-to-be graduates. ‘I want to put it on a T-shirt: It sucks to graduate right now,’ she said.”
“Florida’s unemployment rate is approaching 10 percent and the situation is nearly as dismal elsewhere. ‘This is not your standard recession,’ said Wayne Wallace, director of UF’s Career Resource Center. ‘It has seemingly crossed across all sectors of employment and geographic regions of the U.S.’”
The St Petersburg Times. “A prominent Atlanta developer headed for bankruptcy court this week, casting uncertainty over two high-end Pinellas condo projects. Water’s Edge, a $100 million high-rise in downtown Clearwater, sits nearly empty. Only 10 of 153 units have sold, a hefty drag on Clearwater’s downtown market.”
“By January 2008, Opus had contracts and down payments for 109 of the 153 units. Then disaster: A legal glitch voided all contracts. With the condo market slumping, buyers took their deposits and walked. Since Water’s Edge opened in September, only 10 condos have sold; the average unit costs $750,000.”
“Opus intends to leave the condo market. ‘It’ll be like every other property the bank takes over,’ said Clearwater developer Guy Bonneville. ‘They’ll auction it off, sell it for what they can get, and get it off their books.’”
“If that happens, it could shake up Clearwater’s condo market. A neighboring high-rise, Station Square, is also largely empty and is putting units up for rent.In St. Petersburg, Opus South has sold all but 19 of 400 Beach Drive’s 93 units. The most recent sale was last month, when a 3,306-square-foot condo went for $1.2 million. In June, a same-sized unit sold for $1.345 million.”
“A development boom is brewing under the radar of Floridians distracted by deteriorating real estate values and record foreclosures. The state is processing an unprecedented number of proposals for new homes and commercial development. If approved, these projects could pump more than 600,000 rooftops onto a market suffering from a surplus of product and slowdown in population growth.”
“Mike McDaniel, a planner at the state’s Department of Community Affairs for 22 years, finds the surge stunning. ‘Instinctively, most people would think there would be a slowdown,’ he said. ‘And it may be true at the other end, where the developers apply for the permit (to build). But there’s been no letup here. It’s a gold rush.’”
“McDaniel said landowners, eager to turn dirt into money, are behind the push for a record number of new planned communities. Regardless of whether these megaprojects become reality, the owners stand to win. ‘They want to get the land use change, strike it rich, then move off to where there are not a lot of people,’ he said.”
“But where will that leave Florida? McDaniel points to a satellite map of Flagler and St. Johns counties that shows plans for four projects totaling more than 20,000 homes and 7-million square feet of nonresidential space. ‘My jaw dropped when I saw this,’ he said. ‘Can there possibly be this much need? And is this area really suitable for this intensity of development?’”
“The planners at DCA see themselves as gatekeepers of the state’s growth management laws. Now there’s a sense inside the department that the sentries are being stormed at the gate. Florida’s legislators, eager to jump-start the economy, have proposed everything from eliminating the oversight agency to carving out exemptions for bigger and bigger sections of the state.”
“Another factor behind the deluge of requests for land use changes? Developers’ fear that the Florida Hometown Democracy amendment will pass in 2010. It would give local residents, not just municipal or county officials, the right to vote on land use changes in their neighborhoods. ‘We hear from large landowners all the time that they just want to get their property entitled before Hometown Democracy goes into effect,’ McDaniel said. ‘They say, ‘We might not do anything with this land for 50 years, but we want these entitlements now!’”
“In Gainesville, veteran economist David Denslow said he never considered the possibility that, in light of the current downturn, a glut of new projects would be under review at the DCA. When the department recently pulled together data on all major developments pending and approved since 2007, the totals were staggering: projects covering 410,126 acres, with a potential for 630,965 new homes and 479.5 million square feet of nonresidential space.”
“‘This really catches me by surprise,’ said Denslow, who is with the University of Florida’s Bureau of Economic and Business Research. ‘I’ll have to revise my thinking.’”
“Denslow fears that the behind-the-scenes gold rush will doom Florida to relive its past. His assessment: When migration to Florida picks up again, newcomers will find affordable housing aplenty. Existing Florida homeowners, on the other hand, can kiss goodbye any dreams of cashing out big on their homes.”
“‘In the 1980s, Florida had a huge increase in population but house prices, adjusted for inflation, didn’t rise at all because the state and counties had been very friendly to development,’ Denslow said. ‘Now nobody in their right mind, even an amateur flipper, could look and say that (housing) prices are going to double in the next 10 years. Prices just won’t go up all that much when you’ve got that number of projects in the pipeline.’”
“McDaniel said that if Pasco stopped approving new housing today, the county could accommodate new residents through 2035 — and still have more than 90,000 empty homes. But McDaniel has learned that open spaces in Florida, whether they’re in cattle or crops, are often treated as little more than a placeholder.”
“‘Many people seem to believe that agriculture is temporary; that someday the land will be developed for housing,’ he said, saying that kind of thinking led to the quick-flip behavior fueling the last real estate boom. ‘A lot of that is the bubble mentality.’”
