By Rich R

September 8, 2006 06:22 PM | Link to this

I’ll beleive it when I see it.

I really don’t see how 500 new jobs will correct this RE market in a positive way.

Once again, let’s just roll the dice and see if we yeild “Craps”.

By Rtj

September 8, 2006 07:00 PM | Link to this

Are you all for REAL!! This bio-tech hype is only putting money in the pockets of the politicians and a few of the folks they are in bed with. 189 jobs over a ten year period is all that agreed to. Those jobs are not for Fl residents. Disgraceful, that we let these people get away with this hype!Those fools will be brought in from elsewhere. The only thing that is going to create is more SERVICE work.People working for Scripps right now in labs CANNOT afford to rent by themselves.They all need roommates. That will never help the housing market sales which has an inventory of several years, not months like some say. We are in for some very rough times folks, strap on your seat belt.

By Rich R

September 8, 2006 07:39 PM | Link to this

is this true? Only 189 jobs? And for this FL/PBC gives up hundreds of million’s of dollars?

I guess that explains what PBC is doing with all the $$ gained from the “Great RE Boom”. Nice job Karen Marcus!

I still want to know why PBC finds the need to maintain $1.3 Billion with a “B” rainy day fund. I really hope this is earning interest.

By TANC

September 8, 2006 07:39 PM | Link to this

First of all, who knows how much employment growth will be generated as the finalization of these endeavors are years from coming to fruition. The theory may have some validity and as companies move here, other ancillary companies will eventually move as well and in total you may have a job and market growth level that is significant. This will not, however, happen overnight creating a boom in the housing market.

At best, it will inch up demand slowly and create enough pull to keep the market from crashing over the LONG TERM. At worst, it will be a meaningless endeavor that costs us taxpayers millions….

By Rich R

September 8, 2006 07:49 PM | Link to this

It’s already cost taxpayers million’s.

Does anyone remember the project that was started and then ended by court order. How much did that WASTE?

I would be much different if the industry being courted was more inline with the abilities of the current workforce, but how many people do you know that work in Biotech?

As far as the ancillary work product, I guess a local company will mow their lawn, clean their windows, and a few will get low paying jobs as janitors, secretaries etc, but nothing to boost the RE market to the point of recognition.

Just my thoughts.

By Mike Fink

September 8, 2006 09:34 PM | Link to this

Well, I have to agree on this one, what a total waste of time and breath this whole thing has been.

First off, why on earth are we paying these companies to come here? These are biotech, they should be making billions of dollars by raping another system (healthcare). Why do we have to bribe them into coming here in the first place?

Also, the number of jobs; well, its just totally insignificant in the face of the housing market. Honestly, there is absolutly nothing that can help housing right now (on a national scale) except for a drop of the fed rate to 0%. People are as leveraged as they can get; and will soon start to feel the pain from all that leverage as rates adjust upward. Again, we all need to remember, PB was hit HARD by the housing bubble (as was most of S. FL) but by no means the only place. Many, many areas were caught up in this; as it starts to correct nationally, the biggest bubble are going to feel the most pain.

Anyway, here’s my take on this whole thing. You’ve got 1.something billion dollars sitting around in a rainy day fund. You have to find something to spend it on. And then Scripps steps to the plate. :)

By TH

September 8, 2006 10:25 PM | Link to this

I agree..the housing bubble on a national scale is in big trouble. I have relatives in MD which have had similar gains as PB county and inventory has just exploded. Regarding that one billion dollars extra in tax money I think the county is going to need to hire add’l cops from the fall out of this financial disaster. i think there will be murders, suicides, children being neglected, divorces…etc..The worst is yet to come folks….After all greed is a mental illness….

By INTERNET MADAM

September 8, 2006 11:41 PM | Link to this

To Rich R

You need some relaxation and conversation. You have been working hard 24/7 on these blogs, not good for your sex life if you have one and it doesn’t sound like you do.

I have a couple of very charming ladies who would be interested in hearing more “intimate details” of where the housing market is going or even evaluating your sausagehead for a price of course.

Get some rest for yourself. It is going to be a busy season.

By Mike Fink

September 9, 2006 07:31 AM | Link to this

This is a big part of the problem with the S. FL housing market:

http://www.palmbeachpost.com/news/content/localnews/epaper/2006/09/09/s1bappraiser_0909.html?cxtype=rss&cxsvc=7&cxcat=17

I don’t understand why the system works like this. They are browbeating the appraiser; but, as stated in this article, his job is very easy. What is the FMV of this home, as of Jan 1.

The real question is, why on earth is the “roll back rate” not the default? Why don’t they have to fight to raise taxes? They will call that a rate decrease, when in fact, its an increase in the amount of tax they are bringing in.

I think that they should start from the rollback rate, and have to justify ANY additional spending (maybe allow a 3% increase each year for cost of living)!

This is SUCH a flawed system right now, I just can’t imagine buying my way into this mess.

How mad are people going to be when their neighbors, who bought AFTER them, are paying less tax? I could be in that situation right now. The condo next to mine sold about 7 months ago, for right around 260. I could buy mine, right now, for 225. That would be a significant tax decrease for me, and I live in the same exact unit.

So stupid.

By GB

September 9, 2006 09:02 AM | Link to this

You know Rush Limbaugh pays over $500k per month for property taxes on his home in PBC and he’s not wasting time complaining on blogs.

How’s that for the blaring, gaping $200 disparity between what you and Mr. Jones next door pay at your “condo”.

Please. With all that’s going on in the world today don’t we have more to do than analyze how much more or less our neighbor pays in property taxes?

This is the most preposterous bubble-prolonging poppycock I’ve heard to date.

Next I’ll be reading that Paris Hilton is fueling the PBC RE bubble and it will soon be over for all of us.

