Still In Denial
A commentary in the Daily Business Review. “Realtors can’t cry over condo mess they made.” By: Jack McCabe
Every now and then, I read an opinion piece from a local real estate person complaining about the condo depression in Miami that screams of “still in denial,” and which I opine to be an absolute shirking of the author’s personal responsibility in creating the mess to begin with.”
In an opinion piece in the Jan. 25, 2010, DBR, Jack Studnicky, a sales executive with International Sales Group, or ISG, blames banks and appraisal firms. “Banks holding boatloads of foreclosed Miami condos need to take a deep breath and stand firm on realistic pricing, which should be at least the cost of replacement. There is no need to comply with an archaic and misdirected appraisal process
as these bargain hunters are paying cash.”
ISG, along with several other South Florida sales groups, were responsible for hyping and fluffing the Miami condo market with multimillion-dollar international campaigns to develop a market of speculative flippers that artificially inflated sales and created the atmosphere for developers to overbuild true market demand.
Marketing programs and Web site ads were designed to attract investors to purchase multiple condo units, because as marketing materials trumpeted, they were a “can’t lose” investment.
Perhaps the best example of ISG’s own involvement in catering to speculative flippers can be found in a quote from ISG Principal Philip Spiegelman in an article by the Miami Herald on May 22, 2005, regarding the condo project Marina Blue (exclusively marketed by ISG). “One hundred percent of the
buyers were investors and speculators,” Speigelman said. “Anyone who tells you their projects are different are deluding themselves.”
I would recommend to representatives of firms that profited in the millions of dollars by prostituting Miami’s condo market that perhaps it is best to go play golf, go fish, go to Aspen and put a finger across their collective lips anytime they might wish to shine a light on the role they played in causing this debacle, and expose how they profited by it at the expense of the investors or flippers they sold to, and the banks that made the construction and mortgage loans.
To point the finger at anyone else or any other industry is not only ludicrous, but hypocritical and delusional. Time for some to take a good, hard look in the mirror.
Jack McCabe is a Deerfield Beach-based real estate analyst and CEO of McCabe Research & Consulting
The Herald Tribune. “Troubled homeowners in Sarasota and Manatee counties will soon be guaranteed a meeting with lenders to try to save their properties from foreclosure. Every homesteaded property will be referred to a new mediation program under a Florida Supreme Court order, and the lenders will have to pick up the cost. The homeowners will get credit counseling, as well as a trained mediator to guide the meeting with the lender about short sales, loan modifications or other alternatives to foreclosure.”
“‘It’s one more layer of protection from the unnecessary loss of the home,’ said Elizabeth Boyle, a lawyer with Gulfcoast Legal Services in Venice. ‘It’s a large step forward for homeowners.’”
“The program could resolve more foreclosure cases before they end up in the courts, where they are clogging civil dockets. One of every 19 homeowners in Manatee and Sarasota counties received a foreclosure notice last year, a total that pushed Florida to third in the nation for its distressed property rate.”
“The main hurdles to starting the new program: it must be run by a proven nonprofit group that is politically and professionally neutral, and there are upfront startup costs. For anyone looking to take on the task, the ‘good news’ is ‘there will be no shortage of clients,’ wrote Twelfth Circuit Judge Lee Haworth, in a letter to the legal community.”
“‘We expect the flood of residential foreclosure cases into our civil divisions to continue through 2010 and into 2011, so there should be thousands of cases eligible for mediation,’ Haworth wrote.”
“There are questions about how effective the program will be. A leading real estate expert, Jack McCabe, says homeowners might get a loan modification through mediation, but many slip back into foreclosure in less than a year because lenders are not reducing the amount owed.”
“Half the state’s mortgages are for more money than the property is worth, and could stay that way for the rest of their owners’ lives, McCabe said. ‘They’re upside down and they’re getting deeper in debt,’ McCabe said. ‘We’re going to continue to see this high and escalating number of foreclosures.’”
Very on point on all accounts. It’s why I’m shocked every time I read about how the market is just about to turn around.
Yes, the biggest bust in history is just about to “turn around.” IMO, this can all be traced back to a refusal to accept what the HB really was.
‘Half the state’s mortgages are for more money than the property is worth, and could stay that way for the rest of their owners’ lives, McCabe said. ‘They’re upside down and they’re getting deeper in debt,’ McCabe said.’
