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FRED
05-15-08, 11:31 PM
"Report" from the front :D


http://www.itulip.com/images/wefedL.jpg

ax
05-16-08, 12:45 PM
"Report" from the front :D



http://www.itulip.com/images/wefedL.jpg

As mentioned previously, I live in S. Florida about 50 miles north of Plantation. The housing market is in a word, awful. One of the many things that worry me most going forward was expressed in a NYT article concerning condos (http://www.cnbc.com/id/24641425). Here is an excerpt:

"Each of the remaining owners has had to chip in an extra $1,000 assessment and $50 more a month for cable and Internet. That is on top of Ms. Sanz’s $450 monthly maintenance fee."

As HOA fees continually go uncollected, the builder accumulates more and more debt. As per our contract, we don't take over the HOA until 90% of the units are sold. Now, that may never happen, but when it does, a large assessment is undoubtedly coming. In the meantime, multi-family dwellers (supposedly illegal) have become rampant and destruction of community property is a weekly occurrence. To collect some of these fees, the builder has resorted to "deactivating" gate clickers and cutting off cable (successful I'm told).

On a positive note, 2 homes in my subdivision have sold in the last month. One a foreclosure and the other a builder-reduced sale.

jimmygu3
05-16-08, 01:51 PM
My brother, who is as much a believer in FIRE economy dogma as I am a contrarian, sold his Pompano home last year and has been renting a condo on the beach. Lucky move, as he did not see the collapse coming. He was, however, wise enough to take what the market would bear rather than wait around for prices to come back up.

touchring
05-16-08, 02:43 PM
As mentioned previously, I live in S. Florida about 50 miles north of Plantation. The housing market is in a word, awful. One of the many things that worry me most going forward was expressed in a NYT article concerning condos (http://www.cnbc.com/id/24641425). Here is an excerpt:


Is there an excess supply of homes in Florida right now? Where do people stay if their homes are foreclosed?

There's a big condo building boom going on in Singapore. If all the projects in the pipe are developed, the supply is expected to increase by 30% over the next 4 years.

I would be curious as to the supply versus demand situation in Miami?

ax
05-16-08, 03:12 PM
Is there an excess supply of homes in Florida right now? Where do people stay if their homes are foreclosed?

There's a big condo building boom going on in Singapore. If all the projects in the pipe are developed, the supply is expected to increase by 30% over the next 4 years.

I would be curious as to the supply versus demand situation in Miami?

That may be the understatement of the year. Gross excess supply increasing daily with pending foreclosures, auctions failing at an all-time high, and builders unable to sell any inventory.

Compounding the difficulty in selling your own home is the ability of the developer to offload excess land to another developer who may not finish the intended project. My friend lives in a community where about 500 of the 1800 proposed homes will never be built. His builder has sold tracts of land to another builder who will now put multi-family dwellings smack in the middle of his community! These units may or may not match the decor of the original community. That ain't good for property value.

Where do people go? Good question. Some people go nowhere. Foreclosures are taking forever down here much to my dismay, so some are simply squatting in their own homes. "In Florida, a St. Lucie County (2 counties north of me) court actually added a night shift to handle the massive backlog of foreclosure filings. The clerk of the courts was quoted as saying the caseload has become, “just horrendous.” The court used to handle about forty filings per month. http://www.cnbc.com/id/24615625

In January they were tracking 715 foreclosure filings. Some are reporting lower numbers because the numbers simply can’t get into the system."

Others are doubling and even tripling up with family members. Anecdotally, I can tell you there has been some flight to Georgia and the Carolinas. My friend was able to sell his house for break even and move to Hickory, NC where he pays about $600/yr in property taxes on 3+ acres.

The condo glut is another huge problem. The most recent estimates I've read on Miami range from a 37-month to 4-year backlog! And don't be fooled into thinking it's just Miami. Waterfront condos span from Miami to Stuart, about 120 miles of overbuilt space that is causing the type of dilemma from my previous post.

touchring
05-16-08, 03:50 PM
The condo glut is another huge problem. The most recent estimates I've read on Miami range from a 37-month to 4-year backlog! And don't be fooled into thinking it's just Miami. Waterfront condos span from Miami to Stuart, about 120 miles of overbuilt space that is causing the type of dilemma from my previous post.


3 years is bad. So the Miami situation is not just subprime or foreclosure, but also too many excess units?

ax
05-16-08, 05:43 PM
3 years is bad. So the Miami situation is not just subprime or foreclosure, but also too many excess units?

