‘Buyers Market Coming Into Full Bloom’ In Florida
The St. Petersburg Times has this housing bubble report from Florida. “For the first time this year, a chill in May’s housing market sent Pasco’s year-to-date building permit growth into retreat, compared with that of the same period last year. As demand cools and speculative investors burn off, inventories are bulging, especially in west Pasco, increasing sixfold from this time last year.”
“In east-central Pasco, inventories are doubling in some listings, by some real estate firm’s rough estimates. In what may be the tail end of a stare-down between sellers and buyers, a buyers’ market may just be coming into full bloom.”
“In May, just 505 permits were issued. In the same month last year, 700 permits were issued. It’s a small dip compared with deeper and longer troughs in the southern Tampa Bay area. But the chill confirms fears of a spillover from a national cool-down, and it shows signs of creeping north.”
“The slowdown follows a trend of growing inventory that began last fall. In west Pasco, inventory ballooned from 800 resale homes and condominiums this time last year to 4,900 currently, said Jennifer France, a past president of the West Pasco Board of Realtors.”
“She blamed insurance rates that have reached $2,300 on a $100,000 remodeled block home. Rates like these have knocked first-time buyers out from qualifying under mortgage debt ratios, France said.”
“In east Pasco, a two-partner Dade City realty had maintained 30 to 40 listings for the past eight months. The inventory has roughly doubled there. There’s just one or two buyers a month, and a six-month inventory. The trend may take its toll not just among investors, but also in one key Pasco industry.”
“‘All those who got into real estate because of the easy money, you’re going to see a lot of Realtors leaving the market,’ said Gregory DeLaRue, president-elect of the East Pasco Association of Realtors.”
“The chill seeped in from South Florida and Orlando. ‘It shows the changing marketplace,’ said Jack McCabe of McCabe Research Co. ‘Every market has seen a drop in sales and an increase in inventory. Pasco is one of those.’”
“In the Tampa-St. Petersburg-Clearwater area, the first quarter saw a 23 percent drop from 11,740 sales of single-family existing homes in the same period last year to 9,087, according to Florida Association of Realtors numbers quoted by McCabe.”
“‘Pasco is not as severe, although this may be just preliminary,’ McCabe said. ‘Their time is coming just a few months down the line.’”
“In Pasco, sellers are throwing out concessions to lure buyers that range from $2,500 to $10,000 in value, McCabe said. Agents are still advising sellers to pay buyers’ closing costs rather than underprice their homes.”
“The thing that’s causing a slowdown is that housing prices have gone up so dramatically,’ said Marvin Rose of Tarpon Springs’ Rose Residential Reports. But prices may slip. ‘It’s always several months later that they go down,’ McCabe said. ‘The sellers and buyers are in a stare-down process.’”
Some Florida foreclosure news:
‘Lenders sued six Treasure Coast homeowners in May versus just one a year earlier. There were 14 foreclosed homes for sale that month, up from four in May 2005.’
‘During the first five months of this year, eight homes were foreclosed on and 32 put up for sale in St Lucie. ‘The over-paying for homes by many buyers in the past couple of years fueled by the availability of low interest rates is really starting to play out in the real estate market,’ FBrad Geisen said . ‘The continued rise in interest rates, which affects monthly housing costs for owners with adjustable-rate mortgages, is triggering a rise in foreclosures and a softening of home sales across the board.’
‘As a result, a buyer’s market is emerging, he said. ‘But the question that remains is how far will it go?’ Lenders are foreclosing on more Treasure Coast homes, according to a study released Wednesday. The number jumped to six in May from one the same month last year. The number of foreclosed homes for sale more than tripled to 14 — 10 in St. Lucie County — from four a year earlier.’
OT;….BEN FYI….Sac Bee this morning…
Home ‘for sale’ signs soar
May brings near-record inventory in capital area.
By Jim Wasserman — Bee Staff Writer
Published 12:01 am PDT Thursday, June 15, 2006
Yeah and the realtor still calls this a normal market for the Spring in Sacramento. Record inventroy and 36% sales decline is not normal. Plus there are lot of for sale by owners in the Sacramento area not being counted.
‘The over-paying for homes by many buyers in the past couple of years fueled by the availability of low interest rates is really starting to play out in the real estate market,’
Huh, you’d think Suzanne would have caught this.
I’m curious to hear from Floridians if this ‘creeping north’ trend is real or not.
