The Greed Factor Is Starting To Kick In
CBS 12 reports from Florida. “The number of homes snapped up for $1 million or more in Palm Beach County rose in the first quarter of this year by 16 percent from the same quarter a year ago. In the past month, philanthropist Lois Pope paid $16.2 million for an ocean-to-Intracoastal mansion in Manalapan. The seller was Amway co-founder Richard DeVos. While $1-million-plus sales are surging, buyers are still discriminating, brokers say. Pope, for instance, paid nearly $4 million less than DeVos was asking earlier this year.”
The Sun Sentinel. “In Fort Lauderdale, Eric Roach, co-founder of the social media platform EveryoneSocial, spent $4.6 million for a home built on ’spec,’ without a buyer in place. The Del Lago estate sold for about $2 million less than the asking price from last year. ‘Everybody feels we’re undervalued on the luxury end,’ said Ron Shuffield, broker with EWM Realty International. ‘Many of these homes are selling far below the cost of replacing them.’”
From Equipment World. “According to the three panelists on a contractor panel held last week at Flagler Construction Equipment, construction has picked up in Florida. ‘There’s a lot of commercial and residential construction going on,’ says Rich Fuist, director of fleet operations for civil and utility contractor Ripa and Associates, Tampa. Cautions Don Woodruff, president, Woodruff & Sons, an underground utility and highway contractor: ‘There’s still a lot of housing available out there.’”
The News Journal. “Bob Fitzsimmons, president of the Volusia Building Industry Association, said the sales of new homes locally appear to have leveled off in recent months. ‘I had a flurry of sales in the middle of March from the parade, but it was a spike I was not able to maintain,’ said Fitzsimmons.”
“In the first five months of 2014, permits for new homes are up nearly 40 percent in Volusia compared with the same period last year, according to the association. Builders in Flagler County received 209 permits for new homes in the first five months of this year, up 33 percent from 157 during the same period last year. Fitzsimmons said local building permit numbers are up significantly so far this year thanks in part to an increase in ’spec building’ by national builders such as KB Home and D.R. Horton.”
The Naples News. “While prices in Southwest Florida are nowhere near the inflated prices they reached during the top of the housing boom, some real estate experts are worried a bubble is starting to inflate. Flippers, more lax lending standards, a pervasive inventory shortage, and a growing lack of affordability are to blame, they said. ‘It’s a harbinger of a bubble,’ said Daren Blomquist, VP of RealtyTrac.”
“He notes that in April, overall median prices were below peak prices during the housing boom, but still have risen considerably from their recessionary lows in 2010. Including single-family, condos and townhouses, prices in Collier County were up 60 percent from their trough, to $240,000. In Lee, they rose a whopping 90 percent, to $142,500. ‘It’s a warning flag,’ Blomquist said. ‘Properties are not necessarily selling for what people can pay.’”
“Naples real estate appraiser Tim O’Neill also has heard of investors who have purchased in this area flipping homes to each other, to bring up the values of their portfolios. ‘They’re falsely inflating prices,’ he said. ‘It’s a problem — and what happened leading up to the last boom. The whole greed factor is starting to kick in. We’re suffering from short-term memory loss.’ Lenders also are loosening guidelines as to who they will lend to, he said. ‘It resembles a lot of what was going on in 2005 and 2006,’ he said.”
“Naples real estate appraiser Tricia Eriksson said that overall, prices in the county have risen so much ‘we’ve already had a small bubble.’ FreddieMac chief economist Frank Nothaft said while he doesn’t think a housing bubble is imminent on a national level, in some markets, home price increases are ‘unsustainable.’ ‘Increases we have seen so far are eye-popping,’ he said.”
The Herald Tribune. “A total of 39,782 residential properties — or 22 percent with mortgages in Sarasota and Manatee counties — carried more debt than the homes were worth in the first quarter of 2014, according to CoreLogic. In Sarasota and Manatee counties, another 5,108 homes, or 2.8 percent, were ‘near negative’ equity in the first quarter. Tampa-St. Petersburg-Clearwater had the highest percentage of mortgaged properties in negative equity at 29.5 percent.”
