‘Complacency And Denial’ In Florida
The Herald Tribune has this update from Florida. “For months, real estate pundits have been talking about..an erosion of pricing. In May, in Southwest Florida, it happened. Prices in the Charlotte County-North Port market dropped 2 percent when compared with the same month in 2005. It might be the first drop in pricing since the early 1990s, long-term market observers said.”
“In the Sarasota MLS, for example, there are now 7,304 houses available for sale, three and a half times the level of a year ago. The average weekly sales rate is now 97, down 38 percent from a year ago.”
“‘The rate of deterioration has accelerated,’ economist David Scott said. ‘For every house that was available for sale last year at this time, there are four or five times as many now.’”
“Peter Schiff, an acknowledged long-time real estate bear who runs an investment firm, said home prices are at the beginning stage of a fairly lengthy decline that will leave many homeowners, investors and lenders hurting. ‘The market has topped. We haven’t had the bursting yet. There is still complacency out there, and denial,’ he said.”
“Statistics show the market is absorbing 15 percent of the available supply, Schiff said. He figures that by the end of the year, less than 10 percent of the houses now for sale will sell, leaving record-high supply. ‘If you figure prices started getting out of control three or four years ago, prices are going to fall back below what they were when the whole thing started,’ he said.”
The Wall Street Journal. “In some markets, such as South Florida, vacancy rates for large apartment buildings are down and rents are up. However, the supply of condos and homes available to rent in the region is growing as investors clamor to rent out properties they are having trouble selling.”
“Owners of large rental buildings fear that this ’shadow supply’ of rental properties could eventually put a lid on rent increases in some markets where speculation has been rampant.”
“‘We’re having a flood of rental properties coming back into the market simply because the investors who bought with the intention of flipping them have not been able to,’ says Brenda F. Gerdes, broker-owner of a property-management firm in Port St. Lucie, where average rental rates for properties owned by individual investors have fallen about 20 percent over the past year.”
“Real-estate agents say individual investors need to be realistic about their asking rents, even if the rent isn’t enough to cover their monthly costs. Robert Fowler, owner of a rental Web site, tells clients to base their asking rents on what similar properties are fetching, not the rents charged by large apartment complexes. If tenants aren’t forthcoming, ‘don’t wait too long before making adjustments,’ he adds.”
“J.P. Johnson has been trying for the past three months to rent out a four-bedroom, 31/2-bath home in Palm Beach Gardens, that he purchased for $661,000. He recently dropped the asking rent to $3,000 from $3,300 but has yet to find a tenant. ‘The market has slowed down,’ he says. ‘We have had a few phone calls, but nothing solid.’”
Related links:
‘Harold Polsky and his wife moved to Port Richey, Fla., in 2002 with plans to retire. Now they find themselves in a hurricane-damaged home, spending half their income on a mortgage and skyrocketing insurance rates. ‘We figured we were making the last move of our lives,’ said Mr. Polsky, 49, whose three-bedroom home was damaged by Hurricanes Frances and Jeanne in 2004. ‘Now we’re ready to move out of state, and we shouldn’t have to.’ Florida is losing its luster for many residents like him, who are scouring for homeowners’ insurance after two ferocious hurricane seasons and struggling to pay for what they find.’
‘The housing market may be cooling nationally, but inside the Duval County Courthouse the foreclosure market is booming. ‘Particularly in poor neighborhoods, we’re drowning in foreclosures,’ said April Charney, a consumer attorney for Jacksonville Area Legal Aid.’
49 what a dork- get to work
RENTS- why rent an apartment , you can squat on a luxury sael for 3-500 a month
“Now we’re ready to move out of state, and we shouldn’t have to.”
Oh, really? And why not, Mr. Polsky? Presumably it is because life is unfair, or Mother Nature is unfair, or because you think someone else should pay the cost of the losing bet you made. How about maybe getting your butt back to work?
