Illegal Construction Jobs Dwindling

Here at Paradise Lost, many have predicted that the collapse of the real estate bubble in Florida would result in the loss of jobs for construction workers. Not only that, the prediction was that since a large portion of the construction work has been done by illegal labor, those job losses wouldn't be reflected in the unemployment numbers. Courtesy of the Herald-Tribune, some light has now been cast on the subject.

'With the huge drop-off in the state's formerly hot housing market, Latinos are leaving Southwest Florida for places offering more work or taking jobs that pay less.

Construction permits across the region were down as much as 66 percent in recent months, and with 50 percent of Southwest Florida's construction industry staffed by Latinos, the shift is likely to have a big impact on that industry and perhaps the region's general economy.

The impact goes beyond construction companies to rental managers and shops catering to Latinos.'

Up to this point in the article, I keep seeing the word, "Latinos" mentioned, but nothing about their residential status. Then this.

'"The majority of us here are illegal," said Benjamin Ramirez, a 34-year-old framing subcontractor from Bradenton, who has worked in the United States illegally for about eight years. " For us, when the work is gone, it's just no more."'

So, what are the options for this "silent workforce"?

'Many Latinos are moving to other areas, such as Louisiana and other Gulf Coast states where residential construction is still strong.

At the same time, lower-paying jobs in agriculture, food service and retail are reclaiming workers as they wait out the construction downturn.

About six weeks ago, Ramirez was called to a meeting with Lennar Homes, the big Miami-based developer and the biggest home builder in Southwest Florida.Ramirez, who had subcontracted for Lennar for three years, was told there would be no more work.'

And as predicted here, the loss of jobs for these guys is not being reported. Because, then the employers would have to admit they were breaking the law this entire time.

'Though the overall unemployment level has remained relatively unchanged in Florida, unemployment claims in construction have risen 63.37 percent since June.

That measure greatly underestimates what is going on because of the vast number of undocumented workers in the sector and its heavy reliance on subcontractors.

"Many of these workers may never have been included in the jobs figures," said Mark Vitner, a Wachovia Bank economist, who focuses on the Southeast. "Many may be working as independent contractors and still have jobs but just not be as busy."'

And the personal tale of the Ramirez subcontractor is very interesting.

'The best documentation of what is happening comes from the workers.

Benjamin Ramirez and his 31-year-old brother, Ricardo, said construction jobs in Southwest Florida have evaporated.

"Last year was nice. Everybody had a job. And there were a lot of houses to build," Ricardo Ramirez said. "This year there's no work."

The brothers came to the United States about eight years ago from Toluca, a congested industrial suburb of Mexico City, known as Mexico's Detroit because it is home to DaimlerChrysler, Nissan, General Motors, BMW and Mitsubishi plants.

They learned the construction trade on the job in Indiana, and moved to Southwest Florida three years ago.

Together, they formed The Brothers Ramirez Construction Co. of South Florida. They built up a base of 60 full-time independent contractors and began working with Lennar

With the downturn, the brothers thinned their crews to a handful of close friends and immediate family.

One crew went to Indiana, one crew went to Miami and one crew went to Tampa," Ricardo Ramirez said. "Others wait. They are sleeping on the couch or playing soccer -- not much of anything -- until there's more work."'

And surprisingly, enforcement of illegal labor laws had a banner year in 2006.

'Last year, employers and workers saw unprecedented enforcement of immigration laws, with more arrests for immigration violations at job sites nationwide than any other period in recent memory

Add to that new rules from Homeland Security designed to prevent employers from hiring undocumented workers, by checking for mismatched Social Security numbers. Employers are now becoming leery.

Wendy Smith, an attorney with employment law specialist Fisher & Phillips, knows why. Her firm began counseling clients about six months ago to be cautious in hiring decisions. Picking up an undocumented worker carried the threat of criminal charges

"We told our clients, 'You have to tighten up and get your house in order,'" Smith said. "We said, 'You know what? This is coming. And with the no-match letters, it's going to be: You can run but can't hide.'"'

And what's happening in these immigrant communities when the jobs have dried up?

'Property managers and owners in Southwest Florida catering to Latinos have been hit with unexpected vacancies

About 25 percent of the 1,400 units that Harvey Vengroff owns are rented to Latinos, and he has more than 40 vacancies

"I'm getting a lot of stories. It's really a very different world than it was last year," said Vengroff, also the owner of one of the world's largest collections companies, Vengroff & Associates. "Last year, people had more money because there were plenty of construction jobs".

Evictions are up.

"We have a huge problem of people who are nice people, but they are taking in other family members. And we are evicting them. It's not because they are not nice people. It's just not conducive to having a good neighborhood," Vengroff said.'

Full Article

Foreclosures Continue to Rise

From CNN/Money, the latest foreclosure numbers are out. For the month of December, the Sunshine State rates the following:

#12 in rate of foreclosures - 1 in every 878 households. (Colorado is #1 with 1 in 376)

#3 in total foreclosures - 8,321. (Texas is #1 with 14,195)

'NEW YORK (CNNMoney.com) -- Americans continue having difficulties paying their mortgage obligations, with December foreclosure rates above the 100,000 mark for the fifth straight month.

The number of homeowners entering into some stage of the foreclosure process in December was 109,652, down 9 percent from November but up 35 percent from December 2005, according to RealtyTrac.'

You just KNOW that toxic mortgages (interest-only, balloon payments, ARMs, etc...) has been a huge contributor to this malaise. Well, that and prices that have levelled or declined.

'Adjustable-rate mortgages, especially subprime ARMs, continue to drive the spike in foreclosures: many of those loans are due to reset in 2007, and many of the loans written in 2006 are performing less well than in previous years.

The combination of slower home sales and rising interest rates on ARMs continues to drive foreclosures at significantly higher numbers than a year ago," said James J. Saccacio, chief executive officer of RealtyTrac.

Other circumstances are involved. One is that the housing market turned, removing one avenue of escape for some homeowners facing foreclosure. "People would be reselling their homes if they got into trouble," says Rick Sharga, VP of marketing for RealtyTrac.

When they can't sell at or above what they owe, they may go into delinquency instead.'

