By INTERNET MADAM

October 30, 2006 11:56 AM | Link to this

So Jeff, are you suggesting now that instead of using realtors, we should auction off properties? A real estate broker is just like a madam. I wonder how this auction bandwagon would work out in my line of business?

Maybe it would work out like ebay, you slam someone else’s bid not knowing what the bid is and then wind up paying more for the item than what it is worth. I think I like this idea. Good thinking Jeff.

By Rich R

October 30, 2006 01:20 PM | Link to this

SoFla went from having bidding wars on the lawn to now autions - Sad (that was for you giodome05).

You’d have to be very desperate, or very stupid to engage in this activity. Buyers Premium? Too funny.

If you were a flipper caught with your pants down, I guess it makes sense.

It’s all about choices.

Good article Jeff O.

Hey Easy, where are you? Are you alright?

It’s been very quiet in this blog for days now.

By DD

October 30, 2006 01:58 PM | Link to this

jeff, how can you say it is a buyers market, when buyers are not buying in the last six months. i see it as a “will wait it out” market.

owners have it, buyers want it. so far, the owners have not budged. the buyers are hoping for those intrest rates will not rise any more higher.

your story told all of how realtors are looking at new ways to sell. only ones who are hurting are the realtors. house auctions were used in the past during the 1930’s and failed.

the market will tell all by early 2007, here and everywhere else in this country.

DD

By Monster

October 30, 2006 04:41 PM | Link to this

Went to the auction at Muvico in Boca a couple of weeks ago. Started 40 minutes late, alot of confusion. Alot of lookey loo’s. I’m a buyer and when prices get realistic then I’ll buy, sellers need to forget their appreciation since 2004. I went to a open house in Boca and the house was listed at 1.8mil and the guy bought it in 8/05 for 1.3mil, he said he would take 1.6ish, he should be happy to get 1/3 and run. Sellers still trying to make a buck. If you want to seel then make the offer logical. Anyone can see what you paid for it.

By hahahahaha@hahahahahahahahaha.us

October 30, 2006 06:34 PM | Link to this

hahahahahahahahahahahahahahahahahhahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahaha

By DDD is right

October 30, 2006 06:58 PM | Link to this

very well spoken DD. You are very correct in how this market is, however, you missed on aspect of who is hurting.

Yes, realtors are hurting, actually the novice realtors are out, the avg ones are hurting, the real good ones have stashed away their acorns for a rainy day, so they will always get through it. The other group who is really hurting is the other amateur…the buyer who used the “tools” of interest, neg ams, the no money crowd who put no money down. that is the group who is hurting and actually, should hurt. once they are all gone via foreclosure, this will change to a more historically normal market.

Monster, on the other hand, the supposed buyer, I suspect, is one of the amateurs. Pros wouldn’t waste their time on that Muvico trash, a complete time waster to anyone with experience. 2004 prices will only be seen again for properties that a pro doesn’t want anyway, i.e. new construction built in the last two years that builders 10yrs ago wouldnt build on for fear of looking like an idiot, i.e. building near railroad tracks, borderline with delray cracktowns, you know, places like the dump built in martin county, martins crossing i think they called, those types of places, will all see 2004 prices, but like i said, anyone with any business sense won’t touch crap like that. just remember, just because it is new and has a “luxurious” inside does not mean it is good. if it is next to the new and next to the tracks (or the other junk examples), it is junk sold by a opportunist developer bought by people who have absolutely no business sense.

By Buy it right

October 30, 2006 08:45 PM | Link to this

You are correct sir, When I look at properties to buy I always think about resale. Or I think would I live here. Places that are next to train tracks are out, or a house that backs up to a major road or hwy. The only exception is if it is on the beach. The water front seems to be the exception to the norm.

By NUMBERCRUNCHER

October 30, 2006 09:09 PM | Link to this

To quote Monster

“Anyone can see what you paid for it.”

