‘Buyers Reluctant To Overpay’ In Miami
ABC has this preview of a show on flipping in Florida. “‘Flipping’ in real estate lingo means buying and quickly reselling properties for big profits. In south Florida and other popular real estate markets, it got to the point where people were buying and flipping contracts on condos before they’d even been built.”
“Mark Zilbert, a Miami real estate broker, estimates that at one point, up to 80 percent of condo purchases were purely speculative investments, made by people with no plans to ever live in one of the tens of thousands of new condos transforming the Miami skyline.”
“By last winter the Florida real estate market had taken a dramatic turn. ‘It stopped, frozen. Selling investment property was very difficult,’ said realtor and investor Peter Celnicker.”
“Celnicker came to Florida as the market was soaring. Then, almost overnight, the market changed. ‘I mean, it was really that quick. [It] went from an absolute seller’s market where you could sell a property literally in 24 hours to a buyer’s market where it can take three, four months to sell a property,’ Celnicker said.”
“There are a lot of unknowns today in south Florida real estate, where there’s concern that words like ‘hot’ and ‘flip’ may soon be replaced with ‘chilly’ and ’stalled.’ One reason: Experts now say Miami Beach has perhaps the most overvalued real estate in America.”
“‘Construction costs have gone up, prices have gone up and so there is a point, we think, that buyers are reluctant to overpay for an apartment, especially when there’s an oversupply,’ said Zilbert.”
“He remembers the moment he realized the market was changing. ‘There was a day that I woke up at the launch of a new building, and I contacted my clients and I sent out my e-mails and I did my advertising, and not a single person wanted it. Not a single person showed up. And the feedback was, ‘I think prices are gettin’ outta control,’ Zilbert said.”
“Celnicker agrees that desperation has hit the south Florida real estate market. ‘I think there’s going to be a lot of desperate sellers,’ he said. And speculative investors who bought into the high-priced, preconstruction condo market in south Florida may be in for a rough ride, Celnicker believes.”
“Buyers, Zilbert says, are becoming more cautious. ‘There’s not a day that goes by that I don’t take a buyer to a property he or she will find something he absolutely adores, wants to purchase it, but at the end of every conversation is, ‘I think I’m going to wait six months and see what happens.’”
“If you’re ready to buy a south Florida residence right now, the market could be working in your favor. Take those Delray Beach condos launched last summer. It turns out 40 percent of those units are still available, and some of the prices have dropped dramatically. That’s good news for new buyers, but not so good for those who paid $100,000 more just eight months ago.”
There’s that “…it’s a buyer’s market!” crap again. From what we’ve been reading about Florida recently, there is no market and there are no buyers. It’s getting so bad that even these “investers” can’t put a spin on it anymore.
Its happened before….1981….and 1991 to a degree. 1981 was much worse driven by unbearable interest rates which paralyzed the market…This one could be even worse due to the leverage in the system….
exactly - leveraged big time and the subprimes - too many people who should have not been allowed to enter the mkt
It’s even worse because “subprime” can be thought of as a relative term - relative to the amount of the loan. In other words, Joe and Jane Doe, with a great FICO score and $100K in combined income taking out a $700K mortgage are in reality subprime borrowers in the sense that they’re as poor a credit risk - due to financial overextension - as a traditional poor-credit subprime borrower.
‘I think I’m going to wait six months and see what happens.’
Six months from now folks still will be saying this. And six months after that and six months after that and………….
Or, after six months they’ll just say “real estate sucks” and lose interest altogether.
At lunchtime I saw a preview of a show that flips properties with the guy from the cartolinas, I think it is called Trademark Properties, and in one of the houses, they had estimated 10K for repairs and it came to almost 50K. It showed the guy reaming a worker for the cost over-runs! Hylarious, as I think he lost more than the 40K delta!
That show is called “Flip This House” and he’s been doing it for a decade, and is probably worth over $50 million.
It’s a great show, and there’s Ginger too.
Like I said in another topic.. all you need to know about Mr. Z. can be found at http://www.condoflip.com.
The only thing missing is the elepants and the popcorn from that site.
That link was painful BigDad….With the G.Q. picture and all…Clearly marketing too the 20-30 somethings….This is the same group that now thinks they are Texas Holdem figured out also…
LOL!
so this zilbert guy is mr flippin’ florida himself, and he’s letting out that people have decided “prices are kinda outta control”?!
i dunno; even if the rhetoric is ‘buyers are reluctant to overpay’ but ‘things can worked to the buyer’s advantage right now’, the hint that anyone is willing to wait even 6 months has gotta make it that much more likely they’d wait til prices really get under control!
No one is gagging RE yet. Like the NASDEQ a few years ago, only when you hear people say they will never buy RE as an investment again will be at the bottom. Long way to go. As some of you have pointed out, the resets have not started as of this point.
