‘We Are Finally Coming Out of Denial’: Florida
The Florida Press reacts to the new housing numbers. “The cooling real estate market offers a bit of good news for cash-strapped home buyers: The affordability squeeze has eased slightly. But the income needed to buy a typical home is still twice what it was four years ago. The typical Palm Beach County home cost $392,900 in the first three months of the year, down from $415,800 in last year’s fourth quarter and $399,900 in the third quarter.”
“Indeed, the lull in the region’s five-year run-up in home prices may have fewer potential buyers contemplating a move out of the area, but many more still are sitting on the sideline waiting for prices to fall further. That means that, for the near future, home sellers will have to contend with a glut of properties for sale and less interest from buyers, a reality reflected in Monday’s first-quarter report, which said the number of home sales in Palm Beach County fell 32 percent from a year ago.”
“Agents say they expect sales to increase this summer compared with the past few months. ‘A resurgent market? I think that will be out much farther than the immediate future,’ said Beverly Rothstein, an agent in Coral Springs.”
“Inez Fleming, an agent in Delray Beach, said she hasn’t worked with many buyers in 2006 and said people might be waiting to see whether the region gets hit with a hurricane for the third year in a row. Fleming has three storm-weary clients selling and moving back north. ‘They just don’t want to deal with it,’ she said.”
“The median home price in South Florida, $377,000, increased 11.2 percent compared to the same period a year ago. However, the median price in the tricounty area was down from $391,200 in the fourth quarter. ‘Pressure is coming off of home prices,’ David Lereah, the NAR’s chief economist, said.”
“Sales of existing homes and condominiums on the Treasure Coast remain higher than they were a year ago, but the median price fell for the second consecutive quarter. In the Fort Pierce-Port St. Lucie area, which includes Stuart, the median sales price (of) $260,200 is down from a high of $267,500 in the third quarter of 2005.”
“Pamela Peterson-Drake, a professor in Port St. Lucie, said the market could not sustain the same levels of sales and price appreciation it had in 2004 and 2005. ‘A lot of this was speculation and there was a reliance on the greater fool theory,’ Peterson-Drake said. ‘The prices were simply too high and not a true economic value of the prices they were selling for, so people had to find a greater fool to buy a home.’”
“‘We’re seeing a flattening of sales,’ said (economist) Merle Dimbath, president of Dimbath Economics in Stuart. People that bought in the last year who are trying to load these properties might sell them for less than they paid for.’”
“The number of condominiums sold in Lee and Collier counties plunged in the first quarter of 2006. Statistics released Monday showed that 698 condos were sold with the help of a Realtor in Lee County, down 47 percent, and 784 in Naples, down 48 percent. Charlotte County’s condo market collapsed in the first quarter, with a 91 percent slide to just 17 sales.”
“Local median housing prices fell slightly from the fourth quarter of 2005 to this year’s first quarter. The median-price figures for Brevard County tend to mirror the overall national picture, where there was slippage from last year’s fourth quarter and this year’s first quarter.”
“Watching the real estate market lately has provided some anxious moments for homeowners and homebuyers. The Florida Association of Realtors reported a 5.1 percent drop in median home prices, to $222,400 in the first quarter of 2006, from $234,400 in the fourth quarter of 2005.”
“Misty Morrison, who is helping sell a home in Viera, recently reduced the asking price by $25,000 to $254,900. ‘Obviously, you have to be competitive to be able to sell it,’ Morrison said.”
“Others agree. ‘We are finally coming out of denial, and beginning to acknowledge that tough times are ahead,’ said Manuel Iraola, CEO of a real estate consultant group. ‘No one wants the bubble to burst, but the market is showing signs of fatigue, and the balance of power is shifting to the buyers.’”
‘We are finally coming out of denial, and beginning to acknowledge that tough times are ahead,’
Then the speaker goes to mention that its TURNING to a buyers market.