The condo glut was particularly susceptible to vultures who thought that they could buy 2-3 units, live in 1, and just watch their money grow exponentially. Instead, they can't even afford their mortgage let alone 3. There are stories daily here of sub-20% occupancy in these massive projects which has all the benefits of increased crime, poor utility use, etc. While many projects won't be finished, they line downtown skylines with dirt piles and cranes.

metalman
05-16-08, 05:46 PM
The condo glut was particularly susceptible to vultures who thought that they could buy 2-3 units, live in 1, and just watch their money grow exponentially. Instead, they can't even afford their mortgage let alone 3. There are stories daily here of sub-20% occupancy in these massive projects which has all the benefits of increased crime, poor utility use, etc. While many projects won't be finished, they line downtown skylines with dirt piles and cranes.

ah, those were the days...

These were launch parties for condominium projects, one of the stranger forms of nightlife in a city obsessed with real estate. Alcohol and music were abundant, but so were sales agents and brochures with statements like, "It is the impeccable aesthetic of textures and calming shades—limestone and blue marble—that further distinguish these voluminous spaces."
—Salsa Dancers and Stunt Men? Must Be a Miami Condo Project, The New York Times (http://www.nytimes.com/2005/05/23/national/23condo.html?8hpib) (registration required)

Dancing, Booze, and Overpriced Houses (http://www.itulip.com/forums/showthread.php?p=4484#post4484)

ax
05-16-08, 05:56 PM
ah, those were the days...

These were launch parties for condominium projects, one of the stranger forms of nightlife in a city obsessed with real estate. Alcohol and music were abundant, but so were sales agents and brochures with statements like, "It is the impeccable aesthetic of textures and calming shades—limestone and blue marble—that further distinguish these voluminous spaces."
—Salsa Dancers and Stunt Men? Must Be a Miami Condo Project, The New York Times (http://www.nytimes.com/2005/05/23/national/23condo.html?8hpib) (registration required)

Dancing, Booze, and Overpriced Houses (http://www.itulip.com/forums/showthread.php?p=4484#post4484)

Along with people camping out for 3 days to be first in line for the glorious opportunity of being in a lottery for a primo unit.

Starving Steve
05-17-08, 03:24 PM
I am not in Florida but rather, central coast California. And from what I can see, nothing is selling. There are endless listings and almost zero sales.

Add to this mess, outrageous--- and I mean OUTRAGEOUS--- prices. Florida, by comparison, looks prudent.

Then add into this mix here in California: the gang violence, the Nortenos versus the Surenos, the drive-by shootings in Salinas and Watsonville, the non-existent job market, the field-worker starvation wages, the lack of unions, the tech blow-out in Silicon Valley, the energy crisis, the impending bankruptcy of the State of California, the pending bankruptcy of Vallejo, the mess in the public schools with the phonics crap and the English-only, 1 in every 204 homes already bank-owned in California, the La Nina drought cycle, the lack of any kind of realistic energy plan (except for silly windmills and solar roofs), the $127 oil, Bush in Washington, the Republicans blocking everything in the US Senate, the bozo-Bernankee running the Fed, and you have a total disaster.

This is where we are now. I'll keep you informed of how this mess festers. :)

Rajiv
05-18-08, 09:16 AM
There's a big condo building boom going on in Singapore. If all the projects in the pipe are developed, the supply is expected to increase by 30% over the next 4 years.

Touchring, from "Land Value Taxation Around the World" (http://www.henrygeorge.org/rem4.htm)


Hong Kong and Singapore - Both of these Asian city-states are small in area, heavily urbanized and densely populated. Because of the scarcity of land, the majority of land in both cities is publicly owned and distributed to developers via long-term leases. In this way, ground rent provides a sizeable portion of public revenue, and taxes, on both personal and corporate incomes, are relatively low. Also, many people live in public housing in both cities (86% of Singapore's population, and roughly half of Hong Kong's). This keeps the cost of housing low, which tends to dampen costs for employers, helping to keep businesses competitive. Hong Kong has now been returned to the jurisdiction of China, but its land-tenure policies have not changed and it remains prosperous.

Has the above underlined situation in Singapore changed? If not, I do not see much impact of the excess supply.

See also the two threads - Ricardo's Law - The Great Tax Clawback Scam
(http://itulip.com/forums/showthread.php?t=4026) and Beating the Bust: Land Value Taxation (http://itulip.com/forums/showthread.php?t=4025)

In particular, see my comments about the real estate market in Pittsburgh PA -- there was no real estate bubble in Pittsburgh, and hence no real estate bust -- that I believe is because of the property tax structure that reduces the probability of a real estate bubble from happening. I believe that things are similar in both Singapore and Hong Kong, though becuse of a similar effect but from a different mechanism.

