Wednesday, August 23, 2006

Finally, A Change in Florida

Our "good friends" at the FAR (Florida Association of Realtors) are loath to admit it, but they have released their official numbers for July, and they are not so great. Here now the synopsis:

July, Year over Year, 2006 compared to 2005:

# of Homes Sold: 21,691 (down 33%)
Median Price: $250,800 (up 1%)

Major Cities --------- # of Homes Sold --------- Median Price
Tampa/SP/Clear---------2,629 (down 45%)------------- $237K (up 9%)*
Jacksonville------------- 1,374 (down 17%) -------------$204K (up 7%)
Miami ------------------- 673 (down 38%) -------------$382K (up 5%)
West Palm/Boca----------714 (down 44%) -------------$390K (even)
Tallahassee-------------- 467 (down 7%)--------------- $173K (down 2%)
Fort Myers/CC---------- 694 (down 32%) -------------$290K (down 8%)

* Note that this #, in my studied opinion, is serious fudge. The number is actually around $300K. (Please see previous posting here titled "Something Smells in Tampa Bay...." for an analysis as to why and how the numbers are so skewed from reality.)

More commentary on this report to follow. Until then, get your fill of half truth at: July FAR Report

...and remember - unless you have overwhelming reasons for buying a house in Florida right now, DON'T DO IT!!!

To employ a Florida metaphor, we are presently at the very top of the "Kamikazee" water slide at Wet-N-Wild. We've got a lot of air between us and the bottom.

Tuesday, August 22, 2006

Top Resources for Keeping Track of the Florida Housing Bubble

In this extremely over-valued market, you can never have too many sources of information to keep an eye on things. As such, I have assembled my top 10 links for Florida Housing Bubble Resources

1. Housing Bubble - This is a national site, the original, the best by far. Updated several times a day, with very thoughtful commentary by a great number of "bubbleheads" from around the country. Areas such as AZ, CA, NYC, MA, DC, and of course the Sunshine State are often in focus.

2. Bubble Meter - Another great site. If you notice, I keep this and the previous site posted over on my links (to the right ------>).

3. - A very good site for assessing what's for sale. Unfortunately, the filters and sorts are sometimes a little too coarse, and they won't reveal the exact address of the listings. Actually, if you go to the listing agent's site, you can often find it there. Also, for those of us/you who plan on renting until the market recovers, it has a great rental search.

4. Matrix - Excellent site run by a Jonathan Miller, a long-time real estate appraiser based in NYC. He's experienced with up-markets, down-markets, and a lot of market influences. Great commentary, as well as categorized topics including our good friend, the housing bubble. Brutally honest and forthright.

5. CNN-Money Magazine Real Estate - Good source for nationally based housing issues. Updated a couple times a week.

6. Florida Association of Realtors - No decent observer of the Florida Real Estate Bubble can get by without checking the laughable lies and half-truths posted on this site. As discussed earlier, many agents are in big trouble in our state, some due to lack of client activity, and others due to holding investments that they can't sell. Take everything you read from the FAR (and the NAR - National Association of Realtors, for that matter) with a LARGE grain of salt. Even though this is probably the worst time to buy since the 1920's, they sure as hell don't want you to know that.

7. RealtyTrac - A good way to find out what's being listed for foreclosure in your town/zip code. This is a for-profit site, so they only give you so many free details on the foreclosing properties, but often you can do further research on your own to get the remaining details. Or, if you're serious about purchasing a foreclosure/lis pendens, become a subscriber. I may become one if/when I feel the time is right. One thing is certain: they will be doing plenty of business over the next several years.

8. New York Times Real Estate - It tends to be a little NYC-oriented, but they also track national issues in housing. As per anything that comes from the NYT, the articles are well written.

9. - See your house from space, and see what your and everyone else's house in your neighborhood is worth. There is some debate as to the quality of the estimates, due to the "comp" (lagging) nature of valuation, and major differences between homes that can't be judged without human viewing (such as landscaping, appliances, carpets/flooring, etc...). Still, its a terrific idea, and a very popular site.

10. Your local property appraisor site. If your county/locale doesn't put all of this info on line yet, you must be living in a third world country. To find it, go to Google or Yahoo, and search on " property assessor". FYI, for those who live in Hillsborough County, its Hillsborough County Property Assessor

11. Okay, I said there would be 10, but hey, don't forget to bookmark yours truly. We're keepin' it real for the homeslices, yo'.