Note to DC: you aren’t helping many of these folks at all, but rather putting them in position for yet another default. How does that improve their finances, or those of lenders or advance the economy past this mess?
I watched myself get crushed by the entire mess. I was in denial of the true scope of this bubble. I fault not only myself, but the so called experts who helped “guide” us through the process. In the end I’ll have lost my good credit rating and thousands of dollars in down payment and monthly payments, but I’ve forever gained a new perspective on home ownership.
Bad Andy, you have been here a long time and I have very much appreciated your openness about your situation. I don’t know how much you’ve been reading, but my wife and I have come close to buying on several occasions and we’re still lokking at houses on weekends.
1. Any advice?
2. Can you share more information about your situation and thought processes over the last few years?
Thanks — your honesty has always been refreshing. I am trying to avoid making a huge mistake, too.
Muggy,
It all depends on location and how long you’re going to hold onto your property.
A great deal in a great area may be the ticket, but a good deal in a good area may lead to disaster. We’re nowhere near bottom as far as I’m concerned.
If you plan on living in the home for no less than 10 years and you’re buying at 1990’s level pricing in an area that has little chance of decline I think you might want to move forward. Even if we were at the bottom (lol) you won’t be doing yourself any disservice by taking your time. We’ll see a long steady flat line before prices begin to trek upwards. Don’t be pressured by people in the industry. That’s where I went wrong. Even holding out for 2 years would have made our experience much different.
“We’ll see a long steady flat line before prices begin to trek upwards.”
That’s for sure, Bad Andy. Muggy, look carefully at the C-S curves for the early ’90s, both in Cali and nationally. Then ask yourself why the rush when nominal prices will be flat for decades, and inflation-adjusted prices will still be declining. And that’s when the bottom is actually in, as opposed to the heavily-manipulated debt-cat bounce we are seeing at the moment.
“decades”
Ok, maybe not for decades, but the 5-year horizon seems abundantly clear.
Never buy a home if you think you are going to move up, move down, or move sideways.
Buy your home when you think you are set for life, going to stay married for life, retire in your home, and when you have enough money to pay the house off , either in a 20 year loan, or lesser time.
You can, then, be sure that you will not lose money on your home, that you will never make a profit on your home, and you will never be foreclosed upon!
And , with that in mind, it makes absolutely no difference what you pay for the home!
JackO
Totally agree with you, JackO.
Don’t feel bad… those of us that held back are paying a price too. 7 years of renting, and it’s STILL cheaper to rent than own because of the collusion between the banks holding the foreclosures off the market.
Sure, we’ve been saving up a lot of cash, but will the banks give in before inflation hits and destroys our savings? What new stunts will the government pull to punish those that act carefully and rationally? At this point I wouldn’t be surprised to see the “Savings Account Confiscation Act” in congress.
It’s all starting to make Vegas odds look good. At least in Vegas there’s a chance of winning.
10 year treasury forecast to go to 5% by end of Q2 2010 which means higher CD yields….. and of course 7-8% mortgage rates.
It’s all starting to make Vegas odds look good. At least in Vegas there’s a chance of winning.
But Obama just warned against that!
I live here in Vegas. The chances of winning are slim and none, and slim is on vacation a lot of the time…
“I wouldn’t be surprised to see the “Savings Account Confiscation Act” in congress.”
I would not put that past congress. What would that buy them? One years interest payment on the national debt? Printing money brings in more revenue and has less change of causing riots.
Bad Andy-
We’re on the other side. We sold, and have been living in a renters h*ll, just north of L A county. We’ve been priced out for years. We just want to buy (no loan) an average toe tag house. Our economic condition has drastically changed, and not for the better.
awaiting wipeout,
I didn’t realize that, sorry to hear. Still, we have to give it up for Bad Andy in that he’s stepped up in a big way with his candor!
Personally, I’m somewhere in between. I HAD sold, rented from 2004 to mid 2007 and I could either move ( again ) or bite the bullet on a $200k purchase. Things could be worse, but I really miss the care free times of -no- HOA and zilch property taxes.
I’d be lucky to sell for $135k and I seriously doubt paying it off would do much good? Neither of our daughters would want it and the returns ( net ) returns wouldn’t be worth the hassle to rent it out if we died in a tragic blimp accident. Lose/Lose.