Yeah, why is the guy retiring at 49 and complaining that life is not fair because now he feels cheated that he cant sit on his ass for the next 30 years without working.
“Statistics show the market is absorbing 15 percent of the available supply, Schiff said. He figures that by the end of the year, less than 10 percent of the houses now for sale will sell, leaving record-high supply.”
The housing market is not the only part of the national economy which faces the problem of an inventory glut. Detroit has a related problem (no more home equity gains = no more dough to blow on overpriced SUVs, especially with inflation driving gasoline prices sky high):
—————————————————————————
Detroit is thinking fire sale
Big 3 careen toward summer of discounts
By Nick Bunkley
NEW YORK TIMES NEWS SERVICE
June 29, 2006
DETROIT – To many car shoppers, $5,000 off might sound like the deal of the year. The truth is, it might not even be the best deal this week.
Tyson Loffredo, a 30-year-old pizzeria owner in a town near Las Vegas with his eye on a new Dodge Durango Limited, hopes to squeeze even more savings from the big sport-utility vehicle’s $36,000 sticker price before he commits.
http://www.signonsandiego.com/uniontrib/20060629/news_1b29autos.html
Do you really need a $36K gas guzzler to deliver Pizzas ?
No — just a $30K gas guzzler (after incentives).
or a $20,000 gas guzzler after his first delivery….
Or one he’ll be lucky to sell for $5999 in two years. Durangos have the worst resale of large SUVs….with declining demand the SUV market will get ugly
Gosh it sounds just like the housing market…
Does the Durango have the option of Daimler-Chrysler’s (more specifically, Mercedes’ :)) new V6 diesel?
If so, it might not guzzle that much gas; that’s a truly exceptional engine.
“‘We’re having a flood of rental properties coming back into the market simply because the investors who bought with the intention of flipping them have not been able to,’ says Brenda F. Gerdes, broker-owner of a property-management firm in Port St. Lucie, where average rental rates for properties owned by individual investors have fallen about 20 percent over the past year.”
But rents are going up, right? Isn’t this supposed to be the last chance for renters to buy a home, before they are not only priced out forever, but they also see soaring rents eat away more and more of their paychecks?
good point. I think the only reason why rents are going up are.
1. people don’t look around and realize they can rent a house or a nicer apartment. there is housing out there but they don’t realize it.
2. they don’t want to move, along with #1
month after month these flippers will suffer $ loss. each month will see more of them desperate to rent out at any price to stop the bleeding.
I imagine the scenario goes like this. flipper buys a house and doesn’t rent it so it’s brand new. flipper realizes the market may be turning and puts it on the market for a high price. the problem is he bought in flipperland so everyone around him is doing the same thing. then he slightly lowers the price(or advertises instant equity).
now he still can’t sell the place, so he decides to rent it out. only problem is he tries to make the rent pay the mortgage. nobody in flipperland will rent a house for that much. so it takes our flipper a few months to realize that. so we’re probably 4-6 months into this process. so in flipperland we’re probably now getting to the stage of lowering rents to a point where they don’t even cover the mortgage. so in flipperland that’ll probably go on for a few more months. next phase is either panic or taking the home off the market and going for the long haul. that will just delay the panic.
there is trouble in flipperland…
It is expensive to hold vacant property, while paying PITI. As the inventory buildup continues to get more and more massive, it will become obvious that there is an additional expense to holding on to vacant property: capital losses.
Woohoo!!!! More Florida condos for everyone!
“In some markets, such as South Florida, vacancy rates for large apartment buildings are down and rents are up.
This is untrue. In our complex on Village Blvd. in WestPalm Beach they raised our rent last year by a hundred dollars a month but about three months ago people started leaving in droves and no one replacing them. I would say we are 30% vacant now. However they have not dropped rents yet.
It sounds like the inventory glut applies not only to used homes but also to apartments…
As Schiff suggests, today’s inventory glut will morph into tomorrow’s price (and rent) reductions.
