North Port Homebuilders Have ‘Caught Up’
The Herald Tribune has this update from Florida. “North Port may be the fault line for the downturn in the Southwest Florida housing market. The adrenaline of a real-estate gold rush has given way in a matter of months to a buyer’s market.”
“Local builders blame investors for the downturn, saying they flooded the market, bought up houses and tried to flip them. And now there’s simply too much inventory.”
“All along Price and Toledo Blade boulevards, North Port’s ‘builders’ row,’ the signs of the cooling housing market are flapping in front of almost every model home in big, bold letters: $10,000 in free upgrades, $20,000 buyer’s bonus, homes starting below $200,000.”
“On top of that, some builders are offering giveaways like a chance to win a trip to Bermuda, a $10,000 gift card to a Rooms To Go furniture store, free moving expenses, an eight-night hotel stay or a shopping spree at Wal-Mart.”
“A year ago, when the city was issuing more than 350 permits a month and builders had customers on waiting lists because they couldn’t build fast enough, marketing tactics like these were unheard of in this fast-growing city. But today, as the flood of customers has slowed to a trickle, home builders are reaching out in new ways to attract buyers and move their stalled inventory.”
“North Port officials had expected to permit more than 5,000 single-family homes this year, but in May issued just 74 permits. That followed only 88 in April.”
“‘Everybody is doing something; you have to,’ said Marge Weber, a new home specialist with Jade Homes. ‘We’re sitting here not selling many homes.’”
“More than 1,400 homes, 377 of which were built this year, are listed for sale with agents in North Port. That’s not counting the houses that are for sale by owner and many builders’ spec homes. Combined, some real estate professionals estimate, close to 5,000 homes are sitting on the market in the city.”
“The only other area where builders are offering such incentives is Orlando, according to the Florida Home Builders Association. Around Orlando, builders are raffling off Mini Cooper cars, furniture packages and vacation getaways, behavior Beth McGee, executive director of the home builders association there, hasn’t seen in more than a decade.”
“‘For a long time, they couldn’t keep up; they couldn’t build them fast enough to accommodate the sales,’ McGee said. ‘Well, now they’ve caught up.’”
Listen to the bell Orlando…..it tolls for thee.
Anybody who can beg, borrow, or steal a copy of this weekend’s WSJ should check out the article on the “McMansion Glut”.
I couldn’t come up with a link. Maybe someone more tech literate can help out.
Great reading for followers of this blog.
Famous last words from real estate broker, Michele Stash of Washington DC…”SELLERS ARE DYING OUT THERE…”
Greedy f*cks…couldn’t happen to a better group.
Easy! We’re all greedy f*cks. The only difference is– you are on the right side of this disaster/transaction. Always fascinated by the lack of humility when one is right.
Nice to see you post again. (Peace)
Gloating is wrong and fun.
Bulls get fat, bears get fat, pigs get slaughtered. I have no problem with bulls or bears, right or wrong. Sellers are people who accept a price. Greedy would-be sellers end up not selling.
pvTom
Speak for yourself-Greedheads DO live in 6k to 10k SF homes, and then whine about the fact, that when it burns them out financially and upkeep wise, there is now no greater fool is coming over the horizon to purchase their white elephant.
OT-is it just me or has LVLandlord been conspicuous by her absence lately. I guess the recent market downturn has forced her to accept reality.
She, hedgehoganalyst, and BeaConst have started their own private blog and no longer post here.
Are you kidding? After the 16th round of agreeing with each other that RE always does ONLY go up, what do they talk about?
How the stock market is undervalued…
That would be the obvious follow-on, hehe
“‘For a long time, they couldn’t keep up; they couldn’t build them fast enough to accommodate the sales,’ McGee said. ‘Well, now they’ve caught up.’”
Kinda like those razors/scooters a few years back… Then one day, pooof, you couldn’t give them away. When people wake up and realize, truly realize, what’s been going on in the RE world the last few years the silence will be deafening.
The amount of debt taken on by the average household is staggering. The complete loss of barings with respect to household finances will test the family fabric in an unprecendented fashion.