Seems to be that the denial is not yet turning to acceptance quite yet.
simmssays…
americaninventorspot.com
With interest rates the highest they’ve been since 2002, anybody who doesn’t pay cash for a house is paying more for it than they were last month, or last year. The days of historic low rates are behind us. Now even as home prices are dropping, they are less affordable. Unless they drop a whole lot more than they have so far.
“Unless they drop a whole lot more than they have so far.”
Which most of us believe they will. Cuts like the $100K Centex ones are only the beginning and are taken by the more astute builders who want to get out while the getting’s good. Existing-home sellers are the deer in the headlights and most will not bolt until it is too late, IMO.
I can’t believe your saying this LV Landlord . Are you finally seeing the truth? Is this the LVLandlord that we all know and love . I thought you said the correction was behind you in Vegas?
Hold his feet to the fire Wizard…
It’s a she.
She ought to call herself “LVLandLady”. Otherwise, we may as well refer to her as a he.
Oh who cares if I am a he or a she. And stop putting words in my mouth. I never said the price of housing would not drop. It’ll probably go down a lot, in some places. It might even go down in Las Vegas. If I knew for sure what it was going to do, I’d be rich by now.
Oh wait, I guess I am getting pretty rich by now. Hmm… never mind.
I’m going to work those interest numbers and post the results here in a little while.
Okay, here’s the numbers. A $500,000 house at 6% is equal to a $408,750.00 house at 8%. That’s if you put 20% down and pay $2400/month for 30 years.
I think it is likely interest rates will go up past 8%. And it is certainly possible housing prices will drop by 18.25%. The question is, which will happen first? Interest rates are rising pretty fast, prices are coming down pretty slowly. You’re looking for a sweet spot where the decline in prices exceeds the increase in rates. Good luck with that. I wouldn’t dream of predicting at what moment when that will happen.
“You’re looking for a sweet spot where the decline in prices exceeds the increase in rates.”
No, not at all. The goal isn’t to buy with the lowest monthly payment. That’s what got us into this mess. If I buy a house at the “sweet spot” then for some reason it goes down another 100k, then I lost 100k. If I have to sell it in a few years then I’m 100k down.
Let’s say I buy at the lowest price but at the peak of the interest. If interest rates then fall later then I can refinance. I can’t do anything about the price of my house falling.
I agree and that is why I will not even consider shopping until prices drop a whole lot more. I imagine there are a lot of folks out there with the same idea. It really is about affordability. Overall affordability as opposed to the monthly payment variety. We could probably create a graph that shows prices, interest rates, and true cost and maybe see the sweet spot where they cross over.
The assessors office and title companies can get you the purchase price. Let say they seller is asking $399,000 and he paid $199,000 in 2003.. How about offering the seller the 6% commission ($24,000) plus closing costs ($6,000) plus a little moving allowance ($2,000). Thats $32,000 on top of $199,000 or
$231,000 offer on a $399,000 asking price. Can the market go lower than that???
This is the third consecutive significant decline in housing starts this morning. From 2.25 million to 1.85 million is a big three month change.
Simmssays…
http://www.americaninventorspot.com
I would like to see a 1 year trend line..Can you do it simm ???
Hey, the greater fool theory! FIrst MSM reference I’ve personally seen to that…
““‘We’re seeing a flattening of sales,’ said (economist) Merle Dimbath, president of Dimbath Economics in Stuart.”
Proffessional liar.
David
http:/bubblemeter.blogspot.com
“flattening”? Amateur liar. Lereah would have come up with something like “de-verticalization”
Flattening = staying about the same right? or flattening = falling like a rock? Falling Flat? or how about a 30% reduction in sales?
Florida is overdue for a massive property correction. Every thing I’ve read about the 1920’s looks to be repeating itself verbatim. Last week the St. Pete Times had a story about people in Polk county selling land for 6x it’s assesed value to New Yorkers who were scared off my local thugs yielding guns when they arrived to check out the swampland and found no way to get to their new piece of heaven on earth, much less build anything on it.
There is no lack of greater fools in this world. There is a lack of easy credit for the greater fools though, which is pulling back this market.