“‘Despite the massive improvement in prices and reduction in negative equity over the last few years, many borrowers still lack sufficient equity to move and purchase a home,’ said Sam Khater, deputy chief economist for CoreLogic.”
The Palm Beach Post. “Owners in a Boynton Beach condominium community are suing a company that is trying to turn the development into apartments, saying they were ‘threatened’ and told that they should sell to the company or lose their homes no matter what. Via Lugano, which suffered huge drops in property values after the real estate bust, now has 90 percent of its units owned by Northland Investment Corp. A state condo termination law gives the company the ability to turn the units back into apartments, but it must offer fair market value to owners or give them a share of the new converted complex in exchange for their units.”
“Many of the remaining owners bought their units at boom-time prices, meaning if they sold for fair market value, they could owe deficiencies to their bank. Dale Domanick, who is named in the suit, paid $313,900 in 2006 for her unit. In 2013, its total market value was $74,000. ‘Now we feel like our homes are being stolen from us, like we’re not even living in America,’ Domanick told The Post last year.”
How much taxpayer fraud is occurring at FHA, Fannie and Freddy by their employees?
‘Naples real estate appraiser Tim O’Neill also has heard of investors who have purchased in this area flipping homes to each other, to bring up the values of their portfolios. ‘They’re falsely inflating prices,’ he said.’
Maybe Jingle Male will care to chime in on how there’s no fraud out there.
If anyone knows about housing fraud, it’s going to be J._Fraud.
“Many of the remaining owners bought their units at boom-time prices, meaning if they sold for fair market value, they could owe deficiencies to their bank. Dale Domanick, who is named in the suit, paid $313,900 in 2006 for her unit. In 2013, its total market value was $74,000. ‘Now we feel like our homes are being stolen from us, like we’re not even living in America,’ Domanick told The Post last year.”
No, you’re not living in America anymore. This is how sh*tbag third world countries operate. And sometimes strongarm countries like Russia. First the govmint and the corporations get in cahoots and laws are generated for corporate benefit. Then your property is confiscated through legal sleight of hand. Ha-ha, you lose.
Another good reason never to “own” a condo in Florida.
Speaking of condos, the project at the corner of Bayshore and Bay-to-Bay Boulevard in Tampa appears to be on again after a hiatus of seven years or so. The lot was a great place to park if you wanted to go for a run, but now it’s been fenced off with banners announcing a tower to be named “Aquatica,” like the water park. From the marketing announcement:
“Pre-construction sales for Aquatica on Bayshore are attracting young executives and empty nesters who want a prime spot at the most desirable location in town — Bayshore Boulevard.
The sleek, all-glass facade of the 15-story residential tower at 3001 Bayshore Boulevard will have spectacular water views from the double terraces off each condominium. Square footage of units range from about 2,300 to more than 4,700. Sales prices are from $838,000 to about $2.1 million.
‘Daily, people are signing contracts,’ says real estate agent Toni Everett of The Toni Everett Company.”
http://tinyurl.com/l2ya9jk
Yeah, that’s going to attract young professionals and empty nesters all right! I also saw a crane yesterday at the former Trump site downtown. I’m calling a top.
Bwa-ha-ha-ha-ha-HAH! You got that right. This is all so wrong on so many levels I can’t even believe it.
To begin with, buildings with glass facades in Florida are what we used to call “Slice ‘em and Dice ‘em” back when I lived in Ft. Lauderdale. One good hurricane, heck, even one good wind storm and look out below! Yeah, sure, young professionals and empty nesters are just FLOCKING to get one of those glass cages. I’ll bet. They haven’t even got rid of the other condo tower inventory in Tampa, lol. People are still trying desperately to get out from under some of those.
And don’t get me started on the flooding in the area. It floods at the drop of a hat. Like if a dog so much as takes a whiz in the gutter.
It surprises me how quickly and easily the drainage system is overwhelmed here. I take a different route home from work when it rains hard. Even so, last year during a torrential downpour I had to pull up on a median because the water was almost above my fenders. Drivers of large SUVs were plowing through regardless, so there were waves on top of that.
