Raining On The Housing Bubble Parade
It’s Friday desk clearing time. “Centex has quietly backed away from its “Westward Ho” joint-venture development project on the Las Vegas Strip, TheStreet.com has learned. C.J. Julin, VP of marketing with the division of the homebuilder that specializes in second homes and resorts says he could not disclose whether Centex made or lost money on the deal, but he did say, ‘We never lose money.’”
“‘For us..we need to make sure that things that we have in the market today, we are successful with,’ he says. Centex may have become worried about the huge spike in supply of luxury condos in Vegas. In the fourth quarter of 2005, the Las Vegas Valley, which includes the city and outer regions, had 62,600 luxury condo units already completed or under construction, which is about double the figure from a year earlier.”
The Cape Codder reports on one way to move sales. “Maria Marelli was so excited when she closed on a small condominium cottage in the far East End of Provincetown. Sure, it was only 400 square feet, but it was hers.”
“‘It was the only thing I could afford,’ said Marelli, who works three jobs. ‘And I could barely afford it. But the realtor I worked with told me I either buy this or I could forget about ever being able to buy anything.’”
“Talking about hot markets that have suddenly cooled down, real estate agent Nick Calvert, who sells homes in Virginia Beach, Va., says, ‘I have people who are waiting for homes to sell in West Palm Beach, Fort Lauderdale, New Jersey, Connecticut and Fredericksburg, Va. All of them thought their homes were going to fly (off the market).’”
The Washington Times. “Home sales slowed last month in the Washington metropolitan area, falling to 9,372. It was the slowest April in six years. Sales were down 27 percent compared to April 2005. Nearly 20,000 homes were placed on the market in April. Despite the fact that the seller’s market of 2000-2005 is now history, plenty of people are still trying to sell.”
“But, with sales down by 17 percent in Maryland and 37 percent in Virginia, new listings aren’t going to sell very soon. The change is probably due to two things: Some sellers are still reaching for the stars when they set their asking price, and buyers aren’t getting into bidding wars that push prices higher.”
The Washington Post. “Now we’re taking this topic straight to the readers, are high prices starting to affect your budget? Waldorf, Md.: Yes, this is starting to impact our budget. We are currently looking for ways to cut back.”
“We dropped full coverage insurance for liability on the car that is paid for. We are thinking about getting rid of cable or finding a cheaper way to watch TV. We are going to find a cheaper phone service. I told my husband that if this continues then we will both have to get part-time jobs.”
A reader pointed out this drop in home sales. “Home sales prices stabilized in April, but sales volume was significantly below last year’s levels, according to DataQuick. Merced County’s median price was $378,000, which was $5,500 more than March . But the sales volume was dramatically lower, down nearly two-thirds, compared with last year.”
And the Associated Press reports on the latest condo investing idea. “Three car condo developments are scheduled to open in south Florida by the end of 2007, and developers say they’ve already sold between 20 and 30 percent of the condos available.”
“Developer Kevin Buckley said condos start at $150,000 for a 620-square-foot condo for three cars and go up to $400,000 for an 1,800-square-foot condo. “(Developer) Dayna Heit said buyers also consider car condos an investment. ‘It’s a piece of real estate as well as a place to put your car,’ Heit said. ‘It’s very minimal compared to what you’re paying for the homes down here.’”
Another great week of building a housing bubble consensus. My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics.
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Forecasters Worried by Job Losses
By Lisa Girion
The state shed 2,600 positions in April after a weak March, spurring fears of an economic slowdown. Building trades are hit hard. >>
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http://www.latimes.com/business/la-fi-caljobs20may20,1,646162.story?coll=la-headlines-business
A perfect microcosm of the last 5 years.
People. THINK FOR YOURSELVES!!! Use your brain.
Especially when making a purchase that will affect the rest of your life…
I think he misheard the Realtor.
The Realtor actually said “If you buy this you can forget about ever being able to buy anything else.”