The Northwest Florida Daily News. “Steve Riggs has decided to stop development of Heritage Plantation, a 1,000-acre, upscale residential and golf development 10 miles north of Crestview. Estimating his loss at $6.5 million, Riggs has turned the entire project over to BB&T, the bank that is his creditor. ‘It’s not my first failure and it probably won’t be my last,’ Riggs said. ‘I had budgeted for slow, but not for dead in the water on real estate sales.’”
“Plans called for as many as 780 upscale homes in a gated community, with a ‘buffer’ of at least 25 feet from the lot lines. Homes ranged from 1,727 square feet starting at $359,000 to 3,851 square feet starting at $693,400. But of the 297 sites in the first two phases, only 57 have been sold and four have been built.”
“‘I would have been OK with 20 to 25 lots a year,’ Riggs said. ‘But I think we sold one in all of 2008. Someone is going to make a lot of money on this project. ‘I had hoped it was going to be me, but apparently it’s going to be the next guy.’”
‘Lewis Lopater recently bought on a three-bedroom house in Palm Beach Gardens. He paid $174,000 for a home that was listed last summer for $229,900. Lopater and his wife, Dawn, have a monthly mortgage payment of about $1,400, only $200 more than they paid in rent. ‘It’s well worth it to have a fenced-in back yard and a piece of the pie, so to speak,’ said Lopater, 48, a father of two and a food service employee at Boca Raton Community Hospital. ‘I really lucked out.’
OK, I’m not looking down on the food industry; I’ve waited tables and worked in kitchens in my life. But the price of his exact house has dropped $50k in less than a year, and he jumps in for a ‘piece of the pie?’
Given the economy in Florida, IMO it doesn’t really matter what the rent comparison is; this family could be one or two paychecks from the edge.
‘When the department recently pulled together data on all major developments pending and approved since 2007, the totals were staggering: projects covering 410,126 acres, with a potential for 630,965 new homes’
I’ve never even been to Florida, but it has struck me as a place ruled by developers.
Did Lopater factor in Insurance, Property Tax, Repairs and maintenance to his new purchase? Don’t renters usually get at least one freebie like cable or water? Knife-catchers like this guy will supply the third or fourth wave of foreclosures in years to come. The second big wave is about to kick off any time now. Stay tuned…
Renters get free water, probably by law. In Florida, the Water Wars will come soon.
Was posting during the winter about some Florida Flippers I had financed (Oct 08 to Mar 09). Although they (and not I) ultimately lost a little money, they are itching to do it again — this time on two duplexes (four units). They showed me their business plan, which assumes no vacancies, no maintenance costs, and no decrease in rents over the next seven years. If I lend them 80% of the money at 9% interest, I will be playing it a little near the edge, as I do not want two duplexes for my personal use. They expect to make big money when they sell out in seven years. In my opinion, the question is, whether the 15-year amortization will go fast enough to keep them Never Underwater…while they pay the tenants’ water bills!
No maintenance cost, no vacancies, no rent decline. How about increased taxes and insurance? Is this Florida or la la land? Water bills will be the least of their problems.
“OK, I’m not looking down on the food industry; I’ve waited tables and worked in kitchens in my life. But the price of his exact house has dropped $50k in less than a year, and he jumps in for a ‘piece of the pie?’”
Ben, despite all of your work, and even some mainstream coverage, people still believe owning a home is the only way to “make it.”
We still represent a very small portion of the population.
Its a house on a street named applecrest
previous sale 1975 $35,660 (about 140K in todays $)
year built 1968
under a/c 1268
total 1872
sold as a rep deed for 173K in April 09
guess estimate of land value in the area (some familiarity) 50-70K
paid per square foot total = $50-$65
It’s not what I would have paid for it, on the other hand the $1400 has to include PITI + escrow for taxes and insurance.
Lewis got hosed wrong side of the canal, not a good neighborhood. Should be $ 70,000 upside down by the end of the summer. Get to the hospital Lewis and get those hands stitched up.
Yeah, our PITI for a similar price point works out to almost $200/month less. If the $1400 is for mortgage alone they got hosed.
“…it has struck me as a place ruled by developers.”
That it is.
As for these buyers, it’s a shame that they didn’t do more homework on rents, which have been falling off a cliff for at least six months now. In one year, my own rent has dropped from 80 cents a foot to 50 cents. Many, many owners of second-homes in Florida are putting them up for rent, to help with cash flow - houses as well as the more ubiquitous condos.
Since early 2005, when I figured that the bubble couldn’t last forever and we cashed out, I have told anyone who will listen and over time that has been dozens of people. To my knowledge, only one has taken my advice (either to sell at the top and rent, or to continue renting and not buy).
So while the average American apparently has lost 40% of their net worth since the bubble peak, we who have paid close attention to all the contributions and views on Ben’s blog and good news sites, should have lost not much at all. I exclude any comment relative to those many posters here who trade stocks, because I don’t and I have no idea if they’ve made or lost money at it, net.
Hmm, yes, I had no RE and no stocks, but (sob) I lent big bucks to the Republic of Iceland. Sorry to keep repeating myself.