DinOR
Firstly, you’re right. Bad Andy evidently is an adult and takes his lumps. Most homemoaners I’ve met, who are underwater, or took a hit some how, are whinners. Bad Andy, sorry to hear you got hit with a boulder. You’re part of our cozy HBB community.
Secondly, we both lost our major careers, basically. Then my other half got diagnosed with an eye disease (post HMO sign up). We have a limit to pay cash, and most of the toe tag homes that would fit our needs and desires were $700K and up. They are about $440K now. It wouldn’t be long.
I like lemonade. Not that I wanted to drink a swimming pool of it, mind you.
“if we died in a tragic blimp accident”
If you pull this off, please make sure it happens in Florida and you used the blimp as a getaway after robbing a bank in drag. This has the perfect makings of a classic Florida tragedy.
Bonus points for working in some sort of taser mishap / all over $7.31 and/or a bottle of booze.
awaiting wipeout,
One of the long time patrick.net contributors was from your area. Back in ‘05 when he and his wife were looking, $750k meant it had bars on the windows!
“if we died in a tragic blimp accident”
You’re 2 away from the Floridaquattfecta: robbery+blimp+taser=accident
“If you pull this off, please make sure it happens in Florida and you used the blimp as a getaway after robbing a bank in drag. This has the perfect makings of a classic Florida tragedy.”
Sounds like a Carl Hiaasen novel.
Bad Andy,
I’ve been in and out over the past year. I seem to remember when you decided to buy but don’t think I saw the rest of the story. Can you give a quick ‘cliff’s notes’ version? I, too, appreciate the openness you’ve displayed.
Sure, in a nutshell…in December of 2006 I found a nice house in a gated community for what would be considered a steal. Houses in that neighborhood sold for as much as $350,000 during the boom, and this one was priced at $229,900. We bought for $227,500. I put down a handsome sum and did a no documentation loan. Because of the down payment, there was no terrible penalty as far as rate went.
Bring on the great recession and a pay cut of over 75% on my part and the house was taking nearly everything out of our budget. Throw in an uncooperative bank and houses selling for under $100,000 in our neighborhood and we stopped paying. When the foreclosure papers hit, we started to find another place to live. Moved out in June of last year and the foreclosure process has stalled. The house is sitting vacant in housing limbo.
Although I think you’ve posted it before, yours is an interesting story and some hefty price declines. I hope your kids(if you have any) didn’t have to endure any hardship.
I know a guy in the Phinney Ridge area of Seattle- a Microsoft project manager- who purchased in 2006, a 1500 square foot craftsman “fixer” on a 4K square foot postage stamp lot, for $629k. If that wasn’t stupid enough he proceeded to sink, conservatively, $150k into renovations. Houses on his street are now selling for mid $400k’s, and that’s still ludicrous, especially considering rents are ~$1600. This guy’s underwater to the tune of $350k. I don’t care what kind of company I’m running, I don’t want some idiot like this making ANY decisions, let alone managing large projects.
Thanks Andy. I didn’t realize the price drops had been so steep considering what they had already dropped when you bought. Best wishes to you moving forward.
“If that wasn’t stupid enough” LOL!
Stooopid, there, fixed!
Grizz, wasn’t the the mindset to a ‘t’?
Bad Andy,
You did everything right. It’s now the job losses which are hitting hard. One of the “pockets of value” (my term) that companies are targeting is job security. Health insurance is chopped up, pensions gone, pay going down, and now job security is at risk. Jobs are now outsourced and freelanced and part-timed. Companies are clearly “renting” employees. Employees in turn are beginning to live like migrants.
And I see no solution. Companies have to do this to survive; employees have to move to keep a job.
AHHHHHHHHHHH…your big mistake….you moved before you even went to court
Think of all the rent free living in your home….now just sitting empty you could have had
PS…you candor is appreciated here
————————–
When the foreclosure papers hit, we started to find another place to live. Moved out in June of last year and the foreclosure process has stalled. The house is sitting vacant in housing limbo.
Andy, “Moved out in June of last year and the foreclosure process has stalled. The house is sitting vacant in housing limbo.”
If the foreclosure stalled, don’t you still “own” the house? Maybe I don’t understand what this means. Why can’t you legally move back in?
I could legally move back in. At this point vandals have made that an option that I’m not interested in. Remember, this is in a gated community!
