Prices Coming Down In ‘Fast Changing’ Florida Market
A pair of reports provide an update on the Florida housing bubble. “A planned high-rise condominium tower called 1390 Brickell Bay in Miami won’t be built and deposits will be returned to buyers, the developer announced. ‘Market conditions impaired us from doing this project,’ said Kenneth Baboun. ‘The market changed so fast, the rules have changed drastically.’”
“Baboun was in some ways the classic example of the young, wealthy developer with big ambition but little experience. Just 25 years old, the Mexico native moved to Miami in 2003 and had never built a high-rise tower in his life. Last fall, Baboun staged a lavish condo party, a trademark of the South Florida condo boom, but something seen less today.”
From the Sun Sentinel. “Linda Rudner of Boca Raton bought a two-bedroom condominium near the beach as an investment last year. She fixed it up, then listed it at $450,000 but later dropped her asking price to $399,000. Rudner might have to come down even more. She wants to sell soon and said she’s done dabbling in real estate.” “‘I won’t do it anymore,’ Rudner, 51, said Wednesday. ‘I’m too afraid. There’s too much on the market.’”
“The rising inventory of existing single-family homes is slowing sales across South Florida. Sales fell by 35 percent in Broward County and 23 percent in Palm Beach County. As inventory builds, homes sit on the market longer, causing antsy sellers to reduce their asking prices.”
“Steve Petranick, a Broward real estate agent, said he used to have only three or four properties to show clients looking for homes in the $200,000 to $300,000 range. Now he has 20 or more. ‘There are a ton of listings,’ he said. ‘It’s definitely become more of a buyer’s market.’”
“The housing market has slowed, and sellers need to be more realistic, Anne DeFries said. ‘They can’t compare their home to a home that sold a year ago or even six or eight months ago,’ she said. ‘And homes have to be properly marketed. The days of just putting it in the MLS or putting a sign in the front yard are over.’”
“Brevard County’s home resale prices fell in the fourth quarter. Realtors and home sellers say the market is slowing. Jeanne Dobus of Indian Harbour Beach, who put her home on the market in October, said she has been disappointed so far in the response, which has been slow. ‘I’ve never seen such a glut of homes for sale in this area,’ Dobus said, noting the asking price of her four-bedroom home is $349,000.”
“‘People are offering $250,000 to $260,000,’ Dobus said. ‘That’s just not the right price.’”
“Kathy Smith had a much-easier time selling her Port St. John home, asking price $89,900. Smith, who moved to Fort Pierce, put up a sign in her yard Friday, and had it sold that afternoon. ‘It’s because of the price,’ Smith said. ‘We probably could have asked for more, but we needed to move quickly.’”
“Sales of existing homes fell 34 percent in the Bradenton-Sarasota market in the fourth quarter compared with the previous year, and inventories are on the rise. Agents collectively sold 1,062 fewer homes in the fourth quarter. ‘Artificial prices seemed to outdistance buyers’ desires,’ Richard Taylor, president of the Manatee Association of Realtors. said. ‘We’re not in the frenzied market we were in a few months back.’”
Thanks to the readers who sent in these links.
Can we start a list of halted or bankrupt highrise condo projects around the country? I think this would be a pretty interesting list and I bet it could be newsworthy.
“‘I won’t do it anymore,’ Rudner, 51, said Wednesday. ‘I’m too afraid. There’s too much on the market.’”
Now repeat after me: “I am an idiot, and I’m very very sorry!”
OT: Added info. today on the lower SoCal median…
Home prices down as condos boom
Median home price falls to $582,000 in January as buyers switch to cheaper housing. But analysts predict a rebound come springtime.
http://tinyurl.com/89bs7
“She wants to sell soon and said she’s done dabbling in real estate.” “‘I won’t do it anymore,’ Rudner, 51, said Wednesday. ‘I’m too afraid. There’s too much on the market.’”
