May 29, 2014

Markdowns Are Supplanting The Bidding Wars

Miami Today reports from Florida. “Tallying what’s on the drawing boards of real estate developers, greater downtown Miami appears to be on the verge of a condominium explosion. There are 49 projects with a total of 16,843 units in the preconstruction phase in the greater downtown area, according to data compiled by a website affiliated with the Miami Association of Realtors that tracks condo preconstruction projects in South Florida. In addition to those units in preconstruction, said veteran Miami real estate broker Ron Shuffield, about 4,500 units currently are in construction in the Brickell area alone.”

“As the situation stands, Brickell may be facing an oversupply of condos that could cause prices to stagnate, according to Mr. Shuffield, who has worked the local real estate market for 39 years. He estimated that once those units are completed, Brickell will have an inventory of condos that should take about 15 months to be absorbed. ‘Generally,’ he explained, when there’s an absorption period of ‘12 months or over, prices begin to stagnate at some point.’”

The Miami Herald. “South Florida homes continue to get pricier, but slowing sales momentum is signaling that buyers are balking at sellers’ lofty expectations as their choices widen. The median condo price rose 10.3 percent to $193,000 from a year earlier, but slipped 3.5 percent from March. Sellers commonly expect to command a higher price than the home that just sold down the street. Dickering over deals and markdowns is supplanting the bidding wars and back-up contracts of last year.”

“‘I try to counsel a seller that a house is worth what someone is willing to pay for it — not necessarily how much they need to buy their next house,’ said Philip Vias, a broker associate with Berkshire Hathaway HomeServices Florida Realty in Fort Lauderdale. ‘Unfortunately, some sellers are not as realistic as they should be.’”

“A key shift in the housing market continues to be the rise in choices for home buyers. In Miami-Dade, the number of single-family home listings rose 24 percent to 6,034; condo listings swelled 38 percent to 11,033. That was the highest level of existing condos listed for sale in Miami-Dade since May 2011, and it amounted to 7.7 months of supply — a level that tips the balance toward buyers. The swelling level of existing condos for sale comes as Miami-Dade is in the midst of a new wave of condominium construction.”

“‘It’s starting to slow a little bit, and I think a lot has to do with sellers’ expectations,’ said Bette Abrams, a Coldwell Banker agent in Coral Springs. ‘For the first time, I’ve seen price reductions. A year ago, people were jumping in with the full price and above the full price.’”

The News Journal. “The number of homes sold in Flagler County last month was the first time in nine months that sales have topped 200, but the sixth time in the last 12 months that sales have not been better than the same month a year ago. The median price of homes sold in Volusia County was $125,000 in April, up 8.7 percent compared to the same month a year ago, but down from $135,000 in March.”

“There were 3,818 homes for sale in April in Volusia County, up almost 20 percent from a year ago. Flagler County had 1,159 homes for sale in April, up 18.6 percent from a year ago. ‘Sellers feel confident to list their home and the good news is we are able to keep pace,’ said Ian Anderson, president of the Daytona Beach Area Association of Realtors. ‘While the market may have softened a bit, it’s like a train running steadily ahead.’”

The Sun Sentinel. “South Florida sellers aren’t seeing as big a bump in home prices as they did last year. The percentage increases have slowed considerably in recent months. In 2013, median prices in the two counties were soaring, with year-over-year gains above 20 percent. Home sales in the two counties increased slightly last month from a year earlier. Broward had 1,334 sales in April, up 1 percent. Palm Beach County’s 1,478 sales were 5 percent higher.”

“Over the past two years, buyers have complained about a shortage of homes for sale. But listings in both counties are on the rise as sellers feel more confident that they can get the prices they want. The percentage increases have slowed considerably in recent months. In 2013, median prices in the two counties were soaring, with year-over-year gains above 20 percent. ‘Those days are gone,’ said Liz Caldwell, a Fort Lauderdale agent who also sells in southern Palm Beach County. ‘It’s a more normal market now.’”

From WOKV. “Florida led the nation in foreclosures last month and Jacksonville is among top ten in the state. Realtor Christine Lee tells WOKV 50 to 60 percent of the sales for homes worth less than a hundred thousand dollars are in distress. ‘Under $100,000 you are definitely going to see some much more incredible and distressed foreclosure short sale rates.’”

