Sizing the Housing Bubble

[Spanky]

broward county, florida ...

This area is also expensive. Check out this place.
2501 Mercedes Dr.
Fort Lauderdale, FL 33316

$15,500,000
5 Bedrooms
7(full) 5(half) Baths

 

[lazygood4nothinbum]

2501 Mercedes Dr.

nice address. point intracoastal lot in harbor beach. the views are amazing. it is also just across state road a1a from the beach. taxes about $350,000/year. i'm surprised the house is going so cheap.

i dated a guy in there for a while. he was only worth a few hundred million and had a house (then) worth about $4 mil, on the same canal i think.

Some interesting reading about the FL market.
http://globaleconomicanalysis.blogspot.com/2006/07/ghost-housing-market.html

and yet from the realtor/author's own website ( www.treasure-coast.us/waterfront )....

Shortage of Waterfront - Our most valuable homesites are waterfront. We are fortunate in our area to have a beautiful Atlantic Ocean coastline, as well as three beautiful wide water rivers, The Indian River, The St. Lucie River and the Ockeechobee Waterway. But there are a limited number of homes and condos available, and far more demand from buyers. Prices for waterfront homes and condos are running ahead of the general market.

and

Baby Boomers Control - There is no other way to say it. This year Baby Boomers turn 60, and they are starting to retire and plan for retirement. They are not retiring to Canada or Chicago or even New York. They retiring to Las Vegas, Phonenix and Florida, with more than 60% of them estimated to be headed to Florida. That's millions and millions of new buyers that want to spend the rest of their lives relaxing in their waterfront home in Florida.

the realtor of a thousand faces.

 

[laurence]

350k a year in taxes? What

We hung out with our Doctor friends this weekend, they are actually in the market to buy a house right now (They live in a townhouse that they bought right out of residency 3 years ago). They are looking at homes in the 1.3 to 1.5 million range, saw a home they really liked but thought 2 million was "a stretch".

I'm tempted to tell them to wait, since the loss of equity in their townhome over the next year will be a drop in the bucket compared to the likely drop in price on the home they will buy. But I think they are pretty revved up at this point, and the extras new home builders are throwing in at this point are really piling up.

 

[wabmester]

Some interesting reading about the FL market.
http://globaleconomicanalysis.blogspot.com/2006/07/ghost-housing-market.html

Wow, that is the most bearish real estate broker I've ever seen. (And he's right on, of course.)

 

[ShokWaveRider]

I agree, RE Agents can be a little two faced as it suits them. But they are sales people after all, so to sellers and buyers they do have to put on a rosy face.

As a contrarian, I also happen to agree with the article, whoever it was written by. There are 2 or 3 things going on here.

1) The general RE cyle of events, similar to historical data, I remember 1989-1995 in SoCAL.

2) The majority of Americans historically are over spenders and poor savers, the more money they have the more they spend. The US Economy relies on it. The more equity they accumulate in their homes, the more they re-finance to tap into it, and yes spend more. (Interest rates low, tax cuts, more cash more spending better economy) They live for the moment. As a Brit, I never dreamed of not saving for consumer goods before I bought them. TVs, Cars etc. (Homes are the exception) I still do to this day unless there is 0% financing (and it is a good deal) or I can write the item off. I take free money any time.

3) I am a great believer that if you talk about something for long enough it WILL happen. Or you will "WILL" it to happen. Just look at the length of this thread! AND Every day on TV, or in the street, you hear talks of the proposed bubble, no such thing as a bubble, buyer's market, massive inventory, the RE world is ending as we know it.... Whatever.

Personally I hope it does crash and hard, but I am a renter, what do I know or care?. I sold my SoCAL home at about 90% off the 2005 October peak. I will be a buyer at the rates 20% - 30% perhaps 50% who knows, lower than today. If not I will continue to rent. Maybe I will become one of those "Flippers" maybe not.

Folks like those on this board, I really do not think will be affected at all, at least not in real terms. They will simply re-adjust their time horizons and move on. Or they will trade up or down when it suits them.

