Getting In On The Condo Glut In West Palm Beach
A pair of reports from Florida, starting in Polk County. “Only one feature of The Ledger’s Polk Business Barometer, new housing permits, is heading south. But although building permits issued in May fell 27.4 percent to 637 single-family homes, the decline appears to be a temporary blip in an otherwise growing industry.”
“‘If you look at building permit numbers over the years, last year was driven by investor frenzy, the expectation that home prices would go up 30 percent a year every year,’ said Mike Hickman, a Lakeland home contractor. ‘All that (the May decline) tells me is that the get-richquick speculators have left the market.’”
And the Palm Beach Post found a couple of condo bubble contrarians. “Amid what many call a glut of condos in West Palm Beach, two developers are spending big to put up even more units. Co-owner Pasquale Renzi said he hopes to build 600 to 800 units on the property, which is just north of another condo project, The Whitney.”
“Premier’s Bradley Deckelbaum said he plans 170 units on the site, which is between two other planned condos, Barcelona Square and Prism.”
“One real estate expert was incredulous that developers are still betting on a market that many consider already overbuilt. The city of West Palm Beach says 5,200 condo units are planned or under construction in the city. Jack McCabe puts the number at 6,600 units.”
“‘A very large oversupply is going to hit the market,’ McCabe said. ‘There just isn’t anything to justify the volume of units that are currently under way, let alone any new units being announced.’”
“Both developers said they’ve found a niche in the market, although they have different strategies. Premier Developers is aiming for the high end of the market, Deckelbaum said. ‘Our project, I’m sure everyone says this, is a little different from what’s already out there,’ Deckelbaum said. ‘We build condominiums as primary homes. It’s not your typical investor and second-home project.’”
“Renzi’s units, on the other hand, will be smaller and priced from $300,000 for a one-bedroom unit to nearly $1 million for a three-bedroom unit, which Renzi called the ‘affordable’ end of the market.”
“Renzi bought the property from residential developer Kenco Communities. Kenco’s broker in the sale, Neil Merin, predicted Renzi will begin building as the glut eases. ‘We’re overbuilt,’ Merin said. ‘We have an inventory that needs to be absorbed. By the time (Renzi) gets ready to build, it’ll be three to four years, so he’ll probably do all right.’”
“‘I don’t think there’s a glut,’ Renzi said. ‘But this is the time when people are getting scared, so it’s a good time to get in.’”
Thanks to the readers who sent in Florida links today. Here are a couple more:
‘Last week, when the state’s last-resort insurer announced it intended to stop covering buildings under construction, the response from the construction community may have seemed muted. Now builders and insurance agents alike are speaking up, worried about how construction along the coast will continue if Citizens Property Insurance Corp. stops writing builders risk policies.’
‘ The Florida Home Builders Association is meeting with Citizens this week to express its concerns, said Edie Ousley, the association’s spokeswoman. ‘Obviously our industry is in a Catch-22 when builders are required to carry this type of coverage but it is about to be, for many builders, simply unavailable,’ she said.’
‘Lehigh Acres has the highest increase in the county, with a 88 percent increase in taxable property values. Real estate agent John McWilliam said even though lot prices peaked last year at about $50,000 and an increasing number are being listed closer to $25,000.’
“Both developers said they’ve found a niche in the market”
It’s different here! LOL!
David
http://bubblemeter.blogspot.com
OT…The Plunge Protection Team…
Here is a quote from George Stephanopolous, former aid to Bill Clinton, made shortly after September 11, 2001, commenting on the stock market at the time:
” “And perhaps the most important, there’s been - the Fed in 1989 created what is called the Plunge Protection Team, which is the Federal Reserve, big major banks, representatives of the New York Stock Exchange and the other exchanges, and there - they have been meeting informally so far, and they have kind of an informal agreement among major banks to come in and start to buy stock if there appears to be a problem.
“They have, in the past, acted more formally.
“I don’t know if you remember, but in 1998, there was a crisis called the Long Term Capital crisis. It was a major currency trader and there was a global currency crisis. And they, at the guidance of the Fed, all of the banks got together when that started to collapse and propped up the currency markets. And they have plans in place to consider that if the stock markets start to fall.” ”
http://tinyurl.com/gw4wt
If you think you can prove the existance of the ppt, why don’t you go make $100,000
http://www.freerepublic.com/focus/f-news/885992/posts
Well, John Mauldin didn’t exactly offer $100,000 if someone proved the existance of the PPT. He rather blandly offered “to show you how to make $100,000.” I suspect he would show anyone how to do that under much simpler conditions than proof of the PPT.
In the meanwhile, we have a statement by a government insider saying it exists. You may believe what you care to. As for me, I am convinced that the PPT exists and is active in our markets.