Both the realtor and the buyer are to blame here. The realtor should never be allowed (by the “strict code of ethics”) to make statements like that. It is basically a promise that property values will only go up. And, the buyer needs to think for herself. She simply can’t afford to buy, and should not have bought the condo. It is a 400 sq. ft. condo (400 sq. ft!!!), and she got a roommate to help her cover the expenses! WTF. How do two people live in a 400 sq. ft. condo?
“‘It was the only thing I could afford,’ said Marelli, who works three jobs. ‘And I could barely afford it. But the realtor I worked with told me I either buy this or I could forget about ever being able to buy anything.’”
I’m wondering what rents are in Providence? And I’m thinking this was part of the motivation. With water on 3 sides of a very teeny town, (and does she even have a car….don’t necessarily need one in P-town), she might have felt she had to make a decision which amounted to the lesser of many evils. Not saying she chose well. Just saying the little info in that article quote probably doesn’t give the proper picture.
Provincetown. (sorry)
Here you have this hard working young person being pressured into a stupid purchase based on a sales pitch to induce panic buying . I wonder if the realtor really believed what they were saying ? I guess everybody at some time in their life has to learn to not be the victim of a salesperson ,but it’s so evil that it has to be this expensive of a lesson for this nice young person .
400 sf? Is Provincetown somewhere near Tokyo?
that’s a great comment…I was thinking that life in P-town (do people who live there get offended when it’s called that? it’s what I always used to call it when I lived in MA?) is similar to Tokyo perhaps, and that’s why you can/have to live in 400SF with a roomie.
I watched this great show with my kid the other day on life in Tokyo–showed how since RE and space is at such a premium, people live in small small places but it doesn’t matter that much since so much of your living gets done out in public and there is good ’safety’. So you don’t need to worry about neighborhood so much, and you don’t do much at your home but sleep and eat a little bit, but mostly you hang in public. If you’re single I’m guessing that’s what life is like in P-town, and you eat out so much on shitty service-job wages that you can’t afford to buy many objects to fill your SF with anyhow…
Sucky for the P-towners though that US culture is so individualist in the ‘f-you’ sorta way, and that the summer people treat the year-rounders like dogs.
Vicki Graham is so out of here she’s got half her stuff packed. “I have one foot out the door,” she said.
Graham is moving to Alabama.
Graham and her family would been been gone by May 31, but Graham’s buyer backed out last month — on the day of the appraisal — leaving her standing at the altar of commerce.
Now Graham’s home is back on the market. And once again, she’s keeping the place tidy for those crucial weekend open houses.
But her eye is still firmly set on getting out of town. “We’re going to Alabama,” she said. “The schools, the taxes, the money, and I don’t want another hurricane season.”
Recent reports show public school enrollment is declining throughout South Florida. In Palm Beach County, for instance, forecasters expect a drop of about 500 student for the coming school year.
“Something is definitely going on,” said William Strong, a professor of economics at Florida Atlantic University in Boca Raton. “Where are kids going, and why?”
Graham knows why. She’s had it with the crime, crowds and endless increases in everyday costs. Today it’s home insurance, tomorrow it’s taxes. Suddenly, South Florida isn’t looking like such a great place to raise a family after all.
But in Alabama, things seem different. “The girls look like girls. The boys look like boys,” Graham said. “We went to an open house up there. They had a sign: ‘The last person closest to 4 p.m., lock up when you leave.’ Here, they would have taken the appliances out.”
The decline of the middle class in Palm Beach County is a creeping syndrome. I chart the trend’s beginning when the shopping malls started doing away with reasonably-priced stores and started carting in Cartier. Soon the family restaurants gave way to places that never serve salad with an entree.
And now we’re at the point where housing is out of touch for many families — unless you like driving an hour or so to your job.
