‘Housing Feeding Frenzy Is Over’ In Florida
The Sun Herald has this second half of a series on home sales. “When asked who is looking at homes in North Port, the answer is mixed. What is missing are the investors looking to get in and out quickly. ‘The people looking to ‘flip’ houses are pretty much leaving the market,’ (realtor) David Schertle said.”
“‘We are offering 50-year mortgages, and the interest-only loans, and there are buyers showing interest in different types of financing,’ said Nora King, mortgage broker in Warm Mineral Springs.’The credit market has certainly tightened up; the qualifications alone are harder,’ King said.”
“‘The ‘affordability’ of housing is directly related to the availability of financing, and creative alternative financing is what is driving the market,’ King said. ‘It used to be that the borrowers could have a 30 to 35 percent debt to earnings ratio, now it’s closer to 41 percent,’ King said. ‘That is, borrowers can spend 41 percent of their monthly income on housing cost.’”
“North Port realtor Bob Mason thinks the housing market has definitely slowed down. ‘There are a lot of resales, older homes, back on the market,’ Mason said. A search of the MLS in North Port shows approximately 670 new houses (built in 2005 and 2006) for sale in North Port. A second search brings up a total of 1,335 available homes, including existing older homes.”
“‘There is no question that the growth in North Port has slowed down and leveled off. There are basically a lot of houses on the market,’ Mason said.”
“According to Mason, a lot of houses were sold to investors in the range of $180,000, with the expectation of doubling their money. Some builders were securing the new construction investments with minimum down payments. When the prices started to level off, the investment buyers simply told the builders to keep the house and the $1,000 down payment.”
“‘A $1,000 forfeited is a write-off, not a loss for a land speculator,’ said Mason. ‘It’s not a good practice for the builders, though.’”
“‘I agree with the general consensus around town, that the housing feeding frenzy is over,’ confirmed King.”
So $1,000 deposits on spec houses in Florida. Something to keep in mind ahead of tomorrows new home sales is that when a home is cancelled, it isn’t added back into the governments unsold inventory.
Some Orlando data I missed the other day:
‘For-sale signs multiplied in Orlando-area neighborhoods last month as the number of homes available for purchase through local Realtors topped 16,000 for the first time in the group’s history. Existing-home sales were down nearly 6 percent in April from the same month a year ago, to 2,407 — the first such decline since July, the Orlando Regional Realtor Association reported Friday.’
‘The local Realtors’ inventory of available homes bottomed out in April 2005 at 2,947 properties, near the height of last year’s home-buying frenzy. Last month’s inventory totaled 16,036 — more than a fivefold increase and the seventh consecutive monthly record.’
‘Orlando is the biggest single vacation-rental market in the nation, no question,” said Brian Sharples, chief executive of a Web site for listings of vacation-rental properties nationwide. By the end of the year, Sharples predicts, the Web site will list more than 100,000 properties for rent, up from more than 30,000 today.’
‘Sharples said many second-home buyers, who may have thought of their property as a profitable short-term investment but now face a buyers’ market, are rushing into the rental market. “They’re looking to cover their costs,” he said. But Orlando is a challenging vacation-rental market because of the competition, said Christine Karpinski, a sales consultant. Not only are there huge numbers of homes for rent, especially in the Walt Disney World/Osceola County area, where international investors are heavily concentrated, but the area’s hotel market is so huge. ‘Orlando is so saturated with hotels. It’s hard to get positive cash flow on your vacation home,’ she said.’
when a home is cancelled, it isn’t added back into the governments unsold inventory.
____________________________________________________
What a total scam.
Yeah — I had no idea about that. There are a lot of cancellations in Florida, so apparently there is a phantom inventory on top of the growing published.
Ben, going back about a year, a friend was planning a family vacation at Disney. 10 or so family members. He called a 5+ bedroom place in Kissemee(sp) and were told they were booked but it would normally be something like $2000 a week. He said “Thanks we’ll let you know.” and then got caught up in other family business. A week goes buy and the property owners call him saying they “cleared the schedule” and he could have it for $700 a week.