Ok ok… Pick up a copy of the Palm Beach Post, Sun-Sentinal or any other major news paper down there and every single condo project advertised in there is the same story. 1 bedroom studios starting in the 300s, 400’s and 500’s.
Yes 300K for a 1 bedroom, perfect primary residence for todays family of four taking home an average of 55K per year!
As far as the “high end project” they are all high end projects. The crisis for South Florida is there is no affordable housing. Nothing the average working family or vital worker can afford so they up and leave.
I am considering starting a placement service for teachers, nurses, cops and other employees. I will sell my services to school boards, hospitals and governments in more affordable cities up north and simply rescue all those frustrated workers who desire to own a home for their families and place them in more affordable, practical markets like Georgia, Alabama, the Carolinas and Texas.
Something else about these WPB downtown condos that has been happening. Many are sold “decorator ready” which is a developers way of saying “plain jane”. Want appliances? want window trim?, want carpet or tile? that’s all extra. There have been a few articles in the past couple of months on this subject in the Palm Beach Post.
300,000 affordable. i see signs all over south florida for town houses at 300,000 in bad neighborhoods, who is going to live there? 9% of all retirement areas are empty and thats alot. old folks, young professionals are moving out. all of the housing and no one to live. today, archstone apartments have flags and banners all over for the need of renters. i checked out their website and THEY HAVE DROP THEIR PRICES 10 TO 20% FROM 3 MONTHS AGO. i was looking for a place to live in march/april and the lowest 2/2 i could find was 1200+ and the second lowest was 1300+ from pompano to boynton. there is no bubble, just this sound. ssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssspop!!!
Inexplicable… Now is the time to get in???
Could someone please send me whatever it is he smoked this morning.
I say let them build and keep building! The greater the supply the greater the bust and MORE IMPORTANTLY- the lesson learned will be much better!
Yes, yes yes!!! Build more! And more!
He’s smoked good gandgha wit a lot of THC in it. Apparently it gives psychosis. I think bubbles in America are prevalent because of drugs and Central Bankers. They are all on something. Coke, Cannabis, Acid, LSD, Meth, Heroin and too much Greenback. And real estate must we admit, is one of the greatest way to launder it. In Montreal wher I live, the police estimates that each year 500 millions of transactions in real estate is related to drugs. So guess what? It’s probably far more prevalent in places like Florida. Jeb Bush and the cuban mafia should know the numbers.
You are right on about the drug money being laundered through real estate transactions. Too bad we don’t see more about it.
“Renzi’s units, on the other hand, will be smaller and priced from $300,000 for a one-bedroom unit to nearly $1 million for a three-bedroom unit, which Renzi called the ‘affordable’ end of the market.”
Well WTF would you call the “unaffordable” end of the market?
“‘I don’t think there’s a glut,’ Renzi said. ‘But this is the time when people are getting scared, so it’s a good time to get in.’”
Well this statement clears up my question. The guys a fu*king retard! How does he even qualify for a loan as a developer with this level of stupidity?
“Well this statement clears up my question. The guys a fu*king retard! How does he even qualify for a loan as a developer with this level of stupidity?”
He has a heartbeat!
As long as the lenders give them the money, they will build. When no one comes they will stop.
You are abolutely right about this guy being retarded. I truly believe that the “elite” of society (the robber barrons) have no touch with reality and what a normal working person can afford. Unfortunately our country is heading even more in the direction of the “haves” and “have nots”. $1M may not seem like a lot to them, and it shows how out of touch with reality they are. Only thing this guy doesn’t seem to realize is that there are a lot more of the “have nots” out there than the “haves”, and even the rich market has a limit as to how many condos they need. Only problem with this scenario is that the guy is probably operating under an incorporation thus protecting his personal assets and will pay himself a nice big salary while “developing” this great idea, even though it will probably never come to fruition. All he needs are some idiots to invest in his venture (a modern day, legal GRIFT), he can pay himself development fees until the seed money runs out, then claim corporate BK….then on to the next big deal!
Oh, you mean people who run hedge funds, eh?
Couldn’t resist that one.
BTW, reading “Inside the House of Money” Very interesting new book. Check it out on Amazon.
http://tinyurl.com/lfkwh
This is a joke, but it doesn’t surprise me. I have two coworkers that are moving because their apartments are going condo??WTF?? Who in the hell is making these dumb ass decisions??
On a brighter side, check out realtor.com’s rental search for the areas of Miami, Fort Lauderdale, and West Palm Beach. The number of rental properties have EXPLODED!!!!
But that means rents have to go up right? That’s what a realtor hen would have us believe. Slaughter these birds…..real estate hens and roosters alike.
I’m telling you, a lot of people in S. Florida are without a clue.
Try drug trafficking and laundering? That’s the clue you should follow .
Nah, that one is to easy.
‘We build condominiums as primary homes. It’s not your typical investor and second-home project.’”
