Florida Housing Markets ‘Flooded’
The Sun Sentinel reports on Florida condos. “David Dweck couldn’t believe it. The founder of the Boca Real Estate Investment Club scanned the MLS last week and found 2,700 condominiums for sale just in Palm Beach County retirement communities. That represents roughly 9 percent of the county’s total listings. ‘That’s a staggering number,’ Dweck said.”
“Some of the building facades haven’t been updated in years and aren’t appealing to existing residents or buyers, he said. ‘That market will continue to correct downward,’ Dweck said. ‘I don’t expect it to pick up at least for another year.’”
From Florida Today. “A new report on housing construction permits reflects the slowdown in Brevard County’s real estate market. There were 415 permits issued countywide in May for single-family homes, condos and apartment units, down from 577 in April and 617 in May 2005.”
“Joe DiPrima, (who) builds mainly in Viera, said most of his company’s current construction projects are from contracts that were signed last year. ‘I think we definitely have seen a slowdown in activity,’ DiPrima said. ‘We anticipate that it will take some time for the inventory out there to be absorbed.’”
“He said the flurry of housing construction in Brevard in recent years has flooded the market, and local housing prices in general have fallen somewhat since last summer, when the market peaked.”
“The median sales price in Brevard for existing single-family homes, a market that reflects trends in new-home prices, was $224,800 in April, up 4 percent from April 2005, but down from the peak price of $248,700 in August 2005.”
“The number of local single-family home sales in Brevard fell by 32 percent in April, compared with a year earlier, according to data from the Florida Association of Realtors.”
“DiPrima said said the local market for condominiums seems weaker. In April, the median sales price of a local condo was $175,000, down 17 percent from a year earlier.”
“Also, the number of local condo sales fell by 81 percent in April, compared with a year earlier. ‘The condo market here took off after the single-family-home market,’ DiPrima added. ‘The number of condominiums on the market is higher than it’s ever been.’”
Lennar cuts 2006 profit outlook: Lower new orders, higher cancellation rates cited as worries
While no cancellation rates were quoted…
and how many shares have they bought back in the last year?
Stock is up over 3% this morning.
Flooding? And you don’t even need an Katrina Hurricane to do it!
it seems to be an epidemic, my husband and I are looking for a place to rent on the west coast, and this morning a broker of 20yrs told me “just don’t even think of bying” pricing down over 30%—-could not believe it, thought this would take much more time. Broker told me that houses that could have sold last year at 289 can’t get 189 today—-oh my god this is going to be a rough ride
Might we suggest the colorful expressions:
“real estate bust” and “real estate depression”‘ ?
Where is my Prozac?
Some of the building facades haven’t been updated in years and aren’t appealing to existing residents or buyers, he said.
LOL. It’s not the ridiculous prices or anything — it’s the facades to blame! BTW, here is Dweck’s ponzi scheme site: http://www.bocarealestate.net/ — help the dude out and buy some tapes.
Kings point is a old run down mess. The retirees never kept the place up. Why fix up the buildings if you know you are going to die soon anyway.
That is a problem in many of Florida’s coastal condominiums — it is like pulling teeth to get the longer-term retiree owners to pony up any money to keep the place in shape. They are oblivious to much of the deterioration because they see it every single day, yet they are loathe to listen to those who do see the rot and want to fix it. It takes determined new blood on the boards of directors, and persistence, to overcome that much inertia.
That’s my mom you are talking about. Oh, and you are correct up to a point. Remember, today’s 80 year old lived through the depression and lost fathers and brothers in WW-II while they clipped rationing coupons and bought war bonds. They’d have a heart attack trying to write a check for a granit counter kitchen remodel. It flies in their very nature and goddammit they are correct. Keeping the place inshape means painting when it’s peeling not when it is faded, replacing the formica with formica when it bubbles and cracks not scratched and chipped. They’d sooner furrow a victory garden in the yard as pay for professional landscaping. If forced to choose between the values system of the greatest generation and a boomer board of real estate fluffers there’s no contest. It isn’t inertia or oblivious, these people don’t just have different values, they have better values. Keeping a place to live dolled up to tweak the highest and best sales price soonest has no meaning to people who buried spouses the month before their first social security check. Inertia my grandma’s tookis. That new blood board wants these people to pony up a higher monthly assesment and higher taxes for benfits they will never see although it does mean the nature of the community will certainly change away from their preferences. “Hi, we are the new board and we are here to take your money, raise your taxes and make you uncomfortable living here. Time to overcome your outmoded conservative values and leverage our equity for bigger returns.” Brave New World.