So he ends up staying in what he said was a beautiful place - 1 bathroom per bedroom, private pool, etc, for less than it would’ve cost to rent hotel rooms.
That was in ‘05 so I can only imagine what is going to happen there now.
“According to Mason, a lot of houses were sold to investors in the range of $180,000, with the expectation of doubling their money”
This drives me as crazy as those flipper shows where they put in $15K in new paint and carpet then clean up the yard and say the value added was $100K and some SAP actually buys it.
Mo Money,
Yeah, I’ve seen those shows too, I think we all have. What I’ve found interesting is that (with very few exceptions) virtually no one was able to buy in 2005 and sell in 2005 and been able to pull it off. We saw a lot of high fiving when these
flips” were completed but the volumes are showing very few of these sold. And I agree, most of the “flips” were just basically spring cleaning level work with new fake flooring. Oh joy.
You’re not kidding. How about the Donald himself. On one of the Apprentice episodes (last year I think) he made each team choose one of two middleclass gouses, redecorate it, and then the experts come in and tell them how much it went up because of their work. Each team put in $20,000, and each team got an appraisal increase of 30 to 50,000. Despite that one of teams screwed up on time (Russian contractors!) and wasn’t able to finish. They showed the house to the expert with the toilet not connected to the wall and a big stain of paint from the top to the bottom of the stairway. But the expert said the house was now $30,000 prettier. Yuk yuk.
I don’t think I’ve ever seen anyone actually buy a flipped house. And the math is totally skewed. “Purchase price - $300K. Renovations - $40K. New estimated price by joe schmoe realtor - $400K” Then they happily end the show announcing the house has been successfully flipped for a $60K profit without ever showing it through the final sale.
You are exactly right. Joe Schmoe realtor saying the house is worth X is totally different than the house selling for X. Also, they always ignore commissions and carrying cost.
Yeah, just because the appraisal comes in higher, doesn’t mean someone will actually pay that much.
Even if they get that price, the $60K profit will evaporate with $28K transaction costs plus thousands more for property tax and carrying costs.
There are many risks that can make the investment a loss.
I see these “renovations” all the time. Some ugly paint, a cheap kitchen, and new wall to wall carpeting (yuck). If I were a buyer I would rather that the flipper did nothing to the house/apartment in order to save me the expense of paying for (and then undoing!) his/her crappy renovation.
‘That is, borrowers can spend 41 percent of their monthly income on housing cost.’
Of course, that figure is only a ‘this point in time’ amount. Spending 41% of your income to meet housing costs anchored by an interest-only loan is simply stealing the future. At re-set, that payment may easily rise to 50% or higher. Must be that new ‘this time it’s different’ math.
Quick casualty story out of Central Florida. I rent in the Lake Nona area. There is a development about 1 mile away from the Lake Nona golf course where Sergio Garcia and Annika etc. live so it is a fairly ritzy area. (or at least the people there think so) Anyway, there was a former model home on the market for $520k. Believe it got listed back at the beginning of Q4, 2005. The family also put a deposit down for a much larger home in the same area. We went to see the house and it was nice but obviously not even close to being worth $520k. In Feb of this year, they brought the price down to $495k. I got home from work yesterday to have my wife tell me that they wound up selling the place in sheer panic for ~$380k. Of course they took at a HELO on their first house, wound up not having enough cash to pay off the first mortgage and the HELO and wound up losing the deposit on the 2nd house because they couldn’t get finanacing. Hopefully a taste of things to come….
bobbymac,
Of all of the tales that come out at the end of a bubble this type is among my favorite. True, Frank Raines at Fannie getting hauled out on the carpet only seems more impactful. It’s going to be what’s happening in the “trenches” that counts! This “tale of woe” means more to me b/c this gets to the core of how this thing was able to feed off of itself for so long. This is why we were wrong in 2004/05. Joe Dude the “homeowner” takes out HELOC from silly appraisal on primary residence and puts a down on a second/vac. home and drives prices there too! No offense, but these people got to go down.