Yes Ben it is “creeping north” here to Central Florida.
Interestingly enough, there are ALOT of homes on the market from retirees who want to cash-out “equity” and get out while the getting is good….nobody in the MSM talks about the thousands of retired do-nothings who are wanting out because of the hurricanes, insurance, immigrants and the horrible drug and traffic problems….alot of these folks are moving up to TN, SC and NC.
Polk County is absolutely flooded with inventory and there are hundreds of BRAND NEW absentee flipper-owned properties for sale/rent.
Problem is, most people who have “been here all along” can’t afford $1800 mo rents or $300,000 starter homes. The median household income is like $35,000/yr.
It’s a mess.
Ben-
I live in Orlando in the Lake Nona area which is for the most part more expensive than other Orlando areas as the Country Club where some famous golfers live is right there.
The only thing creeping north is the amount of inventory that is going on the market.
Sellers still aren’t budging on prices and houses are just staying for sale longer and longer and longer. When sellers do move the price, they are moving it down a whopping 3%. Zip code is 32827.
Ditto bobbymac above.
I’m in the Winter Park area near University of Central Florida (northeast of downtown Orlando). I observe sellers by and large still trying to hold on to ridiculous gains in their asking price but inventories are mounting as evidenced by a noticeable increase in For Sale signs (FSBO in particular). Also starting to see more “price reduced” listings/signs.
I’m eyeing closely how the apartments south of town we chose to move out of because they went condo are going to fair. The company that bought the complex has mounted a large construction effort to at least double their inventory but it’s looking like their sales have come to a screeching halt.
IMHO, it’s just a matter of time before the hammer falls.
I would say it is real. I live in Palm Beach County. Here in Florida the bubble started in Southeast FL and then spread to the rest of the state. I think the slow down started on the Southeast and Southwest coasts and has moved north into Orlando, Tampa, and the Ocala/Gainseville areas as well as the “Redneck Riviera” (panhandle). I am sure Jacksonville is bubbly, but it doesn’t seem to have had the insane appreciation the southern coasts have seen. Jacksonville certainly hasn’t been lumped in with Miami, West Palm, Naples, Sarasota, etc. as grossly overvalued markets. What do others here in Florida think?
Overall, the Florida markets are icy cold and the inventory keeps mounting. The nasty correction we all expect is underway. The standoff between buyers and sellers will go on for awhile, but eventually capitulation will set in on the sell side. It will be a full on rout come early 2007.
In south Brandon, a suburb of Tampa, the monthly MLS realty magazine went from 99 pages in May to 133 pages in June.
Down here in the Keys, the market has just flat-lined ! We sold our place near Marathon (half way between Key West and Key Largo) in late 2004 after it became obvious that the market was dangerously over-heating and unsustainable. We had been burned rather badly in the early 90’s market and decided to get out while the getting was good (or as my wife said, “Time to run screaming”). The lack of value down here is jaw-dropping. A friend purchased their home in 1997 for $197K and sold it in 2002 for $350K. It came back on the market late in 2004, asking $730K. A year and a half later it is STILL on the market, the asking price, however, has steadily increased to a tad over a cool million - absurd! Last summer, before the onslaught of hurricanes (Dennis, Katrina, Rita and Wilma), we noticed a change in the market. Inventory, slowly at first, began building. Sales volume began falling (the local agents said it was “a healthy breather”). It started in Key West and moved north through the Keys. Recently, inventory seems to be exploding while sales have ground to a near halt. The 8′ storm surge from Wilma last October damaged alot of property down here - many properties are still being repaired. When they finally come back on the market, it will only swell the inventory further. It sure looks like a hard landing down this way, and if we get nailed by another storm this season, well …
Here in South Tampa, there are TONS of for sale signs everywhere. Yet when you check out the listings online, many are still priced well above comps from last summer. However, these properties then sit on the market and go through 2-3 new MLS numbers and several reductions before they end up selling. Sellers are still in total denial here.
That’s why rent makes more sense right now. I can’t tell you how much money I have saved from renting. I also can’t even begin to tell you how much money I have made by selling my house over the summer and putting it to work for me.
Ben,
Here in Miami things are at a standstill, but where its really telling is in the construction business. We used to get alot of job orders for Superintendants, Formen, and even skilled trades (Electricians, etc…) but for the past 60 days nothing construction related. A couple calls but no follow up.
