Monday, February 19, 2007

Housing Slump - Bigger Than Ever

Despite the repeated denial by those in the REIC (real estate industrial complex) over the past 2 years, the numbers don't lie. And the numbers from the 4th quarter of '06 were not pretty, especially in locales with unusually bloated prices - does that sound familiar to you?

'NEW YORK (CNNMoney.com) -- The slump in home prices was both deeper and more widespread than ever in the fourth quarter, according to a trade group report Thursday.

Prices slumped 2.7 percent in the fourth quarter compared to the fourth quarter a year earlier, according to the report from the National Association of Realtors (NAR). That's the biggest year-over-year drop on record and follows a 1.0 percent year-over-year decline in the third quarter.

The most recent median prices are down even more: 3.4 percent since hitting record highs in the second quarter. Almost three-quarters of the markets, reported on by the group, saw declines in median prices over the past six months, with eight reporting double-digit declines.'

And what about those aforementioned bloated markets?

'Vacation markets, where investor-buyers had driven up prices during the building boom of 2005, were particularly hard-hit.

The Sarasota-Bradenton-Venice, Fla., market saw the biggest year-over-year decline in the fourth quarter, with prices plunging 18 percent.

When looking at the change between the fourth quarter and the second-quarter peak, the Palm Bay-Melbourne-Titusville, Fla., market saw the biggest drop, with median prices plunging 19.5 percent.'

Really, is anyone surprised? Unfortunately for those in the larger metro areas of our state (Orlando, Tampa, Miami-Palm Beach), the realtors have been dramatically UNDER-reporting the median sales prices for the past 2 years. Now that prices in these markets have started to fall dramatically, it won't make the news because the previous year comparison numbers have been cooked (to a crisp!).

In the smaller Florida markets however, the realtors haven't been able to disguise the sales prices so easily, and that's where we've seen the biggest news reports of declines.

Back to the article. Despite all the bad news, the used-car salesmen from NAR (National Ass. of Realtors) keep on shovelling the bull$hit.

'Examination of data within the quarter shows home prices stabilizing toward the end," said a statement from David Lereah, the NAR's chief economist. "When we get the figures for this spring, I expect to see a discernible improvement in both sales and prices.'

Remember, this is the same guy (I always get a chuckle when I see others refer to him as "David Lie-area") has been predicting a "soft landing" and a "quick turnaround" since 2005. During this time period, sales have continued to drop, inventory has climbed to new records every quarter, and foreclosures have skyrocketed. I just want to know - how does he do it, lying to the public, over and over and over again? But wait, there's more - this time from the president of NAR.

'NAR President Pat Vredevoogd Combs, a Grand Rapids, Mich., realtor, admitted the group doesn't expect to see a big gain in 2007 statistics.

"Right now, buyers are responding to seller pricing and incentives, and there's a bit of a pent-up demand as a result of buyer hesitation during the second half of 2006," she said in the group's statement. "We're not looking for big changes, but a gradual rise in sales and home prices is projected - that will be good for the overall housing market and related industries."'

Where does she come up with these figures? Again, inventories are at an all-time high, 2.1 million homes are sitting empty, and every major historical indicator says home prices (especially in Florida) must drop at least 30% before getting back in line with median incomes.

The facts: prices are NOT going to rise in 2007, sales are going to continue to drop, and the overall housing market is going to be in bad shape until prices get back to historical trend lines. At this point, the only real question is how long before the price correction goes into full swing.

Full Article

23 comments:

jayz said...

Right on again, brother. I'd be willin' to bet that holy water would burn like battery acid on the skin of those satan-spawn-sleazebags in NAR & FAR.

What a bunch of lyin' scum-buckets - they cheerled the bubble to the point of losing all credability. Now let them feast on the decaying wreck of the market they helped create.

sandi said...

I hate to say it, but I'm still not seeing much of a price drop in Orlando and Tampa. A lot of inventory that's been sitting around since last summer - how long can this last?

Anonymous said...

This dummies are in total denial. They will go bankrupt first before selling way below equity.

Bring on the pain......

Zippo said...

I agree - the denial tank is still somewhere between 3/4 and FULL.

We've got a lot of aligator bleeding to do before the next phase.

Timothy said...

I'm with Sandi. Alot of people have to be hurting but prices are not dropping as they should be in the Tampa area.

Anonymous said...