And their story at the cocktail party isn’t going to be one of “my house went up $50k last month”, but a tale where through tears they talk about how they lost their dream house and part of their down payment since they stretched too far, and are now renting for a while while they lick their wounds.
When these stories become more prevalent than the massive “profit” stories, people get less aggressive on the financing, and pricing will come down. When the psychology surrounding housing shifts en masse, things will get bad, real bad.
yeah it’s funny. my two “flipper” friends no longer want to talk about their properties anymore. go figure.
Let’s just say I am hoping to see a repeat of this story over and over and over and over again. Groundhogs day, baby. I’ll keep you updated if any of the comps start suffering because of these people.
I live in the Orlando area too. I picked up a flyer yesterday from a home for sale in Winter Park. This is a house on North Park Avenue, which is a desirable part of town, but many of the houses are very old (50s) with carport.
The flyer listed 6 homes for sale (including the Park Ave. home), and upon research at OCPAFL.org, I discovered that a flipper/investor from Massachusetts owned every one of the houses. He’s even advertising “0% down and 100% financing” and “seller will pay all closing costs.”
Here’s a quick rundown:
House No. 1 - bought for $219K in Sept. 2004
asking price: $549K
House No. 2 - bought for $289 in Jan. 2005
asking price: $549K
House No. 3 - bought for $245 in Sept. 2004
asking price: $549K
House No. 4 - bought for $299K in Jan. 2006
asking price: $459K
House No. 5 - bought for $261K in Oct. 2005
asking price: $449K
House No. 6 - bought for $325K in Jan. 2006
asking price $425K
If he gets his asking price (he won’t) he’s anticipating a profit of approximately $1,341,000. (asking price - sales price).
By and large, these are crap 50s era houses with carport (or a converted carport). With the exception of his Park Ave. house (location does warrant a slight premium there), these houses would have sold for $150K or less up until maybe 2002 before prices started escalating.
Keep us updated on this guy. This is insane.
Yeah. If you dont mind we all would enjoy finding out how this eventually plays out.
Or if you have the addresses, we could do it ourselves.
Hey Ben, you interested in starting a “Tracking potentially F’d flippers blog”?
I’m guessing he heloc’d #1 and #2 to buy #3 and #4, and heloc’d #3 and #4 to buy #5 and #6.
Which means even if he can get out of #1 and #2 with a “profit”, he’s already rolled it up into his portfolio and he will be in the poorhouse soon.
A classic Enron Death Star strategy that only works in the mind.
Add to that the carrying costs and the profit is far less than asking price minus purchase price… even if he could get it.
Old, small houses like these in Winter Park almost always sell solely for their “lot” value, as tear-downs. At that, I believe there are a good number of 50′ lots there, which doesn’t give you much to build on even with minimum setbacks. It will be interesting indeed to know if this flipper gets anywhere near his price, even in toney Winter Park.
F’in loser. He’s going to get crushed and like it! Please do follow up with the results of this clown’s soon-to-be pain and agony.
Dude, you are cold! In a good way, like Mr. Cote.
I agree, watching these ruthless weasels squirm would be crisp and sweet indeed.
I googled up carport. Very cool. You can almost picture the evolution from the simple flat car roof to the house like roof, to a full blown room for the car, and finally, a big attached part of the house, which acts as car storage and all around handy shop. Beautiful. Would a carport have worked in an evil climate like Chicago? Maybe they went straight for the garage there.
Everyone comments on San Diego, Arizona, Sacramento and Florida. What about Manhattan? Any thoughts? I live in Manhattan and doesn’t seem like anyone thinks that prices will fall here. RE agents tell me there is a bit more to choose from, but “sales are brisk”. If you think P/E ratios are out of whack, just look at Manhattan. A colleague of mine and her husband (both doctors) bought a townhome in 1995 for $650,000, today its valued over $2.5 million. her salary has gone up $30,000 in the past 10 years, but its not four times what she used to make. She herself says that she couldn’t afford this 3 bedroom townhouse in Manhattan today and her kids won’t be able to live here either. Today academic docs (like me) can barely afford studios. I didn’t buy a studio when I moved here 2 years ago because I thought it was a bubble. I can barely buy that same studio now. I don’t know what people here do for a living, but they all can’t work for Wall Street. Its telling when physicians are priced out of the market. However, everyone says “Manhattan” is different. “People place a premium for living here”. Who are they and how much money do they make? I don’t get it. I can’t buy the one bedroom apartment I rent for $2100. It would cost twice the price to own it given the maintenance, taxes etc,. I would have almost no money left over to live on after the mortgage. Any thoughts on Manhattan?
