‘The Spiraling Price Increases Had To Stop’: Florida
Some housing bubble updates on Florida. “It may be hard to imagine with all the construction around Brevard County that the local housing market is slowing down. But that’s what the latest figures show. There were 577 housing permits issued throughout Brevard in April, up from 433 permits in March, but down from 735 permits in April 2005.”
“‘I think you’re going to see a continued slowing of permit activity,’ said Franck Kaiser, CEO of the Home Builders & Contractors Association of Brevard. ‘What we’re seeing is a market adjustment. The spiraling increases in prices had to stop.’”
“The median sales price for a single-family home in Brevard rose 1 percent from March to April to $224,800, down from the peak of $248,700 in August 2005, according to new figures from Florida Association of Realtors.”
“Prices at Heritage Isle range from about $230,000 to more than $400,000. The project includes more than 200 condos, which originally were going to be priced above $300,000, but are now priced between $230,000 and $276,000, Lennar representatives said.”
“‘There’s such a glut of condos on the market’ countywide, Kaiser said.”
“In an effort to stimulate sales of the last remaining units at Trump Tower Fort Lauderdale, Donald Trump and his partners are offering the agent who makes the first three sales a little added reward: either a pair of handmade platinum cufflinks, or a signature platinum and diamond necklace worth $10,000. Trump is also boosting commissions.”
From Fort Meyers. “A new car, vacations, money, sounds like a lottery dream but it’s actually the latest marketing ploy to get you to buy a home. The cooling real estate market is giving rise to some hot ticket perks for home buyers.”
“Ashley Dostal got a whole year’s mortgage free, plus closing costs and other giveaways. It convinced her to buy now. ‘The first year, I expect to save about $15,000,’ Dostal said.”
“Sellers of existing homes have started offering free landscaping and lawn care for a year, but that’s nothing compared to what realtors and homebuilders are offering, you think of it, they’re serving it up.”
“The source of this buyers’ grab bag is a dip in home applications, which are down 20-percent from last year. That means too much supply and not enough demand. ‘In a market that has a lot more inventory, many brokers and many sellers have looked to incentives to draw attention to their property,’ Ron Phipps of the National Board of Realtors said.”
“While almost all of the local home builders say they’re not ready to jump on the incentives bandwagon yet, a few of the bigger companies are offering deals that affect the bottom line. Many local companies think the incentives trend may be short-lived, depending on what the market does. But industry insiders say if home sales flounder, buyers will be able to get very creative about the perks they want.”
“Ashley Dostal got a whole year’s mortgage free, plus closing costs and other giveaways. It convinced her to buy now. ‘The first year, I expect to save about $15,000,’ Dostal said.”
If she goes bankrupt 12 months from now, otherwise her gain will vanish with depreciation.
They don’t call them “Greater Fools” for nothing!!
“Sellers of existing homes have started offering free landscaping and lawn care for a year, but that’s nothing compared to what realtors and homebuilders are offering, you think of it, they’re serving it up.”
One reason I’m glad I have a rowhouse with a brick patio and garden is I don’t have to mow a lawn. Did enough of that as a kid.
Now imagine having to mow someone else’s lawn in a house you used to live in for a year!
Can’t live without a yard. Just pay landscapers to mow the grass and trim the bushes.
This will so hurt the illegals. I already see complaints that FBs are undercutting everybody else with cheap labor.
I like to mow the lawn. But then I’m odd, and you guys should know that by now.
I do too. I like clearing brush, hauling bags of rocks and pulling weeds too.
How’d you like to bet over the next few years many people will be forced financially to again re-experience the American “can-do” additude of doing things for themselves?
Once all the “paper” equity gains are wiped out and people aren’t feeling rich I think they’ll start mowing their own lawns, painting their own houses, washing their own cars and changing their own oil.
I think this will have a secondary effect on the marginal labor market as alluded to above.
I read this and want to scream. Ashley: she saves $15,000 (gift that will probably be taxed) the first year but pays increased property taxes for the life of the loan. Wow, let’s give her a boost on her retirement the first year and then a decreased amount for the remainder of her retirement.