And I loaned medium-sized bucks to Iceland because you were making money on it and hadn’t lost anything back in the day.
At least I got to offset the gains made from shorts, right?
NOT blaming you, as I should have known it was “too good to be true.”
Lewis got hosed ! This is not a great neighborhood, I would expect Lewis to be seventy grand upside down by the end of this summer. Here are some other listings in the same hood right now.
9372 Birmingham 3bed 2 bath $109,000
9491 Birmingham 3 bed 2 bath $109,900
9130 Keating 3 bed 2 bath $124,999
Get to the hospital Lewis and get those hands stitched up.
I know approximately where the place is;
It’s between Military trl, and the I-95 just north of North Lake Blvd..
Mostly older cracker box style houses, 30-40 yrs old….
Palm Beach Gardens area, adjacent to Riviera Beach [where you would NOT want to live]…
I guess the ONLY thing positive you could say about it, would be, it gives him fast access to I-95, so he can drive 45 minutes to his Boca hospital job….
Most certainly he would NOT be able to afford a place in Boca
“The Bubble Mentality In Florida”
In the early days of the HBB, I used to go on about the similarity between the recent experience in the Florida housing market and the 1920s Florida Land Boom. Groucho Marks captured this very well in an often-cited passage from the movie “The Cocoanuts”:
Groucho : You can have any kind of a home you want. You can even get stucco. Oh, how you can get stucco.
Comment: Years after I posted under the GetStucco handle, and after myriad FBs financially doomed themselves by catching falling knives in a declining-price real estate market, I have to say that I see little evidence that any lessons have been learned. In fact, it seems as though our top economic leaders (especially at the Fed) have adopted policies to encourage new housing market entrants to catch themselves falling knives.
Please, professor.
Don’t criticize the FED. They just want to help “stimulate” the economy. Really. All we need is more lending to more borrowers who can probably pay back the loan over the next 50 to 60 years, maybe, and that will create new demand for all kinds of stuff people don’t need or probably don’t even want.
That’s what America needs. Buy more~!! Save the economy!!! Remember: It’s a consumer economy now.
We need more consumers. God Save the Fed. Printers of money. Lenders to the wealthy and poor alike. Let us all drown is a sea of new money……………………glug, glug, glug
Hair-of-the-dog hangover cures are one thing, but how about taking a drunkard and throwing him into a swimming pull filled to the brim with Jack Daniels to cure him? This kind of takes the hair-of-the-dog concept to an entirely different level, don’t you think?
Good analogy, professor.
It’s gone from “taking away the punchbowl” to filling the pool with booze. Perhaps, looking at the numbers in TRILLIONS, you are being a bit too conservative, hummm??
Should I have called the Bernanke money wave a booze tsunami, or is that pushing the metaphor too far?
Let us all drown is a sea of new money…
No, no, diogenes, more like drowning in the sea of love:
Ive been down one time
Ive been down two times
But now Im drowning, drowning in the sea of love
Let me tell ya all about it
Ive been out here so very long, Ive lost all my direction
Baby when you came my way I thought Id found my protection
But a strong wind came into my life, surely took me by surprise
& I cant seem to control these tears thats falling from my eyes
Listen to me
Baby I depended on you, for a love & affection
But now you gone and deserted me, cant you see that Im in desperation
Im in the middle of a bad love storm, ew yeah I just cant let it boy I
Looked around and all I could see, was water coming over me
All I do is cry, all I do is walk around and cry
but right now Im drowning, oh Im drowning in the sea of love
But thats alright, I dont mind drowning for your love
Thats alright baby, hear me when I say its alright
You got the kind of love that make me feel alright
You got the kind of love baby that make me cry all night long
You got the kind of love baby make me do things I dont wanna do
And its alright
-Joe Simon
Groucho : You can have any kind of a home you want. You can even get stucco. Oh, how you can get stucco.
GetStucco - I must be the last person to get it.
Just heard that the younger generation in Toronto - 35 year olds - are looking to buy $800,000 homes. eight hundred thousand! You gotta be kidding.
Here is another gem from “The Cocoanuts” that I somehow missed before. I really have to get myself a copy of this movie and watch it soon.
Anyhoo, this timeless quote apparently pertains to many areas rife with vacant homes today.
Groucho : Why, it’s the most exclusive residential district in Florida. Nobody lives there.
A few years ago at the height of the mania here in FL I had an idea that a devoloper could build Barbie-sized dollhouse condo units to make maximum use of the available lot he had just purchased at an inflated bubble price. The purpose of owning a ’scale-replica unit would be to flip it to the next flipper and the size would be irrelavent because nobody would ever live in the condos anyway. This was a joke of mine, but I bet it could have really happened at one time. That is how crazy things really were around here in coastal FL.
Florida housing and especially condos has always been a racket but fresh meat was always available and people forget. Normally the RE people and the locals won’t or don’t warn the newbies bcause that doesn’t pay.
Just before the bust in the 80’s I listened to a local condo developer at a well-heeled private party in Orlando. Everyone was a little loaded.