Manhattan will drop. It’s just further behind the curve than some of the other places. My parents bought a co-op in Manhattan in the late ’80’s– the value dropped soon after their purchase and it was under water for almost 10 years. When they sold it 10 years later, they got exactly what they originally paid for it. NYC is not immune to all of this.
I think Manhattan/NY will have a correction. It may not be as severe as Miami, Las Vegas, LA, etc. since its fundamentals are stronger, but it will correct.
http://money.cnn.com/2005/09/19/real_estate/buying_selling/price_declines/index.htm
http://money.cnn.com/2006/04/03/real_estate/manhattan_housing_prices_sluggish/index.htm
You do sound somewhat frustrated. Perhaps you should move out of Manhattan? As for “People place a premium for living here” it is just another old chestnut like “they aren’t making any more ____ (land, coastline, San Diego, Manhattan condos), ” and “this time is different”. Real estate cycles can be very long, and you may not want to wait for the bottom. Even when it comes it may not be 90% off todays’ prices and even if the drop is that dramatic, would you buy after such a correction, or would you be too afraid? I don’t know if that helps, but that is my two cents.
I don’t think they are making anymore suckers anymore…
There is a big upper class in Manhattan but there is an even bigger middle and lower class. I don’t think Manhattan is different because this boom has been driven by credit availability which seems to be global in nature. My bet is NJ, LI, and the outer burroughs will be hit harder than Manhattan but who knows. I think there are a couple blogs that focus on NY.
I think manhattan is coming down. The stuff on the higher end has been sitting, and prices are getting reduced. Real Estate agents aren’t truthful because real estate in NYC is propelled by hype and celebrity. The Trumps, Shvos, and Corcorans of the world. Also, have you noticed the amount of building that is going on around town?
That being said, Manhattan will not really tank until Wall Street has a bad year or two.
For a canary in the coal mine, consider that the sales market in the Hamptons is apparently dead and everyone has decided that paying 5-6 figures to rent a place for the summer is a better deal than paying 8-9 figures to buy one.
This Michael Shvo is a piece of work, isn’t he? I admire him for coming to this country with almost nothing and scratching out a multi-million fortune in just a few short years. These friggin Israelis are a resourceful peoples! Here are some great articles on this guy worth reading. He’s a real pisser!
http://newyorkmetro.com/nymetro/realestate/features/11619/
http://www.therealdeal.net/issues/May_2005/1114638462.php
http://www.therealdeal.net/issues/OCTOBER_2005/1128301932.php
Some great articles on Michael Shvo worth reading. Very entertaining:
http://newyorkmetro.com/nymetro/realestate/features/11619/
http://www.therealdeal.net/issues/May_2005/1114638462.php
http://www.therealdeal.net/issues/OCTOBER_2005/1128301932.php
He looks like a fudgepacker.
stoolpusher…..
That reminds me of all the Dot Con CEO’s in their early 20’s making 6 and 7 digit salaries one year, and moving back in with their parents the next because they blew it all in drugs, alcohol and women!!!
Hey Sal, been living here for thirty years. Between ‘89 and ‘95 apartment prices dropped by 40%. Think for a minute, all you’ve got tied up in your rental is probably one month’s damage deposit and the last month’s rent: $4,200. Why buy something for, say, $500K that’ll cost you a 25% downpayment, or $125,000, plus at least a thou in monthly maintenance? I’m sure you’ve got better things to do with your money.
You are right. I think when I moved to my apt I said its temporary and it doesn’t look temporary anymore. Its a walkup and I am getting tired of walking up the stairs. I should just move and stop thinking I will buy next year so why move.