Comparing the situation in San Diego to Pittsburgh, one has the following

San Diego median income 64,273 median house 569,900 ratio 8.9
Pittsburgh median income 30,278 median house 74,000 ratio 2.44

The ratio 0f 2.5 had been considered the rule of thumb historically.

GRG55
05-18-08, 09:17 AM
Along with people camping out for 3 days to be first in line for the glorious opportunity of being in a lottery for a primo unit.

Back in March FRED posted this video about a different sort of real estate related "camping out" experience... :eek:

http://www.itulip.com/forums/showthread.php?p=31327#poststop

Thailandnotes
05-19-08, 01:20 AM
In Singapore, rents for people not living in government housing are sky rocketing. Renters are being told that as soon as their leases run out, their rents will double. People living in homes are having to move into apartments.

touchring
05-19-08, 01:57 AM
In Singapore, rents for people not living in government housing are sky rocketing. Renters are being told that as soon as their leases run out, their rents will double. People living in homes are having to move into apartments.



A lot of apartment blocks, some only a few years old, were sold to American hedge funds, and demolished to make way for new apartments, causing a sudden shortfall in rental housing. A lot of hedge fund money poured into Singapore last year, driving up the Singapore dollar versus the American dollar.

Thailandnotes
05-19-08, 09:45 AM
A lot of apartment blocks, some only a few years old, were sold to American hedge funds, and demolished to make way for new apartments, causing a sudden shortfall in rental housing. A lot of hedge fund money poured into Singapore last year, driving up the Singapore dollar versus the American dollar.

I'm hoping you can elaborate. It's always amazing to see buildings being torn down less than 10 years after they were built, especially if they are big with lots of units. Did the value of that land/location explode that much? It's very suspicious, and looks too much like money laundering. Condo occupancy where I live is less than 30 percent. You can read about it or just drive around and look at 40-story condos with only 18 apartments with lights on at eight pm. Yet, the cranes are everywhere just ten years after '97, in which a speculative housing boom and the money borrowed to pay for it brought on the crash of Thailand's currency. Billboards and sales offices are everywhere. And the prices are ridiculous...higher than you would pay in many cities in the US.

Singapore has an influx of expats. International schools are full, with waiting lists.
Do you really think hedge funds are driving up the Sing dollar? The currency seemed to be moving in concert with other regional currencies.

touchring
05-19-08, 02:19 PM
Like Bangkok, Singapore and (Hong Kong also) also went through the 1997 condo boom, but unlike Bangkok, the oversupply is not as bad due to space constraints. You can't build condos on the sea or in the mountains for the case of Hong Kong. The situation in singapore is exacerbated by the fact that the government own most of the land - the bulk of private land was seized from private ownership decades ago and so the Singapore government can artificially reduce supply by not selling state land.

During the 7 year "real estate bear market" from 1997 to 2004, the excess supply was slowly mopped up by migrants of well-to-do to wealthy overseas chinese (from Thailand, Indonesia and Malaysia) and recently even mainland Chinese, leading to a shortage in 2005 when the property play started.

Without land to develop, housing developers got to buy over existing condos "en bloc", pull it down, and rebuild. Many house owners made a million to a few million US dollars by selling their home to such developers.

http://www.theaustralian.news.com.au/story/0,25197,23133937-25658,00.html


THE residential property boom in Singapore has been characterised by a peculiarly Singaporean phenomenon known as en bloc or collective sales.

Last year, 109 such deals were done, totalling $S13.3 billion ($10.5 billion).
An en bloc or collective sale occurs when owners in an apartment block agree to sell the entire block for redevelopment.


In its wake, Singapore's en bloc fever has produced instant multi-millionaires, but has also spawned legal challenges and untold bitterness among minority owners forced to sell.


A High Court hearing due next week will be closely watched - and could unravel the many pending en bloc sales.


At least 10,000 apartments will be demolished for new developments, leading to even more expensive apartments, over the next two years or longer.

I'm hoping you can elaborate. It's always amazing to see buildings being torn down less than 10 years after they were built, especially if they are big with lots of units. Did the value of that land/location explode that much? It's very suspicious, and looks too much like money laundering. Condo occupancy where I live is less than 30 percent. You can read about it or just drive around and look at 40-story condos with only 18 apartments with lights on at eight pm. Yet, the cranes are everywhere just ten years after '97, in which a speculative housing boom and the money borrowed to pay for it brought on the crash of Thailand's currency. Billboards and sales offices are everywhere. And the prices are ridiculous...higher than you would pay in many cities in the US.