He said its just like the Wild West. You just load the shotgun with a little Gold, fire at the walls and salt the mine. Except down here we yell “Eureka, I’ve discovered Pre-Construction Condo’s” instead of gold.
“Us local boys aren’t usually the ones that go broke and we are seldom left holding the bag. That’s a problem for banks and ‘tourists’”
He wasn’t kidding either.
I do not live far from downtown Clearwater, and Water’s Edge is truly a spectacle. At night it’s like a huge coffin. It’s right by the library, which is amazing, and always empty.
Click the link and check out the photo.
Muggy,
perhaps you have read my posts in the past concerning Hyatt’s Aqualea that’s just finishing up right in the middle of Clearwater Beach. LUXURY hotel/condos, right here in beautiful working man’s capitol.
The City vacated the original right-of-way to allow them to push their project closest to the beach in the area where there was originally parking. This is the govt/business model at its finest.
It nearly bankrupted most of the businesses only the adjoining roadway, since their project cut off access.
the city apparently got some money for re-working the beach-walk, which i admit is an improvement.
However, the benefactor of all the modifications is now the LAST to complete their work.
Personally, I find it sickening to see special privileges granted to big money corporations at the expense of the small business owner and taxpayers. I HOPE the project fails and then gets converted to working-class hotel rooms for families.
Is this the project for which they tore down that great classic old hotel? I really hated it when that happened.
No.
That is the Sea Pearl.
This is Central beach area South of the Pier.
“Click the link and check out the photo.”
Link?
BTW, Northwest FL is the new South Florida with all the fraud and speculation.
It will also become the “new” ghetto as well..
Broward may cut 900 teachers:
http://www.sun-sentinel.com/news/local/breakingnews/sfl-042409-broward-teacher-surplus,0,4434901.story
Have quite few teachers in my area who sold during the boom and moved..saw it coming…expect FL to reach 15% unemployment…which I suspect is really around 12% now..
“Tom Bourgault, a Rhode Island carpenter with 40 years experience, said he was visiting Florida to care for his ailing father. ‘I could go back to Rhode Island,’ Bourgault said. ‘But there’s no work there.’”
I probably shouldn’t mention this, but it IS possible to get a job in this part of Florida. It may not be what you want to do, and it may not pay a whole lot, but there IS work, still. And this guy knows that. He may not get carpentry work, then again, he may, you never know. I think he’s probably right when he says his chances are better in Florida than RI.
And that’s what Florida used to be all about. Wages were low. But a lot of housing was priced pretty low, too. And if you lost one crappy, low paying job, you could always get another and do ok if you kept your cost of living low, which used to be possible. I have hopes that we will return to that.
You are so right about that…housing affordability was the key to Florida’s economy…Seniors 55 and over could buy condos for $25K, with low HOA’s and starter homes were 60K…that is very evident for most of the country that is not suffering as badly as Florida. For many of those areas owning a house is not a big deal as the cost of housing is affordable and comparable with wages.
“that is very evident for most of the country that is not suffering as badly as Florida.”
I don’t think Florida is suffering as much as the media would have us think. Yes, in terms of the foreclosures and declines in housing prices, but I don’t consider that suffering. I welcome it. In terms of work, however, there’s work to be had if you look for it.
I’m not so sure it is silly to buy a house in the face of job insecurity. If you miss a few rent checks, the eviction process is fast compared with missing mortgage payments. So, if it is a nonrecourse state, you do not want to move for work, and you make little or no downpayment, why not buy?
The list I have, of non-recourse states, does not include Florida. Here’s the link:
http://www.mortgagereliefformula.com/recourse/
“‘This really catches me by surprise,’ said Denslow, who is with the University of Florida’s Bureau of Economic and Business Research. ‘I’ll have to revise my thinking.’”
The professor must be really hard of thinking if something that has been brewing for over five years has just now caught him by surprise!
“‘This really catches me by surprise,’ said Denslow, who is with the University of Florida’s Bureau of Economic and Business Research. ‘I’ll have to revise my thinking.’”
“I found a (multi-trillion-dollar) flaw in my economic models” — Alan Greenspan
“The war situation has progressed not necessarily to Japan’s advantage” — Emperor Hirohito’s surrender speech, August 1945
The Black Swan may be on it’s way. Anyone else a little bit worried about the swine flu outbreak? Supposedly it has one hallmark of a pandemic. It’s most lethal to people in their 20s and 30s with strong immune systems. That and we seem overdue for a flu pandemic.
Yes, I am concerned about it. Especially considering the rather large population of folks from south of the border who tend to come and go in this area. I didn’t know about its effect on people in their 20s and 30s with strong immune systems. That almost doesn’t make sense to me.
What I find creepy, in reading about this particular strain of virus, is that it almost seems engineered. And don’t anyone give me the “take off the tin foil hat” razzmatazz. Nothing would shock me much at this juncture.
Someone posted a photo on another blog of a long “cone” of pig meat the other day. It was both pink and charred and looked like a series of stacked flounces. Apparently, it was some sort of way that they display and sell the stuff in Mexico, after marinating it. Kind of like a pig meat pinata.
OK, I’ve lost my appetite.
Until next week.