We are getting calls for boat mechanics, and Marina personel. Boats have to be maintained. So those with alot of money seem to be spending it on their hobbies.
My friend’s wife works for St. Joe corp on the Panhandle. As Florida’s largest land owner and RE developer you would think they would have done their research. Maybe not, they have seen sales drop off a cliff in the past 3 months, I am told. Now they are working their marketing and sales but its a losing proposition.
When I go to the Tampa-to-Sarasota corridor, I see many times the number of for-sale signs I ever saw in any past years. I’m in central Florida and the effect is coming here. We have, essentially, three types of sellers (count the first two as non-flippers): Those who want to sell, those who have to sell and those who are speculators.
The folks who want to sell include a lot of under-motivated retirees; they will sit in the stare-down stage the longest because their taxes are locked in and because the real risk of catastrophic hurricane loss appears much lower here than in the Gulf or farther south on the Atlantic coast. That is why, I believe, there has been only minor price cutting in the older houses at the beach. Condo owners are, in contrast, more willing to drop their price because of the huge runup in inventory.
The group that has to sell has, pretty much by definition, been cutting prices since last Fall, but most do so a bit too little, a bit too late.
The speculators, so far, are behaving about like the have-to-sells, but are more aggressive in price cutting, which is logical. The sense of sweat among flippers is noticeable. Gone completely, for months now, are any signs of cheery conversation about how much “my” place has gone up in value.
Finally, rents range from stable to declining. In the case of condos, rents are falling as more units become available. That is exacerbated by the fact that most of the condos toward the coast (away from the jobs center of Orlando) are too expensive/high-end to have been built as rental units, so to speak, and there is not enough income to support anywhere close to what investment-grade rent would be. As a result, it is possible to rent fantastically nice condos with spectacular views for great prices — and there are few potential takers beyond retirees.
I think the next stage will be (again, nothing new here) the speculators pulling the rip cord and knocking down the comps. The media finally is noticing and writing and that will quicken the pace of the panic. Prices will head straight for the long-term median from there, if they don’t overcorrect from sheer velocity. All IMHO.
P.S. It’s been a long time since I heard anyone talking about all the boomers who are headed here. They must be stacked up at the rest stops.
Just driving around I see conversions and new construction with the builder’s/developer’s sign still out front with a “Final Closeout” banner taped across it for the past several months. Either someone forgot to take the sign down or the final closeout is taking longer than anticipated. This is in Palm Beach and Broward counties.
We sold last summer and are renting in Tampa. It’s cheaper and less risky! We have been watching Lakewood Ranch in Bradenton for a couple years. The prices like everywhere else have skyrocketed! We went and visited just to see where things stand. The builders have many lots for sale, a year ago you were in a lottery everytime a lot was released. Of course they told us we should put a deposit down so we can get the lot of our choice. They were offering free closing and 40K to use towards upgrades, cost of the home……..When asked, they are still selling to investors. The comment made was that people can’t afford to buy a $700K+ home for an investment. After leaving the model home, we drove around and on that street alone were five empty homes for sale! In this particular area there were approximately 40 homes finished, only 10 were lived in while there were 25 homes for sale(all empty). We drove to other sections. One thing that was shocking were the number of FSBO’s and for rent signs that don’t show up on the MLS. On one street, there were five houses in a row for sale with a total of 14 out of 28 homes. It was shocking! Anyone that would buy a home there right now is absolutely nuts!
It’s the same in Tampa although our community is more established so it’s not that bad. What you see are the sellers not lowering their prices and the houses sitting on the market. These aren’t serious sellers. In the newer communities, especially New Tampa and Pasco, it’s gotten out of control and is similar to Lakewood Ranch. The difference is that these areas have a little lower priced homes. In Lakewood Ranch, we were shocked at how many million dollar homes there are for sale! The people who need to sell, are finally lowering their prices. Shockingly, they still aren’t selling. One went from 1.1 million and is now at $750K the owner paid $475 back in 2001. He still needs to come down! Just driving through these communities really confirms that the bubble has burst.
“For now, the buyer’s market beckons, France said.
‘Buyers should start coming out and looking again,’ she said. ‘The interest rates are great, so now’s the time.’”
Is there ever a time that isn’t THE time according to realtors?
Agents are still advising sellers to pay buyers’ closing costs rather than underprice their homes.
In other words, agents don’t want there 6% commision effected. They just want the seller to sacrifice.