Thank you, sir. My sentiments exactly. It seems the “entitlement society” is in for a day of reckoning.
Well said!
I don’t know why you bother sugar-coating your thoughts, Robert.
Spot on - my mom & pop (in their 80’s) own a 100 y/o Victorian in NY that they bought for less than 50K thirty years ago and is “worth” a million now - and they do put some $ into it to keep it functioning but wouldn’t think of going for all the high end reno’s that a new buyer would drop in there. Getting pops to buy a new $20 bathrobe is only an option when the one he owns has literally disintegrated off his back - and yes he owns his home outright & has no debt. I am (slowly) learning from hsi frugal ways. If you try to stir him up to spend some money - he basically reminds us that he grew up in depression and we don’t know what it was like to be hungry and not have a nickel in your pocket.
Mr. Cote: What a wonderfully written comment about the generation that understood financial responsibility.
Robert — The potential fairness of your retort was ruined by the straw man sown throughout, such as: “They’d have a heart attack trying to write a check for a granit counter kitchen remodel.”
What in the world does that have to do with the point I was making? Zero! I was talking about things in the power of the board, that affect the common value — which is nothing inside an individual unit. Your other error, more glaring because it falsely stokes sensitivities to taxes: In Florida, improvements to residences will not increase taxes at all for existing principal residences, the people you describe. My reference was only to HOA fees or assessments.
In the beachside communities to which I referred, rust, corrosion and certain types of obsolescense are almost never addressed quickly enough in the older condos, because they would cost money to correct. You seem to have a mother in one — I had a more intimate knowledge of the problem than you, as the owner of one for twenty years. An example: two identical condos on the beach — effectively “twins.” One (collectively) declined to replace its 25-yr-old sun-damaged garage doors, the other replaced those doors with current-code reinforced steel doors. Hurricane blew through. The fiberglass doors on several garages of Condo A blew in, popping out the roof and causing major structural damage. Condo B suffered only minor soffit damage and some flat-roof surface peeling, neither attributable to doors.
Rail at renovations if you wish, but my point had nothing to do with the type you implied.
I don’t know why you bother sugar-coating your thoughts, Robert.
Because if I told you what I really thought your screen would melt. Besides I’m already catching heck from all the people ruining keyboards spraying coffee at reading my comments. Thanks to all who replied for the kind words. [I'm puttering around Santa Cruz this morning on my oldest's first of many college tours. Banana Slugfest for breakfast, yummmm.]
Chip
I think the sentiment is on my side this time. I certainly don’t need suggestions as to my building strawmen and you know nothing of my experience or my mom. One thing that’s become an issue is insurance. Staying under the radar is probably cheaper than proofing the structure and getting a new policy. The improvements you advocate are material improvements not mantainence or remediation. No wonder you are experiencing resistance. They know thee difference and you do not.
Robert — I don’t have any resistance from owners — I sold the place a year ago but remain in touch with many friends who do. My reference was, for example, to replacing elevators when the cost of service calls becomes ridiculous relative to the long-term value of new ones. That is not an improvement any more than replacing a failing computer would be. Or encouraging storm shutters so that the guy below you isn’t flooded out because you chose not to spend the money to protect from the storms. The fact that the new one has niftier switches is circumstantial because you can’t get the crappy old ones any longer. I know that you live inland in the West, so you probably have little worry about the effects of salt corrosion or a damp climate. Asd to your Mom, you are the one who said she is a condo dweller and since the point of my post had to do specifically with condos on the coast, you clearly implicated by reply that she lives in a coastal area, else you’d have been into apples and oranges.