Getstucco,
Actually I just recently exchanged a few emails with Mr. Schiff. He is of the opinion that rents will RISE. I was a little confused by his reasonning as we both shared the same view of upcoming events yet arrive at differents conclusions. Bottom line is I think he is counting on theses FB’s just leaving their houses vacant befire they get forclosed while I believe they will be put on the rental market.
Zadok,
I live at Village Crossing on Village Blvd. in WPB. My rent was raised $50 after my first year there. We have vacancies as well. I am hoping to renew for the same price ($959). Are you at Cascades, Village Place or Village Crossing?
Cascades. Also the problem seems to be getting worse for them as each month goes by. They are running “specials” but have not officialy dropped rents yet.
Untrue? There is a simple word in english. It’s a LIE!
Zadok — if it were me, I’d not renew without them giving back to me all of the increase from the time it began. Period. That quite easily could be less than a month’s free rent and they are looking into a rapidly emptying tenant barrel. More and more and nicer and nicer (relative to price) rental uits are coming onto the market. Smart landlords will forego any rent rise or even cut rents a bit if their vacancies mount. A happy tenant pretty much becomes John Law’s #2 reason for staying on — no point in enduring the hassle of a move if my landlord is treating me right.
If remember correctly, there were a couple of condo conversions going on last Winter on right on Village. Maybe the owners thought this would make their rentals more valuable (you know, law of supply and demand). I moved back north in Feb, but I bet there’s lots of vacant conversion condos for sale (or rent) in those two complexes. Plus someone was still building condos and there was another conversion right over on Military just north of the middle school. Bet the vacancy rate is sky high.
Zadok, last year I lived right off of village on Brandywine (near PBLakes Blvd.) They tried to raise rent 90$. I left never looking back. I have since moved back to Tallahassee and will be looking to buy somewhere in the next 4 years in Florida. BTW. I’m a native Floridian from Jacksonville.
At least I have a good job where I can save up for a down payment (or buy in full). Until then, I’m renting it like I always have.
apt landlords are in trouble. they want to raise rent to make money off of lack of rentals, but the condo converts are going back to apts., after they couldnt find anyone to buy. it is like housing, everyone is just looking at each other, but no one is moving. and the interest rates went up today. nyt today talked about the crazy rise in insurance. south florida dont get it. they priced out everyone, low and middle class people are leaving and there is no one to buy. everyone is looking for the end of the rainbow gold, but if you dont drop prices in housing or lower rents for people to live down here, 2007 and 2008 is going to be real blood bath. our condo convert went back to apts in 7 months, havent raise rents and drop the condo price 33%. coconut creek (north broward county) florida
JP in Palm Gardens needs to get real. Drop that sucka to $1,600 and maybe someone will bite.
I’ll repost since this IS a Florida thread. Enjoy.
http://www.npr.org/news/specials/hurricane/ap/
The interactive is available on the start page of my hometown newspaper’s website. I guess they just want to make sure that people are really up for making the move into hurricane alley. Or maybe the webmaster is a closet bubblehead doing his part to scare off speculators and yankee money.
I guess they want insurers to know exactly what kind of risk of catastrophic loss they are assuming if they sell insurance in Hurricane Alley?
No problem! The stupid suckers and slaves in China and Japan will be paying the bill.
Maybe NPR is looking for insurance company sponsors.
Oh, man… That’s kinda cold!! But I did have to laugh when the waves started coming in.
Lee & Collier counties are going to get pummeled in the next couple of years. People here are still very much in denial, a recent home I have been following started at $499,900 for just under 2000sq ft., its now been reduced to $474,900. Recently sold comps put this house at around $350,000 It was bought for $235,000 in 2003.
This is just one example of the denial that these sellers are going through. How long will it take to get to the acceptance stage of grief? I think this change happened too fast and the selles didn’t have the time to get angry. I suppose that will come when they have no choice but accept a offer far below thier expectations, as thier house continues to vomit value.
