Over-Priced Florida Homes ‘Not For Sale’
Some housing bubble updates from Florida. “Former Orlando Magic star Tracy McGrady recently unloaded some of his local holdings. McGrady sold his 18,000-square-foot home for $5.1 million. Curious thing: At a time when real estate prices have gone sky high, McGrady unloaded the property for about $875,000 less than he paid for it six years ago, according to Orange County records.”
The Naples Insider. “The majority of sellers in the area and their listing brokers refuse to accept the fact that the Naples real estate market had been over-priced, and that a correction was/is occurring. These sellers should have a big sign in their yard reading ‘Not for Sale.’”
“Overall the majority of homes for sale remain overpriced for the market trend, but a significant number of sellers have reduced prices. Some sellers have reduced pricing from an outrageous amount to just an absurd price. But others have reduced prices to year 2004 levels.”
“Let’s examine the group of homes that closed during the two week period ending May 26, 2006. In this group 35% of sellers accepted offers that were 6% to 10% below the sellers’ asking price. And 13% of sellers accepted offers 11% to 20% off of the asking price.”
“But that doesn’t tell the whole story. The majority of sellers had already reduced asking prices before getting the offer. Take the group that got a full price offer for example, sellers in that group had previously reduced their asking price by an average of 9% and some by as much as 25%.”
“Some sellers have to sell, and instances are appearing were they have sold at extremely low prices. I’ve seen some properties sell for 40% off of original list price and 25% off of peak prices.”
“A comparison of actives (homes for sale) vs. pending (homes under contract and waiting to close) is a good measure of the health of the housing market. In a healthy real estate market, pendings might equal 50% of of homes listed for sale in the mid price ranges, and 20-25% in the higher price ranges.”
“In the winter of 2005 that ratio was near or over 100% for many areas and communities. In May 2006, the actives vs. pendings ratio for the Naples area was in the 9% range. An indication of low buying activity.”
“Year-to-date the pace of sales is suggesting total sales for year 2006 will be 30% to 40% less than the previous two years. With a record number of homes for sale, trends suggest that unless bus loads of price-insensitive buyers start arriving, or prices drop significantly, or a combination of both, the Naples real estate market will remain a buyers’ market for a very long period.”
Thanks to the readers who sent in these links.
Other Florida data:
‘The Fort Lauderdale area’s scorching real estate market began to cool in September. And each month since, home sales have dropped by double digits, while the inventory of homes for sale has soared. There is now an 11.4-month supply of single-family homes, up from 1.9 months a year ago. If that number rises much more, area home prices, which have risen about 25% a year since 2001, will begin to fall, Shuffield says’
‘The picture is worse for condos, which account for more than half of home sales. Condo sales declined 37% in April compared with a year ago. And the inventory of condos for sale has shot up 386%, to a 12.3-month supply.’
‘Softness dating back to the end of the third quarter has continued in the first quarter, the South Florida division has reported. The increased supply of finished, vacant homes illustrates the slowing market, with 4,141 unoccupied homes, an increase of 57.6 percent compared to 2,627 units one year ago.’
‘Metrostudy said it is also tracking more than 207,000 future lots in subdivisions soon to begin development or in existing communities where new phases of development are about to start.’
‘The supply of finished, vacant homes in Palm Beach County was only 353 units, but Metrostudy said there were 5,623 units under construction.’
‘There are 20,000 single-family and multi-family units on the resale market, suggesting that a large number of sellers who are not in brand-new homes are testing the water,’ Hunter said’
‘With 349 finished, vacant units and 2,515 homes under construction in Broward County, Metrostudy said there is a 13.2-month supply of inventory.’
‘ In Miami-Dade County, Metrostudy said housing starts, at 1,923 units. were essentially unchanged during the first quarter from the same period a year ago. However, the company said data obscure a surge in construction in the third quarter 2005, when 2,692 homes were started. There were 1,650 finished, vacant homes, a 2.5-month supply. Metrostudy said the 10-month supply of vacant, finished homes and units under construction is slightly high’
So long as they get a good feel how chilly the water is. Let’s hope they didn’t HELOC the gains already. Perhaps the cocktail party chit-chat will be about hurricanes and shark attacks this summer while every one casually sweeps the carpet with the tips of their toes and looks at the drapes when someone mentions how long the for sale signs have been on the lawn.
Re: “Suzanne, I researched this!”
great handle.
Re: “Suzanne, I researched this!”
great handle.
every one casually sweeps the carpet with the tips of their toes and looks at the drapes when someone mentions how long the for sale signs have been on the lawn.
Every single time I RE comes up while talking to a former bull or excuse-puller I inevitably get the sideways turn of head and breaking of eye contact followed by awkward silence.
