6813 SPARROW HAWK, WEST PALM BEACH, FL 33412
- 3 Bed, 3.5 Bath, SFH
- Bought in September 2006 for $756,009
- On the MLS for $659,000
- Loss before the Realtor® commission: $97,009
- Loss after the Realtor® commission: $136,549
Saturday, August 18, 2007
Today's F@cked Buyer
Thank you to a reader for this one. This house was bought as with the intention of flipping -- it was listed only 14 days after being purchased. Since then, it has languished on the MLS for 319 days even after being reduced from its original asking price by $100,000.
6813 SPARROW HAWK, WEST PALM BEACH, FL 33412
6813 SPARROW HAWK, WEST PALM BEACH, FL 33412
Friday, August 17, 2007
Video: Presidential Candidate Ron Paul on the Housing Bubble
At least one of the Presidential candidate is talking frankly about the housing bubble:
CLICK HERE TO WATCH THE VIDEO
If you know of any other political candidate that has a video showing his/her views on the housing bubble, please send me a link at sfhbubble at gmail.com (replace at with @) and I will include it on an upcoming post.
CLICK HERE TO WATCH THE VIDEO
If you know of any other political candidate that has a video showing his/her views on the housing bubble, please send me a link at sfhbubble at gmail.com (replace at with @) and I will include it on an upcoming post.
Today's F@cked Buyer
Here's a foreclosure in Aventura:
19501 W COUNTRY CLUB DR Unit: TS-07, AVENTURA, FL 33180
19501 W COUNTRY CLUB DR Unit: TS-07, AVENTURA, FL 33180
- 3 Bed, 3 Bath, Condo
- Bought in June 2005 for $650,000
- On the MLS for $570,000
- Loss before the Realtor® commission: $80,000
- Loss after the Realtor® commission: $114,200
Today's Local Real Estate News
The Daily Business Review reports on a F-cked Buyer using the legal system to get out of flip properties:
“Virginia investor who bet on South Florida’s condo market in headier days is trying everything he can to get out of contracts on four Singer Island units and recover about $1.6 million in deposits.”
“John Cherin has filed three federal lawsuits against Bonita Springs-based WCI Communities, which developed the Resort at Singer Island and One Singer Island.”
“‘During the happy times of the condo boom, if a purchaser wanted to get out of a contract a developer said, ‘Fine, I’ll sell it again,’ said Robert Chasnow, a Washington, D.C-based partner at Holland & Knight who is not involved in the litigation. ‘You didn’t find them squaring off on these issues. But now the market has turned; developers are reluctant to cancel and give back the money.’”
“Cherin claims WCI made misleading and confusing contract promises, according to complaints before federal judges in West Palm Beach.”
Yahoo Finance explains the recent surge in Jumbo mortgages:
“Buyers of pricey houses are finding that money has suddenly become more expensive to borrow. Ditto for loan applicants who don't want to prove that they told the truth about their incomes.”
“Rates on jumbo and Alt-A mortgages have zoomed upward since the last week of July, even as rates on conforming, fixed-rate mortgages slipped downward.”
“The development is bad news for people who want to borrow more than $417,000 to buy a house or refinance a loan, or who can't or don't want to document their income. Rising jumbo rates make it more difficult to sell a house costing half a million dollars or more.”
“‘I've never seen anything like this in my life,’ says Bob Moulton, president of Americana Mortgage Group of Manhasset, N.Y. ‘The last couple of days last week, it was difficult to place loans.’”
“Moulton quoted one client a 7 percent rate on a stated-income, jumbo mortgage. That was on a Monday. By Thursday, the rate had jumped to 13 percent and the client was considering an option ARM, which would allow him to pay interest only or even less than the interest accumulated over the month. It's either that or lose a $120,000 deposit.”
But Jumbo mortgage are not he only mortgages affected. Rates on conventional mortgages keep going up as reported by the Miami Herald:
“Rates on 30-year mortgages edged up slightly this week after falling for three straight weeks.”
“Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.62 percent. That was up from 6.59 percent last week, which had been the lowest level since early June.”
“This week's rate is the highest since 30-year mortgages averaged 6.73 percent four weeks ago, a level that was near the high for the year of 6.74 percent set in mid-June.”
The Miami Herald writes that legislators in Tallahassee have little interest in Save Our Homes portability, long touted as a savior of the real estate market:
“A proposal to let homeowners take at least part of their existing tax breaks with them when they move received a frosty reception Thursday from part of a commission studying Florida's tax structure.”
“Several members of the Taxation and Budget Reform Commission's property tax work group said the ‘portability’ proposal would exacerbate inequities caused by the Florida Constitution's Save Our Homes Amendment, which voters adopted in 1992.”
“‘As I look 20 years out into the future and I see this portability that you're talking about, I see a disaster that's going to make Save Our Homes seem like a walk in the park,’ said Commissioner Nancy Riley, also president of the Florida Association of Realtors.”
“The amendment caps assessment increases on primary homes, known as homesteads, at 3 percent annually, but that has shifted tax burden to other taxpayers including new home buyers and owners of commercial and rental properties and second homes.”
The Sun-Sentinel reports on slowing housing starts:
“Construction of new homes fell to the lowest level in more than a decade in July as builders continued to struggle with the steepest housing slump since 1991.”
“The Commerce Department reported Thursday that construction of new homes and apartments dropped 6.1 percent last month to a seasonally adjusted annual rate of 1.38 million units. That was down 20.9 percent from the pace of activity a year ago and represented the slowest pace since January 1997.”
“Home builders in South Florida have been hit particularly hard. Lennar Corp. of Miami and Fort Lauderdale-based Levitt Corp. have seen rising contract cancellations as demand for new homes wanes.”
“Last week, Levitt announced a $58.1 million loss for the quarter ended June 30, compared with a $737,000 loss for the same period a year ago. In the past year, the builder has laid off at least 70 employees, about 10 percent of its work force.”
Still, construction does continue in South Florida. One developer plans to build 14,000 homes in Okeechobee. The Sun-Sentinel reports:
“The Grove, a proposed development in the county's extreme northeast corner, could encompass the city of Okeechobee.”
“Barron Collier plans to raze the grove and replace it with nearly 14,000 homes and roughly 2 million square feet of commercial space. The master-planned community would have a turnpike exit -- built by the developer -- and its own water and sewer system.”
“Age-restricted communities would encompass about half The Grove's homes.”
“‘It's going to be a lot of people from up North, getting on the computer and finding this community, and it's going to be a much cheaper place for them to live,’ Noah said. ‘Coastal living is just getting out of hand.’”
Efinancedirectory.com reports on local housing affordability:
“During the boom, Florida home prices increased 84 percent. Wages, on the other hand, did not. The result is that workers in Florida's key occupations, such as nurses, receptionists, firefighters, and law enforcement professionals, have been priced out of the housing market. Here is an interesting collection of charts detailing how many hours people in these key occupations need to work to afford fair market rent, and how much they would need to make annually to afford the median priced home in some of Florida's largest metropolitan areas.”
“In Fort Lauderdale, it is just as difficult for individuals making the average wage [as a firefighter, nurse, police officer, receptionist, or wait staff] to afford a median priced home as it is in Miami. Fort Lauderdale police officers, who earn the highest average wage of the five occupations, need to work at least 90 hours per week to reasonably afford a median priced home. Renting, in comparison, is cheaper but still incredibly difficult for receptionists and wait staff, who need to work 60 hours and 80 hours per week respectively to rent a two bedroom apartment.”
“Virginia investor who bet on South Florida’s condo market in headier days is trying everything he can to get out of contracts on four Singer Island units and recover about $1.6 million in deposits.”
“John Cherin has filed three federal lawsuits against Bonita Springs-based WCI Communities, which developed the Resort at Singer Island and One Singer Island.”
“‘During the happy times of the condo boom, if a purchaser wanted to get out of a contract a developer said, ‘Fine, I’ll sell it again,’ said Robert Chasnow, a Washington, D.C-based partner at Holland & Knight who is not involved in the litigation. ‘You didn’t find them squaring off on these issues. But now the market has turned; developers are reluctant to cancel and give back the money.’”
“Cherin claims WCI made misleading and confusing contract promises, according to complaints before federal judges in West Palm Beach.”
Yahoo Finance explains the recent surge in Jumbo mortgages:
“Buyers of pricey houses are finding that money has suddenly become more expensive to borrow. Ditto for loan applicants who don't want to prove that they told the truth about their incomes.”
“Rates on jumbo and Alt-A mortgages have zoomed upward since the last week of July, even as rates on conforming, fixed-rate mortgages slipped downward.”
“The development is bad news for people who want to borrow more than $417,000 to buy a house or refinance a loan, or who can't or don't want to document their income. Rising jumbo rates make it more difficult to sell a house costing half a million dollars or more.”