Exactly! I have to wonder why these newspaper articles never point out the realtor’s self-interest in these transactions. The media look to realtors like oracles but really they are just looking to make a buck. Remember all the ‘analysts’ touting the stocks they were selling during the dot-com boom?
They also don’t want to get hammered by other agents for screwing the comps.
“She blamed insurance rates that have reached $2,300 on a $100,000 remodeled block home. Rates like these have knocked first-time buyers out from qualifying under mortgage debt ratios, France said.”
Can you say “Katrina”? The insurance companies have figured out that people who live in San Diego, Boise and Omaha have been artificially subsidizing your rates for years, and now they are pricing in accordance with their exposure.
I believe that after Hurricane Andrew in 1992, Florida lawmakers allowed insurance companies to create separate Florida divisions to keep them from leaving the state. So I don’t think other states have been subsidizing us (except of course with FEMA money and such).
BeachB, thanks for the clarification. You are correct to some degree. Most national carriers set up a separate Florida subsidiary after Andrew in an effort to reduce the risk to the parent company. Nevertheless, the biggies (State Farm, Nationwide, Allstate) Florida subsidiaries still receive cash infusions from the corporate offices. Further, the catastrophe claim teams are funded through corporate funds. The only reason that the Florida subsidiaries are not junk rated is because they have access to corporate funds. Finally, the local subsidiaries generally do not have access to the reinsurance market like the corporate offices. And without access to reinsurance, there would be exactly zero carriers writing HO insurance in Florida.
I apologize if I sounded rude, but I work in the insurance biz and basically ALL coastal markets are subsidized to some degree. Wind (hurricane) and earthquake are the 2 loss types insurers fear the most because they could bankrupt the company.
“The slowdown follows a trend of growing inventory that began last fall. In west Pasco, inventory ballooned from 800 resale homes and condominiums this time last year to 4,900 currently, said Jennifer France, a past president of the West Pasco Board of Realtors.”
“She blamed insurance rates that have reached $2,300 on a $100,000 remodeled block home. Rates like these have knocked first-time buyers out from qualifying under mortgage debt ratios, France said.”
Granted, insurance rates have gone up quite dramatically the last two years in FL. But what about home prices? Think that has something to do with it too? Do you think that a home that sold for $200,000 three years ago that is now listed for $350,000 just might hurt someones ability to qualify for a mortgage as well? That $150,000 difference adds $850 (assuming 6.50% interest) to a borrowers payment. That will affect them more than a $100 monthly jump in their insurance payment. Somebody ought to keep track about the excuses for folks not buyer these realtors make up other than prices being so out of whack.
Anyone want to bet on the trifecta conundrum facing BB in their order of effect on the economy. (1) Fannie Mae, Freddie Mac fraud (2) Collapse of the housing bubble (3) Underfunded Pension Benefit Guaranty Corp. How many people will find that their pension won’t be there when their company goes bankrupt? What most don’t realize is that if you retire less then 5 years before the company goes bankrupt that you can loose the pension that you’ve been living off of. GM should be a wake up call, especially with numbers (1) and (2) above lurking in the wings.
A million-dollar question:
If employees have been faithfully cutting checks toward their pensions, but the pension plans turned out to be underfunded, where did the missing funds go?
Pensions are not 100% funded. The pension game consist of managing the fund for profit through investments and future employee contributions. There are no regulations regarding how much percentage growth from investment a company can count on. Most simply say they can earn 10% (above the stock market’s average returns). The “productivity miracle” means there are fewer employees to fund the pensions (and most companies moved to 401Ks).
In short, no one money is missing. Promises were made that can’t be kept.
In this case, the plans are genuienly underfunded.
“Promises were made that can’t be kept.”
Years ago they could be kept. The huge baby boomer generation easily paid for the WW2 generation’s retirement.
It isn’t that the money disappears, rather that people are living longer than was expected when the fund was established (and health costs rose faster than most people were projecting). Let’s say that you (really the company) was cutting checks to your pension based on spending $40,000 that grows with CPI for 15 years after retirement (on average). If at 50 the assumptions change and you are going to need $45,000 but it will grow at 2x CPI for 17 years the amount you should have saved just increased by 50% (even if you prudently had saved 10% extra; the pension is now way, way behind).