You should have seen the picture, lol. I’m still queasy from looking at it. The poster just sort of put it up there with no explanation at first, after a post about the swine flu and got a whole bunch of responses about “Ewww, what in the name of God is THAT??????”
Then he explained. Ewwwww.
Apparently the 1918 Spanish Flu hurt young adults with strong immune systems the most. Something about sending the immune system into overdrive so much that it ends up killing the person.
Being in my 30s with a strong immune system, I really don’t like the sound of that. Hopefully that won’t happen now.
Oh, and now they are finding it in Kansas and New York.
Yes, this is actually pretty serious, if you read between the lines of the reporting. There is a LOT of concern over this. The headlines aren’t screaming red alert as yet, but given the whole Pollyanna attitude of the press, the current tone of the reporting signals that something’s up. I don’t like it.
Outbreaks of Pandemic Flus is part of the recovery story.
you guys arent reading enough into Winston.
Cramer is saying the flu could be very bullish for healthcare and undertaking sectors. The financials would rally like theres no tomorrow (literally) says Jim. Which could explain the recent run-up in. BUY, Buy, BUY!!!!
how does healthcare and undertaking relate to the financials? I feel like I’m missing something…
“finding it in Kansas and New York”
Ha. I knew there must be a reason why I decided to make my transcontinental this time through Nebraska instead of Kansas. Alas I’m not totally skipping New York — will go from Erie to Toronto by way of Niffles (Niagara Falls to you outlanders).
What seems to be puzzling some of the medical techs following the illness, is the deaths in Mexico, compared to those in the US who have it, who seem to be recovering. Now that’s weird. I wonder if it mutates when it crosses the border, or if it’s the better medical care, or what.
OK, I just found this. ANOTHER rare strain of yet another disease on the loose. WTH is going on? Did some biowar lab take a dump?
http://www.upi.com/Health_News/2009/04/25/Meningitis-outbreak-reported-in-Miami/UPI-50811240695659/
In just a couple days, the swine flu has surpassed the bird flu scare from a couple of years back…and that simmered in far off Asia for months. I remember local heath officials that were convinced the bird flu was going to wipe out millions. Way overblown, IMHO.
The BBC has a selection of reader comments from Mexico. They don’t seem to think it is overblown.
http://news.bbc.co.uk/2/hi/talking_point/8018428.stm
Any disease gets around pretty fast when hygiene is poor. I’m in the “stuff” business and I’m often out at thrift and charity stores, which in this part of Florida have a large clientele from south of the border. They’re not usually shopping for the same things I am, but one of the things that disturbs me is when I see one of these folks enthusiastically excavating his nostrils in public and then pawing through racks of clothing or bins of stuff. It’s not that uncommon a sight to see, because in their world, it’s perfectly natural and there’s nothing wrong with it and no one has bothered to educate them in the simplest acts of hygiene or common courtesy that are taken for granted in the US. It’s a problem.
It’s called Al Pastor, and it’s just like a gyro, but with pork, and it’s delicious. I’ve eaten those in Mexico for years. A little pepto for a chaser and you’re golden.
What do they use for a marinade, do you know? I’m not a big fan of pork or ham, but I do like a good gyro. If anyone’s familiar with the local Popi’s Place family run chain here in Hillsborough/Manatee, they serve one helluva awesome gyro.
Actually, I’d guess that many of us in SoCal have eaten tacos with meat carved off these skewers, it’s actually quite tasty, and available north of the border. Here’s the Wikipedia description:
Tacos Al pastor/De Adobada (”shepherd style”) are made of thin pork steaks seasoned with adobo seasoning, then skewered and overlapped on one another on a vertical rotisserie cooked and flame-broiled as it spins (analogous to the Döner kebab used in Greek restaurants to prepare gyros)
The Black Swine?
(as he ducks the incoming tomatoes)
Awesome, Chip! Made my day.
Did you mean the Black Swine?
If you die you die. And you will die. Stop being afraid. I’m so sick of this.
“Anyone else a little bit worried about the swine flu outbreak? ”
No way! Even lower home prices!!
‘You need to see these price declines start to level off before you could see a return of that market,’ Snaith said. ‘Right now, we’re clearing some of the casualties from the battlefield. . . . That’s why we’re seeing some of these pretty gaudy prices.’
Somebody owes this man a nice “Snaith souffle.” Or at least a pie to the face.
Russ - do you remember back a few years ago when he was pilloried pretty regularly here for his optimistic views on housing while we were heading over the cliff? As I recall, he was teaching at a west-coast school at the time.
Florida is looking for ways to cut its budget and the higher educational institutions are crying poormouth, but Snaith is still on the payroll. After his egregious mis-statements about housing in Florida. Gimme a break. I’m gonna mention this every time I hear some sob sister whining about the “deep cuts” to the education system. What a steaming pile of BS.
As an aged Baby Boomer, I remember when a typical school classroom had 35 kids and we all learned to read. Now, the teachers insist that 20 kids are too many. I suspect they can consolidate a lot of the classes and eliminate the teachers without too much trouble.