Let’s be honest, unless “professionals” refers to pro athletes, young professionals in Tampa can’t afford those prices. I suspect the buyers, to the extent they exist, aren’t from here and won’t work here.
So let’s see, what can I report about housing in my neck of the woods in Florida (South Hillsborough County, Tampa Bay).
This area was the the last to develop, and got hit with the ugly stick during the first downturn, and it’s starting to get really ugly again. It’s mid June and the nasty summer heat and storms are upon us. Four months of this to look forward to.
It’s been both interesting and sad to see what’s happened here. What was once a relatively peaceful area has become a hot, congested hole with a mix of very resentful looking people who don’t seem too happy with their piece of Florida “paradise”. Traffic out the wazoo, everybody on the move and on the march. There’s a (now) major intersection that used to have only one mega convenience store/gas station complex on one corner, but another corp (Circle K) put one in on the other corner. They’re looking for all the business from the Amazon facility gearing up nearby.
Progress, huh? Fugly.
Two concrete block shacks in my nabe sold during the spring. Two more are now up for sale, as the elderly owners both moved in with family. As usual, way overpriced for what they are.
I remember the conventional wisdom of 2006, which was that you could build a shopping mall and the resulting retail jobs would support house prices in the vicinity. Unless drones and robots buy houses and shop at convenience stores, I would not expect any long-term economic boost from the Amazon facility.
I agree with you on the resentment. People are very unhappy.
You can just FEEL the resentment seething out of people, the most intense being recent immigrants, mainly from Asia and the Middle East, who no doubt expected something completely different. Whoo, boy, those are some SERIOUSLY unhappy campers. Some of them are taking a severe hosing on the franchises or small businesses they purchased in order to establish a foothold in the US.
The best one I heard was some poor guy from the Caribbean who bought some sort of Italian ice franchise. OUCHIE!
You can just FEEL the resentment seething out of people, the most intense being recent immigrants, mainly from Asia and the Middle East, who no doubt expected something completely different.
You mean they were expecting a prosperous first world country?
Suckers!
“A state condo termination law gives the company the ability to turn the units back into apartments, but it must offer fair market value to owners or give them a share of the new converted complex in exchange for their units.”
“Many of the remaining owners bought their units at boom-time prices, meaning if they sold for fair market value, they could owe deficiencies to their bank. Dale Domanick, who is named in the suit, paid $313,900 in 2006 for her unit. In 2013, its total market value was $74,000.”
“Fair market value”, I suppose this means “the going price”.
But if the “going price” is determined by what others will pay and others who will pay will discover that the law has been changed and this change in the law will allow their condo agreement to be terminated and hence their asses will be dumped out into the street if they decide to buy a condo, well, under these conditions I don’t suppose the “going price” will be all that high.
Which may help explain why it isn’t.
Condos are the caricature of the housing mania.
I have been looking in Sarasota county the past few months and the prices are ridiculous for the quality of homes offered. All cash buyers are still scooping up houses before we can even look at them.
It’s not an accident:
‘Institutional Investors, led by Wall Street’s Blackstone and rival Colony Capital, have stockpiled homes for single-family rentals across the country. But a panel of real estate experts last week had different views on the risk these hedge funds may present when they exit markets like Southwest Florida, where they have lifted demand and boosted prices.’
‘The shopping spree is an attempt by the groups to capitalize on rising real estate values, cash flow homes with monthly rents, and diversify their massive portfolios from Wall Street stocks.’
‘A Herald-Tribune investigation last year showed these mega firms routinely outbid owner-occupiers by paying significantly more for houses than what the same properties fetched just months earlier.’
‘Colony, for instance, bought one home last May for $172,000. The same residence sold the previous November for $64,000 — a markup of 275 percent in six months.’
‘As distressed inventory thinned, the investors turned to condos and even new builder models in Southwest Florida to solidify their portfolios. “These investors are going in and disconnecting home prices from incomes because they’re not reliant upon incomes,” said Daren Blomquist, vice president of RealtyTrac. “That’s the danger. It could accelerate appreciation.”