JPatrick has the right idea, taking his vette, selling his home in TX and moving to what I can see a VERY economical Ozarks, beautiful to boot. House Taxes are so reasonable there 19% of the Assessed value divided by 100 x 3.9973. Compare that to Florida. I will use generic numbers for the same quality of home as I see it, after some personal non qualified research on Realtor.com.

Nice average home in NE florida with a view of something other than your neighbors.

$500,000 Taxes = on average 18% per thousand = $9000 per year.

Similar home in the Ozarks (MO)

$250,000 Taxes = 250,000 x 19% /100 x 3.9973 = $1898.71

$500,000 (McMansion) Home = $3797.43

Speaks for itself. Regardless of a state income tax.

SWR

 

[brewer12345]

Wooo, dawgies: http://www.azcentral.com/arizonarepublic/news/articles/0730emotional0730.html

 

[Scrooge]

Some interesting reading about the FL market.
http://globaleconomicanalysis.blogspot.com/2006/07/ghost-housing-market.html

Heh, a blog called "globaleconomicanalysis"? And he writes "We hire nurses from all over the world and we even have an association called Visiting Nurse Association"? (FYI, VNA has been around since 1888 and is about visit[ing] the sick in their homes). 

 

[laurence]

People stretch themselves too far, don't understand what they are getting into, and when they get burned they beat up their agents and vandalize other peoples homes?  Nobody is ever at fault for their own mess.  Barf.  It's only going to get uglier.

 

[brewer12345]

People stretch themselves too far, don't understand what they are getting into, and when they get burned they beat up their agents and vandalize other peoples homes?  Nobody is ever at fault for their own mess.  Barf.  It's only going to get uglier.

Actually, I think such (mis)behavior will be short lived. In another 6 months or less, I think people will be resigned to a weak market. That's when banks will be getting a lot of sets of keys in the mail...

 

[Spanky]

Wooo, dawgies: http://www.azcentral.com/arizonarepublic/news/articles/0730emotional0730.html

This reminds of the real-estate market in Hong Kong and Shang Hai, China not too distant ago. A lots of people became rich and those who came into the game lost their shirt. When will we ever learn?

 

[Mwsinron]

This reminds of the real-estate market in Hong Kong and Shang Hai, China not too distant ago. A lots of people became rich and those who came into the game lost their shirt. When will we ever learn?

Never and I hope it stays that way. Way to hard to make money if you dont have any suckers.

 

[youbet]

Actually, I think such (mis)behavior will be short lived.  In another 6 months or less, I think people will be resigned to a weak market.  That's when banks will be getting a lot of sets of keys in the mail...

I know you mean this figuratively, but so no one gets confused.........  Folks, underwater in their homes, who drop by the bank and toss the keys to the mortgage loan officer still wind up being foreclosed on, taking the credit ding and all that bad stuff........  Turning over the keys to the bank doesn't get you out of the obligation to pay off the mortgage loan, even if the current selling price is less than you owe. Sad stuff.......

 

[brewer12345]

I know you mean this figuratively, but so no one gets confused.........  Folks, underwater in their homes, who drop by the bank and toss the keys to the mortgage loan officer still wind up being foreclosed on, taking the credit ding and all that bad stuff........  Turning over the keys to the bank doesn't get you out of the obligation to pay off the mortgage loan, even if the current selling price is less than you owe.  Sad stuff.......

Yup. And the recent changes to the BK law make it more likely that the lender will go after the defaulted borrower for the difference between the proceeds from the sale of the house and the amount owed.

 

[wabmester]

HUD is trying to make it harder for banks to foreclose on FHA loans. I wouldn't be surprised to see something similar for FNMA loans as well. At least I hope the government will try to reduce taxpayer liability when Fanny Mae starts bleeding.

HUD changes

 

[honobob]

New home sales in Honolulu were down 26 percent from year-before levels in the first half of 2006, despite strong luxury condo sales.


"High-rise condominiums have enjoyed strong demand -- the largest two project sales performances year-to-date 2006 are at Keola Lai (210 contracts) and Watermark in Waikiki (128 contracts)," Cassiday said.


Sales of new single-family homes are slowing, Cassiday said, because there is no inventory at the lower end of the price spectrum and many prospective home buyers are priced out of the market at the other end.