Suppose you bought home 10 years ago for 200K. You put in 50K in upgrades. Suppose you put $250K away in a cd for 9% interest 10 years ago instead of in house. Do you know what your value of $250K would be today? That would equal $591,840. That purchase price of $200K and 50K upgrades was then - 10 years ago. This is NOW. Don’t be ridiculus telling people how much they paid for their property when they bought it. If the seller is asking $450K today, can you blame him when he could have put that $250K in house instead in cds or stocks. For that seller, $450K is only 6% for rate of return in 10 years, very modest return in my eyes. I am sure that the 50K of upgrades 10 years ago would also cost alot more if done today. Property is an investment. Instead of buying property, you can put money in stocks, bonds, cds, or anything else that you would consider an investment. Do you tell your stock broker “gee I could have gotten that stock for $5 a share 10 years ago and now you want $200 a share?” Monster - you sound like an “uneducated amateur with no business sense”.

And I loved this quote from DDD is right

just remember, just because it is new and has a “luxurious” inside does not mean it is good.

DDD is Right has the best line for the day!!! Isn’t that the truth!!!!!

By postman

October 30, 2006 09:26 PM | Link to this

i was just browsing the post and read the article: Exit strategy: Homeowners turn to auctions to sell properties.

THEM CHEERLEADERS ARE IN SOME DEEP S*.

a 725,000 and all he was offered was 500,000? that is a scalping.

then the kicker, a 3/2 in flamingo park (wpb) i need the crack that people smoked to buy a house in wpb at that price. in that community.

the slowdown has caused an astounding 49-month supply of existing homes for sale in Palm Beach County, Regional Multiple Listing Service records show.

forget about buying a home, they better start dropping prices for real. i google the location of that house. it is east of 95. just think of the taxes and insurance cost over the sellers head.

then, one block away some one was asking for a similar property for 239,000!

THE HOUSING MARKET BUBBLE IS OVER!

SEE YA EASY!

By postman

October 30, 2006 09:28 PM | Link to this

“South Florida,’’ he said, ‘’is working off of a totally new economic model than any of us have ever experienced in the past” according to a realtor who predicted that a land shortage will support higher prices indefinitely.” - New York Times, Trading Places: Real Estate Instead of Dot-Coms, 3/25/05

By NUMBERCRUNCHER

October 30, 2006 09:29 PM | Link to this

sellers need to forget their appreciation since 2004.

Why stop there? Tell you what. How about banks forget about paying interest and start charging YOU to keep your money there. Tell the stockbroker to forget the dividends for the past 5 years. And then tell your boss you will work for 1990 wages.

Did I make my point? You can’t have it your way. Buying a house is not like buying a hamburger at Burger King. Why don’t you take a nice long nap and wake up in January 2007. See where everything is at then. When you snooze, you loose.

Buyers need to stop wasting money, need to get better paying jobs, get second or even third jobs and SAVE SAVE SAVE. Go complain to your boss and tell him he does not pay you enough money to buy a house. See if he will feel sorry for you and give you a great big raise.

By duh Donald's brother

October 31, 2006 03:46 AM | Link to this

So Jeff, are you suggesting now that instead of using realtors, we should auction off properties? A real estate broker is just like a madam. I wonder how this auction bandwagon would work out in my line of business?

How prophetic…a RE broker is just like a madam. Is this because they both supervise prostitutes? What a great analogy.

By Michael Fink

October 31, 2006 05:06 AM | Link to this

NumberCruncher:

Suppose you bought home 10 years ago for 200K. You put in 50K in upgrades. Suppose you put $250K away in a cd for 9% interest 10 years ago instead of in house. Do you know what your value of $250K would be today? That would equal $591,840. That purchase price of $200K and 50K upgrades was then - 10 years ago

You are correct, you cannot expect to pay the same price that the buyer paid for the home 10 years ago. The problem is, if this were a real example, (bought 10 yo for 250, 50K in upgrades done), that home would be selling now for 1-1.25 million (assuming it kept up with the appreciation in PB county for the last few years). 250K home 10 years ago was (guessing) about 2-2.5X the median (so an 800-1mil home today) home price.

I am not looking to scalp anyone, I think that 6-8% appreciation is pretty resonable. I have told people before, but a fair bid on a home is go back to 1999-2000 prices and appreciate that number by 7% until today. That’s the fair price for the home.