Wow, I do remember Bad Andy’s posts from years ago. I had 2 properties in Jupiter, FL. that I sold during that time period. I remember Andy saying he was buying a property that had declined in value and thinking it still had a long way to fall. Sorry you got burned, my best friend would not listen to me and got hammered on 2 Port Saint Lucie properties.
“Half the state’s mortgages are for more money than the property is worth” ??
Yeah Ben…Thats what I took away from the article also…It is just stunning if it is anywhere near the truth and if true you realize why there is such a effort to attempt to prop up valuations…
They are scared SH…..S
They are scared SH…..S
Now, let’s play “replace the dots with actual letters.” Here’s my contribution:
SHoeS
“Now, let’s play “replace the dots with actual letters.” Here’s my contribution:”
Spitless
Strike 1
And strike 2
Hint….It rimes with Pit….
Inundated with statisitcs as we are - there’s still no getting around the fact that half underwater = cataclysmic? apocalyptic?
We are living through the world’s longest collective financial breathhold.
Well stated EJohn…
Not a problem. Ben Bernanke is working diligently to re-inflate house and asset prices as best he can (keeping in mind the FED’s “goal” of low inflation).
What made the bubble was rampant price inflation, what the Realtwhores called “appreciation”, that was guaranteed to take you to financial nirvana.
All we need is some more of it. That will put all the borrowers back in the green, and put the rest of us (savers) underwater, as paupers and wage-slaves. But i think you will find that the governments prefer the inflation to the deflation and are working very hard in their best interest to push some inflation, resulting in……more taxes, more government, more benefits…….to them. Money inflation, the hidden tax.
“Note to DC: you aren’t helping many of these folks at all, but rather putting them in position for yet another default.”
Ben, not to mention another oft-ignored reason that pushing these defaults down the road is bad for borrowers: the sooner they accept the default, the sooner their credit-report is clean again. I have made this point to a few locally that I believe either will walk, or are in the process of walking. By deferring the default, they are pushing out the time when their record is expunged by an equal amount.
Better to take one default sooner, and start the clock ticking on getting back into financial health.
Couldn’t agree more. Have an acquaintence in AZ that bought a million dollar house at the peek in Gilbert, AZ for $1M, then couldn’t sell his other house when he moved into the million dollar house. He put money down to have it built in 2005, moved into it in 2006 and it was in default by 2007. So, he quit making the payments on both places. He owed around 1.7M on both places and lost them both to forclosure at the same time. Now, it has been over 2 years and he is renting and happy and hasn’t missed anything as far as housing coming back. The two houses were probably only worth a combined 700K. No way was he ever going to pay back a million bucks. A very strategic default on his part.
“Have an acquaintance (fixed sp) in AZ that bought a million dollar house at the peek in Gilbert, AZ for $1M, then couldn’t sell his other house when he moved into the million dollar house.”
Sounds like a pure speculator, playing with a couple of million dollars on margin. I hope he is pursued by the lenders for deficiencies and made to pay for their losses for 20 years.
Here’s an interesting article that came out today on Deficiency Judgments:
http://finance.yahoo.com/news/Mortgage-lenders-pursue-cnnm-3107909798.html?x=0
Here if Florida, it is a law, but was seldom used in the past.
As we have debated here before, many people feel there is no financial responsibility for signing a mortgage note, providing the house as collateral.
They often talk of “giving it back to the bank”. Sorry. Wrong answer. It’s not the bank’s house. It’s the borrower’s house. They simply lent them the money to buy it…. and they made a promise to pay the lender back. The fact that the house is worth much less than borrowed, doesn’t make it the banks problem. It is the borrower’s problem. That is how the law should be enforced.
If this law was applied with great regularity, there would not have been many speculators in the market, knowing that if the house sold for less, the BUYER would be responsible for the loss if they came into any money during the next 20 years.
“As we have debated here before, many people feel there is no financial responsibility for signing a mortgage note, providing the house as collateral.”
It’s certainly a two way street, but honestly, the banks putting up $500,000+ for 50 year old crapshacks in Compton with no income verification in a NO RECOURSE STATE deserve to burn, with no government bailout. The moral imperative of the buyer in that case pales to insignificance, especially on owner-occupied places. Flippers and multi-property speculators deserve some pain.