‘The only other area where builders are offering such incentives is Orlando, according to the Florida Home Builders Association.’
I have posted on incentives all over the country, including many places in Florida.
Our local market has several builder offering new cars. Gimmicks will only bring in so many GF’s!
It must be awfully hard for FUHS (f*cked used home sellers) to compete with new home sellers offering cars as incentives.
They are desperately trying to maintain the illusion of price stability. Soon they will abandon this effort and the race to the bottom will begin.
You are right — it is merely an illusion. Pretty soon they will run out of cars to give away, and then the sale price will reflect new market reality.
Only in Orlando, eh? Well, let’s take a look at the Southeast FL regional website for Centex Homes, shall we?
http://tinyurl.com/pd6rq
How about I pick a development close to me? What about Canterbury Place in Jupiter?
http://tinyurl.com/o9o8x
Oooh, looky here. Right on the web, it says “special incentives up to $25,000.”
What about a little further up the coast? Looks like $30,000…
http://tinyurl.com/ntguv
Then there are all those pretty ads in the Palm Beach Post “Real Estate Weekend” section every Friday — the ones with bought-down mortgage rates, no HOA fees for a year, thousands off closing costs, etc., etc.
It’s satisfying, really, to expose utter B.S. for what it is.
Ziprealty homes for sale was was 836,471 last saturday, may 15th 800K and today 846,120
http://www.ziprealty.com/maps/index.jsp?usage=search&cKey=74rbwvlk
That is about a 95% annualized rate of increase in inventory ON A NATIONAL LEVEL from May 15 to the present. I know there is no national housing market, but nonetheless, I submit that almost every local US market formerly referred to as frothy is IN A SLOW-MOTION TRAINWRECK.
each house needs at least one body to live in it. when flippers buy 20 houses, and find there are not 20 bodies (at least) to buy or rent from them, they have a little problem. Gee, so hard to figure that out.
LA Times article today!
Oh, that is too funny! “Jailbait form next door.” Priceless.
Ben, check out this link:
http://realtytimes.com/rtcpages/20060616_perspective.htm
This may be the best candid piece from a market insider that I have seen to date… GREAT STUFF! (I know Ben already gave it its own post…)
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However, there are stories from the field on how sellers are defending their prices as if their lives depended on it. While sellers are sitting on hundreds of thousands of dollars of equity, they can’t stand the idea of dropping their price by $25,000 or $50,000 to sell it today. The house that was $260,000 in 1999, is now selling for $569,000 today. But some sellers now want that same type appreciation and can’t imagine selling it for less than $589,000. Bringing it down the $20,000 or $40,000 to sell the property seems, well, just not fair.
What’s even scarier are the agents who are defending their prices in a correcting market. I have to keep in mind that nearly half the agents in the country (as well as here in the Capital region) were not in business five years ago. They’ve just now entered a market where prices have to be corrected, dropped — improved, as it were.
However, as I talk with agents around the region about their listings, they’ll be the first to let you know, “It won’t sell for what the seller’s asking,” but they’re too afraid to tell the seller the sobering news.
The market is like playing Russian roulette. Sometimes you don’t know what you have until you pull the trigger. Somebody needs to blink. Sellers seem to be saying to buyers, “I’ll drop my price, just make an offer.” While buyers are blankly replying, “I’ll make an offer, just lower your price.”
It’s this stalemate that has played a part in creating an abundant supply of houses on the market in the DC area. We’re talking upwards to 200 percent more homes on the market in any given year-to-year comparison. And, folks, after a dearth of homes in this area, it’s a good thing. Is it affecting prices? Sure thing. Will prices come down? Absolutely. Are sellers going to lose money? Well – in some cases.
“What’s even scarier are the agents who are defending their prices in a correcting market.”
There is nothing whatsoever scary about this — it is entirely natural. Darwinian selection will soon drum these guys out of the biz, as a Realtor (TM) cannot make a living by never selling any homes. This mechanism has been at work since the beginning of life on Earth…
“The house that was $260,000 in 1999, is now selling for $569,000 today. But some sellers now want that same type appreciation and can’t imagine selling it for less than $589,000. Bringing it down the $20,000 or $40,000 to sell the property seems, well, just not fair.”