When the stock market crashes from the economy going into a recession because of the consumer spending that will dry up from the debt cloud from massive credit cards and equity vanishing from a popping housing bubble (yes this will all play out), many of those people on Wall Street will lose their jobs and their won’t be big bonuses like their are now. When this recession/depression crashes, NY will feel it and feel it hard. Prices there will absolutely fall off a cliff and there is no telling how far that fall will be, but it will be pretty steep.
there*
You may have noticed how many new luxury condos and former office condo conversions are going on in Manhattan. I’m sorry but there just aren’t that many millionaires. Like all bubbles they are over building in this one and Manhattan will see a glut.
Does any one remember the luxury rental boom of the 90’s. They ended up offering 6 mo free rent to attract tenants.
Had to do this:
” I live in Manhattan ” So sorry.
” her salary has gone up $30,000 in the past 10 years, but its not four times what she used to make.” That is pathetic. is the starting salary of new hires more than what she gets paid?
“Today academic docs (like me) can barely afford studios.” See first item. Why live there?
Nothing personal, but why are you choosing to live there? If I never go to NYC I will have considered it a win. There are better places to live on balance when lifestyle, affordability, and sanity are considered. I woke up early this AM and went out to the back porch. Drank my morning caffine and rubbed on the wolfdawgs and watched the morning sky change colors as the sun was getting ready to peek over the horizon. There was a low fog over the farm fields I was looking over. The birds were chirping and singing. A flock of Canada Geese flew over and landed in the pond. It was nice. Then I took my time getting ready for work and drove 15 minutes through the countryside to work. Feel great and unstressed. BTW, no debt and tomorrow is payday. Too bad all the single women around here are either fat, smoke, have way too many kids, or are wacko.
There are choices other than the rat race that TV makes you want to live. Any good looking single professional women (who have not been ruined by TV) want to live in a place where they can keep horses in their yard?
I don’t where this broker is sending her loans, but where I’m sitting I don’t see much credit tightening. Maybe Fannie & Freddie have tightened a little, but most of the purchase market for the last 24 months has been sub-prime, Alt-A, and non-conforming because that is where you find most of your 100% financing. As volume has dropped dramatically, lenders in desperation are really starting to push their crap now. All this talk of regulation has had no effect so far. All these guys care about is keeping the volume up, and they’re doing whatever it takes to do it. You wont believe the crap my reps have been pushing lately. I wont sell it and I know it hurts me. I’ve often said I’m way to ethical to make the big money in this biz.
The only thing I’m hearing from my peeps in the office is that they are “verifying” income a little bit more. It’s almost laughable if this is what is considering tightening. They are asking for letters to verify income, but some lenders are accepting a letter from the borrower stating that, yes indeed I do make x amount of dollars a year. Way to go underwriters!! Good thing you verfied that income! Now we can all sleep at night knowing that there aren’t any more funny loans being underwritten.
WSJ had an article last week about a survey the fed did-2%of banks are tightening credit and 11% are loosening, easy money everywhere here in socal, until that changes people will keep buying . Still lots of loans for “self employed” people- all it takes is a letter from your “CPA” saying he’s done your taxes the last 2 years and you aare self-employed, what could be easier?
Perhaps “stated income” is the protection for lenders.
Borrowers can not sue and claim that they were tricked into
these risky loans. After all, borrowers are the ones who “stated”
their incomes.
Yea, I was thinking the same thing. It’s almost to the point where goldfish dead or alive can get a loan for a million bucks
I agree with the exception that Fannie made a major change to its Expanded Approval initiative on 4/24/06 regarding median income. Anyone below HUD’s median income for that demoraphic that would have gotten an EA1,2,3 or 4 now gets a bump in level. Freddie on the other hand has been slowly tightening since beginning of Feb.
And for the record if you are ethical you can make money in this biz as long as you realize that karma is circular.
Keep the faith.
Southwest Florida Fort Myers/Cape Coral Area , The large inventory of available homes is driving the price down, the paper prints a list of recently sold homes. this week I found the list had the same homes listed as 2 weeks earlier, but what is recently 1 week or 1 year ? the housing market has definitely slowed down.