I can’t take it anymore! Aaaaaaaaaah, I better buy now because interest rates are low. I better buy now or I won’t be able to afford a house. I better buy now because all the available land will be gone. I better buy now because interest rates are going up.I better buy now because house prices are coming down but will be going back up next year. Gee, will someone please explain to me that if all of this pap is true why anyone would want to sell their house to me. From my experience, when something is a good deal, no one is gonna let you in on the action…..so let’s go back to playing poker: if you don’t know who the mark is, it’s you……
That 15k in savings might cover her new hurricane policy for this year.
“That 15k in savings might cover her new hurricane policy for this year.”
I think that sounds about right. Assuming it will never go up for her 30 year fixed, it comes out to $450,000 just for her HO insurance. Of course we know HO insurance rates will stabilize, or go down in time.
Oops, forgot to insert the scarasm tag there.
Ok so they offer her a year off on her mortgage payment… is that just a delay on the payments like those furniture stores or deals on cars, no payments until June 07′ or are they paying them for her?
Also here is some food for thought… If the builder has to offer these incentives, what is she going to have to offer to intice someone to buy the place when she wants to move up? She will be stuck in that entry level condo until the market picks up again, meanwhile those who saw this coming will buy their houses not from builders but from banks and the government. Not such a bad deal since most of the foreclosures will probably be investment property that was never lived in.
Add this reason to your “better buy NOW” list:
Rents are going up 5.3% !all over the country! this year.
The NAR says so.
“Spiraling price increases” reminds me of the TMBG song “Spiraling Shape”. The lyrics of which describe the housing bubble perfectly. Seriously, google it.
It has been a while since I listened to TMBG.
Lincoln, Flood and self-titled.
I should get a couple of their newer discs.
IMO their last really good album was “John Henry”. “Spiraling Shape” was on the one after that, but it’s still a great tune.
The song is about some never explictly specified thing that everyone is doing and raving about. You’re not sure whether to believe the hype… then you jump in yourself to discover it ain’t all that.
“And now that you’ve tried it, you’re back to report
That the spiraling shape was a fraud and a fake
You didn’t enjoy it, you never believed it
There won’t be a refund, you’ll never go back”
If that’s not the future of the housing the housing bubble, what is?
“The spiraling increases in prices had to stop.’” Is there a more ridiculous way to describe an asset bubble than an upward spiral. The phrase is downward spiral . . . as in a plane crashing or your quasi-equity being flushed down the toilet. Oops, I mean downwardly spiraling. The only upward spiral I can think of is a tornado . . . pretty appropriate to compare the prices of housing with the most destructive windstorm. “Leaving a trail of death and destruction”.
Death spiral is the term I believe that you were searching for.
I believe that it is an aerospace term from WWII.
Tornadoes spiral upward.
Financial news today “Air fares are going up” …..I guess all those rental agents in Hawaii will be having a few sleepless nights.
That is old news. I read about that at least 2 weeks ago.
I saw an ad on Craigslist Los Angeles that is pleaded for offers and then pleads for people not to bring offers. Ahhh… I am confused. (wink)(smile)
$235000 - Bring your offer!!! Motivated to Sell!
Reply to: j_sherman82@hotmail.com
Date: 2006-05-27, 10:00PM PDT
“PLEASE, NO investors with low ball offers! Also willing to discuss rent to own possibilities.”
What is puzzling is why, as this property is located in Pheonix, that they are advertising in Los Angeles, and they get upset about an investor giving an offer. I suppose that seller will need to take some sleeping pills and get back to their dreamland. They apparently are not ready to face the real world.
Los Angeles Friends In Deed
I saw an ad on Craigslist Los Angeles that is pleaded for offers and then pleads for people not to bring offers. Ahhh… I am confused. (wink)(smile)
$235000 - Bring your offer!!! Motivated to Sell!
Reply to: j_sherman82@hotmail.com
Date: 2006-05-27, 10:00PM PDT
“PLEASE, NO investors with low ball offers!”
What is puzzling is why, as this property is located in Pheonix, that they are advertising in Los Angeles, and they get upset about an investor giving an offer. I suppose that seller will need to take some sleeping pills and get back to their dreamland. They apparently are not ready to face the real world.