However, that number is typically about 1/2 the asking price, which is why I contend we are in for such a correction.

sellers need to forget their appreciation since 2004.

Why stop there?

Agreed; go back to 2000, compound that price annually by 7% per year. I would not pay 2004 prices today, I think that we were already bubbled up too high by then.

I’ll work for 1990 wages, if I can buy a house for 1990 prices. And that’s the problem! Housing prices have inflated MUCH faster then incomes, so 1990 wages and home prices sound great to me.

By online reader

October 31, 2006 08:13 AM | Link to this

M.Fink,what you’re wishing for sounds like a beautiful dream. Don’t hold your breath.

By dreaming

October 31, 2006 08:26 AM | Link to this

You are dreaming if you think prices will go back to 2000 levels, everybody says that there is a 27,000 listings on the market and all this supply is going to make the market crash.

Well yes that is true if all those listings were single family homes and all of those for sale were moving out of the area. A majority of what is on the market is crap, 1bd 1ba condos. I havn’t looked at how many are condos but I bet it makes a large percentage of what is on the market.

So if only a small percentage of what is on the market is sfr and a majority is not moving out of the area, and people are still moving into the area. You can not expect prices to go back to 2000 levels.

By To Dreaming:

October 31, 2006 10:05 AM | Link to this

Dreaming, nobody is saying that prices will go back to 2000 levels. When you look at other recent r/e booms/busts in the country, such as LA, Honolulu, Houston, etc., you will see that when the correction comes it will bottom out at a level higher than where it started with the boom.

Persoally, I think prices will bottom out at around early 2004 levels. That’s only about 1.5 years off the peak.

Property will still be much higher than it was in 2000, and some of that gain we will have forever.

But with the insurance problem (anybody notice that Citizens is limiting coverage to homes under 1,000,000), homestead, etc., we won’t get bailed out by the northerners or “normal” people moving here.

By crazydem

October 31, 2006 10:25 AM | Link to this

Fink is at it again with his rent/price ratio argument. It didn’t hold water last month and doesn’t hold water this month.

Mike-End it and buy already, please!!! Go to east Lake Worth-they’ve got your 2004 prices there. Don’t complain about the neighborhood-it’s what you get nowadays for 2004 prices. Nice little places with character-just takes some effort on your part to be involved in the community to turn things around. It’s what you have to endure for 2004 prices buddy. I did it myself-only people I complained to where the code/police people, not the landlords and other sellers about how their prices were too high.

By sanerepub

October 31, 2006 11:26 AM | Link to this

Crazydem is an appropriate name for you. When you have a 49 month supply of homes on the market 2004 prices would be a godsend. With all the fundamental problems built into the real estate market in sfl you will be lucky not to have 1999 prices within 2 years.

By Capt. easyasabc is back

October 31, 2006 11:38 AM | Link to this

Life is good in South Florida!

I am back from a long weekend. Had fun at the boat show. Met alot of people, talked about everything and anything. My little yacht is ready for the season for parties or whatever. I wish i had those Minnesota Viking players charter a weekend cruise with me. I had a sign hanging out on Friday & Saturday night saying, “if this boat is rockin, don’t come aboard knockin”. Coast Guard told me they recorded record high in high wake activity in the bay. HA HA HA

First off……Rich R., YOU NEED TO GET A LIFE ! You sounding GAY to me by calling for me in the past few weekends. Raliegh must not have much to offer if you spend your whole weekend writing to me. Stop it, go back to that fast a*s girlfriend of yours, do the nasty and walk your puppy. I hope the b***h didn’t run away from you. (Talking about the girlfreind, not the dog).