Interesting note. One of the residents of Briny Breezes has listed their trailer. Do you think they are realizing this deal most likely will not happen and they still want to make a killing?
Here is the ad:

27 shares of briny breezes co-op stock. Buy now for big payoff potential. Briny is under contract, set to close march 2009. Buyer could profit significantly from this transaction. Seller not offering guarantee of sale or waranting any sale info 27 shares in briny breezes co-op stock. Briny breezes is currently under contract to be sold march 2009, this offer could net new owner over 800k. This offer is not guaranteed and neither seller, nor broker warrant any guarantees. Buyer should ver ify all info.

If I owned their I would be doing the same thing.

On another interesting note, whats up with the idea of getting rid of property taxes and raising the Sales Tax?
What do you think? I like it.

http://www.sun-sentinel.com/news/local/southflorida/sfl-fproptax20feb20,0,116507.story?coll=sfla-home-headlines

FL - Paradise Lost said...

I saw that proposal too - completely eliminating property taxes for all homesteads, locking the rate increases for commercial/rental/vacation homes, and making up for it with a large increase in the sales tax.

This is HUGE news, and will be the subject of the next post.

Dragasoni said...
This comment has been removed by the author.
Dragasoni said...

Prices are definitely dropping in the Tampa area. Go to www.zillow.com and search in your zip code. Make sure you set the view to only show recent sales (the yellow flag). You'll see property selling at foreclosure prices. You can even verify these selling prices on the county appraiser sites.

For example, a 2 bed 2 bath condo in my complex had an asking price of $251,000 back in the summer of 2006. It sold last month for $114,500. The previous owners paid $170,000 for this POS condo. Talk about getting burned.

My best advice to everyone is to RENT while this bubble deflates, and let the insurance crisis work itself out. Now is NOT the time to buy anything. I would hold off until 2009, if you can, so you get a fair deal. Remember, good things come to those who wait :)

-Dragasoni-

FLORIDA BOUND said...

Went house hunting in Sarasota/Bradenton two weeks ago. We spent most of our time in an area called Lakewood Ranch. It is an area that we've been told to concentrate on because we have children. It was shocking and disgusting what homes cost! What was more shocking were the number of homes for sale and rent. There was one section that is new with what I would call starter homes(If you call $450k a starter home cost). Every other house was for sale, yards looked messy and the junk you could see in the garages. A total turn off!

Other areas were much nicer, but costs much more. The Country Club area was ridiculous! I even laughed when the realtor drove us by 2500 sq. ft. million dollar homes. When asked what people do for a living that they can afford to live there I was told Doctors, Lawyers, Professionals and lots of realtors. That one made me laugh again. I don't really put realtors in the same realm as doctors! Of course the old stand by of folks from up north selling their homes and making a fortune....I

n the established areas, the number of homes for sale was mind boggling. The realtor kept saying it's a buyers market, such a selection and sellers willing to negotiate.... Whan I asked are they willing to take 40% off the price, he said that he doubted it. When I explained I couldn't see paying someone double what they paid for a home two-three years ago, he said I understand. Not too much of the persuading I've heard about(prices only go up, they aren't making anymore land, it's a great investment....) Just that it's a booming area and you can't go wrong. And of course, things are really starting to pick up!

Moving to Florida SUCKS!!!!

FL - Paradise Lost said...

Florida Bound - you couldn't have said it any more succintly. There is a great amount of hubris and arrogance amongst the sellers in regards to price.

They have totally deceived themselves into thinking that the irrational runup of the past several years was based on solid market principles - when (as we have shown here, many times over) there was no fundamentals at all.

It was just a lethal combination of banks lending out too much money, crooked apprasiers, "me too!" spec-u-vestors, and uneducated real estate agents spewing complete bs to the media.

Stay informed and thanks for the report on your housing search. Keep on posting!

- Jerry (who lives in a N. Tampa subdivision that hasn't had a home sale in 6 1/2 months)

Anonymous said...

"Whan I asked are they willing to take 40% off the price, he said that he doubted it. "

Why ask him? Make an offer and see what happens.
Do NOT trust a slimly Real Whore EVER.
They will screw their Grandmother over to make a commission.

Also, better not to even bother looking at homes as it seems to make sellers have some kind of hope if they see buyers coming around.

Anonymous said...

Those same false fundamentals are still quoted and still believed by the dupes that are still buying property here in Coral Springs. These folks will believe anything they read in the paper or see on TV. I would love to get the raw data on what is happening here, but no one is examining realty.

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