Los Angeles Friends In Deed
““Prices at Heritage Isle range from about $230,000 to more than $400,000. The project includes more than 200 condos, which originally were going to be priced above $300,000, but are now priced between $230,000 and $276,000, Lennar representatives said.”
************************************************************************
And there is no guarantee that they will sell at that price either.
Time to sell Lennar stock short!
May 2006 - “Many local companies think the incentives trend may be short-lived, depending on what the market does.”
May 2005 - “Many local car dealers think the incentives trend may be short-lived, depending on what the market does.”
OT: for those of you interested in seeing how Vegas Extreme Flippers are doing (those that bought multiple flips), see the latest installment on EF I.
What are we supposed to conclude from this link? what’s with the asking price increases in the last few months?
I think the price increases are hail mary’s and shooting darts in the dark. What else did he have to lose? may as well increase the price and hope he gets lucky. One thing you do see from the price changes is the panicking. We did not see such illogical price changes early on when he still had money to substain the monthly carrying cost. once he start to run low the panic sets in and the prices are all over the place.
Conclusion? this may be one single example, but it demonstrates how a market filled with flippers with multiple properties can crash hard and fast. Think about it, in 3 short months, as EF I ran out of cash, 8 properties go into default and now there’s 8 pending foreclosures, from one person. You didn’t have this in the last crash. From the last crash, you needed 8 aircraft engineers to be laid off before 8 foreclosures occur. Another conclusion bairen already touched on, the financial disaster when this is done and over is going to be huge. Watch out below!
OK, so maybe the price hikes are a last ditch effort to find some suckers before foreclosure…Probably not likely to be a successful strategy; the blood’s already in the water.
What are you guys talking about. It’s SPRING. Prices always go UP!
You gotta love the house that’s been on the market for 526 days. In a couple of years, we’ll be seeing a lot of those.
What a waste of our financial resources. Taking on so much debt at the height of the market to make if everything goes well so little money.
We have so many regulations in this country. Why can’t there be a federal law that anyone who wants an ARM, I/O, or a mtg for a second home or investment property be required to take and pass a basic math and finance exam? That law would have prevented this bubble. People would be either unable to pass and borrow because their stupidity factor was too high, or they could wake up and realize what a financial burden they were imposing on themselves.
Why can’t there be a federal law that anyone who wants an ARM, I/O, or a mtg for a second home or investment property be required to take and pass a basic math and finance exam?
You are a racist! You are just putting another obstacle in for loaning to the poor/minorities! The American dream is for everyone! Not just those who YOU think are GOOD at Math.
Not that I think that, but that’s why such a law would never fly.
Remember, a democratic government exists to give the people what they WANT, not what they NEED.
Invest accordingly.
Wasn’t Clinton’s Community Banking Act designed to mandate ‘affirmative action’ for minorities in becoming home-debtors? I know I’ve seen the FDIC quoted as supporting mortgages to illegal aliens because it fulfills some kind of harebrained ‘goal.’
Ok, color me stupid but how does that comment make him a racist. I mean there are similliar programs out there like that where people have to go to counseling or classes before the ycsan buy under specific programs.
Ft. Lauderdale, FL reaches 11.4 months supply.
http://www.usatoday.com/money/economy/housing/2006-05-30-close-ft-lauderdale_x.htm
I DONT BELIEVE IT, inventory should be ZERO days:
“South Florida,” he said, ”is working off of a totally new economic model than any of us have ever experienced in the past” according to a realtor who predicted that a land shortage will support higher prices indefinitely.”
- New York Times, Trading Places: Real Estate Instead of Dot-Coms, 3/25/05
That never gets old.
That quote is like a fine wine…just keeps getting better with age.
It is difficult to get a man to understand something when his SALARY depends upon his NOT UNDERSTANDING IT.
– Upton Sinclair
You’re all a bunch of bitter renters. That article is correct. It is different this time. I’m buying all available inventory in South Florida and I’m not going to give any of you a break in price when I sell it for a 50% gain next week.