I see Jeff added a story about auctions. I read several stories here about what if……forget about the past, forget about your boss raising your salary, forget about 2000 home prices. How many people alone in Palm Beach County bought from 2001 to 2006? You think all those people will go back to 2000 prices? I don’t think so. What we are all guilty of is GREED. We all think our property is better that the guy who just sold. The buyers out there who did not buy this summer, will most likely not buy here at all, but keep on renting, with no return on their money. Realtors who have not made a sale in the past six months, as there are lots of them, are now working at two jobs to get by. Most homes out there now are junk homes or in the wrong location, next ot RR tracks, garbage dumps or highway. Ocean or intercoastal view is nice to have, but many of you cannot afford the taxes let alone the house price. Stop dreaming on that, be realistic and start deciding if you really can afford to live here with your family. No politician is going to save you with his promises of tax cuts. Florida is on the footsteps of what California became in the late 90’s, high price property. Did you know many Arabs are buying property in California? No matter what, if Americans don’t have the money to buy here, some other group will.

Anyone see the story about the Pharmacist who has to give up his million dollar home at Evergrene due to medicad fraud? Mike Fink, here is your chance to buy a million dollar house from the govt for maybe half the price. Not on the intercoastal, but if you like trains, this is the place.

Remember, you are a owner when you have clear title of your property. Otherwise, the bank owns it. Many of us see the outside of a home, no one really knows what goes inside. Bills can be piled to the ceiling, and some think that bankruptcy will save them. I have to tell you boys and girls that it does not work like that.

I talked with several bankers, and i have trust in what i said about this market. This is Florida, some people want out for various reasons, but many more want in. I believe that the “garbage” homes will be bought up by people moving up in classification, the avg. homes will sell, but the market might be a little rough for those multi-million dollar homes for a little bit longer. As it was said, if you have to sell, you will, if you don’t and can wait it out as someone mention, patience has its rewards for you. No matter what, the landing was soft, the upturn is about to happen, and the winter selling season will prove that this is a strong market. If a realtor wants to lower your price, do it without them, and sell on your own. Don’t make life easy for them. I bet Rich never told anyone that realtors in the Carolinas want 7% or more for commissions.

Realtors in Canada charge 7% on the first $100,000, then 3% anything above that. Broward realtors also are selling their own lisitngs, and no others. See, GREED is with them also. They want it all or nothing. And what we can tell about the number of sales and number of realtors, most are getting nothing.

What will happen is a down surge in our DOW. We might see 10,000-10,500 range due to a major sell off. This money might be put into real estate. What does numbercruncer think ? Does he hear the same news that i do? Hey Internet Madem, is your name Diane? If it is, you look like more of a librarian. I liked your hat and dress your wore. Those two young ladies with you were HOT looking. And that guy with you was one big fellow. I bet he was a football player one time. I will talk with the Capt. of Moonriver to get a hold of you. Sounded you needed a charter for the Super Bowl week. i am booked, but can squeeze you in the week after. I bet you are the internet madem we have here! ok, i know this is not about real estate, but i tell you, me and my girlfriend was impress with her charm. In the bible, Jesus hung out with prostitutes, so there is no shame withthem.

Sorry madem, not prostitutes, but they are a professional escorts as you said. My girlfriend also asked “where did you buy your hat”? she thinks it might be from italy.

And finally, for the college student who wanted to know about several people here. They tend to forget what they said in the past and change stories around.

Rich R., was in health care industry, laid off 200 people due to insurance cost, retired from Boca, moved to Carolina, got back selling pills, na dnow also a land developer or in real estate.

Mike Fink is a stock broker, investor and now a IT guy. Sold two years ago, lives in a an apt. at City Place. Him and his wife eats at over priced pasta rest. at City Place and drives around every weekend looking at houses for cheap entertainment. Moving to Evergrene soon, as a renter, will smell skunk from 8pm to midnight and then will listen to train whistles from midnight to 6 am.

Bubba is not a lawyer, not much of anything at all. If someone was a lawyer, they will say they are an attorney, not a lawyer. When was anyone named Bubba a attorney? Would you hire a guy named Bubba as your attorney? Bubba said he was in the tire business. I thnik he changes them at a local tire dealership.

Talking about Attorneys, Rich R., you said you needed one for a sale that went bad here. Don’t tell me that cess pool home sale in Lake Wothless went under! What happen to your lawyer friend on Palm Beach Lakes? I bet he had to sell out at Mirasol, take a lost and close up shop here. So many attorneys who cannot hack it here. Let us big boys do the legal work the correct way. Did he move up to Carolina defending moonshiners?