No! Really?!!! (okay, I'll get that smirk off my face)

Full Article (with foreclosure numbers for all 50 states)

Builders Losing Money

From today's Tampa Tribune, more bad news from the homebuilding industry.

'U.S. - home builders, stuck with more than 500,000 unsold houses, may report the lowest earnings in five years because a rebound in the real estate market is too little too late to save 2007 sales.

Net income at D.R. Horton Inc., the industry's largest company, may plunge 60 percent in fiscal 2007 to $498 million, the worst since 2002 when the domestic economy was recovering from the slowest growth in more than a decade. The average drop in annual profits at America's four biggest home builders probably will be 55 percent, according to analysts surveyed by Bloomberg.

"The demand side of the market is stabilizing, but it doesn't mean that all of a sudden construction is going to be off to the races," said Michael Darda, chief economist of MKM Partners in Greenwich, Conn. He cited a 3.4 percent gain in new-home sales in November from the previous month.

New-home sales fell 18 percent in 2006 to 1.05 million, the biggest contraction since 1990, after median prices rose 41 percent in five years, making them unaffordable for many buyers, said David Berson, an economist at Fannie Mae, the largest mortgage buyer.'

But there's light at the end of the tunnel. Well, at least according to these guys.

'Sales will rise to 946,000 homes at an annualized pace in the third quarter and gain until at least the second half of 2008 after falling to a five-year low of 942,000 in the second quarter, the Chicago-based National Association of Realtors said last week.

Freddie Mac, the second-biggest mortgage buyer, and Mortgage Bankers Association predict more housing demand in the second half of this year. The National Association of Home Builders in Washington projects new-home sales will gain in every quarter of 2007.'

Lennar, which made a BOATLOAD of money over the past 5 years, has a different take.

'Stuart Miller, chief executive officer of Miami-based Lennar, the fourth-biggest U.S. home builder, isn't as optimistic.

"Market conditions continued to weaken during the fourth quarter and we have not yet seen tangible evidence of a market recovery," Miller said on Jan. 2. Lennar reported its first loss in more than a decade in the fiscal fourth quarter, which ended Nov. 30. Analysts believe Lennar's earnings will fall 51 percent in fiscal 2007.'

And remind us again - how has homebuilding affected overall economic growth in the US?

'New-home sales bottomed in the fourth quarter at an annual rate of 970,000, sliding from an all-time high of 1.3 million in 2005's third quarter, Berson said. The construction slump helped to slow U.S. economic growth in the fourth quarter to an annual rate of 1.6 percent, down from 5.6 percent in the 2006's first quarter, he said on Dec. 20.

Buyers canceled contracts to purchase homes at a record pace in the second half of 2006, swelling builders' inventories. Measured in terms of how long it would take to sell off the existing stock, inventory stood at 6.3 months in November, down from 7.2 months in July and up from 4.9 months a year ago, according to the Commerce Department.'

And my personal favorite: a tale of couple who smartly waited things out, and got a killer deal. My question is: could the price they paid still be undercut in years to come?

'That means buyers like David and Wendy Butler of Orlando are able to purchase an already-completed new home at a discount rather than ordering one and waiting for it to be built. During the five-year real estate boom that ended in 2006, that option was rare.

The Butlers are purchasing a four-bedroom, 3,700-square- foot house in Orlando built by Ashton Woods USA LLC for $545,000. The same home was listed at $768,000 three months ago, David Butler said. Nationally, the median home price probably will slide 5.4 percent in the current quarter to $231,700 from $244,800 a year ago, according to forecasts from Fannie Mae.

"People were saying the average homes in this neighborhood would be $1 million-plus, but there's so many homes on the market the prices have been tumbling," said David Butler, 45. "It's incredible really. All of a sudden, it's time to buy."'

I don't know why they titled this article, "Builders See Deep Losses In Spite Of Rebound". What rebound? To 1999 levels?


Full Article

The Exodus Started in 2006

From the Sun-Sentinel, new evidence that out-of-staters are getting the message about the high cost of living down here.

'For the first time in 30 years, United Van Lines Inc. says it moved more people out of Florida than in, and analysts see that as a sign that consumers are looking elsewhere for a cheaper slice of life.

The nation's largest moving company reported 16,212 inbound shipments to Florida last year and 17,019 outbound shipments. United moved more people to Florida in each year from 1999 to 2004, but the number of inbound moves fell in 2005, spokeswoman Jennifer Bonham said.

The study isn't scientific, but it does underscore a recent trend in which fed-up Floridians are moving to other parts of the country, in part to escape rising property taxes and insurance rates.'

To quote Mr. Spock, "Simply fascinating." So, if Florida is no longer the #1 moving destination east of the Mississippi, where ARE people moving to?

'United's report shows that North Carolina, Oregon and South Carolina were the top destination states in 2006. Michigan, hit hard by automobile industry layoffs, North Dakota and New Jersey were the states that saw the most people leave.'

Again, fascinating. So the anecdotal stories of "half-backs" and "J-turns" to the Carolinas are true. It looks like the free income tax system in Florida has lost it's luster. I still wonder how many folks who are thinking about moving here realize they'll be asked to subsidize all of the current dwellers (via the regressive "Save Our Homes" tax) when they buy or lease their residence in the Sunshine State. I suspect the word has gotten out, but most are still clueless.

'The housing boom brought more people to the Sunshine State at the start of the decade, but the run-up in home values during the past five years sent property-tax rates soaring. Many residents now say they can't afford to move elsewhere in Florida because of the huge hit they'd take on taxes.'

And of course, along with taxes, our good friend The Insurance Crisis has had a major role in convincing people to move out. C'mon folks, admit it. It is VERY expensive to live and work in Florida (extremely rural areas excepted).

'What's more, busy hurricane seasons in 2004 and 2005 led to massive rate hikes from the state's largest home insurance companies.

It all just pushed us past the breaking point," David Levin, a Delray Beach-based housing consultant, said Wednesday. '

Besides having one of the worst income/housing cost ratios in the country, we have another issue that's been like a debilitating disease, slowly destroying the place. It's called the "build it first, take care of growth problems later" cancer, a product of an unholy union: the scorched earth developers and the elected officials whose campaigns they fund. This has led to bad street design, horrible congestion, overcrowded schools, leveled forests, ugly condo-towered beaches, and the steady, continued degradation of the Florida lifestyle.

