Florida Housing Sector ‘Continued To Adjust’ In May
The Florida realtors have the May numbers out. “With mortgage rates still ticking upwards, Florida’s housing sector in May continued to adjust to changing market conditions, including a greater inventory of homes available for sale in many areas. A total of 18,680 existing single-family homes sold statewide last month, a decrease of 24 percent from the 24,523 homes sold during the previous May, according to FAR.”
“Sales of existing condos also decreased in May, with a total of 5,725 condos sold statewide compared to 8,337 in May 2005 for a 31 percent decline.”
“The number of Lee County homes sold plunged 24 percent in May from a year ago. In Collier County, the number of homes sold dropped 40 percent to 313. Charlotte County’s home sales dropped 15 percent to 398.”
The Herald Tribune. “In the Charlotte County-North Port market, prices dropped about 2 percent, from $216,200 to $211,500. In the Sarasota-Bradenton market, home sales dropped 32 percent.”
The Naples News. “‘Overall “everything is still status quo, still pretty slow (in Naples),’ Mike Timmerman of Hanley Wood Market Intelligence said. Some of the larger developers have seen declines in sales lately. ‘The decline..is worrisome for different reasons,’ Kitty Green of the Bonita Bay Group told the Daily News. ‘Traffic is prospective buyers and is essential for builders.’”
“Because of the glut of housing, some of the larger housing developers, such as WCI and The Ronto Group, are delaying housing projects so as to not flood the market and significantly lower home prices.”
The Sun Sentinel. “‘There’s no question home sales are slowing,’ Doug Duncan, chief economist of the Mortgage Bankers Association, said. ‘We’ve got a big buildup in inventory out there.’”
“Home builders have responded by increasing incentives. WCI Communities Inc., the Bonita Springs builder with many projects in South Florida, is handing out lifetime country club memberships and two-year luxury-car leases.”
The Palm Beach Post. “Florida foreclosure filings jumped by 6 percent from April to May. ‘ The numbers for St. Lucie County were even more grim. And in Palm Beach County last month, one of every 561 households faced a new foreclosure action.”
“‘Unfortunately, this is not a blip,’ said Jack McCabe, president of McCabe Research and Consulting in Delray Beach, which months ago warned of coming foreclosure problems. ‘It is going to be a trend for quite a period of time.’”
“The uptick in foreclosure activity is linked in part to the popularity of ‘exotic’ mortgages. As the flexible interest rates of such loans reset, though, payments and overall debt can balloon.”
“‘You just can’t have a median income of $58,000 to $60,000 and live in a $400,000 house,’ said David Levin, a Delray Beach real estate consultant. ‘It just doesn’t work. You don’t need a Ph.D. to understand that $2 will not allow you to afford $3.’ But, he added, ‘people wanted to believe.’”
My poor buddy down there is trapped by his greed and humoungous inventory. He’ll never get out.
From the FAR release:
‘The economy continues to be very strong, there are new businesses coming to the area and our jobs outlook is solid now and for the future.’
The Palm Beach post:
‘Florida’s job market might be booming, but two University of Florida economists say the quality of the state’s jobs is lagging. ‘A lack of college-educated workers, high levels of tourism and a large retiree population account for most of Florida’s low and declining job structure,’ the study says.’
‘ In a state with an influx of immigrants and a large number of retirees looking for part-time jobs, it’s only natural that low-paying jobs would be the rule, he said. ‘We’re a different type of state than the more manufacturing-oriented, traditional states,’ Stronge said. “We’re collecting their people as they lose their jobs.’
‘But others see bad news for workers as Florida loses the quality-vs.-quantity battle. IIf you’re looking for quantity, Florida ranks pretty well,’ said Bruce Nissen of the Center for Labor Research and Studies at Florida International University. ‘If you’re looking for quality, we’re in deep trouble — and getting worse.’
Bingo… I am so sick of hearing people in NW Fl always saying how many jobs there are here and how the economy is doing great with new businesses coming in…..
Just look in the paper any given day and 80% of the ads are for crap wage jobs… retail, restaraunt, cabana boy, etc…
Sure we have lots a jobs, but they pay close to minimum wage… therefore the reason that houses USED to be cheap in Fl before all the speculators and easy money has made prices balloon.
Hey you forgot there are loads of sign twirler jobs, if they all bought the houses, problem solved…
Amen Destinism.
I would say that 90% of my high school class that went on to University left Pensacola because of the lack of quality jobs in the town. Another productive group that lacked the resources or grades to go on to University joined the military and also left town.