The problem he does not mention, and whose importance will not be fully understood until the dust has settled on this real estate crash, is the role of the housing-ATM in draining equity gains out of homes as their prices skyrocketed in the last few years. The Greenspan wealth effect will bite with a vengeance in a declining market.
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The consequences of our past actions grab us by the back of the neck, blithely disregarding the fact that we have meanwhile “reformed.”
-Friederich Nietzsche-
Living in Orlando you hear more commercials on the radio and now moving into telivision advertising new homes. They are wheeling and dealing like car dealerships.
Mercedes is now offering special financing of 5.85%
Centex is offering up to $40,000 off selected homes (starting around 230K) thats 15-20% off.
Any new developement you see here has some kind of deal going.
Builders are also quietly lowering prices. One town home developement off the Econ. Tr near Lee Vista on the south east side of Orlando has been doing so. Last year they were starting at 275K for a 2bed 2bath, back in April they were starting at 250K, now they are starting at 223K. They make no mention of reductions or price declines, they just quietly reprinted their brochures and advertising with new pricing. There are a good 100 or so townhomes completed. Last time I drove through there were 22 for rent (asking around $1100 a month) and about 20 for sale. Go there on a Saturday and the place is dead.
If anyone is familar with Florida’s Geography, There is no economy south of Tampa. No major employers, only tourism and hospitality and mostly catering to retirees. North Port should be the poster child for the housing bust in Florida. They clear cut and filled in thousands of acres of wetlands and natural habitat to put up miles and miles of cookie cutter homes… The only people buying these homes were speculators hoping to cash in when they flipped them.
Orlando does have a strong economy, a lot of commercial growth here and light industry combined with tourism. There are well over 16,000 homes for sale in Orlando and there are even more buyers for them. The only problem, prices are not affordable so no one is buying. The average salary here is around 55K for a family of four so either prices come down or wages go up.
Oh the condo conversions are even sadder. The condo converters priced these things based on what they figured 2006-2007 prices would be. They are not good deals at all. Yeah if your a widow or single a one bed one bath for 160K is alright but a two bedroom they go for 200-230. You can get a town home for that, and a 3bedroom condo conversion they are asking over 250K which you are now in the single family home range. With Orlando’s plentiful inventory of new and re-sale homes averaging 248K anyone buying a 3bedroom condo over a single family home is a fool.
2 things
1) I used to travel Florida for business and I passed Northport every 2-3 months and it seemed to be a dead, boring nothing town kind of lost in the space between Tampa and Ft. Myers/Naples. I cant imagine paying a high price to live there.
2)I had always heard that wages in Orlando were quite low for a major city, in fact some of the lowest in the nation. Perhaps things have changed in the 5-6 years since I have been going there.
I’ve been an Orlandoan all my long life. Wages have always been low because people would accept those wages in exchange for the climate and low cost of living. My father in law refused, in the 50s and 60s, several super-attractive promotions if he would just move to another city. No deal.
Life in Orlando “before Disney” was idyllic. I was lucky enough to have been in the muscle-car generation and teenagers were entirely satisfied cruising Steak ‘n Shake and going to the youth center or Ronnie’s. Disney changed all that — to the delight, I suppose, of those who had not yet moved to Central Florida and to the everlasting regret of most of those who were already here.
Now Orlando is, as L notes, a healthy economy. But house prices are beyond the reach of too many who get by on average incomes. They will come down here, too. In the yuppie heaven of Heathrow, for example, SFR active listings in the range of $200K-600K are up 137% since mid-December, from 95 to 225 in one large gated community.
Only the most dunked of the podunks are relatively immune to this bust, IMO.
I wouldn’t call Tampa’s economy that great either. I left after jobs at GTE and Eckerd Drug were drastically reduced because of mergers and there was no work to be found in IT. Tampa is extremely overpriced overpriced when compared to wages.
Walt,
I used to work for GTEDS and when they got bought out buy Bell Atlantic and became Verizon, they started outsourcing jobs to India and laying off competent people here and importing H1b’s. The Verizon Data Services out by USF is basically all Indian and Chinese workers making 35% of the wages of what an American worker would demand. this problem is everywhere and Ivan Seidenberg does not care as long as he gets his fat bonuses.