Ben: I agree - the number of people who *still* think that the Bubble was normal and that every other time in history is abnormal is mind-boggling. Sadly, as long as there’s money to be made in fees by encouraging people to buy houses they cannot afford, I doubt anything will change from DC.
the number of people who *still* think that the Bubble was normal and that every other time in history is abnormal is mind-boggling.
Boy, no kidding. Funny how we can define what “normal” is. The greater incongrity is when the same people readily admit to the necessity of learning to scrape along in the “new” economy. They can get their head around the idea that big money jobs will be very rare, but that somehow “housing will come back to normal.”
You are still of the mind that gov, companies, actually any large matrixed entity has the ability to act strategically. Good news is there is so much random push/pull cause and effect to these non-strategic, unthinking acts that things generally and eventually turn out as intended.
I can’t tell you how many times I hear “housing’s coming back” or “prices are increasing again”. I cannot even respond anymore. In fact, I try to avoid any discussion at all about housing. My blood pressure can’t take it. People are stupid.
Take a few deep breaths and walk away, Griz, my friend.
And I’m not entirely convinced that people are stupid. They may not be as smart as you are, but that is a different thing. Now, people are ignorant, is something I can get behind 100%…
Persons are intelligent. People are stupid. Glad we settled that.
Oh come on, you naysayers. Our economy is like a big ole Titanic, er, I mean aircraft carrier. It just takes a long time to turn that sucker around. Yeah that’s it, that’s the ticket.
I looked into some Miami condos and taxes, insurance and HOA fees in many cases did not exceed rent by any significant margin. I guess, however, as the prices approach zero the taxes and insurance will not be as expensive.
If it is a newer development buyer beware. Newer condo developments keep HOA fees artificially low to try to sell and then it’s 10% -20% annual increases, plus 3-4K special annual assessments. Even in a decent market, eventually Taxes, HOA fees will get a condo owner everytime. Now consider buying a condo in a declining and then stagnant market? The condo would need to be virutally free for the numbers to work.
Re: cost of insurance
I have heard that insurance company pricing often turns on the investment return that the Insurance company is getting on its other investments (equities, bonds, real estate). IF those other investments arer getting whacked, there might be that much discounting happening in premiums.
Otherwise, your point is well taken.
I looked into a Miami condo. Actually I looked right through it. You see, it was just an skeleton of an unfinished building on which all work had long since ceased. Smiled, shook my head, moved on.
Great. Buy six.
Let us know how it turns out.
Every homesteaded property will be referred to a new mediation program under a Florida Supreme Court order
Does the FL Constitution really give the Florida Supreme Court this power? Or does the Florida Supreme Court also think it is a legislative branch of government?
The Florida Supreme Court is just like the US Supreme Court and every other court in the nation. They think they should pass legislation reserved to Congress or to the People. I have found it quite sickening, but, then who can stop them? No Senators seem willing to impeach them for incompetence, which is the right of the Senate.
I started to make a list of grievances i had with a number of decisions, but i deleted it………too controversial for today.
Plus Festivus is the time of year for the airing of grievances, and the next one is not until December.
“Plus Festivus is the time of year for the airing of grievances,…” To be immediately followed by the Feats Of Strength…
Don’t courts often have quite a bit of power to make rules about the efficient workings of the courts? If you are anticipating a case load of at least double (or triple or quadruple, etc. ) what your court system can possibly handle, then referring everything to mediation for an initial go around seems perfecdtly reasonable.
Unless you think you can convince the legislature and executive branch to double or triple or quadruple the staff and budget of the judicial system.
“To point the finger at anyone else or any other industry is not only ludicrous, it’s hypocritical and delusional”
Well thank YOU Jack! It’s not only time for the REIC to take a look in the mirror but also one for getting back to basics.
Most existing homeowners cannot stand the thought of affordable housing.
It’s not that they can’t stand the thought of affordable housing, it’s that the ones that bought and refinanced during 2002 to 2006 don’t want to admit the mistakes that they’ve made.
One of our HBB’ers coined the word “homemoaner”. Pretty much sums it up.
It would be more accurate to say existing homeowners don’t want to be underwater on their homes.
Sorry, Biff, I don’t think that’s accurate.
The entire purpose of buying overpriced houses was to GAIN “appreciation”. $250,000 for a studio condo in Miami is absolutely ridiculous. Remember the pricing: $1000 per square foot in some places. It used to be $100 per S.f.
