Wednesday, November 29, 2006

The Florida Room - Newstories

This time around, I'd like to get some links from you all with news stories dealing with the Sunshine state and the national media regarding real estate.

Please post and share (Crazy G and Lizziebeth - we all enjoy your posts and links). Here are my latest, submitted for your interest....

FAR Report for October 2006

Florida Tourism Down for Summer 2006

3rd Quarter Home Prices Nationwide

Legislature Addressing the Insurance Problem

Florida Property Tax Reform Comittee - Meeting in Orlando

Monday, November 27, 2006

We're Now #5 in Foreclosure Rate (#2 in Total)

From RealtyTrac (a foreclosure information tracking service) and Money/CNN, the new numbers are out.

For October, 2006:

  • We're now #5 in the country, with one foreclosure for every 640 households.

  • We're #2 in total foreclosures, with 11,413 filed last month.

  • Our total is now 49.6% ahead of this time last year, which (interestingly enough) puts us at mid-pack in relation to % increases in other states.

Full Article with All States Ranked

Wednesday, November 22, 2006

At Least 2 More Years

From a press release by Investment U (via Yahoo Business). As we all have expected, the prospects in housing are far from rosey.

'There's a growing consensus among economic and financial experts on the rate at which the real estate bubble will deflate. It will be a slow leak, they say. But the reality is far more chilling.

Last month, former Fed Chairman Alan Greenspan said, "The worst may well be over." But the "worst" is a frightening picture: Median prices for home sales have fallen sharply year-over-year, for two straight months, according to NATIONAL ASSOCIATION OF REALTORS.

"In addition to being the largest price drops in at least 38 years," The Wall Street Journal reported, "the back-to-back declines are the first time median home prices have fallen since 1995." And the decline is hardly over.'

And how about those exotic mortgages that everyone has been using the past 3 years? How are they going to affect things?

'Those who have interest-only, or "teaser-rate," mortgages could see their monthly payments more than double.

"Interest rates will rise on about $300 billion in adjustable-rate mortgages this year alone," he said. "That figure is projected to skyrocket to more than $1 trillion in each of the next two years."'

And, we have to ask: What states will be affected the worst?

'Arizona, Nevada, Florida and California will be hit particularly hard, he said, and homeowners in these states may not see a 5% decline, as experts predict, "but could fall two or three times that number."'

Full Article

Friday, November 17, 2006

K-12 Enrollment Down in Florida for the First Time

There has been some rumblings recently about the dearth of expected school increases here in the Sunshine State. Apparently, the state has been attempting to keep this fact in the closet (almost Mark Foley-like!), but after some badgering by some dilligent reporters at the Associated Press, the real figures are coming in.

Bottom line: from October 2005 to October 2006, the state lost more than 2000 students. In the past 50 years, this has never happened.

Note that the state is also attempting to show an actual gain, by comparing the current figures to the end of the school year of 2005 - that's not "apples to apples" because it doesn't take into account the number of dropouts during the year. Nice try, though! I wonder: did the persons trying to push this fictitious "gain" have previous employment at Enron?

"A loss would be historic in a state that has added 34,845 to 65,187 more students in kindergarten through 12th grade annually for the most recent three academic years. A slight gain would still be a dramatic slide.

Either way, the shrinking student enrollment in a state that officially counted 2,641,598 students in mid-October means a $204 million loss to school districts this year, The Associated Press reported Thursday. The implications for the economy may be far greater.

To put it another way, the state fell short of its projections for new students by 48,375.

"A whole school district is not showing up," said Bruce Tonjes, Polk County schools' associate superintendent. "It's scary, isn't it?"

And we all have to wonder: why did this happen? Could it be.....HIGH housing costs?

"The dramatic drop was evident in August when districts of massive growth, such as Hillsborough County, showed dramatic declines. By early September, soaring housing costs and insurance rates and last year's spate of hurricanes were blamed for keeping working families with children from moving to Florida.

No one has come up with any better reasons as the state tallies numbers from its official October statewide count. The focus is now on just how great the loss is and what it means in dollars.

"No one in a hundred years is ever going to expect this state to be down," said Jim Hamilton, Hillsborough's chief officer for district compliance. "

With this in mind:

Has the word got out about how expensive housing (prices, taxes on those prices, and insurance) is down here?