Exactly, They “funded? ” plans based on x% appreciation knowing full well it would never happen. You have to look at the big picture ,the plan is to let these big behemoths go BK ala GM, Ford etc. clear the decks , and toss it over to the Fed-pension (PBGC)bailout similar to what has happened via FNM with mortgages. They makes their money/bonuses ,and let it implode. Start over without the dead weight ( apologies to you pensioners) ….
Not really (there’s lots of review and you have to publish the asset appreciation). The problem was that 20 years ago no one expected health care to rise at 10+% a year when they were making promises to pay it in retirement.
The next problem was that both sides at the negotiating table saw the excess return of the 1980-2000 bull run as something more permant that could be used to increase benefits rather than a rather long abberation from the norm. Both sides (management and unions) are to blame in the pension issue) shoot most people have too little clue about time value of money (and the accounting for pensions does not help).
Investing
Three Home Sales
By Frank Curzio
RealMoney.com Contributor
6/15/2006 10:24 AM EDT
URL: http://www.thestreet.com/p/rmoney/investing/10291892.html
Last week, a report from the National Association of Realtors said, “The housing boom has ended but sales will continue at historically healthy levels with price appreciation returning to normal patterns across much of the country.”
The group is not alone in its sanguine assessment of current conditions. Over the past few months, I have heard the words “mild,” “moderate” and “cooling” when describing the slowdown in housing prices. However, 12 months from now, this optimism could turn to wishful thinking as higher interest rates cripple this erstwhile pillar of the economy.
But the fallout is going to hit more than homeowner equity. Here are three stocks that this downturn will hurt the most, and should be sold on strength: Countrywide Financial (CFC:NYSE) , Lowe’s Companies (LOW:NYSE) and Target (TGT:NYSE) .
First, let’s examine the increased costs of home ownership. Over the past five years, the median home price in the U.S. increased more than 11% annually as of year-end 2005, including a 13.6% rise last year, according to the Office of Federal Housing Enterprise Oversight (OFHEO). In San Francisco, the average price for a home is $718,000 and in the New York metro area, the average price is $472,000.
To put this into perspective, I used a mortgage calculator and entered data including the average home price, the mortgage rate and a 20% down payment to compare today’s averages with the averages from three years ago.
In 2003, the average home price in the New York metro area was about $320,000, according to the National Association of Realtors, and the average 30-year fixed rate mortgage loan was 5.6%. With a 20% down payment, or the amount needed to avoid paying personal mortgage insurance (PMI), the monthly payment was $1,470.
Today, using the same calculator, but with today’s average home price in the New York metro area ($472,000), the current 30-year fixed rate (6.6%) and 20% down, the monthly payment jumps about $1,000 to $2,410.
Keep in mind that these figures do not include taxes, which could add at least $400 a month to the payment, oil prices (which are 100% higher than they were in 2003), electricity, heat, water or home insurance. This could easily add $800 to the payments; when you add the other monthly expenses such as cable, car insurance and food to that, it could total $4,000.
That’s roughly $50,000 a year, after taxes, just to own a home in today’s marketplace and pay other living costs — with $94,400 used as a down payment (20% of $472,000).
So who does this hurt? Mortgage lenders, home improvement stores and retailers.
Put Countrywide to the Side
Because of the higher mortgage rates, I believe fewer homes will be purchased over the next 12-18 months. This could have a major impact on Countrywide Financial, which derives 50% of its profits from mortgage banking and is considered the largest U.S. independent residential mortgage lending firm.
Countrywide does hedge against inflationary risk, but this just makes it a best-of-breed stock in a declining industry. This is no reason to own the shares here, and I’d sell them now because higher interest rates will reduce mortgage activity, resulting in lower home prices and eventually lower profits.
Looking Down on Lowe’s
Lowe’s is another stock that could feel some pressure. The second-largest home improvement center in the U.S. is a one-stop shopping place for new homebuyers and homebuilders. Despite the largest homebuilders calling for a slowdown in the national and local housing market and losing anywhere from one-third to one-half of their market value, shares of Lowe’s are up 5% this year.
A slowdown in the real estate market will lead to fewer home improvements. After reviewing Lowe’s first-quarter results announced on May 22, the trend may have begun, with management slightly lowering its guidance for the second quarter. There could be downward revisions within the next three to six months from sell-side analysts as this trend persists, and shares should be sold here.
I considered adding Home Depot (HD:NYSE) to my list, but its share price is down about 18% over the past three months due to a large acquisition, and rising shareholder frustrations.
Lastly, shares of Target could also come under some pressure over the next year.