Yes, there are plenty of new homes being built and sold. But when homes sell for $300,000, $400,000 or more (and many of those are townhouses!) you can bet sellers aren’t marketing them to Orlando-area families. They’re selling to the only people who can afford them: Rich, retiring Baby Boomers.
And these folks don’t have children who need to enroll in public schools.
“People with children are selling, and people without children are buying,” Strong said.
I know many people, who, like Graham, have had enough. Tennessee. North Carolina. Alabama.
The same states, for the same reasons, are the new paradise for South Floridians.
Graham says she’s making some adjustments to her forced, extended stay in Palm Beach County.
Her immaculate 4 bedroom/2.5 bath home plus pool in Boynton Beach’s Nautica Sound is priced at $469,000 —- but she’s throwing in $3,000 for closing costs.
If she can’t sell the house in time for the coming school year, she’s already made plans to put her daughter in private school.
Wonder why enrollment is declining in public schools?
Suddenly, it doesn’t look like such a mystery anymore.
The car condo reflects the sad state of our society…
“The girls look like girls. The boys look like boys,” So does this. Is there something wrong with the children of South Florida? Last I knew, girls these days look like fat walruses with those horrible pants and belts. And boys sometimes look like Black kids. But at least they still look like girls or boys.
Walruses/Black kids…What are you talking about?
WTF are you talking about?
I think he’s talking about the stupid “pants hanging below the buttcrack” fad popular with today’s kids.
Whiggers.
Whiggers? What does that mean?
Young white kids who affect the dress and manner of the Whigs, a political party that flourished in the mid-ninetenth century.
It’s a derogatory term applied to a white person who is trying to “act/look black”. Think of what a stereotypical inner city, young black “thug” dresses and acts like, then imagine that nothing is different except they’re white. I’m not trying to play on stereotypes, just answer your question.
I like Thomas’ answer better
We have the same thing up here. Go to any mall and you’ll see obese teenage girls with the folds of blubber hanging over their belts. And the boys (white) wearing those “I just took a dump in my shorts” baggy pants doing the “gangsta thing”.
It is sad that teens have no role models except “rap culture”.
We have become a country of fat, selfish, under-educated “McLife” consumers.
No wonder here that folks from China and India are taking over all the high end jobs.
Allstate is dropping wind storm coverage all along the Gulf Coast. You folks in Corpus Christi, Galveston/South Houston (paging NASA!), the Golden Triangle, what’s left of New Orleans, Mobile (nice place), Pensacola, all of Florida, sorry.
http://www.chron.com/disp/story.mpl/business/3874097.html
yesssssss…………desk-clearing time
*friday*
Citizens rate increase of 16 percent on average OK’d by state
Careerbuilder
By DAVID ROYSE
The Associated Press
May 19, 2006, 6:48 PM EDT
TALLAHASSEE — Residents whose homes are insured by Citizens Property Insurance will see their premiums go up by about 16 percent on average this year, although for some coastal residents the increase will be much higher.
The increased rates, approved Friday by the state Office of Insurance Regulation, were widely expected _ and a recently enacted law means Citizens customers will likely see more increases in the next couple years.
Citizens Property was created by lawmakers in 2002 to provide hurricane wind insurance for Florida residents who can’t find a private insurance company to cover their house.
Most coastal residents in the state are now covered by Citizens, as are many mobile home owners. The company is now the second largest insurer in the state, with more than 800,000 policies.
By law, Citizens has to charge more than other insurance companies. That’s because, as a state company it is meant to be an insurer of last resort, not a company people seek out voluntarily. The company’s policies are backed up by all state home owners _ when Citizens is unable to pay claims, the customers of other companies are charged to bail it out. This year, after two straight years of shortfalls, taxpayers bailed the company out. Lawmakers agreed to pump $715 million of state money into Citizens to decrease its shortfall and thus lessen the hit on homeowners.
Avoiding future shortfalls is part of the justification for the rate increase for Citizens policy holders.