I’ll just wait for the next speculative espisode and ‘invest.’
David
Bubble Meter Blog
Yesterday’s news was the announcement to provide land to Scripps Biotech in Jupiter/Palm Beach Gardens or something like that will help the North Palm Beach real estate market to rebound
http://www.sun-sentinel.com/business/local/sfl-zscrippsland15feb15,0,2122835.story
“Tuesday’s decision to build Scripps Florida in Jupiter could put some sizzle back into a once-hot housing market, at least in northern Palm Beach County.
“I don’t think people in north county will have to worry about their values decreasing,” Palm Beach Gardens real estate agent Peter Reed said.
“It’ll jump-start a market that has stalled,” added Jupiter agent Rebel Cook.
She expects more interest in Jupiter-area homes, but was quick to point out that not even Scripps will cause prices to appreciate at the record pace of the past few years.
“They won’t decrease, but they won’t go up 30 to 70 percent the way they were,” Cook said. “Buyers reach a point where they say, `No, I’m not going to pay that.’”
They way things go down here in the Banana Republic, It’ll take years before a Scripps Industrial Park has that kind of impact
on housing. Of course a realtor relates this to housing and tries to spin it as it will save the North Palm Beach market. There are already thousands of homes on the market for anyone that wants to relocate to this area.
Mish Shedlock’s take on the Florida Keys market (from the Whiskey & Gunpowder site):
http://www.whiskeyandgunpowder.com/Archives/20060213.html
I live in West Palm Beach (use to live) near where Scripps is coming. They have been talking about this for 3-4 years or so. It is totally old news and won’t affect the RE market one bit. There is so much being built we will have plenty of homes available, which is eveident by the 20,000 homes(and growing) on the MLS. Besides, this whole thing won’t happen overnight. Demographics mean nothing to an RE market that has been fueled by zero lending standards, rampant speculation, and a herd mentality of “RE can’t lose”. Once the credit bubble goes Kaboom, the RE will follow. The entire state of Delaware could move to Palm Beach County and it wouldn’t matter. Tough to buy a home when you can’t get a loan.
They have been planning for that Scripps campus for years. Scripps actually tried to back out a couple times siting envirnmental issues and even housing costs for employees.
Problem with a lot of big employers in West Palm, Ft Lauderdale and Miami is big employers are finding that candidates are turning down offers in the 35-120K/year range due to housing. They can make the same money in another major city like Atlanta, Dallas, Houston, and especially for Scripps they are competing with the “research triangle” in the Carolinas where houses are 1/3 to 1/4 what they cost in South Florida. If i am a recent grad from Chapel Hill, MIT, Georgia Tech they are better off taking offers from big companies based in cheaper locals due to cost of living.
“The days of just putting it in the MLS or putting a sign in the front yard are over.’”- Anne DeFries said.(Realtor)
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This is a blatant example of why many consumers have difficulty in paying 6% to agents. The admission that all you had to do was just stick the home in the MLS and it would sell in a hot market…. What a true statement and yet a significant step in shedding light on what is broken in real estate.
If it’s priced right that’s all you need to do now. Just look at the lady who sold for less than 100k.
My wife looked at a house this summer. It had been on the market since January at $275 to $250. When they dropped the price to $215 in September it had two offers within a matter of days.
Sent this story to my friend. Won’t matter. He’s in total denial.
I did the say to a friend of a friend who is about to close on a $400,000 fixer up in Broward county. He currently owns (rents from the bank) five houses which he has purchased with IO mortgages.
“Brevard County’s home resale prices fell in the fourth quarter. Realtors and home sellers say the market is slowing. Jeanne Dobus of Indian Harbour Beach, who put her home on the market in October, said she has been disappointed so far in the response, which has been slow. ‘I’ve never seen such a glut of homes for sale in this area,’ Dobus said, noting the asking price of her four-bedroom home is $349,000.”