Wednesday, August 16, 2006

Something Smells in the Bay Area (and its not Red Tide)

As you know, the NAR (National Association of Realtors) and the FAR (Florida Association of Realtors) just released their 2nd quarter numbers.

Once again, I look at what they are showing for the "Tampa-St. Petersburg-Clearwater" sales, and I am shocked. Not that the prices are not lowering (they haven't) nor that the number of sales has dropped (they have). What is shocking is the median sales price they are listing for the area.

From FAR August 15, 2006 report, median sales price for 2nd Qtr: $232K

Okay, lets do a quick check on to verify what's currently for sale.
Tampa - median price $280K
St. Petersburg - median price $300K
Clearwater - median price $305K

Also, in Orlando, a town just up the road (I-4) with very similar demographics (and much more available land to build on) reports a median price of $265K

What's going on here? It looks like a far rosier picture than reality is being painted here in the bay area. How can the prices for the 3 major cities in the region be $50-$60K higher than what the FAR is reporting? And how does Orlando have a $30K higher price with more available land?

Here's my theory.... Although you can't find it anywhere on the FAR website, the "Tampa/St. Pete/Clearwater" area should be defined as Hillsborough, Pinellas, (and sometimes Pasco) counties. What I believe is happening is that, to keep the numbers down, they are also adding such areas as Hernando, Citrus, and even Levy and Polk counties. If you cherry-pick which geographic region to add or subtract the numbers, you can make the median price trend anyway you want.

"So, it's obvious they are under-reporting the median price here in Tampa. The next question is: Why keep the numbers down?" you may ask.

A great question, and one I've put a lot of thought into. Choose one or more of my postulates:

1. After decades of being one of the cheapest places to live in the country, Tampa is now one of the most expensive (as a % of median income). To attract employers, the chamber of commerce (which includes all of our good friends in the realtor business) needs to keep the "official" housing costs artificially low. Sorry folks, funny numbers or not, unless you just made a ton of money selling your house in NY/CA/PA/NJ/AZ/DC/MA, it is VERY expensive to move here.

2. This is related to postulate #1 above. Nobody wants to be known as the town with the highest increases in the country (see also Naples and Phoenix). It scares away employers and retirees.

3. What goes up usually comes down. If the numbers are correctly reported, the drop in prices (which is already happening) will look even more precipitous. Nothing will ruin a market worse than a perception that prices are falling - who wants to "catch a falling knife"? Instead, with weak appreciation being reported, it gives a look of positive return. Furthermore, in the future when they can no longer hide the fact that prices are dropping, they can say, "Yes, the prices are dropping, but look how small the drop is!"

4. This is also interrelated with all of the above. What, you may ask, is the #2 industry in Florida after tourism? Excellent question, and I'll give you the answer: CONSTRUCTION. Without people constantly moving into this state, the #2 engine in the Florida economy sputters. How else could we afford schools, roads, plumbing, parks, habitat protection, AND no income tax? Answer: we couldn't. The housing numbers HAVE to look good to outsiders. Without a massive and continuous influx of out-of-staters, unemployment goes through the roof and state revenues fall through the floor.

Of course, its just my opinion, and I may sound like a conspiracy theorist, but the numbers don't lie. What the FAR is reporting does not correlate in any way to what the actual sales prices are.

End of story.

Monday, August 14, 2006

A Tale of 2 Taxpayers

The "Save Our Homes" tax system is creating a 2-tiered hierarchy where one homeowner can be paying 3-4 times the property taxes than another with an identical house in the same neighborhood.

From an excellent article in the Palm Beach Post, a few months back...

"Save Our Homes, the tax relief package aimed at keeping Floridians of moderate means from being taxed out of their houses, increasingly divides Florida property owners into two classes — winners and losers."

If you purchased within the last 3 years, you're most likely in the "loser" category.

"The winners? Longtime property owners with homestead exemptions.

The losers? Everyone else, from recent buyers of homes to apartment tenants, from snowbirds to owners of malls and office buildings, even longtime residents like Matthew Krische who simply move a few miles away."

Why the "fuzzy math" on taxation? Read on....

"The amendment to Florida's constitution [1992] says the taxable value of a homesteaded property can rise by no more than 3 percent a year or the rate of inflation, whichever is less.

Throughout the '90s, Save Our Homes didn't matter much. After all, houses were appreciating by only a few percent a year.

But as home prices have skyrocketed in the past five years, so has the gap between the taxable value and the true value of many homes. "

It really is a "smoking deal" for those who got in early, and a real bummer for everyone else (out of staters, investors, first-time buyers).