Mirasol, there is another overpriced development. Prices will go down there because they lost the the PGA Honda event. If you are going to spend millions for a home, make sure you are in a the right location.

Yes, easyasabc is back to talk about real estate and life is good in Palm Beach. The selling season starts tomorrow and will last until April. How many will buy? How high will the median price will be in April? How much more b******t will we hear from the bashers? It will be a fun winter here.

Jeff, go cut Cerabinos grass, it is Tuesday.

By sanerepub

October 31, 2006 11:56 AM | Link to this

Easy:

So Easy now you are questioning what the median will be in April? I thought the buyers from all over the world were going to make SFL prices go up? Now you you are not going out on the limb are you? Are you changing your story again? I will go out on a limb and say the median will be 12 percent lower in April than today. What do say Easy what is your prediction?

By sheep are people too

October 31, 2006 12:04 PM | Link to this

I think I’ll just watch a few infomercials on fabulous real estate opportunities in the north Georgia mountains or Tennessee or North Carolina or West Virginia…. I’ll pay full retail because I am a novice who always follows the pack and jumps on the bandwagon. You know, i’m the same person who bought pets.com stock late in 1999 before the internet stock bubble burst and I also bought a fabulous brand new condo for full price that looks just like everybody elses in the same development. Do you know if you look down the block you cannot tell my unit from anyone elses, except I think my wife picked out prettier pastel colors than all of the others with the exact same layouts. I’ll try and sell it now so I can go up to North Carolina and buy a moutain view lot I heard on an infomercial and finance it with an interest only loan. It’s not so bad, because all that matters if my neighbors thinks I have a lot of money because I just went down to the local car dealership and leased that car that people think looks good. I only have 36 easy payments of $499.00 each month, but then I’ll have to give it back and then pay for all of the extra miles because I really don’t own the car that I put all of those extra miles on it driving to North Carolina because I got shafted like I always do on my mountain view lot in North Carolina sold to me by some fast talking infomercial because I think I am an expert in real estate.

I can then go to a cocktail party and brag to my friends that I’m going to pay more full retail prices because I have just discovered this hot new trendy town they call Ocala and I’m going to buy an overpriced lot there onyl because I jump on bandwagons like other sheep who have no idea what they are doing, but like I said it looks good when I tell everyone at cocktail parties. Did you know Ocala is a brand new town built by Disney and every house there has a white picket fence and all of the neighbors bring pies to you when you move in just like north Carolina.

Wow, it’s so great to be a shrewd south Florida resident who knows all about real estate.

I wonder if I can get more credit on my home equity line of credit. My neighbor just pulled in his driveway with a new flat screen TV and that means I’ll have to get one too…..

By A.P.

October 31, 2006 12:07 PM | Link to this

Like always, a good post Easy!

Rich R., Mike Fink, Bubba, and others will be rattled!

You have their number!

By sheep are people too

October 31, 2006 12:13 PM | Link to this

I think I’ll just watch a few infomercials on fabulous real estate opportunities in the north Georgia mountains or Tennessee or North Carolina or West Virginia…. I’ll pay full retail because I am a novice who always follows the pack and jumps on the bandwagon. You know, i’m the same person who bought pets.com stock late in 1999 just before the internet stock bubble burst and I also bought a fabulous brand new condo for full price that looks just like everybody elses in the same development. Do you know if you look down the block you cannot tell my unit from anyone elses, except I think my wife picked out prettier pastel colors than all of the others with the exact same layouts. I’ll try and sell it now so I can go up to North Carolina and buy a moutain view lot I heard on an infomercial and finance it with an interest only loan. It’s not so bad, because all that matters if my neighbors thinks I have a lot of money because I just went down to the local car dealership and leased that car that people think looks good. I only have 36 easy payments of $499.00 each month, but then I’ll have to give it back and then pay for all of the extra miles because I really don’t own the car that I put all of those extra miles on it driving to North Carolina because I got shafted like I always do on my mountain view lot in North Carolina sold to me by some fast talking infomercial because I think I am an expert in real estate.