My Suncoast. “The most recent numbers are showing around 1 in 4 real estate sales in our area still involve a short sale or foreclosure. Deb Bean-Guinto with Anytime Realty in North Port says you can still find a discounted home in the area. These days though, you are going to have to put some work in. ‘This is what you are getting for $110,000…a pool, a four bedroom house that needs work,’ says Bean-Guinto.”

“More and more homes like these are coming on the market every month. ‘As far as foreclosures, we are seeing more, but it is steady.’ Bean-Guinto says that could just be that a bank released a bunch. ‘They are holding onto homes and releasing so many at a time.’”

“In fact, driving around you will notice homes which look distressed, but are not for sale. ‘They are not in the MLS and it does the realtor no good to call the asset manager company, because they don’t want to talk to you. They have not done all of their work to release the home for sale,’ says Bean-Guinto.”

“Despite improvements with around a quarter of all local real estate sales involving a distressed home, it leaves the area in the bottom quarter of the country. ‘We are going to see foreclosures in this area for a couple more years I would think. None of us know how much is truly out there,’ explains Bean-Guinto.”

“Florida has more than 200,000 backlogged cases of pending foreclosure. In Manatee, DeSoto and Sarasota counties there are nearly 10,000.”

RSS feed


Comment by Whac-A-Bubble™
2014-05-29 03:14:23

‘For the first time, I’ve seen price reductions. A year ago, people were jumping in with the full price and above the full price.’

Where are the all-cash hedge fund and foreign buyers when you need them?

Comment by Combotechie
2014-05-29 05:00:58

“Where are the all-cash hedge fund and foreign buyers when you need them?”

Some of them are now going into the borrowing phase.

Comment by Whac-A-Bubble™
2014-05-29 06:37:50

Others of them are now going into the selling phase.

Comment by Puggs
2014-06-02 09:10:46

Whilst many other move into the “broke” phase.

(Comments wont nest below this level)
Comment by oxide
2014-05-29 05:11:04

From the articles:

“For instance, the Related Group’s 28-floor, 192-unit MyBrickell project is listed in preconstruction by, but most of the building already has been constructed and all of its units reportedly have been sold.

…If all or nearly all of the nearly 17,000 units listed in preconstruction now in greater downtown are built and placed on the market in the next five years, he added, it probably would create an imbalance that stagnates or even drops prices.”

MyBrickell? Is anyone else turned off by this “My” in front of everything? My account. My passwords. MyCiti. MyBoA. My Lists. It’s even more condescending that the “solutions” of the early 2000’s.

And who is buying these 17,000 floating boxes of air? This is probably the worst place to be when it’s go time.

Comment by Housing Analyst
2014-05-29 06:44:58

A reinforced cast in place concrete structure high above the high water mark is the worst place to be?

You have strange notions.

Comment by oxide
2014-05-29 16:02:08

I invite you to share said structure with a couple hundred other households… and the power goes out. Or the food runs out. Or the potable water runs out. Or the windows blow out. Or you can’t go when it’s go time because the roads are crowded with looters in the water.

(Comments wont nest below this level)
Comment by Housing Analyst
2014-05-29 16:41:42

And your 50 year old shanty magically sprouts food from the basement and a waterfall down the chimney.


Comment by Arizona Slim
2014-05-29 10:21:07


Comment by Whac-A-Bubble™
2014-05-29 03:18:03

“In 2013, median prices in the two counties were soaring, with year-over-year gains above 20 percent. ‘Those days are gone,’ said Liz Caldwell, a Fort Lauderdale agent who also sells in southern Palm Beach County. ‘It’s a more normal market now.’”

Like Santa Claus and the Easter Bunny, a normal market is a figment of the imagination.

Comment by Muggy
2014-05-29 03:53:17

“Ron Shuffield”

Wow. Early bubble days revisited…

“Premonitions of a bubble on the verge of popping do not ruffle those who are bullish on real estate. In Miami, Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors, predicted that a limited supply of land coupled with demand from baby boomers and foreigners would prolong the boom indefinitely.

“South Florida,” he said, “is working off of a totally new economic model than any of us have ever experienced in the past.”