'Recent U.S. census figures show that Florida gains 1,000 people a day while losing 400, said Grant Thrall, a professor of business geography at the University of Florida. But some residents clearly are reconsidering because of the cost of living and other factors, Thrall said.

"People move to where their well-being is going to be the greatest," he said. "Many people find the urban-built environment of Florida totally disgusting."'

Thanks to Ben at the Housing Bubble Blog for the story.

Full Article

Insurance Crisis: More Brainstorming in Tallahassee

From today's Miami Herald, more ideas on how to lower insurance rates.

'A rate freeze for the state-run insurance pool, which is the largest home and condo insurer in Florida, is among the proposals in a 153-page bill that is being offered by the Senate's Banking and Insurance Committee.

Rates for Citizens Property Insurance would be frozen for one year at the Dec. 31, 2006, level and would require the insurer to set new actuarially sound rates for 2008. The bill also would eliminate a rate hike that already was approved for Jan. 1. Citizens would have to provide refunds to any policyholder who was charged the higher rates.'

Sounds great - so how are we going to pay for this? Ohhhh, I see...just gamble and hope that Citizen's never has to actually PAY on claims from a major catastrophe. But hey, at least everyone doesn't have to pay now, right? Sweet - I love short-term thinking politicians - they're the best, and here in Florida, we have the best, ever!

'Sam Miller from the Florida Insurance Council said by lowering premium rates, consumers could be facing higher costs after a major catastrophe if assessments are needed to make up a deficit in Citizens or the Florida Hurricane Catastrophe Fund, which sells reinsurance to insurers.

A proposal from the House Insurance committee is expected late Wednesday.

A major component of the Senate bill focuses on eliminating many of the onerous provisions of the insurance law that was passed in the final minutes of the 2006 legislative session last May.

One provision would be to remove the requirement that the state-run pool raise rates dramatically by March to increase its reserves so it would have the cash to pay future claims from storms.'

And more ideas that were passed around...

'• Citizens would be allowed to continue covering vacation and second homes as well as homes valued at more than $1 million.'

I particularly love that one - let's subsidize the insurance of vacation homes, because you know, THAT's the kind of business gov't should be in.

'• Citizens would be allowed to write multiperil policies throughout the state. Citizens officials have said previously that writing the extra policies would expand its premium base and spread risk. '

To be honest, I have no opinion one way or the other - though it sounds good in theory.

'• Insurers would be allowed to buy additional reinsurance from the Florida Hurricane Catastrophe Fund. This could be less expensive than buying in the private market. Insurers would be required to pass on any savings to policyholders. '

Again, this is a wonderful idea - lower the rates by subsidizing the private insurers. This is almost as genius as the original idea to create Citizen's. Now, instead of just allowing the IL to "cherry pick" the low-risk buyers, we'll now go ahead and remove all hurricane risk from the insurers and pass it on to the state. Brilliant!

'• The Panhandle's exemption from the statewide building code would be eliminated. Most experts believe stronger buildings would reduce insurance losses, and this is a move that many lawmakers and the insurance industry champion.'

Huh? Why was the panhandle ever exempted from building codes that the rest of the state had to follow? Ohhhh, that's right, it's FLORIDA politics at work here. Sorry, I forgot that reason and logic are not strong suits up in the halls of Tallahassee.

• The position of the state's insurance consumer advocate would be beefed up, moving it out of the Department of Financial Services and combining it with the Office of Public Counsel. The public counsel represents consumers in utility rate filings, something the current insurance advocate can't do for policyholders.

Why do I get the feeling that the Office of Public Counsel just got double the work with no corresponding increase in resources? Awwwwwwwesommmmme!

• Homeowners would be permitted to take on larger deductibles, buy less coverage than what would be needed to rebuild their homes after a major storm and even go without windstorm insurance if they've paid off their mortgages.

Another beauty! This way, Granny doesn't have to drive all the way over to the nearest bingo hall/indian casino for entertainment. She can just opt for the "minimum coverage" policy and get great excitement every hurricane season to see whether she loses everything (while the bank losses nothing) if her house gets hit! How is that NOT a cool way to go?

Full Article

Insurance Lobby - Vows to Fight!

From today's Palm Beach Post, it appears our new governor (in his first week of office) is getting a cold splash of reality.

' TALLAHASSEE — New Gov. Charlie Crist's campaign vow to lower property insurance rates Thursday ran smack into the real world of the insurance lobby.

"If we create more regulations, more mandates, and rate rollbacks, then we will have even fewer companies willing to do business in Florida," said Barney Bishop, president of Associated Industries of Florida, an influential umbrella lobbying group that includes property insurers.

The group staged a news conference Thursday to say it would be following the developments in the special session that is to begin Jan. 16 and would oppose legislation that requires rates to be reduced.

"We believe rates have been suppressed," Bishop said. "And we believe that rates are going to have to rise to the current level to (give incentives to) insurance companies to be in Florida."

Crist, who in his inaugural address Tuesday said that it was time "to rein in overreaching insurance companies," said he was astonished to hear Bishop's assessment.'

Should we be astonished that Charlie is astonished? Hey, here's an idea: let's SUBSIDIZE these poor folks in the IL (insurance lobby)!

'Bishop, speaking for a Florida Hurricane Crisis Coalition made up of Associated Industries members, said past elected insurance commissioners and the current appointed insurance commissioner, who answers to the elected governor and Cabinet, are too sensitive to political pressure.

He and his group instead suggested that Crist and lawmakers should make it easier for insurers to obtain subsidized "reinsurance" - the financial backing to pay for massive claims from a catastrophic storm - from the state; that the state spend $500 million a year to help Floridians harden their homes against storms; and that homeowners be permitted to buy hurricane insurance with 10 percent or even 20 percent deductibles in return for lower premiums.'

A few thoughts:

1. I can't believe they have the gall to ask for free money from the state.


2. With that outrageous proposal in consideration, enquiring minds want to know how much the IL collected as a whole, from Florida homeowners in 2006.


3. The idea for "home hardening" is a great concept, but in reality, it's just another subsidy for the IL.


4. The last suggestion is a good one - but how do you prove that granny has $60K in the bank to cover the deductible on her $300k home (the one she bought for $75K back in 1982)?