I can then go to a cocktail party and brag to my friends that I’m going to pay more full retail prices because I have just discovered this hot new trendy town they call Ocala and I’m going to buy an overpriced lot there only because I jump on bandwagons like other sheep who have no idea what they are doing, but like I said it looks good when I tell everyone at cocktail parties. Did you know Ocala is a brand new town built by Disney and every house there has a white picket fence and all of the neighbors bring pies to you when you move in just like north Carolina.

Wow, it’s so great to be a shrewd south Florida resident who knows all about real estate.

I wonder if I can get more credit on my home equity line of credit. My neighbor just pulled in his driveway with a new flat screen TV and that means I’ll have to get one too…..

By Greg

October 31, 2006 12:17 PM | Link to this

Prices will absolutely fall to 2000 levels and maybe even lower. Once the ARM and interest only foreclosures get started (2007-2008) comps will start dropping fast. Banks will start to feel the pinch and they won’t be so free with the lending. So the buyer pool will shrink even smaller.

It isn’t a housing bubble it is a credit bubble and once the creditors start losing money then the ride is over.

I say save, save, save and be ready to pick up some real steals in 2010-2015. Don’t be tricked into thinking the downward trend is anywhere near the end. It is just getting started.

Oh and I’m not a disgruntled renter. I bought my home in 2000 and plan to sit tight for many years to come. Gotta love Save Our Homes!

By easyasabc

October 31, 2006 12:54 PM | Link to this

I notice the email address does not show up, so i will have sign off who i am.

I am saying, as we speak through the selling seasion, the prices will rise. You say 12% less, i say above $400,000 by Spring Training season. Alot can happen from now to then and change course for many. All indications are we are on a upswing in real estate. I would be happy with just one percent of the baby boomers and one percent of people from other countries buying here. The inventory will be reduce fast. Builders are already helping out on not building due to building and labor costs.

If you think prices will go down even more here, why do you still talk about the Carolinas? I tell you why, because it is not Palm Beach. Your heart is here, you and many others that have to come to realize that you will have to pay the price to live here. Garbage price gets you garbage house. People who are at lower pay wages are the ones buying the garbage houses in low scale areas. Owners are not budging to let go upscale homes in upscale areas. If you see upscale home at a great price, grab it before someone else does. Since last thursday, we had over 5,000 people enter this state. Someone is buying somewhere. Not everyone is renting.

easyasabc

By to easy

October 31, 2006 01:06 PM | Link to this

i am not sure if i agree with you 100% about prices going up. i sure do not agree with rich r, and wish he would get a life.

i think this market is in big trouble, the question is for how long. i do however agree that this is a global market, driven by many more factors than most. i would compare it to ny or la.

south florida, as i was flipping through tv this past weekend, was all over it. many tv shows based on, talking about, showing the south florida lifestyle.

rich r needs a life. csi durham.

go blog on the hillbilly post.

By Frank

October 31, 2006 01:17 PM | Link to this

“Did you know Ocala is a brand new town built by Disney and every house there has a white picket fence and all of the neighbors bring pies to you when you move in just like north Carolina.”

I think that was meant for Rich R or Easy, maybe a little bit of both, can’t tell , but the point was made.

By INTERNET MADAM

October 31, 2006 02:34 PM | Link to this

What I meant when I said a real estate broker is just like a madam is that a real estate broker and a madam both sit back and relax while their “staff” hustles for them and brings home the “bacon”. A madam and a real estate broker “coordinate” their own showings. Madams do not share their “listings” or “events” with other madams either. Madams get the full commissions if we only do our own events. Easy, that was the Madam of Broward territory that you saw at the boat show. My ladies were working the Fantasy Fest down in the Keys this past week. Diane and I do not swap events. Madam Diane is known for her shopping trips to Milan and Paris. And she does have an interesting collection of hats. On the otherhand, I am known for my windsurfing since I was a windsurfing champion when I lived in Kona. Should you go boating near Peanut Island, you can find me on Friday afternoons with my green and purple sails.