State Insurance Commissioner Kevin McCarty approved an average statewide increase for Citizens homeowner’s policies of 16.1 percent.
For those in the areas with the highest risk for hurricane damage, the average increase will be more than 25 percent. For mobile home policies the average statewide increase will be 6.7 percent, lower than what the company had sought.
McCarty’s office also rejected a requested increase for some condominium unit policies. But it also approved a requested rate increase of 21.5 percent on average for Citizens’ house fire policies.
Property insurance rates have gone up for nearly everyone in Florida after two stormy hurricane seasons and projections for increased hurricane activity in the next several years.
The rate increases were also partly needed because most other insurers have raised premiums _ meaning Citizens needs to do the same to make sure it remains the most expensive option. Regulators also say the company’s rates have been too low to reflect the actual risk for several years. That’s led to the company’s shortfalls, which have in turn required assessments on everyone else.
“Our actuarial staff has rigorously examined these rates, and I am confident the approved adjustments achieve adequate rates given the risks involved,” McCarty said.
Citizens Property spokesman Justin Glover said company officials believed the premium increase was “a step in the right direction” of getting rates more in line with the risk of covering Florida homes.
Some Citizens customers already began seeing part of the rate increase in April _ the company was allowed to begin raising premiums before it received final approval. Most customers should feel the full effect of the increase by September. ___
On the Net:
Citizens Property: http://www.citizensfla.org
Copyright © 2006, South Florida Sun-Sentinel
“‘It was the only thing I could afford,’ said Marelli, who works three jobs. ‘And I could barely afford it. But the realtor I worked with told me I either buy this or I could forget about ever being able to buy anything.’”
Wonder when THIS realtor is going to be featured in Century 21’s “Agents of Change” rogues’ gallery.
I wonder when people with 3 jobs who were suckered into a condo they can’t pay start commiting Realtorcide.
State Farm plans huge increases; Allstate wants to dump thousands
By Kathy Bushouse
South Florida Sun-Sentinel
May 13, 2006
Depending on which of Florida’s two largest property insurers covers your house or condominium, you’ll soon either face a wallop to your wallet, or will have to find a new insurance company.
State Farm plans massive price increases, while Allstate intends to jettison 174,000 policyholders.
Florida’s biggest home insurer, State Farm Florida Insurance Co., asked state insurance officials Friday for its largest-ever increase in annual premiums — one that will more than double the rates paid by many of State Farm Florida’s customers in South Florida and in parts of the central and western areas of the state.
The company made two requests, one for an average 58.8 percent rate increase statewide plus a 12.7 percent statewide boost for its 1 million policyholders, State Farm spokesman Chris Neal said. Subject to state approval, the increases would take effect Aug. 15, which is in the middle of hurricane season that starts June 1.
In South Florida, many State Farm Florida customers are facing rate increases of at least 80 percent for their homeowners’ coverage. Policyholders living east of Interstate 95 actually could see their rates fall because they buy windstorm insurance from state-backed Citizens Property Insurance Corp. Those living west of the interstate face larger premium increases because State Farm Florida insures their homes against hurricane damage.
State Farm’s request is “certainly one of the largest rate increases we’ve seen for a company of considerable size,” said Insurance Commissioner Kevin McCarty.
Meanwhile, rival Allstate Floridian Insurance Corp., the state’s third biggest home insurer, said it would shed 174,000 of its about 468,000 home, condo and mobile home policies statewide, starting in November. Of those being dropped, 120,000 will be offered new home or condo policies with start-up insurer Royal Palm Insurance Co. of Ormond Beach.
No similar arrangement was made to help Allstate Floridian’s mobile home customers find new policies. They likely will end up in state-backed Citizens Property Insurance Corp., the insurer of last resort.
State Farm also is dropping some policies. The company won’t renew more than 1,500 condominium association policies, and will shift the wind insurance portion of 39,000 homeowner policies to Citizens, Neal said.