And what makes this comment even funnier is that I can remember posters on this board who weren’t sarcastic when they uttered this crap.
“posters” AKA “Trolls”
Yep, it is getting harder and harder to find bubble deniers.
If anyone knows of a place to go to get into a flamefest with people in that faith based reality let me know.
OCR’s RE blog has been pretty quiet and dominated by bears.
Try a homebuilder stock yahoo message board. They are good for a laugh or two nowadays.
Sunsetbeachguy-
There are still a few zealous realtors and nervous home “owners” on the Seattle Bubble blog.
One realtor finally got banned last week for spamming. He set up his own blog entitled “Seattle Bubble?” there’s a link to it from SB.
LOL
“Ashley Dostal got a whole year’s mortgage free, plus closing costs and other giveaways. It convinced her to buy now. ‘The first year, I expect to save about $15,000,’ Dostal said.”
Feb, 2000 ..She bought 1000 shares of JDSU- JDS Uniphase as a great investment. I have to buy now.I should make 20% next year”
Dec 200. She doubles down on JDSU! Her finanical advisor told her to buy on the DIPS - She will make millions!!!
August 2005 - her broker can’t give her JDSU for free at 1.35. If she HAD bought it, it was more than a triple!
And that is the nature of the market’s tops and bottoms.
What is sad about JDSU is that they made some really great equipment.
It’s as if all the incentives builders are lining up for their sales people is just one huge contest to see who can find the ever-shrinking pool of absolutely-the-last-idiots-standing buyers.
I don’t know if anybody else has posted this news from China:
http://www.cbc.ca/story/business/national/2006/05/29/china-housing.html
“Commies” cooling their housing market
Isn’t it telling that people think they get something for nothing? As every economist knows, there is no such thing as a free lunch. SOMEONE is paying and it sure as hell isn’t the seller. It’s the buyer, who is paying in some other way, likley to see a $15,000 loss in a matter of months. One reason I hate buying new cars is the “freebies” the dealer gives. Yeah right, I refuse to neogotiate on payment, only on price. I bet this poor lady was just looking at payment, saw one years worth of free payments, and jumped. What do you bet she still has a 30 year loan at the end of the first year?
Here’s a novel idea.. if you want to sell these unit….
LOWER THE PRICE!!
just my .02.
and another one from the trenhces here in FL….
http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20060529/BUSINESS/605290473/1007
From that article
Jennifer Roemer, a Re/Max Properties agent who has two homes listed on Dancing River Drive, says her sellers would be happy to get out at $359,000 for homes they bought for about $315,000 in the first auction in 2004.
I’ll bet to hell they would! This crap is not going to end until people begin to realise THEY ARE NOT GOING TO MAKE A PROFIT. THEY ARE GOING TO LOSE MONEY.
Put it this way. When this current generation of realtors©®†™ is BK. The next generation (and the old-timers) will ONLY take realistic clients. The problem is the most troublesome, arrogant sellers right now are THE REALTORS™£¢∞©ƒ
This is why it takes so long for these RE bubbles to deflate. No one wants to lose money, not if they can help it. Give ‘em a couple of years……
The only people “losing money” are specuvestors who bought between 2003-2006. There will be PLENTY of sellers from prior years. Right now the criminal class of Realtors™£®©ƒ is preventing this clientel from lowering its prices because the Realtors®©£¢ have their own properties to sell first.
and bob mcCormick on knx 1070 (los angeles major news) is talking bubble stories as we speak. in addition to the usual nar cronies and hacks he is presenting the other side. i.e….folks are losing huge sums of money in so. fla right here and now.
this might put the fear of god into a million or so commuters
millions of commuters listening to KNX 1070 in LA? Not very frickin’ likely. Not when Ryan Seacrest (from American Idol fame) is on 98.7 in the morning. The GFs that need to hear the truth are stocking up on tulips while driving their sloburbans toward the cliffs with the other lemmings. Not listening to talk radio.
Exactly
KNX is hard-core news. Not talk radio. Their audience, including me, are well-educated and spread across the socioeconomic spectrum.
Pardon me, but I love my balanced news deliversed free daily!
Said before, look at the numbers. Hidden agenda?