Comment by Whac-A-Bubble™
2014-05-29 06:40:03

“…totally new economic model…”

Was that the celebrated souffle model?

Comment by Muggy
2014-05-29 11:37:53

“Was that the celebrated souffle model?”

Same era, different guy:

Palm Beach Post, US 11.22.2006
November 22, 2006

Bubbles burst, soufflés flatten. So says University of Central Florida economist Sean Snaith, who denies that the housing market is in a bubble.

Comment by snake charmer
2014-05-29 07:16:48

Thank you. I was going to post that myself. It’s one of the all-time classic quotes, and it didn’t impact his career in the slightest negative way. Sean “Housing Souffle” Snaith rears his head with a quote in the mainstream media from time-to-time, and I still am waiting for the reappearance of Hank Fishkind.

Comment by Muggy
2014-05-29 04:17:24

Interesting dynamic in my household these days. My wife’s bro had a baby, and all of the pics of him and the littleguy hiking around the Catskills are causing my wife to miss NY and want to return.

We just re-upped our lease for one year + I just received a positive evaluation and was re-appointed for one year + My littlegal’s VPK is great, and we have that for one year, too. If things are the same — and that is to say if housing is still stupid expensive/bubbly a year from now — I might actually have a shot at getting my wife to agree to get serious about relocating.

I still can’t wrap my mind around committing to Florida. It’s such a bizarre place to live.

Comment by Blue Skye
2014-05-29 04:34:57

Maybe a compromise should be considered, like N. Carolina.

Comment by oxide
2014-05-29 05:21:06

Muggy, what about NYS does your wife miss? The family? Then yeah, move to be near family. If all she wants is Catskill-like rolling hills, there are millions of square miles of that, in surprising places. Like southern Indiana.

Comment by Muggy
2014-05-29 11:41:41

Family, yes. All of our family is either in Florida (St. Pete area) or Upstate NY; her’s is split, mine is all “up there.”

(Comments wont nest below this level)
Comment by Whac-A-Bubble™
2014-05-29 06:41:49

My dad lasted there for a decade (1952-62) before moving on. But crazy housing prices were not among the issues he faced at the time…

Comment by taxpayers
2014-05-29 07:07:57

talked to a guy in cornwall ,ny- regular pos house 14k a year re taxes

Comment by Muggy
2014-05-29 11:43:01

Great schools, beautiful area, within range of NYC… I’d do it.

Comment by Housing Analyst
2014-05-29 11:54:20

And within 7 minutes of the Ghetto Of Newburgh.

(Comments wont nest below this level)
Comment by plasmacutter
2014-06-03 10:57:35

If you think Newburgh is a ghetto you haven’t seen a real ghetto. I’d take that “ghetto” over some of the better neighborhoods in the bay area any time.

SF bay: Looks like fallujah, schools like demilitarized zones, average housing price: 800k.

Comment by Ben Jones
2014-05-29 05:28:27

‘Alachua County’s housing market continued to pick up momentum in April with a 9 percent increase in sales over April 2013 while indicators pointed to an upward trend in prices that had been recovering in fits and starts.’

‘Local condo sales jumped 69 percent to 66 from 39 a year ago and the median sale price was up 12 percent to $79,250 from $70,500.’

“I think that there is more general improvement in the economy so parents are buying again for their student children and seeing it again as an investment,” said Gary Thomas, GACAR president and broker with Re/Max Professionals. “The condo market was so overbuilt that it had to go through a cycle of cleansing. People are buying again.”

Comment by Ben Jones
2014-05-29 05:35:49

This S. Florida condo thing is like watching a movie re-run.

‘South Florida has experienced its worst winter buying season for condo and townhouse resale transactions in the past four years in the tricounty region of Miami-Dade, Broward and Palm Beach.’

‘A number of factors, including overly optimistic sellers, rich pricing expectations and widespread competition from preconstruction projects, contributed to the unexpected year-over-year drop in condo and townhouse transactions in South Florida during the historically strong winter months when out-of-towners escape to the region for the weather, events and nightlife.’

‘Before the 2013-14 winter buying season, the last time fewer condos and townhouses transacted in South Florida was near the bottom of the real estate market crash in 2009-10.’