“‘I've never seen anything like this in my life,’ says Bob Moulton, president of Americana Mortgage Group of Manhasset, N.Y. ‘The last couple of days last week, it was difficult to place loans.’”
“Moulton quoted one client a 7 percent rate on a stated-income, jumbo mortgage. That was on a Monday. By Thursday, the rate had jumped to 13 percent and the client was considering an option ARM, which would allow him to pay interest only or even less than the interest accumulated over the month. It's either that or lose a $120,000 deposit.”
But Jumbo mortgage are not he only mortgages affected. Rates on conventional mortgages keep going up as reported by the Miami Herald:
“Rates on 30-year mortgages edged up slightly this week after falling for three straight weeks.”
“Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.62 percent. That was up from 6.59 percent last week, which had been the lowest level since early June.”
“This week's rate is the highest since 30-year mortgages averaged 6.73 percent four weeks ago, a level that was near the high for the year of 6.74 percent set in mid-June.”
The Miami Herald writes that legislators in Tallahassee have little interest in Save Our Homes portability, long touted as a savior of the real estate market:
“A proposal to let homeowners take at least part of their existing tax breaks with them when they move received a frosty reception Thursday from part of a commission studying Florida's tax structure.”
“Several members of the Taxation and Budget Reform Commission's property tax work group said the ‘portability’ proposal would exacerbate inequities caused by the Florida Constitution's Save Our Homes Amendment, which voters adopted in 1992.”
“‘As I look 20 years out into the future and I see this portability that you're talking about, I see a disaster that's going to make Save Our Homes seem like a walk in the park,’ said Commissioner Nancy Riley, also president of the Florida Association of Realtors.”
“The amendment caps assessment increases on primary homes, known as homesteads, at 3 percent annually, but that has shifted tax burden to other taxpayers including new home buyers and owners of commercial and rental properties and second homes.”
The Sun-Sentinel reports on slowing housing starts:
“Construction of new homes fell to the lowest level in more than a decade in July as builders continued to struggle with the steepest housing slump since 1991.”
“The Commerce Department reported Thursday that construction of new homes and apartments dropped 6.1 percent last month to a seasonally adjusted annual rate of 1.38 million units. That was down 20.9 percent from the pace of activity a year ago and represented the slowest pace since January 1997.”
“Home builders in South Florida have been hit particularly hard. Lennar Corp. of Miami and Fort Lauderdale-based Levitt Corp. have seen rising contract cancellations as demand for new homes wanes.”
“Last week, Levitt announced a $58.1 million loss for the quarter ended June 30, compared with a $737,000 loss for the same period a year ago. In the past year, the builder has laid off at least 70 employees, about 10 percent of its work force.”
Still, construction does continue in South Florida. One developer plans to build 14,000 homes in Okeechobee. The Sun-Sentinel reports:
“The Grove, a proposed development in the county's extreme northeast corner, could encompass the city of Okeechobee.”
“Barron Collier plans to raze the grove and replace it with nearly 14,000 homes and roughly 2 million square feet of commercial space. The master-planned community would have a turnpike exit -- built by the developer -- and its own water and sewer system.”
“Age-restricted communities would encompass about half The Grove's homes.”
“‘It's going to be a lot of people from up North, getting on the computer and finding this community, and it's going to be a much cheaper place for them to live,’ Noah said. ‘Coastal living is just getting out of hand.’”
Efinancedirectory.com reports on local housing affordability:
“During the boom, Florida home prices increased 84 percent. Wages, on the other hand, did not. The result is that workers in Florida's key occupations, such as nurses, receptionists, firefighters, and law enforcement professionals, have been priced out of the housing market. Here is an interesting collection of charts detailing how many hours people in these key occupations need to work to afford fair market rent, and how much they would need to make annually to afford the median priced home in some of Florida's largest metropolitan areas.”
“In Fort Lauderdale, it is just as difficult for individuals making the average wage [as a firefighter, nurse, police officer, receptionist, or wait staff] to afford a median priced home as it is in Miami. Fort Lauderdale police officers, who earn the highest average wage of the five occupations, need to work at least 90 hours per week to reasonably afford a median priced home. Renting, in comparison, is cheaper but still incredibly difficult for receptionists and wait staff, who need to work 60 hours and 80 hours per week respectively to rent a two bedroom apartment.”
Thursday, August 16, 2007
Video: U.S. mortgage mess goes global
Reuters explains how U.S. mortgage problems are affecting international markets:
CLICK HERE TO WATCH THE VIDEO
CLICK HERE TO WATCH THE VIDEO
Today's F@cked Buyer
A reader (140 dollars per sq foot) provided this waterfront home in Lighthouse Point. This shows that foreclosures and price drops are affecting every price range. This house was bought May 2006 and was deeded to the bank only 13 months later. The losses in just 15 months is amazing.
3851 NE 24TH AV, LIGHTHOUSE POINT, FL
3851 NE 24TH AV, LIGHTHOUSE POINT, FL
- 3 Bed, 2 Bath, SFH
- Bought in May 2006 for $1,295,000
- On the MLS for $899,500
- Loss before the Realtor® commission: $395,500
- Loss after the Realtor® commission: $449,470
I need your help with this daily feature. Do you know of a F@cked Buyer? Just add the MLS number or the FSBO link in the comments section and I will add it to an this daily update in the future.
Media Bias and the Median Price
Previously I wrote how the Florida Association of Realtors® (FAR) uses the Median Sales Price to paint an artificially optimistic view of the local real estate market (click here to see that post). However, using the median statistic to dupe consumers into thinking that home prices are stable is not exclusive to FAR; the local media may be the biggest real estate cheerleader of all.
Consider the article Paul Owens, the Sun-Sentinel’s real estate reporter, wrote on July 26, 2007. In the article, he wrote:
“Sales of existing homes in Broward County tumbled 22 percent last month, to 674 from 861, the Florida Association of Realtors said Wednesday.”
“But the median price of an existing home in the county rose a modest 1 percent or $4,600, to $382,000 from $377,400 a year ago, the association said. Tallahassee and Ocala, north of Orlando, were the only other areas in the state to have median price increases in June.”
Then today, the exact same writer for the exact same newspaper wrote the following:
“South Florida's housing market continued to fade in the second quarter, according to the Florida Association of Realtors. Existing home sales were down 24 percent in Broward County from a year ago, while Palm Beach County sales slid 21 percent.”
“The median price of a single-family home in Broward was $372,200, virtually unchanged from $373,000 a year ago.”
In first article, Paul Owens explained that median sales price “rose a modest 1 percent.” In the second article, the author declared that median sales price was “virtually unchanged.” As a result, most readers of the two articles would conclude that the median sales price was stable.
However, nothing could be further from the truth. Using the same statistics, we show that in Broward County the median sales price was $382,000 in June 2007 and $372,200 for July 2007. This is an amazing an amazing 2.6% drop in just one month – something Paul Owens did not bother to disclose.
This is significant because if annualized, this one-month 2.6% drop will compound to a 26.8% drop. Why didn’t Paul Owens explain in the story that we saw an annualized 26.8% drop in median prices since last month?
I don’t mean to suggest that month-to-month comparisons of median sales price provides a fair gauge of our local market -- it does not.
My point is the median sales price is an absolutely worthless statistic – one that should never be used as a gauge real estate market condition. Anyone that is closely following the local market knows that prices have fallen dramatically in the past year (just check out the daily F-cked Buyer posts). It is a shame that the efforts by FAR and our local media to distort the truth will keep most consumers understanding the reality.
Consider the article Paul Owens, the Sun-Sentinel’s real estate reporter, wrote on July 26, 2007. In the article, he wrote:
“Sales of existing homes in Broward County tumbled 22 percent last month, to 674 from 861, the Florida Association of Realtors said Wednesday.”
“But the median price of an existing home in the county rose a modest 1 percent or $4,600, to $382,000 from $377,400 a year ago, the association said. Tallahassee and Ocala, north of Orlando, were the only other areas in the state to have median price increases in June.”
Then today, the exact same writer for the exact same newspaper wrote the following:
“South Florida's housing market continued to fade in the second quarter, according to the Florida Association of Realtors. Existing home sales were down 24 percent in Broward County from a year ago, while Palm Beach County sales slid 21 percent.”
“The median price of a single-family home in Broward was $372,200, virtually unchanged from $373,000 a year ago.”
In first article, Paul Owens explained that median sales price “rose a modest 1 percent.” In the second article, the author declared that median sales price was “virtually unchanged.” As a result, most readers of the two articles would conclude that the median sales price was stable.