Target missed margin estimates in its first quarter reported on May 15. The company announced that one of its largest-margin and worst-performing segments for the quarter was home furnishings and decoration.
Target, unlike Wal-Mart (WMT:NYSE) , has no international exposure. This means it’s 100% levered to the U.S., and a slowdown in the housing environment and the economy do not bode well for the company.
I would use the bounce provided by the recent upgrade from Lazard Capital as an opportunity to sell.
In the bubble markets in Florida it is a Renter’s Market.
David
http://bubblemeter.blogspot.com
From Tampa, FL here…..Ben, the R/E market here is so cold it could easily be in a freezer.
Have friends in west Pasco county; bought at peak of madness for $250k last summer. Neighbors aren’t getting a single bite for identical home @ $240k; and they initially listed at $280k. Heard they are two blue-collar workers who are seriously underwater on three homes.
West pasco is a DUMP. Can’t imagine the allure to those people who must drive 60-90 minutes each day to work. Never mind the sinkholes that swallow a couple houses each year. Better hope your neighbor doesn’t declare a sinkhole because your house just became uninsurable either through cost or lack of willing underwriters.
Sink hole.
http://www.strangepolice.com/images/content/110019.jpg
And who said real estate always goes up?
Like I said in reference to Detriot, a house can become worth less than $0. Here is just another example. Even the lot isn’t worth enough to cover the cost of removing the house and filling the hole.
It sure brings home the don’t put all your eggs in one basket lesson.
I dunno — the guy could soon be the proud owner of his own lake.
I’m in Sarasota and seeing the same thing. I’ve got a freind that’s renting a house for about $1100 a month. It’s a nice little starter home, about 1300 sq ft. The landlord bought the home about a year and a half ago for $270,000. Down the road (in the same development) there’s a similar home for sale. It was initially priced at $330,000. The home is now at $230,000 with pretty much no interest. Another guy in the same sub division bought a crappy lot for $140,000. I doubt it’s worth $90,000 right now.
I’ve been looking in West Pasco - and although there are negatives like the sinkholes, there is still a lot of pretty country there, and some nice subdivisions. The problem there, like everywhere, is GREED of flippers and investors. West Pasco was affordable up until a year or two ago. All of the communities I’ve looked at have dozens of empty homes for sale that flipper/investors are trying to tack 30-40% of their buying price onto, as if they were entitled to make 60-100K in a month just because they got onto the builder’s waiting list first.
I saw one empty new home that an investor paid 215K for in March 2006 - put it on the market for 299K, no bites, lowered to 289K, now 279K, it’s still sitting - and I hope it sits for another couple months because it’s in an area i’d like to go to, but I might tell his broker that i’ll offer him 225K to get him out of his mess without a loss.
These investors are going to get burned. These homes are piling up on the MLS. The investors will have to make payment after payment on their nodoc, interestonly ARM’s while the rates ratchet up until they feel immense pain.
Try the drive from U.S. 41 (North Nebraska) from Lutz to Tarpon Springs. I can’t remember the name of the road, but you’ll go past many beautiful areas; far nicer than anything in Lutz.
As for sinkholes, the entire city of New Orleans is sitting on top of a sinkhole caused by oil extraction off the coast, and is expected to collapse:
http://tinyurl.com/9wmov
Highway 54
No, not 54, but Lutz-Lake Fern Road. It’s a very attractive drive.
Lutz-Lake Fern is much closer than 54 to the Tampa city line.
I’ll have to check that out sometime. Only been on 54 & 52 up that way….41 is a nice drive but I often wonder who in their right mind would live way up there. I work with a guy who lived near Calusa Trace (south Lutz, hwy 41) and it took him 60 minutes to get to work on a good day (about 22 miles)
There are some nice areas off Hwy 54 in west Pasco, but a majority falls into two categories: 1) suburbs for yuppies nowhere near any real jobs or 2) typical FL trash houses with run down gas stations, brown grass/sand yards, single car garage on postage stamp sized yard, and crappy looking stores.
A much better choice would be 54 between Gunn and Land ‘o Lakes, what little of it that is left that doesn’t cost an arm and leg or isn’t already covered with tract homes.
The days of people living in small hobby farms surrounding the Tampa metro area are pretty much over if you don’t own it already. I’m hoping the coming crash will allow me the oppotunity to buy my hobby farm. I was looking all over the place from Palmetto to Dade City and over to Gunn. The prices are ridiculous.