I was watching the local PBS Friday night punditry program. Apparently Tallahassee is beating the drum for offshore oil drilling 3 miles off the Florida Gulf Coast. Using, of course, the economic downturn to justify the money that Florida would make off the deal. Disgusting.
Palmy - did you have a chance to drive by those Ellenton condos yesterday?
Sorry, Chip, I didn’t go. Kinda got caught up with some other stuff. But I hope to get a gander soon.
No sweat. My curiosity stemmed from watching them being built over the course of a few years, then seeing them apparently finished, then seeing them look like no one lives there. Next time, I’ll drive in and see what’s going on in the parking areas.
I would never buy a condo in Florida..just ask those that were stupid enough to jump on that bandwagon in the 80’s when Florida went through a housing maket downturn..sure the condo only cost you 30-50K but check out article after article of the problems condos are having now with HOA fees.
My mom has a condo development from the 80’s near her..you can buy a condo in there for $75K but be prepared for $800 a month HOA fees…
“I would never buy a condo in Florida..”
I wouldn’t, either. The HOA fees are a real trap, IMO. Your finances are at the mercy of people you don’t even know. And if you get the wrong neighbors next to, above or below you, it’s not like renting, where you can just move if you have to. You’re stuck. I realize that neighbor problems can happen with a house, as well, but usually they’re not right on the other side of a wall or above or below you.
Everything you said, times a million, squared.
I’ll second that. I live in a townhouse and occasionally I’ll hear the faint sounds of my neighbor vacumning but that’s it. It’s not like an apartment where you hear every footstep, toilet flush and family argument from above and below 24/7/365.
“Another factor behind the deluge of requests for land use changes? Developers’ fear that the Florida Hometown Democracy amendment will pass in 2010. It would give local residents, not just municipal or county officials, the right to vote on land use changes in their neighborhoods.”
I wasn’t aware of this amendment until now, but I’d guess maybe it’s not “another” factor, but instead it is “the” factor. I’d think the changes going on will change the property-tax status of this land, so landowners wanting to cash in their agricultural-exemption land will make less than they would have if they could wait until there’s real demand for housing. Sure sounds bubbly to me.
“University of Florida student Ashley Kohler bluntly summed up the frustration of soon-to-be graduates. ‘I want to put it on a T-shirt: It sucks to graduate right now,’ she said.”
Oh, boy, here comes the chorus of boomer-bashers, blaming the boomers for eating their cheese.
I cooked donuts in college. Before sunrise.
Doesn’t sound like Ashley gets up early.
My reaction to her distress was a little different. I was thinking, pretty soon they’re going to realize that big-bux tuition is money thrown down the toilet. Pretty soon the second-tier private schools are going to have to start making serious cuts. Then the top tier. Have I mentioned that in INFLATION-ADJUSTED terms, Harvard tuition tripled between 1962 and 2008?
Two things I saw in the past two weeks: cash at closing for repairs to a house (35K) and houses moving quickly through MLS from “new” to pending in weeks.
This is in a nice neighborhood in South Fl (Coral Gables.)
-
re condos:
Condos are really rentals.
An interesting anecdote: management company where I live says tenants are behaving surprisingly well with no problems, but homeowners are behaving badly and are always angry.
A 35K house in the Gables? I’m shocked, I tell you, shocked! Or was that for the repairs?
No, just repairs.
35K legal payback towards repairs.
House mid 300s
Taxes, upkeep, insurance and whatever repairs where needed made this either a great deal or a financial disaster or somewhere in-between.
The 35K at closing was unusual.
This was a pre-foreclosure going on towards REO range with 27K in back taxes.
Bank came up with the money, that made it unusual.
$300,000 with $35,000 for repairs, etc. in the Gables is pretty good. One of the better places to live in Miami, IMO. I love the old architecture, the shops, etc.
“But McDaniel has learned that open spaces in Florida, whether they’re in cattle or crops, are often treated as little more than a placeholder.”
“‘Many people seem to believe that agriculture is temporary; that someday the land will be developed for housing,’
Yep, a lot of landowners in Florida had that attitude. Not unusual to see a bunch of cows on an unlikely plot of land, placidly chewing their cud and providing an agricultural tax deduction. Also tree farms. There’s a place up in Hernando County on the Pasco line where you can see citrus trees huddled underneath pines. The owners got disgusted after a freeze wrecked their citrus crop and planted pines. But some of the citrus came back wild, although I bet it tastes pretty bitter.
Florida needs the ag land, though. It needs to keep its springs running and green space to cool the air.
I’ve watched prime ag land eaten up and paved over in the Willamette Valley and along the front range of Colorado. Does anyone think we can continue to grow population without the food produced in that open ground?
“Does anyone think we can continue to grow population without the food produced in that open ground?”
We definitely need the open ground. Although I will say, the new hydro-harvest method, where one acre can grow six acres of food, is very interesting. We have a hydro-harvest farm near me and they have great stuff. But I’m not sure everything can be grown that way.
I definitely hate seeing land eaten up for crappy development.
Bizarre
What do ETFs, MBS and PPPIP have in common.
Well, everything.
