Tuesday, April 26, 2005

Madness On The Coasts

The Palm Beach Post is reporting that California has nothing on Florida when it comes to a housing bubble. "The median price of existing homes in Palm Beach County rose to $371,500 last month. That's a 37 percent jump from the county's median price of $272,100 in March 2004."

"The median price of an existing home in Martin and St. Lucie counties rose to $235,000 in March.When compared with March 2004, the price soared by 39 percent from $169,100."

The new mindset is apparent. "'Part of it is there's been a turn in how people view mortgages, not necessary that they're not staying in homes but they're not staying in mortgages.' Houses sell so quickly in Palm Beach County that buyers (will) forgo the typical sales contingency that the price be no more than the appraised value, meaning they'll buy the house either way."

"Everything is selling and price doesn't seem to be a factor. There are buyers at every price level."

Not everybody is jumping in. "Sales dipped 7 percent compared with March of last year. Charlene Montford, (is) renting while she looks for a home. So far, Montford says she's been priced out of housing in the area despite a salary that approaches $100,000 a year."

17 Comments:

At 7:42 AM, Anonymous Anonymous said...

just saw the new home sales report... pretty funny... sales increase by 12%... but home prices fell by 9.3%... sounds like a liquidation sale to me...

 
At 7:49 AM, Anonymous Anonymous said...

also... seems like every media outlet is calling a 9.3% decrease in home prices "a dip"... that's also pretty funny... by the end of the summer, people are really going to be wondering what happened...

 
At 7:54 AM, Blogger Sunny said...

Median home price in Brevard county (coastal county north of Martin and St. Lucie) is up 38% over last year's numbers. 2004-- $151,200 2005--$208,000.

Fla Coastal Blog here.

 
At 8:03 AM, Blogger John Law said...

I bet everyone went to spring training and convinced everyone else to buy a house.

 
At 8:15 AM, Blogger John Law said...

I love when people say there is no national bubble, it's confined to the coasts.

let's see:
NY
mass
CT
PA
florida
texas
california

that's basically 1/2 the pop of the US.

 
At 8:21 AM, Anonymous LV_realprop said...

Lest we forget that the Realtors association just started I think last month, maybe this month to include condo's and "conversions" into thier new home sales figures. When I heard they were going to do this it just reeked of skewing the data to fit thier growth model. More scrapping the bottom of the barrell to "get the numbers".

 
At 8:23 AM, Blogger Ben Jones said...

Don't forget Baltimore, Wash. DC...

 
At 8:35 AM, Anonymous RentBoy said...

Yeah,

I thought the big decline in median price was very interesting. Surely, it will be spun by the RE complex. Interesting to stocks like TOL, which has a much higher price point than $200K, up today. These numbers are all rearview mirror type stuff -- all the more interesting since rates actually declined during March.

 
At 8:55 AM, Anonymous Anonymous said...

The last sentence struck home for me. My household income is 250k and we're almost priced out of the market in SF. This is the classic end of a pyramid. With no more money coming in to the market, the base cannot expand.

When I can't buy anything remotely decent, you know things are completely out of whack. Only people with inflated equity can afford to buy now; how can this be sustainable?

 
At 9:01 AM, Blogger John Law said...

we've all heard how stocks are indicators of where thing will go. so this economy is built on a housing bubble, loans and consumer spending.

so the stocks of banks, the other lenders, the homebuilders, the GSEs, automakers and consumer stocks(wal-mart etc.) should give us clues...

 
At 10:33 AM, Anonymous The Angry Attorney said...

Furniture companies are getting hit hard. They are still selling, but not as much. Moreover, their inventory is starting to pile up -- which the true indicator of a slowdown.

See STLY (Stanley) and HOOK (Hooker) as examples...

 
At 12:05 PM, Anonymous semper fubar said...

(I posted this at CalcRisk too, so just scroll if you saw it there)

Another bubblicious personal anecdote about FL, from a week ago:

An ex-colleague of mine, a pleasant but not overly-bright middle-aged woman who spent the last 15 years in a lower level job (this should be your first clue) in the company I work for, recently left the company and got her RE license in FL. After inquiring to a mutual friend as to how she was doing, I was told she's "doing great! She's dumped all those homeowner clients -- because who wants to waste their time driving Mr and Mrs Bubba around looking for a house -- and she's focusing solely on investment properties!!" After asking how she got into that arena, I was told she "put together a group of investors " (brother-in-law among others, it turns out) and they're going to start buying up properties in Jacksonville!"

The first thing that popped into my mind was Joe Kennedy and the shoeshine boy. Run for the exits, everyone!

 
At 3:40 PM, Anonymous Anonymous said...

Oh, please! Stop this Joe Kennedy anegdote. He was a major liquer trafficking crook. He's got his clues from fellow crooks, not shoeshine guy.
However, I am with you on keeping your money out of real estate. I have been real estate broker for 10 years and full time real estate investor for 6, and I rent now. And I can proudly say I am flipper, but I buy undervalued properties and pass them to "next guy". There is a lot of "next guys" this days.

 
At 4:19 PM, Blogger Andrew said...

I was all set to become a flipper. Back in September 2004, I sold my house here in DC. Paid $315k in 1999, sold it for a ridiculous $840K. Rented a small place while I looked for a flippable property--but (fortunately) I discovered this blog last fall, and quickly realized the real estate party was over.
Very, very, happy to be out of this market.
Thanks for a terrific site, Ben. It's required reading for everyone.

 
At 7:19 PM, Anonymous Anonymous said...

Wow Andrew you scored on that deal. Now put that money in a safe place and wait for the bubble to burst. Then buy some to flip and buy some to hold for 1-3 years/3-5 years/5-7 years. Be careful buying as the market is going down and make sure they pencil out to cover all your expenses including vacancy factor and repairs/reserves. Then sell as the market goes up first the 1-3 holdings then the 3-5 holdings etc. With the 500k seed money you have you should be set after that.

 
At 3:48 AM, Blogger Andrew said...

Thanks for the advice, anonymous. Based on what I've read on this site, we may see prices continue to drop over the next several years, so I'll need to sit tight in my rental and see how it plays out.
Haven't noticed a drop yet in prices in the DC market...but, folks here are clearly delusional here. They seem to think the market can only keep going up since the Federal Government keeps expanding and creating jobs. But, do they realize the average wages for such workers can't possibly keep pace with housing prices...?

 
At 3:48 AM, Blogger Andrew said...

Thanks for the advice, anonymous. Based on what I've read on this site, we may see prices continue to drop over the next several years, so I'll need to sit tight in my rental and see how it plays out.
Haven't noticed a drop yet in prices in the DC market...but, folks here are clearly delusional here. They seem to think the market can only keep going up since the Federal Government keeps expanding and creating jobs. But, do they realize the average wages for such workers can't possibly keep pace with housing prices...?

 

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