Every single time.
btw fox or cnn or msnbc had coverage on key west that was so funny to watch the people there are delusional this one guy said he lowered the asking price by 300k but he will not go a penny lower. They have the highest insurance rate and tax rate in florida about 16 or 18 k for a 700k house which is the median house for a working family stfu. Their inventory hit 2+ years because everyone wants to leave and noone wants to lower their price.
You know the drill… Hummer in the driveway, big new rock on wife’s finger means they can’t drop the price because all their equity was “liberated” and burned off.
“The majority of sellers in the area and their listing brokers refuse to accept the fact that the Naples real estate market had been over-priced, and that a correction was/is occurring. These sellers should have a big sign in their yard reading ‘Not for Sale.’”
How about a big sign that warns buyers of “Greed-based pricing”?
“Year-to-date the pace of sales is suggesting total sales for year 2006 will be 30% to 40% less than the previous two years. With a record number of homes for sale, trends suggest that unless bus loads of price-insensitive buyers start arriving, or prices drop significantly, or a combination of both, the Naples real estate market…”
… is in for a devastating hard landing.
Guys,
although this ” Naples insider” is telling it like it is to some extent, he is still a realtor and has been sugarcoating it, Naples/Marco have been in the tank for over a year and price reducxtions are greater than he would lead on, yes, there are greedy sellers but they are tire kickers with millions in the bank living in Port Royal, Park Shore, Bay Colony, Royal Harbor, Moorings, ect. They dont have mortgages. Remember, the median home in Naples is over 100k higher than Palm Beach, there is serious dough here.
The outskirts, dry lots and off the beach condos are getting crushed in Naples and have been soft since mid 2004. Sellers are coming to closings with checks and foreclosures are skyrocketing.there are no buyers in many areas off the water and even on Marco Island,which is a virtual water haven, there are no buyers at all. ( 5 years of inventory) Obscene pricing, taxes, insurance and impact fees have really put a damper on “boomer demand”. Also, the cheerleaders failed to estimate how many WW2 generation fossils would bail out once their neighbor sold their 2/2 on the water for a million bucks, amidst 2 huge hurricanes back to back.
You are right in your assessment bubcity. I follow the Naples market to some extent and am quite familiar with certain areas.
Being on the water (beach or Bay) is important. A relative is selling a place in the Moorings right now. The Agent says it won’t make a difference to lower the price.
It is priced very well, but there are zero buyers. I imagine that the Barron’s article did not help. This relative owns the place free and clear and has no urgency.
I like Naples alot and don’t care if prices go into freefall. I am retiring there and would never sell my place.
“Being on the water (beach or Bay) is important.”
Especially during storm surges.
one word “insurance”.
Yes, and one reason why Disney chose Orlando- Well inland.
And Insurance will continue to increase. So while you live as a retiree in Naples, you will be paying through the nose in just insurance for the ability to live there. Now throw in taxes and various other costs, and you watch all that money you worked so hard for just dwindle away. Then when a hurricane does hit, you have to deal with the hassle of evacuating, then dealing with insurance companies trying to screw you over, that is, IF YOU CAN EVEN FIND INSURANCE. Many are cancelling and if citizens go bankrupt, then you’re screwed.
But but but, I thought “insurance” was the one word. Oh well, you’re an attorney, so you could just sue them.
It’s true. I’ll never forget a line that I once read in an old real estate book. Something to the effect that, when the market turns, all the buyers just simply walk away.
a “buyers market”,my sweet and purple a$$.we will start to see a buyers market come spring,and it will just get better for the next few years.when there is a two or three year inventory and foreclosures are up 500% or so,i suspect sellers might become willing to negotiate a bit…6-1-07,or sooner
I would think we should start seeing negotiations a lot sooner than that. I would imagine that it should start by the end of the summer when sellers realize that the selling season is over and that they are in trouble. Until then there should be more hope. By winter I don’t think anybody will be able to kid theirselves. The homes here in Venice, CA have been sitting for sale with virtually no movement for at least three months already, some for five. Very few have moved at all. The only movement has been people removing their ‘For Sale’ signs and then returning them after 60 days. By the end of summer nobody will have any confusion and will need to start reducing. It should probably be a freakout by next summer.
Veniceguy
I agree with your perception except I expect by fall *enough* FB’s won’t be able to handle the holding costs and that by then the asking prices will have dropped noticably.
I will note that the longer we have this standoff, the more inventory is going onto the market. Thus, by not reducing prices early (and creating a buying frenzy) sellers have contributed en mass to their own doom.
Then again, they would have been required to reduce pricing down to affordable levels (for Cali). We’re a long way from that.