However, nothing could be further from the truth. Using the same statistics, we show that in Broward County the median sales price was $382,000 in June 2007 and $372,200 for July 2007. This is an amazing an amazing 2.6% drop in just one month – something Paul Owens did not bother to disclose.
This is significant because if annualized, this one-month 2.6% drop will compound to a 26.8% drop. Why didn’t Paul Owens explain in the story that we saw an annualized 26.8% drop in median prices since last month?
I don’t mean to suggest that month-to-month comparisons of median sales price provides a fair gauge of our local market -- it does not.
My point is the median sales price is an absolutely worthless statistic – one that should never be used as a gauge real estate market condition. Anyone that is closely following the local market knows that prices have fallen dramatically in the past year (just check out the daily F-cked Buyer posts). It is a shame that the efforts by FAR and our local media to distort the truth will keep most consumers understanding the reality.
Wednesday, August 15, 2007
Today's F@cked Buyer
Thank you to a reader this property in Doral. It was originally listed 160 days ago for $745,000. The price has been reduced eight times since then.
8556 NW 111 CT, MIAMI, FL 33178
8556 NW 111 CT, MIAMI, FL 33178
- 4 Bed, 4 Bath., SFH
- Bought in March 2006 for $750,000
- On the MLS for $620,000
- Loss before the Realtor® commission: $130,000
- Loss after the Realtor® commission: $167,200
Today's Local Real Estate News
The local flood of foreclosures (see my previous post on this issue) means that our market is among the worst in the entire United States. The Miami Herald reports:
“Miami-Dade and Broward counties made the top-10 list of metropolitan areas with the nation's highest foreclosure rates in the first half of 2007, according to RealtyTrac.”
“The top three cities in the country were Stockton, Calif., Detroit and Las Vegas -- three areas with vastly different economies and demographic trends, the data firm said.”
“Rounding out the areas with the top foreclosure rates are Riverside-San Bernardino, Calif.; Sacramento, Calif.; Denver; Bakersfield, Calif.; and Memphis, Tenn. Cleveland tied with Fort Lauderdale for 10th place. Miami was seventh.”
The foreclosure crisis has led the Miami Herald to call for Federal intervention to make mortgages more consumer friendly:
“The meltdown in the market for subprime mortgages is a disaster long in the making. Loaning money to borrowers with shaky credit on terms that made timely repayment difficult is risky business to begin with. Factor in gullible borrowers, greedy investors, sticky-fingered brokers, over-eager lenders and lax supervision, and you have all the ingredients of a full-blown crisis.”
“The subprime market consists of loans to borrowers who do not qualify for regular loans because of low earnings, a bad credit history -- or both. These loans usually carry higher interest rates and often are loaded with cash-draining gimmicks. These include an ''adjustable rate'' that starts out low and then suddenly increases, often steeply, as well as prepayment penalties and high fees for the mortgage brokers who today originate about 75 percent of all home loans.”
“Another twist: The loans can be bundled together and ‘securitized,’ which turns them into financial instruments for investors to buy. As testimony before the Senate Banking Committee earlier this month revealed, many investors and hedge funds did exactly that because Standard & Poor and Moody's gave them an AAA rating even though the entire pyramid of debt was balanced on the high level of risk posed by borrowers whose ability to repay had been deemed questionable from the beginning.”
“Bailing out investors and hedge funds is not a good option. Neither is expanding the loan limits of the quasi-government agencies that buy mortgages -- such as Fannie Mae. It would be wrong to transfer the risk and the losses resulting from bad decisions made by lenders and investors to the strapped taxpayer.”
“What the Fed can do is expand its regulation under the authority of the Homeowners Equity Protection Act. It can severely restrict prepayment penalties, limit the fees pocketed by brokers, create a mandatory grace period before a higher rate mortgage kicks in (giving borrowers time to find better funding), and encourage lenders to restructure faulty loans before resorting to foreclosure. Owning a home remains the heart of the American Dream. The government has a duty to keep it from becoming a nightmare.”
The Miami Herald reports that promised property tax cuts will not have a significant effect on most Dade and Broward homeowners:
“As early property tax notices start hitting mailboxes across South Florida this week, most taxpayers are due a slight drop in their bills”.
“Even so, more than half the cities in Miami-Dade, and a third in Broward, are set to avoid the most severe effects of the state-mandated tax cuts.”
“In Cutler Bay and Miami Gardens, two communities that are exempt from the cuts because they are relatively new, revenues could climb as much as 24 percent, based on a Miami Herald review of preliminary tax rolls.”
“That exemption, and several others, mean that the tax cuts mandated this year by the legislature will be muted across much of South Florida -- if the initial tax rates proposed by communities stay where they are. Local governments can reduce the rates that they have announced, but they cannot increase them.”
The Sun Sentinel explains how one city, Davie, will decrease millage rates but it will still not impact most homeowners:
“The Davie Town Council tentatively rolled back the millage rate from 4.97 to 4.12, and the annual budget has been tentatively rolled back from about $98 million to $96 million.”
“Davie town officials don't expect any layoffs of staff, but they do plan to impose a hiring freeze and may not be able to offer as many municipal services next year. There had been discussion about laying off one person in the development services department, but the council requested that the individual be retained on staff.”
“Council Member Susan Starkey said tax relief is important to Davie residents, but she is concerned that while the millage rate is being decreased, county tax assessments on properties are being raised, and so residents really won't see as much relief. She is concerned this may cause many Davie residents to leave the state and go to places with a lower cost of living.”
“‘Everyone in town is being hit by higher taxes,’ Starkey said. ‘The tax appraisals for housing has gone up. We are seeing many homes in foreclosure.’”
USA Today has brought the plight of Briny Breezes to the nation (see my previous post on why Briny Breezes defines the bubble):
“Who wants to be a millionaire? Never mind.”
“That's the come-on, and ultimate torment, recently served up to Briny Breezes, a 43-acre mobile home community on Florida's Gold Coast. In January, Ocean Land Investments of Boca Raton agreed to pay Briny trailer owners $510 million for their oceanfront property, a defiantly unpretentious middle-class oasis wedged amid mansions, high-priced condominiums and opulent hotels.”
But two weeks ago, Ocean Land, facing an Aug. 10 deadline to pay the rest of a $5 million non-refundable deposit (it had put down $500,000) asked for a 45-day extension to talk to nearby towns opposed to the project. Briny's board of directors refused, and the deal is off.
There goes the money. The new sailboats. The lavish gifts for grandchildren. Most troubling: A few dozen residents have already bought new homes in anticipation of the big payday.
"Some of these people have purchased elsewhere," says Roger Bennett, mayor of Briny Breezes, which incorporated as a town in the 1960s. "Some can afford it, but it's the many who couldn't that I feel sorry for."
More South Florida companies are reporting poor earnings as a result of the housing slump:
“Sales slumped at building products firm Imperial Industries ( IPII) on weakness in Florida housing construction.”
“The Pompano Beach-based firm said sales slid to $13.6 million from $20.4 million in the second quarter of last year. The company had a net loss of 6 cents per share for the quarter compared to 43 cents in profit last year.”
Meanwhile, Fort Lauderdale-based homebuilder, Levitt is calling off deals due to the housing slump:
“The proposed marriage between home builder Levitt and BFC Financial may be on the rocks. The reason: the ongoing housing slump.”
“Levitt lost $58.1 million in its second quarter, the company said, compared to $737,000 in the same quarter last year.
That poor performance has prompted BFC Financial and Levitt, both based in Fort Lauderdale and headed by chief executive Alan Levan, to rethink their deal. Levitt told investors in its earnings statement that BFC Financial is ‘reviewing the transaction to determine if it is willing to proceed.’”
“Levitt said it's also deciding whether to go forward or not.”
“On Monday, Levitt stock sank 10.7 percent to a 52-week low of $3.96 per share; its 52-week high is $15.44.”
Yet, despite all this (plus evidence from our daily F-cked Buyer posts and virtually every other piece of objective data), most Florida homeowners remain absolutely clueless about the current housing situation. In fact, most Florida homeowners are actually optimistic:
“Florida homeowners in a recent survey overwhelmingly said they remain optimistic about the local housing situation, despite media reports expressing views of a volatile market.”
“The survey, which is part of the Fund Consumer Education Campaign sponsored by Florida's Attorneys' Title Insurance Fund, Inc., concluded that 63-percent of Florida homeowners believe the value of the homes in their community will either rise or remain the same during the next 12 months. The report says ‘more than half of the respondents believe now is a good time to buy a Florida house or condo,’ but only one in five plan to do so within the next 2 years.”
“‘The good news is that, amid proliferating news stories about an underperforming national real estate market, Florida homeowners remain optimistic about the value of their homes and are encouraged by the growing buyer's market,’ said Charles J. Kovaleski, president and chief executive officer of Attorneys' Title Insurance Fund.”