"When one homeowner pays two or three or four times as much as a neighbor in a similar home, questions of fairness follow."

Of course, its not quite "taxation without representation". Just "unequal taxation with representation". Sorry, you're not a member of our "Clique" (moved here prior to 2003) - you pay more. A LOT more.

"'Nobody ever said it was fair,' said Ken Wilkinson, the Lee County property appraiser and Palm Beach County native who pushed for its passage. 'The inequity it fixed was far greater than the one it created.'"

Okay, at least he's being brutally hones with his first statement. However, the second statement makes it (to be brutally honest) obvious that this guy is an untruthful sack of you-know-what. When one resident pays triple the taxes of his neighbor in an identical residence, you've got a SERIOUS issue. The inequity is much, much worse.

Still, you've got to admit, it's in Florida's DNA. I just wish they'd spell it out directly in the constitution, so that people wouldn't get confused in the future. It would go something like this:

Article 1. All legislation must be written in a way to maximize SUBSIDIES TO THE GEEZERS.
Article 1a. They deserve FREE MONEY.
Article 1b. Everyone else must pay to support this.
Article 1c. Get used to it.

Really now, it's all a ruse. When the law was proposed, that was the justification:

"Save Grandma's House! She's gonna lose it because taxes are SKYROCKETING! The sky is falling! The sky is falling! Save Grandma's House!".

In actuality, it was people like Wilkinson, Greg Norman, Rush Limbaugh, and Malcom Glazer that are the biggest beneficiaries of being "saved" from losing their homes. Talk about strange bedfellows.

"Save Our Homes also has evolved into a regressive tax where the biggest benefits accrue to the wealthy. Golfer Greg Norman, Tampa Bay Buccaneers owner Malcolm Glazer, singer Jimmy Buffett, broadcaster Rush Limbaugh, even former Tyco International head Dennis Kozlowski, among other longtime owners of oceanfront manses, see millions in property value sheltered from taxes. All saved more than $100,000 in property taxes last year thanks to Save Our Homes.

Yet there's no such break for cash-strapped first-time buyers who struggle to find homes they can afford. They pay taxes on the full value of their homes, posing one more obstacle to affordable housing."

But there is hope. Really.

"State Rep. Fred Brummer, R-Apopka, is an ardent tax cutter but has been an outspoken opponent of expanding Save Our Homes. Not only does the break shift the tax burden from the wealthy to everyone else, it also puts less affluent inland counties at the mercy of wealthy coastal counties such as Palm Beach, Brummer said.

When he introduced a property-tax reform plan in Tallahassee last month, Brummer specifically pointed to Norman's outsized tax break.

'Because the appreciation is so much greater in the coastal counties, the coastal counties have a far greater percentage of their property protected under Save Our Homes,' Brummer said. 'The wealthy homeowners are not paying their full share.'"

Now, the whole thing is actually having a "reverse effect" on the housing boom. Just another reason to be very, very careful where and what you buy.

"During a recent tour of Nettles Island in his yellow golf cart, McIntosh pointed to for sale signs and said high property tax bills have made lots difficult to sell.

'When people are told what the tax bill will be,' he said, 'they burn rubber getting out of here.'"

Full article: 2 classes of homeowner

Wednesday, August 09, 2006

Yet Another Faulty Forecast

Similar to the Hillsborough County Schools blunder (see post below) on expected student population for 2006-07, the NOAA is now predicting fewer tropical storms for this season.

"Scientists with the National Oceanic and Atmospheric Administration on Tuesday said they now think this hurricane season will produce slightly fewer tropical storms and hurricanes than they forecast in May."

Now, for those who are counting, we've only had 3 so far this year - as opposed to 28 for all of 2005's season. So, we're way ahead of the curve, right? Not so fast, my friend....

"Three tropical storms have formed since the season's start on June 1. None became hurricanes. However, the most active part of the season runs from mid-August into October."

And really, the decreased forecast seems like a "drop in the bucket" (excuse the pun), really.

"NOAA's new forecast reduced the number of tropical storms and hurricanes by one from its May prediction. Forecasters now expect 12 to 15 tropical storms and seven to nine hurricanes."

I wonder how our good friends in the homeowner's insurance business will treat this news. (I'm picturing nerds in Hartford and NYC hi-fiving each other and planning their next exotic vacations with the bonuses they'll get from record profits this year)

Full Link: Lowered Hurricane Forecast for 2006

Tuesday, August 08, 2006

Wall Street Journal: Housing Market May Have Hard Fall

From today's WSJ. Some say its cool, some say it's c-c-c-COLD!