A great catch for Pensacola is the relocation of call center companies from California or Washington that pay $7.50 an hour or some ridiculous figure. The one bright spot is the medical industry which is pretty good but has not been developed properly.
I can tell you first hand that the QUALITY of jobs here in Central Florida SUCKS.
Everybody down here does low-paying retail / tourism jobs. Rarely, if/when a decent job in my field pops up they get 500 qualified applicants from all over the country.
I am lucky. I work for the State of Florida as a scientist and make a stable, secure ~ $ 45,000 /yr. Not much in most places; but slightly above median here. My girlfriend is in Forensics and makes ~ $ 50,000 /yr.
Individually, neither of us can afford a decent home down here TODAY. Three years ago you could buy a nice 1800 ft2 , 3/2 rancher for around $ 120,000. Now that the absentee flippers moved in and swooped up all available living space, the same DECENT style home is around $280,000-$300,000. You can get a 2bdrm shack with bars on the windows in a crack prostitute neighborhood for $ 100,000. Ridiculous.
It can’t last. This thing is already falling apart at the seams. At every intersection in Winter Haven and Lakeland you now see hand-made “House For Sale” , “Rent To Own”, and “For Rent” signs. It is amazing to have witnessed such a “sea change” overnight. You can sense the fear and desperation.
Its gonna be a long, hot summer here in Central Florida.
Hey the big reason companies move to FLa is to take advantage of low wages and a liberal work atmosphere.
Hey - there’s probably a market in contraband Viagra
Boing-oing-oing-oing!
“…there’s probably a market in contraband Viagra”
And, for the double-entendre du jour, that is probably a very sore point for Rush this week.
Got a job offer for $30K for a job opening specifically requesting an MS + 5 yrs experience advertised from $30K to $55K, which I had. This was in central FL. I asked the HR lady if she was serious, and even she said “I know” when I asked if she realized that I’d be taking a pay cut much greater than the cost of living difference to do more work. THis was for a FL state biology job for a brand new lab. How the hell can they get top scientists by paying less than many make with a BS?
Here in MD, even with decent job growth (read: higher paid jobs), we’re still top 10 on the list for risk of price declines (PMI report). While we had reasonably strong job growth, we lost 1000 fed jobs, and our wage and income growth slowed sharply (it’s my bet that they’re connected, and a reduction in fed spending will hit MD just as hard as DC). If the new jobs don’t pay enough to support the overpriced market, it means nothing.
South Florida’s economy is based on the services and tourism industry. High paying jobs are few and far between. I am employed by a manufacturing company in WPB. Most of our manufacturing people are retirees and are not paid well ($12-15/hr). Even our engineers (EE/ME) aren’t paid well ($50-60K). I am the sales manager and make $20K-$30K below the national average for a comparable position. The economy is far from booming.
whaddaya mean i can’t afford $3 if i only got $2? hey,i’ll give ya $5…..if you will take a postdated check on a closed account.
Great points Ben. Here in Florida our economy is pretty good and we have low unemployment. This is due to all the low paying jobs in tourism and supporting the retirees. This will never change. Florida is what it is. We will never have the quality jobs of other areas. Unfortunately, home prices look as if everyone here is a corporate executive.
Florida isn’t alone. Here in Arizona, the economy seems healthy. But such a big percentage of current jobs are tied to RE, that nobody knows what will happen if the sector stalls for a prolonged period. Cheap land and housing made up for a lot of it, but now even that doesn’t exist.
Thanks for bringing up RE jobs. They are everywhere. In Palm Beach County there are like 10,000 realtors.
“‘You just can’t have a median income of $58,000 to $60,000 and live in a $400,000 house,’ said David Levin, a Delray Beach real estate consultant. ‘It just doesn’t work. You don’t need a Ph.D. to understand that $2 will not allow you to afford $3.’ But, he added, ‘people wanted to believe.’”
First off, $58-$60K median income might be a bit high. I thought we were hovering around $50K. Anyway, this quote sums it up and I am dumbfounded at how many people can’t grasp the elementary concept of not spending more money than you make.
Welcome to “the land of the debt” where this thinking appears to be the norm. I’m still amazed when I hear radio ads for financing your breast implants or even tooth whitening! If you’re willing to make 5 yrs of payments for adult braces, then you’re willing to take on a 103% financed option ARM with a 1% teaser rate for some property you clearly can’t afford.
Bubblefucius say:
One who saves for a purchase, leans on no man.