“Miami-Dade and Broward counties made the top-10 list of metropolitan areas with the nation's highest foreclosure rates in the first half of 2007, according to RealtyTrac.”
“The top three cities in the country were Stockton, Calif., Detroit and Las Vegas -- three areas with vastly different economies and demographic trends, the data firm said.”
“Rounding out the areas with the top foreclosure rates are Riverside-San Bernardino, Calif.; Sacramento, Calif.; Denver; Bakersfield, Calif.; and Memphis, Tenn. Cleveland tied with Fort Lauderdale for 10th place. Miami was seventh.”
The foreclosure crisis has led the Miami Herald to call for Federal intervention to make mortgages more consumer friendly:
“The meltdown in the market for subprime mortgages is a disaster long in the making. Loaning money to borrowers with shaky credit on terms that made timely repayment difficult is risky business to begin with. Factor in gullible borrowers, greedy investors, sticky-fingered brokers, over-eager lenders and lax supervision, and you have all the ingredients of a full-blown crisis.”
“The subprime market consists of loans to borrowers who do not qualify for regular loans because of low earnings, a bad credit history -- or both. These loans usually carry higher interest rates and often are loaded with cash-draining gimmicks. These include an ''adjustable rate'' that starts out low and then suddenly increases, often steeply, as well as prepayment penalties and high fees for the mortgage brokers who today originate about 75 percent of all home loans.”
“Another twist: The loans can be bundled together and ‘securitized,’ which turns them into financial instruments for investors to buy. As testimony before the Senate Banking Committee earlier this month revealed, many investors and hedge funds did exactly that because Standard & Poor and Moody's gave them an AAA rating even though the entire pyramid of debt was balanced on the high level of risk posed by borrowers whose ability to repay had been deemed questionable from the beginning.”
“Bailing out investors and hedge funds is not a good option. Neither is expanding the loan limits of the quasi-government agencies that buy mortgages -- such as Fannie Mae. It would be wrong to transfer the risk and the losses resulting from bad decisions made by lenders and investors to the strapped taxpayer.”
“What the Fed can do is expand its regulation under the authority of the Homeowners Equity Protection Act. It can severely restrict prepayment penalties, limit the fees pocketed by brokers, create a mandatory grace period before a higher rate mortgage kicks in (giving borrowers time to find better funding), and encourage lenders to restructure faulty loans before resorting to foreclosure. Owning a home remains the heart of the American Dream. The government has a duty to keep it from becoming a nightmare.”
The Miami Herald reports that promised property tax cuts will not have a significant effect on most Dade and Broward homeowners:
“As early property tax notices start hitting mailboxes across South Florida this week, most taxpayers are due a slight drop in their bills”.
“Even so, more than half the cities in Miami-Dade, and a third in Broward, are set to avoid the most severe effects of the state-mandated tax cuts.”
“In Cutler Bay and Miami Gardens, two communities that are exempt from the cuts because they are relatively new, revenues could climb as much as 24 percent, based on a Miami Herald review of preliminary tax rolls.”
“That exemption, and several others, mean that the tax cuts mandated this year by the legislature will be muted across much of South Florida -- if the initial tax rates proposed by communities stay where they are. Local governments can reduce the rates that they have announced, but they cannot increase them.”
The Sun Sentinel explains how one city, Davie, will decrease millage rates but it will still not impact most homeowners:
“The Davie Town Council tentatively rolled back the millage rate from 4.97 to 4.12, and the annual budget has been tentatively rolled back from about $98 million to $96 million.”
“Davie town officials don't expect any layoffs of staff, but they do plan to impose a hiring freeze and may not be able to offer as many municipal services next year. There had been discussion about laying off one person in the development services department, but the council requested that the individual be retained on staff.”
“Council Member Susan Starkey said tax relief is important to Davie residents, but she is concerned that while the millage rate is being decreased, county tax assessments on properties are being raised, and so residents really won't see as much relief. She is concerned this may cause many Davie residents to leave the state and go to places with a lower cost of living.”
“‘Everyone in town is being hit by higher taxes,’ Starkey said. ‘The tax appraisals for housing has gone up. We are seeing many homes in foreclosure.’”
USA Today has brought the plight of Briny Breezes to the nation (see my previous post on why Briny Breezes defines the bubble):
“Who wants to be a millionaire? Never mind.”
“That's the come-on, and ultimate torment, recently served up to Briny Breezes, a 43-acre mobile home community on Florida's Gold Coast. In January, Ocean Land Investments of Boca Raton agreed to pay Briny trailer owners $510 million for their oceanfront property, a defiantly unpretentious middle-class oasis wedged amid mansions, high-priced condominiums and opulent hotels.”
But two weeks ago, Ocean Land, facing an Aug. 10 deadline to pay the rest of a $5 million non-refundable deposit (it had put down $500,000) asked for a 45-day extension to talk to nearby towns opposed to the project. Briny's board of directors refused, and the deal is off.
There goes the money. The new sailboats. The lavish gifts for grandchildren. Most troubling: A few dozen residents have already bought new homes in anticipation of the big payday.
"Some of these people have purchased elsewhere," says Roger Bennett, mayor of Briny Breezes, which incorporated as a town in the 1960s. "Some can afford it, but it's the many who couldn't that I feel sorry for."
More South Florida companies are reporting poor earnings as a result of the housing slump:
“Sales slumped at building products firm Imperial Industries ( IPII) on weakness in Florida housing construction.”
“The Pompano Beach-based firm said sales slid to $13.6 million from $20.4 million in the second quarter of last year. The company had a net loss of 6 cents per share for the quarter compared to 43 cents in profit last year.”
Meanwhile, Fort Lauderdale-based homebuilder, Levitt is calling off deals due to the housing slump:
“The proposed marriage between home builder Levitt and BFC Financial may be on the rocks. The reason: the ongoing housing slump.”
“Levitt lost $58.1 million in its second quarter, the company said, compared to $737,000 in the same quarter last year.
That poor performance has prompted BFC Financial and Levitt, both based in Fort Lauderdale and headed by chief executive Alan Levan, to rethink their deal. Levitt told investors in its earnings statement that BFC Financial is ‘reviewing the transaction to determine if it is willing to proceed.’”
“Levitt said it's also deciding whether to go forward or not.”
“On Monday, Levitt stock sank 10.7 percent to a 52-week low of $3.96 per share; its 52-week high is $15.44.”
Yet, despite all this (plus evidence from our daily F-cked Buyer posts and virtually every other piece of objective data), most Florida homeowners remain absolutely clueless about the current housing situation. In fact, most Florida homeowners are actually optimistic:
“Florida homeowners in a recent survey overwhelmingly said they remain optimistic about the local housing situation, despite media reports expressing views of a volatile market.”
“The survey, which is part of the Fund Consumer Education Campaign sponsored by Florida's Attorneys' Title Insurance Fund, Inc., concluded that 63-percent of Florida homeowners believe the value of the homes in their community will either rise or remain the same during the next 12 months. The report says ‘more than half of the respondents believe now is a good time to buy a Florida house or condo,’ but only one in five plan to do so within the next 2 years.”
“‘The good news is that, amid proliferating news stories about an underperforming national real estate market, Florida homeowners remain optimistic about the value of their homes and are encouraged by the growing buyer's market,’ said Charles J. Kovaleski, president and chief executive officer of Attorneys' Title Insurance Fund.”
Tuesday, August 14, 2007
Today's F@cked Buyer
Thank you to a reader for this one:
16295 SW 26TH ST, MIRAMAR, FL 33027
16295 SW 26TH ST, MIRAMAR, FL 33027
- 4 Bed, 2 Bath, 1,672 Sq. Ft., SFH
- Bought in August 2006 for $385,000
- On the MLS for $335,900
- Loss before the Realtor® commission: $49,100
- Loss after the Realtor® commission: $69,254
I need your help with this daily feature. Do you know of a F@cked Buyer? Just add the MLS number or the FSBO link in the comments section and I will add it to an this daily update in the future.
Today's Local Real Estate News
Zillow.com, which traditionally has provided some of the most slanted statistics on housing price increases, is announcing significant drops in home prices. Zillow highlighted South Florida in their press release:
“Nationwide, values for all homes are down 2.8 percent year-over-year and are relatively flat quarter-over-quarter (0.1%), with a U.S. Zindex(TM) home value indicator of $251,588. But, when broken out by size, differences in value become very evident.”
“Midsized and large homes -- which include the U.S. average 1,500 square-foot residence -- showed the steepest declines among single-family residences, with values down 3.1 percent and 2.8 percent year-over-year, respectively. Small homes declined just one percent in the same period. In this analysis, large single-family homes are defined as those with more than 1,900 square feet, midsized homes are 1,200-1,900 square feet, and a small home is defined as less than 1,200 square feet.”