"Bubble or not, the biggest housing boom in recent U.S. history is coming to an end."

Nice to see a major business journal actually admit the fact.

"The boom has depended heavily on the upbeat psychology of consumers, builders and lenders. As moods swing, the landing could be very hard indeed."

Especially the lenders - if they get burnt from the current crop of exotic loans they're holding, things are going to get a LOT tougher for all future borrowers, no matter what the interest rates are.

"'We could be underestimating the dark side,' says Mark Zandi, chief US economist at Moody's and among the first to seek to quantify the housing boom's broader effects. 'Euphoria could turn into abject pessimism very quickly.'"

The key phrase schaudenfreude comes to mind.

"In June, total single-family-home sales fell 8.7 % form earlier, to an annualized rate of 6.9 million, the sharpest year-to-year drop since April 1995."

I owned a house in 1995 in Phoenix, doubt that it was worth a penny more than when I bought it (new) in 1993 for $99K - sold in 2000 for $135K (after installing a pool). Recently, a search on Zillow reveled that the place is now worth more than $300K. That, my friends, is the Webster definition for "irrational exuberance".

"Still, judging by most economists' forecasts, the fallout from a slowing housing market doesn't look all that unpleasant. Typically, they expect the decline in housing and housing-related activity to shave about a percentage point off inflation-adjusted GDP growth in 2007, compared with the 1 % point the sector contributed to growth in 2005."

I'm not an economist, but I do possess an engineering degree and an MBA, and have been very observant over the past several years. If the market keeps its current path, a 1% downside from housing will be the very best scenario.

"Economists, however, have few clues on which to base their predictions. Today's housing boom differs radically from its predecessors. For one, it has been bigger and longer-lived. House prices are still more than twice the level of 1991, when the boom began."

It should be noted, that the vast majority of that growth is concentrated on the coasts (CA/NV/AZ/OR/WA and Boston-south-to-Miami). For the most part, growth in rural and smaller cities has been much more sane.

"Because the market has risen so far, economists worry it has the potential to fall much harder than their main forecasts would suggest."

If they're worried, why aren't they quantifying this worry-level and incorporating that into their forecasts?

"There is reason to believe home builders will have to pull back more sharply. That is because the leveling off of house prices changes the equation of homeownership. When housing took a down-turn in the 1970s, new-home sales quickly fell to their long-term norm. This time around, that would entail about a 50 % decline in sales, says Ian Shepherdson, chief US economist at Valhalla, NY-based consulting firm High Frequency Economics."

So, the next time you drive by a new home development, that says in smaller font, "from the mid 400s", remember the price will eventually get to "from the low 200s".

"'It's a 15-year bubble unwinding in two years,' Shepherdson says. 'It's going to hurt.'"

No pain, no gain.

Monday, August 07, 2006

Tampa, we Have a Problem

Here in Tampa, the Hillsborough County School District (one of the largest in the country by population) has experienced phenomenal growth over the past several decades, similar to many other cities in the sunbelt.

Until now.

It seems the forecasters were a "bit" off for the 2006 school year, which started last Thursday (yep, that's right, August freakin' 3rd* - how WACK is that?). In fact, this is the first time in recent memory that opening day enrollment was DOWN from the prior year. Over 25% down from the forecast.

My question: does the overpriced real estate market have any correlation with this problem? Will it have consequences for the future?

Hillsborough County Schools - Opening Day Shortage

* Our fine legislators in Tallahassee, in a rare moment of lucidity passed a law that actually made sense: Starting next year (2007), schools in Florida will start no earlier than the week before Labor Day.

Defaults on the Rise (like the ancient Phoenix!)

As you may know from my profile, I lived in Phoenix for 8 1/2 years. It, like Tampa, has experienced an unrealistic surge in home prices over the past 4 years. Now, the party, if not exactly over, has definitely taken a turn for the worse.

Check this link (via and the talk around the valley of the sun about mortgage defaults:

Arizona Housing Defaults

Sample Resignation Letter

Funny, Mary is resigning from her job today, and I agreed to help her with her resignation letter. Did a search on yahoo and found this link for a sample letter - note the content of what the resignation is all about.

Sample Resignation


Sorry to be blunt about this - are blogs not overrated? It seems everyone has one, so who the hell is reading all of these?

Personally, I enjoy reading the housing bubble blogs, and occaisonally posting on them. No big deal. Someday I'll own a house again.

Posting my picture here for my profile...