‘The decrease in condo and townhouse transactions in the tricounty region this past winter comes at a time when average resale prices are reaching their highest levels in years in South Florida. During the 2013-14 winter buying seasons, South Florida condos and townhouses sold at an average price of about $189 per square foot.’

‘News of the rising resale prices in South Florida has contributed to a cycle in which an increasing number of unit owners want to sell their condos and townhouses at prices that are higher than those levels currently being achieved in today’s tricounty market.’

‘For example, the current average asking price for a South Florida condo and townhouse is nearly $315 per square foot, a 66 percent increase over the average price during the recently completed winter buying season, according to the data.’

‘Compare this rich asking price with the $178 per-square-foot average listing price for those condos and townhouses currently under contract and waiting to transact, according to the data.’

‘Despite the price premiums being sought by sellers, South Florida still has a relatively healthy amount of condo and townhouse inventory on the resale market. Adding to this uncertainty, an increasing number of buyers are reportedly bypassing listings for existing condos and townhouses in favor of entering into contracts to purchase some of the nearly 31,000 new units proposed to be developed in South Florida.’

Comment by Housing Analyst
2014-05-29 05:35:53

Sarasota, FL Housing Prices Dive 7% YoY As Housing Demand Craters Nationally

Comment by Ben Jones
2014-05-29 05:38:01

FYI. some one emailed this to me last night:

‘Investors still dominate Las Vegas here is why >>Net Worth Loans WOW!!! 2005 is back. Hedge Funds and Investment banks are full of cash and want to lend. Loan is based on your net worth. Interest Only @ 2.5-4%
NO credit check NO Income check NO closing cost NO money down…
*********NEXT INVESTOR 3 DAY EVENT LAS VEGAS 6.21-6.24 *****
Buy and hold was dead since 2011. Its now back. Buy just like the hedge funds do!!!!! 200k home total interest cost 6k per year. Rental income 16,800. Private message for tickets — at Ceasars Palace Las Vegas.’

Comment by Housing Analyst
2014-05-29 05:54:06

How much you want to wager our very own R._Fraud or J._Fraud is behind that scam?

Comment by Whac-A-Bubble™
2014-05-29 06:45:43

“200k home total interest cost 6k per year. Rental income 16,800.”

Maintenance = ?
Insurance = ?
Property tax = ?
HOA dues = ?

etc etc etc

Comment by Tarara Boomdea
2014-05-29 11:03:48

some one emailed this

That was me. I read that and was amazed that things here could get even more crazy.

My rental:
LL Purchase price $180K Mar 2003
Peak price $314K Jan 2007
Hit a low of $115K in June 2012

In June 2012, I turned down LL price of $150K (said it was what he owed) because it seemed ridiculous at the time. I also knew that he had it on craigslist from March 2011 for $150K and over the next few months reduced it to $115K in November 2011.

My rental Zillowed:

Beginning of 2014 $154K
end January $157
end February $161
end March $163
end April $169
Today $172K

Local radio RE show says inventory will continue to increase, so prices will fall. They said that last year, too. My rent is still a little too high; now it’s about what they’re getting. I like the house (it could use some renovation), but my main concern has always been the sketchy, but gentrifying, neighborhood. I don’t want to move anymore. Well, more inventory is coming, and everything could change again.

Comment by Housing Analyst
2014-05-29 05:40:14

Billowing Housing Inventory Craters Prices In Tallahassee, FL; Down 11% YoY

Comment by Housing Analyst
2014-05-29 05:42:51

Vero Beach, FL Housing Prices Collapse 34% YoY As Inventory Doubles

Comment by Housing Analyst
2014-05-29 05:49:47
Comment by Ben Jones
2014-05-29 06:00:12

BTW, a funny thing happened on the way to the Slide fire near Flagstaff. Last weekend weather conditions threatened to snuff the fire out, and since the Forest Service had a thousand people here, with attendant air support, they decided to burn an additional 20,000 acres. So they have been dropping ignition bombs and doing hand fire starts since. It sure was important for the government to sit on this 20,000 acres for 30 years to watch these trees grow, only to burn them at a cost of millions of dollars. Meanwhile, the media price of houses is around $300k, and wages have gone nowhere.