I just got an email from a Realtor/Flipper who had bought a house a few months ago for $265 in Sarasota and she’s trying to now sell it for $380k!! She’s offering a plasma TV, hot tub, cruise and gift certs as “gifts”. I emailed her asking for justification on the price and here is the response:
“The bonus gifts are just a little something extra that we do for our home buyers to make their home buying experience a little bit nicer – an experience which isn’t always the greatest for some and we believe it should be. This has no affect on the pricing. As well, we assist with financing and lease options which helps many that may not be able to purchase a home today. Which we feel, is just our little way of giving back since someone gave us a break with a lease-to-own option many years ago.
As for the market, it may not be as hot as it was for the past couple years, it’s just evening itself out to where it should be, not a surprise. There are over 700 people moving to Florida each day, though it may take a little longer to sell these days, this home is well worth the price and compatible if not lower than other homes in the area that have been remodeled”
The 700 people moving to Florida every day must have taken a detour before crossing the state line because no one is buying up all these vacant houses. This town is littered with For Sale signs……
I can smell the fear in her email!
Average IQ in the US of A is ! 100. Come on people, we are dealing with morons.
Add to that: the average person never reaches formal operations stage which, according to Piaget, is a stage of maturity that allows us to thing abstractly and put unrelated information together in order to figure things our independently. Very useful to be able to do that when making financial and other plans.
Actually moron is from 50-75 IQ so that would mean somewhat under half. And I think IQs are the same all over… the US just has just been given more rope with which to hang themselves.
It was a 1000 a day, I did the math on another blog, now it 700 a day, 255500 a year, Mexico City would be a ghost Town if that was true,
She’s giving away thousands of dollars in gifts out of the goodness of their hearts. What a wonderful person! I want to be her friend so she can buy me a plasma screen TV when I’m having a bad day.
Not she. “They”. I like how “we” is used to imply agreement reality.
Ben — North Port is in Charlotte County, just south of Sarasota County.
Suttree
OK, thanks, I changed the title.
You should change it back…
North Port is in sarasota county…
Port Charlotte is the one in Charlotte county…
http://www.cityofnorthport.com/demographics/default.asp
http://www.cityofnorthport.com/demographics/default.asp
The Sarasots market, too, is toast.
“The bonus gifts are just a little something extra that we do for our home buyers to make their home buying experience a little bit nicer – an experience which isn’t always the greatest for some and we believe it should be. This has no affect on the pricing. As well, we assist with financing and lease options which helps many that may not be able to purchase a home today. Which
not only fear in her email. It also has atrocious grammar, mispellings, etc. If I were a buyer, I would rather have them discount the price by whatever those ‘gifts’ cost. In reality, the buyer is paying for them and wrapping them into the mortgage, paying taxes and interest, etc. I hope folks like her go down in flames. Ciao
“Beware of those bearing ‘gifts’.”
Hey if I buy a house from someone else can I still get the gifts to make it a little easier? After all, it isn’t about the money, right?
She says 700 people a day are moving to FL. She forgot to mention the 800 (guess) that are leaving and putting their homes up for sale. THose folks want to bail before the next Wilma (Katrina, Rita, etc) hits.
That’s actually too low.
Florida 2004 population 17,397,161
Florida 2000 population 15,982,378
Difference over 4 years is 1414783.
4 years have 1460 days.
Increase of people per day = 1414783 people / 1460 days = 969 people/day.
Any questions class?
Where are these people coming from? I suppose your 969 figure includes births and foreigners, and excludes many who high-tail it back up Hwy 95 and those shipped back in an urn.