As far as area employers, companies do recognize that they can pay less in Tampa. But there are 3 companies that are large with an IT presence in Tampa that take care of their people. Those 3 would be Raymond James, PriceWaterhouseCoopers, and Nielsen Media. THere are some other companies which are smaller, but the economy seems to be doing ok; however, the prices do not reflect the underlying fundamentals and we will surely see prices stagnate here.
“Local builders blame investors for the downturn, saying they flooded the market, bought up houses and tried to flip them. And now there’s simply too much inventory.”
1). Anyone with an I.Q. of 10 could see what was driving this market the past few years (think “investors” here). So for builders to claim ignorance of this fact is ridiculous.
2). Without said “investors”, builders wouldn’t have made money building the homes these idiots bought.
So, why the animosity towards “investors”? Because they are now selling? WTF did the builders think these guys were going to do with them?
Yeah now the golden question…
Who will fire the first shot? will investors sue the builders or will the builders sue the investors?
The builders hate the investors now because they are all dumping at the same time creating a inventory glut that’s killing the builders . Had the investor/flippers continued to buy the builders would of loved them . In developments where you have to many for sale signs/and vacant houses from flippers the buyers back off .
When everybody wants out ,nobody wants in .
I disagree. The HBs loved the specuvestors. They overpaid enriching the HBs. They increased demand allowing premium pricing margins for everyone. Now, in the downturn the floppers are holding comps at unrealisticly high levels allowing the HBs to sell “new” for what used is asking. I wouldn’t be surprised to see a few backdoor deals twixt the HBs and floppers to keep the asking prices high.
Correction ,IMHO , Builders use to love the speculators , now the builders want end-users that won’t clutter up the tract with vacant houses and for sale signs . It’s starting to become a problem for the builders especially went prior investors that can’t sell let the weeds grow and buyers see all those FOR RENT signs .
Yes - at a subdivision I was looking at in Pasco, there was a marked difference in builder attitude between last sumer and this spring. Last summer, they were telling us that maybe we should camp out for the next release as it had been happening for the last couple of releases. They upped the price 15K two times from September to February - when I went back in April though, there were dozens of for sale signs, and the same woman who told us to camp out (we didn’t by the way - they called us two weeks into the supposed six month waiting time, as did two other builders - this makes me date the crash about October in Tampa) was practically biting her nails, muttering about “these investors, they are just so GREEDY” Well, we learned all about just who was being GREEDY now didn’t we. They were happy to sell to them when the getting was good, but when the chickens came home to roost (or rather sell) they weren’t so nicey-nice.
Investors were to new homes what hedge funds have been to stock prices — a massive sh!tload of speculative demand which drove the prices to bubblelicious, conundrumish levels. On the downhill side of the cycle, the rapid withdrawal of this transient source of demand tends to turn lead cooling market into a hard landing, as the rapid withdrawal of speculative demand drives a chasm as wide as the Grand Canyon between bid and asked prices. The basic problem is that sellers believe recent comps reflect the equity gain to which they believe they are entitled, having been brilliant enough to buy when prices were going up at double-digit rates, when in fact they merely reflect what the greatest fools paid on the evening before speculators left town.
The take home message: If you want to avoid losing lots of money, avoid buying stocks favored by hedge funds and homes favored by investors.
Check out the lead article in the Personal Finance / Money & Investing section of today’s WSJ to see how well this is working out for the stocks recently favored by hedge funds:
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When the ‘Smart Money’ Flies’
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Hedge Funds’ Favorite Stocks Often Take It on the Chin Harder Than Indexes in Market Slump
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By Susan Pulliam and Gregory Zuckerman
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Here’s a smart tip for individual investors in times of stock-market turbulence: Steer clear of stocks favored by the so-called smart money.
