Doom and Gloom in the Sunshine State of Florida

[LA Woman]

this just in: On the cover of Time Magazine 7-21-2008:

"Doom and Gloom in the Sunshine State":
"Mortage Fraud, Foreclosures, Water Crisis, Polluted Beaches, Declining Crops, Algae, Failing Public Schools, Consumer Confidence at all time low" and on and on and on.

Very depressing article, however I think the same problems are faced by many many other states.

 

[Mike Siegfried]

"Mortage Fraud, Foreclosures, Water Crisis, Polluted Beaches, Declining Crops, Algae, Failing Public Schools, Consumer Confidence at all time low"

Sounds alot like Los Angeles, except the "Crops" part. Oh, but they forgot the 20,000 gang members, emergency room closures, press 1 for English, higher gas prices due to our special blend (gee, I knew we were special) and the millions of illegals. Ahh. Home Sweet Home.

Mike

 

[Charles West]

You forgot the part about Northern California being on fire Mike. It's been really weird-the sky looks like a high flying fog is socked in, except that the air temperature is 100 degrees.

 

[MBD]

I just reviewed a report where the appraisers processed time adjustments at a rate of -2% per month. I have seen about 10 appraisal reports in Florida over the past 3 months prepared by companies other than mine. Every one of them has over supply, prices decreasing, and either 3-6 or or month marketing time. The number hitter appraisers aren't getting much work now. The lenders are holding the mortgage brokers responsible for the appraisals.

I calculated that with 2% monthly depreciation compounded monthly, if you purchased $200,000 property in May 2005 (around the peak), it would be worth $139 in May 2035.

Does anybody here really think the market will never recover?

We recently did an absorption analysis for condos in one city in South Florida. I did see a light at the end of the tunnel. The number of new listings has decreased over 5 consecutive quarters, the number of closed sales have increased dramatically, and both the average and median days on market have decreased. There is still an oversupply. The market is still decling, and probably will until at least 2009Q1, but mortgage brokers, real estate agents and other appraisers have told me that they are getting busier.

Many investors think the market has bottomed out. The first time home buyers are returning to the market. Prices have dropped so much that for the first time in a long time, it could be cheaper to buy than to rent. When the first time home buyers actually purchase properties, it enables the sellers to move up the ladder, and prices will start to appreciate again.

We probably won't see prices go as high as they did at the peak for a very long time, but don't forget that the last time prices were this low, the market was appreciating. 20% down today is equivalent to 10% down a few years ago in many markets.

I hate to spoil the state of depression here, but I am convinced that the end of the real estate downturn is near.

 

[c w d]

The number hitter appraisers aren't getting much work now. The lenders are holding the mortgage brokers responsible for the appraisals.

Is that why every call, the few there are, is for an assignment contingent on value? Living in Florida I'm pretty sure the target shooters are getting a bulk of the business, at least the one's I know. They're not overly busy but, they're getting more work than we are.

 

[MBD]

The shady MBs call appraisers for "comp check" values on every lead. Every lead does not turn into a deal or a mortgage application. There is a difference between being a number hitter and doing a "comp check," but I do not want this to turn into a comp check thread.

 

[PropertyEconomics]

Im starting to see the number hitters be so scared they are actually under appraising properties now.

Prime example, 2000 sf home on 2.3 acres, all the comps they used were on 1 acre and they made the statement the additional 1.3 acres added no value to this equestrian/residential property.

I find it intersting, bad appraisers cant estimate value no matter how hard they try and now they are runnign scared.

Good for us. Their time is limited in this business.

 

[Couch Potato]

I've seen many 2.3 acre properties where they were of no more value than a 1 acre property, but none of them had the word 'equestrian' attached to them. Typically the additional words were things like swamp and wet lands.

Florida's problems are much more complex than much of the nation. The demographics of Florida are unlike anything else in the country.

 

[Karl]

My bus to Mexico is looking like a better investment each day.

 

[c w d]

Karl, is there room for me on the bus?