“This is the biggest story of the decade and will drive us into recession by 2020,” Florida real estate consultant Jack McCabe said at the conference in Houston. “We’re seeing the capitalization of housing across America.”
On this:
‘bought one home last May for $172,000. The same residence sold the previous November for $64,000′
Guess what? The government is backing the new loans for every house on that street. Again, no fraud going on?
‘FreddieMac chief economist Frank Nothaft said while he doesn’t think a housing bubble is imminent on a national level, in some markets, home price increases are ‘unsustainable.’ ‘Increases we have seen so far are eye-popping,’ he said’
These Naples News interviews were made at some sort of RE confab. You would think the MSM would take note of what Freddie Mac’s economist is saying.
‘In this week’s Economic Report, Dr. Rick Harper discusses the factors behind Florida’s inclusion on a list “The Biggest Losers: The 5 Worst State Economies,” as reported by CNN Money.’
‘Each of the states is listed in part due to the decrease in their Gross Domestic Product (GDP) between 2007 and 2013. Nevada topped the list, with a 10% drop in GDP. Florida followed with a GDP of -7%. Also in the top five are Connecticut, Arizona and Michigan.’
“It’s really been all about the bust in construction jobs, driven by an excessively exuberant bubble in the housing market,” says Harper noting the drop substantial dip in GDP particularly in Florida, Nevada and Arizona as a consequence of the Great Recession.’
‘Construction, Real Estate and Wholesale Trade were listed as the primary drains on Florida’s economy.’
‘Harper says there is evidence of strong recovery in the housing market in some areas of Florida. For example, Harper notes the increasing demand from Latin America for condos in the Miami market, which had been expected to be a bust with excess inventory for decades.’
Wow Rick, as an economist you may have noted that this “strong recovery” is just prices going up and not doing much for jobs. Maybe this guy is on to something:
‘Cautions Don Woodruff, president, Woodruff & Sons, an underground utility and highway contractor: ‘There’s still a lot of housing available out there.’
You better hope you were truthful on your docs. The piper will be paid and no stone will go unturned. Its gearing up now.
‘The median home price in the core Orlando market increased during May for the fourth consecutive month to reach $165,000 — the highest since 2008, according to a report. Association Chairman Zola Szerences said the decrease in sales was partly attributable to a decline in investors, who left the Orlando market as prices rose.’
‘After years of foreclosures accounting for a shrinking proportion of Orlando’s existing-home sales, they increased by 15 percent in May from a year earlier. Part of what’s happening is that more foreclosures are entering the market as those loans are getting acquired by Ocwen Financial and other loan servicers, said Moe Musleem, a broker for Re/Max Legacy in Sanford. In addition, he said, residential construction has somewhat softened demand, but not prices.’
“You will see more and more foreclosures going into the market, and there’s been so much new construction in Orange and Seminole that you’ll see more properties sit on the market,” Musleem said.’
‘The biggest decrease in sales was in Orlando’s condo market, where the number of closings was down 24 percent from May 2013. Single-family home sales, meanwhile, decreased 8 percent from a year earlier.’
“Even in the absence of the excess empty housing inventory estimated in the tens of millions, historically housing prices fall. Why? Because houses depreciate. ALWAYS.”
That’s right. A house never gives. It takes directly from your wallet and never pays you back.
“..Dale Domanick, who is named in the suit, paid $313,900 in 2006 for her unit. In 2013, its total market value was $74,000. ‘Now we feel like our homes are being stolen from us, like we’re not even living in America,’ Domanick told The Post last year.”
And now, will you all please rise for our national FB theme song…
http://www.sadtrombone.com/?play=true
And we’ll hear the same moaning and gnashing of teeth from the suckers who bought during the dead cat bounce of 2009-2013.
The answer is simple. Don’t buy until housing prices finally bottom.
you missed the boat again renter.
Bottom is a long way down Amy/$hithouse Poet. A very long way down.
As a renter, I’m glad I missed that boat, because it’s going to be sinking real soon.