Comment by scdave
2014-05-29 06:58:15

Fire suppression in guaranteed fire locations every year is just another Municipal/State union boondoggle….

Comment by Ben Jones
2014-05-29 07:30:03

And it has the double-plus good of allowing the government to come in and act as savior in a crisis they created. There was once a logging industry in N AZ - no more. Flagstaff used to generate its electricity burning wood; now we all just choke on the smoke. Recently we were able to beg the feds for a grant to pay out of state contractors to thin the forest along a few roadways (which really doesn’t solve anything) at a cost of many millions.

Comment by Blue Skye
2014-05-29 07:25:07

from USAtoday:

“Officials believe the fire was human-caused, and the case remains under investigation.

As of Tuesday, the blaze had burned 20,328 acres, or nearly 32 square miles, and was 35% contained, said Matt Smyers, a public-information officer for the fire crews.”

So it went instantly from 35% contained to 17% contained. Might be human causation! The media rarely has a clue.

Comment by Ben Jones
2014-05-29 07:54:31

GDP contracts in the first quarter. And this:

‘Larry Fink runs BlackRock, the world’s largest money manager, so when he shares the concerns he’s hearing from his customers, it’s worth paying attention.’

‘Lately, he’s hearing worries about the impact of technology on job growth, especially in the developing world. From agriculture to manufacturing, industries are becoming increasingly productive by relying more heavily on machines and other technological innovations. And that in turn is displacing workers and holding down wages.’

“In the United States, we’ve been living with technology transforming the workforce, and most of developed countries have been living with a transformational technology (of) the workforce for many years,” Fink said. “But what is going on in the developing world that we don’t spend enough time (focusing) on: technology’s now gutting jobs just as fast in the developing world.”

‘Fink speaks with world leaders from China to Europe and across Asia and Africa and they are voicing fears that these changes, and the increasing economic inequity that results, could end violently.’

“I don’t think it’s an accident that we’re seeing more social unrest,” Fink said. “The threat of job creation is not just a European, U.S. phenomenon today. It is a phenomenon in every country and technology is changing us very rapidly. And so my black swan is we wake up one day with huge social unrest.”

Oh Larry, you’re such a worrywart. Janet and the boys have already figured this one out; create trillions and use it to drive up house and stock prices - voila! Problem solved. Anyway, what’s the chance that millions of people are going to be walking around staring down at their phones and get the message - “You’ve Been Had”?

Comment by Whac-A-Bubble™
2014-05-29 08:06:53

Home sales down, home prices up…lather, rinse, repeat.

Comment by Ben Jones
2014-05-29 08:17:58

‘Warmer weather and higher expectations failed to cause a meaningful surge in home sales. Signed contracts to buy existing homes increased just 0.4 percent in April, according to a monthly report from the National Association of Realtors (NAR). The expectation had been for at least a 2 percent gain sequentially.’

‘Regionally, pending home sales in the Northeast increased 0.6 percent, but are 12.0 percent below a year ago. In the Midwest sales rose 5.0 percent, but are 6.9 percent below April 2013. Pending home sales in the South slipped 0.6 percent and are 6.4 percent below a year ago. In the West, sales declined 2.9 percent and are 15.0 percent below April 2013.’

“Higher inventory levels are giving buyers more choices, and a slight decline in mortgage interest rates this spring is raising prospective homebuyers’ confidence,” said Lawrence Yun, chief economist for the NAR. “An uptrend in closed sales is expected, although some months will encounter a modest setback.”

Me confused Lawrence. I thought the lower sales were because of low inventory and cold weather. Now we have warmer weather, more inventory but even lower sales. It’s almost like you’re pulling this stuff out of your ear.

Comment by dwkunkel
2014-05-29 09:44:54

It’s source is called an RDE (Rectal Data Extraction).

Comment by Lionel
2014-05-29 20:30:43

House across from us just sold after 5 days on the market. 21 offers. My wife watched in amazement as cars rolled up within 15 minutes of the real estate sign being planted. She said a guy in scrubs (there’s a children’s hospital nearby) climbed out of his car and video taped the house, giving a narrative the whole time. It’s comical in one sense but depressing in another.