As for updating, I think there is a possibility, though I have no clue as to likelihood, that failure to address updating needs for storm protection will adversely affect the insurance cost and availability of those condos who do not act. Many of the ones built today are incredibly storm-resistant compared to the old ones. Failure, by owners of older condos, to address maintenance or practical (storm-related) upgrades will, IMO, hurt their values dramatically relative to the values of the new buildings when a huge surplus of inventory is on the market, IMO.
Sentiment may be on your side, true, but how many of those are participants rather than observers? I spent my time in the trenches, not at a desk.
Maybe if my generation(gen x) were more like my grandmother’s we wouldn’t even have this board. It is true that greed rather than need has gotten us into this mess. My husband has said for years”the best thing that could happen to this country is a recession.” People would learn the value of a dollar and hard work. My Grandmother had to work in a factory at the age of 12. I’m having a hard time teaching my 12 year old good values. My Grandmother learned the hard way. Who’s better off, the folks so far in debt with their granite kitchen counters, Lexus, and house with two mortgages or the folks with the old laminate counters and green appliance, 1980 Chevy and no debt? Hmmmmm, I wonder who sleeps better at night.
from your post I can say that at least your child is in Very good hands!!!! If I ever had children, I would have loved to raise them like you are.
Why blame a generation with no political power or clout and no significant part in creating this mess? Most of the people I know in generation x are renting or own inexpensive houses in outer suburbs (no granite counters). Many were lured into spending money and time getting degrees in a field which then imploded. Now in their prime earning years, they are seeing little or no return on stock investments. That, combined with historically low rates and rapid inflation has given them very little incentive to save (I know my savings have not kept pace with inflation). They have limited benefits and no pensions to speak of. They voted pretty overwhelmingly for the other guy in the last two presidential elections. They weren’t old enough to vote Reagan in, and needless to say they had nothing to do with FDR’s Great Society. Generation x is not the problem here, just a symptom of the problem.
Lots of Gen xers in my neighborhood. Driving their fancy cars and spending money like there’s no tomorrow. Of course it was thanks to them that I first heard of interest only loans. It was greed that my generation and my parents generation for more, more, more that has caused this mess. Yes, the fed gave us easy money, but stupidity and greed caused everyone from bartenders to teachers to start investing in real estate.
I’m on the older side for a gen xer. I will tell you that my first house was $85,ooo in an okay neighborhood. We moved around for the past 12 years for our careers. We took job transfers of only $5,000 plus the one month salary to get ahead. We drove one car for a few years when the children were little. We didn’t have cable and were the last to get cell phones. We saved money by using coupons and were creative finding inexpensive things to do. Funny thing is, I have some of the fondest memories from those times. Those years of saving and moving have put us in a good position. Now we are financially secure and amazed that people spend as they do. They don’t want to work hard or save to get ahead. They moan about money, then go out and spend $500 on clothes. They are drawn to eachother by the cars they drive, clothes they wear and how much money they appear to have. That is the downfall of our generation.
As far as the stock market, I’m not sure what kind of returns you are looking for. We have done quite well with our portfolio, aside from a few .coms. Of course, we don’t look at it as a get rich quick investment either.
Point being, Gen xer’s can get ahead with hard work and a little sacrifice. Yes, we had to move away from our family and friends, sacrifice, save….. but it has paid off! We are now waiting out this crazy cycle to buy a house in our hometown Sarasota, Florida. We didn’t sacrifice and save to throw it all away. Besides, we are not willing to pay 50% more than a house is worth!!!!!
Our family was so poor, one time a burglar tried to break into our house, and we robbed him!
BWAHAAHHAAHAHHAAHA!
I slay me….
Financial health should be required high school education. I know it is difficult to even get kids to read nowadays, but really, learning about credit, and the consequences of ruining it, and living in debt and never saving, etc., are more important subjects than 90% of what kids learn in school. When i first went to college in early 1980’s, i don’t recall credit card companies setting up on campus and throwing cards at every kid who walks by, but when I went back to complete my degree in 1996, I was amazed at the constant stream of offers physically on campus as well as in the mail - way too much temptation and not enough instruction about the consequences. I bet most parents would have helped their maxed out kids but were barely aware of the lure & catch until lots of them were in bad habits and/or trouble already.
