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."
10 Comments:
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...
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...
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".
Don't forget Baltimore, Wash. DC...
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.
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?
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...
(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!
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.
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.
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