“Similarly, condo values dropped 5.2 percent year-over-year, with a Zindex home value indicator of $238,721. Condo owners in parts of Florida and California's Central Valley experienced the sharpest drops -- between 10 and 14 percent compared to Q2 2006.”
“‘The U.S. real estate market still appears quite anemic, at best, with many markets still doing poorly, especially those in South Florida and Southern California,’ said Stan Humphries, Zillow's vice president of data and analytics. ‘The one ray of hope this period is that we have not seen another quarter-over-quarter decline as we have experienced for the past two quarters. The significantly poorer performance of condos and larger single-family homes suggests that prices for these housing sectors are still not in accord with current demand.”
As expected, the tax-and-spend propaganda against the proposed super exemption is picking up steam. We can expected more and more of article like this one from the Sun-Sentinel that was title “New property tax system would slam ‘affordable’ cities in Broward.”
“The communities with many of the condos and homes most affordable for middle-income families in Broward County would take the biggest financial hit if a shake-up of state property tax breaks wins voter approval.”
“The proposed ‘super exemption’ on a statewide ballot in January could cost Coconut Creek, Lauderhill, Margate, North Lauderdale, Tamarac and West Park at least a tenth of their tax base, according to an analysis of property tax data by the South Florida Sun-Sentinel. Each city would face drastic cuts in services.”
“The six cities lack large swaths of luxury housing, investment property and commercial development that protect other communities from a major hit. Instead, vast numbers of homeowners in their middle-class neighborhoods and senior communities could cut thousands from their tax bills.”
“‘It would be tough to run the city and offer people the services that we have always offered,’ North Lauderdale Mayor Jack Brady said. ‘Come check our books, because we haven't overspent. This would devastate us.’”
Of course the Sun-Sentinel couldn’t leave Palm Beach County out:
“Palm Beach County's middle-class bedroom communities and the poor towns in the Everglades would take the biggest financial blow if a new "super exemption" wins statewide approval.”
“The plan on the Jan. 29 ballot could cost 10 cities, including Boynton Beach, Royal Palm Beach and Greenacres, at least a tenth of their tax bases, according to an analysis of property tax data by the South Florida Sun-Sentinel.”
“These communities share a stock of moderately priced housing by Palm Beach County standards and lack luxury homes and large swaths of investment and industrial properties that bring in higher tax revenues.”
“‘It's not all mansions on the beach,’ said Jamie Titcomb, executive director of the Palm Beach County League of Cities, citing communities that operate on tight, tiny budgets, such as Pahokee and Belle Glade. ‘Many of our communities are marginal at best in terms of their survivability under some of these scenarios.’”
As more people face foreclosure, we can expect the amount of “suspicious” home fires to go up significantly. The Miami Herald reports on one:
“John D. Lummis and his ex-wife, Cynthia Macbeth, own a house where Lummis lived with his girlfriend, Beth Howe, and her three children. Lummis was in a financial bind: Between the $1,300 a month garnished from his wages in order to pay child support for four of his six children, and supporting Howe and her three children, he had not made a mortgage payment for almost two years.”
“The mortgage holder, Cendant Mortgage Co., had been paying the premiums on the State Farm homeowner's insurance policy. On Feb. 5, 2003, Cendant obtained a mortgage foreclosure decree on the house. The next day, the house burned down.”
“Howe called 911 to report the fire around noon. She then phoned Lummis at work. Lummis' boss offered him a ride home immediately. He turned it down. But he took his buddy up on a second offer of a ride home later in the afternoon.”
“After Lummis got home, he reported the fire to State Farm. The agent who took his call thought he sounded nonchalant. State Farm immediately started an investigation of the claim.”
“‘One of the most important clues to the fire's origin was a red plastic container found at the scene that tested positive for traces of gasoline and kerosene. Lummis, who was a volunteer firefighter for about seven years, would, State Farm concluded, be more familiar with this mixture as an accelerant than would the average Joe,’ according to the court's report.”
“Nationwide, values for all homes are down 2.8 percent year-over-year and are relatively flat quarter-over-quarter (0.1%), with a U.S. Zindex(TM) home value indicator of $251,588. But, when broken out by size, differences in value become very evident.”
“Midsized and large homes -- which include the U.S. average 1,500 square-foot residence -- showed the steepest declines among single-family residences, with values down 3.1 percent and 2.8 percent year-over-year, respectively. Small homes declined just one percent in the same period. In this analysis, large single-family homes are defined as those with more than 1,900 square feet, midsized homes are 1,200-1,900 square feet, and a small home is defined as less than 1,200 square feet.”
“Similarly, condo values dropped 5.2 percent year-over-year, with a Zindex home value indicator of $238,721. Condo owners in parts of Florida and California's Central Valley experienced the sharpest drops -- between 10 and 14 percent compared to Q2 2006.”
“‘The U.S. real estate market still appears quite anemic, at best, with many markets still doing poorly, especially those in South Florida and Southern California,’ said Stan Humphries, Zillow's vice president of data and analytics. ‘The one ray of hope this period is that we have not seen another quarter-over-quarter decline as we have experienced for the past two quarters. The significantly poorer performance of condos and larger single-family homes suggests that prices for these housing sectors are still not in accord with current demand.”
As expected, the tax-and-spend propaganda against the proposed super exemption is picking up steam. We can expected more and more of article like this one from the Sun-Sentinel that was title “New property tax system would slam ‘affordable’ cities in Broward.”
“The communities with many of the condos and homes most affordable for middle-income families in Broward County would take the biggest financial hit if a shake-up of state property tax breaks wins voter approval.”
“The proposed ‘super exemption’ on a statewide ballot in January could cost Coconut Creek, Lauderhill, Margate, North Lauderdale, Tamarac and West Park at least a tenth of their tax base, according to an analysis of property tax data by the South Florida Sun-Sentinel. Each city would face drastic cuts in services.”
“The six cities lack large swaths of luxury housing, investment property and commercial development that protect other communities from a major hit. Instead, vast numbers of homeowners in their middle-class neighborhoods and senior communities could cut thousands from their tax bills.”
“‘It would be tough to run the city and offer people the services that we have always offered,’ North Lauderdale Mayor Jack Brady said. ‘Come check our books, because we haven't overspent. This would devastate us.’”
Of course the Sun-Sentinel couldn’t leave Palm Beach County out:
“Palm Beach County's middle-class bedroom communities and the poor towns in the Everglades would take the biggest financial blow if a new "super exemption" wins statewide approval.”
“The plan on the Jan. 29 ballot could cost 10 cities, including Boynton Beach, Royal Palm Beach and Greenacres, at least a tenth of their tax bases, according to an analysis of property tax data by the South Florida Sun-Sentinel.”
“These communities share a stock of moderately priced housing by Palm Beach County standards and lack luxury homes and large swaths of investment and industrial properties that bring in higher tax revenues.”
“‘It's not all mansions on the beach,’ said Jamie Titcomb, executive director of the Palm Beach County League of Cities, citing communities that operate on tight, tiny budgets, such as Pahokee and Belle Glade. ‘Many of our communities are marginal at best in terms of their survivability under some of these scenarios.’”
As more people face foreclosure, we can expect the amount of “suspicious” home fires to go up significantly. The Miami Herald reports on one:
“John D. Lummis and his ex-wife, Cynthia Macbeth, own a house where Lummis lived with his girlfriend, Beth Howe, and her three children. Lummis was in a financial bind: Between the $1,300 a month garnished from his wages in order to pay child support for four of his six children, and supporting Howe and her three children, he had not made a mortgage payment for almost two years.”
“The mortgage holder, Cendant Mortgage Co., had been paying the premiums on the State Farm homeowner's insurance policy. On Feb. 5, 2003, Cendant obtained a mortgage foreclosure decree on the house. The next day, the house burned down.”
“Howe called 911 to report the fire around noon. She then phoned Lummis at work. Lummis' boss offered him a ride home immediately. He turned it down. But he took his buddy up on a second offer of a ride home later in the afternoon.”
“After Lummis got home, he reported the fire to State Farm. The agent who took his call thought he sounded nonchalant. State Farm immediately started an investigation of the claim.”
“‘One of the most important clues to the fire's origin was a red plastic container found at the scene that tested positive for traces of gasoline and kerosene. Lummis, who was a volunteer firefighter for about seven years, would, State Farm concluded, be more familiar with this mixture as an accelerant than would the average Joe,’ according to the court's report.”