Many are still hoping that the “greater fool” scenario will be played out. I am still stunned at the number of homes sold in Fort Myers and the surrounding communities. I think alot of ithas to do with the spin from the FAR.
I can’t wait for this to play out, it can’t happen soon enough!
Yeah, this denial thing is amazing. I’ll use an example of a particular floor plan in a local development, since you have all these listings of the exact floor plan, making for perfect comps. So you have all these listings of this same floor plan listed in a range of 410k-420k. But then you’ll see this handful of listings of this floor plan 450k-470k, which were last summers prices. Now, what kind of idiot thinks he can move this property when he’s got, not just one, but several listings of his exact same house 50k cheaper. When i sold my home last summer, I looked at all my comparable competition, and went 5k lower……and things were still hopping then. What the heck are these people thinking?
total denial in florida. i learned not to care. if i survive living in florida, i will watch blood bath from my bedroom window. people have begged for workforce housing. no one would make a move. now in broward, they are building 150,000 in pompano beach (collier city). are govt. officals stupid. why keep shipping workforce (middle class) families to crime ridden neighborhoods. developers keep claiming cost or red tape. stop lying to people. your profit margins are just not good enough. i lost all my respect to those who will try to convince me that not a traditional 30 year loan with even 5% down is worth asking for. they offer me neg-am, interest only and adj all the time. what a joke!
Next couple of months, not yeras. The smell of a dot.com crash is in the air, and the number of buyers seriously looking in July and August should be meager. Then our unmotivated, over-priced seller will have to look himself in the mirror, and think
“Maybe the problem is me” It will be a rude wake up call, and then the stampede. The Crash of 2006 is on its way.
I’m starting to wonder if the prices aren’t dropping because the owners have refinanced and have used up all the equity. What happens when they owe$400K on a house that is only worth $350K and they don’t have the funds to pay off the loan when they sell???? Are there special loans to cover the difference? Or do they simply walk away? Maybe their denial is really desperation!
they try to talk an appraiser into appraising it for $500,000 so they can borrow more money. thats how they are covering there payments from borrowed money left over from a new toy they had to have. now they have to cover the payments on the house and the new toy. so they are really double fb.
Whats really strange is the condo-conversion rentals. Here in Orlando I would estimate well over 50% of the units converted to condos are on the market again as rental units.
Large apartment complexes are trying to get top dollar and the media keeps publishing stories of rents increasing dramatically due to a “shortage” in rental property out there…
They fail to mention that you can pretty much name your rent with some of these desperate investors. A two bedroom apartment rents for around $1100-1200 a month, a 3bed 2bath townhouse with a garage rents for around $1150 and you can work them down from there. Right now the people I know who have signed leases over the past 3-4 months have been able to knock $100-150 off each months rent.
Naming your rent is not necessarily occuring everywhere in Florida. Two months ago my wife and I looked at a nicely-restored older house in Tampa, but the owner pulled the bait-and-switch when it came time to talk rent. When I said our discussions would have to end unless we went back to the original number ($1,400/month instead of $1,700), that in fact ended the negotiations rather abruptly. I drove by yesterday and the place is still unoccupied.
If he calls me, the new number is $1,200.
I’d be tempted to call him up and ask him what he would buy with the $2,800 dollars he woud have had if he’d rented to you. I think that what you really want is to get several of these condo owner in a bidding war with each other. Invite several of them into a single meeting and start the bidding. Hah! That would be fun. At the end of the day, I don’t think that they’re the sort of moron that you want for a landlord.
