We know Florida is bubblicious. Now, it is the leader in foreclosure activity.
Yikes! Expect the foreclosure rate in Florida to rise further. Florida's homeowners are especially vulnerable to foreclosure because of high hurricane insurance rates. The Real Estate Industrial Complex bears a large degree of responsibility for this debacle.Florida is leading the nation in foreclosure activity, according to a report by Bargain Network.
The report said that Florida has approximately 28,000 properties in some form of foreclosure, accounting for 27 percent of the nation's total. With one new foreclosure filing for every 254 households, the state's foreclosure rate was more than four times the national average.
Where's Bugs Bunny when you need him? Bugs would take a crosscut saw and cut FL loose.
ReplyDelete"The Real Estate Industrial Complex bears a large degree of responsibility for this debacle."
ReplyDeleteHow so? Unless there was fraud involved in a given transaction, the responsibility is that of the ignorant/greedy/lazy purchasers and their lenders, who failed to do due diligence.
After the dust settles it looks like there will be plenty of affordable real estate in Florida for folks who actually want to live there. Let's pray there's no RTC-esque bailout that spreads the costs of others mistakes among those who watched from the sidelines.
David said:
ReplyDelete"Yikes! :-( Expect the foreclosure rate in Florida to rise further. Florida's homeowners are especially vulnerable to foreclosure because of high hurricane insurance rates."
Why would anyone rejoice in another's bad fortune?
Lance,
ReplyDelete:-( = is an unhappy face as the it is a backwards smile. Please read more carefully!
"Let's pray there's no RTC-esque bailout..."
ReplyDeleteThe RTC was in the liquidation business, not the bailout business, with its costs (for the most part) paid for with S & L's insurance premiums.
David said...
ReplyDelete"Lance,
:-( = is an unhappy face as the it is a backwards smile. Please read more carefully!"
I'd noticed the backwards smiley face ... But coming directly after a "yikes!" I saw it more as being a "smirk" than a "sad face" ...
the real bob said:
ReplyDelete"FYI salaries havent increased 30% in 10 years."
Bob, if you're salary hasn't gone up at least 30% in 10 year, than you are in the wrong business. I know mine has at least doubled in that time.
The Real Bob said...
ReplyDelete"lance is grasping for straws to somehow discredit bubbleheads. Soon he will go back to...
"You bubbleheads are the reason the market is declining""
Bob,
There are no fundamental reasons out there for house values to decrease. The economy is continuing to go strong, the population is continuing to swell, and people are continuing to get raises. Could/should house prices stop rising as quickly as they have? Of course! Does it make sense for prices to go down in light of all the fundamental reasons I outlined contiuing to push demand up? No ... Only one thing can possibly be causing prices to decline ... and that is fear. Minus the fear factor, prices would simply just stabilize ... which is what they WILL do once people realize that the gloom and doom armagedon being spread around by bubbleheads is baseless. So, are bubbleheads responsible for stopping the rapid rise in prices? Of course NOT. Are they responsible for introducing fear into the equation? Read your various posts and THEN try to deny that your agenda isn't one relying strictly on fear fabrication and mongering.
http://money.cnn.com/2006/09/22/real_estate/help_home_for_sale_young_ballanco/index.htm
ReplyDeleteanyone else notice the shift from "wannabe millionaire" to "HELP! my house won't sell" on CNN's personal finance page? both driven by real estate.
The economy continues to go strong? Uh, no Lance it isn't. I bet you said the same thing in October 2000. Very similar in current conditions.
ReplyDeleteLance said,
ReplyDelete"There are no fundamental reasons out there for house values to decrease. The economy is continuing to go strong, the population is continuing to swell, and people are continuing to get raises."
Lance, Have you been living under a rock for the past 5 years?
The fact of the matter is, according to government statistics; The majority of American workers earn less today, in real dollars, than they did 5 Years ago.
What is it about this fact, that that your inferior intellect cannot understand?
lex,
ReplyDelete"From Wikipedia, the free encyclopedia
The Resolution Trust Corporation was a US government owned asset management company mandated to liquidate assets (primarily real estate-related assets, including mortgage loans) that had been assets of savings and loan associations ("S&Ls") declared insolvent by the Office of Thrift Supervision. It also took over the insurance functions of the former Federal Home Loan Bank Board. It was created by the Financial Institutions Reform Recovery and Enforcement Act (FIRREA), adopted in 1989. In 1995, its duties were transferred to the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation.