Monday, August 13, 2007
Today's F@cked Buyer
Thank you to a reader for supplying this one:
126 INKBERRY DR, JUPITER, FL 33458
I need your help with this daily feature. Do you know of a F@cked Buyer? Just add the MLS number or the FSBO link in the comments section and I will add it to an this daily update in the future.
126 INKBERRY DR, JUPITER, FL 33458
- 3 Bed, 2 Bath, 3,315 Sq. Ft., SFH
- Bought in March 2006 for $598,500
- On the MLS for $469,000
- Loss before the Realtor® commission: $129,500
- Loss after the Realtor® commission: $157,640
I need your help with this daily feature. Do you know of a F@cked Buyer? Just add the MLS number or the FSBO link in the comments section and I will add it to an this daily update in the future.
Sunday, August 12, 2007
Today's F@cked Buyer
This one has already been foreclosed on is being sold by the bank. Proceeds from the sale will be be almost 50% from its March 2006 purchase price:
1405 TAHOE Ct, Lake Worth, FL 33461
I need your help with this daily feature. Do you know of a F@cked Buyer? Just add the MLS number or the FSBO link in the comments section and I will add it to an this daily update in the future.
1405 TAHOE Ct, Lake Worth, FL 33461
- 5 Bed, 4 Bath, 3,027 Sq. Ft., SFH
- Bought in March 2006 for $420,000
- On the MLS for $229,900
- Loss before the Realtor® commission: $190,100
- Loss after the Realtor® commission: $203,894
I need your help with this daily feature. Do you know of a F@cked Buyer? Just add the MLS number or the FSBO link in the comments section and I will add it to an this daily update in the future.
Saturday, August 11, 2007
Today's F@cked Buyer
Thank you to a reader that suggested this first home listed below. I decided to look up some other sellers in the same Plantation development (Fountain Springs). As expected I found some other F-cked Buyers along with some sellers who are overpriced by more than $100,000. Here's a sampling of the F-cked Buyers:
10670 NW 12TH CT PLANTATION, FL 33322
10670 NW 12TH CT PLANTATION, FL 33322
- 3 Bed, 2.5 Bath, 1,797 Sq. Ft., SFH
- Bought in July 2005 for $399,000
- On the MLS for $275,000
- Loss before the Realtor® commission: $124,000
- Loss after the Realtor® commission: $140,500
1691 NW 107TH LN, PLANTATION, FL 33322
- 4 Bed, 3 Bath, 1,922 Sq. Ft., SFH
- Bought in June 2005 for $374,500
- On the MLS for $349,900
- Loss before the Realtor® commission: $24,600
- Loss after the Realtor® commission: $45,594
10680 NW 16TH CT, PLANTATION, FL 33322
- 3 Bed, 2.5 Bath, 2,100 Sq. Ft., SFH
- Bought in June 2005 for $431,000
- On the MLS for $409,900
- Loss before the Realtor® commission: $21,100
- Loss after the Realtor® commission: $45,694
Today's Local Real Estate News
The Miami Herald reports on that the mortgage crisis is still in its early stages (see my previous post on this issue):
“Millions of other borrowers are wrestling with another type of adjustable rate mortgage, or ARM, called ‘interest-only.’ These loans allowed borrowers to pay just enough each month to cover the interest owed on the loan, leaving the balance of the outstanding debt unchanged.”
“While most of the mortgage market worries so far have focused on the huge losses flowing from the subprime home loans made to people with bad credit, the option and interest-only ARMs held by more creditworthy borrowers loom as another calamity in the making.”
“If the worst fears about these loans materialize, the economic damage would likely extend well beyond the United States because much of the debt has been packaged into securities sold to pension funds, banks and other investors around the world who were hungry for high yields. The fallout could also further depress housing prices, leaving U.S. consumers feeling poorer and less likely to buy the merchandise imported from overseas.”
“So far, less than 4 percent of the option and interest-only ARMs are delinquent, well below the 14 percent rate for the subprime market, where about $1.5 trillion in home loans are still outstanding, according to the most recent data from the research firm First American LoanPerformance.”
“But there is still reason to be alarmed because the trouble with option and interest-only ARMs still appears to be in its early stages. Many industry observers suspect the biggest problems will emerge during the next 16 months as shoddily underwritten ARMs made near the real estate market's peak in 2005 and 2006 climb to higher interest rates.”
The Sun-Sentinel reports on the credit crunch, an issue that I feel will ultimately impact prices in the market more than any other issue:
“If you're hunting for a home loan and have lousy credit, plan to keep looking. Even if your credit is stellar, prepare to pony up a sizable down payment and prove every penny of income to the lender.”
“‘Banks, especially those in South Florida, are becoming increasingly tight-fisted,’ said Ken Thomas, a Miami-based industry analyst and consumer advocate.”
“Growing delinquencies and defaults on subprime mortgages, loans given to customers with poor credit histories, have increased rapidly in recent months. As a result, investors are hesitant to buy the loans in the secondary markets.”
“Without that, lenders often have no other funding sources and shut down because they have no cash liquidity.”
“The widening credit crunch has claimed more than 100 lenders nationwide in recent months, many of them with ties to Palm Beach and Broward counties.”
Local developers are not doing much better. The Sun-Sentinel reports:
“Stung by the downturn in the U.S. housing market, Fort Lauderdale-based builder Levitt Corp. on Friday announced a $58.1 million loss for the quarter ended June 30, compared with a $737,000 loss for the same period a year earlier.”
“The hefty loss included a pretax charge of about $63 million to revalue its home-building inventory, compared with a impairment charge of $4.7 million during the same period last year.”
“The company said the ‘large’ impairment charge reflects the ‘continued deterioration’ of its home-building markets, especially Florida, the need for ‘aggressive pricing and discounting strategies’ to increase sales, and ‘the prolonged duration of the weakness in the market.’”
When all else fails, sellers can always pray for Saint Joseph to intervene. The Sun-Sentinel reports on this growing practice:
“Some folks say it's silly superstition. Others even call it sacrilegious. But those who've had success with the help of St. Joseph say despite the dismal housing market you can count on him as your heavenly real estate agent.”
“True believers insist that when they plant a small statute of this patron saint of carpenters upside down in the yard and pray for his help, their house sells.”
“‘I plant them all the time, and I say a little prayer,’ says Christine Beck, a real estate agent with Coldwell Banker on Las Olas Boulevard in Fort Lauderdale. ‘You have got to do something in this market.’”
“St. Therese of Lisieux Catholic Church in Wellington carries the St. Joseph home sale kits in the gift shop. Father Brian Lehnert says they come with prayer cards and he doesn't disapprove.”
“‘Whatever you do, ask St. Joseph to help guide you in selling the house,’” he says. ‘If it's done in faith, I don't have a problem with it.’”
I have a better idea, why not simply lower the price -- I have little doubt that will be far more effective than burying a statue in the yard.
“Millions of other borrowers are wrestling with another type of adjustable rate mortgage, or ARM, called ‘interest-only.’ These loans allowed borrowers to pay just enough each month to cover the interest owed on the loan, leaving the balance of the outstanding debt unchanged.”
“While most of the mortgage market worries so far have focused on the huge losses flowing from the subprime home loans made to people with bad credit, the option and interest-only ARMs held by more creditworthy borrowers loom as another calamity in the making.”
“If the worst fears about these loans materialize, the economic damage would likely extend well beyond the United States because much of the debt has been packaged into securities sold to pension funds, banks and other investors around the world who were hungry for high yields. The fallout could also further depress housing prices, leaving U.S. consumers feeling poorer and less likely to buy the merchandise imported from overseas.”
“So far, less than 4 percent of the option and interest-only ARMs are delinquent, well below the 14 percent rate for the subprime market, where about $1.5 trillion in home loans are still outstanding, according to the most recent data from the research firm First American LoanPerformance.”
“But there is still reason to be alarmed because the trouble with option and interest-only ARMs still appears to be in its early stages. Many industry observers suspect the biggest problems will emerge during the next 16 months as shoddily underwritten ARMs made near the real estate market's peak in 2005 and 2006 climb to higher interest rates.”
The Sun-Sentinel reports on the credit crunch, an issue that I feel will ultimately impact prices in the market more than any other issue:
“If you're hunting for a home loan and have lousy credit, plan to keep looking. Even if your credit is stellar, prepare to pony up a sizable down payment and prove every penny of income to the lender.”
“‘Banks, especially those in South Florida, are becoming increasingly tight-fisted,’ said Ken Thomas, a Miami-based industry analyst and consumer advocate.”
“Growing delinquencies and defaults on subprime mortgages, loans given to customers with poor credit histories, have increased rapidly in recent months. As a result, investors are hesitant to buy the loans in the secondary markets.”
“Without that, lenders often have no other funding sources and shut down because they have no cash liquidity.”