One who borrows, liens with pay plan.
One who borrows unwisely, liens for life span.
I am glad someone admitted that the math just doesnt work out here after several years of saying that prices will keep going up because of demand and shortage of supply(dubious as well). I dont care how many people want to live in FLA or SoCal, prices can only go as high as incomes will allow.
Lol . What a mind Rainman 18.
Rainman’s on a roll today.
“‘You just can’t have a median income of $58,000 to $60,000 and live in a $400,000 house,’ said David Levin, a Delray Beach real estate consultant. ‘It just doesn’t work.”
And just where have people like Levin been hiding these last 4 years. This is one reason mortgage companies should get the hell sued out of them by putting people in loans that they couldn’t afford in property that they knew was falsely inflated.
And just where have people like Levin been hiding these last 4 years.
Exactly!
This is one reason mortgage companies should get the hell sued out of them by putting people in loans that they couldn’t afford in property that they knew was falsely inflated.
I’m, personally, against lawsuits in the majority of issues. I think they create more problems than they resolve. That opinion aside, while I do feel bad for people who were told they could buy a $400K house on a $60K salary, the fact is that initially the payments were such that it WAS affordable. If someone can’t understand that this will change when rates reset or principal comes due, etc. then they’re a victim of their own misinformation. People have got to be accountable for their own stupidity!
I’m with eastcoaster,
It seems like nobody in society wants to take responsibility for their own actions anymore. “It’s the mortgage company, not me, that got me to buy three houses in the last six months when my current job won’t even pay for one”
Totally agree. Well, these people are going to learn a hard life’s lesson. Let’s hope they get humble and blame it on themselves.
“People have got to be accountable for their own stupidity!”
In the case of a truly stupid person, the salesman are more culpable - the real estate and mortgage broker should be held accountable.
I disagree ~ in the case of a truly mentally retarded person, ok. But just being stupid is not an excuse. (And I’m not saying this to be mean - I’m serious that the only person who should be able to cry foul is someone who honest-to-God has a mental disability.)
“‘You just can’t have a median income of $58,000 to $60,000 and live in a $400,000 house,’ said David Levin, a Delray Beach real estate consultant. ‘It just doesn’t work. You don’t need a Ph.D. to understand that $2 will not allow you to afford $3.’ But, he added, ‘people wanted to believe.’”
I don’t think that you’d even want a $400K house on double that income. Unless you had a very big down payment.
This guy must not get quoted very much in the papers.
Someone on another list did a household budget for a couple earning $110,000 a year and they had negative cash flow on a modest house. Then they showed a budget on a CA house after one spouse got laid off and it showed about $57K negative cash flow.
“A total of 18,680 existing single-family homes sold statewide last month,”
This is what bothers me, the idiots that keep the game going. Just like that idiot on SDCIA that txchick assailed…..bought a month ago and is in trouble……he doesn’t even deserve to be a WalMart greeter….
Yeah, I’m startin’ to feel kinda low about the trashing of Wal-mart greeters. Next to that guy, they’re stellar.
Here is the FAR release with detail breakouts for the various metros, by SFR and condo (at the bottom of the link).
The sales for some areas are shocking (Naples) and the condo prices are giving way, yoy for some markets.
Not only are they “giving way,” they’re starting to tank. 52% YOY condo sales volume decline in Fort Walton Beach accompanied by a 19% price decline … 12% YOY decline in Panama City condo prices … even a couple scattered single family home price declines (though only a percentage point or two).
Anyway willing to wager, like the NAR, that this is it … Things will get no worse … we’ll never see falling prices in FL, blah, blah, blah? Didn’t think so.
On CNBC this morning, there was a segment on how speculators account for approx. $20 of current oil pricing (i.e. oil would be only $50/barrel without all that market speculation). I would love to see CNBC discuss what speculators have contributed to housing prices, but I doubt they’ll go there.
no, they won’t, because most of them are hedge funds or friends of GWB
I saw the same thing, and was inspired by the interviewer. He was actually asking questions of Sen Levin that were contrary to his opinion (which he continued to say were the results of experts, noth is, but couldn’t remember who the experts were…they were in the report). Inflation is too much money chasing too few goods. Is it that difficult to comprehend? It doesn’t matter whether in oil or housing. Inflation in some areas (oil) makes the pain obvious, while in others (housing) it isn’t quite as obvious.