It makes absolutely no sense to buy a house if you are going to be selling it in 5 years without inflation in pricing. It’s a Lose-Lose.
You lose with the costs of buying and lose an additional 10% when selling, even in a “good” market.
Yet, people were willing to devote 50% of their income to the purchase of a house. There’s only one reason for such stupidity. Actually 2 reasons: Fear and Greed. Fear they would be “priced out” as the Realtwhores were telling everyone, and GREED over the 50% gain they would get on the price, with NO MONEY DOWN.
Without those motivators, simply being “even” with the sales price/purchase price is a bad deal, especially since housing is an EXPENSE that requires maintenance. When the “game” is finally discovered for what it is, and the realization that the $3500 month mortgage payment will not be recovered, then the desire to “own” the house is gone.
I think you will see strategic defaults even with the supposedly LTV at 100%. The costs continue and the “value” ain’t making it.
Exactly, Diogenes. The only thing that has kept strategic defaults from turning into a tsunami is this ridiculous hope that the bubble inflation will restart “any minute now”. If (when) there is another leg down due to higher mortgage rates, etc. watch out below.
The sudden, wholesale collapse of housing revival hope and delusions will be a fearsome yet beautiful thing to behold.
“Most existing homeowners cannot stand the thought of affordable housing”
Most existing homeowners might be a temporary thought condition themselves.
“Banks holding boatloads of foreclosed Miami condos need to take a deep breath and stand firm on realistic pricing, which should be at least the cost of replacement.
I can show you beautifully made homes in Detroit, Philadelphia, Trenton, Newark that probably cost over $1 million dollars in historical money (lead windows, slate roofs, turrets, 8 bedrooms, real stone walls, mahogany woodwork/built-ins, etc.) that you can by from 1-10% of replacement cost.
Replacement cost has NOTHING to do with price.
True. A more accurate statement would be “which should be about the cost at which it is actually cheaper to own than rent.” Still a long ways to go.
The fact of the matter is if “banks holding boatloads of foreclosed Miami condos” want to stand firm on what they consider “realistic pricing,” they should. Go head banks, do it — price ‘em however you’d like.
But the banks should also be prepared for the carrying costs of waiting for said “realistic pricing,” which could take three, five, or perhaps 10 years to reach. It’s not just replacement cost, or the buy/rent ratio, it’s what people are willing to pay, and whether they think a given location will still work for them in the future (see Detroit, Philadelphia, Trenton, and Newark, among other examples).
“Replacement cost has NOTHING to do with price.”
Yes and no. Price certainly can dip below replacement cost, at which time no/less new inventory should be created. Eventually the reduction of new supply will push price back above replacement. So short term, replacement cost doesn’t impact price. Long term, replacement cost is important. I doubt replacement cost will be a factor for years to come.
“I doubt replacement cost will be a factor for years to come.”
Your statement makes sense for most markets. Some markets however my be so oversupplied that we don’t ever see replacement cost as a factor in our lifetimes. Detroit is a great example of this. With the vacant units that are in the city, even if there was a sudden urban renewal we wouldn’t see enough of an influx to make a difference.
I would generally agree with Al but would add that “replacement cost” becomes a bigger factor in setting some bar for valuations in constrained markets either do to buildable land, a extreme example being Manhattan or restrictive land use another extreme being “Big Sur” coastline in California…
“Half the state’s mortgages are for more money than the property is worth, and could stay that way for the rest of their owners’ lives, McCabe said. ‘They’re upside down and they’re getting deeper in debt,’ McCabe said.
That’s a really telling number. Presumably not enough properties would have turned over during the bubble years for that many with mortgages to be upside down if not for all of the equity extraction.
Also, we’re beginning to see, bit by bit, acknowledgement that borrowers that bought near the peak of the bubble will not live long enough to see a return to peak values.
SDGreg,
Half the damned state is underwater and many “won’t live long enough” to break even!? ( How is ‘any’ of this Realtors’ fault? )
“I” blame the Icelandic Government for having bought all those Credit Default Swaps. If it hadn’t been for that, I’m sure everything would have turned out just fine.
“Banks holding boatloads of foreclosed Miami condos need to take a deep breath and stand firm on realistic pricing, which should be at least the cost of replacement.”