Even worse, with this housing bubble, people who have lived for years on remote coutry roads suddenly find themselves surrounded by subdivisions. In 2003 I considered a plot in the Thonotosassa area that was being subdivided into 13 parcels in the beautiful woods behind a poor guy’s house. The builder wouldn’t take what I offered and later they all “sold”. I did drive through there last month and noticed 3 houses built, a bunch of lots with for sale signs, and no other sign of progress. A massive german shephard was chasing my truck the entire time and I did notice that one of the resident trailers had moved a couple junk cars.
Even worse is the poor guy on CR 579 east of town who used to look out over an orange grove but it’s now a suburban “estate” home paradise full of backyards with Fisher Price toys and SUVs in the driveway. Heck if I was that guy, I’d start a salvage yard on my land and drive their property values through the floor.
don’t buy! Rent! Your $225 bargain could be worth $200 in a year. There are so many rentals right now! You can negotiate and it will be less than owning!
I once tried to figure out where in central Florida you could buy a lot that wasn’t prone to flooding or sinkholes or tornados. Seemed there were none — you had to accept at least one of those risks.
Agents are still advising sellers to pay buyers’ closing costs rather than underprice their homes.
Yea, and RE Agents were telling the buyer in the past to pay sellers cost when prices were going up. I don’t think so.
Max, this might give some insight into the problem:
“I am sure that many you have read in the newspapers that pension plans and the pension insurance system are in difficult financial straits. Although most companies do make benefit payments when due and fund their plans responsibly, an increasing number in recent years have not. Underfunding in pension plans increased from $164 billion to $450 billion between 2001 and 2005. During that same five-year period, PBGC has seen its net financial position decline from a $7.7 billion surplus to a $22.8 billion deficit. The increase in PBGC’s deficit has come about primarily because of the failure of a number of very large pension plans including those of United Airlines, US Airways, LTV Steel, and Bethlehem Steel. Claims against the single employer guarantee fund from these and other pension plans that failed over the past five years totaled $34.1 billion.”…..”One of the key deficiencies in the current funding rules is that it is difficult to get an accurate measure of the degree of pension plan underfunding. A significant reason is that current pension funding rules are designed to make contributions even and as predictable as possible while the plan sponsor funds to a target that represents its long run benefit payment obligations. Today’s funding rules allow pension plan assets and liabilities to be measured on a smoothed rather than a current basis. Liabilities are averaged over a four-year period while assets may be averaged for up to five years. Smoothed measures that delay recognition of asset and liability value changes make plans appear to be much better funded than they are on a current basis when asset values are declining and liability values rise. This has occurred most recently when stock prices and interest rates both fell at the beginning of the 2001 bear market.”…”A convenient way to think of pension underfunding is to consider it a loan from employees to employers. Accrued pension benefits are part of an employee’s compensation for work already performed. To the extent that employers are permitted to make less than the contribution required to fully fund their pension promises the plan is essentially extending credit to the employer – and employers that take such loans from their pension plans are shifting some of the risk of meeting pension obligations from themselves to their employees. “…../www.treasury.gov/press/releases/js3047.htm
Another thing to consider is that the PBGC has a cap on the amount it will pay to a retiree should they take a pension. I don’t know the exact amount, something like $45k. So, if youe pension was say $60k per year, after the PBGC takes it over the max you’ll draw is $45k.
And should you retire early on a full pension, your final pension could be less than the $45k. Retire at age 57, now at age 60 you’ll get a second PBGC reduction because you’ve not yet hit the normal retirement age. Nice.
I have recently moved to Tampa from Houston, Texas. I am amazed and very concerned about the similarities in the Tampa market in 2006 and the Houston market in the early-80’s. Does this resonate with others? Like Tampa, Houston was booming in the 70’s with no end in sight. Everyone was “in” real estate somehow and it seemed like the good times would never end. Like Tampa, Houston had a disproportionate share of condo conversions (a huge, looming problem in Tampa). The good times ended with huge numbers of foreclosures (so many that people were literally walking away form houses that they could no longer afford). Granted, a lot of things came together in Houston to create a sort of “perfect storm” that crashed teh economy…but the similarities are still there. While I am not predicting that the Florida market will be as bad as Texas in the 80’s I am very concerned that Floridians are looking at things through rose colored glasses.
I think this will also happen again in Texas. Make no mistake, prices have bubbled there too.