I stand by my prediction that summer selling prices won’t drop a lot but inventory will continue to build… and build… and build until its too much to “deflate gently.”
Since its obvious its going to happen, I wish it would just play out… instead I’ll just rent and save and wait.
Neil
December property taxes will loom large. Followed rapidly by th e April installment. Death on a stick here in CA.
July 4, 2006…with lots of inventory, and no great buyer motivation, all the listings from March and April from sellers who need to be in the new school system by fall and those who can’t make their higher ARMs will be in the “survivor”
mode…get me out of here at any price.
I stand by my prediction that summer selling prices won’t drop a lot but inventory will continue to build… and build… and build until its too much to “deflate gently.”
—-
I agree with this. The majority of sheople are not yet totally freaked out. THey still have their original ’strategery’ of making an easy mega-profit with no real work.
A couple of people I know are selling their homes in the town I live in. One has been on the market for almost four months with a price reduction of a whopping 1%, the other has been on the market for a month with no reduction YET. Anyway, the one that has been on the market 4 mos has had four offers, all of them accepted. Problem is 2 of them couldn’t qualify, and the other 2 after finding out “howmuchamonth” the payment will be, backed out. The other house has had one offer, it was accepted, but they too backed out after finding out the payment. Sooo, the sales price of over half a mil won’t scare them off, but the monthly payment will. Ummm, duh if you’re going to borrow over 500,000 you have to pay it back!! So $500,000 dollar debt looming over your head, not so scary. $3500 a month payment…no way??? I just don’t understand the disconnect. I don’t care what it will cost me a month, I’m not borrowing $500,000 for one of those 50+ yr old POS houses.
They both should fire their agents how do you not know what the payment is going to be. What happened to the listing agent asking for a pre-qual from a lender. They are not worth the paper they are printed on but at least the buyer has taken the step of finding out what he’s in for.
I don’t understand that
I sort of understand the psychology behind this. I remember when $500k was a lot of money for a house, but people have become numb to these big numbers. 5 years ago I wouldn’t have thought my in laws would be living in a million dollar home, but it is (or was) worth that much and it’s just a big tract home in Brea.
The only numbers that hit home now are the monthly payments because that hits you in the face right away.
a tract home in BREA is not worth 1M. Let us know 2 years from now what that is worth. If it were priced correctly, I would say $400k.
Anyway, the one that has been on the market 4 mos has had four offers, all of them accepted. Problem is 2 of them couldn’t qualify, and the other 2 after finding out “howmuchamonth” the payment will be, backed out. The other house has had one offer, it was accepted, but they too backed out after finding out the payment.
It’s amazing to me how people could even entertain the idea of buying a house, much less mking an offer without calculating the approximate monthly payment beforehand. Unbelievable.
What happened to the “Spring” selling season?
stone, housing is like the rock, it falls in florida
Speaking of foreclosures, this excerpt from The Daily Reckoning is interesting:
*** “Indianapolis is the 12th largest American city,” starts a note from
our small cap superstar, James Boric.
“And, as a native Hoosier, it’s one I have spent quite a bit of time in
over the years. But I have to tell you; I was shocked to learn it boasted
the highest foreclosure rate in all of America - beating out Atlanta,
Denver and Los Angeles, cities that have ballooned over the last decade.
“How could this be?
“Until the 1980s, Indy was known as the agricultural and manufacturing hub
of the States. It was a working-class, blue-collar town that wasn’t afraid
to get its hands dirty. Unfortunately, a lot of the manufacturing jobs
(think auto, steel, pharmaceutical and major equipment) have recently been
moved offshore to places like India and China. And while agriculture is
still a big business in Indy, retailing and insurance have taken the place
of the old manufacturing jobs.
“The problem in Indianapolis is that the blue-collar workers who lost
their manufacturing jobs are not the people getting the insurance and
retail jobs. (Ironically, a lot of foreigners are migrating from China,
Korea and India to Indianapolis to fill those positions). And those
blue-collar workers are the people feeling the pressure of the latest
housing glut. After all, when they no longer have a niche to fill in the
local economy they inevitably lose their jobs, go bankrupt and have to
foreclose on their homes.
“It’s a vicious cycle. And it’s one that has to change in the classrooms.
“Indianapolis has long suffered ‘brain drain’. Less than 20% of all
Hoosiers have a college degree. And of those that have graduated from an
Indiana college or university in the last decade, 100,000 have left the
state to pursue their career (yours truly included).
“You can’t have a vibrant economy when a large portion of your most
qualified workers are skipping town. Couple that with the fact there is a
glut of about 19,000 homes in Indiana and it’s no wonder you have so many
home foreclosures.
“The combination of weak housing prices and an uneducated and unemployed
population is deadly.”