Please.

By CJ

September 9, 2006 11:35 AM | Link to this

I don’t think so - in order for someone to pay $500K a month in property taxes, their house would have to be worth (500,000*12)/.022 = $272 Million. According to the property records, his taxes are $435,000 a YEAR.

By GB

September 9, 2006 12:54 PM | Link to this

Yes, $500k divided by 12 for the monthly payment which is $41,600.00 per month.

Now, where do these guys hogging this blog fit in by comparing themselves to their neighbors with $200 per month discrepencies?

The utter fruitless foolishness of this doom-n-gloom blog is beyond all comprehending.

You guys argue all day long over $200 per month and when the Palm Beach bubble with pop while Palm Beachers like Rush Limbaugh earn billions.

Like I said last week: usually the loudest voices heard at the game are not the players; it’s the one’s sitting on their duff in the stands.

If anyone has any right to complain about high Palm Beach prices and property taxes I would say it is someone who is paying almost $50,000.00 per month in taxes.

Yet he’s working hard at earning money.

And these north carolinians are sitting around condemning us for our expensive real estate.

Well, get a revelation! North Carolina prices are rising now faster than Palm Beach so get ready for your next tax bill.

And in North Carolina you don’t get the luxury of a homestead exemption! You will pay full tax on FULL MARKET VALUE of your house year after year every year for the rest of your life.

I’m stayin’ in Palm Beach and I really don’t give a flying fig how many hundred or thousand dollars more or less my next door neighbor pays than I do.

Who cares.

By an education can help

September 9, 2006 01:16 PM | Link to this

Looks like we need some brains into this area the way some of these people think here. I really don’t know where they get their figures of taxes. If anyone is paying taxes that high, then they are making more more then most of these bashers ever can imagine. Once these bio-tech companies get establish here, other related companies will soon follow. At least their salaries will be much higher than the people working at Home-Depot or Publix. If the Scripps brains bought 500 homes, that would make 500 existing homeowners happy, in which in return they can make another 500 other homeowners happy of buying their homes. And so on and so on. I think Jeff O. should look for a new job, his contribution hurts the Palm Beach Post more than it helps. And for the bashers out there, you need some brains yourselves. Your lack of education shows, that is why you hate people with money who made it being honest from having an education.

By Mike Fink

September 9, 2006 02:54 PM | Link to this

Yes, your right, if Scripps adds 500 jobs, there are 500 homes that have to be sold. Even if they added 500 jobs a month for the next 5 years, its not going to make a dent in the housing inventory. That’s the point, we need 1,000s or 10,000s of jobs, not hundreds. And they have to pay 100-150K, not the 40K median down here. When someone starts talking about an employer like that coming to town, that’s when I will take notice.

Also, here’s what I really wanted to post. This is knows thet the UHaul test; and shows how/when people are migrating to/from certain areas. 1000 people a day may move here. But the numbers show far more then that are leaving.

Miami, FL to Austin, TX $3,522 Miami, FL to Phoenix, AZ $3,062 Miami, FL to San Diego, CA $4,858 San Diego, CA to Phoenix, AZ $646 San Diego, CA to Austin, TX $4,015 San Diego, CA to Miami, FL $1,443 Austin, TX to Miami, FL $436 Austin, TX to Phoenix, AZ $651 Austin, TX to San Diego, CA $729 Phoenix, AZ to San Diego, CA $174 Phoenix, AZ to Austin, TX $2,693 Phoenix, AZ to Miami, FL $1,376

These numbers were all gathered from the UHaul website, feel free to compare. This is for a 26’ truck, one way.

By Mike Fink

September 9, 2006 02:57 PM | Link to this

Sorry, that was unreadable. Anyway, I tried to clean it up a bit. Point is, way more UHauls headed out of this state then into it.

Miami, FL to Austin, TX $3,522

Miami, FL to Phoenix, AZ $3,062

Miami, FL to San Diego, CA $4,858

San Diego, CA to Phoenix, AZ $646

San Diego, CA to Austin, TX $4,015

San Diego, CA to Miami, FL $1,443

Austin, TX to Miami, FL $436

Austin, TX to Phoenix, AZ $651

Austin, TX to San Diego, CA $729

Phoenix, AZ to San Diego, CA $174

Phoenix, AZ to Austin, TX $2,693

Phoenix, AZ to Miami, FL $1,376

By TANC

September 9, 2006 03:04 PM | Link to this

GB,

My research on NC (I live in FL now) shows the RE Tax rate in most areas in NC is close to HALF what it is in Florida. Yes, you are assessed at full market value from when the property is purchased, but, the assessed value is not refigured annually as you say. By law it is refigured at least every 8 yrs although some areas are looking at reassessing it more often than that. Every 4 in some areas is what I have heard is being considered in some areas. AND, they do have a homestead exemption once you get to the ripe old age of 65 :).

Home values in Raleigh are increasing at about a 10 to 12% rate annually of late and that is healthy but nothing near where we have been in FL, and job growth in Raleigh remains among the strongest in the nation.

Another key item is Insurance. It is so much less than in FL it is ridiculous.

Strong job growth, and a lower cost of living that is not out of control can likely support 10 to 12% price growth.

By Mike Fink

September 9, 2006 03:12 PM | Link to this

Cross-post from another blog:

The perfect storm hits Florida Real Estate.

As the slow down continues in Florida, those of us who are in the real estate business, are worried. Conditions are looming which could cause the largest property value meltdown since the 1928 bust.

Most of our markets are overpriced for the median income family, you know, the people actually trying to make a living here. Home prices in most of our major metropolitan areas have been driven up by a false demand created by outside buyers and speculation. A classic asset bubble seen before in real estate and the stock markets. Natural population growth has stopped in the past two years, since the 2004 hurricane season. School enrollments have dropped in most South Florida Counties. Housing inventories continue to grow. All this we know. However, I’m telling you, this is the good new!

