Prices continue to fall rapidly according to the South Florida Business Journal: “Finally, a bit of positive news about Florida’s housing market. Sales of existing family homes in the tri-county area rose in the third quarter. But, the good news was tempered by the fact that prices across the board continue to tumble, according to the Florida Association of Realtors.”
"’Coming on the heels of positive sales activity in September, Florida's existing home sales are once again above year-ago levels in the third quarter,’ FAR President Chuck Bonfiglio said. ‘Despite lending restrictions and the difficulties of finding affordable credit, we're seeing buyers take advantage of homeownership opportunities in the current market – buyers who want to make a long-term investment in their future.’”
“Sales of existing single-family homes in Fort Lauderdale were up 20 percent, to 1,796 from 1,498 in the same quarter last year. However, the median sales price was down 24 percent, to $277,900, from $364,400.”
“Miami reported a 2 percent increase, with 1,271 sales in the third quarter, up from 1,250 during the same quarter of 2007. Median prices tumbled 24 percent, to $287,300, from $380,400.”
“The West Palm Beach-Boca Raton market saw a 9 percent increase in sales of existing homes, to 1,797 from 1,644. The median price there was down 18 percent, to $300,200, from $365,400.”
Meanwhile, the same publication reports that builder confidence is dropping: “Homebuilders’ confidence that there will be a resolution to the housing crisis anytime soon is at an all-time low, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index.”
“As the financial crisis worsens, the job market weakens and an overwhelming uncertainty hangs over the economy, builders fear it will take major incentives to bring homebuyers back to the table.”
“’Today’s report shows that we are in a crisis situation. If there’s any hope of turning this economy around, Congress and the administration need to focus on stabilizing housing,’ NAHB Chairman Sandy Dunn said. “Beyond the work that is being done to help reduce foreclosures, Congress must immediately incorporate such incentives for qualified buyers in a new economic recovery package.’”
The Miami Herald reports on dropping prices: "The median sales price for South Florida single-family homes fell 16.9 percent from a year earlier in the third quarter, the Chicago-based National Association of Realtors said Tuesday.”
“Nationwide, prices were down 9 percent and sales of properties with mortgages in default accounted for at least a third of all transactions.”
“Home prices fell in four out of every five U.S. cities in the third quarter, a record spurred by distressed foreclosure sales across the country. Prices fell in 120 U.S. metropolitan areas, rose in 28 and were unchanged in four, the biggest share of declines in data going back to 1979.”
“In the Miami-Fort Lauderdale metro area, the median price for existing single-family homes sold in the third quarter was $287,800, down from $346,300 in the same period of 2007.”
“South Florida condo prices fell 14.6 percent to $159,000.’
A large home auction was also announced in Market Watch: “Hudson & Marshall Will Raise its Buyer Agent Commission from 2% to 3% to Attract More Buyers to Florida Auction “
“Overbuilding and a high rate of foreclosures toppled Florida's housing market, making it one of the worst in the nation. With ample supply to choose from, savvy buyers are turning their attention to bank-owned foreclosure auctions because they offer great deals. America's largest foreclosed real estate auction firm, Hudson & Marshall will auction nearly 700 homes throughout cities in Florida December 2nd-7th. Approximately 120 homes will be auctioned in Orlando and more than 300 homes will be auctioned in the Miami/Fort Lauderdale area. “
“To attract more qualified buyers to the Florida auction, Hudson & Marshall is increasing its buyer agent commission from 2% to 3%. Unlike other real estate owned (REO) auction firms, Hudson & Marshall retains the banks' listing agents to better market properties to prospective buyers. Having marketed the foreclosures for many months, listing agents have extensive knowledge that can help buyers understand a property's market value so they can be successful bidders.”
Wednesday, November 19, 2008
Tuesday, November 18, 2008
Don Peebles, the "successful" real estate entrepreneur sees 60% to 70% drops in South Florida
Forbes magazine recently published an interview with Don Peebles where he described the South Florida market:
"Forbes: Do you see big differences in regions of the country where you think some are harder hit than others, or some may come back quicker than others in this thing?"
"Peebles: Yeah, I do. I see we're actually in two markets that I think are probably the worst two markets for residential, for sure, and that is Las Vegas and South Florida. South Florida was overbuilt. And you take Miami, for example, on the condo side: In downtown Miami alone, almost 50,000 new units were built during this market cycle. And that's not a center of employment. I think it's their values have plummeted, 60%, 70%."
"Forbes: Wow."