You may now predict that it will be as bad, but I’m willing to predict it.
How about the marekt in NW Florida (panhandle)? Joe just pull some 12 condo from Watersound out from the market. So I assume that it is dead in the water as well?
Besides the absurd number of for sale signs, what I’ve noticed most here in Tampa is that it feels over. Not objective evidence like MLS listings and falling prices, to be sure, but I think psychology helped drive the bubble almost as much as interest rates.
The poster from the Keys made me recall my drive down the Overseas Highway to Key West a few months ago. McMansions were being built not too far from the monument in Islamorada to the 1935 Labor Day Hurricane.
Your post about the keys reminded me of another reason I’m glad I moved back north. Ten years ago, you could drive down to Marathon, find a nice “Old Florida” style motel on the water and try to visualize what the state used to be. Now those places are being bought up and leveled for condos and townhouses. Why, you may ask? Because the permitting time in Monroe County is measured in years (fresh water and waste being the issue), but buy an old motel or bunch of cabins and you get the grandfathered rights to the same number of units that existed for the motel. Viola, price them at $600K and up find some rich baby boomer Yankees who never experienced a hurricane to buy them as 2nd homes.
http://www.latimes.com/business/la-fi-highrise15jun15,1,7965564.story?coll=la-headlines-business
So Orange county adding twin 25 story condo towers on corner of MacArther and Main st. They are badly needed. There are lots of professional/managerial jobs in the adjacent Costa mesa/Irvine area who’s workers need “reasonably”affordable housing units. Also a burgeoning pupulation of Recent blue collar working class Hispanic families in Santa Ana. All will benefit from increasing the supply of available condo units in that part of the OC, which should help lower unitselling prices.
Reporting from Bradenton, FL I can attest to everyone elses comments that are from the Tampa Bay region. This part of the state is literally dead in the water thanks to the exploding inventory and hyperinflated prices. Sarasota/Bradenton median is down 15% from last summer already but the Realtors are still touting yoy growth saying we’re “appreciating” faster than most other places. They fail to tell you how the market did a complete 180 last summer/fall. New home developments are littered with For Sale and For Rent signs. In many cases, you see both signs in the yard. I have followed a few houses that have dropped in price a solid 20% and still have not sold while other people are not budging on their price (mainly FSBO’s). A local mortgage broker even admitted to me the market is in deep sht, especially new home communites but that was obvious to me months ago when I started driving through them. Who is going to buy a house in a community where every other house is for sale???
BTW, I’ve been tracking inventory of $300-$400k 3/2 homes in Sarasota/Bradenton since July ‘05. In July, the inventory stood at about 230. As of right now, it’s at about 2000. I think that’s about a 700% in 11 months….
As far as people moving north, I have definitely noticed that trend so I think it’s for real. We just had 3 people retire and all of them moved up north permanantly!! I also had 2 friends recently leave. One to NC and the other to Georgia. Main reason? Can’t afford the housing, and the jobs here suck. I work in the Brokerage industry and have had numerous clients move north the past 6 months. Three family members that were seriously thinking about buying a second home in FL have tossed the idea out the window thanks to the prices and hurricanes. But hey, I hear all those baby-boomers are packed in their RV’s on their way here to buy up all these vacant houses!!
Reporting from Fort Myers / Cape Coral Sales are down signs are on every street, the new trick is to not lower the price but give a rebate or cover the closing cost. this makes the price look like its not dropping and the NAR can keep the numbers up. unemployment is up for trades, but 7-11 is looking for night shift workers,
The Navarre/Ft Walton Beach/Pensacola areas appear to be just like the rest of Florida. Too many sellers with unreasonable asking prices. I looked at a few last night. Buyers purchased builder grade homes in 2003-2004 for $140k and are now asking near double the amount for the same homes. I spoke with a county building inspector and he said new home construction was basically at a standstill. This time two years ago you could barely navigate in the streets due to all the construction activity. Now, all you see are a lot of for sale signs. I’ve yet to see signs of significant price reductions but I have no doubt they are coming as the hai is way out of whack. The flippers are going to get creamed here.
Pensacola Beach has a 44 month supply of inventory as of 6/14 based on the absorption rate from 10/05 to 6/06.
It is going to be very interesting to see how this pans out. I watched the winds get taken out of the sails of the condo market in Perdido Key in 1987, it appears we are heading down that same route.
FLreappraiser