This fall will see the start of the gagging. RE tax bills due at the same time ARM resets kick-in.
The screams you hear will be the people at the front of the roller-coaster as it starts down the fall.
should be NASDAQ, sorry
This Fortune article put’s D.C. beyond the danger zone and into the dead zone: http://money.cnn.com/2006/05/03/news/economy/realestateguide_fortune/index.htm
Good link….
Well, where does 50% of the population of US live. In all the cities where a bubble has been identified. Good link, and thanks.
“South Florida,” he said, ”is working off of a totally new economic model than any of us have ever experienced in the past” according to a realtor who predicted that a land shortage will support higher prices indefinitely.”
- New York Times, Trading Places: Real Estate Instead of Dot-Coms, 3/25/05
The insurance problem in Florida will add to the problem (speed up the correction).
Good find
the land shortage in so flo is a lie. there is land, but in neighborhoods that certain people dont want to live. look at biscayne. in the 1990’s is was no way people wanted to live off of biscayne in miami. now, there is development all the way from downtown to 81st street. plus palm beach county has land from the turnpike to the glades for development. on broward is in a bind and condo developments are rising all over 441. it is about living space. people are moving out of wellington, rpb and the acreage and people from broward and miami are moving north. someone has to buy in miami and broward. the housing availablity has rose every month since hurricane wilma. now my apt. that turned to a condo in 11/05 is back to an apt. in 5/06 and i predict that full year leases will return by the end of the year. the condo owner must make money or lose thousands. land is available in south florida, it is just how you look at land.
The article ends with:
But, after all, no one ever said buying real estate came without risks.
*cough* *cough*
Question for florida market watchers regarding this quote:
“Celnicker came to Florida as the market was soaring. Then, almost overnight, the market changed. ‘I mean, it was really that quick. [It] went from an absolute seller’s market where you could sell a property literally in 24 hours to a buyer’s market where it can take three, four months to sell a property,’ Celnicker said.”
Where there or what where the predictors to the change in that market? From the layman’s view, the market suddenly turned cold. Does anybody remember what sales and inventory were doing in that area, say, last Fall? Phoenix was very much the same “sudden” cold zone. According to blog poster Flip, in Phoenix we saw marked increase in inventory 7K April 2005 thru Fall just before things imploded here. Anybody know if Miami saw the same steady increase in inventory from Spring 2005 to Fall 2005?
One of the goals of this blog should be to produce very turn key predictors of the real estate market for now and the future. There is no reason I should not be able to know exactly when the market has bottomed and is heading back up - assuming I have access to good data, right?
Florida situation is a little more complicated because of Wilma. It would have happened anyways, but realtors used slow sales numbers from October and blamed it on Wilma, then on Christmas. I started monitoring the inventory from Jan 3 and it went up about 50% since then.
The day I discovered it slowed down was just before thanksgiving when I was driving around this neighborhood I liked and saw a for sale sign. I called the realtor and he said that the house has been on the market for about a month. These houses sold within hours in early/mid 2005 so I thought we finally hit the peak when these houses were on the market that long. There are still houses in the same neighborhood that were put on the market in December, and they are still on the market even after 4 price reductions.
Sounds though like the increase in inventory and slowdown almost happened simultaneously. Where there any statistical things like slow sales, building inventory prior to you noticing houses sitting? We know we cannot really look at house prices as a leading indicator, but can we say that in ALL cases, one will see at least a significant trend that is identifiable to the naked eye prior to reaching an r/e top or bottom?
The convoy of Baby Boomers are now at the SC/GA border on southbound I-95 on their way to buy up all the vacant condos in Miami……
they can’t afford the gas anymore to get all the way down to south florida.
bummer
I love this, the boomers are on the way, Yeah right if they can buy at the price, but most cant or wont, they come and leave,8% might buy in florida, look a little to the north and you will find them, HALFBACKS, lot of new homes in florida with no one in them, the big dogs (builders) lay off all the trades and hire mex-workers to show a gain and thats not working, its bad news in florida overbuilt and vacant, 1927 miami all over ,
‘There was a day that I woke up at the launch of a new building, and I contacted my clients and I sent out my e-mails and I did my advertising, and not a single person wanted it. Not a single person showed up.
That day is coming soon to a housing bubble near you!
I can just see this guy sitting at the end of the day in, talking to the sellers, looking at a blank sign in sheet. “You know, I wonder if I sent out the wrong address…you know now that I think of it, I’m sure that’s what it is. And you know with the advertising, I think what happened is I oversaturated. You know, just overmarketed it.”
“Celnicker agrees that desperation has hit the south Florida real estate market. ‘I think there’s going to be a lot of desperate sellers,’ he said. And speculative investors who bought into the high-priced, preconstruction condo market in south Florida may be in for a rough ride, Celnicker believes.”