Most single family home insurance rates for wind storm damage have increased to a factor of 1.5 to 3.0 over rates prior to 2004. These rates are capped by state law. After the November elections expect the caps to be removed. The insurance companies demand this, and will leave the state otherwise. Many have already done so, or are not writing new policies. Unknown to the general population, the State of Florida has allowed the insurance companies to drop ALL apartment and condominium projects in the State! The only remaining source of insurance available is the State’s own “Citizen Insurance” which is referred to as the “insurer of last resort”. The insurance rates for these projects (Wind Storm Coverage) will average at least ten times the rates of two years ago. I’m told that on average, you can expect a $100 per bedroom/per month insurance expense for apartment and condo projects.

Real Estate tax assessments have lagged behind our markets due to the system. In Florida, your real estate taxes reflect the estimated value of you home as of January 1st of the prior year. TRIM notices of January 2006 assessments are sent out over the summer with final tax bills in October or November. Taxes are past due in May of 2007. So, the market sales data used for your current tax bill reflect last year’s price levels. A typical entry level home of $250,000 (Assessed Value) will have a tax bill (new buyer) somewhere around $6,000 to $7,000 a year after a homestead exemption of $25,000. That’s a monthly expense of $500.

Real Estate Taxes and Insurance expenses will remain high. There is no relief in sight.

Now, the really bad news. Most think of Florida as the land of Oceanfront mansions and million dollar boats a la Miami Vice. There are 17+ million people in Florida. Most are younger GI generation or older boomers, mostly middle class retirees, living off a FIXED INCOME. Given current price levels, most could not buy the house or condo they are currently living in. They are stuck where they are, and they’re not happy about it! Bottom line: The cost of living in Florida has exceeded the benefit of not having a State Income Tax. Most of these people will not leave the State. They will stay here and eventually die in their condo boxes like all the others. But, and this is the main point, THEY WILL NO LONGER TELL THEIR FRIENDS, RELATIVES OR ANYBODY ELSE, THAT FLORIDA IS A GREAT PLACE TO LIVE! This fact, more than anything, is going to hammer Florida Real Estate.

By Rich R

September 9, 2006 03:24 PM | Link to this

Tanc is 100% correct on the way NC Prop Tax works. I am in Wake County and they are thinking of going to the 4 yr plan rather then 8 to raise funds for school construction. Ours is skyrocketing, as yours is decreasing.

It’s a totally fair system to all, and breaks are given to seniors, disabled. D

on’t matter weather you live in it, rental, live out of state, it don’t matter. This allows for uniform burden being carried by all. It also provides for an ample supply of rental units for folks who choose to rent.

Rush Limbaug.

I took a look, Rush does pay $435K prop tax on an assessment of: $23.3 MILLION, Market Value: $35.3 MILLION.

If you see Rush riding down the road, say thanks. That’s all money there from one guy.

I did notice that he’s homesteaded and protected by SOH, He;s been for a while, how much do you think the tax would be if a new owner moved in?

I wish I could…LOL

By Rich R

September 9, 2006 03:28 PM | Link to this

The current retiree’s are already telling people in the north.

This should be very obvious to all ,but I’m not sure so I’ll say it.

THE BOOMERS ARE THE CHILDREN OF OUR CURRENT RETIREE’S.

If you, for one minute don’t think that a late 50’s New Yorker hasn’t spoke to their parnents, aunts, uncles etc, you’re sadly mistake.

See my previous posts about Long Island Wedding.

Just Logical!

By twyla

September 9, 2006 09:03 PM | Link to this

To whoever’s in charge of Palm Beach Post Blogs:

I’ve been reading the realdeal blog and have even posted a couple of entries asking for advice on selling our townhouse next year. Although I received a few very helpful replies, the realdeal isn’t really that kind of blog. I feel like an intruder asking practical questions.

Do you think the Post could start a blog for ordinary people just wanting to talk about their own experiences and questions about selling and buying homes? The speculation on realdeal actually is very interesting but it’s not at all what I was looking for and I can’t imagine I’m the only person who would like to discuss some of the issues from a realistic, nuts and bolts standpoint.

Thank you for thinking about it. I’d appreciate hearing from you.

By Mike Fink

September 9, 2006 10:00 PM | Link to this

Well, twyla,

The articles that we are blogging on are typically about the RE market in general, not about selling/buying homes, etc.

I am not sure what kind of advice your looking for, and I am certain your going to get some VERY conflicting answers here. Before any advice can be given; how long ago did you buy it, and can it carry itself as a rental? If so, that’s definately your best bet; the market is very, very soft; and your going to take a significant loss (from peak) if you need to sell it right now.

If you must sell it, and have enough equity, I suggest you look at comps that are for sale right now, and go 5% below them. We are in the beginning of a RE adjustment right now, the 5% you “lose” by selling quickly is going to be lost by everyone in the very near future. If you need to sell now, my advice is price right, advertise hard, and do anything to go through closing as fast as possible.

Its a very, very real possiblity that your property is depreciating at 1-2% of value each month. If you must sell right now, sell fast, get out quickly, and cut your losses.

I am not a RE professional, nor do I claim to have any inside knowledge, but, from all the signs I see, RE is going nowhere but down for the next couple of years. The faster you get out, the more money your going to take with you.

By Twyla

September 9, 2006 11:23 PM | Link to this

Hi Mike— Thank you, been reading this blog long enough to have gathered we should get out sooner than later. And yes, I already know I have to price our place closer to the low end than the high end of asking prices in my neighborhood if I want to sell in this lifetime. But we’re not retiring till the end of the year and unless we want to sell it as a rock-bottom fixer-upper, we need to spend some time and money before we can put it on the market.