“‘People are offering $250,000 to $260,000,’ Dobus said. ‘That’s just not the right price.’”
This looks like a bid/ask spread on the stock market. When things get screwy, the spread can get quite wide. There is usually some volitility involved as the speard then narrows. Sombody wins and somebody loses. Ms. Dobus will lose. She is correct, $250K-$260K might not be the right price. It could be $225K!!!!
I’ve never seen such a glut of homes for sale in this area,’ Dobus said, noting the asking price of her four-bedroom home is $349,000.”
“‘People are offering $250,000 to $260,000,’ Dobus said. ‘That’s just not the right price.’”
“Kathy Smith had a much-easier time selling her Port St. John home, asking price $89,900. Smith, who moved to Fort Pierce, put up a sign in her yard Friday, and had it sold that afternoon. ‘It’s because of the price,’ Smith said. ‘We probably could have asked for more, but we needed to move quickly.’”
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That is the way glutted markets work. Somebody has to sell and the price plummets. That encourages other buyers to drop their offers further or wait longer. All the factors that created the state of euphoria in the real estate markets across the country are reversing. Not the least is the psycology. Instead of buy it now before it is gone at a higher price, now we will see buyers thinking there is no hurry. If I wait too long, the only thing that happens is that the price goes down and more options are presented. Low balling makes sense and most buyers will figure it out.
Well Jeanne Dobus… Just goes to show, it does not matter what you paid or what its appraised at, your investment is only worth what someone else is willing to pay for it (or what someone else can afford).
In my South Florida zip code, listings are up ~30% since January 2, 2006. Now I have a chance to watch the market up close and personal. My jerk neighbor bought his 1500 sq foot house for $600k in late 2004. It’s back on the market for $740K. I might offer $425k.
About time South Florida came back to reality. I’m glad because my “reputation” was suffering. Prices kept going up and everyone was euphoric about RE while I kept preaching about the dangers of RE investing, interest rates, exotic mortgages and the lack of fundamentals to support outrageous prices and all the crap realtors tell people (out of plain stupity, ignrance and no memory of previous booms and busts.)
I’m betting many, many more of the planned buildings in Miami will never be built and many “investors” will lose their shirts. what a shame
Keep talking Pablo!
Just make sure you are out of swinging range.
I had dinner the other night with my dear friend the scientist.
She was crowing that she had just priced her home on zillow.com and it is now worth 300k (bought for 100k).Once again I tried to interject some common sense but got no where.But hey , I recall her saying during the tech boom that all stocks should appreciate 100% every five years. Some people refuse to learn.
“…the asking price of her four-bedroom home is $349,000. ‘People are offering $250,000 to $260,000,’ Dobus said. ‘That’s just not the right price.’”
The right price is what you can sell it for…
Kathy Smith had a much-easier time selling her Port St. John home, asking price $89,900…
Now THAT’S a price I like!
Ft. Lauderdale is about to break another milestone with 9,993 units on the market.
I was checking the Greater Tampa Ass’n of Realtors site this weekend to see if they had posted Jan.’s numbers and they had.
http://gtar.org/mls.htm
The numbers are shocking:
Jan. ‘05 SFH sales: 1317
Dec. ‘05 SFH sales: 1884
Jan ‘06 SFH sales: 1262
Median price Jan ‘05: $178.2
Med Price Dec. ‘05: $222.7
Med Price Jan. ‘06: $175.4
Median price had been steadily rising for the past year, and backtracked to 2004 levels in one month. I am anxious to see what Feb. numbers look like, since one month doesn’t make a trend, but local Realtors must be freaking out right now. And the number of new listings for jan. was over 5200. Have fun burning through that–and that doesn’t even reflect post-Superbowl listings!
If you drive down A1A through Indian Harbour Beach, you cannot go fifty feet without another for-sale sign. This is one of my regular leisure drives and in the past twenty years I’ve never seen anywhere near this many signs. As in, by what seems a factor of ten.