According to Joseph E. Stiglitz in his book, Towards a New Paradigm in Monetary Economics, page 243, the real reason behind the need of this company was to allow the United States government to subsidize the banking sector in a way that wasn't very transparent and therefore avoid the possible resistance. This is supported by the fact that the banks had better information related to the loans than the RTC."
Yes, "government subsidy" is more accurate than "bailout". My bad.
Anon at 5:42 AM
ReplyDeleteI don't mean to be a a history dick, but citing a Wiki article with a quote from Stiglitz without the underlying context proves nothing.
The RTC did not subsidize failed
S & L's. The institutions would be closed and its assets sold, or occasionally merged with a solvent bank. To the extent there was a subsidy, it was to protect insured deposits, not the lenders or borrowers.
Did the FDIC & RTC make mistakes that cost the taxpayers money? Sure. Some assets were sold too quickly & cheaply, and too many of the crooks involved got off the hook. But you want to see a bailout/subsidy? Look to Japan--their RTC counterpart never took the difficult steps necessary to write off bad loans. A good reason why Japan's RE market has never fully recovered.
the real bob said:
ReplyDelete"well, if you read the reports the average annual salary, after adjusting for inflation has went down over the last 10 years."
The question wasn't whether average salaries in general were going up or down but whether an individual's salary could be expected to go up by 30% in 10 years. I think you would be hardpressed to find more than a handfull of individuals out there whose salary hasn't risen by more than 30% in nominal terms over a 10 year period. And, YES, it was nominal dollars we were talking about and not "real" dollars since I/O adjustments go up in nominal dollar amounts ... And THAT was the orginal question ... Can someone expect to be able to pay a 30% nominal increase in mortgage payments when their Interest Only loan resets in 10 years. And again, I say, if you don't think your salary would go up enough in 10 years to handle a 30% increase, then you are in the wrong business. Even retirees can expect at least a 30% increase in nominal dollars over a 10 year period just by getting an inflation-linked cost of living increase!
therealbob said:
ReplyDelete"I agree, however, their was no fundamental reason for the increase. And when fundamentals dont drive the price the lack of fundamentals will kill the price. This has been the bubble head creed all along, lack of fundamnetals."
Bob, of course what you are saying is correct. If the fundamentals weren't there to begin with, eventually people will smarten up and stop throwing money down the drain. I don't think any "housinghead" would disagree with this statement. I think what we disagree with is the broadbrush stroke which bubbleheads apply to all houses/condos in segements of each market in all of the cities they have identified as "bubblilicious." And THAT is what I personally disagree with. I think a smart buyer can make a smart purchase under any market conditions at any time. And I think when one is buying a home in which they intend to live, the longterm outlook is even easier to acheive because one isn't held hostage to shortterm fluctuations as flippers are. Buying in DC is a good idea because the fundamentals of the situation are that for a number of reasons, DC has been far from its potential for a number of years. If you buy on to the fact that DC is permanently improving, then it becomes a no-brainer to understand that its real underlying value can only go up. This same statement could be made for a number of other places in other cities due to a number of reasons. It could be as simple as a new plant opening up in a city where industry (and jobs) have been lacking. To broadbrush stroke all houses in all areas and market segments as "overvalued" (and to await the devaluation of such places) is to do oneself an injustice. It is to force oneself to depend on luck rather than skillfull planning and research ... followed by skillful negotiation. It's basically akin to saying "I give up ... I'm going to wait for something nice and cheap to fall in my lap."
lex,
ReplyDeleteAnon 5:42am here. My original point was that it would be better if the Fed. government did not rush in with new agencies and regulations to save the day. Let the courts handle it, companies are routinely placed in receivership without an act of Congress. People will be more wary next time.
The RTC may not have been a bailout, but that's what it's called, popularly if not academically:
"Resolution Trust Corporation (RTC)
U.S. Government agency created by the 1989 bailout bill to merge or close savings and loan institutions becoming insolvent between 1989 and August 1992. "
"Resolution Trust Corporation." Dictionary of Finance and Investment Terms. Barron's Educational Series, Inc, 2006. Answers.com 11 Oct. 2006. http://www.answers.com/topic/resolution-trust-corporation
Bob,
ReplyDeleteI give up! You either missed or misinterpreted every single point I made. For example, if a $400/month property tax payment goes up with inflation, it will NOT rise by nearly the same discrete amount that your salary will go up over that same period. (E.g., a 3% increase on $400 tax is $12 ... while a 3% increase on $5,000 salary is $200.) And of course, anyone other than a retire should be seeing their salary increase by more than inflation in any given year ... or they are making a mistake staying in their job since people are worth relative more in real dollar terms as their years of experience increase. Of course, you could be the exception here. And THAT is but one instance where you are missing/not understanding my point.