And for my poor pathetic Rich R. Now I understand why you did not come to share the fun in the Fantasyfest. You were too busy looking for Easy down at the boat show instead of looking for me at the Fantasyfest. What a pity. And I had so many wonderful tricks and treats for Rich R. Well maybe those puppies of yours can satisfy your appetite for tricks and treats tonight.

By Smart Renter

October 31, 2006 05:00 PM | Link to this

How quickly times change in the world of quick and easy profit schemes. It just goes to show that short-sighted get rich quick trends never last that long. Greed always comes back to haunt you in time.

Seems that almost every day we read more bad news about the real estate market. Well, its not really bad news at all for the majority of regular hard working folks who earn modest wages for an honest days work. Its only bad news for the very same people who are mostly responsible for the unprecedented exorbitant price increases on real eastate over the last 5 years or so.

Yes, for a few years it seemed that any joker could come along and buy any house, no matter the location, or quality, sit on it for 6 months, then turn around and re-sell it for $50,000.00 more, and make a nice profit for doing absolutely nothing. That greedy practice resulted in the average working person being priced out of even the most basic no frills house. When a $300,000.00 home is considered to be ‘affordable’, something is drastically wrong!

Over a space of five years or so, home prices in South Florida increased almost 300% on average. Meanwhile, the average wage barely budged in the same time. I find it very strange that people accepted these prices so compacently, yet if the stores that sell their everyday staples had tripled their prices on groceries, clothing, and other household items, there would be rioting outside the stores.

Strange how Americans would freak out if milk that cost $3. a gallon five years ago, had jumped up to $9. a gallon today. Yet they have no problem with a house that cost $120,000. five years ago now going for $360,000. today. Talk about misplaced priorities.

Perhaps the reason so few seemed to care about housing becoming affordable for only the top 10-20% of society in terms of income, is because so many folks jumped on the speculation bandwagon themselves. Who cared if 80% of the working population could no longer afford basic housing? As long as I MAKE MY MONEY on that investment property! Thankfully, those days are finally over.

I feel absolutely NO empathy for all those speculators and flippers that are suddenly stuck with unsellable houses and condos, and the mortgages they carry. Houses were meant to be homes for people to live in, to raise families in, to contribute to the neighborhood and community in. Houses were NEVER meant to be game pieces in a life-sized monopoly game.

The often heard catch phrase ‘real estate is always a good investment’ is dead wrong. As we can see by all of the dark windows in several new large condo projects downtown, and by all of the for sale OR rent signs sprouting like crabgrass everywhere you look. Now, a HOME that you plan on living in, where you want to live, is always a good investment. However, playing the real estate speculaation game is about as reliable as casino gambling, or the lottery. Sometimes you get lucky. More often than not, you lose.

Regarding the home featured in your recent article about real estate auctions. It was a 3brm/2bth home on Flamingo Drive that had been listed for $725,000 at one time. At the recent auction, they get a single bid for $500,000. What they neglected to include i the story was how much the seller originally paid for it. I’m guessing $120,000-$150,000. Poor guy. I feel so sorry ofr him that he hasnt been able to unload his investment on some sucker for a nice 250% profit.

At long last, Americans have wised up to the foolishness of buying homes for ifinitely more than they are actually worth. You can’t tell me that a house that sold for $135,000 five years ago is now worth $400,000 today. Why? How? Is a gallon of milk now worth $9 today? Does an oil change now cost $70 today? Does a Hyundai Accent economy car now cost $36,000 ? DId your salary triple over the last five years? No? So then what on earth would lead you to believe that a house is worth three times more than it was five years ago? Why would anyone fall for that?

The real estate market is nothing but an illusion. Its based entirely on perceived value. Not actual value. Trend following fools jump on every bandwagon they see, only to get thrown off at the first bump. Smart people who base their decisions on hard facts, and not trendy marketplace perceptions, kept their money in safe places, and watched peacefully from the sidelines while the fools rushed in to a costly game few knew much about.

Today the results of this risky game are evident everywhere you look. You can’t find one single block in Flamingo Park without at least one for sale sign posted. Question…if Flamingo Park is such a pleasant, historical neighborhood, why are so many trying to sell?