Singapore has an influx of expats. International schools are full, with waiting lists.
Do you really think hedge funds are driving up the Sing dollar? The currency seemed to be moving in concert with other regional currencies.

ax
05-19-08, 06:46 PM
Back in March FRED posted this video about a different sort of real estate related "camping out" experience... :eek:

http://www.itulip.com/forums/showthread.php?p=31327#poststop

Here is the letter my local congressman, the honorable Robert Wexler, responded with (about a month later) to my request that he not vote for any legislation that allows a 4-year retro tax rebate to big builders or a bailout for upside down ARM/flippers.

Thank you for contacting my office regarding legislation that provides tax cuts to homebuilders, rewrites loans, or provides a bailout to subprime mortgage borrowers. I appreciate your views on these important issues.

Since the end of last summer, more and more homeowners in our country have been unable to make their mortgage payments and have been losing their homes to foreclosure. In fact, the number of foreclosures in our country has hit an all time high. To protect homeowners from losing their homes to foreclosure, the Bush Administration has implemented a program called "Hope Now." Hope Now requests that mortgage lenders voluntarily re-negotiate their loans with homeowners. I do not believe that a voluntary program alone is a workable solution for homeowners facing foreclosure.

Currently, the mortgage industry has very little regulation. I strongly support legislation that increases regulations on the mortgage industry. Indeed, mortgage lenders need to be required to seek alternatives to foreclosure, including: altering repayment plans, loan modifications, short sales, and other options. I firmly believe that foreclosure should only proceed as a last resort, after all available options have been exhausted. Moreover, if a lender does not take action to voluntarily modify a mortgage repayment plan, then I support giving bankruptcy judges the ability to modify the mortgage repayment plan. I firmly believe that if lenders refuse to re-negotiate loans, then the courts need to step in to save people from losing their homes. The threat of the courts taking action to modify repayment schedules would encourage lenders to voluntarily re-negotiate with homeowners. In addition, homeowners that are late on their mortgage repayments should be referred to qualified housing counselors to provide assistance. Proactive and robust action is the best way to address our Nation's mortgage crisis. Yet, I do not believe that the government should bailout individuals who have made very poor loan decisions. Please be assured that I will keep your views in mind as this issue is debated in the House Financial Services Committee and on the floor of the U.S. House of Representatives.

Thank you again for taking the time to write. Please feel free to contact me with any additional questions you may have or anytime I may be of assistance to you. If you would like to be updated on these and other issues, please stop by my website (www.wexler.house.gov) and sign up for my electronic newsletter. I hope you will find these tools to be valuable resources in keeping up with events in Washington and South Florida.

With warm regards,

Robert Wexler
Member of Congress

I like my brother's translation: “We must bail out homeowners. However, I do not believe in bailing out homeowners.”

Wow, he'll be keeping my views in mind! Guess he's not getting my vote.

bill
05-19-08, 08:26 PM
I firmly believe that if lenders refuse to re-negotiate loans, then the courts need to step in to save people from losing their homes. The threat of the courts taking action to modify repayment schedules would encourage lenders to voluntarily re-negotiate with homeowners.

he needs this link:
http://en.wikipedia.org/wiki/Subprime_mortgage_crisis


Some have argued that, despite attempts by various U.S. states to prevent the growth of a secondary market in repackaged predatory loans (http://en.wikipedia.org/wiki/Predatory_loan), the Treasury Department (http://en.wikipedia.org/wiki/Treasury_Department)'s Office of the Comptroller of the Currency (http://en.wikipedia.org/wiki/Office_of_the_Comptroller_of_the_Currency), at the insistence of national banks, struck down such attempts as violations of Federal banking laws.<SUP class=reference id=cite_ref-61>[62] (http://en.wikipedia.org/wiki/Subprime_mortgage_crisis#cite_note-61)</SUP>
.
.
"There has been plenty of talk about 'predatory lending,' but 'predatory borrowing' may have been the bigger problem. As much as 70 percent of recent early payment defaults had fraudulent misrepresentations on their original loan applications, according to one recent study. The research was done by BasePoint Analytics, which helps banks and lenders identify fraudulent transactions; the study looked at more than three million loans from 1997 to 2006, with a majority from 2005 to 2006
.
.
As of April 2008, credit rating agencies had downgraded over U.S. $800 billion in highly-rated CDO and MBS, and more downgrades are expected. Since certain types of institutional investors are allowed to only carry higher-quality (e.g., "BBB" and better) assets, there is an increased risk of forced asset sales, which could cause further devaluation.<SUP class=reference id=cite_ref-64>[65] (http://en.wikipedia.org/wiki/Subprime_mortgage_crisis#cite_note-64)</SUP>