That owner is a jerk, and if he pulls that kind of crap, you don’t want him or her as a landlord. My fiance and I rent a nice house in the Palma Ceia area of Tampa, about 1700sf for $1350 with pool and lawn care included. The lady who showed it to us screwed up and wrote $1350 instead of $1550 on the “for rent” sign, but we were the first to look at it and expressed interest, so she honored that price and we signed that day. The owner has been extremely punctual in responding to repair requests, and we have had no hassles. I haven’t been so lucky in the past, especially with these “private” landlords (”flippers” in this market) who have no experience owning and managing rental properties. The best way to find good deals in Tampa is to pound the pavement and avoid anything offered by the realty companies like Smith and Associates, because they are stupidly overpriced.
I agree 100%. The Property management companies tack another 10% management fee on top of the price.
We rented for 18 months from a good landlord/owner who lived right across the street and took care of all the yardwork. He was very pleased to be renting to a “traditional” family (wife stayed at home with my kids) with stellar credit who were punctual with the rent, took good care of the place, and were good neighbors. He never raised the rent ($1500) in 18 months, and offered us a great deal if we wanted to buy the house (we declined). He needed to sell it (FSBO) so we moved to a different rental. I think it’s important to note that GOOD landlords (not greedy flippers) recognize the value of solid tenants, and will happily go the extra mile (e.g. by not raising rent, or by offering discounted rent) to attract and retain quality renters.
Repartments for Everyone , according to the WSJ and SF Jack!
$3,000 monthly rent for a $661,000 property is kinda high. Here in SD you’ll probably get somewhere in the neighborhood of $2,200/month for a property “worth” $661K. Of course, the quotes in “worth” tell the whole story…
Here in NorCal, a $1M home would generate about $3,000-$3,300 rent. Yep, no housing bubble here.
$3k rent isn’t exactly what any investor with a brain would be looking for.
If this guy paid $661K for the house and put down an enormous deposit of $261K at a very good interest rate he might end each month with a few hundred bucks, but of course he’s foregoing about $13K in interest on the $261K
From the Palm Beach Post blog:
‘Frank Nero, head of Miami-Dade County’s economic development agency, tells a story about a Cincinnati company considering moving 300 people to Miami.’
‘Once company officials realized South Florida home prices were almost three times Cincy’s median ($137,700 in the first quarter of this year, according to the National Association of Realtors), they scotched the deal. Where are the new jobs coming from now that Florida no longer is the low-cost, low-tax haven it was for years?’
South Florida no longer makes any economic sense. I moved from Los Angeles to Ft. Lauderdale in 2004 thinking that it would be a good move from an economics standpoint. After housing prices went up another 30-40% from 2004 to mid 2005, utility rates had gone up 20-40% due to hurricane repair related surcharges, insurance was sky high and property taxes were double the California rates I realized that I could own and maintain a median priced home in San Diego for less than the median priced home in Ft. Lauderdale. Top this off with low wages and extremely low benefits in South Florida I decided to move to San Diego a few months ago. I’m so glad I did.
Well the USA and the world economy does not make sense. The world is managed by people arms dealers, pimps, drug traffickers, corrupt politicians and bankers. Florida. Well you want an explanation for the bubble. South American drug lords from Columbia and Mexico. USA is soo a nice place for dirty and filthy money and Florida is a paradise. You should ask that to Jeb Bush and the cuban mafia. What a stinking country you have become.
Why don’t you keep your comments limited to the real estate market? This is not the place to vent out your frustrations against other ethnic groups. I’m tired of coming across the Florida-bashing that appears on this blog, and the occasional immigrant-bashing, too. Stick to the topic.
“What a stinking country you have become.” Yeah, tell me about it! Its gotten so bad here that we now suck almost as much as some shit-hole, psuedo-socialist countries! So, what paradise are YOU from, Marc?
And where the hell are you? Please tell us how perfect your country is.
WOW!!!!! You know things are really bad when Southern California is more affordable than Florida.
Do you miss the humidity?
“In congressional testimony on Tuesday, Mickey Levy, Bank of America’s chief economist, said that the negative impact that slower housing activity will have on consumer spending is overstated.