We just sold a few months ago one of our family cow pastures in Polk for more than 10 times what it was worth 5 years. I am kind of hoping to be able to pay cash for a foreclosed, unfinished beachfront condo in 2 to 5 years for pennies on the dollar, and convert it to a suite hotel of my own. (I work as a researcher in the central Florida hospitality industry).
“I don’t see [prices] going much lower,” said Donn Roebke, an agent for Illustrated Properties in Wellington. “This is the best time for someone to go ahead and purchase a home.”
Something tells me that in Donn’s view “the best time for someone to go ahead and purchase a home” is pretty much of every single day of Donn’s career…(and what the heck does “Illustrated Properties” mean?)
I think “illustrated” means, you can only buy from hand-drawn renderings at an as-is auction. You don’t get to inspect the “property” first.
I agree.
I won’t consider buying ANY home unless the prices come down another 20% or so. No way in hell am I paying $400,000 for a 1500 sq ft shack in crack town.
The best part of the housing market is that it is very illiquid. The movements and changes in momentum are looooooong and sloooooow. The bottom will be apparent after 2-3 years, just like it has been in every other housing crash. By illiquid I mean that there are high transaction costs, the transactions take a long time, and that buying and selling a house is not an efficient market in general. Efficent or liquid markets react much quicker. Look at the NASDAQ in 2001.
after 2-3 years of constant low, the low won’t happen in 2-3 years, it will happen in 4-6 years.
I think the rapidity with which we the bottom depends upon the percent of speculators (and empty units) in the market. The more speculators the quicker the bottom. How quickly we reach the bottom probably also depends upon how quickly rates rise (pull the band-aid off slow or quick).
Does anybody have information on the change in housing starts as a leading indicator of directional changes in prices?
It will take 2-3 years for many of these fools to figure out that they will never, ever be able to sell their homes at 2005 price levels again.
Case in point: One home around the corner from where we live has had maybe 25 open houses since it was first on the market last July. Yesterday morning (after yet another Sunday open house with probably no attendance, esp. given that it was Mother’s Day!), I noticed a “Price Reduced” sign appended to the top of the main one for the first time. It will be interesting to see how many price reductions later they will finally find a buyer…
Just this evening saw a price “Price Reduced” sign here near Eastern Market on Capitol Hill in Washington, DC. Been maybe two or three years since I’ve seen that. Meltdown begins.
I thought that the hurricanes this year would be the first to take out a region and return it to the ocean. Looks like New England gets that first distinction. Any comments from someone with bird’s eye view in Nw Eng to let us know specifics, and any expectations for the bubble market.
New England Sees Worst Floods in 70 Years
By KEN MAGUIRE, Associated Press Writer
1 hour ago
LOWELL, Mass. - Storm-weary New England residents waded out into a fifth day of rain Tuesday as the region’s dams kept a tenuous hold against cresting rivers and evacuees wondered what remained of their homes after water filled their basements and surged over some rooftops.
Across northeastern Massachusetts, thousands of people fled submerged neighborhoods during the region’s worst flooding in nearly 70 years. More than a foot of rain fell during the weekend in some areas.
“It seemed almost Biblical,” Gov. Mitt Romney said Tuesday on ABC’s “Good Morning America.” “We’re sort of making jokes about Noah and taking two of each kind of animal because we haven’t ever seen rain like this.”
The stubborn storm system lingering over the region was expected to move out by Wednesday, and Peter Judge, a spokesman for the Massachusetts Emergency Management Agency, said the worst of the flooding appeared to be over.
But Tuesday morning, commuters still awoke to another day of driving rain.
In Lowell, crews took to the streets in boats and used bullhorns to urge 1,000 households to evacuate. Nick Barrett, 24, took an air mattress when he left his condominium overlooking the Merrimack River, and later joked it might become a raft.
“I’m going to use it to get back in, too,” he said late Monday night as he looked over the flooded parking lot of his building.
