Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Thanks for sharing. I'm in the Tampa market and prices here have dropped substantially and continue to go down - it's based on market segment but it's not quite as deep as it is in S. Fl I've been told. I think we're only down by 32% last I checked. There remains a 22 month supply of product and with tighter lender restrictions the velocity of sales is slowing.
I worked in the S & L industry and then the RTC in the early 90's when the US was recovering from the TRA of 1986 and the collapse of the commercial/investment real estate market. It took 9-11 years (depending on who you ask) for the market to recover but it also made a lot of investors very very wealthy.
This market is a little different as I see it because it's at the consumer level and there are some benefits and liabilities of this fact. First the benefit is that there is always a segment of the population aging into the buy sector to absorb product (unlike investment property that must have a viable reason to exist that is profit driven and very sensative to demand) - but this consumer componant will contribute to the recovery - as long as there is achievable financing for them to get started. This demographic however doesn't have a history of saving so they tend to be behind the curve in the department of equity - this could delay their contribution to results. Coupled with this aging-in population is the affordablity curve. There's certainly ample inventory at this point and home ownership has historically hovered around the 60% mark in the US (62% actually) and as over supply drives prices down individuals who previously could not buy a home will be able to purchase a home that just 3 years ago might have been out of reach. So there are definately some segments that will benefit from what's going on in this market.
The down side of course is that so many people have lost a great deal of equity in their homes that just 3 years ago was quite high and many of their loans exceed the value of the asset that the loan is collateralized with. It's clearly affected the banking industry and the secondary mortgage market that purchased these mortgages - investment groups that are now not realizing the return that their investors relied upon. It's affecting our economy in ways few predicted.
Couple this with the spin economy that usually benefits from a balanced real estate market - the realtors, mortgage brokers, insurance agents, title companies, inspectors and contractors not to mention home builders that now spend little or no dollars and have laid off workers down to support positions related to their industry - there are now fewer dollars to fuel the economy - which is contributing to the downturn. Businesses move out of their lease space which further effects investors who are now not receiving rent that they were before - driving down the income on investment properties which can put that segment at risk as well - further impacting the lending industry which is already severly compromised.
What's the solution? Flow and time. There needs to be an availablity of money again in the economy. But regulators don't want us back where it was. They want it "stable" - whatever that means. It should mean that losses are shared risk and that borrowers are qualified. There are certianly in roads being made to alter who can get money and under what circumstances.
Recovery is going to take time. In our market a 5-6 mos supply of inventory is a stable market. But, once we do get to that point, since there's been an almost complete halt to new construction permits issued for obvious reasons, the market will have an quick upswing when it will become more of a seller's market again unless new homes are also eased into the pipe. Believe me builders are watching this closely and lots are plentyful so it won't be a window that stays open long - maybe 90 days.
Your article is right on IMO regarding pricing with the market will work, it's just almost always a shocking number for the owner. There is no other other real option except to wait. We'll know where the bottom is after it's past.
It appears from just skimming through the article it took a couple of anecdotal examples to illustrate the entire market. Because 2 or 3 properties took big haircuts doesn't mean nothing is selling. Granted I don't know the S.Flo market but I also have to wonder if a home has been on the market since 2005 if it wasn't grossly overpriced to start with using current comparables. Now I know the market in S.Florida has gone down but I didn't see anything particularly special in that piece.
I could tell you about a home I know that has been on the market for at least a year and a half that is still overpriced. It will be on the market for another year unless they reduce their price. That could be anecdotal and make it seen the whole market is that way in my area but it's not the case.
It appears from just skimming through the article it took a couple of anecdotal examples to illustrate the entire market. Because 2 or 3 properties took big haircuts doesn't mean nothing is selling. Granted I don't know the S.Flo market but I also have to wonder if a home has been on the market since 2005 if it wasn't grossly overpriced to start with using current comparables. Now I know the market in S.Florida has gone down but I didn't see anything particularly special in that piece.
I could tell you about a home I know that has been on the market for at least a year and a half that is still overpriced. It will be on the market for another year unless they reduce their price. That could be anecdotal and make it seen the whole market is that way in my area but it's not the case.
I know exactly what you are saying.
There is one on the market here that started at $7M 3 years ago, is at $3.5M now and will probably go for $2.5 to $2.8. It will probably be used as an example of prices falling drastically even though they probably only have $1.5M into it.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