In comments likely to soothe the frayed nerves of real estate agents and builders, Levy said that although “housing activity and prices will flatten” they will “not fall materially.”
Anybody from THBB been invited to Congress lately?
Consumer: I’d like to borrow more money to buy more stuff.
Bank: Sorry, your Home has dropped in value since your last HELOC so we can’t lend you more money.
Consumer: Whaaaaaa !
Retail Stores: Whaaaaa !
Travel Industry: Whaaaa !
Car Dealers: Whaaaaa !
Resteraunts: Whaaaaaaaaaaaaaa !
No no, you got it all wrong. Here it goes:
Pension/bond funds: let’s buy some of those high-yield thingies again.
Banks: OK. Hey Joe Schmoe, come here. Here, have a vacation.
Joe Schmoe: Cool!
6 months after, a stray lowballer: I’ll give you $200K below what you’re asking
Joe Schmoe: GD! $##@@!
Banks: Oops! But we’re OK, we already got our new yachts.
Pension/bond funds: Oops!
Joe Schmoe (again): GD! $##@@!
…In related news, the maker of Zoloft is enjoying a 180% increase in sales, attributed directly to the housing bubble.
When asked about this growth, Edward Leamer, director of UCLA Anderson Forecast, said that their forcasters were right all along, the housing sector is nothing but good for the economic growth of this country.
More problems for home builders in Florida. Citizens, the insurer of last resort, won’t cover buildings under construction.
http://www.palmbeachpost.com/storm/content/business/epaper/2006/06/29/a1d_builders_0629.html
Florida is supposed to be cheap for housing. How can you spend much on housing when you’ve got insurance and hurricane repairs to pay for?
The flippers did their thing because certainly all the baby boomers would retire and want to move to Florida. With predicted increased hurricane activity, that’s not looking to be the case, but its funny how the bubbles jumped up in a few densely populated locations. Funny because retired people don’t need to buy near job centers for obvious reasons.
Driving through Florida a few months ago, I noticed that even after all the bubble mania, there were still developments advertised for 100-120K in out of the way places.
If I was a retired boomer looking to move to Florida, I’d sure take that before making some Orlando or Miami flipper rich.
The Paradox of Retirement Destination Speculation
One of the paradoxes of “retirement destinations” is that once they are no longer a bargain they will no longer be a major “retirement destination”. Retirees in general will go where it is cheap. So places that have a runup in price due to people speculating about a future infusion of retirees will very quickly stop being actual retirement destinations!
So that’s what was causing that boom up in Montana and North Dakota I saw a few threads back. Damn those flippers are smart! Cutting off those old folks at the pass!
I agree. Maybe the retirement of the boomers will revive some of these small dying towns on the great plains.
Maybe places like Canton OH should market themselves to the AARP.
http://www.nytimes.com/2006/06/25/realestate/25nati.html
the real joke on these demographic speculators is that many boomers (unlike their parents’ generation) haven’t saved enough and thus will have to retire on a shoe-string budget if not postpone retirement indefinitely.
http://tinyurl.com/ket99
“One of the paradoxes of “retirement destinations” is that once they are no longer a bargain they will no longer be a major “retirement destination”.
If I were retiring, I’d consider parts of MD’s Eastern Shore, central/western PA, Kentucky, South Carolina, or Alabama.
Plenty of cheap places in all of those. I’m at least 15 years away, so I’ll adjust my destination as necessary.
“J.P. Johnson has been trying for the past three months to rent out a four-bedroom, 31/2-bath home in Palm Beach Gardens, that he purchased for $661,000. He recently dropped the asking rent to $3,000 from $3,300 but has yet to find a tenant. ‘The market has slowed down,’ he says. ‘We have had a few phone calls, but nothing solid.’”
A $660K house being used as a rental property ? What the hell is this guy thinking ? You can’t rent it to executives relocating since they have the money to buy right away and your common working family of 4-5 can’t possibly afford that kind of rent. Time to sell or bleed cash.
