Friday, November 24, 2006

South Florida Prices Falling Like Rocks

According to the Sun Sentinel, prices of homes in South Florida continued to steamroll downward in the third quarter of 2006.

"The median price for existing single-family homes in Palm Beach County was $380,900, down $19,000, or 5 percent from the third quarter of 2005, the Florida Association of Realtors said Monday. Broward's median of $371,100 dipped 3 percent, or $12,800.Quarter-over-quarter sales declined 49 percent in Palm Beach County, the biggest slide in the state. Sales fell 27 percent in Broward."

"Some real estate analysts say the housing market could remain soft for another year or more. But agents in Palm Beach and Broward counties say they're encouraged by a surge in sales contracts during the past three weeks.Bob Goldstein, chairman of the Realtors Association of the Palm Beaches, said huge increases in property taxes and property insurance premiums still are hurting potential sales. But he's counting on Gov.-elect Charlie Crist and state legislators to address those issues."

As usual, the head Kool-Aid Drinker himself "David Lereah, chief economist for the National Association of Realtors, was similarly optimistic. He said in a statement Monday that buyers nationwide are being enticed by the lower prices."Given a positive economic backdrop of lower interest rates and job creation, we expect sales activity to pick up early next year," he said."

Now, I have to tell you, if you are not living here in South Florida, that sales have stopped- simply stopped. Regardless of the spin that the media and the NAR want you to believe, in the REAL world home prices are being chopped some 20% or more in order to sell. Despite the NAR's shameful forty million dollar ad (scam) campaign, desperatley trying to create a sense of urgency, most buyers have caught on that all they need to do is WAIT and prices will continue to drop.

IF you think that the markets have gone down, wait until next year. We have still not seen the two trillion in ARM resets, the insurance renewals, or the new taxes hit the market. This market is not going to "bottom" until 2008 or 2009. There is almost a four year VISIBLE supply of houses to work through.

As far as Learah, his statements are pure nonsense. I doubt anyone, even the milions of Realtors actually believe him.

In the interim, prices will continue to reflect the extreme overvaluations that exist in the market. I would not be surprised to see a return to 1999-2000 prices, and that means another 30% or so. Look out for the falling rocks.

17 Comments:

At 4:39 PM, Anonymous JohnVosilla said...

I think another 25-30% takes us down to late 2003 levels for the average house. That is probably about all I expect.

Condos will be much worse especially the overbuilt high end in marginal areas at the edge of our downtowns.

 
At 6:08 PM, Blogger Rob said...

I am the treasurer of a high-end condo on the water in Miami. I think that one of the biggest problems is going to be the loss of monthly maintenance payment revenue as unit owners go into foreclosure. As revenue drops, building amenities like valet parking, pool boys and maintenance men will have to be cut.

Established condos that have few non-resident owners will be okay, but the new buildings, particularily those with large numbers of non-resident speculator owners (like the condos on Biscayne Blvd.) are going to be in big trouble.

 
At 7:38 PM, Blogger AnalysisGuy said...

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At 11:33 PM, Blogger AnalysisGuy said...

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At 4:16 PM, Blogger AnalysisGuy said...

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At 9:16 PM, Blogger Jack Doueck said...

Not all Florida Real Estate is in the dumps.

Stillwater Capital Partners just purchased a 30 story condo tower on the water in West Palm Beach Florida for a good price ($36,500,000) and we plan to invest about $300,000,000 in West Palm Beach over the next 3 years.

Not all Florida real estate is alike and we believe there are great opportunities available to the patient investor.

The Stillwater Asset Backed Fund was the vehicle through which we
found the properties (we were approached for loans) and now our real estate division is very excited and optimistic on the prospects in West Palm Beach.

In 2 or 3 years we expect to sell Waterfront condos at more than $900 a square foot.

We are building 4000 square foot Ultra-luxury apartments with incredible amenities.

 
At 9:13 PM, Anonymous Anonymous said...

We've been renting in Parkland for three years watching the market. We ae seeing some good drops in prices already but nowhere near real value. What makes these renters even happier is watching them build yet two more subdivisions to compete with Heron Bay. It won't be pretty.

 
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