The insurers’ moves come only one week after the Florida Legislature passed a series of measures designed to lure private insurers back to the state, prompting state Sen. Ron Klein, D-Boca Raton, to request an emergency special session on insurance.
Klein urged Gov. Jeb Bush to veto the property insurance bill and call a special legislative session to craft new legislation to protect homeowners from “random cancellations and massive rate increases.”
Bush or legislative leaders would have to call a special session, and representatives for Bush or for the House and Senate leaders could not be reached for comment Friday night.
State Farm is blaming spiraling reinsurance costs for its request for a 58.8 percent increase. Reinsurance is essentially insurance for insurance companies to help pay claims after a catastrophe, and State Farm’s Florida division buys the coverage because it is a separate entity from its Illinois-based parent company, Neal said.
“It’s just necessary that we have reinsurance,” Neal said. ” … If we could go a season without a storm, I have a feeling those costs could come down greatly.”
The other proposed increase would cover the cost of doing business, Neal said.
State Farm’s decision to not renew the condo association could free up some money for the insurer to issue new home policies, but not necessarily in South Florida, he said. State Farm has not sold new homeowner policies in South Florida since the mid-1990s.
At Allstate Floridian, the company decided it needed to cut even more policies from its roster, after making a similar decision last year to jettison 95,000 policies, company spokeswoman Deb Clouser said.
Of the policies Allstate Floridian is dropping, 120,000 homeowner and condo policies will be offered replacement coverage through Royal Palm Insurance, a company started earlier this year by insurance executive and former state Sen. Locke Burt.
Customers who accept a new policy with Royal Palm will be able to keep working with their existing Allstate agent and will be eligible for discounts on both policies, Clouser said.
Though it’s a new company that just received its license from the state on March 31, Royal Palm has about $65 million in capital, said Burt, Royal Palm’s president. Allstate Floridian’s former customers will be the first clients for Royal Palm.
Royal Palm will have the opportunity to take a maximum of 15,077 policies from Allstate Floridian in Broward County, 10,706 policies in Palm Beach County and 9,453 policies in Miami-Dade County, Burt said.
What’s unclear is how much former Allstate Floridian policyholders will pay for coverage from Royal Palm. That will depend on several factors, including age of the home and materials used to build it, Burt said.
McCarty said he is confident Royal Palm had the money and the management structure to take on a significant chunk of Allstate Floridian’s policyholders. It is rare for a start-up insurance company to come into the state with $65 million in capital, which is how much Royal Palm will start with, McCarty said.
As for State Farm’s significant proposed increases, McCarty said he’s seen other companies come in with similarly high requests based on reinsurance costs. Reinsurance isn’t regulated by the state, and “the prices have just been outrageous in the reinsurance market,” he said.
The uncertainty in the state’s property insurance market worries Floridians like Joan McDermott of Hollywood.
McDermott is an Allstate Floridian customer who kept her policy after last year’s round of non-renewal notices. She wonders whether she’ll still have coverage come November, and how much she’ll pay for it.
“I just hope we have a quiet year,” McDermott said. “Because everybody’s going to be anxious.”
They are going into the hope mode now in Florida, as in “we hope we dont get hit by a bad one this year.” This pretty much exemplifies this whole real estate thing. So far hope has worked and the market has not tanked, but ask anybody who is in RE, “what if RE goes down”, vrry few will have a plan B, no one (still) thinks it can happen, no fall back plan. If RE goes down just 10-20% I think many people will be financially ruined,in a way, we as a country are less ready for a RE crash than a major hurricane.
So true
10%-20% declines here in Bay Area mean a LIFETIME of median-income earning. I want everybody to think in silence about it.
aww…. isn’t that cute… Whats amatter BallState? You bled everyone dry until it’s time to deliver and now you want to go home?
And Florida has 2 smucks, George and Jib, doing nothing about it. Imagine that.