- Or - (in a derivative of the science fiction that has been quoted by the realtors for the past 5 years):

Is it that everybody still wants to move to Florida, it's just that now they can't sell their previous house?
Also, with less working families moving here, who will they find next to subsidize the current residents of the Sunshine State?

Full Article

Tuesday, November 14, 2006

UBS: 10% Nationwide Correction in 2007

From Marketwatch, some predictions about housing prices in 2007.

Home prices will fall 10% on average in 2007 and it will likely take three years to clear out the huge inventory of empty unsold homes currently in the market, according to a UBS report released Monday.

We are now overbuilt to the tune of 900,000 houses. Wonderful!

UBS analyst Margaret Whelan estimated that the industry overbuilt to the tune of 900,000 homes between 2003 and the first half of 2006. "Most of those homes are vacant," which means they'll rely more heavily on price discounting to get sold than if they were homes with people living in them, she said, during a conference call Monday.

"It will take about three years to shift all of that excess inventory," said Whelan. As a result, she expects housing starts to fall 15% in 2007 from 2006 levels.

Whelan said there is currently a five-month supply of existing homes up for sale and a six-month supply of new homes on the market, based on current sales trends.

In past cycles, when inventory levels have reached four or five-months' supply, "you've had a dropoff in real house prices," said UBS chief economist Maury Harris.

Harris is predicting median home prices will fall 10% over the next year, and housing starts will fall by 180,000 units to 1.55 million in 2007 from 2006. He trimmed projected GDP growth to 2% from 2.2%.

Now, my fellow Floridians, I ask you this:

With lower than median incomes in this state, much higher than median prices, and much, much higher inventories (ahem...Sarasota/Bradenton and West Palm Beach...), what do you think will happen to our median prices in 2007?

Full Article

Thursday, November 09, 2006

The Florida Room - Local Reports

This week, I would like to hear from you regarding what you're seeing locally, in regards to homes for sale, homes that are selling (or more likely, not selling), and stories you may have.

Here's my report in Northwest Tampa:

  • Current neighborhood (about 70 homes) has had 3 homes for sale since the summer. Every one is priced nearly double the value from 4 years ago. Open houses were being held just about every weekend, but now they've stopped. Also, 2 other houses are up for rent - no takers.

  • Got serious about making a purchase back in June - looked at 9 houses that were in the right locale, but all were seriously overpriced. Finally got interested in 2 homes, both listed for $400K. One was nearly new, but definitely not worth that price. The other was 10 years old, had been bought out of foreclosure by a local flipper, who had the house repainted, the yard re-sodded, and new cabinets installed. Made a bid of $350K on the first house, and did not think the 2nd house was worth anything more than $300K, so didn't bid on it (as much as I loath flippers, I'm not going to slap someone in the face). Result on the first house: knowing that we had made a bid, another realtor convinced his/her buyer to make a FULL PRICE offer. They closed in September. Result on the 2nd house: owner kept lowering his price, first to $389, then $379, then $374 for a looooong time. Then 2 weeks ago, lowered the price to $355. It is no longer listed, so I am assuming that it either sold or got taken off the market. Result on the other 7 houses: every single one of them is still on the market.

  • Overall, I am still seeing a large disconnect between the sellers and the market. Nothing is selling, yet prices are still not coming down. As per the theory that has been presented on the Bubble Blog, this area is slightly above the median income, so folks can hang on to money-losing properties a LOT longer in this area. Talk about a drag on the economy.

Tuesday, November 07, 2006

Subsidized Housing in Florida - For the MIDDLE Class

I find it pretty depressing when they are now considering handing out grants to provide housing assistance for people who make 130% of the median income. Buddy, could you spare a dime?

Middle Class Housing Assistance - Palm Beach

And don't forget, 2 years ago, in the statetwide and national elections in Florida, EVERY SINGLE incumbent won reelection. That's right. Every congressman, every state house rep, and every state senator who was ran for re-election won the race (and many did not even face an opponent). Over 100 different office holders did such a GREAT job that none were voted out. How's that for gerrymandering and the decline of democracy? Of course, this was also in the midst of the real estate boom, so perhaps everyone was so happy that their house was worth double that they didn't care who was actually running the state.

Please take this into account when you go to vote today.