5. If a company doesn't offer home insurance, they shouldn't be allowed to offer any other form of insurance (as in the highly profitable auto insurance), period. The IL's claim of "you'll chase all the insurers out of the state" is anectdotal CRAP. Not based on fact, not based on anything but their collective money-grubbing hive mentality.


6. Where are the proposals from Crist to eliminate Citizen's?

Full Article

Disappointing Holiday Sales

From the Orlando Sentinel, sales were not too keen this past holiday season. Even for Wal-Mart.

'NEW YORK -- An already disappointing holiday shopping season turned out to be even worse than expected for many of the nation's retailers, who said Thursday they had tepid sales gains for December.

The downbeat results came from merchants in all retail categories, particularly from apparel sellers who struggled with depressed sales of cold weather items like heavy coats amid mild weather across the country. Wal-Mart Stores Inc. posted better-than-expected results for December following a dismal November, but the discounter's overall holiday season was the worst on record, analysts said. '

Are customers getting smarter or do they just have less to spend (now that the housing ATM machine is shutting down)?

'Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass., said retailers were forced to mark down heavily to bring in sales.

"Clearly, this was a promotional Christmas," he said. "Consumers clearly waited until the last minute."

Such aggressive discounting led a number of merchants including Zale Corp., BJ's Wholesale Club Inc., Gap Inc. and AnnTaylor Stores Corp. to cut their profit outlooks. '

Could it be the warm weather? Not enough socks, hats, and boots?

'Mild weather across much of the country meant consumers were in no hurry to buy cold weather wear such as coats and gloves, depressing sales at many apparel stores. Declining gasoline prices and a steady job market should have helped merchants, but Perkins believes the recent drop in home equity loans -- a big source of buying power over the past few years -- curtailed spending among middle-income shoppers.

Sales results were also hurt by two big shifts in the way consumers are shopping: the increasing popularity of gift cards and robust online buying, which is not included in same-store results. Gift card sales are only posted when they are redeemed rather than bought, helping to extend the holiday season into January. '

There were some winners...

'Costco Wholesale Corp. posted a 9 percent gain in same-store sales, beating Wall Street's 5.7 percent estimate.

Nordstrom Inc. reported a robust 9 percent same-store sales gain, exceeding the 4.3 percent forecast. Luxury operator Saks Inc. had an 11 percent same-store sales, gain, nearly twice the 5.3 percent estimate. '

But more losers.

'Pier 1 Imports Inc. suffered a 10.7 percent drop in same-store sales, worse than the 9.4 percent analysts anticipated.

Gap, which has long been struggling with its merchandising formula, suffered an 8 percent drop in same-store sales, worse than the 5 percent estimate. As a result, the company said it was slashing its annual profit outlook.

AnnTaylor posted a 5.3 percent decline in same-store sales; analysts predicted a 0.6 percent gain.

Among teen retailers, Pacific Sunwear of California Inc. had a 3.2 percent dip in December, worse than the 2.9 percent forecast. '

Not being a certified "economist" (who can make predictions that never come true - see David Lireah from the National Ass. of Realtors for example), I am not sure what to make of these numbers. Do they relate in any way to the housing situation? I am inclined to think so.

Full Article

Would-Be Trailer Park Millionaires

A great article from MSNBC about a waterfront trailer park in Palm Beach County. If they agree to get bought out by a developer, they'll get over a HALF-BILLION dollars for their little 43 acres of paradise.

'BRINY BREEZES, Fla. - The owners of nearly 500 mobile homes in one of the last waterfront trailer-park towns in South Florida stand to become instant millionaires if they agree to sell to a developer. But some are holding out, saying there are things more important than money.

“You just can’t buy a way of life,” said Tom Byrne, a 68-year-old retired sales executive from New York who doesn’t want to sell even though he would make a little over $1 million on the trailer and site he bought two years ago for $150,000. “This is my home.”'

Okay - the first question is - what kind of land are they sitting on?

'With 600 feet of oceanfront property and an additional 1,100 feet along the Intracoastal Waterway, real estate like this in southeastern Florida is pure gold.

Boca Raton-based Ocean Land Investments has big plans for the property if the deal goes through, as many residents are certain will happen. The company envisions about 900 low-rise multimillion-dollar condo units, a high-end marina and a 300-room luxury hotel.

“There really is no other piece of property like this in Florida,” said Logan Pierson, the company’s vice president of acquisitions.'

And a view from an owner who wants to "Sell, sell, SELL! Like NOW!".

'Kevin Dwyer, 47, is all for the deal. Dwyer, who paid just $37,500 for his trailer nine years ago, would make about $800,000.

“See these pockets? They’re empty,” Dwyer said, a stack of unpaid bills sitting on a table in his single-wide trailer less than 100 yards from the ocean. “I’ve nickeled and dimed my whole life. I hit the lottery.”

Pierson acknowledged that the loss of Briny Breezes means a piece of old Florida will be gone forever. But he said that because of the town’s location on a barrier island, a hurricane could eventually wipe out Briny Breezes.

“At some point Briny is going to face a bad storm,” he said. “There are other potential threats out there other than development.”'

And is this really a good idea for the developer, being on the ocean?

'Palm Beach County Commissioner Mary McCarty is not so sure it’s a done deal because of constraints on zoning, water, sewage and traffic. “I find the developers extremely optimistic to the point of being delusional,” she said.

For one thing, the community is in a hurricane evacuation zone and has few ways in or out. Developers will have to clear their plans through the state before any dirt is moved, and neighboring communities will have a chance to weigh in.

“This would be extremely complicated and extremely unpopular,” McCarty said. “But people see dollar signs and it sparks the imagination.”'

Full Article
(Many thanks to SKB for finding this.)

Finally, a "Happy 2007!" to all our readers and posters. 2006 was a break-through year - let's keep up the fight and make 2007 the year that EVERYBODY discovers the truth about the fantasy of a bubble market.

Nationwide New Home Sales Up - Except in Florida

Commerce figures are out for new home construction sales in November. From the St. Pete Times:

'Maybe it was balmy weather up North, maybe it was lower interest rates, but the country as a whole experienced a mini spike in new home sales in November.

Pity poor Florida: The Sunshine State, and most of the South for that matter, didn't enjoy the rebound.