I’m trying to get an idea of what specific fix-ups will be most likely to make buyers out of shoppers. I got some good suggestions before but I’d like to see a blog where that’s the main thing being discussed.

I’ve been doing my own little market research…checking the homes on realtor.com, keeping track of the asking price, what upgrades the homes had, what real estate agent they used…and then going back a couple of months later and seeing what the property actually sold for on the Palm Beach County Property Appraiser’s site. But there haven’t been enough sales, from what I can tell, to see any real trends.

I think a blog for people whose interest in real estate is just on these practical details is really needed. I’m glad I started reading realdeal, it really does fill out what I’ve gleaned from reading the Post’s business pages, but what I really want to know is…should I spring for granite or can I get away with a nice formica? Should I tile the bathrooms or just use some DIY vinyl tiling—it sounds yucky, does it look decent? Is it true there’s paints that I can use on my fake wood cabinets to give them a more updated look that don’t require sanding and priming? Where can you find good discount appliances and things like tile and carpet at prices that aren’t as high as the usual orange big box store?

At this point, I’m thinking clean till my knuckles bleed, paint everything, tile the bathrooms, paint the cabinets, get new kitchen appliances and forget the kitchen counters, get accordion shutters for the upstairs sliders and regular shutters for downstairs. That would all cost us about $10k but would probably help us sell it a lot quicker. But I have no idea if I’m right.

Then there’s the issue of whether or not to use a real estate agent. I read the Post every Sunday and I know the real estate industry certainly advises people to use one. I’d like to know what real people have to say. I’ve polled my friends and the opinions are mixed. I figure a larger poll group will give me a better idea.

So see, there it is…you guys are great at the big picture…what I want is a blog that addresses the little picture.

Thank you for humoring me. Sorry if this is too deadly boring for most of you. Hope the PBPost powers that be start a little picture blog.

By Mike Fink

September 10, 2006 12:56 AM | Link to this

As a shopper in this market, I can tell you what is most important to me, perhaps that will be of some assistance.

I won’t even look at a home without an upgraded kitchen. Does not have to be grantite, but nice countertops, stainless appliances, and good fixtures/faucets. You have to remember, men are much less likely to “fall in love” with a home then a woman. I would try to market the home in a way that makes it attractive to you. Most likely, if its a couple buying the home, the women is going to be the one pulling the strings. Men (imho) kind of just view a home as a place to sleep and watch TV. :)

I think one of the biggest challanges your going to have is getting people to look at your home at all. There are so many things on the market right now; you have to make your stand out. Obviously, the first thing is price. So, if I see a home with a reasonable price/sq ft, I am going to at least read through the description.

Here are the things that I would look for (in order of importance):

All (new) stainless appliances Granite countertops Tile throughout

I think your plan is good, just make sure you hit the buzzwords. People are going to be picky (trust me, my GF is proof of this). I hear “Ahh, no granite, we will just look somewhere else”. Or “Crappy appliances, next”, about 10 times a day. :)

My one caution. You may find that you do not get a return on your investment in all these upgrades. If will help you house sell faster, but I am not sure if the 10-20K will increase your asking price by 10-20K. Typically it does, but as buyers become more savvy, and more “upgrade hungry”, it may just be the cost of making a sale in a slow market.

By Twyla

September 10, 2006 01:23 AM | Link to this

Hi again Mike “…it may just be the cost of making a sale in a slow market” is about it. But I have a feeling our price point is lower than what you and your girlfriend are looking at…Sandalwood Lakes is listing between $185K and $225K though I don’t think the high end sellers are getting quite that any more. Everything you’re talking about, though, plus major decluttering, is on the agenda…just not sure about granite, it sure is expensive and in our area it might be overkill. Oh, well, maybe if they do a retail RE blog I’ll find out. I think in a couple of years granite will be so overdone…and soon thereafter the landfills of this country are going to look like rock quarries. Ah, well, I’m only in it for the short run, gotta give the people what they think they want.

By Mike Fink

September 10, 2006 08:56 AM | Link to this

Twyla,

Well, I am very happy to see your in a listing range between 185-225. Your going to have to work to sell the home, but it is going to sell if you take the time to work on it a bit, and make sure it gets some exposure.

185-225K is affordable to people down here, and honestly, that end of the market, although it is going to get “downware pressure” from the 300-400K homes; right now is pretty healthy. I would price it lower (just a little bit) then any of the comps in your neighborhood, spruce it up as you have already described, and get it out there. I would not spend much money; just get the place looking 100% and get it out there.

People do not expect granite at the price point now. They do not expect stainless, etc. I should have asked you earlier, but I “figured” you were probably selling one of the million homes in the 450-750K range that are on the market. Your price point, I think your going to find, is much easier to sell. A big factor is that the people who live here can actually afford to buy it. :)

Also, make sure you move as quickly as possible. The “downward pressure” is already starting to happen. Those homes that are 300K today are going to start to press down into your price range; which is going to make it harder and harder to sell yours.

Funny about the granite. And yes, your right, its going to be a “Fad” that people look back on. However, its one of those “buzzwords” that gets people to look at a listing. In your price point, forget about it. Nobody would expect granite right now in the 185-225 range.

On a funny note, there is a street that in CA that the city is attempting to get funding to PAVE in granite. :)

By Mike Fink

September 10, 2006 09:45 AM | Link to this

Straight from the ol’horses mouth. Typical housing downturn = 3-5 years (David predicts one quater of downturn, I have NO idea where he got this from, as it has never worked that way in the past). Prediction of 2-5% price drops per quater by the head of the NAR = 8-20% depreciation per year.