Thursday, November 02, 2006

Save Our Homes Killing New Home Buyers

Front page article in the Tampa Tribune. I know I've been preaching to the choir about how the "Save Our Homes" tax system is royally screwing the real estate here - it's nice to see that the msm is finally catching a hint.

"Recent buyers in Florida’s housing market are learning hard lessons, come tax time.

The year after a home qualifies for a homestead exemption, it is shielded from the double- or triple-digit assessment hikes that have been the norm in the sellers’ market of the past few years. That shield comes courtesy of a Save Our Homes cap that limits such increases to a maximum 3 percent a year.

But before that kicks in, the reassessments that take place when property is sold can yield astounding changes in taxable value.

For Jamie Tingen, the surprise came with this year’s tax bill. A Florida resident for a half-century, she traded up from a two-bedroom to a three-bedroom townhouse on the same street.

Her tax bill more than tripled."

People are absolutely clueless about this. They see what the current owner has been paying for taxes, and the realtors (being the soul-less wonders that they are) make no attempt to inform the buyer that, the following year after the purchase, their home will be re-assessed at CURRENT market value, which can often mean a several-thousand dollar increase per year. For current homeowners who want to move up, it'll bite you good.

"Just last year, Tingen, as a longtime owner of a homesteaded property, was on the enviable side of the street of Florida’s property tax system. Her smaller townhouse, which she bought in 1980, had an assessed value last year of $45,305 – held down for the past decade by the Save Our Homes cap.

Its market value was far more. She sold it for $137,000. The tax bill for the new owners leaped to $2,200 from the $500 Tingen paid last year.

She says such disparities are unfair: “Everybody seems to be in the same boat, and nobody seems to be doing anything about it.” "

People from out of state are being stunned by their predicament.

"Aldegonda Caris and her husband, Glenn Smith, moved from Long Island, N.Y., to Tampa last year after Smith accepted a job as an assistant professor at USF’s College of Education. They heard the cost of living in Florida was lower. Then they bought a house.

“We have a smaller house and pay more taxes,” said Caris, who said their property taxes on a larger home in New York stayed at about $5,500 a year. “The taxes increased gradually, while in Florida, every time the house is sold, it goes up significantly.”

Between last year and this year, the tax bill on their Tampa Palms home nearly doubled to $6,300.

Caris was shocked to see neighbors in a similar home pay $2,500.

“We get the same benefits. Why would we need to pay so much more?” Caris said. “I don’t see what the goal for Florida is. Why do they give a higher burden to newcomers? Maybe they want to chase them away. I definitely think they should do something about it.”

Welcome to the "Greed State", Mr. Caris. Believe me, I care about the issue, but the vast majority of people in this state do not. Another recent immigrant, John Sarver, has the same tale.

"The civilian strategic planner at U.S. Central Command moved to Brandon late last year from Colorado Springs. That recent arrival earned him the not-so-enviable position on the block as the man with the highest property tax bill.

He’ll pay almost $9,000 this year in property taxes. That’s more than he paid for both property taxes and state income taxes in Colorado. Most of his neighbors pay a third or half of that, even though their homes are about the same size as his – or larger.

“I look across the street,” said Sarver, who bought his home for $475,000 at the height of the market late last year. “I know my neighbors have enjoyed all this equity they’ve gained from ’03 to ’05, but I feel like I subsidize their property.”

Let's face it - Pandora's box has been opened, and nobody can close it. People who've lived here for 3 or more years are paying next to nothing, and every new homebuyer since then is subsidizing their lifestyle. Because of this, outside investors won't invest and persons considering a move here won't. I've said it before, and I'll keep saying it until everyone understands:

If you buy now in Florida, you'll pay more in taxes than the majority of wealthier homeowners in this state. And until they move or die, you always will.

Do you think this will help or hinder the real estate values? Ken Wilkinson must be very proud of himself.

Wednesday, November 01, 2006

Yet Another Reason to Buy in Florida

Sure, the houses are overpriced and likely to devalue over the next several years.

Sure, the insurance situation is a complete mess.

Sure, the SOH system ensures new homeowners on average will pay more than a hundred thousand dollars more in property taxes over the life of the exact same house than wealthier existing homeowners.

But, look! It appears there will soon be an ALL NEW benefit to buying a home in the Sunshine State. Get'er done!

What a Great Idea!