Lots of good realtor quotes in this story from Florida today.
I'm reminded of Bubble Proof #6 from Merrill Lynch economist Rosenberg:
1) Overheated prices
2) Over-ownership
3) Too much debt
4) Speculation
5) Complacency
6) Denial
As the number of homes on the market climbs, area real estate agents are holding their breath, hoping the usual springtime buying bounce will rejuvenate a faltering market.
Nan Harper, recent past president of the Pensacola Association of Realtors, has a rosy outlook" The bubble is not bursting here," she said. She predicts that a steady influx of retirees, job-seekers and tourists will continue to be attracted to the area by the water, weather, top-flight hospitals, the University of West Florida and the overall business climate along the Gulf Coast.
Joe Endry, president of Coldwell Banker JME Realty in Pensacola, has a more cautious outlook. The National Association of Realtors expects home sales in the Pensacola Bay Area will decline by 5 percent this year, Endry said. But he expects sales in the Pensacola area to remain "steady" and for prices on single-family homes to "go up slightly."
"I think as far as Escambia and Santa Rosa counties are concerned, we've made a lot of progress in the last year in stabilizing prices after the storms," he said.
Endry said he sees a "lot of opportunity" in the market now that likely would not exist had Ivan and Dennis not hit this area."I don't see value declining," he said. "I think what we will see are properties that are at very high prices will start to get back to more realistic prices.
"Lisa Weeks of Weeks Realty in Pace called the housing inventory "huge." She said one reason is that "builders are raising housing prices every week."
"We're still selling houses, but we have so many listings it's driving us crazy," she said.
Joel Asmar, a Pensacola-based real estate appraiser, said whether there will be a strong rebound is unclear."But I don't think there will be a crash," he said. "The general basic trend is towards devaluation."
January 09, 2006
Oh, Denial - pick your realtor quote: No bubble. No crash. Not bursting. Soft landing. Prices stabilizing.
Subscribe to:
Post Comments (Atom)
17 comments:
"I think what we will see are properties that are at very high prices will start to get back to more realistic prices."
In another words, a price decline.
Call a spade a spade.
...strong a steady influx of retirees, job-seekers and tourists will continue to be attracted to the area by the water, weather, top-flight hospitals, the University of West Florida and the overall business climate along the Gulf Coast...
As overpriced as I think real estate is, it's hard to find a good counter to this argument.
There's a similar situation in my area, near San Francisco. The scenery, climate, and general living conditions continue attract well-to-do people from all over the world, despite the $650,000+ median house price.
When the many fools who got in over their heads lose their houses, it seems there will be plenty others to take their places.
Comments?
Dead market realtor giveaway phrases:
"...different here because..."
"...pockets of... but..."
"...return to more..."
"...over the long term..."
"...value..."
"...positioned..."
"product"
trust, experience, expertise,...
I s that the chick from Stargate SG-1? Or is it just one of those schmaltzy real estate agent pictures?
As a 10 year resident of central FL, I can attest to the housing slowdown in my area. Homes that were snapped up in a few days are now on the "Block" for weeks and months. Here is my theory concerning "Retirees", 'Baby Boomers" buying in FL. If they come from the Northeast they may not be able to easily sell their McMansions. Retirees are looking for a low cost of living area.......FL is not that ....any longer. An influx of retirees from areas where there is "No Housing Bubble" may not be able to afford housing, taxes, hurricane insurance. By the way.......there are high risk areas, waterfront, swamp, sink holes, areas of FL where insurance may cost 5K to 10K per year on a mid priced house. These are more common than you would think! Sometimes these costs are not known until closing unless you do your homework. I don't consider this "Low Cost Retirement" any longer.
some more newly-ubiquitous realtor talk:
- it will pick up in the spring
- immigrants / retirees will keep buying
- bubble talk is self-fulfilling prophecy, please knock it off
- end-of-year bonus money will yield more Jan offers (Best If Used By FEB 28 2006)
Anonyomous 2:12:15AM said...
"it's hard to find a good counter to this argument..." (regarding all the good things about west florida).
You're right, but I generally find this to be a distraction from the real issue, which is the "PE" ratio for housing. I live in SF, and when people list all the good reasons why someone would want to pay a lot of money to live in SF, I don't argue - because I agree. Just as I agreed when people argued that information technology would be a source of huge benefits to the economy back in 99-00. disagreement was over PE ratios, not the benefits of IT. A lot of people missed this.
A bubble doesn't mean that the fundamentals are bad, it means that prices have become detached from fundamentals, ie., when Webvan (an on-line grocery store) is valued above General Motors. There's nothing wrong with the idea of an on-line grocery store - if done right, it could be a profitable little business. It's the PE ratio that made me nervous.
Same thing here. Nobody's saying that prices in SF shouldn't be high. It would make perfect sense for that little 995 sqft 1+ br house house I saw this weekend to sell for 550K or so (suggesting a traditional morgage and debt ratio for a family with a 100K down payment and about 100K/yr in income). By the way, this isn't pessimistic - 550K would be wonderful appreciation over the last five years. Problem is, people are using interest-only ARMS to bid it up to 750K, on the belief that they'll sell it for 850K next year.