Hope FPSS and Bear sees this one.
Two ETF Plans Emerge
“At the heart of the issue is resolving so-called “toxic” debt related to mortgage-backed securities. That alone is estimated to represent more than $1 trillion of regulators’ efforts. MBS markets are made upon debt obligations that “represent claims to the cash flows from pools of mortgage loans, most commonly on residential property,” according to the Securities and Exchange Commission.
The Treasury’s plan to breathe new liquidity into this market is called the Public-Private Partnership Investment Program, or PPPIP. While the Treasury was developing the PPPIP program, which was unveiled in March, ETF companies began working on an alternative.
Over the past two months, two plans have emerged: One from Invesco (IVZ) PowerShares and the other from Murray Stahl (CEO of Horizon Asset Management) and Robert Holderith (CEO of Emerging Global Advisors).
The PowerShares initiative actually started earlier this year when it filed papers with the SEC to launch two new funds. These would be the first ETFs to target non-agency residential mortgage-backed securities (RMBSs).”
This gets weirder:
“The ETF giant’s filing targets only the two top credit categories in RMBS-Prime and Alt-A—and only focuses on the top tranches in each of these market categories. These are not the toxic MBSs that people talk about, as these markets are still functioning well.
Still, it raised an interesting idea: What if you could package together the truly toxic debt into ETFs and trade them on the open market?
The products would open the market to a whole new class of investors currently excluded from participation in PPPIP: individuals.
In addition, if the ETFs were successful, they would create liquidity in the underlying securities, because investors would have to trade those securities into and out of the ETF to allow it to function properly. Investors would demand transparency so that they could know what they were buying (ETFs publish their holdings on a daily basis). And the ETFs themselves could become the source of price discovery, with trading of the ETF shares providing a live, liquid market where “mortgage-backed securities” as an asset class could be properly valued.”
And still more pimping from Forbes:
Let The Public Buy Toxic Assets
“The Public Private Investment Partnerships are a mess. What we need is more public participation at the retail level.
It might be time for retail investors to start buying toxic mortgage securities. That’s not as radical a notion as it sounds. People will profit and it will help restart the credit markets in a way that the current institutional investor approach simply can’t. Retail participation will build political support for TARP and other government programs that might be required to strengthen the financial system.”
__
This could be the ultimate attempt to reflate.
This is so stupid. Let me try the combo approach:
Isn’t selling a toxic asset to the public, essentially the same as a foreclosure?
WTF, mang?!
Holey Moley, these guys just don’t let up, do they? Just when you think the whole securitization jig is up, they find another way to re-package crap.
Muir, the new Fed Funding Investment Liquidity Facility for “Servicers” is part of the recovery story.
winstonized filth
Fed turns a profit despite tumultuous year
“Despite its extraordinary intervention to prop up a broken financial system, the Federal Reserve is so far maintaining its own ability to run at a profit.
On Thursday, the Fed provided the first post-bailout snapshot of its own cash flows.
The upshot: Despite all the tumultuous events and the central bank’s big responses, the Fed was able to transfer surplus funds of $32 billion to the US Treasury for the 2008 calendar year. That was down, but only by about $3 billion, from the year before.”
___
This is NOT from the Onion
“Despite its extraordinary intervention to prop up a broken financial system, the Federal Reserve is so far maintaining its own ability to run at a profit.”
Not that difficult, considering all they have to do is make a few entries on the computer (use to be in a book) and PRESTO! We got money!
If you can print unlimited amounts of money and use it to purchase productive assets, aren’t you pretty much guaranteed to produce a profit any year? Note that the Fed is the only corporate entity in the U.S. for whom printing money is not a felony. (One might argue that issuing stocks or bonds is essentially like printing money, except the value is automatically determined relative to money…)
I thought it was simply that they’re making whatever amount (6%?) on the money they loan to the fed gov…it’s a can’t lose situation….the greater the borrowing by the fedgov, the more money they make, no?
There are a zillion ways to prosper during a man-made economic disaster!
I think I should start running ads to “virtually boost your immune system against swine flu”.
$197 via paypal gets you a happy face emoticon, a Sound of Music ringtone, 24 x 7 text message alerts concerning swine flu in your neighborhood direct from Dr. Pepper, a genuine complete Ginsu knife screensaver, and virtually all you really need to know about the coming pandemic! This offer cannot be beat!
Stop staring at the wall!
Click!!!
Can someone please remind me of the rationale for encouraging households to purchase houses in this kind of economic situation?
Just recently a widely-renowned economist (I think it was Vernon Smith) suggested a key factor behind the Great Depression was numerous households purchasing homes during a very bad economic downturn. I guess our leaders are trying hard to herd us down the same path this time?
Global Economy Called Worst Since 1945
By BRIAN KNOWLTON
Published: April 22, 2009
WASHINGTON — The global economy will most likely contract this year for the first time since World War II, and the recovery will take longer than expected, the International Monetary Fund said Wednesday.
The I.M.F. projected a 1.3 percent decline in global economic activity for 2009, down sharply even from the modest 0.5 percent growth it had projected in January. In the United States, still the “epicenter” of the crisis, according to the fund, economic contraction would be even greater, at 2.8 percent this year, with zero growth for 2010.