You think you are in good hands with Allstate, but after you get dropped on your head, you realize you aren’t in Allstate’s hands, but Britney Spear’s.
“But, with sales down by 17 percent in Maryland and 37 percent in Virginia, new listings aren’t going to sell very soon. The change is probably due to two things: Some sellers are still reaching for the stars when they set their asking price, and buyers aren’t getting into bidding wars that push prices higher.”
Reversion to the mean has begun. If you’re having trouble selling you may want to get one step ahead of the guy down the block and price it to sell in the given environment. It’s likely the most you will get for a long, long time.
Lately, the prices on houses for sale in neighborhoods here in Northern VA remind me of leapfrog. What a week. The end of school is here and this weekend is a listing bonanza. A lot of sellers are putting their houses up for rent and planning to wait it out ’til next Spring. I read recently that real estate cycles last 18 years and 4 months . . .
You mean the investor/flippers are going to rent their flips until the big real estate come back of 2007 that the NAR spinners predict . What happens when their houses go for less next year ? Don’t tell me that realtors are telling people to keep investing based on the 18.4 year cycle ?
Test
F
Testing again
D-
Comment by Mo Money
2006-05-19 15:38:40
I wonder when people with
The term going postal will have a new meaning, when FBs go after their realtors.
So it will be called ‘Going Realtor’. I can truly imagine that.
Shakespeare:
“The first thing we do…let’s kill all the Realtors”
…or something like that
Silicon Valley job market grew at modest clip in April
By Chris O’Brien
Mercury News
“Silicon Valley’s job market posted another modest gain in April thanks to an unusually high number of leisure and hospitality jobs, such waiters and hotel employees.”
Yeah, we wouldn’t want to be adding any HIGH PAYING jobs to support the crazy housing prices. Yep, no problem here with flat wages and poor jobs being created to replace high tech. Silicon Valley to become Silicon Slum in the future ?
I love these signs of the growing disparity between wealthy and not in our land..well, no, they suck.
“Living on borrowed dimes
It’s not just Britons who are struggling under mountains of debt, says Paul Harris. Consumer and government spending has got out of control in the United States too”
We had that debate today…It seems superfluous to bash Realtors.
Was there any doubt that they were anything but sleazy used car salesmen.professionals ?? You study for 2 hours , pay $100 , and now you’re a professional. Their only goal is to wedge you the biggest house you can qualify for to maximize their commission, period. It’s like getting mad at a politician for lying ,and lining their pockets….It’s inate.
As bad as the realtors are, think about the theoretical honest broker who encourages his buyers to purchase no more than they can afford, to avoid dangerous loans, etc. This broker would be rejected by buyers and sellers alike, and would soon starve.
or he/she could apply for a job at costco handing out finger food.
And just what would you put near your mouth previously handled by a Realtor®?
Referral business. Honesty wins longterm. I know a great honest car salesman and I refer people to him constantly. He has probably sold 10 cars to people I know because he is honest and fair. I’m not including people referred to him by the people I referred to him. It’s exponential if you treat people right and word of mouth advertising is the best you can have.
Testimonials
Slightly off topic but since i have 30,844 iTunes songs lately I’ve been taking the subject and searching for music to listen to while reading. Take this one where I typed in “rain.” Red Rain by Peter Gabriel, A Hard Rain’s A-Gonna Fall Bob Dylan, Brain Damage Pink Floyd, Brains Voltaire The Grim Adventures of Billy & Mandy, Here Comes The Rain Again Eurythmics, Raindrops Keep Falling On My Head Patti Page, Somewhere Over The Rainbow Israel Kamakawiwo’ole… you get the idea. It is hilarious to play this game.
Yet somehow, I doubt you’ll find a single song featuring the word Realtor®.
You just never quit trying to let everyone know how “wealthy” you are, do you. 30K on recorded music. Yeah right. You really are a pompous blowhard and I don’t believe a word of it.