“The widening credit crunch has claimed more than 100 lenders nationwide in recent months, many of them with ties to Palm Beach and Broward counties.”
Local developers are not doing much better. The Sun-Sentinel reports:
“Stung by the downturn in the U.S. housing market, Fort Lauderdale-based builder Levitt Corp. on Friday announced a $58.1 million loss for the quarter ended June 30, compared with a $737,000 loss for the same period a year earlier.”
“The hefty loss included a pretax charge of about $63 million to revalue its home-building inventory, compared with a impairment charge of $4.7 million during the same period last year.”
“The company said the ‘large’ impairment charge reflects the ‘continued deterioration’ of its home-building markets, especially Florida, the need for ‘aggressive pricing and discounting strategies’ to increase sales, and ‘the prolonged duration of the weakness in the market.’”
When all else fails, sellers can always pray for Saint Joseph to intervene. The Sun-Sentinel reports on this growing practice:
“Some folks say it's silly superstition. Others even call it sacrilegious. But those who've had success with the help of St. Joseph say despite the dismal housing market you can count on him as your heavenly real estate agent.”
“True believers insist that when they plant a small statute of this patron saint of carpenters upside down in the yard and pray for his help, their house sells.”
“‘I plant them all the time, and I say a little prayer,’ says Christine Beck, a real estate agent with Coldwell Banker on Las Olas Boulevard in Fort Lauderdale. ‘You have got to do something in this market.’”
“St. Therese of Lisieux Catholic Church in Wellington carries the St. Joseph home sale kits in the gift shop. Father Brian Lehnert says they come with prayer cards and he doesn't disapprove.”
“‘Whatever you do, ask St. Joseph to help guide you in selling the house,’” he says. ‘If it's done in faith, I don't have a problem with it.’”
I have a better idea, why not simply lower the price -- I have little doubt that will be far more effective than burying a statue in the yard.
Friday, August 10, 2007
Today's F@cked Buyer
Thank you to a reader for supplying this one:
18982 CLOUD LAKE CIR, BOCA RATON, FL 33496
I need your help with this daily feature. Do you know of a F@cked Buyer? Just add the MLS number or the FSBO link in the comments section and I will add it to an this daily update in the future.
18982 CLOUD LAKE CIR, BOCA RATON, FL 33496
- 2 Bed, 2 Bath, 1,172 Sq. Ft., SFH
- Bought in May 2005 for $249,900
- On the MLS for $217,000
- Loss before the Realtor® commission: $32,900
- Loss after the Realtor® commission: $45,920
I need your help with this daily feature. Do you know of a F@cked Buyer? Just add the MLS number or the FSBO link in the comments section and I will add it to an this daily update in the future.
Today's Local Real Estate News
The Sun-Sentinel reports on the effects foreclosures are having on South Florida:
“In Broward, the number of people behind on their mortgage payments in July almost tripled from a year ago, jumping from 517 to 1,430, according to a recent South Florida Sun-Sentinel article. In Palm Beach County, the number jumped from 298 to 1,063.”
“It's a harsh reality, but it's one that almost always follows a housing boom. Sadly, we never seem to learn the lesson that budgeting and keeping manageable debt levels is critical to the American Dream of home ownership.”
“That said, the impact of the mushrooming foreclosure cloud may not be limited to those people who lose their homes.”
“There's plenty of talk from the nation's capital to the country's financial nerve center in New York of an impending credit crunch. The last time Americans faced such a mess was during the savings and loan debacle, which sparked a recession and required a bailout from the federal government.”
Fortunately, President Bush recently stated that there would be no bailout:
“President Bush said Thursday concern should be shown those who've lost their homes but it's not the federal government's job to bail them out.”
“‘Obviously anybody who loses their home is somebody with whom we must show an enormous empathy,’” Bush said. Asked whether he would champion a government bailout, Bush responded: ‘If you mean direct grants to homeowners, the answer would be No, I don't support that.’”
“Bush said that he does support financial institutions working with distressed homeowners. He also suggested that some people may not have fully understood the terms of their mortgages. The government, he said, can help out by educating prospective home buyers.”
“Analysts estimate that nearly 2 million adjustable-rate mortgages will reset to higher rates this year and next. Some higher-risk ‘subprime’ borrowers were lured by initially low "teaser" rates offered during the housing boom. But those teaser rates can spike upward after the first few years, causing payment shocks.”
After saying for months that property taxes were the major source of our housing woes (see my previous post on this issue), some Realtors® are now saying lower taxes will actually hurt sales. The Sun-Sentinel reports:
“The scramble is on by cities to cut property taxes, but instead of luring home buyers, real estate agents say it may be discouraging some of them.”
“‘A big question on people's minds is what will happen in terms of public services and does this mean schools will have less money, and what about public hospitals?’ said Barry Rothman, sales associate with Lang Realty in Boca Raton. ‘Are we going to get even less service for our tax dollars?’”
“That's not what state legislators had hoped would happen when they ordered cities and counties for the fiscal year beginning Oct. 1 to freeze tax collections at current levels and then make an additional cut, ranging from 3 percent to 9 percent.”
‘People see the tax issue as a bunch of bull, so to speak, because insurance rates haven't gone down, home prices are still high and now interest rates are rising so people who were barely able to get in when prices were down can't afford to buy now,’ said broker Jeff Kahn, manager consultant with Century 21 Hansen Realty in Fort Lauderdale.”
Local Realtors® also once claimed that international investors would continue to drive up housing prices in South Florida (see this 2005 article from the Sun-Sentinel ). Now, The Sun-Sentinel reports a very different story:
Some real estate agents say the state's sluggish housing market has stemmed the tide of international home buyers, particularly from Latin America.
"We had a lot of people from Latin America putting their money here, investing in housing. But with all the negative press about prices falling and the rate of foreclosures, it's slowed down," said broker Natascha Tello of Pembroke Pines.
Even the National Association of Realtors® swayed from its normally Pollyanna view of the market:
“The National Association of Realtors' revised forecast calls for existing home sales of 6.04 million in 2007, down 6.8 percent from last year. The forecast was 1 percent lower, or 70,000 fewer homes, than July's prediction of 6.11 million.”
“This year's sales would be the lowest since 2002, when sales hit 5.63 million. Last year's sales were 6.48 million.”
“Next year, the trade group expects sales to climb to 6.38 million, up slightly from the forecast it gave in July of 6.37 million.”
“The forecast comes as delinquencies among borrowers with weak, or subprime, credit have risen dramatically over the past year, and other loans are showing weakness as well.”
“‘With fewer affordable loans available, that will cut back on some of the homebuyers who wanted to enter the market,’ Lawrence Yun, the trade group's senior economist, said in an interview. However, Yun projected that demand would rebound next year.”
It may be worse for South Florida. The Sun-Sentinel reports:
“In South Florida, existing home sales are down roughly 20 percent in the first half of 2007 compared with the same period last year, according to the Florida Association of Realtors.”
“Sales in Palm Beach and Broward counties are expected to remain sluggish through at least this year, even with Florida Gov. Charlie Crist signing into law a plan to cut property taxes.”
“New home sales also are disappointing. Robert Toll, chairman of luxury builder Toll Brothers, on Wednesday described the southeast Florida market as a ‘flunk minus.’”
“Experts had said the housing climate here could start to recover later this year, but they're revising their predictions in the wake of the mortgage-market mess. Some analysts now say it could be late 2008 or even 2009 before South Florida's housing market rebounds.”
Miami condo builder provide evidence of the downturn as they are now being forced to sell slow moving units at auction (remember when people used to sleep out on sidewalks just to be the first to buy these new units?). The Miami Herald reports:
“Panoramic views of Biscayne Bay. A short distance to the Carnival Center and downtown Miami. Living in the heart of Miami's emerging Edgewater neighborhood.”
“In what may preview the straits the ailing South Florida condo market faces in the coming months, developers of the Platinum condominium are auctioning 20 condos in its 119-unit, 22-story tower. Eight will go to the highest bidder, no matter how low the sales price. The rest require the developer's approval.”
“Carmen Redondo, a principal with Maysville, the property's builder, said buyers started closing on units at Platinum, 480 NE 30th St., in May, but the remaining inventory couldn't attract enough interest in the sluggish market. ‘We decided to auction the last 20 units so we can finish this project and go to a new thing,’ Redondo said.”
“The move echoes the condo bust of the 1980s, when new units were auctioned in bulk across South Florida. Recently, individual condo owners, companies converting apartments into condos and single-family builders have already experimented with auctions, both online and in person with full-throated auctioneers.”
“Market watchers bet more are to come, given conditions in the condo market. In June, the number of Miami-Dade condos sold dropped 52 percent from the same month a year earlier -- although prices held on, gaining 7 percent year-over-year to a median price of $275,500.”