Nationally, new home sales in November rose 3.4 percent from the previous month to an annual rate of 1.047-million. That exceeded economists' forecasts of a 1.018-million homes.'

Sadly, prices have risen. Again.

'The national median new home price climbed to $251,700 in November 2006 from $237,900 in November 2005.'

Remember, the Commerce Department report does not take into account cancellations - so these numbers tend to be higher than actual.

And for the Tampa Bay region, some reports on the builders.

'Transeastern Homes: The builder of such best-selling neighborhoods as New Tampa's Live Oak Preserve has tried to stave off bankruptcy by laying off more than 100 and dismissing regional president Bob Krieff.

Ryland Homes: Heavily invested in Pasco County, Ryland's southeast division, which includes Florida, saw new home orders tank 64 percent from the third quarter of 2005 to the third quarter of 2006.

Centex Homes: Centex's sales this year have been leaden compared to 2005. In the Southeast region, the number of home contracts plunged 53 percent.

Beazer Homes: In the Atlanta builder's annual report in September, the company said new home orders dropped by a third in Florida. Its stronghold has been southeast Hillsborough County.

Pulte Homes: Based on its latest report, the nation's second-biggest homebuilder sold 29 percent fewer homes in the region that includes Florida. It has trimmed its work force 10 percent. Pulte is active in Clearwater, Seminole, Hudson and Wesley Chapel.'

Full Article

US Commerce Report - New Home Sales

Our Own Private Idaho

The US Census population growth figures for 2006 are out, and, as you can see, we're trading places with (of all places) Idaho in terms of population growth. (source, US Census Bureau - releases from 2002 to 2006)
(And in case you were wondering who the top 2 have been these past 5 years, in every year it's been Arizona and Nevada. Talk about wandering tribes in the desert!)

Note that these figures are from July to July, so the latter half of this year won't show up until the December 2007 release of data.

Though we've dropped to #9 in % ranking, we're still #2 in total population gained (2nd only to Texas), with 321,697 added. That comes to 881 people per day (and we all know that figure is dropping as we speak). So tell your local realtor to stop spouting off the "1,000 people a day" figure that's been quoted ad nauseum during the bubble.

The bottom line - for the first time in decades, we're almost assuredly dropping out of the top 10 next year. What a surprise.

Full Article from US Census Bureau

Oh, and if I don't get a chance to post before next Monday, have a wonderful Christmas Weekend!!!

- Jerry

Markets Heading for a Fall - Part Deux

From Yahoo! Finance, more dire predictions for homesellers in 2007.

'Although few experts predict that home values will fall dramatically in 2007, many economists say that prices won't improve for 12 to 18 months. And without the cushion of rising home equity -- which softened the blow of high oil prices last year and kept consumers buying big-ticket items at a rapid clip -- Americans may lose confidence in their finances, and the broader economy is likely to suffer.

Ambitious building booms in many markets in the past half-decade, combined with mortgage interest rates that have increased about 1 percent in the past year, have resulted in residential real estate stagnation. The gridlock defies conventional wisdom, stubbornly remaining neither a buyer's nor a seller's market.

"We are currently experiencing the worst of the market freeze, which is being exacerbated by the gap between the buyer's desire for bargains and the seller's fantasy of what they once thought their homes would be worth," said Diane Swonk, chief economist for Chicago-based Mesirow Financial, who forecasts a rebound in early 2008. "The good news is that there are some signs of stabilization. The bad news is that a substantial backlog of unsold homes still exists."'

Moody's Economy.com makes an important observation - is this a portentous statistic?

'Global forces and U.S. monetary policies play important roles in the housing slowdown, which already appears to be depressing the national economy.

The newest forecast by Moody's Economy.com, a private research firm, projected that the median sales price for an existing home will decline in 2007 by 3.6 percent -- the first decline for an entire year in U.S. home prices since the Great Depression of the 1930s.'

Again, how did we end up in this mess? Quick answer: It's the interest rates, stupid!

'Peter Morici, business professor at the University of Maryland, said artificially low interest rates over the past half-decade encouraged China and other exporting nations to purchase 10-year bonds, which kept U.S. mortgage rates low and fueled the housing bubble -- despite a gaping trade deficit that should have sapped investor confidence years ago.

"In order to play this ponzi scheme, the value of the homes had to go up faster than the economy grew and faster than people could service their debt. We've reached that limit," Morci said. "The housing market sustained the economy at a time of very large trade deficits. It's been a false prosperity."'

And what do the forecasters say about our fine state?

'Florida will likely remain the toughest market for buyers and sellers.

Building frenzies in Miami, Orlando and the Caribbean coast resulted in a plethora of for-sale signs. Developers desperate to unload inventory offer free granite countertops, appliances and furniture -- even cars, vacations and mortgage payments for up to six months.

Meanwhile, insurance companies dramatically raised premiums after Hurricane Katrina. Depending on where they live and their policies, Florida home owners may pay as much as 10 times more for flood and wind insurance than last year; premiums can exceed $30,000 per year on mansions. That's caused monthly costs to skyrocket, pinching current owners and making it all but impossible for renters to buy.

Throughout Florida, 12,773 existing single-family homes were sold in October, down 22 percent from a year ago, according to the Florida Association of Realtors. Florida's median price was unchanged at $242,500, but more than half of the urban areas posted declines. Around Fort Myers, the median price plunged 44 percent to $249,200 from October 2005.'

And let us end with some serious b.s. from a man who obviously owns real estate that he can't unload. His data that he quotes is from pre-2005, and his statements are nothing but air-filled cheerleading. We will keep his statements here for posterity.

'Not everyone is pessimistic -- even in beleaguered Florida.

Long-term demographic shifts from the Midwest and New England bode well for the notoriously boom-and-bust state, said Dave Denslow, professor of economics at the University of Florida. Florida, which gained 430,000 new residents in the past year, is a popular destination for Latin American immigrants and retirees from northern states, Canada and western Europe.

"People start thinking about buying a retirement home in their late 50s, and baby boomers are approaching that age," Denslow said. "The demand for residential housing here is only going to get stronger through 2020."'

What a load of crap.