That is the lesson offered by a recent report from Goldman Sachs Group Inc. that studied how the stocks held by hedge funds — the investment pools for wealthy investors and institutions — had performed during stock swoons over the past three years. And the market’s most recent drop supports the conclusion. Stocks with the heaviest concentrations of hedge-fund holders fell between 9.7% and 13% during the period of May 9 through June 13, the research shows, while the Down Jones Industrial Average and S&P’s 500-stock index each fell about 7.5%.
The selling “was most concentrated in the names hedge funds had positions in,” says David Kostin, the analyst who did the research.
undsoweiter…
‘(think “investors” here)’
think “investers”
Funny to hear these builders blaming investors. They knew exactly who they were selling to. I don’t care what business you’re in, you can never lose track of your target audience or customer base. You ask yourself, is there a market for this? There is always a saturation point with any good or service. These builders had to know that the well would run dry at some point. There were too many warning signs. They were just stuck in a rut of greedy denial while living the high life at their favorite watering holes. Hope they made solid plans. The small time builders are f****d.
The latest excuse from realtors in Bradenton is that the housing glut is due to people buying larger homes as prices were increasing dramatically. They wanted to get in while they could still afford to. They are carrying two mortgages and trying to sell both properties to see which one sells first. I don’t know how much money these folks have, but not many can afford to carry two mortgages for an extended length of time. Two mortgages+No buyers=foreclosure!
The builders have to keep building or they essentially go out of business. The builders will lead the market down as they compete with sellers of existing homes for buyers. The sellers of existing homes will cling to their delusions as the builders take any buyers. Meanwhile inventories build and the problem gets worse. The next two years should be interesting. It will be funny to look back and be amazed at the prices that were being paid.
The problem the article describes will only get worse as more and more inventory is created.
Historical data on economagic.com shows that the largest ever inventory in the USA (relative to the time it would take to clear it at current sales rates) was a 14 months supply (1975 was the year). I believe we have rather quickly gone from record-low inventories (early 2004) to about 7 months supply (in less than 1 1/2 years) and will be out past 14 months by the end of 2007. At that point, waves of price declines will hold the inventory level at a stable level until the bubble prices have morphed into a Japan-style real estate deflation. But I am not 100% sure that BB does not have a strategy mapped out and ready to implement, in order to prevent this… Any thoughts?
If you bought 2 properties ,and your waiting to see which one sells first ,your a flipper not a end-user home buyer .
In the Tampa bay area,I was driving yesterday and heard on the radio that Lennar is now offering a price guarantee, if you purchase one of their homes they will refund you the difference if the prices are lowered, , I wonder how this will play out, FB purchases now and when prices drop another ten percent he “cashes” in on the builders guarantee, then six months to a year and prices drop another ten to thirty percent but the FB has used his magic wand already! I think this kind of guarantee will drum up some sales but I can’t believe that the builder is not aware of people cashing in early and leaving them to pay small differences rather than the larger ones. IMHO
I’ve seen the price guarantee on new condoes in DC too. I was wondering how they worked. I figured it’s just a price gurantee until you close on the sale ( a month or two, big deal). Or does it continue on for years?
I’m sure that there is a time limit on these types of marketing, funny thing is that it seems like the builders are pulling out all the stops, except for lowering the prices that is. I suspect that it is in part due to the worry of FB’s talking the HB to court. I was looking in Bradenton in Country Meadows the past year, prices started around 600k and now are down to 493k but are not advertised on their web site????????
Looks like very smart marketing to me. Probably a one-year deal. I’d do that, too, if I were a builder — they had so much fat in their profits that they are not yet close to cost on selling, so they can afford to offer the guarantee without going into the red. Worst, worst case — they reach a point where they hold a few properties off the market (by virtue of over-pricing) until the guarantees expire, then cut the heck of prices on the inventory. Smooth move, I think.
Homebuilders are now crying foul when at the time they were more than happy to take their profts from anyone? If they really wanted to restrict speculator purchasing they could’ve tightened up restrictions like you must own for a couple of years.
Blame blame blame. That’s all anyone ever does these days in this victim mentality culture.
Oh those Bastards think there is unlimited supply of money and it is all coming their way. What they don’t understand is there is thing called a market with several different interests. They are so lame, I hate realtors. Scum bait.