3 year downturn = 24-60% drop 5 year downturn = 40%-100% drop (hmm, I think 100% may be a bit much).

I fully expect, because of all the toxic morgages written during this housing bubble, we are going to be on the short side; I think we are going to see high percentage drops, with a shorter timeframe then we would normally see. Again, it will drop faster because people have to sell; when their hand is forced they must take what they can get and walk away. That will have a negative impact immediately on comps; and so it crumbles much more quickly then it has in the past.

Anyway, here’s th quote from David, the master criminal for the NAR.

“‘I’m probably going to say that prices turned negative [in numerous metro markets] this month,’ when September sales data are released in October, David Lereah, chief economist for the National Association of Realtors, said Tuesday.”

“‘For a couple of quarters you’ll see price drops from 2 to 5 percent,’ he said in an interview. ‘It’s going to be short-lived, though. If there’s any national downturn, it will probably last a quarter.’ That’s because Lereah predicts the market will pick up again next year after sellers begin to cut prices this fall.”

“‘They will have to, he says. He says that all talk of the Fed’s role, shaky mortgages and irrational speculators aside, what’s at the root of the market stall is sellers’ reluctance to budge on their asking price.”

“Lereah focuses on speculators who acquired properties too high and mortgage products whose interest rates have begun to reset at unaffordably higher rates. ‘Basically the speculators and the exotic mortgage instruments, interest-only loans and zero-down payment loans that permitted households to purchase at lofty prices, they emptied the punch bowl at the party,’ he said.”

“‘This boom would have gone on a little longer if not for them,’ Lereah said. ‘They took prices up higher than they should have been.

By Mg

September 10, 2006 09:55 AM | Link to this

You assume that homes are going down in value 1-2% a month, what a crock. You also assume that we are going to have a huge realestate crash in fla. For that to happen unemployment would have to go above 7% all the people that are selling right now would have to be leaving the state, and people would stop moving here. I don’t see that happening. People are still moving here and not that many are leaving they are selling and buying an another house here. And although the residential construction mabey slowing Commercial is going crazy there is developers begging for work force and they are paying for it as well. And if there is a drop of 20 or 30% in the market, all the buyers that are sitting on the sidelines right now will rush to start buying and that will create another sellers market, And what happens in a sellers market. Bidding wars, the nation is doing good right now unemployment is at its lowest levels I sure would not be shorting re now. Remember to have a realestate crash you need have everyone selling and no one buying or renting. That just can’t happen. Why you ask becuase people need to live somewhere, you think people are going to live in their cars. The reason the stock market crashed was becuase you can’t live in a stock. We have to live somewhere.

By Michael Fink

September 10, 2006 10:29 AM | Link to this

MG,

I did not assume those numbers, I took them from the head of the NAR and extrapolated them out based on previous RE downturns.

Unemployment does not have to go over 7% to have a market crash. I don’t know where that number comes from, but RE is driven by supply and demand, if the demand is not there, and people need to sell, prices will drop.

The people selling do not have to leave the state. There has been a staggering amount of speculation in the past 2-3 years, and we are, imho, built FAR beyond what the population needs. Look at how much inventory we have right now; that begins to show the picture of how many “extra” homes we have out there.

I would typically agree, a 20-30% price drop would typically get people into a buying frezy. However, not many people buy homes with cash, they use leverage to buy a home. If home prices are trending downward, not many people are going to want to purchase, because they know there is a likelyhood they are buying a depreciating asset.

Bubbles always go higher then anyone can imagine, and always crash further then the worst projections. It’s psychology, when people think “its going to go up forver” they are willing to pay anything for it. When people think “its dropping in value every month” they stay on the sidelines longer then they should.

You do not need everyone selling and no one buying/renting. You just need more people selling then buying, or more people selling with people who cannot buy (because of lack of income/tighter lending standards). RE crashes can happen; they have happened in the past. Realators would have you believe that RE always goes up. It DOES NOT. Crashes happen after periods of huge runup.

People do need to live somewhere, but that has held constant forever, we have had plenty of RE crashes in the past.

By mg

September 10, 2006 11:45 AM | Link to this

Yes we have had realestate drops in the past but they were due to economic reasons, What we are in now is alot of sellers do not have to sell they are only selling because they think that they can cash out now and buy back in at a lower price. They will soon realize that buyers will not pay for what they are asking. And all they will do is take their house off the market and stay put. Yes I agree there has been alot of speculation from investors but their inventory will be absorbed. The realestate market will come down over the next year or two but not to the extent that everyone thinks. The econmy is just to good right now and people can afford to stay in their homes. So for a huge realestate crash to happen their has to be some sort of ecnomic trigger. Their will be plenty of sellers offering incentives to buyers their will be plenty of sellers lowering their asking price but that is not a crash. Sellers can offer these incentives becuase they have alot of equity. But they will only go so far till they say enough and just pull it off the market. And NAR never said that houses were deprciating 1-2% a month that is absurd that is 12 to 24% a year. We keep setting 2005 as a bench mark for sales, all we are getting back to is mormal sales volume look back at 2000,2001,2002,2003, 2004 this year has had just about the same number of sales as all of those years. Its all just perception by the media to say that sales have plunged, yeah they have plunged in relation to 2005 but not in relation to the rest of the years. 2005 was a record year for realestate and hurricanes it does not mean it is what lies head it only means that that is what has happened.

By Mike Fink

September 10, 2006 12:08 PM | Link to this

I have to run out, and would like to talk about your post above more later. But one thing really struck me:

And NAR never said that houses were deprciating 1-2% a month that is absurd that is 12 to 24% a year.

The quote from the NAR is above, read it for yourself. They did not say it that way, they said 2-5% per qtr. But those are the words right from David’s mouth (or so they were posted on MSN).