He was asking him about his hypothesis in that based on oil inventories (being equal to what they were 8 years ago), the price shouldn’t be that high. The interviewer asked “Well what about the fact that demand 8 years ago was nothing compared to what it is now”? Just as he started to come up with a poor answer to the question, the feed was cut. The senator came back in a few minutes, but never answered the question. Perfect.
Can you imagine if Congress was doing investigations into the speculators in the housing issue? It is absolutely no different, but much more devastating to our country. I find it very unlikely that the money in the oil markets is borrowed money by folks making 50K a year. It could be, and I have no hard evidence, but I just don’t see that. Maybe someone else has hard evidence either supporting or refuting.
“…oil would be only $50/barrel without all that market speculation…”
That is something I do not understand, at all, as in ignorant of the workings. I would have assumed, maybe incorrectly, that the speculation is some sort of put/call type bet that prices will move in a given direction. It would seem that there must be a day of reckoning — an expiration of the bet. Do the same people spend money on even more such bets after the first (then the second, then the third) fail?
Surging Defaults in West Linked to Risky Loans
Foreclosure activity is surging in several Western housing markets, partly as a result of “high-risk mortgages,” according to ForeclosureS.com, a Fair Oaks, Calif.-based investment advisory firm and publisher of foreclosure information
The numbers are incorrect as i ran them. The Orlando group lumps them all together then splits out condos so it appears to be a higher number. The condos are in the total figure then appear again as a seperate line item. I am meeting with them in a few days as i have said that they are not being clear and their statistician and I will go over them. I will report back.
Regardless of what you are reading, i am in the field as an appraiser and i can tell you there are clear signs of a huge wall in front of this race car. Subdivisions are sitting half complete, weeds are overgrowing lots, heavy eqipment companies are flush with equipment sitting in the yard and sales offices have buzzards circling them.
For the first time in my 30 yrs brokers are calling me to ask me to intercede with their sellers. They want us to tell them what is “really going on” so that they can get a realistic listing. Brokers are turning 1 out of every 3 listings down.
‘Brokers are turning 1 out of every 3 listings down.’
That’s starting to happen in N AZ as well.
Thanks for the valuable “on the ground reporting”. The media and NAR always seems to be in spin mode. However, the reporting from the field on this bolg has been 6-12 months ahead of what the MSM is saying!
good report.
a few honest words from the front lines weigh far heavier than back room paragraphs
Jack — thanks. An easy way to see a number of these subdivisions in stall mode is to drive the 417 beltway from I-4 near Disney to I-4 near Sanford.
“Here in Arizona, the economy seems healthy. But such a big percentage of current jobs are tied to RE, that nobody knows what will happen if the sector stalls for a prolonged period. Cheap land and housing made up for a lot of it, but now even that doesn’t exist.”
Isn’t the new growth industry in AZ fighting fires?
They bring those folks in. The fires are definitely starting to disrupt the tourism.
True. As opposed to realtors, fire-fighters are professionals all the time. And the number of highly trained wildland fire-fighters is actually quite low - in the low 1000’s. If they make a mistake, it’s their ass that gets burned, instead of a home buyer.
I expect there, and in some places here in Florida, we may find a lot more “fires”……Can’t pay the mortgage?
Cash in the Insurance value………walk away.
“Cash in the Insurance value……..walk away.”
Doesn’t quite work as well as you might think. Insurance will normally cover the house itself, but not the land. If you bought a place for $400k, the building might be insured for $280k. (Check your policy.) You might be able to “pad” the payout with personal goods lost in the fire, but how much of that coverage do you have. (Check your policy.)
Katrina victims found that out when many were covered for house and contents, but that still didn’t pay off the mortgage, so they still owe money on the flooded lot with a ruined house. Doh!
If you’re a typical FB with nearly nothing down and a recent mortgage, you might end up waaaaaay upside down on an insurance loss.
Not to mention going to jail for fraud.
No, no… that’s not gonna work,… the hurricanes will douse the fires.
historically florida has had low wages, offset by it being cheap to live here. what’s changed is it is no longer cheap to live here.
so now we got nothing going for us.
We can still go fishing…..
and panhandle from the tourists along the beach walks.
What more could you ask for?
Redfish and Diogenes — LOL — I love gallows humor — probably my favorite type.
The US economy is currently propped up by a mountain of debt. In 2005, the federal debt increased by $571 billion, reaching the congressionally set debt ceiling of $8.2 trillion. If the present value of unfunded Social Security and Medicare obligations is taken into account, it now stands at $49.4 trillion - $160,000 for each American.