If only more people realized that speculators and flippers have hurt alot more than themselves with their greedy game. They hurt neighborhood quality and character, by keeping so many homes empty, and by pricing houses out of range to so many working class folks with kids who might have moved in and made a home of that empty house thats been for sale for 15 months. Also, all of those for sale signs create the perception that the neighborhood is in decline, thus property values decline as well.

There is a vast difference between house flippers, and true home owners. Home owners actually invest in the community in which they live and raise their familes. Whereas flippers invest only in their selves.

By Truth Is

October 31, 2006 07:21 PM | Link to this

Truth is

Most house flippers are realtors.

Truth is realtors can ask and get a good price for their own house but make their neighbor with exact same house sell for 75K less than them.

Truth is realtors who were constant flippers were the ones responsible for putting the homes out of reach.

Truth is realtors don’t care if they screwed you. You let them do it and they know how to manipulate you or scare you into selling lower than you should.

Truth is realtors are back buying up some bargains now again. They must be getting ready to flip in the Second Wave of Flipping coming this way.

Truth is realtors will have to answer to God someday.

By Michael Fink

October 31, 2006 08:27 PM | Link to this

Man, busy day on the blog!

Anyway, Greg, your pretty much right on the money. This is a credit bubble; as the loans start to underperform, banks will stop writing this garbage paper. Especially when they may be forced to buy back some of this crap paper (when MBS underperform, or are based on fraud, the bank may have to buy back the garbage).

Anyway, as the credit is turned off; the housing prices will continue to collapse. Banks will be less willing to lend money, as the underlying assest will not be enough to support the loan value. It becomes a self-sustaining cycle (much as the run-up was, who cares if the lendee can afford it or not, if we foreclose we will more then get our money out of it). The trend is already starting; credit terms have to tighten up, as the tighten, the market will slough off all these “marginal” buyers. When people have to put real skin in the game (20% cash downpayment), the crazy home prices will come crashing to the floor.

I think 2009-2010 is about the earliest to start looking; don’t be fooled by false bottoms.

Price of rent = price of ownership. That’s when you know we are nearing bottom.

By Mike Fink

October 31, 2006 08:32 PM | Link to this

Crazydem -

Fink is at it again with his rent/price ratio argument. It didn’t hold water last month and doesn’t hold water this month.

Mike-End it and buy already, please!!! Go to east Lake Worth-they’ve got your 2004 prices there. Don’t complain about the neighborhood-it’s what you get nowadays for 2004 prices. Nice little places with character-just takes some effort on your part to be involved in the community to turn things around. It’s what you have to endure for 2004 prices buddy. I did it myself-only people I complained to where the code/police people, not the landlords and other sellers about how their prices were too high.

Crazydem,

Please explain to me how this “argument” does not hold water. Its not an argument, btw, its a fundamental pricing factor for home prices. I don’t think anyone can aruge that those raios exist, but if you would like, be my guest. No using prices later then 2000 though (those were bubble prices, and therefore not valid for comparison).

By postman

October 31, 2006 09:30 PM | Link to this

easy talking smack again. he really thinks he is smacking people down. the only smack down is your buddy in wpb who is receiving a 30%. then, getting played by his neighbor who purchased a house at 150,000 and plan to sell it at 270,000. any guess which house will sale first. then easy talks about the boat show. really, going to believe this skirt. i love these cheerleaders. they rather burn holding the bag than just let it go. your house dont go to hell with you!

By MRJ

November 1, 2006 10:58 PM | Link to this

Loved the post by Truth Is about realtors..could not be more true…those scumbags drove up the prices and forced us to move to Tallahassee because we needed a bigger house. Sold our place in the south end and made a boatload but had to find a less expensive place to live to coutneract the SOH law. Now, a realtor who bought a dump on the next block from us is trying to sell the dump for $925,000. Same realtor who got Anne Coulter in trouble for voting fraud on the island. Can anyone imagine paying close to $20,000 a year in property taxes for a dump just because it 2 blocks from the intracoastal? Yes, PBC was nice but the people are friendly, weather is good and the schools are excellent. I’ll still have fun reading about Tony M. screwing his constituents out of millions.