And this is where the absurdities…. the complete detachment from fact and reality begins and ends. The general public and been bamboozled into believing that building costs per square foot is some insanely high number. I’ve heard $100, 200 and even $400 per square, none of which are founded in reality. Further to the point, condos are high density architecture which further push building costs down.
When the lying, thieving, market distorting REIC comes clean about building costs is when I will begin to consider lending them a smidgen of credibility.
“And this is where the absurdities…. the complete detachment from fact and reality begins and ends. The general public… bamboozled into believing…”
Yep, the engineering of consent was an Edward Bernays legacy, we could have lived without. The REIC has perfected it.
Also ,the insurance industry wants the building costs to be higher so they can charge more for replacement cost insurance .
In Florida I think the insurance industry would like to keep the risk off the books…at least until rates are brought back to represent the actual risk…then you’re spot on.
In general, yes. But in the case of Miami, I’m not sure they want to touch that market with a ten foot pole because of the loss potential from a major hurricane. As big as the losses were from Andrew, they would have been much, much larger if the track had been 10 or 15 miles farther north across areas now teeming with condo towers.
Spot-on commentary, Jack! I’m very glad to see you getting it out there in the MSM. Nice work.
Pretty good video on Chinese property bubble:
http://www.youtube.com/watch?v=zXNr46HTYkw
Didn’t know they had a bubble there? Well, they do.
There’s a haiku verse in here, somewhere.
What about the sugar bubble?
saw it hit a 29 year high. India is the second biggest consumer.
As a deflationista, I was rethinking my position….seeing the housing bubble in china, now i’m thinking emerging markets are gonna get a whacking.
A condo is nothing more than a glorified apartment with all the drawbacks of renting, noise, common walls, no yard, combined with the drawbacks of ownership, maintenance, and taxes. I think I’ll pass.
Let’s see. My Condo is pretty quiet, I don’t have to mow the lawn or trim trees, the exterior is taken care of by the HOA (painting etc, gutter cleaning). The asphalt is taken care of by the HOA. Water and trash pickup is part of the commons charge. I have a courtyard for my BBQ and a few tomato plants plus table and chairs. I have the freedom on a weekend to go someplace instead of taking care of a yard. I have a two car garage and enough space for my stuff. On the whole it’s a pretty good deal for my situation.
I’ve heard horror stories about assessments that are more than the mortgage and units owned by accidental landlords who rent to noisy trash. I’d rather not have anyone directly above or below me.
“I’d rather not have anyone directly above or below me.”
The first condos I ever was in, circa 1974, were one-story. I think I could live with that.
In Montana,
That would be about my recollection as well. How did we ever lose sight of the basic concept that condoze were originally intended to be modest, low maint. and above all.., modest?
Where’d all the upscale concept garbage come from? I often ask myself just how much less painful this all would be had it not been for the word, upscale?
Mine is a two story on slab, I have neighbors to one side only. The horror stories you have heard are made up.
what’s the difference between you hiring somebody to that for your house/yard and paying the HOA to do it?
I don’t have to hire anyone, that’s the HOA’s job. I write one check for several services at one time and don’t have to be involved at all.
Condo, no thanks.
A relative bought a condo in Los Angeles in 1994. Building was three stories on top of a parking garage. Everything was fine until the Northridge earthquake hit 1/2 mile away. Building was yellow-tagged, and she couldn’t even camp out anywhere on the property. She was effectively homeless even though she was a homeowner. At least with a house on a lot you could still camp out in the backyard if the house were uninhabitable.
In Sacramento condos have tanked. I went to three complexes last week. One was built in 1987, but a bunch in 2005-06 were resold or refinanced for about $250K. About a dozen 2 bed/2bath units are now being offered for 70K short sale and 85K foreclosed. HOA $232. One honest short seller told us that “riffraff” from the street use the pool in the summer, but that she likes the complex.
“A condo is nothing more than a glorified apartment with all the drawbacks of renting, noise, common walls, no yard, combined with the drawbacks of ownership, maintenance, and taxes. I think I’ll pass.”
I’ll take most of the landlords I’ve had over the one HOA I had. At least with the landlords, management was generally competent and repairs done in a timely and competent manner.
There were generally better quality neighbors with the apartments, too. Of all of the places I’ve ever lived, mostly apartments, the only place I’ve had my newspaper stolen was in the condo. What a bunch of cheap bastards.