The above is from the Pacific Business News.  7/31/2006


Strong luxury condo sales and the only reason SFR sales are down is because of no inventory. 

That's why I skeptable of them figgers and graphs. 

Call me Honobull

 

[wabmester]

Strong luxury condo sales and the only reason SFR sales are down is because of no inventory. 

That's why I skeptable of them figgers and graphs. 

Call me Honobull

You're probably right, Honobull.   Sales down 26% YoY?  Prices down month to month?  Inventory levels up 100% YoY (highest levels since 1999)?  Honolulu is obviously in the clear when it comes to this crazy bubble talk. 

But you might want to consider this: when nobody can afford to enter the market (no inventory!?), where is the pool of upgrade buyers going to come from?   And do you think there's any chance that those new condo buyers might be (gawd forbid) flippers?

 

[honobob]

But you might want to consider this: when nobody can afford to enter the market (no inventory!?), where is the pool of upgrade buyers going to come from?   And do you think there's any chance that those new condo buyers might be (gawd forbid) flippers?

Nope it's all good!  Market needs to provide at least 26% more entry level SFR's to equalize.  Maybe  not the best time to hold high end properties, but is it ever. " Metric" Best to own the smallest home in the neighborhood.  Flippers are in the ocean.  Most highrise highend new construction is sold by lottery only to owner occupants. 

Akamaibob

 

[laurence]

We'll have a better picture in a year or so. If I had the cash for it and didn't need to free it up anytime soon, I would buy a luxury condo in Hawaii myself, but because I want to spend time there, not as an investment. Interest rates alone are a big turn off for me right now.

 

[Martha]

Yup.  And the recent changes to the BK law make it more likely that the lender will go after the defaulted borrower for the difference between the proceeds from the sale of the house and the amount owed.

Maybe not. Some states allow a quicker and easier foreclosure process if the lender gives up a deficiency. Most states provide that if you take a deed in lieu of foreclosure you must give up the deficiency. Most often the lender goes for speed. Often lenders just want to get the loan off their books.

 

[brewer12345]

Maybe not.  Some states allow a quicker and easier foreclosure process if the lender gives up a deficiency. Most  states provide that if you take a deed in lieu of foreclosure you must give up the deficiency.  Most often the lender goes for speed.  Often lenders just want to get the loan off their books.

Interesting. My suspicion is that lenders will probably not find it worth the trouble to go after the deficiencies anway. After all, homeowners wouldn't default on the loan if they had a pile of ready cash laying around.

 

[Martha]

Another reason to believe that the housing bubble is bursting. This thread has had 10743 views as of this post.

 

[bpp]

Newspaper reported today that 2006 is the first time in 14 years that real estate prices rose year-on-year in Japan as a national average. (Limited pockets had started recovering previously.)

14 years from peak to trough.

But, it can't happen over there in the US, so don't worry.

 

[ShokWaveRider]

Another reason to believe that the housing bubble is bursting. This thread has had 10743 views as of this post.

One of my points exactly. If you, (and everyone else) is talking about it. It WILL happen. Seen most TV news broadcasts lately? Inbetween the wars and a sick Castro that is.

SWR

 

[cute fuzzy bunny]

Another reason to believe that the housing bubble is bursting. This thread has had 10743 views as of this post.

Weeeellll...the mineshaft canary just chirped a little. I had reported that developement had all but stopped here, some homes that look like they'd been built-to-suit ended up foreclosed on without being lived in, and then theres the famous "house for sale via piece of white paper and crayon sign on the garage door".

But...yesterday the KBHOME up the street from me plowed a 20 acre field and marked it off...

Not sure if they were just trying to make it pretty or if they're going to start another 100 homes...

 

[Spanky]

There is no telling when a bust will occur. The following links about the Hong Kong and Shanghai housing markets may shed some light on the afrermath of run-ups fueled by massive speculation.

Attention, Speculators: Here's a Lesson from Hong Kong's Housing:
http://knowledge.wharton.upenn.edu/article.cfm?articleid=1194

Shanghai Housing Boom Turning to Bust:
http://www.china.org.cn/english/BAT/151997.htm