Check out this table on Florida Driver Licenses (http://www.hsmv.state.fl.us/reports/facts_dl.html). Since 2003, around 200 people a day traded in a license from another jurisdiction for a Florida License.
please stop assuming that 1000 people are moving to florida a day. that may have been the case until the hurricanes. i live in south florida and schools district are actually losing students this year. after hurricane wilma, uhaul was having more people move out of south florida than moving in. this is real basic information, but here is the reason why the south florida housing is in a crisis. half of the population make less than 50.000 a year. at lest 30% of the population is below the poverty level. flippers and investors clearly where the movers and shakers of housing purchasing. after wilma, insurance cost has skyrocketed. taxes are forcing people to have to sell quickly or face paying a mininal 2% of the value of a home. if you have 1000 homes vauled at 100.000 dollars in 2000. and now you have 1500 homes valued at 350.000 dollars in 2005, just see the tax windfall and you can see who is really benefitting from rising housing prices. get a cat 4 or 5 and watch out. it is like people saying that housing never devalues, other hurricane andrew will never happen. we will see.
Updated data from Wikipedia
“As of 2005, Florida has an estimated population of 17,789,864, which is an increase of 404,434, or 2.3%, from the prior year and an increase of 1,807,040, or 11.3%, since the year 2000. This includes a natural increase since the last census of 246,058 people (that is 1,115,565 births minus 869,507 deaths) and an increase due to net migration of 1,585,704 people into the state. Immigration from outside the United States resulted in a net increase of 528,085 people, and migration within the country produced a net increase of 1,057,619 people.”
So 1.58 mil people moved to Florida, with 1/3 of them being foreigners. That makes it 868 people per day over the last 5 years.
so at 8.00 an hr. a 200 year loan should do it.
census.gov has some interesting predictions for future population of FL. However I doubt they are taking into account we are in the middle of an “active” cycle for hurricanes.
On local news here (Florida) today, they were saying this cycle, that began in 1995, could last 40 years. I’ll be pushing up swampgrass long before it’s over.
In the 2 years since 2004, I’d say the hyperinflated housing, insurance premiums and hurricanes have driven down that number significantly. I’m surprised how often I hear about people leaving FL for more affordable places (GA, NC, SC, etc). One person I know just quit her job here in FL and is moving to Alaska. I would again pose the question to anyone claiming 1000 people/day are moving here….why are there so many vancant houses and an exploding inventory?? That should be more than enough people to fill these overpriced stucco shacks!!
One thing the stats didn’t seem to mention is average income of these pilgrims. Might be a lot of them are living 6-8 to a box.
A good friend of mine moved here from Mississippi the same time I did (2000). He married a native Floridian (not too many of them left) and just moved to Nashville, citing high prices of everything and lack of seasons. Although I like it down here, I sometimes wonder how much longer I’ll be able to afford it considering the high costs of housing, lower salaries, and opportunity cost to my career.
To the Manhattan doc:
According to the monthly market report at halstead.com prepared by an economist named Gregory Heym, the median price of a Manhattan apartment declined from a peak of $831,000 in June, 2005 to $722,000 in April, 2006. That’s a 13% drop, but you didn’t read about it in the Times, did you? I have lived in Manhattan for 30 years and remember vividly the 30% to 40% drop in price in the early nineties, during the recession which hit middle-aged managers particularly badly. The current bubble is indeed popping as the price drop indicates. Inventory is also up, although not as much as other bubble areas. I expect prices here to be down for the next five to ten years. Although there is a lot of money in this town, valuations rose 3 or more standard deviations above the historical norms and will revert. If we get a recession in 2007 or 2008 the decline will be much aggravated. I sold my apartment last year and am renting now for the forseeable future. Landlords are indeed a hassle, but I have no wish ever to be involved in condo management again. Good luck to you. Just wait, prices will come down especially for the credit-worthy.
I don’t quite understand the need to own an apartment in Manhattan. Given the protections afforded to renters in stabilized (and even unstabilized) buildings, you really don’t have to worry about management kicking you out. Given prices now, rents are actually lower than the mortgage payment on a comparable apartment, without having to worry about maintenance, insurance, periodic assessments, taxes, lack of flexibility, etc etc etc.