The only plus of the condo was a little more space than the typical apartment and a layout somewhat less like an apartment.
‘Scuse me for being a bit OT, but I’m on hold with Dun and Bradstreet’s outsourced customer support. Sounds like I’m talking to New Delhi, but that’s getting even more OT than I already am.
I’m trying to get registered as a federal contractor. In order to do that, you have to start a Dun and Bradstreet credit file. I’ve told numerous D&B worker bees that I’m not looking for credit, that I’m as a pay as you go kinda gal, and that I need help in filling out the friggin’ D&B form so I can get set up in the federal contracting database.
I’m currently stuck on the D&B Management form, which doesn’t seem to understand the concept of businesses run by me-myself-and-I. The solution? Log out of the form. (Thanks, New Delhi!)
I just hung up.
“I’m currently stuck on the D&B Management form, which doesn’t seem to understand the concept of businesses run by me-myself-and-I.”
Back in my city planning days I compared Dunn & Bradstreet employment data with government data. In every industry the D&B data showed far more employees than the government data, which is benchmarked to unemployment insurance taxes. I guess businesses that want to seem “big” for credit purposes want to seem “small” for tax purposes.
Kind of like “earnings” — always higher when reported to shareholders than to the government. In the 1990s, the “earnings” reported to the government turned out to be closer to the truth.
In whiny voice, Slim says, “But I don’ wanna look big for credit purposes. I don’ need any stinkin’ credit. I jus’ wanna be a federal contractor.”
(Looks like Slim isn’t clear on the concept of business size relative to tax or credit purposes.)
It’s a comment on Dunn & Bradstreet that’s all.
In whiny voice, Slim says, “But I don’ wanna look big for credit purposes. I don’ need any stinkin’ credit. I jus’ wanna be a federal contractor.”
Maybe you could partner with someone already in the federal contracting game for the purposes of avoiding this mess?
In order to be a federal contractor, the rules say that you must have:
1. A DUNS number. Which means that you have to deal with Dun and Bradstreet and their cockamamie forms.
2. A record in the Central Contractor Registry. (That’s CCR.gov.) The record must have the same info as what you put into those D&B forms that I mentioned in Item #1. Being in CCR.gov enables you to get paid electronically, which is how the feds prefer to do things. Me too. Chasing checks from my various university clients has gotten old.
Now, here’s an update: Since I ranted here earlier, I have spoken to a very helpful D&B employee in their Philadelphia office. She and I are in agreement on the incompetence of the Indian tech support people. Apparently, that’s no secret within the company.
The Philadelphia lady said she’d be happy to assist, and she’s down with my idea of just being a federal contractor and not desiring credit.
So, HBB homies, that’s where things stand. I’ll keep you posted on my quest to become registered as a federal contractor.
Been there..trying to get my company on the GSA supply schedule. Or whatever it was. We didn’t fit the forms well either, especially our pricing model, and I finally gave up.
We did have the DUNS number already however.
“Half the state’s mortgages are for more money than the property is worth, and could stay that way for the rest of their owners’ lives, McCabe said.
Those are the words and thinking of capitulation - the final stage that takes things rapidly to the next leg down and then settle into a slow drift of decline for years. I suppose it makes sense for capitualtion to first appear in Florida. Judge how long will take for this thinking to mainstream and spread up and West.
Don’t Know Nothin,
While it may not provide an exact timetable ( you’re right, it’ll give us a pretty durn’d good idea ) Can’t wait!
I’m in Orlando for a meeting today. Asked the taxi driver how the economy is going. Turns out he’s Haitian and feels like the luckiest person in the world compared to his relatives back home. He’ll wait two months and then go back for a family memorial service.
That sure puts things into perspective.
One of every 19 homeowners in Manatee and Sarasota counties received a foreclosure notice last year, a total that pushed Florida to third in the nation for its distressed property rate.”
Replace “distressed” with “deadbeat”. How does that fir for you? Do you mean all those people who ignored our warnings since 2005? Just wondering.
Fir = fit. Sorry for the typo.
No doubt that real estate in Florida was hit hard. Hopefully it will climb back over the next few years.
Just in case there was any doubt, this guy’s a realtor - check the URL in his name link (but use Google to do it, no sense giving him any hits).
A totally worthless and empty post by realtor. Go figure.