For a couple of quarters you’ll see price drops from 2 to 5 percent,’ he said in an interview. ‘It’s going to be short-lived, though.

Anyway, is it your contention that RE can appreciate at 20-30% per year (as we have seen), buy never depreciate at the same speed? If so, why? Remember, the economy has not been great during this surge in RE prices; it’s really been between medicore and average. And much of the spending/fuel for the economy has come out of home equity.

By Twyla

September 10, 2006 02:57 PM | Link to this

Thanks again Mike—-(streets paved in granite? How decadent!)

Sent email to Pat Beall and Jeff Ostrowski asking about a “practical” real estate blog. We’ll see if they respond.

By Mystic Isabella's Psychic Readings

September 10, 2006 09:55 PM | Link to this

To Mike Fink and/or Rich R

Could you please look into your CRYSTAL BALL and explain to me how there are two identical homes in same community that have such a difference in sold price? The first home sold for $425,000 in May 2006 and the second home sold for $512,000 in August 2006. Both homes have swimming pools. It looks like to me that the realtor for the second home did a much better job in getting a good price for his seller than the realtor for the first home. Is this a sign that prices are about to rise rapidly in the next few months? What do you think? Any suggestions?

By Glenn

September 11, 2006 08:42 AM | Link to this

I have a tax question. I have a friend who has cash to pay me $400,000 for my house. He used to live in the neighborhood when he had lower taxes. He moved away and is sorry he did. He wants to move back to the old neighborhood. If I do a quick claim deed on my house to him, will he still enjoy the lower taxes on my house like he used to on his old house. I know families pass ownership in title by a quick claim deed. But can I do this for my friend? He is so sorry he moved away to a neighborhood that has higher taxes and expenses. He thought he could pay for his new house but as luck would have it, he is making far less money now than before and it is getting to be a burden. I really feel sorry for him and would like to help him out if I could. How does that work at Property Appraiser’s office if house title shows new name but no sales transaction? Will my friend be able to enjoy my low taxes? Thanks.

By taxes

September 11, 2006 10:17 AM | Link to this

We all have to pay taxes. Even businessmen who lie, steal and cheat everyday….even they have to pay taxes!

By A note for Twyla

September 11, 2006 10:57 AM | Link to this

Twyla - your neighborhood that you are in is consider to be vacation homes for snowbirds and low cost housing for others. It is well maintain and has many extras. It is near malls, transportation and close to the beaches and downtown area. You would be able to sell near the $200K market. I would not put in major decorations, except a coat of paint in the interiors. Let the new buyers add all those extras. If they object about your price, they have nothing but higher prices in that area to look at.

You do have drawbacks. I have friends who do live there, they are paying for the new roof system you just had installed on all the units. Did you pay up front or did you do the long term payments? You need to disclose that to buyers. Also, the management company that runs the Sandalwood Lakes community can take off any day and leave all the residents penniless in their treasury. They have done it before in other areas, and most likly do it to you. They can do this, it is legal and your board of directors know this. If you are going to sell, you might want to do it by yourself. Many local realtors have property in there, and they will be showing their own to sell before they show yours. So you would be wasting your time with local realtors. Stick a sign on your balcony and one at your corners on the weekend. I see many FSBO signs in that area. The local realtors in that area are known to be,lets say, unprofessional in all aspects in dealing with real estate. That is why you see them with very little listings these days. If you go with a realtor, go with a national name, not some smuck from a notorious office who eats the free lunch samples at the local Costco everyday. They will never be able to sell while they are eatting all the free food during the lunch hours. Then again, they have not made a sale in a long time. You think they will be able to pay off their mortgages?

By real estate seminar today?

September 11, 2006 12:29 PM | Link to this

Where is everyone? It seems all these bloggers are at the real estate seminar today! Which means most of all the regulars bashers here are REALTORS ! They are in a panic that they cannot sell at higher prices. They can only sell if prices go down. They all need to get into a new line of business. I can sniff them out and their lies all the time.

By Misinformation

September 11, 2006 12:41 PM | Link to this

Talking about lies, our friend(s) here talked about how a developer who canceled out on a condo project in Delray Beach due to low sales and people lost money. The TRUTH was long delays on construction start up date and the developer returned all 15 million in deposits to the customers. The developer is not selling the land, but holding on to it for a larger scale project later on when construction time line is better suited for the customers. You can read about it in the Sunday Post under the Business Section.

When it comes to “misinformation” in real estate in South Florida, nobody can tell it better than the bash brothers, Rich & Mike.

By Mike Fink

September 11, 2006 01:08 PM | Link to this

Hos did I get pulled into that one?

Anyway, here is the quote on that building:

Another Strand condo has unraveled completely. Developer Cary Glickstein has canceled The Strand condo in downtown Delray Beach and returned $15 million in deposits. A factor that ended the project: Glickstein’s buyers were tired of the waiting game. The final straw was seeing one buyer, ‘near tears,’ come into the sales office, Glickstein said. The buyer had used his daughter’s college tuition for his down payment.

However, I don’t remember ever saying anything about that particular building.

Makes me laugh, I always respond to questions/arguments. I have posted up lots of stuff this weekend, and gotten a reply on none of it. Not that I really think there is anyway to dispute the numbers/statistics, but I am always looking for another perspective.

By More Misinformation

September 11, 2006 01:34 PM | Link to this

Mike ONLY wanted to post part of that story, the little girl crying part. Don’t worry folks, that little girl’s parents received her college money back and she will go to college. Anyway, what kind of a parent uses their kids college tuition on real estate flipping then putting the money into safe money funds? An irresposible parent only does that. I hope her parents don’t travel to Las Vegas or sail on those casino “lose all” ships.