Comment by autotech101
2014-05-29 09:22:33

I know every housing market is different so you have to do the math yourself.
We are looking at homes for $130-$150K for a 3-4 bedroom 1500-2000 sq foot homes . With property tax and insurance we are looking at $700-$842 a month (20% down) Now we wont be renting anything below 1500 sq foot so to rent we are looking at 1200-1400 a month and that includes 50% yard maintenance (the back yard is your responsibility) and power is not included.
So lets see the price difference we will use a new home and a new home renal. $842 payment too the $1400 payment and rent never went up.
year one
Buy: $10104
Renting: $16800
Year two
Buy: $20208
Renting: $33600
Year Three
Buy: $30312
Renting: $50400
Year four
Buy: $40416
Rent: $67200
Year Five
Buy: $50520
Rent: $84000
Year six
Buy: $60624
Rent: $100800
That is just after 6 years where we are looking. Now how is rent cheaper? it is not it does have some advantages and disadvantages just as everything in life.

Comment by Blue Skye
2014-05-29 13:59:09

If your math is right, you should be buying as many houses as you can swing with maximum leverage and rent them out.

Comment by Housing Analyst
2014-05-29 14:41:37

The answer today is the same as it was yesterday;

1500 sq ft houses that rent for $1500/month aren’t available for $130k. They’re $260k+.

The question still remains: Why pay current grossly inflated asking prices for a rapidly depreciating asset like a house when you can rent if for half the monthly cost?

We’ll be waiting for your answer.


Housing Analyst

Comment by autotech101
2014-05-29 18:34:41

that is where your wrong and I have proven it many times you have not proven your statement and that is a fact.

(Comments wont nest below this level)
Comment by Housing Analyst
2014-05-29 18:37:10

Being the new troll on the block, you have a long way to prove yourself.


Comment by autotech101
2014-05-29 18:37:30

To rent you need a greater profit ratio to make it worth it.

Comment by Whac-A-Bubble™
2014-05-29 20:26:26

A lower loss ratio will do me just fine.

(Comments wont nest below this level)
Comment by Muggy
2014-05-29 18:17:01

Hi Autotech, welcome aboard. It seems that you haven’t factored in down payment, maintenance, closing costs, etc. Here is a handy tool that you may find useful.


Comment by Muggy
2014-05-29 19:12:48

For example, in my current rental, even with conservative input, it doesn’t make sense to buy even if I love here for FORTY years.

Comment by Blue Skye
2014-05-29 19:24:50

Loving for 40 years has hidden costs Muggy.

Congratulations on an unsnarky reply. Hopefully you have that out of your system.

(Comments wont nest below this level)
Comment by rms
2014-05-29 23:34:19

“We are looking at homes for $130-$150K for a 3-4 bedroom 1500-2000 sq foot homes .”

Forget about nice weather, metro conveniences like colleges, hospitals and jobs, etc.; say hello to always windy, hot-n-cold, obese and toothless fly-over country.

Comment by Muggy
2014-05-29 15:53:48

“Taxable values in many beach havens are expected to increase by more than 7 percent in 2014, according to Property Appraiser Pam Dubov’s annual estimate released Thursday.”

Comment by Muggy
Comment by Whac-A-Bubble™
2014-05-29 20:34:41

At least it doesn’t lie directly beneath somebody’s bedroom!

National & World News
Video: Inside look at Florida sinkhole that dragged man to his death
by Q13 Fox News Staff

SEFFNER, Fla. — Officials in Florida have released a video looking down into the monster sinkhole that swallowed up a man while he was sleeping. The video was actually shot the day after 37-year-old Jeff Bush disappeared back in February when the earth opened up under his bedroom in his home in Seffner, Florida.

Contractors used a video camera mounted on the end of a long pole to take the pictures. In the video you can see an orange cord. There was a listening device on the end of that cord, as firefighters tried to listen for Bush, hoping to rescue him. They never did, and as the hole widened and deepened, the cord and listening device disappear.

The hole ended up being about 60 feet deep.

A chain link fence surrounds the now filled-in hole that became Jeff Bush’s grave. His home was torn down, and two homes on either side of his were also demolished, and the families told to leave.

Name (required)
E-mail (required - never shown publicly)
Your Comment (smaller size | larger size)
You may use <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong> in your comment.

Trackback responses to this post