Classic “soft landing”. Desperate sellers, falling prices, bankrupt speculators, skyrocketing foreclosures. Yep, the market’s just returning to normal.
““‘Flipping’ in real estate lingo means buying and quickly reselling properties for big profits.”
Only a numb nut would buy into this. And many have! Pay 20-30% over market… How stupid…
Many numb nuts already bought. Hope they have some DeepHeet, or something when they are nailed to the side of the boat.
Many numb nuts already bought. Hope they have some DeepHeet, or something when they are nailed to the side of the boat.
How can this Zilbert slime get away with talking out of both sides of his mouth?
This Zilbert clown’s site has a HUGE banner that states ‘ bubbles are for bathtubs” or something stupid like that. Now he has an epiphany that “up to 80 percent of condo purchases were purely speculative investments, made by people with no plans to ever live in one of the tens of thousands of new condos transforming the Miami skyline “? Why does his website stll promote ‘flipping’ when he KNOWS that the market is tanking? Typical sleazebag realtor. If he realized last year that the market has turned, doesn’t he have an obligation to buyers to advise them of the current market, or does he just be a sleaze and go for the $$$.
He is of the same ilk as Baghdad (sp) Bob Learah doing his best to backpedal his way out of the corner he painted himself into.
Mark Zilbert is in the business of making money. Anything that gives him publicity raises his profile and therefore puts him in a position to make more money.
This reminds me of a news story I saw on the Iraq war on NBC. The coffin makers are having a banner year as there are so many dead people. No matter what a bad situation is (war, housing bubble, etC), someone makes money.
Today I had a conversation with some equity rich middle class folks who work for the school district here in miami. Their 100K house is not worth 500K, but they cant sell and move as the property taxes will be so high. They have equity, but still have low income.
A lot of people in the above situation are choosing to move to another state rather than buy something bigger/nicer in thier own community. Some are just staying put and taking out home equity loans to buy new cars, vacations, etc.
Other than myself, I have yet to meet someone (in person) that believes in paying off the mortgage to build equity. I have been told that I am “unwise” and that I should put my money in stocks/bonds/etc instead of paying off the mortgate. I have been burned by the stock maket and have no intention of going back there again (other than Mutual funds in my 401K). The only liquid assets I have are 6 months worth of reserve if something bad happens….every penny that I have left over at the end of the month goes into the house….only time will tell if that is a wise or unwise move.
I hope the mutual fund in your 401K are straight Vanguard index funds or the like and not some BS “growth and income” or something like that.
You think Miamitownhouserenter is pleased he’s out of the market, now that it is coming back? . Also, Who cares what the name of the fund family is, it could be a load or a no load or an ETF. What is the difference between a load fund that is up 10% and a no-load fund that is up 10% and what about the standard deviation of the fund ( variability of returns) and the beta? I am sick of the index fund Suzie Orman crap, if you want to be average, buy an index fund. Shoot, by the time you can get your money out without penalty, your tax rates will probably have doubled from here anyway. Also, why pay down your mortgage when Ben B & Co. are printing money ?
Dude, I’m not even going there on most of what you said. An index fund will allow you to time the market to maximize your return without paying ridiculous management fees to have your fund manager in cahoots with traders doing deals in the extended hours at your expense. Or better yet, buying tranches of MBS for “income.”
txchick57,
you seem to do a lot of trading. What do you think of motley fool guys? I’ve been buying their hidden gems picks and doing really well.
For what it’s worth…
We paid off the mortgage 4 years ago. Best thing we ever did. That allowed us to quit our fulltime jobs 2 years ago when our son was born. The wife keeps our son busy and I do part-time consulting work. We figure in a couple years we might go back fulltime when our son is in school.
For us, it boiled down to control. We now have control to do what we want. We don’t have some bank tugging our leash and making us go to work to pay the mortgage.
As for investing, I found that I now actually understand what is going on in the stock market since I have time to look into it. When I was working fulltime, I had no clue what the market was doing and of course, I never made any money.
Dang.
I was thinking we’d see an ABC special on this in October.
Will the Housing Bubble be the cover of next week’s Time, too?
This thing is moving faster than even I thought possible.
An ABC 20/20 on phucked flippers.
Wow.
Six months ahead of my prediction.
Wow.
Maybe I’m wrong, folks.
Maybe…
“ALL HELL BREAKS LOOSE IN…
…JULY?”
Could we really be moving THAT FAST?
Wow.
I want to go to a kids birthday party and hear people talk about how a house across the street which is bigger/nicer than theirs got sold for less than what they paid for theirs.
I want to tell people I’m buying a house and I want to hear Joe and Jane Sixpack say “Are you crazy, housing only goes down, you’re better off renting”.