6/1/2007 sounds good….right at the time I plan to buy. I am concerned about the Texas market where I plan to relocate to next year. Many bull “analyists”, even Forbes magazine predict that particular market to go up 10% this year. I’m stressed because if that happens my buying power will obviously errode. However, I just don’t see it…why will ANY market increase as interest rates continue to rise, etc. Any thoughts?
T.O.’s house is still for sale in N.J. - down a few hundred grand since his original listing -
“Owner eager to sell….will consider all reasonable offers.”
http://tinyurl.com/mrxp4
http://www.wfmynews2.com/assetpool/images/06318165535_203×152_922345632782977414789207.jpg
PITI is only about $30,000/mo.
Florida is not the only place. Same thing in CA.
People refuse to believe that their house is actually worth LESS money than last summer….lemmings who bought into the ‘RE never goes down’ bit.
So these people just sit…and wait..and sit…hoping that another sucker will come along.
Rule # 1 in RE : YOU DO NOT DETERMINE WHAT YOUR HOUSE IS WORTH. THE MARKET DOES.
I talked to a lady today from CT, she said her house was worth $400,000. I pulled comps and a house right next door to her just sold for $300,000. Exact same subdivision, the house that sold though was a tad bigger and had a bigger lot. She bought back in 2002 for $303,000. Then she said she would not sell it for less than $400,000.
I thought that was hilarious.
It sounds like you’re an agent. Must be hard trying to convince people otherwise. I think most of the agents, with $$ in their eyes, tell people “yeah, we might be able to get that for your home”. Then they make them sigh a 3 month listing agreement. After 1 month the seller says..”hey, not one single person has looked at the house what is going on”. At that point the agent breaks the bad news to them and the seller pretty much has to go with that if they want to sell. Agents love those listing agreements….PS no I’m not an agent.
Pretty much a bait & switch…although I don’t blame the agents.
Not an agent, I live in San Diego. I would have a hard time selling a house in Connecticut.
Can you clue us in if she needs to sell, or just wants to sell? Did she helloc the difference?
No trying to do a refi. Might end up having to sell.
She took the news pretty well, considering. I have been seeing that same scenario happen all over the place now.
I’ve been watching the development in Palm Beach County I used to live in. I closed last September right before Wilma hit. I originally bought in 2001 and more than doubled what I paid for the place.
Houses that were on the market last summer when my place was listed are still on the market and none of them have dropped thier prices. In fact newer listings are 50 to 80K more than what I got and from what I have seen I got out at the top.
You have to wonder how serious some of these people are about selling.
they are not serious, because they believe someone somewhere is going to buy their house. they cant see that insurance, taxes and cost of living has crushed people. no matter how many people are moving in, how many of these people can pay for a 300,000 home. that is just one problem in florida. the other major problem is the condo building in miami. if the city of miami completes the mall, (30th and miami ave) and redevelop everything east of I 95 and south of I 195, it is over. all of the celebrities are moving to miami within the action. who is going to move to pompano and drive down to miami. traffic is incredible, especially during the weekends. everyone one wants you in a condo or home and expect you to go to debt or work 80 hours a day (fort lauderdale mayor) just to live here. how many people in south florida or even florida remember hurricane andrew? you didnt see housing go up afterwards, even with the population increase in broward and palm beach. housing debt is the greatest debt in one’s life. if people think about this for a minute,…. now people are thinking about this.
the tipping point has arrived because, everyone is priced out and willing to move than not have water for 3 to 5 days or no electricity for 2 weeks. florida’s infrastructure cant handle a cat 1. forget about housing with a cat 4 or 5.
then again, we dont get bad hurricanes.
People think they own things which end up owning them.
The old rule of thumb was RE should not be more than 35% of your income. This is no longer true, IMO. Because people show no restaint in spending for other conspicious consumption articles and because people s/b saving more $$$ (demise of SS, Medicare is on the horizon, etc.), I would say anything more than 25% is PUSHING it, 20% is prudent.
Do the calculations on a 500k house. There is no way an avg Joe should even consider such a proposition. No way (unless they have a 50% down payment).
“…demise of SS, Medicare is on the horizon,…”
Medicare yes, Social Security, no. Social Security is fully funded until 2014. It is only after that date revenues will start to be less than payouts. The general deficit is the concern, not SS. Fix the deficit and there is no ‘crisis’ in Social Security.
You are exactly right. Who is left to buy if all the entry level homes are priced out of reach of the entry level buyers. I just read that Miami-Dade has a 28% poverty level. I already knew they had the highest level of child-poverty in the U.S., but I had no idea that almost a 1/3 of the population here is in poverty. They certainly won’t be buying the median priced home in this area. Ooops, I almost forgot. It’s different here! All the rich Colombians and Venezuelans will buy all the shitty overpriced homes. At least that’s what my transferring co-workers think who are trying to sell their homes and not budging on their asking prices.