What amazes me is the way the flips have “renovated” the properties. Bright red paint in the kitchen? Black appliances? Gaudy faux paint on one wall? WHAT WERE THEY THINKING???
They watched “Flip This House” a couple times and thought they were geniuses
Did anyone else find the quote “or a shopping spree at Wal-Mart.” kind of funny. I wonder how much? They offer this instead of a price cut. I’d rather get the cut.
Simmssays…Funny Father’s Day Gifts
http://www.americaninventorspot.com/node/1190
Meghan Daum: Models hawking model homes
Hanging out with a make-believe family on Windfall Drive.
Meghan Daum
June 17, 2006
I USED TO THINK I had to live near the action. No long commutes or good school systems for me. I liked to be able to stumble out of bed and walk directly to a coffee shop in my flip-flops and my Ramones pajamas. I thought I’d die if I couldn’t get to the Center for Inquiry in Hollywood in less than 10 minutes, even though I’m afraid to ask what it is.
But all that’s in the past now because I’m seriously considering moving to Milestone, a new community I discovered out past the farthest reaches of the San Fernando Valley last weekend. I took along my friend Alison, who writes about real estate but also was eager to visit the Wal-Mart in nearby Valencia.
To be honest, we thought Wal-Mart would be the main event, but as soon as we arrived at Windfall Drive, still under construction in Santa Clarita, we saw the future and it was beautiful. We knew it was beautiful because a 2,321-square-foot model home was occupied by a very beautiful family baking cookies with the Kitchen Aid stainless steel “appliance package” and opening and closing the European frameless stained-finish cabinetry. They were wearing nametags — “Mom,” “Dad,” “Son” and “Daughter” — which, given the state of the American family these days, you really wish people would do more often.
But these were no average Joneses. This was “Homelife,” the brainchild of Milestone developer Centex Homes and the public relations firm Roddan Paolucci Roddan. Billed as an “improvisational theatrical model home experience,” Homelife takes the technique of home staging a step further by employing actors to play the roles of people living in the house. “Audience participation is encouraged,” says a snazzy brochure featuring multiracial models laughing with their kids in the laundry room. “Maybe you have a great cooking tip for our ‘family’ — we want you to take part in the action.”
As it turned out, Dad was not only master of his surround sound and central vacuuming systems, he’d played lifeguard Logan Fowler for three years on “Baywatch.” (They call it Windfall Drive for a reason, ladies!)
After chatting with the family — “my room’s much bigger than in my old house!” Daughter said — Alison and I strolled outside to take in the view of the bulldozers across the street. It was then that a New York Times reporter approached us and asked, with an enthusiasm that made us wonder if she thought she’d stumbled upon a “nontraditional partnership,” why we were interested in Milestone. Her face fell when she discovered we were on assignment too. In fact, there were probably more members of the media there than home buyers. A CNBC reporter was so taken by Homelife that she joined the family as “Aunt Jane.” Alison and I decided to call ourselves “Jehovah’s Witness” and “Jail Bait From Next Door,” respectively. But we’re not the nametag type.
Upstairs, we discovered a master bedroom, huge walk-in closets and a laundry room that, in Venice, might sell for close to a million dollars. There were three kids’ bedrooms, which was strange because there were only two kids. A publicist explained that the older daughter was at camp. This was news to Mom and Dad, who didn’t know they had another daughter. There were, however, plenty of other family members, including Centex marketing director Amanda Larson ( “Aunt Amanda”).
“There certainly are a lot of you,” I said to Dad
“Do you ever watch that show ‘Big Love’?” he asked.
So that elusive land off the 14 Freeway is not so boring after all! There might not be any comic book stores within walking distance of Milestone, but after my interactive theatrical model home experience, I could see myself living there, and not just for the tubes-in-the-wall pest defense system.
God knows, I’ve been to plenty of open houses in my day. But like most looky-loos, I find there’s usually something incomplete about the experience. You can only learn so much about a family by checking out their bookshelves and rifling through their file cabinets. The Homelife clan didn’t have files, and the only reading material I noticed was a copy of “Teen People” in Daughter’s bedroom. But none of that mattered because they’d done more than open up their home, they’d shared their lives, their passions (they like Jenga!) and even a little bit of their hearts.