The ballooning trade deficit has increased annually since 1975. Today it is approximately $781 billion, meaning the US must borrow over $2 billion each day to fund its consumption of imported goods and commodities. The US now absorbs over 80% of the entire world’s savings in order to maintain its consumption.
Total US debt as a ratio of GDP has surpassed the previous high set in 1933, when it stood at approximately 255% of GDP.
Oops, the blog hiccuped. The punch line is; don’t expect people to be rational with their money. They, and the government, have not been rational for years.
OT: For a little change of pace, how about taking a look at a house that is on the opposite end of the housing bubble? How much would you pay for a 1200 sq. ft. SFH on an acre of land? 1 million? 100k? How about 10k? My uncle closed this morning on what may be the deal of the decade:
http://www.curbeaurealty.com/listing-614058.htm
They had to lower the price to $10k because they didn’t get any offers at $15k. LOL
Wow! Great deal… I think. Is this a place you can get a job? (It’s midway between Buffalo and Syracuse, middle of nowhere!) Then again, for $10k, you don’t need much of a job to pay that mortgage. The heating bills might drive you bankrupt in that part of the country, though. Come to think of it, I wonder what Jan/Feb would be like out there. Ugh, Florida/Arizona/SoCal people no need to apply!
No, there aren’t many jobs around (unless you’re a wine maker), but the scenery is beautiful and the Finger Lakes are all around. The house is even near the top of a little hill. Really an amazing deal, even for here. The house and land could probably be turned around and resold for $60k or so, once a few repairs are done and the house is staged. But my uncle is going to keep it for a summer place.
“The heating bills might drive you bankrupt in that part of the country, though.”
I live in Minnesota, another famously cold (in winter) state. My annual total home energy bill is $1100. That’s for everything - gas and electric to heat, cool, light, cook, etc.
That’s why I nearly had heart failure when I read that folks in Arizona pay $300/month to cool their house in the summer. No thank you, I’ll live with our cold winters and lower energy bills - and continue to appreciate our cheaper (from Canada) gasoline and electricity (thank you, Canada!)
Nice deal, I don’t think you could build that house for 10k even if you threw in the land and labor for free.
Unless property taxes are 9% a year, the seller must have taken it in the shorts. At a 2% tax rate on full value, the place would come in right around $45K.
Just take one look at the Orlando Sentinel this past Sunday. The homes section were filled with advertisements from the HB’s. Now every Sunday they are filled with them but this past Sunday was different. Almost every last one of them was touting some big “give away” or “48 hour event”. I have to imagine that this is only going to get worse in the coming months.
I still don’t believe that sellers are coming around the bend. There was a house that was listed for $550k back in 9/05. They wound up selling in 2/05 for $490k. There are 3 more houses that have just listed on the same street (within 100 yards) and they are all ~$600k!! They are essentially the same house. Your neighbor just sold for $100k less you morons!!
one thing i’ve noticed re florida. i have been reading “florida sportsman” since around 1988 and lately the number of advertisements for real estate developments has been off the charts. never used to see those in the past, mostly the ads were for rentals and charters.
Heard from a senior adjuster with Farm Bureau that there is a large amount of litigation going on around the Destin area. Seems as though the FB’s have seen the writing on the wall and don’t want to close on their pre-sale “deal of a lifetime” condos. I have not researched this.
FLreappraiser.
What galls me the most about Florida is how much PRIDE the political and business leaders down there take in creating these poverty level 9/hr jobs. They wax poetic about how healthy the economy (they prefer the term “business climate” to “economy”) is compared to those high cost “union” states up north. The state’s biggest selling point is not the weather and certainly not the quality of public services but a population apparently content to be uneducated wage slaves. Take a look at the society of Brazil, your seeing it replicated in Florida.
>>>Take a look at the society of Brazil, your seeing it replicated in Florida.
That’s true of the U.S. in general. Wages have been in decline since the early 1970s. We have shipped most of the manufacturing jobs out of the country in recent years and are now importing vast quantities of cheap, illegal labor to do the few jobs that remain. Meanwhile the bankruptcy “reform” and recent mortgage practices have combined to create a new type of indentured servitude that will ensnare its victims far longer than the mere seven years of the older form.
What we are seeing in Florida is simply a small part of a larger third-worlding of the United States.
Amen. A bloated, self-perpetuating ruling class at the top, a beleagured, shrinking middle class being squeezed dry, legions of wage slaves to do all the service jobs, and a vast and growing underclass of social parasites and AARP leeches for the dwindling number of working stiffs to support. Serfdom, here we come!