They aren’t serious, YET. It’s the “yet” part we stay focused on. The ones who are fishing and don’t have to sell may well pull their listings once average resale values get low enough — that will make their pain go away because they’ll just ignore the market. The ones so many of us are waiting for are those who MUST sell. Their numbers will increase, and probably at a good pace, over the next 1-3 years. It’s like the old acade games — take your time, aim carefully and pick off an easy one. It’ll happen. Just requires patience. And I believe it is a whole lot easier to be patient if you are currently a renter instead of an owner, because you have relatively little skin in the game and can move quickly when the right deal comes along.
The article says “the inventory of condos for sale has shot up 386%, to a 12.3-month supply”…ok, so, the 12.3 month supply figure assumes that the rate of home sales will stay at its current rate, but if home sales slow, then you’re looking at an even slower inventory turn rate….anyways, assume the inventory holding cost for a builder is 10% a year, then it would make sense for the builder to sell a house for up to 10% less than just the COST to build the house.
Not a good time to get in to the home building biz.
“The majority of sellers in the area and their listing brokers refuse to accept the fact that the Naples real estate market had been over-priced, and that a correction was/is occurring. These sellers should have a big sign in their yard reading ‘Not for Sale.’”
Just wait until the first BIG hurricane of the season hits and that ” For Sale” sign is floating somewhere in the Gulf. Then it will need to be replaced with a ‘NOT for Sale and Still Looking Fot It” sign.
If Mother Nature spanks Florida like last year, the Sunshine State will be one big Lights Out, …last one out please forward all mail to somewhere in friggin Montana.
I don’t know if people are noticing it, but there has been a distinct shift in attitude about the housing bubble.
Last summer nobody thought there was a bubble. Nope. We were the only ones.
This spring inventory is building and people are still in denial, but the press is saying there is cooling occurring. OK.
Now people are beginning to see/agree that a) there is a bubble and b) cooking is occurring. The fight right now is what will happen to the price of housing. That is the argument. Things have definitely moved ahead.
And now it looks like we are beginning to see significant price reductions. We are just on the precipice of seeing those reductions, but they are starting to occur.
Mainstream news sources are reporting what we were discussing six or months ago. Once the sheeple digest this news, they will react with precaution, cutting back on luxury consumption and investment in risky assets, which will sow the seeds for further bad economic news down the road. This is how all booms end — in an avalanche of bad news known as an attention cascade (see Robert Shiller’s “Irrational Exuberance” for more on this subject).
The utterly predictable dead cat bounce in the dollar and stock market is causing me to lose hope in humanity. People just won’t learn. They won’t think. They believe the Fed will make everything ‘OK’. Sadly, we need a financial collapse every few decades to correct imbalances. I feel like the next Great Depression generation.
Yeah we will be the next generation that reverts to paying cash for everything, and will end up paying off our mortgages as soon as possible.
“Yeah we will be the next generation that reverts to paying cash for everything, and will end up paying off our mortgages as soon as possible.”
Sounds like a wonderful change. I can hardly wait!
i doubt it. not this generation.
We will if we can’t get credit anywhere.
The thing is, credit crunches a la Depression 1929 are impossible now, because money can be expanded at will. The correct question is rather “would you want to take credit in a deflation?”
Japanese didn’t.
Sun Micro says to cut as many as 5,000 jobs
Melody — are they going away permanently, or out of the country?
Read about Sun to cut up to 5,000 jobs this year.
They go bye bye
One question for David Lareah and the NAR cheerleading crew: If the price of housing continues to rise, how are Americans going to compete in the global economy. Why is an employer like SUN going to hire an American with a $400,000 mortgage when they can get someone just as good with an $80,000 mortgage?
Answer…they aren’t going to compete. Not only are Americans less hardworking than eager and hungry foreigners, we have those high salaries to boot. With globalization underway, the pressue on American wages will be down while Chindia wages will tend to go up. It is all about equilibrium and “tent poles” are the most vulnerable. That would be us.
virtually guaranteeing a burst of the bubble
From what I’ve seen anecdotally, there seem to be a lot of RE agents in Florida who own a lot of properties. I would have thought that, considering what they’re seeing in the market, they would have been listing their own places, and dropping the prices to move them. Maybe they are (maybe these are the places that are actually selling), but I would have thought that more of them would have seen the writing on the wall and decided to dump their properties, thus leading to more downward pressure on prices there (especially for condos). Has anyone seen any evidence of RE agents leading the way on price reductions on their own properties?