"Peebles: And then they have a bigger problem: that many of these condo buildings, the owners who are in foreclosure, or the banks who have them, are not paying condo fees. And so you have this small number of people in the buildings that are having to carry the operation of the whole building. And so the building's getting a little bit more run-down and has greater financial problems. So buyers are even more reluctant to buy, so that pushes value down. I think that market doesn't recover for five to seven years, maybe even a bit longer."
"Forbes: Do you see big differences in regions of the country where you think some are harder hit than others, or some may come back quicker than others in this thing?"
"Peebles: Yeah, I do. I see we're actually in two markets that I think are probably the worst two markets for residential, for sure, and that is Las Vegas and South Florida. South Florida was overbuilt. And you take Miami, for example, on the condo side: In downtown Miami alone, almost 50,000 new units were built during this market cycle. And that's not a center of employment. I think it's their values have plummeted, 60%, 70%."
"Forbes: Wow."
"Peebles: And then they have a bigger problem: that many of these condo buildings, the owners who are in foreclosure, or the banks who have them, are not paying condo fees. And so you have this small number of people in the buildings that are having to carry the operation of the whole building. And so the building's getting a little bit more run-down and has greater financial problems. So buyers are even more reluctant to buy, so that pushes value down. I think that market doesn't recover for five to seven years, maybe even a bit longer."
Monday, November 17, 2008
Miami-Dade plans to buy foreclosures
Miami Today reports that the Miami-Dade County plans to use our tax dollars to buy foreclosed properties to use as low-cost rentals: “Creating more affordable rental housing is to be a key priority for Miami-Dade County and the City of Miami in spending the tens of millions of dollars the federal government is sending their way to help reverse the national foreclosure crisis. “
“Plans for the Housing and Economic Recovery Act money — the county's $62.2 million and the city's $12.06 million — are due to the US Department of Housing and Urban Development by Dec. 1.”
“The funds, which are to impact only a fraction of local foreclosed units, are meant to provide a shot in the arm to low-income areas hit hard by foreclosures.”
“In Miami, this means affluent Brickell is out, but areas such as Little Haiti, Overtown and Allapattah are to receive a big chunk of the program's millions.”
Wednesday, November 12, 2008
UPDATE: Plantation sellers featured on new TLC television show
Over a year ago, back when I was much more active on posting, I made a post about a home seller that was featured on a new show on The Learning Channel. Please read the the original post here (make sure you read the comments section):
Original Post on the TLC Show
In the post, I discussed the house in Plantation Acres that was listed for $649,000. I explained why the price was well overpriced and I made the following recommendation:
"The Bentals could drop their price down to $551,000 and could still walk away after paying the Realtor®’s commission and paying off their outstanding mortgage. Instead, the Bentals remain steadfast, paying nearly $5,000 every month to maintain an empty house. At the end of the show, Dan explained that he was going to hold out until the real estate market turned around."
The Bentals did not take my advice at the time (even thought they made comments to the post) and kept trying to sell their house at the inflated price. I watched this house for months after my original post and the price remained the same.
Recently, I was reviewing some old posts and decided to look up the house and see what happened. The Broward County Property Appraiser’s website shows that the Bentals ultimately ended up selling their house in August through a short sale for just $440,000.
While I am happy that the Bentals were able to finally sell their home, I think it's unfortunate that they were not more aggressive about their original approach to selling their house. Had they started off with a low price, in theory, they could have sold their house at price that would have covered their outstanding mortgages. This would have kept a short sale off their credit report and could have saved them some of those $5,000 monthly mortgage payments.
I'm not posting this to pile on the Bentals -- I truly empathize with their plight. Instead, I am posting this update to serve as a case study for those of you facing similar situations.
If you are in a similar situation where you must sell your house and you still equity in the house, you should be extremely aggressive in your pricing strategy. Based on the current inventory levels in South Florida, prices will only continue to fall. You have the option to sell quickly in an effort to preserve your falling equity and your credit standing or you can hold out for a turnaround that probably will not happen for a decade. It’s your choice. However, consider this particular case when you form your strategy.
Original Post on the TLC Show
In the post, I discussed the house in Plantation Acres that was listed for $649,000. I explained why the price was well overpriced and I made the following recommendation:
"The Bentals could drop their price down to $551,000 and could still walk away after paying the Realtor®’s commission and paying off their outstanding mortgage. Instead, the Bentals remain steadfast, paying nearly $5,000 every month to maintain an empty house. At the end of the show, Dan explained that he was going to hold out until the real estate market turned around."