More than a foot of rain has fallen in a region stretching across New Hampshire, Massachusetts and southern Maine. Between Boston and the New Hampshire border, the National Weather Service estimated 12 to 17 inches of rain fell in three days. Even though the month is only half over, it already ranks as the wettest May on record in Concord, N.H, and Portland, Maine.
In New Hampshire alone, more than 600 roads have been damaged, destroyed or inundated by water. Flooding in Maine washed out dozens of roads and bridges, and threatened a pair of dams along the swollen Salmon Falls River in Lebanon. Two areas of Lebanon near the Spaulding Dam were evacuated Monday as a precaution.
The rising water of Pillsbury Lake in Webster, N.H., breached a dam on Monday, releasing millions of gallons of water and threatening to drain the lake. The water eroded the earth from one side of the dam and began running into woods and downstream to the Contoocook River, causing some flooding and forcing the evacuation of several families.
Several hundred residents in Methuen, Mass., also left their homes after officials became concerned that the Spicket River Dam, shored up by several thousand sand bags, would give way under the pressure of the raging river.
Even though the ferocious water tore away a wooden walkway across the top of the dam and knocked over a nearby lamp post, the concrete structure kept a tenuous hold when the river crested early Tuesday.
“We still have dams holding back a lot more water than they were designed to carry,” Romney said on CBS’ “The Early Show” Tuesday. “This is what you can expect when you’ve got a storm that’s bigger than anything we’ve faced in 70 years.”
U.S. Route 1 north of Boston was expected to remain closed for the Tuesday morning commute, state police said. Large portions of the highway between Route 16 in Revere and the interchange with Route 128 in Lynnfield were underwater, forcing the shutdown of dozens of businesses.
Schools across the North Shore and Merrimack Valley as well as in southern New Hampshire closed for a second day Tuesday.
The flood water also overwhelmed sewage systems and drowned waste water treatment plants. Burst pipes in Haverhill have been dumping 35 million gallons of waste a day since Sunday into the Merrimack River. A flood at a regional treatment plant in Lawrence was threatening to shut down the power there, which would send sewage into the Merrimack at a rate of 115 million gallons a day.
The statewide damage was expected to reach the tens of millions of dollars, Romney said Tuesday. He said officials were also concerned about the long-term environmental impact of the sewage on shellfish beds.
“This is gonna be a big financial crisis for a lot of people,” he said.
Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
“Others agree. ‘We are finally coming out of denial, and beginning to acknowledge that tough times are ahead,’ said Manuel Iraola, CEO of a real estate consultant group. ‘No one wants the bubble to burst, but the market is showing signs of fatigue, and the balance of power is shifting to the buyers.’”
Umm, I kinda want the bubble to burst. Anyone else?
Yes. I want it to burst in an epic “take out all the realtors, flippers, and scumbag mortgage brokers” hollywood movie explosion type of way.
Bubble Butt,
For some odd reason I just keep picturing it more like the original “War of the Worlds” where for all of their fire power and impenetrable armor the atmosphere (of reality) begins to bleed them of their fearsome ways and we find out that they are actually quite frail, even pathetic.
But a Hollywood style explosion would be nice.
LOL. Oh yah…
That means that, for the near future, home sellers will have to contend with a glut of properties for sale and less interest from buyers…
That also means that home sellers will need to lower their asking price in order to sell.
Tuesday, May 16, 2006
$628,000: April home prices set new record
Sales activity is down 28 percent from last year.
The Orange County Register
Orange County home prices set a new record high – $628,000 – in April, however, sales activity hit an 11-year low.
DataQuick said today that the median selling price rose $5,000 from the old peak of $623,000 set in March.
But just 3,276 homes sold last month, down 28 percent from a year ago. That’s the slowest April since 1995 and the sixth consecutive month that sales fell on a year-over-year basis.
You seem surprised. Pretty simple really. It’s because Real Estate always goes up.
Until it doesn’t. Current interest rates reasonable, historically. Current prices, NOT.