Heavy Sarcasm ON:
Wow, a Condo you actully live in ! Genius !!!
Does that mean the condos that were built before are missing vital items like Windows, toilets and Kitchens since they were just second homes and investor projects ? How could any one even think of buying a place that wasn’t built to be lived in !!!!!!
End Heavy Sarcasm:
No wonder the market is in trouble. The most glaring omission is obviously doors, but the lack of windows has dampened buyer enthusiasm as well. Windows would be a more convenient way to enter your stucco box than the 2ft ventilation shaft accessible only via aluminum step-ladder.
Clearly these condo’s you can live in will break new ground and re-invigorate the market!
http://vancouvercondo.info
be careful. some condo assocations may have rules against actually entering or inhabiting your condo.
“‘I don’t think there’s a glut,’ Renzi said. ‘But this is the time when people are getting scared, so it’s a good time to get in.’”
Ha,Ha,Ha, If I were that stupid I’d keep my mouth shut. Of course this clown believes the bildge water he’s spewing. The carnage over the next year or so is going to be incredible!
“There’s never going to be a housing bubble in Florida or California because the demand here is too great.”
“We are not Reno and Vegas where they’ve overbuilt and it’s rampant speculation.”
“I think there are some areas where you see some softening, but Tallahassee is strategically poised to grow.”
It is difficult to get a man to understand something when his SALARY depends upon his NOT UNDERSTANDING IT.
– Upton Sinclair
I’ve got so many good quotes like that saved.
A little off the “condo” topic, but some people in FL are beginning to get a clue. A relative who has been riding the HELOC train just found out the home he has been using as an ATM for the past 3 years is closed for business. The bank is refusing to loan anymore against the house that has decreased in value. Stuck with an adjustable rate and mortgaged to the hilt, he is in for quite a ride. I don’t think there will be 4 cruises this year.
OT: Yahoo prepares for 48% Treasuries: http://finance.yahoo.com/bonds/composite_bond_rates I have a jpeg in case they change it. Shocked me…
What happened to the “Psychological Barrier” post?!? It just disappeared!
This reporter (Kevin Bouffard) for The Ledger quotes: Mike Hickman, the owner of Hickman Homes Inc., and: “Economist” Carl Brown, both real estate cheerleaders.
But they agreed the long-term trends for new home construction continue to look robust. Those include continued growth in Florida’s population and in-migration to Polk from the Tampa and Orlando areas.
“It looks good for the next nine to 10 years,” Hickman said.
Here is Bouffard getting his award for being the most fair, balanced and informed reporters covering ag (twenty years) in the state.
http://aiflorida.org/Nov2005.pdf
Hmmm… A guy with twenty years ag reporting experience assigned to do a fluff piece on real estate. All is well, nothing to see here. The article used the word temporary twice, growing/growth four times, and robust twice. I sure hope Mr. Bouffard gets to go back to reporting on the local citrus crop soon, otherwise he might lose some, ahem, credibility in the area of real estate.
Check out the newly completed houses on the front page of their website:
http://tinyurl.com/loslb
I bet they make a ton on real estate advertising.
Sorry to post so many in a row but I’m on a roll. Quote from The Palm Beach Post:
I was driving some clients around downtown West Palm Beach, and they asked, ‘What’s that crane for?’ I said, ‘It’s a condo.’ ‘And what’s that crane for?’ ‘It’s another condo.’ Finally, I said, ‘Look, every crane you see is a condo, so stop asking.’
See, sometimes MSM tells the truth, but, you have to dig.
So a $1 million condo is in the ‘affordable end of the market’.
I think people have COMPLETELY lost perspective on money. Here is what one million dollars means in terms of monthly cost. Using the (admittedly hopelessly old fashioned) standard 20% down mortgage; $1 million means $200k down (yeah, LOTS of folks who can meet that hurdle) and $800k borrowed. $800k over 30 years at 6.5% is $5056/month; add in $800 for taxes and $200? for insurance, you are at about $6000/month. That is $72,000 in after tax income (or around $100k pre tax) per year needed for the next 30 years to buy a one million dollar condo.
this..is the new ‘affordable’
has the entire country taken a big Stupid Pill?
In Palm Beach County it’s 2.2% taxes = $22,000/year, and probably $6,000 for insurance if you can get it. If maintenance fees are $6000/year, that’s $34,000 + $60,000 for the mortgage = $94,000 year. If they spend 6 months a year here, that’s almost $16,000/month for a condo. They rent for around $6K a month during the season.
‘All that (the May decline) tells me is that the get-richquick speculators have left the market.’
Great, but who else is left?
In 5 years, there will be no such thing as a one bedroom apt in s florida. There will be such an oversupply, that inorder to lower supply individuals will have to connect the one bedrooms to what ever apt is next door to create larger apts