In the face of all this news, the general population still seems completely unaware of the growing economic problems. The Palm Beach Post reports that consumer confidence is actually growing:
“Consumer confidence rebounded in August, rising to a five-month high as receding gasoline prices and a mostly solid employment climate made people feel better about the economy's prospects and their own financial situations.”
“The improved attitudes come even as Wall Street has been enduring a turbulent spell, which has sent stocks on wild upward and downward swings. Investors are worried that mounting problems in the housing and home mortgage markets will hurt the broader financial system and short-circuit the economic expansion.”
“The RBC Cash Index showed that consumer confidence rose to 89.3 in August. That marked a bounceback from July's 76.1, the worst reading in almost a year. The new reading was the best since March. The index is based on the results of the international polling firm Ipsos.”
“‘This indicates that there is a significant disconnect between Wall Street and Main Street,’ said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group.”
“In Broward, the number of people behind on their mortgage payments in July almost tripled from a year ago, jumping from 517 to 1,430, according to a recent South Florida Sun-Sentinel article. In Palm Beach County, the number jumped from 298 to 1,063.”
“It's a harsh reality, but it's one that almost always follows a housing boom. Sadly, we never seem to learn the lesson that budgeting and keeping manageable debt levels is critical to the American Dream of home ownership.”
“That said, the impact of the mushrooming foreclosure cloud may not be limited to those people who lose their homes.”
“There's plenty of talk from the nation's capital to the country's financial nerve center in New York of an impending credit crunch. The last time Americans faced such a mess was during the savings and loan debacle, which sparked a recession and required a bailout from the federal government.”
Fortunately, President Bush recently stated that there would be no bailout:
“President Bush said Thursday concern should be shown those who've lost their homes but it's not the federal government's job to bail them out.”
“‘Obviously anybody who loses their home is somebody with whom we must show an enormous empathy,’” Bush said. Asked whether he would champion a government bailout, Bush responded: ‘If you mean direct grants to homeowners, the answer would be No, I don't support that.’”
“Bush said that he does support financial institutions working with distressed homeowners. He also suggested that some people may not have fully understood the terms of their mortgages. The government, he said, can help out by educating prospective home buyers.”
“Analysts estimate that nearly 2 million adjustable-rate mortgages will reset to higher rates this year and next. Some higher-risk ‘subprime’ borrowers were lured by initially low "teaser" rates offered during the housing boom. But those teaser rates can spike upward after the first few years, causing payment shocks.”
After saying for months that property taxes were the major source of our housing woes (see my previous post on this issue), some Realtors® are now saying lower taxes will actually hurt sales. The Sun-Sentinel reports:
“The scramble is on by cities to cut property taxes, but instead of luring home buyers, real estate agents say it may be discouraging some of them.”
“‘A big question on people's minds is what will happen in terms of public services and does this mean schools will have less money, and what about public hospitals?’ said Barry Rothman, sales associate with Lang Realty in Boca Raton. ‘Are we going to get even less service for our tax dollars?’”
“That's not what state legislators had hoped would happen when they ordered cities and counties for the fiscal year beginning Oct. 1 to freeze tax collections at current levels and then make an additional cut, ranging from 3 percent to 9 percent.”
‘People see the tax issue as a bunch of bull, so to speak, because insurance rates haven't gone down, home prices are still high and now interest rates are rising so people who were barely able to get in when prices were down can't afford to buy now,’ said broker Jeff Kahn, manager consultant with Century 21 Hansen Realty in Fort Lauderdale.”
Local Realtors® also once claimed that international investors would continue to drive up housing prices in South Florida (see this 2005 article from the Sun-Sentinel ). Now, The Sun-Sentinel reports a very different story:
Some real estate agents say the state's sluggish housing market has stemmed the tide of international home buyers, particularly from Latin America.
"We had a lot of people from Latin America putting their money here, investing in housing. But with all the negative press about prices falling and the rate of foreclosures, it's slowed down," said broker Natascha Tello of Pembroke Pines.
Even the National Association of Realtors® swayed from its normally Pollyanna view of the market:
“The National Association of Realtors' revised forecast calls for existing home sales of 6.04 million in 2007, down 6.8 percent from last year. The forecast was 1 percent lower, or 70,000 fewer homes, than July's prediction of 6.11 million.”
“This year's sales would be the lowest since 2002, when sales hit 5.63 million. Last year's sales were 6.48 million.”
“Next year, the trade group expects sales to climb to 6.38 million, up slightly from the forecast it gave in July of 6.37 million.”
“The forecast comes as delinquencies among borrowers with weak, or subprime, credit have risen dramatically over the past year, and other loans are showing weakness as well.”
“‘With fewer affordable loans available, that will cut back on some of the homebuyers who wanted to enter the market,’ Lawrence Yun, the trade group's senior economist, said in an interview. However, Yun projected that demand would rebound next year.”
It may be worse for South Florida. The Sun-Sentinel reports:
“In South Florida, existing home sales are down roughly 20 percent in the first half of 2007 compared with the same period last year, according to the Florida Association of Realtors.”
“Sales in Palm Beach and Broward counties are expected to remain sluggish through at least this year, even with Florida Gov. Charlie Crist signing into law a plan to cut property taxes.”
“New home sales also are disappointing. Robert Toll, chairman of luxury builder Toll Brothers, on Wednesday described the southeast Florida market as a ‘flunk minus.’”
“Experts had said the housing climate here could start to recover later this year, but they're revising their predictions in the wake of the mortgage-market mess. Some analysts now say it could be late 2008 or even 2009 before South Florida's housing market rebounds.”
Miami condo builder provide evidence of the downturn as they are now being forced to sell slow moving units at auction (remember when people used to sleep out on sidewalks just to be the first to buy these new units?). The Miami Herald reports:
“Panoramic views of Biscayne Bay. A short distance to the Carnival Center and downtown Miami. Living in the heart of Miami's emerging Edgewater neighborhood.”
“In what may preview the straits the ailing South Florida condo market faces in the coming months, developers of the Platinum condominium are auctioning 20 condos in its 119-unit, 22-story tower. Eight will go to the highest bidder, no matter how low the sales price. The rest require the developer's approval.”
“Carmen Redondo, a principal with Maysville, the property's builder, said buyers started closing on units at Platinum, 480 NE 30th St., in May, but the remaining inventory couldn't attract enough interest in the sluggish market. ‘We decided to auction the last 20 units so we can finish this project and go to a new thing,’ Redondo said.”
“The move echoes the condo bust of the 1980s, when new units were auctioned in bulk across South Florida. Recently, individual condo owners, companies converting apartments into condos and single-family builders have already experimented with auctions, both online and in person with full-throated auctioneers.”
“Market watchers bet more are to come, given conditions in the condo market. In June, the number of Miami-Dade condos sold dropped 52 percent from the same month a year earlier -- although prices held on, gaining 7 percent year-over-year to a median price of $275,500.”
In the face of all this news, the general population still seems completely unaware of the growing economic problems. The Palm Beach Post reports that consumer confidence is actually growing:
“Consumer confidence rebounded in August, rising to a five-month high as receding gasoline prices and a mostly solid employment climate made people feel better about the economy's prospects and their own financial situations.”
“The improved attitudes come even as Wall Street has been enduring a turbulent spell, which has sent stocks on wild upward and downward swings. Investors are worried that mounting problems in the housing and home mortgage markets will hurt the broader financial system and short-circuit the economic expansion.”
“The RBC Cash Index showed that consumer confidence rose to 89.3 in August. That marked a bounceback from July's 76.1, the worst reading in almost a year. The new reading was the best since March. The index is based on the results of the international polling firm Ipsos.”
“‘This indicates that there is a significant disconnect between Wall Street and Main Street,’ said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group.”
Thursday, August 9, 2007
Today's F@cked Buyer
1616 NATURE, PALM BEACH GARDENS, FL
I need your help with this daily feature. Do you know of a F@cked Buyer? Just add the MLS number or the FSBO link in the comments section and I will add it to an this daily update in the future.
- 4 Bed, 3 Bath, 3,300 Sq. Ft., SFH
- Bought in July 2005 for $605,000
- On the MLS for $520,000
- Loss before the Realtor® commission: $85,000
- Loss after the Realtor® commission: $116,200
I need your help with this daily feature. Do you know of a F@cked Buyer? Just add the MLS number or the FSBO link in the comments section and I will add it to an this daily update in the future.
Video: Flip This House is a Scam
Have you ever watched Flip This House and been amazed how flippers make bundles of cash in just a few weeks? After watching this news story, you'll see what really happens...
CLICK HERE TO WATCH THE VIDEO
CLICK HERE TO WATCH THE VIDEO
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