“Agents say they expect sales to increase this summer compared with the past few months. ‘A resurgent market? I think that will be out much farther than the immediate future,’ said Beverly Rothstein, an agent in Coral Springs.”
Well, this is clearly a problem, especially for realtors. Giving sellers the false impression that volume and interest will pick up this summer may be dragging out the price declines necessary to get the market moving. They need to face the realities of the situation and tell sellers, “You need to lower prices A LOT to get a sale NOW, since waiting to reduce will only ensure you will need to reduce even more as market conditions continue to worsen”.
That advice should come from David Lereah.
New homes sales are a better indicator of the current market .. and I’m seeing good things here in Brevard County.
One particular builder dropped their price on a particular model from $245 to $207, over a 2 month period. That is a 15.5% drop.
In the area I am looking for a home, there are about 13 new developments (”communities”), and a handful more just getting started.
In the ones that are partially completed, 30-40% of the homes have “For Sale” signs in yard. They don’t seemed ot be selling.
And yet, the builders keep on building. Keep it up .. I say !
Would you please comment on how the single family - 1600 square foot home market in Melbourne is doing? Thank you.
It depends on the location in Melbourne. The closer you are to I-95 or the beach, the more expensive.
You can get a new 1600 sqft from Maronda for about 200k (off Dairy road). There are many exisiting home of that size for 220-250k.
All of those are still way overpriced. For example, the 1600 sqft home by Maronda was about 130k-140k in 2004. AND .. nothing has changed here since then. I don’t make much more than I used to in 2004, the city is worst than it used to be in 2004 (more traffic and crime).
So, I have decided not to buy this year. I have seen prices drop infront of my eyes. I don’t want to be stuck in a depreciating home, that I paid too much for.
The affordability squeeze has eased slightly. But the income needed to buy a typical home is still twice what it was four years ago.
Well then, in order to get back to steady state, either house prices have to drop by 50% or salaries have to double. Anyone care to bet which one is more likely to happen?
I know which one I would prefer for just myself, but I doubt that will happen. “Hey boss, I need a 100% raise to be able to afford another house.”
Prices in my area have gone up by 50%, while my income has only gone up by 10%. Oh .. and gas costs twice as much, my electric has almost doubled ( thanx FPL), all the resturants charge more ……..
“Watching the real estate market lately has provided some anxious moments for homeowners and homebuyers…”
Why? Falling prices are good for homebuyers, and shouldn’t cause any anxiety.
“No one wants the bubble to burst…”
Wrong. Housing consumers welcome a return to fair and reasonable real estate pricing.
Can anyone comment on the Melbourne, FL market and how it is doing? Thank you
Tanking…………………….
Read my comments in the above post.
I’v been following the Melbourne/Palm Bay marke for the last few months . Almost seems like evey other house is for sale around here, but nothing’s selling. Price reduced sings everywhere. Private sellers and RE agents don’t want to hang up the phone, even after I tell them its out of my price-range.
There are many new developments all around town. Just wait till those hit the market, and add to the already overflowing inventory.
FL Bust - Thank you for the feedback. It will be interesting to see where home prices end up this time next year. I live in Annapolis, MD. I also see very few sold signs, and now lots of “price reduced” signs. I was curious about Melbourne because my mother used to live there. Thanks again.
“No one wants the bubble to burst.” What? You mean there is a bubble? Or at least an acknowledgement of one by an RE professional? Shocking.
My folks live n Melbourne and whenever I go for a run I would always see sporadic for sale signs in the neighborhood. Now when I pull up into the development, everywhere I look there are for sale signs. My parents paid $117k for their house 10 years ago and the neighbor just put a similar house for sale at $325k. These are mature developments compared to where I live in Orlando. They are building houses every where in Orlando. One new development has approximately 70 houses and I would say 30 of them are for sale. Another development has about 35 houses and about 12 of them are for sale. (all for over $550k….wait….the median income in Orlando is $45k….who is buying these things??!!)
We are finally coming out of denial
Well, you’d better grab a towel
ROTF