-The housing market has gone soft in many areas, but home prices are still much higher than they were at the start of the decade. Nationwide, median home values jumped 32 percent from 2000 to 2005, to $167,500.
ReplyDeleteHousehold incomes have not kept up, dropping 2.8 percent during the same period.
"Until incomes catch up, the housing market is going to remain flat," Zandi said.
America's home ownership rate is at a near-record 68.7 percent. But some housing advocates warn that declining affordability will make it difficult for low-income owners to keep their homes.-
http://www.cbsnews.com/stories/2006/10/03/national/main2057180.shtml
Robert said:
ReplyDelete"Household incomes have not kept up, dropping 2.8 percent during the same period."
What you're neglecting to recognize is that net monthly mortgage payments have also dropped during this period due to falling interest rates. As I mentioned in another post, one can't simply say that a house price should be X times one's salary. One has to look at the bottom line ... i.e., what one is paying at the end of the month. And due to lower interest rates and new types of financing, THAT has not risen ...
That said, why do you make the assumption that prices MUST drop if incomes haven't kept up? I.e., putting aside for a second the fact that you should be looking at net monthly costs compared to net monthly income, where is it written that people are entitled to own their own house. As I've mentioned many times before, historically (i.e., throughout the history of western civilization), MOST people have NOT been homeowners. The 70%+ homeownership we have now is really an anomoly when viewed against the ages. Why should we expect this anomoly to continue? (And please, I am NOT making a value judgement .. as I think it is a good thing for citizens to be homeowners, I am just pointing out what may be a realty stronger than any person or even any government.)
The Real Bob said...
ReplyDelete“Every argument you make lacks data.”
And that is key with any argument Lance makes. Inventory, ARMs, forclosurses, any market indicator mean (and I quote) “ABSOLUTLY NOTHING” according to Lance.
I take that back. Lance’s argument is:
Lance said...
“there is never a bad time to buy”
July 28, 2006 3:14 PM
With a theory like that, there’s no need for data.
Anon at 5:42
ReplyDeleteFair point -- once the FSLIC & FDIC ran dry, let the courts handle it and everyone learns their lesson.
My view is colored by the times: of the of possible outcomes, the country ended up with an expensive but roughly equitable outcome -- the pain was generally levied on the culpable and expenses were paid on behalf of the unknowing.
I don't have a better answer than that.
Robert said:
ReplyDelete"Lance said...
“there is never a bad time to buy”
July 28, 2006 3:14 PM
With a theory like that, there’s no need for data."
Robert still can't manage to understand that point is that buying a house is an individual decision based on the factors specific to a specific house purchase. Based on one's own buying perferences and needs, one can satisfy them under ANY market conditions. Yeah, it may be harder to do so under intense competitive pressures like we witnessed over the last few years, but that doesn't mean it can't be done. Your focusing on the numbers indicates to me that you are just waiting for something to drop in your lap. You're not willing to do the hard work involved in making a good purchase happen for you. You're just hoping that by studying all your stats, you'll be able to guess the best time to cross the street of home ownership without getting hit by the garbage truck coming down that street. Sorry, but it won't work. You need to be out there in the street looking in down both sides of it before crossing it and not depending on what you've read somewhere to see if it is safe to cross that street.
Lance said...
ReplyDelete“You need to be out there in the street looking in down both sides of it before crossing it and not depending on what you've read somewhere to see if it is safe to cross that street.”
“You're not willing to do the hard work involved in making a good purchase happen for you. You're just hoping that by studying all your stats, you'll be able to guess the best time to cross the street of home ownership”
Ah, but Lance, I am looking. I currently have my eyes on a couple of houses. One is a new build that’s been on the market 300+ days (stat). The other, a few years older at 200+ days (stat). I have listings that hit the 180 day mark (stat) sent to me via email as well as any new listings (stat). As inventory continues to grow (stat) and these houses continue to sit,(yet another stat) the pressure is on the seller, not me. And if the two homes that I have my eye on sell? Yep, no worries, a few more hit that 180 day mark today (stat). I’ll buy when I’m ready (oh yea…stat)