Full Article

Markets Heading for a Fall

From CNN/Money, a forecast for the top 100 housing markets in the US for 2007. It should be no surprise to see that 2 of the top 10 forecasted declines are here in the Sunshine State.

'This time last year the big question was whether the real estate market was going to slow down. Today it's "How bad will it get?"

The numbers tell a confusing story. For existing homes, buyers are trickling back into the market - sales inched upward in October even as the median home price fell by 3.5 percent, the largest year-over-year drop on record. And that comes after price declines in August and September.'

And new homes....?

'On the new-home front, sales in October fell, but the median price crept upward. For homebuilders, cancellations are up and orders down. '

Mark Zandi, from Economy.com, says it best.

'"It's possible that the broader housing market will firm in the next few months, that the worst is over," says Mark Zandi, chief economist at Moody's Economy.com. "But that to me is a dead-cat bounce." In a word, yikes.

So Fortune asked Zandi's group and real estate valuation company Fiserv Lending Solutions to give us their take on what lies ahead for housing in the country's 100 largest metropolitan areas. '

Full Article (with forecasts for all 100 markets)

Allstate Backing Off Request for Humongous Rate Increase

From the Southwest News-Press, some somewhat good news regarding the home insurance rate requests from Allstate.

'Allstate has had second thoughts about its next round of rate hikes.

The state's second-largest private property insurer this week has amended rate filings with the Office of Insurance Regulation to lower the amount of the average premium increases it seeks to 8 percent for Allstate Floridian and nearly 9 percent for Allstate Floridian Indemnity.

It originally sought to raise rates an average of 22.5 percent for Allstate Floridian and 33.2 percent for Allstate Floridian Indemnity — though residents in more than half the company's territories would have seen increases over 70 percent. How the new rate hike breaks down for individual homeowners is not yet available.

Allstate has been negotiating with state regulators over the pending rate hike since September. Chief among the many faults regulators found with the rate hikes was a $259 million charge for reinsurance. Allstate actuaries admitted the company did not buy all of that, but wanted to be compensated as if it did.

Meanwhile, Southern Oak Insurance has filed for an average rate hike of 30.2 percent for home coverage. The Office of Insurance Regulation has set a public hearing on the request for 10 a.m. Friday in Tallahassee.

And if you are with a private insurer, don't forget your little "surchage" to help shore up the largest welfare home insurance program in the United States, our very own Citizen's Insurance.

St. Lucie Foreclosures Up - Way Up

From today's Palm Beach Post. Interestingly, the article starts off with better news in Palm Beach County, but then jumps right in with St. Lucie's numbers.

'Palm Beach County saw a dip in foreclosures in November, while at the same time, St. Lucie County saw its troubled real estate more than triple.

Analysts are blaming rampant speculation in St. Lucie's new-home market and exorbitant hikes in homeowners' insurance as the cause of its leap to 313 foreclosures from just 94 in November 2005.

The increase is the highest foreclosure level for the high-growth area in nearly two years, according to a new report from RealtyTrac, which documents foreclosures nationwide.

"Tons of new homes have been built in St. Lucie County in the past couple of years, and a big chunk of those were snapped up by speculators," said Mike Larson, an analyst with Weiss Research in Jupiter. "Now, some are finding they can't rent them out for enough to cover their mortgages. Others are likely getting whacked with big increases in insurance rates tied to the active 2004 and 2005 hurricane seasons."

When you add surging property taxes to this dangerous mix, Larson said, "the hardest-luck cases can even be forced out of their homes."'

Okay, this is now - what about the future?

'"The foreclosure train has left the station and is slowly picking up speed," said Jack McCabe, owner of McCabe Research and Consulting in Deerfield Beach. "Expect foreclosures to multiply in 2007 and 2008."

Besides plunging property values that hinder resale and rentals, so-called "creative financing" is a major reason the foreclosure wolf is now knocking on so many doors.

Adjustable-rate mortgages and interest-only loans have taken off since 2004. Indeed, they were the only way more than half of all local buyers could afford to buy a home, McCabe said.

These loans are scheduled for their first adjustments in the next two years, McCabe continued, and many owners will get smacked with 40 percent to 50 percent increases in their monthly payments.'

'Statewide, foreclosures rose 5 percent in November, to 9,362 from 8,872 a year ago.

That's one foreclosure for every 780 households in Florida - a rate that analysts expect will worsen next year.

Larson, the analyst, blames "excess speculation" for driving prices far beyond what fundamental economic forces dictated.

"Now, with prices falling, that irrational exuberance is being wrung out one foreclosure at a time," he said.'

Full Article

The Florida Room - Housing News

The latest Housing and Economic News from around the state and around the country.

Please do not hesitate to post any interesting links that you've come across.

Knowledge is Power.

Nuclear Power in Levy County

Rents Increasing Faster than Incomes

Older Americans Have More Debt than Ever

Mortgage Defaults Continue to Climb

Jacksonville - Maybe Not as Big a Bubble

Retail Sales Boom in November

Homeowners Getting Riled About Insurance

From today's Miami Herald:

'Florida homeowners are no longer silent victims of the state's insurance crisis. From the Keys to the Panhandle, they've mobilized.

In Miami-Dade County, they have launched a major petition drive to tell lawmakers in Tallahassee that soaring rates are choking their personal finances and the quality of their lives. In Pembroke Park, mobile-home owners are putting some new ideas on the table. In Brevard and Collier counties, groups of home and business owners have been hard at work crafting their own insurance solutions.

''Next year, I won't have any savings,'' said Zenobia Lopez of Biscayne Gardens, who signed the Miami-Dade petition. ``Where am I supposed to come up with $5,000 again? We need to do something.'''

Wow - sounds like a grass-roots drive. But it isn't.

'Dynamic Public Adjusters Group, a Kendall-area company that helps homeowners try to get higher returns on insurance claims, started the petition in September under the name Floridians in Action. The group is now beginning to put together a board of directors so its work can continue long after the petition has been delivered.

Some of what the petition seeks: rate relief, tougher statewide building codes and a strong lobbying effort for a national catastrophe fund.'

And here's an interesting idea from the owner's of mobile homes. Very interesting.

'Meanwhile, a group of mobile-home owners in Broward County's Pembroke Park isn't shy about putting new ideas on the table, even if some lawmakers sometimes are. They would like to see auto insurers cover mobile homes since they now insure recreational vehicles and boats.