BTW, I am a pre-boomer old fart, probably closer in age to Robert’s mother than to Robert. So much for a hijacked post.
What a great discussion….enjoyed the comments by both Chip and Robert.
Moman — thanks — I believe that Robert and I have agreed to disagree on this one. We both enjoy the debate, I believe.
Octogenarians for everyone!!
OT: Here in Salinas I noticed two things on my morning walk. For rent signs with a Sac area prefix. One home just installed a new yard and a few other signs of clean-up. It could have been a rental before but if so it sat vacant for over a month with no activity. The second thing I see are more ‘day care’ signs (realtor type) in peoples front yards. I don’t know what the requirements are for licensing, but definitely a sign of people needing more income. And no there is no housing bubble here; there were only 218 scheduled open houses in the area this weekend.
‘That market will continue to correct downward,’ Dweck said. ‘I don’t expect it to pick up at least for another year.’”
Another year? Try 7-10 years, you bozo. Better sharpen up those telemarketing skills . . .
““Also, the number of local condo sales fell by 81 percent in April, compared with a year earlier. ‘The condo market here took off after the single-family-home market,’ DiPrima added. ‘The number of condominiums on the market is higher than it’s ever been.’””
81%? WOW! Thats sounds like a bubble to me.
David
http://bubblemeter.blogspot.com
81% drop in sales is a “Wow!” The market’s toast and the malace will spread nationally.
Neil
Can someone expalain to me why so many people want to live a parasites, with no pets, children or excenticites (can’t spell, sorry!) What is with this idea that we all live like bats in a cave? I just don’t get–
“The median sales price in Brevard for existing single-family homes, a market that reflects trends in new-home prices, was $224,800 in April, up 4 percent from April 2005, but down from the peak price of $248,700 in August 2005.”
down over 10% since peak but you wouldn’t know it from the yoy - a perfect example of the hidden cath in yoy data with such a sudden downturn - at least here they are reporting the drop from the peak, but notice they give the 4% “increase” yoy first to soften the blow
“cath” - meant “catch”
Catch 22 Real Estate version.
You have to be crazy to buy real estate. But if you want to sell and get out of real estate now, it proves that you are not crazy. So you can’t sell your real estate, because it would prove that after all you were not crazy.
One way or another, Milo from MMM in Washington, and his general, gets a commission and you get in exchange nice little pieces of paper from MMM. (I.O.U. nothing.)
That’s true — there must be guidance at the offices where these reports are created, that the positive/increase number is always shown first. It might have happened the other way round, nut I can’t remember an instance.
Thats going to be the name of the game… Soon they will ditch YOY totals with 2 year and 5 year and 10 year gains.
Can’t you see it now???
“”HOUSING PRICES UP 100% OVER 5 YEARS”"
Also if prices are down from their August peaks what are they going to say Aug-Nov 2006? All those who say real estate never goes down are going to eat those words…
i think the NAR will adopt the yoyo as their new mascot or maybe yoyo ma. and just every year add another yo
Looks to me like Aug ‘06 will be $218,000 that would be a y-o-y of -12%. Double digit y-o-y declines will be the tipping point for every potential seller to panic inside. “I paid $20,000 over the last year and lost another $20,000? That’s more than I earn after taxes.”
http://www.census.gov/const/newressales.pdf
No bubble here. Numbers are very strong actually. Love it - keep on building boys.
Well, I guess Condoflip.com is going to have it rough!11!!111one!
yeah I wonder how Condoflip.com is doing?
If he were smart he could just charge a flat rate for letting people post their listing on his site! That way he makes money either way.
Sites like that are really going to lead to a meltdown in prices. Thats what keeps prices high, sellers were indirectly/unknowingly communication price increases. So and so’s condo sold for this much lets ask more and sure enough someone came along and bought.