The Bentals did not take my advice at the time (even thought they made comments to the post) and kept trying to sell their house at the inflated price. I watched this house for months after my original post and the price remained the same.
Recently, I was reviewing some old posts and decided to look up the house and see what happened. The Broward County Property Appraiser’s website shows that the Bentals ultimately ended up selling their house in August through a short sale for just $440,000.
While I am happy that the Bentals were able to finally sell their home, I think it's unfortunate that they were not more aggressive about their original approach to selling their house. Had they started off with a low price, in theory, they could have sold their house at price that would have covered their outstanding mortgages. This would have kept a short sale off their credit report and could have saved them some of those $5,000 monthly mortgage payments.
I'm not posting this to pile on the Bentals -- I truly empathize with their plight. Instead, I am posting this update to serve as a case study for those of you facing similar situations.
If you are in a similar situation where you must sell your house and you still equity in the house, you should be extremely aggressive in your pricing strategy. Based on the current inventory levels in South Florida, prices will only continue to fall. You have the option to sell quickly in an effort to preserve your falling equity and your credit standing or you can hold out for a turnaround that probably will not happen for a decade. It’s your choice. However, consider this particular case when you form your strategy.
Tuesday, November 11, 2008
A Shrine to the Housing Bubble – The Tao Condominiums in Sunrise
For many, the high rises in downtown Miami, South Beach, or Brickell best represented the South Florida housing bubble. However, to me an even better example of South Florida’s irrational exuberance for residential real estate was the Tao Condominiums in West Sunrise.
These twin, 26-story high-rise condominiums were painfully out of place from the beginning. Flanked by a the massive Sawgrass Mall on one side and a sea of middle-class single family homes on the other, any casual observer could see that these condos were going to noose around a bunch of flippers necks. Who would want to live there? In exchange for deal with Bank Atlantic Center and holiday mall traffic, you could get the great view of the air conditioning units on top of mall.
If you haven’t seen these condos, check out their sales website:
The Tao Condiminums
Not surprisingly, today The Daily Business Review reported this about these condos:
“Corus Bank, one of the most active lenders to developers during the condo construction boom, is taking title to the twin, 26-story Tao Sawgrass condominium buildings in Sunrise in lieu of foreclosure.”
“Although there have been no closings on the complex’s 396 units, purchase deposits are in place on about 80 percent of the project, according to John Barkidjija, a Corus senior vice president in Chicago.”
“Corus, as W/K Sawgrass LLLP, expects to start closing unit sales next month. Construction trailers are still parked across from three fountains at the Tao entrance. Corus has hired Hyperion Development of Miami to complete unfinished portions of the complex. Hyperion affiliate POSH Residence Management will handle leases and broker re-sales for condo buyers.”
So, does anyone want to guess how many of the 80% who made purchase deposits will actually close their sale? I imagine very few. At the same time, these condos which once advertised one-bedrooms starting in the mid-400s, are now being converted into rentals – the South Florida housing bubble at it finest.
These twin, 26-story high-rise condominiums were painfully out of place from the beginning. Flanked by a the massive Sawgrass Mall on one side and a sea of middle-class single family homes on the other, any casual observer could see that these condos were going to noose around a bunch of flippers necks. Who would want to live there? In exchange for deal with Bank Atlantic Center and holiday mall traffic, you could get the great view of the air conditioning units on top of mall.
If you haven’t seen these condos, check out their sales website:
The Tao Condiminums
Not surprisingly, today The Daily Business Review reported this about these condos:
“Corus Bank, one of the most active lenders to developers during the condo construction boom, is taking title to the twin, 26-story Tao Sawgrass condominium buildings in Sunrise in lieu of foreclosure.”
“Although there have been no closings on the complex’s 396 units, purchase deposits are in place on about 80 percent of the project, according to John Barkidjija, a Corus senior vice president in Chicago.”
“Corus, as W/K Sawgrass LLLP, expects to start closing unit sales next month. Construction trailers are still parked across from three fountains at the Tao entrance. Corus has hired Hyperion Development of Miami to complete unfinished portions of the complex. Hyperion affiliate POSH Residence Management will handle leases and broker re-sales for condo buyers.”
So, does anyone want to guess how many of the 80% who made purchase deposits will actually close their sale? I imagine very few. At the same time, these condos which once advertised one-bedrooms starting in the mid-400s, are now being converted into rentals – the South Florida housing bubble at it finest.
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