Only dumb new agents have bought heavily in the last few years. The experienced ones just sat on their hands and got paid. The new toads really do believe the “never goes down” crap, a rising market is all they have ever seen. I know new (less than 5 yrs) ex corporation commando turned super agents holding 20 and 30 houses, financed to the max! Many many other newbies (any RE folks: agents, lenders, inspectors, etc..) that bought more than 4 including the one they live in.
It astounds me! Hell I cashed out my two rentals in late 02 and my primary in mid 03 and am still fine with what I got, even though the market charged up more than 100k on each! I penciled it out, it would have taken me 20-30 years in rental income to equal what I sold them for. There is no doubt that all these new “super investors” will splat the ground very hard when they return to earth.
Last year (at the top) I saw “Investors” paying 500k for homes and putting them to rent for $1,400/mo!!! Shit the taxes and insurance alone is running them about $600/mo. In real time value of money terms they are really losing over $2,500/month not counting upkeep, vacancies, property management and eventual selling cost! HAHAHAH, some investment.
remember our friend Dena Webster - this is interesting -
http://www.ftc.gov/os/comments/FACTA-implementscorestudy/514719-00007.htm
Exactly, like the new loan agent who told me that rates will never go past 8%. There’s a whole lot of hurt coming down the pipe
“The majority of sellers in the area and their listing brokers refuse to accept the fact that the Naples real estate market had been over-priced, and that a correction was/is occurring. These sellers should have a big sign in their yard reading ‘Not for Sale.’”
Not necessary. An unrealistically high listing price will send just as loud and clear a `Not for Sale’ message as a big sign would.
Naples has more signs then I have ever seen, The price is way too high for most buyers, Flippers cant sell, the Teachers are leaving, Firefighters can’t Buy, I feel sorry for that 911 Call or the kids that cant read, Its Just greed, and with a storm season here this is not good, All this for a Buck, Its just SAD
Anybody know anything about the Marco Island market? Considered exact same as Naples?
Marco has always been a poor cousin to Naples. I would imagine market conditions are similar or worse.
I have a nice guy who I do some business with has 3 houses he bought down there. All close to the water - all $500k-$800k - one HELOCed against the other. Bought in like 2002, 2003, and 2005. The latter was a tear-down and killer rebuild. Insurance costs have exploded. Two houses are empty. Not sure how he makes the PITI.
the Teachers are leaving, Firefighters can’t Buy,
The sad part is that this temporary insanity is causing structural and demographic imbalances in communities that will last for decades in some cases. The young, energetic, entrepreneurial people will move on to saner environments, leaving behind a geriatric class living in half-empty condo highrises with very little in the way of local restaurants and services.
Places away from the beach are still fairly reasonable. Prices are nothing compared to northern virginia. I can’t imagine teacher salaries are that much lower than here.
Teacher salaries might be low compared to SFH costs, but DC area teacher salaries among the highest in the country.
Forget teachers and firefighters. Here on the SF Peninsula I know doctors who can’t buy. Still not much sign of weakness though…
naples. anyone in florida understands that there is nothing in naples or anything south of tampa. just rich old folks. where is a real mall, museum or sports team. yea, some hip europeans or latin americans or hip hop stars. oh, they dont want them types in naples. real money is going to the east coast and orlando. i went there a few times to go to the beach. you have to pay an arm and a leg or you just cant go past the private beach signs. naples? next thing you will see is collier county begging people to drive from the east coast or fort myers to work there. people take a two hour bus ride to marathon, in the keys just to have enough workers at stores. i can wait for day that their housing market totally collapse. oh, it is happening. i heard a pin drop.
Remember, those signs can become dangerous missiles in a hurricane!
If you think the Naples market is bad, you should look at the Baldwin County Ala market - Orange Beach and Gulf Shores - almost next door to Pensacola.
As of a couple of weeks ago, 45 condos were sold the prior month. And 3500 are currently on the market. Plus the builders are starting new projects weekly. Insanity.
The prices? From $400k (for a 1 BR/1 bath) to more than $1mil. I’m sorry, I’ve lived in Ala all my life and there is NO house in the state worth $1mil.
Davey Jones, It wasn’t that long ago that you could drive from Pensacola to Ft. Morgan and all you saw to the south was the gulf, sand dunes, and seaoats. Those were the days!
You were my wife’s favorite “Monkee”.
this reminds me of a quote I recently read in a RE book -
“People that refuse to accept the market’s opinion of what their house is worth are fake sellers. They aren’t real sellers - yet. They’re property owners masquerading as sellers.”
Davey Jones, We did the cruise acroos the panhandle..Like you said,signs on every single corner ,most times 2-3 , and cranes still sprouting like mushrooms…This was early April so assumed it was peak season…It was dead!