This pleases me. Your reactions are precisely predictable. What mystifies me is why you wish to show your “issues” in public like this. I’m not lying, that’s all you need know about me.
“Talking about hot markets that have suddenly cooled down, real estate agent Nick Calvert, who sells homes in Virginia Beach, Va., says, ‘I have people who are waiting for homes to sell in West Palm Beach, Fort Lauderdale, New Jersey, Connecticut and Fredericksburg, Va. All of them thought their homes were going to fly (off the market).’”
I bet those good old native virginian boys just love seeing those buckets of $hit pouring in from NJ and CT…… friggin lovely….. just lovely.
I don’t know what’s exactly the deal between VT and NJ/CT, but the way you put it sounds really funny.
UPS Delivers
Please conduct all your pachouli smelling business exclusively in Vermont you filthy unshowered dirtbag. Stay in Vermont and tap a tree for syrup you clown.
pachouli smelling business, lol (the other stuff wasn’t so funny). which makes me realize how in the last 10 years the general public willingness to conduct business to the smell of pachouli has seriously declined. I live in Ann Arbor, one of those towns where it had quite a run, but I think it’s mostly over now. Neroli and geranium, I’m guessing, has been shown via marketresearch to be better for sales…
“Developer Kevin Buckley said condos start at $150,000 for a 620-square-foot condo for three cars and go up to $400,000 for an 1,800-square-foot condo. “(Developer) ‘Dayna Heit said buyers also consider car condos an investment. ‘It’s a piece of real estate as well as a place to put your car,’ Heit said. ‘It’s very minimal compared to what you’re paying for the homes down here.’” ‘
Is this for real? Four hundred thousand dollars for a “car condo?” A slip in a glorified parking garage? The people buying them must be drug lords and dealers, because nobody else could afford such absurdity, or be so tasteless as to fall for it.
Wow, I didn’t realize that this is only for cars. Oh my gawd, what’s next? Animals?
Didn’t they used to call these garages?
I thought the housing bubble jumped the shark when they announced condos on cruise ships — wrong! That delicious definitive shark-jumping moment belongs to CAR CONDOS.
“‘It was the only thing I could afford,’ said Marelli, who works three jobs. ‘And I could barely afford it. But the realtor I worked with told me I either buy this or I could forget about ever being able to buy anything.’”
I almost spilled my vodka-spiked juice all over the keyboard here.
You mean that people in the Bay area really would mind losing 20% of their $2M shitbox there. That would only be $400,000. That is chump change to the phuckin’ flippees that made all that money when it went from $450,000 to $2M in 5 yrs. Or maybe the bag holders might lose the $1.55M when the prices decline big time.
You mean that people in the Bay area really would mind losing 20% of their $2M shitbox there. That would only be $400,000. That is chump change to the phuckin’ flippees that made all that money when it went from $450,000 to $2M in 5 yrs. Or maybe the bag holders might lose the $1.55M when the prices decline big time.
Comment on home profits in Silicon Valley
I’m wondering if some people on this blog think that everyone who had a house in CA and sold in the last year or so made a ton of money (profit). Perhaps not. Here’s why. My experience in Silicon Valley and that of others I know with the same timing who also sold in the last couple years is that if you had bought at peak in 1989 and sold recently your house doubled at best tripled in value. And it took 15 years. And there were periods of time where the house could not have been sold without a big drop in value e.g. 30%. Taking into account that interest rates were very high at the beginning e.g. 12% (and then went steadily downwards) this is 15 YEARS of holding the house to get approximately double the value. I’m not going to calculate the rate of return (which would generally include $100K-$500K or more of renovation as many homes are 50 yr old cheap ranch houses) and the high property taxes, but I suspect it’s not very good. Plus there are taxes to be paid on any gain over the $250K/$500K limit.
