Huge real estate crash in Florida

[schabotte]

While there have been lots of rumblings of falling prices in Florida, the very slow buyers market has sort of frozen price movement for the most part.

The developer in the below article just dumped a bunch of 300K townhouses at auction for half price.

http://www.winknews.com/news/local/7896352.html

Expect a lot more like this in Florida in the coming year.

[sarahk]

Victoria Toher said the developer went back on their word, "They promised us they were not going to go below market value."

I guess if it's an auction that is the market value.

Gotta feel sorry for those guys who didn't do their homework back in December though.

How widespread is this issue?

[schabotte]

I moved from Florida last April and considered myself lucky to sell my house as the market really died for sales last January - right when we listed the house. We got lucky... But the buyers

They paid $480K for a house we bought for 280K 4.5 years before. They did 100% financing and due to the resale, their taxes were reassessed to around 9.5K up from our 5K tax bill and their insurance was in the 3K/yr range. The mortgages are of course variable rate.

Now this is a fairly typical scenario for buyers of houses in 2005 - early 2006 in Florida.

Plus at the time I left, there were 100's of new homes in Palm Beach still coming on line.

Right now most builders are just offering huge incentives to sell - upgraded appliances, floor coverings, decorator allowances, paying points for the mortgage, etc.

But I imagine as pressure mounts on them from the bank, more and more developers will auction off properties.

Add to this the wave of foreclosures that are just starting and it is going to be real messy for the people who purchased in the last 2 years and want to resell.

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Oh, also tons of condo projects were just flat out cancelled since the beginning of last year. Condo developments similar to what was selling for 400K-1Million+ per unit just pulled up and left.

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It'll get a lot worse there before it gets better.

If you were around and real estate aware during the last California price crash, I figure that is the range it will settle down to before stabilizing.

[kyle422]

New home sales are totally different from resales. Builders are definitely feeling the pinch. Resales are only going to lose money if they have been in their home a short period of time. You made money off your sale didn't you? Yes you made a lot of money. There is only a small percentage of people that are going to lose money if they sell now.
You are defining a market crash by one section of the market. There are still great opportunities for buyers and sellers in this real estate market which I would never call a "crash".

[schabotte]

There are always opportunities at the right price.

I made money because I sold at a time when sales were still happening.

But my house was not a new house when I sold it.

If the people who bought it tried to sell it now, they couldn't sell it for what they paid for it. I don't know what the price would be but a friend of mine in that area figured if he wanted to sell his house quickly, he'd have to discount at least 20% from the "value" at the end of 2005 to even get people to come in the door.

I think seeing drops of 25-40% in value in many areas of Florida - new and used - over the next few years are going to be quite common (i.e. a price reset to 2001-2002 house values.)

I also see more insurance price increases in Florida - especially if another hurricane hits the state. And as houses sell at lower prices, it is going to reduce the value of the tax base and all the municipalities are going to either make big cuts in their drunken orgies of spending over the past few years or dramatically raise mil rates & fees to keep the same revenue levels flowing. I'm sure you can guess which choice the municipalities will make.

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That said, this is of course not a nationwide thing. I moved to the Greenville, SC area and while the market here is a bit slower than it was, prices are still rising at pretty much the same slow rate as they always have. This area never had the bubble effect.

[Fort Lauderdale]

You are defining a market crash by one section of the market. There are still great opportunities for buyers and sellers in this real estate market which I would never call a "crash".

Thanks Kyle. Real Estate Crash in Florida?? how irresponsible. Yes, the market is soft, yes, there are going to be foreclosures and yes if a hurricane hits it will have a negative impact. Duh!! There are pressing issues with taxes and insurance, and that is being addressed. However, by the very nature of "real estate crash" you are implying that nothing is selling, that the market is at a standstill and everyone is suffering. Kudos to you for getting out before the state collapses. You are completely wrong. Poor choice of words. You should apply for a job at anyone of the far left media.

[JennSellsFast]

Don't forget about Florida's current brightspots. Jacksonville, Gainesville, and Panama City are rocking right now. Someone forgot to tell them the Florida real estate market was in shambles.

[BuyHawkeye]

I deal in foreclosures. The current fad question is about the dramatic increase in foreclosures that I must be seeing (prior to that it was "do you watch Flip-that-House?"). Hmmm, been doing this for a few years and I am not seeing the rocket ship taking off that everyone promises is just around the corner. Still, I am in my space suit and carry a check book just waiting for the opportunity.

The gloom and doom is a touch over hyped. That is pretty much the only news that will sell these days so guess what we are left with? Next year we will be chidded for being overly cautious.

Oh yeah, I refused to buy in California in the early 90's (the correction that was alluded to I think). The news was out that 8 out of 10 couldn't qualify for a loan. The rest were going to slide into the Pacific someday. I still kick myself for that opportunity lost.

[lpazos]

Hi,

Yes, we certainly will be seeing more of this to come. Just recently an entire condo conversion project went into foreclosure as one of the largest foreclosure filings Palm Beach County has seen in a very long time.

ON the upside foreclosures provide great housing alternatives for fist time home buyers.

If anybody is interested, here is a great site for Florida Real estate: http://www.foreclosurelistingsFL.com

[RESteve]

Ack! I just sent a referral out to Naples. I hope the market provides that they can sell their home in a timely manner.