Telling me that it is a charming little bungalow will cause me to agree with you... until you expect me to believe that next year it will sell for 850K.
IMO Florida's tax laws and the house insurance will drive down prices for years. Its to bad they are worse than taxachusetts now. I think for years Florida's houses were under valued compared to just about everywhere in the northeast. At least in florida you have a new house instead of a 50-100 year old drafty ineffienct old dump. But Florida's tax laws will come back to haunt them. I just left after 20 years there. mrchinup
I thought WebVan was great! I signed up as soon as they covered my area. Made two purchases, then they went out of business. Damn.
Yes, P/E is an important consideration, maybe the most important. It makes me feel better about renting. There's something fishy about buying a house, with the big down payment and all the hassle that entails, then paying $4000/month for a place that would rent for $2000.
Yet with all Bush's mismanagement of the economy (along with everything else), the dollar is still poised for a big drop, and hard assets look good. Especially highly leveraged with a fixed low rate.
The net result is, I don't know where to put what little capital I have left.
anon from san fran - what would the bungalow rent for and what would the monthly cost of owning it be
let's look at the PE
...what would the bungalow rent for and what would the monthly cost of owning it be?
If you used a 30 year fixed at 6%, and put down 20%, you'd end up putting 150K down and borrowing 600K.
Your morgage payments would be about $3600/month. Property taxes would be about $775. And insurance would be about $150. So total montly payments would be about $4500 a month.
I'm renting a comparably sized flat for $1800/mo, and I'm not getting an especially great deal. I've seen them rent for less. But the property under discussion is a house, not a flat... so let's be generous and say it would rent for $2000/mo.
So we're looking at a $2500 difference between buying and renting. A small amount of the payment would go to principle, so we should discount that - what would it be at first, around $600? So we're down to $1900.
Then you have to consider the morgate deduction. This varies widely (make too little and it doesn't matter, make too much and you're paying the AMT)... anyway, the interest each year is about $39000, so if you're in a 25% tax bracket, you'd get about 10K in deductions - all in all, it looks like the property tax and morgage deduction roughly cancel each other out.
So all in all, you're looking at a deficit of between 1000 and 1500 a month. Hard to say, because some of this depends on the individual's filing status.
You also have to count the opportuniy cost of the 150K that you put down, though. Conservatively, let's say it would earn you 500K a month (again, very hard to predict)... so this brings it back up to $1500-$2000 you need to make up in appreciation.
This is all obviously off the cuff... but the numbers for buying are looking horrible compared to five years ago.
Oh, but just think of how much money you'll make from appreciation of the house! In two years, you'll be able to sell it for $1.2M!
Ha, ha.
Of course, that has been happening for the last few years. It will stop immediately after I buy a place myself.
"...strong a steady influx of retirees, job-seekers and tourists will continue to be attracted to the area by the water, weather, top-flight hospitals, the University of West Florida and the overall business climate along the Gulf Coast..."
Here's a counter to that argument.
1. Univeristy of West Florida - has anyone ever heard of it except for those in P.cola?
2. Overall business climate - I.E. no business. With some exceptions such as P.cola, Panama City Beach (Panama City itself is a dump), and Tallahassee, the "Redneck riviera" is alive and well.
I live in FL and had a chance to tour the 'RR' a couple months ago. Nothing much has changed. Destin is still nothing more than a tourist trap, Panama City beach is moving upscale as many of the mom-and-pop motels have been torn down for condos, and anything down the rest of the coast is sparse. Trust me, the people who live there (i.e.locals) want nothing more than to keep it that way.
ST. Joe owns a ton of land, but who wants to live in a subdivision in the middle of nowhere, surrounded by a bunch of pissed-off rednecks living in shitty trailers and driving beat up pickup trucks who think it's a game to go out at night and fire off hundreds of rounds from various guns. Aside from the general 'green teethed' population, there is no industry other than logging and a nascent fishing industry.
Never mind that a ton of forest is protected either throught Wildlife mgmt areas or National forests.
Don't get me wrong, it's a beautiful area; I just don't forsee much development taking place as envisioned. There is no major city in the area. Tallahasse has a small airport. No cultural attractions, arts, cinema. Basically that whole area offers the worst of Florida (cold winters, white trash city, hurricanes, expensive insurance and taxes) without having any real benefits other than being close to the beach.
I have been following a site now for almost 2 years and I have found it to be both reliable and profitable. They post daily and their stock trades have been beating
the indexes easily.
Take a look at Wallstreetwinnersonline.com
RickJ
I can never spend enough time blogging because I�m busy with my own real estate work, but I enjoyed your site. Too brief a visit, but thanks for the insight. Visit my site if you have a chance.
As always, you have compiled a very interesting blog here. I think you would enjoy my real estate property listings usa blog. You should check it out if you are interested in all things related to real estate property listings usa
Hellllllllllloooooooooo
Get Some Great Information about real estate investing . If your interested in finding out how the experts deal in real estate then visit http://realestate.opportunitiesinfo.com
Post a Comment