I don’t think the big appreciation numbers in the last 5 yrs happened in the Santa Clara Valley. Does anyone have any facts?
Taxing developers green for cheap homes looks red to mayor
By Brittany Wallman
South Florida Sun-Sentinel
May 20, 2006
FORT LAUDERDALE · Mega-developers and the city’s mayor are shooting down a proposed affordable housing law, calling it unfair, communistic and doomed to failure. People could afford a place to live, the mayor said, if they were willing to work harder.
Mayor Jim Naugle, a conservative and brash politician serving his final term, said people mistakenly think they’re entitled to an affordable single-family house on a 40-hour work routine. They need to work more hours, and even then settle for a condo or townhouse, Naugle said.
“I’m supposed to subsidize some schlock sitting on the sofa and drinking a beer, who won’t work more than 40 hours a week?” he asked. “I deny that there is a problem. You can buy condos all day for $160,000.”
Naugle’s comments may be contested by the working-class citizens who’ve told the city they want a home but can’t afford it. But his ideas might hit home in other circles, where a city proposal to make developers slash prices or pay a fee was met with skepticism.
“We ought to let the free market work,” said Bill Scherer, a lawyer-developer on the city’s Downtown Development Authority.
The proposal asks developers to give up big money — $1.5 million on a 100-condo complex, for example — for the theoretical good of the community. The city’s law, as drafted, would make residential developers pay for affordable housing, either by providing it within their housing complexes, or paying fees into a trust fund to subsidize housing for the middle class. Families making up to $69,720 — which is 20 percent more than the area’s median family income — would be eligible for a government boost.
New York has rent control. The federal government has Section 8 housing aid. So, this isn’t the first time government has gotten involved in the real estate market to help people afford a place to live.
South Florida’s cities only recently decided housing prices had reached crisis level highs, and Fort Lauderdale is one of the first to seriously attempt passing a law to do something about it. The city is under pressure from Broward County to pass a law; otherwise, the county says it won’t allow another wave of construction of thousands of condos downtown.
“The concept of this ordinance is from each according to his ability, to each according to need, which is the Communist Manifesto,” said Naugle, who calls the proposed law a “luxury housing tax.”
“One person is working two or three jobs to get ahead and one person isn’t. Should we tax the person that’s working hard to get ahead, to pay for the one who isn’t?” he said.
Jim Carras, head of the private, nonprofit Broward Housing Partnership, countered the mayor’s Karl Marx rhetoric with a paraphrase from President Truman.
“`A decent place to live is the right of every American.’ We have maybe stepped away from how we fund it,but even the most conservative Republicans in Congress and the state legislature see a role for government,” said Carras.
Housing prices in Broward continue to shock some buyers. The median home price in Broward County in March — the price at which half the homes sell for more and half the homes sell for less — was $368,100 for a house and $202,600 for a condo.
Still, according to a recent study by Strategic Planning Group Inc., that means most condos are within financial reach of most buyers, though it might not be the size or location a buyer is seeking.
A debate about Fort Lauderdale’s proposed law might have been expected, considering what’s at stake.
“Gas is unaffordable. Now, do gas station owners need to go out and supply affordable gas?” said Doug Eagon, president of Stiles Corp., which built many of downtown’s big towers.
Developers said they would pass the costs to other buyers, leading to increased housing prices overall.
Major developers on the Downtown Development Authority originally supported the concept of an affordable housing regulation. But they don’t like the results. They want it rewritten to offer incentives to developers, and to spread the cost across the general public, by using tax dollars, for example.
The building industry is officially opposed. Brandon Biederman, director of government affairs for the Builders Association of South Florida, told the city that construction costs are going up, making the additional fees an even worse proposition.
A recent version of the law was soundly rejected by city commissioners last month and sent back for more public discussion and revamping.
City planning director Marc LaFerrier said he’s working on a new proposal, and it will likely be back in public debate June 6, at the City Commission’s conference meeting in the afternoon.