You know, I’ve been wondering about the comparison between income percentiles, percentage various income people spend on housing and, replacement costs for housing. How do imbalances between these cause varying shifts in housing prices along the price continum?
Mo Money — I agree. Selling prices are determined by availability of credit and visions of profit. Rents are determined by what’s in the wallet. Around here (Central Florida beyond easy commute to work center), places will rent for up to about $2,000/mo. Almost nothing will rent for more than that, no matter the purchase price. Last year I witnessed fools trying to get too much rent, as the wise owners took what the market would bear. The former now can’t even draw from that renter pool, some of whom, like me, were ready to rent after cashing out, because they’re already housed — and there are no sellers to replace them because there are no sales.
If the MSM is interviewing Peter Schiff for a RE column then that would indicate a seachange in how the MSM are going to report on this market. This would be similar to Ben Jones (or one of us) being given an interview on the same subject and actually being put into print. Peter Schiff is a bear on RE, which is to say he has a brain and can objectively view a market. If the MSM continues with this type of interviewee, it won’t be long before this RE market turns into a real goat rope. IMO of course
Maybe that helps explain why some of the Wall Street builders (TOL, PHM) are dropping to new 52-week-low share prices, despite the euphoric rise in headline indexes on this FOMC meeting day?
price will equal 220 x rent
tops always has ,always will
I’m keeping track of the deflating bubble here in South Florida. The YOY increase in median price for a SFH in Miami-Dade County has gone from 26% in January to 7% in May. In Broward County (Fort Lauderdale), the YOY increase has dropped from 19% in January to 3.5% in May. Pfffffffffffffffffffffffffffffffffff.
OT…
Been a while since I have pulled up this chart… Fun to compare the US HB’s chart to the NASDAQ.
Have a look… eerily similar…
http://tinyurl.com/rquf7
Cool! It looks like HBX has another 50% ahead drop to get back to normalcy.
“Even with the latest price increases, renting remains a bargain compared with owning in much of the country. In Las Vegas, Los Angeles and Seattle, the monthly cost of renting the average apartment was roughly half what it would cost to own the median-priced home in the first quarter, according to an analysis prepared for The Wall Street Journal by Torto Wheaton Research, a unit of CB Richard Ellis Group Inc. The cost of owning is based on a 15 percent down payment and a 30-year fixed-rate mortgage; it doesn’t include property taxes, insurance or tax deductions.”
15% down and a 30 year fixed? is this a time warp?
what a great WSJ article. they must read the blog, I first heard of shadow supply here.
“Owners of large rental buildings fear that this “shadow supply” of rental properties could eventually put a lid on rent increases in some markets where speculation has been rampant.”
Can you blame them? Think of the research expense we save reporters
My rent was raised 5% ( less than $100 a month) for a 4 bedroom, 3 bath 2100 sq ft. apartment with a garage. To BUY something similar in this area woul dbe a minimum of $450,000- $500000 with a mortgage payment of at least $3500 a month.
I am looking around for homes to rent from FB’s though> Maybe I can find someone that needs to rent.
Show me where I am stupid renting vs. buying a deprecitiang asset.
also factor in two things.
1. anyone with an ARM is suffering more than a renter even with rental increases.
2. the rental increases aren’t keeping up with inflation. using the rule of 72, a 3.7% increase in rent a year will take 20 years to double rents.
Where are there 2100 sqft apts ? Thats a nice sized house where I’m from.
I am going out to bid on renting next spring. i will flat out waive cash in front of someone’s face for a 12 month lease at what I feel is market value rent. $200 off monthly rental will equal one month of a slow bleed payment, they can hold their ground, but then that will equal two months of slow bleed payment. Should we go for three.
Of course MSM will start covering this. They’re just jackals at heart. They can’t resist seeing a good train wreck , and many probably enjoy watching poeple get toasted. It’ll still take a while , but you can expect to see the same sob stories of BK FB’s that we saw with like-foolish .com speculators 5 years ago.