By Mike Fink

September 11, 2006 02:00 PM | Link to this

Yes, the person did get their deposits back, I only posted up the story because somehow my name had been drawn into it.

However, those people on here who think that RE is going to slump, and then go right back to normal appreciation, I have a question for you.

Anyway, what kind of a parent uses their kids college tuition on real estate flipping then putting the money into safe money funds? An irresposible parent only does that.

Why is this irresponsible? The only reason this is true is because RE does go down, and sometime dramatically. If not, there would not be any reason NOT to invest your college funds in RE. If RE only goes up, or we are only going to see a slump for a year or so, why is this irresponsible?

It’s irresponsible because RE is risky, right now, extremely risky! If RE always goes up, or will always turn around in a year, its not risky at all, parents should all gamble the kids college money on the market.

People know, in the backs for their minds, that this RE thing right now is like betting on horses. But they just cannot bring themselves to understand how bad the downsides can be.

By For Twyla

September 11, 2006 06:28 PM | Link to this

Don’t bother with the upgrades. I am a buyer who has been looking for a year. They ONLY thing I am concerned about is what you are selling for. It affects how much I pay in taxes. So upgrading the appliances etc. only makes my monthly cost go up. Besides, I don’t want someone else picking out my appliances. Unfortunately for you, most buyers can wait longer than you. Unless the thought of staying in your home for another few years appeals to you, I’d price it low. Believe me, if prices don’t come down, I’m one buyer who will be getting the heck out of this state. And don’t count on thinking that I am the only one.

By Twyla

September 11, 2006 06:31 PM | Link to this

Dear “A note for Twyla”—-

Thank you—-and from your lips to God’s ear re the $200k. Our assessment is paid. And the property management company was replaced a couple of months ago by an “in-house” property manager and we’re already seeing improvements.

I don’t know what to do about real estate agent issue. This is the first house we owned so we’ve never dealt with it. I will, however, research any realtor I consider to see what they’ve got going on…I did see that one realtor in this area not only sold a house recently but sold it for MORE than the asking price—-and it wasn’t his house from what I could tell.

One of the previous posters, named Lisa, kindly suggested that I offer a buyer’s agent 3.5%—-but on top of my seller’s agent’s commission, that could be a lot of money. Don’t know if she meant to sell it myself and offer buyer’s agents that commission or what.

One thing I have come to realize…if you’re not on the internet, you’re nowhere these days…and if you’re not on realtor.com, you’re not on the internet. I don’t think I want to wait until people happen to drive by and see my sign. And does anyone look at classified ads any more? (Okay, I do, but the number of classified ads for Sandalwood is infinitesimal compared to the number of listings for Sandalwood on realtor.com.)

From what I hear about what’s happening to anybody associated with the real estate industry though, I wouldn’t begrudge them free lunch at Costco or anywhere else. But our expected (in 2004 $$)profit margin is already going to be so compromised, every dollar will count. We had been dreaming of taking our Florida loot and having a mortgage-free retirement in our “simple life” paradise. Now, that is definitely not to be.

Thanks for the reminder about the assessment, though. Any ad would certainly need to include “assessment paid”.

Did hear from Jeff Ostrowski…he wanted to know if he could use my name on the blog…I asked that he use only my blog name, Twyla, as I’ve revealed more of my personal real estate angst than I would have otherwise shared with the world. He didn’t say whether there’s going to be a “practical real estate” blog, though. I’m sure everyone will be relieved if I can take my silly-* questions on down the hall and quit cluttering up the big boys’ space (picture smiley face here).

Thanks again.

By INTERNET MADAM

September 11, 2006 09:40 PM | Link to this

Mike, I have read several of your comments on these blogs and came to the conclusion that you are really a “gambler” and not an “investor”.

There is a major difference between these two titles. The simple fact that you are willing to use your daughter’s college money on flipping houses really shows how you think. I truly feel sorry for you to think this way.

Mike, you need good common sense and real friends to help you out of your addiction of “gambling” with your loved ones lives and future.

You probably are really a nice guy, but the way you think shows there are risks in real estate when you use real estate to flip instead of making a house a home. This is not the stock market of the 80’s and 90’s.

You are trying to flip houses like the real investors who bought and sold stocks in the 80’s and 90’s.

It is okay to take risks with your investments when you are in your 20’s and 30’s, but when you are up there in your 50’s and time is running out to make money, think again about your “gambling habits”.

If I knew you and if we were friends, I would try to help you. I know things are tough going now for you and your gang. Things will turn around soon. Wish we were friends.

By Mike Fink

September 12, 2006 09:13 AM | Link to this

Huh?

I don’t own RE in Palm Beach. I hate gambling, and am a very conservative investor.

Also, I am under 30.

Was this directed at me?

Mike, I have read several of your comments on these blogs and came to the conclusion that you are really a “gambler” and not an “investor”.

By to mike fink

September 12, 2006 06:26 PM | Link to this

you are under 30, do not own re here, and probably never owned re.

you are like a college prof. stuck in school with no real life experience.

great, you can read, but have never lived it.

grow up, live a little, own a few homes, see for yourself, live through some ups and downs, then post some blogs.

By Mike Fink

September 12, 2006 07:58 PM | Link to this

I cannot argue with anything you have said, its all true.

I do agree that my being under 30 does have a bearing on this discussion, because I have not yet lived through a big RE bust. I did live through the .coms though, so I know what a bubble market looks like, and what happens when prices disconnect from fundamentals.

However, I am not sure how this is relevant to the conversation?

I would love to own a few homes. Well, one, actually. And will be buying as soon as prices return to the fundamentals. Again, do not see what this has to do with my topics/posts though. This is an academic discussion; we are talking about a market’s behavior, not really anything that requires more then an understanding of economics and history.