What will happen is a reversal… with the lack of buyers is sellers will watch each others postings on msl services and reduce their prices slightly more to compete for fewer buyers. This house a few minutes from here has been reduced, we need to reduce our price or we will loose the potential buyer.
Its already happens around neighborhoods with multiple homes for sale. The internet will just accelerate the process and make it more wide spread.
Everyone check out condoflip, they added “Panic buttons” allowing them instantly to drop prices !!!
“Bubbles are for bathrubs”?
Is that a parody site?
Lennar profits up 33%, New home sales up (crushing expectations), DJ US Home Building Index up 2.69%; looks like this doom and gloom bubble babble is behind us now.
Maybe not.
but the median dropped 4.75% nationally.new home builders are dropping prices and getting out of land contracts.cancelling land contracts will kill the cost of land the bubble has popped.
Ya think–my hubby and I are looking to rent for a year in FL and guess what, the investors are not even looking to sell, they’re listing the houses at less than halve it costs to keep them for rent just to get cash flow, I am being told by realtors that I can’t get to see the place before closing because “something else may be possible”, “a solution may be found” or my favorite “well you just never can tell when the right person will come along.” OK if what was said before is true and this market is down (hang on 30 or more % in one year) who is the buyer (wonderful bridge awaits him) Guy I’ve been talking to is 20yrs in bus and kinda sharp, says this sucks and althouhg we all know its just a flash in the pan—-Not A Good Flash—-But ya got to give him credit, he is no Suzanne!!
David Dweck couldn’t believe it. The founder of the Boca Real Estate Investment Club scanned the MLS last week and found 2,700 condominiums for sale just in Palm Beach County retirement communities. That represents roughly 9 percent of the county’s total listings. ‘That’s a staggering number,’ Dweck said.”
This comes as a big surprise? A dimwitted moron could have seen this coming. We better email him the link to Ben’s blog so he can get updated.
Dweck is such a dweeb!!
anyone believe the new housing sales number?
What if we’re all wrong and this thing goes another year?
I think it is important to seek out the other side when you are 100% sure you are correct.
We all have confirmation bias here.
It could be true - as may would be a strongest month for sales - but YOY - the realtors favorite number - is down, & notice “homes for sale” went up - which i assume means inventory - and is way up YOY - so there is plenty of negative to this report - although it will be spun as “xth” best year ever - and none of this takes cancellations into consideration. The anecdotal info is just too strong for this to be spun too positively. I follow Ryland’s Tampa website and the list of inventory homes grows every week. Let’s see what summer- winter numbers are. I don’t think anyone on this blog that I have read has predicted that May would be a bloodbath.
Interesting that the sales gains appear to be entirely in the south and west—northeast and midwest sales are down from april.
Don’t forget that post-Katrina residential construction is just now starting to ramp up, and will be over-inflating the volume in the south for the next year or two.
Higher new home sales numbers doesn’t surprise me because it goes along with what’s been discussed here. The new homebuilders are offering upgrades, financing and actual discounts to mover their homes. They’re undercutting the existing home sales market.
Many on this blog had been saying all along that existing homes won’t be able to compete once the homebuilders start discounting so I’m not surprised.
Now if sales of existing homes were up as well then I’d be suspicious. But again, this doesn’t take into account cancellations and it helps bolster the fed’s case to increase interest rates, maybe even justify a .50 bump.
Lennar up $1.61 on the bad news???
I love it (in the short term) as I am long all those pigs.
However, won’t be hanging around long.
WASHINGTON (MarketWatch) — Sales of new homes unexpectedly increased 4.6% to a seasonally adjusted annualized rate of 1.234 million in May, the Commerce Department estimated Monday…..and HB stocks are up….
Please excuse my ignorance, but could someone please explain what exactly “seasonally adjusted annualized rate” means? Specifically, what does it mean in the context of this 4.6% increase? Thanks!
but the median price dropped 4.3% thats close to 50% a year.try and spin that.
OTownCajun - see the book, “How to Lie with Statistics”. One can manipulate numbers to do whatever you want them to. They are professional bold faced liars.