“So how’s your marriage working out?” I asked Dad.
“It’s great,” he told me. “But we’re only here for three hours. That’s about the right amount of time to be married and have kids.”
This neighborhood is going to be hot.
TxChick — good story.
I just love watching the builders and speculators criticizing each other.
Builders: The speculators made me misjudge the actual demand for houses. - Yeah right, they had no idea who they were selling to.
Speculators: The builders made me overpay and now they have overbuilt and I can’t make an outrageous profit anymore. - Well boo hoo for both of them. They deserve each other, IMO.
Do I detect a possible reality show? Fear Factor - loser has to market the house to the HB bloggers?
The reality show I’m looking forward to is the one where a bunch of underwater floppers are competing for a 50% lowball offer (which the winner is ecstatic to get) and the losers draw straws for the only dab of vaseline before the ass-pounding is administered by the panel of bankers.
“Well boo hoo for both of them. They deserve each other, IMO.”
This is one disfunctional symbiosis which is a true joy to watch as it crumbles, leading to the inevitable fingerpointing match.
Housing in S. Florida is on the slide. I saw a nice sign of the bust when I was freshwater fishing west of the FL Turnpike in the S. Palm Beach/Lake Worth area.
An open house sign had blown into the canal from the nearby road. The sign said:
OPEN HOUSE
San Messina on the Lake
Fully Furnished
For $300K less than builder!
In the area where I was fishing, there are many communities with on going construction to the north and south. With the median income in the area, I don’t know who will purchase these houses. It’s going to be a real BUST!
HBs vs. FSs (speculators)
The HBs win on every point. The HBs have massively deep pockets. they can sell at a loss and survive. The HBs have much much lower cost basises and carry costs. The HBs are politically and financially connected. The HBs have economies of scale. And finally, if things get really nasty the right word in the right ear from the HBs and the FSs find themselves under investigation for tax or mortgage fraud.
“North Port may be the fault line for the downturn in the Southwest Florida housing market. The adrenaline of a real-estate gold rush has given way in a matter of months to a buyer’s market.”
This is the wrong metaphor for this market. California has fault lines and gold rushes. Florida has buyers who got stucco (just like the ones in the Marx Brothers first film, The Cocoanuts (1929), about the demise of the 1920s Florida Land Boom) and hurricanes which will blow them away — just like the last time!
http://en.wikipedia.org/wiki/Florida_land_boom_of_the_1920%27s
‘Market crashes always occur in the same manner. Regardless of the market, the same simple psychological underpinnings are always at work. People who are caught up in a bubble never look back for historical examples. For this folly, they become paupers.
“Those who cannot remember the past are condemned to repeat it.” ‘
http://www.stock-market-crash.net/florida.htm
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MR. HAMMER (aka Groucho Marx): You - you know what an auction is, eh?
CHICO: I come from Italy on the Atlantic-Auction.
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MR. HAMMER: You can have any kind of a home you want. You can even get stucco. Oh, how you can get stucco.
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MR. HAMMER: Florida folks, land of perpetual sunshine. Let’s get the auction started before we have a tornado.
http://www.marx-brothers.org/watching/movie_detail.htm?movie_id=3
http://www.imdb.com/title/tt0019777/quotes
How can there not be enough buyers in FL?
I thought 100 people were moving to FL every day. Or was it 1,000? or was it 10,000? And I thought ALL the baby boomers were pulling up stakes and moving to FL! And they aren’t making any more land in FL! And there is a permanent shortage of homes in FL!
How can this possibly be?
What a world… what world….
What kills me about that article is the fact that someone thinks a shopping spree at Walmart(!) is going to make the deal happen. “Gee, honey, I wasn’t really interested in that overpriced POS until they threw in the Walmart gift card!”
and these people committing financial suicide think they are a genius when they save $.05 on a gallon of gas or $.50 on a gallon of milk.
They also will get suckered into buying a home destined to lose 40% or more of its value over the next four years in response to their fears of 3% YOY rent increases, sparked by recent news stories about incipient rental inflation.