” ‘Now we’re ready to move out of state, and we shouldn’t have to.’ ”
Yes, yes, yes Mr. Polsky, it’s your god given right to move where you want and have someone else pick up the tab. And I see that you moved there in 02 and are only 49yrs today so that means your retired at age 45? Gee, how did you manage that, go on disability?
“In the Sarasota MLS, for example, there are now 7,304 houses available for sale, three and a half times the level of a year ago. The average weekly sales rate is now 97, down 38 percent from a year ago.”
That is 1.44 years worth of inventory.
1.44 years AT BEST. Remember that we are currently at the peak sales season, and early in the slowdown. By the end of the year, it will be obvious that the (post-bubble) average weekly sales rate is well below 97, and the inventory will be higher, too.
They forgot to mention the 4,000 condos on the MLS. Not to mention FSBO’S
I live in Polk County, FL. A realtor told me that all the home builders are selling houses that previously went for $250,000 for $215,000. What do you guys think will happen to all these builders? They can’t even unload what they have now, there are half-finished subdivisions built on bulldozed citrus groves all over the county and it’s going to be struggle to fill those up…if someone is a builder, why would they want to keep building more homes when they can’t even sell what they have? I would think a ton of those people are going to go out of business.
Builder has to continue building. They have already paid for the land, paid for the site prep, paid for the material and paid for part of the sub. And they can cut the price and still make a buck. Most builder has 15-20% pre-tax margin. So if they cut price by 10%, they still make 5-10%. It beat losing all the upfront money if they stop building. The only one that will get hurt are the recent buyer sof the same sub-division. They will see negative equity and evaporation of their down payment really fast.
Tampa, Fl here. I had a great talk with some of my neighbors yesterday at a “pool party”. One couple was complaining about the $100/mo rent increase they were just served (works about to 15% increase). They said they are moving. I just told them to sit tight and within a year the local market will be back to 2003 - $500 off first 6 months rent. The deals were so stupid low when I moved here in 2003 I lived for 1/2 my previous costs and still went 2 years with no real rent increases.
Lets’ not forget that there are four major apartment complexes in this area (200-300 units each) that have went to condos. Word is they aren’t selling worth a damn so I expect that inventory will come flooding back onto the market starting this fall. Add in local FB renters and we’ll be partying again like it’s 1999.
Also wanted to write - my neighbor, who is in the mortgage business, is negotiating with a FB to buy a condo. She is convinced the market will strengthen soon. She glared at me when I told her if this deal fell through it was assured the next one would be cheaper.
Also heard that Lennar/US homes is having a “4th of July Sale with price guarantee”. It’s billed as a can’t-lose deal. If the price of a US Home drops before closing they will honor the new price. If the price rises, the buyer is locked into the contract price. It’s the deal of a lifetime and only for this weekend and any of the 7 showroom communities around the Tampa Bay area.
(Why the hell don’t the builders call them what they are - ugly tract home suburbia? Nothing “community” about it)
Are you saying that “community” only happens in an inner-city neighborhood?
No, but there is no community in suburban tract homes miles away from schools, stores, and civilization. I lived in that mess for a couple years. I’ve also lived in urban, nice areas with older quaint houses that has wonderful community. The suburbs were the worse - neighbors talking about new SUVs and toys all the time. Nothing for kids to do. Nothing except listening to stories about cash out refi. No thanks, never again.
What the fool with the $600K+ house doesn’t realize is that excess house doesn’t necessarily equate to excess rent. For example, a 40 acre ranch will rent for not a whole lot more than a house on 10 acres when it’s just a residence and not being actively farmed.
Similarly, a 4000 square foot McMansion may rent for not much more than a 2000 foot one. People only can occupy and use so much space at once.
I love it - Check realtor.com for SFD/Condo rentals in S. Florida. The number of places for rent are insane.