Year Over Year Housing Demand Plunging In 53 Of 58 California Counties
http://www.zillow.com/local-info/CA-home-value/r_9/#metric=mt%3D30%26dt%3D1%26tp%3D5%26rt%3D4%26r%3D9%252C3101%252C1286%252C2841%26el%3D0
Oh my word…..
I don’t think I’ve ever seen so many red arrows all pointing down at once before.
And in the high holy Realtard days of Spring too.
“And in the high holy Realtard days of Spring too.”
That’s right. The crux of the biscuit.
HA, thanks - truly a beautiful chart!
‘BlackRock and Pacific Investment Management Co. are among investors that sued banks, including Citigroup and Deutsche Bank, over their roles as mortgage-bond trustees.’
‘The banks knew the loans underlying trillions of dollars worth of residential mortgage-backed securities were misrepresented and failed to invoke their rights to force the sellers to buy them back or act against servicers, causing billions of dollars in losses, said copies of the complaints reviewed by Bloomberg News. The filings couldn’t be immediately confirmed Wednesday in New York State Supreme Court in Manhattan.’
‘Bank of New York Mellon “negligently failed to protect the trusts and certificate holders,” said a copy of the complaint against BNY Mellon. “BNYM and its responsible officers knew of pervasive, material breaches of originators’ and RMBS sponsors’ representations and warranties, and loan servicers’ material breaches, yet did nothing to protect the trusts.”
‘failed to invoke their rights to force the sellers to buy them back or act against servicers’
I wonder why they would have done this?
‘The fact is the vast majority of metro Atlanta has witnessed a double-digit drop in sales compared to the same period in 2013, according to Realty Trac. Marietta, GA - Home sales are down 23.3 percent, though home prices have risen almost 4% over the same period.’
‘In a real shocker, Roswell, GA, one of the most prime residential growth areas in all of north Atlanta, has seen home sales fall a whopping 33 percent since this time last year.’
‘The unthinkable has happened’
‘Other metro communities showing double-digit declines include: Norcross, down 20.6%, Jonesboro, down 24.3%, and Decatur, the investing hotbed of metro Atlanta, down an amazing 40%. Just a few years ago, numbers like this would have been unthinkable, unimaginable. But here they are. So what if home values are rising if no one is buying?’
‘I’d venture to guess that what were are seeing is a massive shift away from home ownership to renting in the metro Atlanta area. With the average per-person income around $25,000 per year, home buyers aren’t exactly rolling in dough. Neighborhoods are seeing more and more instances where there are multiple cars in the driveway, indicating that more than one family or more than one generation are moving into houses together. One of my friends recently noted that she has observed a growing number of homes in her affluent upper middle-class neighborhood where families are combining households instead of starting new ones. This is highly unusual in her area. At least, it used to be highly unusual.’
‘It’s also clear that the hedge fund investors who came to Atlanta with suitcases full of cash have been reducing their purchases since late 2013. The sales numbers have been going south since that time. Just as I suspected, the housing sales data and home price appreciation were basically being engineered by the big institutional buyers. There simply is not enough demand from qualified buyers who actually want to live in the property. Investor buyers create lots of sales activity, but the home is still vacant – they do not buy to occupy.’
‘I have my doubts about the cash flow prospects for the big hedge fund companies. I think they over-paid in Atlanta, on the assumption that rents were more in line with what they are used to up north or out west. I’m predicting that their returns are going to be marginal at best, where Atlanta properties are concerned, due to a combination of very high property management costs, higher than anticipated vacancy rates and unrealistic projections about rental income. I expect that their “poop will hit the fan” before too much longer.’
‘I have my doubts about the cash flow prospects for the big hedge fund companies. I think they over-paid in Atlanta, on the assumption that rents were more in line with what they are used to up north or out west. I’m predicting that their returns are going to be marginal at best, where Atlanta properties are concerned, due to a combination of very high property management costs, higher than anticipated vacancy rates and unrealistic projections about rental income. I expect that their “poop will hit the fan” before too much longer.’
I wonder how much harder that poop will hit cities like Phoenix and Las Vegas where institutional investors drove up prices even more than in Atlanta?