I have the last weeks winning Florida Lotto numbers ,I wont give them away ! last week they were worth 6 mil, I wont take any less, every week they will win, ( this is what the housing market is like in south Florida,) odds of the market making a comeback in the next 10 years, about the same odds as lotto,
These economist say there will only be a crash when there is job loss. But that is extreme crashes. Let’s look at Detroit a city that truely crashed. Max population was about 2.5 mil, now just under 1 mil. So still a huge city. Houses over $1 million listed on MLS two.
http://www.realtor.com/FindHome/HomeListing.asp?snum=1&mlsttl=Detroit&frm=bycomm&pgnum=1&mls=detroit&js=on&poe=realtor&st=mi&areaid=1090155&areaid=1090156&areaid=1090157&areaid=1090158&areaid=1090159&areaid=1090160&areaid=1090161&areaid=1090162&areaid=1090163&areaid=1090164&areaid=1090165&typ=1&typ=2&mnprice=1000000&mxprice=99999999&mnbed=0&mnbath=0&mnsqft=0&ss_mitm=n%2Fa&sid=06B59239FA68C&snumxlid=1059139605&lnksrc=00001
Houses over $500000, 18 and this out of 5446 listed and only 200 over 250000. That is what is a real crash with the job loss looks like. Still want to move the rest of our economy over seas?
Hopefully we wont see a real crash like this for the rest of the country.
Looking only at the city of Detroit is a bit misleading, though I do agree with your point relating to job losses (Bloomfield Hills is hurting as well). Metro Detroit is much different than the City of Detroit. Essentially, the entire city if one big slum. I went to high school in Bloomfield Hills in the mid-1980s and there was never a reason to go into Detroit.
my realtor here in ann arbor Mi just told me that now is the time to buy, that interest rates are creeping up, that inventory is good, that prices fell a little but now are on the uptick again, and that I’m gaining nothing by not jumping right now. I am losing the tax benefits, which alone make it a much better idea than renting (for about half as much, before the tax bennies), and I am losing out on building up that future appreciation that I can get free. She actually used the term “FREE MONEY” in caps and all when describing in her email what I’m missing out on…that she has clients who move every 2 years to get that free money capital gains. Should I write back to her and ask if there’s ever a bad time to buy?
She initially claimed that “Uncle Sam *reimburses* you for the *vast majority* of your payments for the first several years”.
She also claims that Ann Arbor is immune from any national or state issues. She was responding to my husband’s telling her that I am pretty convinced that there is a bubble in effect and that now is not a good time to buy. She said she just hated to see people afraid to buy based on what other people are doing or not doing (?) and that it’s a game one can’t win.
Saying “resistance is futile” would have been over the top, I’m guessing she thought, but she came pretty close!
GO BLUE!!!!!!!!!
94 days until the first Michigan football game. Now should be the time to buy in Ann Arbor — after the sting of 7-5, real estate can ony go up!
When Missy is hungry she’ll do anything to feed herself. That is why I believe RE “professionals” will go the way of the vinyl LP. You are actually negotiating with a hungry stomach which will do anything to feed itself…at your expense. With all the tools/info available on the internet today it still is a mystery why people use RE agents. Why would you purposely invite someone into your life who will lie, harass, and use scare tactics while you try to make the most important economic decision of your life?
Again, are you going to let a big, pink, self-serving acid filled pouch into your life?
Realtors get away with making claims that would land a stockbroker in jail.
GO BLUE!!
I do see a relationship between these bubbles and America’s deindustrialization. As we stopped being a producer nation and became a debtor nation, we had to get consumers to spend down their savings to keep the economy going. These bubbles in essence get people to spend down their savings.
Bubble number one was a way to get Americans to spend down their retirement accounts. Here is how it happened:
1) There was a switch from defined benefit plans run by investment professionals to defined contribution plans, which give more investment control to non-professionals.
2) As the 401k money flowed to Wall Street or in this case, the NASDAQ, paid “investment advisors” sold worthless or overvalued tech stocks, the media put these “investment advisors” all over TV without mentioning all their conflicts of interest. The media treated any real economists as out dated and the media quoted bubble cheerleaders no matter how crazy their theories were and treated them as real experts. As the new 401k investors moved into the markets they were fooled by this way more than any defined benefit plan administrator would ever be.
3) The money flowed from the retirement savings to the economy
4) The people responsible covered their ass by blaming all the “investors” 401ks put into the markets for being fooled by the media blitz and unscrupulous investment advisors.
When that was all played out Bubble number two was real estate. Worked about the same,
1) Low interest rates pushed prices up and new mortgage products allowed inexperienced people to enter as new homeowners and investors.