By JGE

September 12, 2006 08:22 PM | Link to this

There are lots of people waiting in the wings with “vulture funds”. There have been substantial booms and busts before. I don’t see why this one will be any different than the previous one. Condo market will be a bloodbath. Just remember the bigger the boom the bigger the bust. Mike F. I agree it is nothing more than the laws of economics yet too many people are NAIVE and in DENIAL to understand the fundamentals and are naive about what is about to happen. It will affect this nation and will probably be quite painful. I know several people over the past year who have moved to NC or are planning to move there. A couple of them are paying 2 mortgages and dropping the prices of their houses. One house is in Lake Charleston, the other is in Smith Farm in west boynton. Both of these places have been on the market since early 2006 and are just sitting with several price reductions to boot. They have tried renting it out to no avail. Boomers won’t come here unless their houses elsewhere have sold and from the looks of things it is slow in many regions including the NE region. History always repeats itself……..

By INTERNET MADAM

September 13, 2006 12:19 AM | Link to this

Mike, you and I should get together. Actually we are two of a kind. We have so much in common. We really should be friends. Next time you see me, introduce yourself to me. You know where to find me.

You see Mike, it takes one to know one. Oh my gosh, we even could be related. Isn’t that a thought?

You’re a gambler all right. I know a horse better anywhere. I know my race tracks, Arlington, Maywood, Hawthorne, Balmoral, Sportsman. I have been to more horse races than Betty Grable and Harry James.

Are you into thoroughbred racing or harness horse racing?

You being Irish Mike, must remember the good old Irish Sweepstakes. That was a government scheme to raise money for hospitals and schools that was started back in 1930 or so. When legalized gambling became more popular around the world, our Irish Sweepstakes went out of commission in 1987. Then Ireland came up with that 6/42 lotto back in 1988 hoping it would gain more popularity but never did.

Leave it to the Irish to come up with that old scheme to raise money again. I know the market is dead, and I don’t blame you for going into online horse betting. Yes, you are very good at reading and analyzing charts with facts and figures as you say but these are charts on workout times and past performance of the horses. But do you know your racing track conditions like I do? I bet you don’t.

Did you develop a full-proof system or do you know that 5 minute racing system where you can pick winners 90% of the time?

Oh no, I won’t dare send you one of my charming ladies. I am saving you all for myself. Believe me Mike, my services are just what you need for that new business you started.

All my gentleman friends took me out on dates to those race tracks because I was so good at picking them a winner. Mike, I hope you are a winner too. I sure hope you are not like that “Lemon Drop Kid”. Can I quote you Mike from an earlier comment on this blog? And this is from the Horse’s Mouth.

It’s irresponsible because RE is risky, right now, extremely risky! If RE always goes up, or will always turn around in a year, its not risky at all, parents should all gamble the kids college money on the market.

People know, in the backs for their minds, that this RE thing right now is like betting on horses. But they just cannot bring themselves to understand how bad the downsides can be.

By to mike fink

September 13, 2006 07:58 AM | Link to this

the point is you can read all you want about what every so called expert has to say, but you have no real life experience.

i did not mean to attack, i am just tired of the folks on this blog, that have never owned real estate, not living in this area, and are still students in college acting like real estate experts.

i am not saying i am one, but i have been involved with the industry since 1987. i have worked in boston, nyc, and florida markets. i have seen booms, busts, and everything else.

the posts a lot of the people make have no facts to back them up. a lot of the articles do not tell the whole story.

By TH

September 13, 2006 08:06 AM | Link to this

“Some of the bellwether real estate market states are among the leading foreclosure markets. Florida, had more than 16,533 properties in foreclosure in August. That led all states and was 50 percent higher than in July and 62 percent higher than in August 2005”

Sounds like from the so called 1,000 people a day moving to FL, that number is being counteracted by many moving out due to foreclosure..this market is toast, burnt toast at that….

By to the uhaul experts

September 13, 2006 08:08 AM | Link to this

i also have to point out one more example of the posts with no facts to back them up.

the uhaul debate. had anyone called uhaul and actually asked why the rates are that way.

i did, out of frustration. i talked with the marketing dept. they explained it had nothing to do with a huge volume going from fla to nc. quite the opposite, more trucks are need in fla than any other state, more people, and this has been true for the last 20 years, move to and from and around in fla, than any other state. uhaul is rewarding you for bringing a truck into the state.

florida is on a constant “remote stop status”

if your theory was correct, people have been leaving the state in record numbers for the past two decades, we know this to be false.

By U-Hauls are for renters

September 13, 2006 10:00 AM | Link to this

If you are using a u-haul truck, than your living quarters was either an apartment or a trailer. Most homeowners use major movers to move their house items. Pod systems are also good to use i have heard. Yes, more people moving in than out of Florida.

By Roger Theriault, a REALTOR

September 14, 2006 12:03 AM | Link to this

“For a couple of quarters you’ll see price drops from 2 to 5 percent”

Mike, I don’t have the original article handy but the way he worded this phrase, he may mean “on an annualized basis”. I’ve heard other opinions since last year of between 5% appreciation and a 5% decline - on an annualized basis. That’s not a very steep curve, and if it only lasts a few quarters then it’s just a short shallow dip.

Agree with the above poster re U-Haul, most of the homes in my area are moved with a big, national line.

To Twyla, look on Realtor.com for listings in your area and start with the agents who use good photos and text if that’s important to you. There’s much more to selling than an ad, though… you’ll also want a thorough and experienced (or studious and energetic, I was a novice once too) agent who can deal with the transaction through to closing. And that agent should be able to answer many of your questions with more clarity than this blog. (Heck, who can write clearly in a tiny little box like this? I’m amazed that some of the folks here can do it so often, it’s just driving me nuts!)