''If the auto insurers would cover the mobile homes, we could alleviate the burden on Citizens Property Insurance,'' said Michael Sousy, Pembroke Park's code enforcement and community liaison officer, who has helped organize the mobile-home owners.

Citizens is the state-run insurer of last resort. But for many homeowners, like folks who own mobile homes, older houses or condos in coastal areas, Citizens is the only insurer. With nearly 1.3 million policies -- nearly half of those in South Florida -- it's the largest insurer in the state.'

Is it sad, pathetic, or just plain wrong that the insurer of "last resort" is paid for by the government (i.e.; you and I) and has become the #1 insurer in Florida? Note: "All of the above" is a qualified answer to that question.

'Residents insured by Citizens are particularly concerned these days because a new state law requires the insurer to boost its reserves rapidly so it has enough money on hand to cover claims from a massive storm. That means big increases over the next three years. The first one is a 55.8 percent hike planned for March.

Last week, Citizens' board of governors decided to table the increase until after the special session. The board is hoping there will be some changes.

So are other groups around the state.

''Our biggest fear is that the proposals that come out of the special session won't be comprehensive enough,'' said Sherri Hudson, a mortgage banker in Brevard County who has helped organize a group of consumers and business owners called Insurance Reform Now.'

I think it's great that everyone is looking for solutions. Unfortunately, somebody has to pay - and I'm still not seeing how we get around that.

'In recent days, Gov.-elect Charlie Crist, Rubio and several other key legislators have said the planned Citizens rate increase is too onerous and the new provision in the insurance bill requiring the increases needs to be modified or possibly scrapped.

Alex Sink, the state's newly elected chief financial officer, and some lawmakers have also said the state needs a stronger consumer advocate to challenge rate increases. Other lawmakers have called for expanding the state grant program for strengthening homes and allowing consumers to increase deductibles.'

Full Article

More Tools To Help Lower Real Estate Commissions

As we all know, the standard 6% realtor commission has been a 2-edged sword. In a lot of cases (including now, when sales are at rock bottom), Realtors have to work extremely hard to market and sell a house. The buyer's agent? I still haven't been sold on that one.

In most cases, however (especially over the past 3 years, when mortgage lenders were giving away money like Halloween candy and houses were selling in weeks), the difference between the amount of work done and the reward of the 3% commission has been a complete joke.

Now, Zillow.com is getting in on the act. From CNN/Money:

'The Web site Zillow.com, most known for its "Zestimate" price valuations for nearly 70 million homes, launched several new services for home sellers Thursday.

Sellers can now post their home for sale at Zillow - free of charge. Sellers can add details to a page that already includes basic details, such as square footage, number of beds and baths and sales history. '

Sounds good. But wait! There's more!

'And there's something else new - and radical - they can do: "We're encouraging homeowners to post 'Make-me-move' prices," says Zillow's CEO, Rich Barton.

He suggests that owners just toying with the idea of selling can enter an extremely high make-me move price. Then, if they get an offer that blows their socks off, they can make a very profitable sale.'

I like the approach, but these guys obviously haven't paid attention to the market. Unless a house is extra-special (in price, location, or both), it could sit on the database for years. Still, the idea of cutting out the middle-man and saving several thousand dollars is a beautiful thing. And then there's this:

'It's almost the flip side of a service launched this summer by another real estate Web site, Reply.com.

There, buyers are encouraged to make unsolicited offers on any houses they want. Buyers pick out a number of homes, 15 or 20 say (just one or two is too few to work), that they would like to make offers on. They decide just how much to bid on each convey the info to Reply.com. For a fee of $24.95, Reply will deliver a package containing the offers to each of the homeowners.

The company catchword for the service is, "Every home in America is up for sale."

Hmmm...will this drive the total inventory numbers up?

Full Article

Pavement from Ocala to Sebring, Daytona to St. Pete

New projections from University of Florida's GeoPlan Center for 1000 Friends have come out for Central Florida:

'The state's population will double to 36 million by 2060, and if growth management policies don't change, 7 million of the state's 19.5 million remaining undeveloped acres will go urban.'

Other components of the forecast:

'• Continuous urban development from Ocala on the north to Sebring on the south, and coast to coast from St. Petersburg to Daytona Beach. The corridors of interstates 75 and 4 will be fully developed.

• Full build-out of Pinellas, Hillsborough, Manatee and several other central counties.

• Replacement, or at least fragmentation, of virtually all of the area's natural systems and wildlife habitat corridors.

• The largest percentage of urban land use - 51 percent - of any region in the state. More than a quarter of the region will be transformed to urban status in the next generation.'

What does all this forecast growth mean?

'Unchecked growth presents several threats to the state, according to the study. Crowded schools, traffic congestion, inadequate disaster preparedness and infringement on natural habitat and land that has cultural, environmental or historical significance can deteriorate the quality of life of residents. It could put the brakes on the state's phenomenal job growth, particularly with the "creative class" so highly sought.

"This piece of work is saying, 'We can see the future, and it's not what we hope it will be,'" said Tim Jackson, 1000 Friends' vice president. "Let's rethink this and start by doing a real plan for the long-term future."

Some potential solutions?

'• Expansion of the Florida Forever land acquisition program, to the tune of $1 billion a year from the $300 million now budgeted for conservation.

• New policies on the conversion of rural land to urban use, requiring more preservation, open space and agriculture.

• A 100-year legacy plan, a sort of statewide comprehensive plan laying out what areas are appropriate for development and redevelopment.

• Identification of leaders to organize and advocate for statewide growth management.

Officials from 1000 Friends said they will convene state leaders next year on long-term state planning. The group also is working on a 2060 scenario if projected growth and development patterns follow principles of smart growth.'

But, ney, the DEVELOPERS (and their paid-for lackeys who "represent" us in Tallahassee) have other ideas (that will ensure their pockets are lined for decades to come). Remember! Construction is the #2 industry in Florida. If we don't stop building, we die. Ha!

'The Legislature may not be quick to embrace the recommendations.

An extensive growth management package passed in 2005 now requires concurrency from developers, or pay-as-you-go for infrastructure needs such as roads and schools. The legislation also committed billions of dollars in state money toward road projects and other transportation needs.