2) Realtors with conflicts of interest advised buyers that prices would not go down.
3) As prices climbed past any economic justification, the media ignored any economists who suggested there was a bubble and put on re cheerleaders.
4) As prices increased homeowners spent down their equity to make up for staminate wages or at least spent more freely than they would have otherwise as they were more confident with all that equity. (remember we moved all those jobs overseas).
5) RE equity borrowing and false consumer confidence buoyed the economy.
6) The bubble is bursting and “savings” tied up in home equity are gone, blame the fbs.
Bush already has a plan for the next bubble, let American’s invest their social security and spend down the last of their savings.
Many people here think the problem with the bubble is that they cannot afford a house. I am beginning to think that the bubble is a symptom of a much bigger problem.
Look at Christopher Thornburg, the UCLA Anderson dude. I would imagine most folks here have seen his one hour video that makes the “housing crash” case for California. Extremely compelling. So what does he do then? At the very end, he bails and says “but, prices will plateau for the next 10 years while incomes catch up –prices don’t decline unless jobs are lost”. What a cop-out! His presentation has you convinced that the world as we know it will soon come to an end, then throws out a caveat you swear was scripted by the NAR. All that BS about other sectors of the economy “picking up the slack” from jobs lost in RE. I’d certainly like to know what booming sectors these will be.
I went to a lecture by Karl Case two years ago that had the same conclusion. He spent and hour giving every reason in the world why housing prices were due for a major correction and then ended by saying “incomes will catch up and there won’t be a huge downward move!” Case is Robert Shiller’s research partner/coauthor for many projects. Sorry, but the trend in our times of global labor markets is not toward rapidly rising incomes!
Try being a real economist and consistently delivering doom and gloom.
It is bad for the career.
They both lay out the case, they aren’t going to hold your hand and draw your conclusions and battle plans for you.
They also leave themselves an out with job losses. Guess what they just told you the job losses would be significant.
Draw your own conclusions.
repost ,but this Barrons’ article is so spot-on
http://tinyurl.com/j74bd
Some of the facts that are downright scary as to the amount of hommes owned by speculators….especially from a major news source as this…The word is truly getting out.
—–
Also check out Dimartellos piece at the Dallas MN. Foreclosure storm looms again…especially look at the numbers for building permits over the last few years as compared to the last bust.
Wow, the data on Detroit is sobering. Its easy to talk in conceptual terms but the reality behind the Detriot numbers is somewhat firghtening.
In Vegas, its all real estate and service sector jobs. If economy tightens, there will be less people gambling their $s. What will happen then to an economy where less than 20% have a college education and work in the service and real estate sector.
Simmsays…
http://www.americaninventorspot.com
LUDICROUS SPEED!! GO!!!
Has anyone noticed that the Realtor.com website is running really slow? Perhaps they have so many millions of listings that the database can’t take it. Here in Chico CA it seems that the Bubble has finally burst in full force. Sales of residential property last month were 60% of what they were last year. Meanwhile inventory are more than double.
This will most likely go unnoticed.
But hey, what the hell. So have lots of other important statements throughout history.
LADIES AND GENTELMEN, THE HOUSING BUBBLE HAS BURST.
June 1st, 2006. 3 AM.
Let’s see where it goes, people.
Might be bad, might be good, might be boring.
Doesn’t really matter.
JUNE 1st, 2006.
The day the words were finally spoken.
THE HOUSING BUBBLE HAS BURST.
Good night, and, Good luck.
Damn man, you post at some weird hours, this from a guy with a newborn.
First day of hurricane season…
“Last year (at the top) I saw “Investors” paying 500k for homes and putting them to rent for $1,400/mo!!! Shit the taxes and insurance alone is running them about $600/mo. In real time value of money terms they are really losing over $2,500/month not counting upkeep, vacancies, property management and eventual selling cost! HAHAHAH, some investment.”
The trick is to lose a little on each one and make it up on the volume.
I don’t think it’s any mystery as to why we haven’t seen a huge drop in listing prices. The simple fact is that most sellers CAN’T sell for anything less than ridiculously high prices. Very few people have any equity left in their homes, and would be upside down if they accepted “realistic” offers.
I think we are just going to have to wait for a new wave of distressed homes to hit the auction circuit after foreclosure before prices really start dropping significantly. Maybe we could see this happen towards the end of 2007. Right now, we are just beginning to see the growth in panicked/distressed sellers. It will take about a year for these sellers to start falling behind in mortgage payments, and finally have the bank kick them out.
Until new massive waves of foreclosures start coming on the market (well over a year from now) we will likely stay in this holding pattern with growing inventories, but stable median prices.