Since there are plenty of very nice rentals, there seems to be basically zero need to own anything unless you buy into a supremely depressed market.
to lauderdalian:
If you are lucky enough to be in a rent-stabilized or rent-controlled apartment, you are correct, there is little incentive to buy an apartment in Manhattan. Better to invest the monthly savings from rent. However, it is impossible to move into a rent-controlled apartment now–they become decontrolled when the controlled renter moves out. Rent-stabilized apartments are difficult to find. When I sold my apartment last year I stumbled into the latest unfortunate wrinkle in the Manhattan rental market: a resurgence of condo converstions. Shortly after moving into my current rental the building got sold by the long-time landlord to a company that started the conversion process. The first step was to assure me that my (market-rate) lease would not be renewed. So there has lately been some shrinkage in the rental inventory from conversions. It is not much consolation to me that the conversion project is certain to be a disaster since I will be long gone anyway. There is some building going on, particularly in Brooklyn, but this is unlikely to make a significant enough increase in inventory to affect rents. Rents had been stagnant for a few years, but are moving up now and can be expected to continue to move up for the next few years. So, while renting in Manhattan is not a picnic, it is vastly preferable to owning a wasting asset.
Harold,
Nope I didn’t read it in the Times. Thanks for the info. If u read the NYTimes realestate section you think everyone is still on “The HUNT” for a house. Good to know about the price drop, makes me feel much better about not buying. As for why should I buy in Manhattan? Well, I plan on being here long term ( I like my job), so seems like eventually its something that I should do. Like everyone else, I don’t like having a landlord and would like to eventually have my own place. But I will not buy now. After reading these blogs, I am watching from the sidelines to see what happens.
RE: 700 people moving to Florida each day.
Ummm, did anyone bother to tell her that Florida is full of dying retirees?
I bet at many more than 700 of them die each day.
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.
Real Estate Blue or anyone who can answer my question,
where did you get your statistics? I’m just curious if it’s based on real estate licenses, housing or what. We own two properties in Florida and don’t consider ourselves major investors one is a primary residence and the other is my parents home. Like the guy in Winter park with 6 homes….. there are probably thousands of people with multiple properties in florida. Not to mention the europeans that have bought up Orlando and Sarasota…. Just curious if these numbers correlate with the boom of the past few years in housing or if it’s a true resident moving to Florida. Heck half of the Europeans come for just a couple weeks a year and rent the rest of the year. If it’s based on housing, I don’t think that is a factual number. Besides, why are the houses not selling in Sarasota. Houses sitting for months on end. Are they just not going to this area anymore? Where are the 969 people a day moving to???????
If you don’t think real estate agents are getting desperate in FL, check this out:
http://miami.craigslist.org/rfs/160075774.html
CUTE GIRL, WILL PERSONALLY TAKE U LOOKING FOR YOUR NEW PROPERTY.
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Date: 2006-05-12, 1:19PM EDT
I CAN PICK YOU RIGHT UP AT THE AIRPORT IN MY CADILLAC ESCALADE, THEN WE CAN GO TO LUNCH, AND CHILL. WE CAN LOOK AT SOME REAL ESTATE TOGETHER, I KNOW ALL THE HOTTEST AND BEST DEALS IN ALL OF BROWARD, MIAMI, AND PALM BEACH. I CAN FIND YOU FORECLOSURES , AND COMMERCIAL PROPERTY… THEN WHEN THE DAY IS DONE, WE CAN HOP IN MY LIMO AND GO OUT, MAYBE TO A NICE STRIP CLUB, AND HAVE SOME LAUGHS. YOU WILL STAY AT MY NU RIVER SUIET, OVER LOOKING THE RIVER AND MILLION DOLLAR YACHATS. ENJOY THE TWO STORY GYM AND ROOF TOP POOL… AND IF YOU LIKE TO GOLF, I CAN SET THAT UP TOO, WITH A COUPLE SEXY CADDY GIRLS BY YOUR SIDE. I AM HOOKED UP HERE IN MANY WAYS, I CAN FIND ALL THE DEALS, AND ALL THE GIRLS FOR YOUR BUSINESS TRIPS HERE IN FLORIDA.
this is in or around FT.LAUDERDALE/ MIAMI
Oh man, If that’s real. It’s getting harder and harder to defend folks in the biz.
It would be interesting to see her “nu suiet” that overlooks the million dollar “yachats”.