And the Florida Forever program - successor to the original Preservation 2000 program - does not expire until 2010.

Lawmakers on Wednesday suggested it might be premature to tinker with growth management policies.

"I commend 1000 Friends of Florida for being visionary and getting out in front and talking about the next program," said state Rep. Stan Mayfield, R-Vero Beach, head of his chamber's Agriculture and Environment Appropriations Committee. "But it's important to take stock and realize where we are in our overall conservation efforts."

Mayfield's compatriot on the Senate side, Republican Dan Webster of Orlando, said he wants to examine the progress of the 2005 legislation before digging in again. "We're not done with what we started," he said. However, "We haven't stopped evaluating what we did. We're not closed to ideas that would say, 'Here's a better way to do it.'"'

So, maybe all this overpriced housing is a good thing? Maybe the "tax thy new neighbor" policy is a good thing? Maybe the insurance crisis is a good thing? Maybe...?

Full Article

Permits at a 4-Year Low in Lee County

From the Southwest Florida News-Press, it appears the building boom has slowed significantly.

'The slide in Lee County's home-building industry continued in November as the number of permits for single-family homes fell to levels not seen in almost four years.

Builders in Cape Coral pulled 152 permits, the fewest since 81 in December 2002. In unincorporated Lee County, which includes Bonita Springs and Fort Myers Beach, 357 permits were issued — the fewest since 299 in March 2003, according to figures released Monday.'

Have they (like the rest of Florida)(and the United States) overbuilt?

'They're pretty much in a situation of just waiting because there's so much inventory, and you don't want to add inventory" with almost 14,000 existing homes already on the market, he said.

That situation won't change until the inventory of houses starts to shrink, he said.

"They don't want to add more fuel to the fire," Timmerman said.'

And now a story about a guy who's now going to travel 90 miles to live in an affordable house in Lehigh. 90 miles round trip to Naples?!!! That is so sad.

(note: I once had a 77-mile one way commute for 2 years - it was misery, squared)

'About 77 percent of the single-family home permits were for work in Lehigh Acres, valued at about $63.4 million. That's up from October's 74 percent.

The market has stayed relatively strong in Lehigh Acres because prices there are still the lowest in the county, said John McWilliams, a real estate broker with Coldwell Banker Preferred Properties.

"Lehigh still remains the last bastion of affordability," McWilliams said.

Even in Lehigh, he said, "builders are seeking ways to tweak their home/lot packages below $200,000 because they know that's what has to happen for their building careers to continue."

Jack Bowles, 57, and his wife, Ranae, recently closed a deal with America's First Homes on a three-bedroom, two-bath house in Lehigh for $240,000. They'll move from Naples, where he works at Home Depot and they were renting a house.

Bowles said he probably got twice the home for his money than in Collier County. "In Naples, I wasn't able to buy a home for less than about $300,000 or $350,000," he said. "We spent a whole lot less than that and got a brand new home with a whole lot of amenities."

Now, he said, he has a 90-mile commute but the lower price for his house will more than offset higher gas prices.'

Full Article

Housing Slowdown - Effects on Holiday Spending?

From the Palm Beach Post, some insight on the housing/consumer spending relationship:

'Ask Nancy Bagley about the relationship between the housing slowdown and her net worth, and the Delray Beach homeowner is emphatic.

"Absolutely, I feel less wealthy," says Bagley, who works as a business consultant.

It's a sentiment shared by many homeowners in Palm Beach County and the Treasure Coast as the once-sizzling real estate market cools.

The median price of a single-family home in Palm Beach County fell 12 percent from October 2005 to October 2006, the Florida Association of Realtors said last week, while national home prices dropped a record 3.5 percent for the year. An increasing number of home sellers are getting less than they paid for houses bought last year or earlier this year, according to Palm Beach County property records.'

And for the US...

'As the U.S. economy enters the crucial holiday spending season, retailers and economists are struggling to make sense of how the end of the historic housing boom will affect the annual buying binge.

The consensus: The housing slump won't help holiday spending, but Americans will continue to consume as they always do.

"We should see some effect, but not a big one," says Christopher Carroll, an economist at Johns Hopkins University.

Carroll is one of the few economists to put a number on how changes in home equity affect spending. In a recent study, Carroll and two other economists conclude that for each $1,000 of increase in a home's value, the owner will spend an extra $20 in the short term and $90 over several years.

And as home prices decline, consumers will cut spending by the same amounts. So big drops in housing wealth would "substantially" hurt consumer spending, Carroll says.'

And what about our big retaillers?

'A week into the holiday shopping season, the signals are mixed. Stores were slammed on Thanksgiving weekend, although 5 million fewer Americans braved long lines and crowded parking lots this year than last, according to the National Retail Federation.

Wal-Mart Stores Inc. spooked investors when it reported November sales were worse than expected, and Gap Inc. and Abercrombie & Fitch also reported sales declines for the month. But Target Corp., Costco Wholesale Corp. and Federated Department Stores Inc. all posted healthy sales gains for November.

Mixed signals aside, economists agree that retailers can expect another year of frenzied holiday shopping, although some warn that the housing slowdown will eat into consumers' ability to spend.'

Personally, I continue to wonder how the "concrete-feet" effect of screwed sellers and amateur spec-u-vestors is having on the shopping season. I know of several "For Sale" properties in my area that are owned by persons who really can't afford the carrying costs, and are barely getting by. As such, I will be keeping tabs on the final sales numbers for the 2006 holiday season, because it should be a very good barometer for the 2007 economy.

'But now that home values are slipping, is there a reverse wealth effect that threatens to silence cash registers? Tough to tell, says Bill Hampel, chief economist at the Credit Union National Association.

"We've asked consumers that numerous times, and we don't really get much," Hampel says. "I'm not a big believer that these fringe items (such as the wealth effect) have much of a role in holiday spending."

Yet Hampel says the housing slump means homeowners will have to start saving the old-fashioned way, rather than continuing to spend more than they earn.

"Our houses have been doing our saving for us for most of this decade, and that is ending," he says. "But most people's net worth is so far above what they expected it to be that they don't feel they have to start saving. It's sort of like easy come, easy go."'

Full Article

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

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

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

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

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

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.