Separately, the Treasury secretary, Timothy F. Geithner, cautioned against expecting a quick recovery, underscoring the complications of the world’s increasingly interwoven economies and financial systems.
“Never before in modern times has so much of the world been simultaneously hit by a confluence of economic and financial turmoil such as we are now living through,” he said in a speech before the Economic Club of Washington.
Putting a cost to a pandemic:
This afternoon, the WHO declared that the swine flu outbreak in Mexico and the U.S. is a health emergency of international concern.
Reuters has put together a list of estimates of the economics costs that may be incurred if swine flu becomes a full out pandemic.
The World Bank estimated in 2008 that a flu pandemic could cost $3 trillion and result in a nearly 5 percent drop in world gross domestic product. The World Bank has estimated that more than 70 million people could die worldwide in a severe pandemic.
Australian independent think-tank Lowy Institute for International Policy estimated in 2006 that in the worst-case scenario, a flu pandemic could wipe $4.4 trillion off global economic output.
Two reports in the United States in 2005 estimated that a flu pandemic could cause a serious recession of the U.S. economy, with immediate costs of between $500 billion and $675 billion.
One report, from the Congressional Budget Office, said hospitals would have difficulty controlling infection and might become sources for spreading the illness.
A second report by New Jersey-based WBB Securities LLC predicted a one-year economic loss of $488 billion and a permanent economic loss of $1.4 trillion to the U.S. economy.
SARS in 2003 disrupted travel, trade and the workplace and cost the Asia Pacific region $40 billion. It lasted for six months, killing 775 of the 8,000 people it infected in 25 countries.
Between the autumn of 1918 and the spring of 1919, 548,452 people died of swine flu in the US.
Imagine Obama closing all schools and government offices in New York or Los Angeles until further notice. That’s the equivalent of what’s happening in Mexico now:
Mexico’s Calderon Declares Emergency Amid Swine Flu Outbreak
By Thomas Black
April 25 (Bloomberg) — Mexican President Felipe Calderon declared an emergency in his country’s swine flu outbreak, giving him powers to order quarantines and suspend public events.
Authorities have canceled school at all levels in Mexico City and the state of Mexico until further notice, and the government has shut most public and government activities in the area. The emergency decree, published today in the state gazette, gives the president authority to take more action.
“The federal government under my charge will not hesitate a moment to take all, all the measures necessary to respond with efficiency and opportunity to this respiratory epidemic,” Calderon said today during a speech to inaugurate a hospital in the southern state of Oaxaca.
At least 20 deaths in Mexico from the disease are confirmed, Health Minister Jose Cordova said yesterday. The strain is a variant of H1N1 swine influenza that has also sickened at least eight people in California and Texas. As many as 68 deaths may be attributed to the virus in Mexico, and about 1,000 people in the Mexico City area are showing symptoms of the illness, Cordoba said.
Obama’s Visit
The first case was seen in Mexico on April 13. The outbreak coincided with the President Barack Obama’s trip to Mexico City on April 16. Obama was received at Mexico’s anthropology museum in Mexico City by Felipe Solis, a distinguished archeologist who died the following day from symptoms similar to flu, Reforma newspaper reported. The newspaper didn’t confirm if Solis had swine flu or not.
The Mexican government is distributing breathing masks to curtail the disease’s spread. There is no vaccine against the new strain of swine flu, health authorities said.
Museums, theaters and other venues in the Mexico City area, where large crowds gather, have shut down voluntarily and concerts and other events canceled to help contain the disease. Two professional soccer games will be played tomorrow in different Mexico City stadiums without any fans, El Universal newspaper reported. Catholic masses will be held, the newspaper said, although church officials urged worshipers to wear breath masks and to avoid contact.
Schools will likely remain closed next week, Calderon said in the Oaxaca speech. The decree allows Calderon to regulate transportation, enter any home or building for inspection, order quarantines and assign any task to all federal, state and local authorities as well as health professionals to combat the disease.
“The health of Mexicans is a cause that we’re defending with unity and responsibility,” Calderon said. “I know that although it’s a grave problem, a serious problem, we’re going to overcome it.”
Normal Airport Operations
Mexico City’s international airport, which handles about 70,000 passengers each day, is operating normally, said Victor Mejia, a spokesman. Passengers are given a questionnaire asking if they have flu symptoms and recommending they cancel their trip and see a doctor if they do. The measures are voluntary, Mejia said, and no case of swine flu in airport passengers, workers or visitors has been confirmed.
Authorities throughout Central America have issued alerts to prevent the outbreak from spreading. Guatemala ordered tighter control yesterday of its northern border with Mexico, according to EFE. Gerberth Morales, who’s heading the Guatemala government’s response, said no cases of swine flu have been reported in his country, the Spanish news agency reported.
Brazil is intensifying vigilance in ports, airports and borders to check travelers’ health, luggage, aircrafts and ships in a preventive action against the outbreak in Mexico, the Agency for Sanitary Vigilance said on its Web site.