Sunday, March 30, 2008

Florida auctions

Florida is a year or two ahead of Southern California in it's real estate bust. It was 2005 when things slowed in Florida, 2006 the prices started to slip and 2007 just continued the fall. In SoCal were were still seeing increases in the median through mid 2007 in many areas. True, some of that was due to the mid and low priced home sales grinding to a near halt. Our price declines have primarily happened in the last year. Florida has been tanking for at least a year longer than us. What does this have to do with anything you ask? Well, check out this article from the Herald Tribune about an auction in Fort Lauderdale.

The auction, which was anticipated to take four to five hours, wound up clocking in at barely two. Two-thirds of the property on the block failed to garner a single bid.

The first property out of the gate was not a good omen: the auctioneer tried opening the bidding for 1850 South Treasure Drive in Miami Beach, a waterfront lot, at $1 million.

There was no response.

He then tried to get something started at $500,000, but again, no dice. $250,000? Still dead air. $100,000? Silence. At that point, DeCaro threw in the towel and passed the property by.

"Please come see us afterwards," he told the crowd, adding that staff from DeCaro and Sotheby's would be around after the event to field offers and potentially facilitate further negotiations.

And so it went for the majority of the properties on the block.

A six-bedroom, six-bath home in Fort Lauderdale's Coral Ridge County Club previously listed at $5.9 million couldn't fetch a bid for $3.5 million. A 3,100-square-foot penthouse on Williams Island in Aventura was listed for $5.6 million and did not even get anyone willing to start bidding at $2.5 million.

The day was not without its sales, though. A number of Wilton Station brownstones and condos that were absolute provoked some heated bidding wars. Five brownstones priced in the $500,000-to-$600,000 range all garnered bids, ranging from $230,000 to $275,000.

How long before we start to see things like this in SoCal? Right now there are still quite a few people buying. These are the folks that are afraid the prices will take off again and they will get "priced out" again. Once these guys are gone we will probably see stuff like this Florida auction. Florida is already in the Panic area of the graph. In Cali we are still mostly in the Denial area and that's a long way from the bottom.


Anonymous said...

We went out looking at houses in Orangecrest today. There were very,very few open houses and the ones that were open were asking $500,000 and UP! These were occupied homes, of course.

Who is buying at these auctions?? Do they really have 10%+ down in the bank?

Prices seemed to have stopped falling (at least the last 2 weeks or so).

Feeling a little nervous.

Anonymous said...

I agree golfer_X that we are still in denial, especially in the IE. I am watching homes decline by the $100K in the Rancho Cucamonga areas and you have folks out there saying now is the time to buy. Unfortunately, I was a victim of the 1989-1991 drop, and it took several years for homes to stop dropping and prices to stabilize. And I think this time around is much worse than the 89/91 problem. I get several comments from folks "can't happen in RC-will not get any cheaper, need to buy now or you lose". I tell them they are in "fantasy land"- and I think Disney Land no longer does well with "fantasy land". Folks neeed a reminder that we in the IE are pegged as one of the poorest counties in southern california-how can we pay $$$millions for a home we should be paying $250K?

golfer_X said...

I took a few hours Sat morning ahead of my 1:30 tee time to scope out any open houses. I noticed the same thing, nearly none. The couple that I stopped at were priced at "shoot Coke out your nose" high. I actually laughed out loud at one price.

The price declines have not stopped. A few of the houses I've been watching were reduced again last week. The REO's continued to come onto the market cheaper and cheaper. We are still firmly in the Denial phase and 95% of the new listings are priced in fantasyland which is why only the other 5% are selling.

Anon 7:53, I also got caught in the last bust. Bought in 88 for $110k saw the house skyrocket in value to about $180k in two years and then fall right back to about $110k. It stayed there until about 96 or 97 when it started to finally go up again. I didn't really care since the payments were affordable, I liked the house and I didn't buy it as an investment. It was my house and all I wanted to do was get it payed off. This time is WAY worse. Prices are two or three times more out of whack than the last bubble was. They will come down, and they will come down a lot more than most people realize. Everyone seems to think $300k is a cheap house these days. Hell 6 or 7 years ago that would have bought you a mansion in most of the IE.

Anonymous said...

We went out looking at houses in Orangecrest today. There were very,very few open houses and the ones that were open were asking $500,000 and UP! These were occupied homes, of course.

Those people are still dreaming. Look at REO houses. I don't think they have Sunday open house.

PS said...

I looked at several REO open houses on Sunday. One was freaking thrashed inside the other two were decent but still overpriced by at least 50K.

InlandEmpireX said...

I totally agree that South Cali is in the denial phrase now, if that graph is credible, then it might take us a while to get to the bottom..

Anonymous said...

There's plenty of denial out there. On my street there are 3 houses for sale. One is a REO property, one is a short sale and the other (my next door neighbor)is a regular sale. The REO property is listed for $349,000 the Short Sale is listed for $315,000 and my nieghbor, take a guess! your not even close. They have listed at $695,000. I talked to them last weekend about it. They are pissed but actually think they will get an offer. There house is very nice its like a model home inside and out. they think someone will come along that wants a finshed house, ready to move into. I dont want to argue with them but jeez get a clue people. The last comperable sale near us was $345,000 and that was 4 months ago.

Anonymous said...

SoCal realturds going to try to revive the now defunt market with a 'home buyers fair'. LMFAO. I might go just to pick some fights.

Anonymous said...

Bus Tours of Forclosed Corona Homes

My wife and I saw this sign today as we were driving to lunch. Are they trying to create an artificial bottom to the bust by making it seem like now is the time to buy?
Sign up for your tour today!

This has got me thinking...
Question: If the price of homes continues to go down to the levels everyone here says they will, the banks that have (and will continue to acquire) them will stand to loose an insane amount of money. We might just have a "lender bust".
So looking at the big picture...there seem to be two potential outcomes to this: 1) increased Gov't bailouts, and in lieu of this, 2) hell on earth in the Inland Empire.
So here's the question. How bad will they let this get? We all want the low home prices (buyers), but doesn't this create an economic plague for the IE?
Thoghts? Clarification?

golfer_X said...

The FDIC is starting to hire back "old timers" from the savings and loan fiasco so that they will have plenty of experienced help when the banks start falling. I've read they are expecting 100+ bank failures over the next few years.

The government does not have enough money to bail this mess out. I would not be surprised to see bailouts for banks and corporations. They've done this in the past and will surely do it this time. Bailouts for borrowers are far trickier. There are millions of borrowers that are upside down. Bailing them out would infuriate those people that did not take on more than they could afford. They could not handle the Katrina mess and that was only one samll part of the country primarily one city. Do you really think they could handle this mess?

The gov can help by letting the price correction happen. They should help the banks so they don't go belly up. Tax breaks, loans whatever. Make low interest loans available to qualified borrowers like they do after a natural disaster might be a way to get the market moving again (but only after the prices have corrected).

The longer the lenders and the government drag this out the worse it will be. If prices dropped another 30% in the IE tomorrow there would probably be a huge wave of buyers. Those buyers would then drive the economy by buying furniture, doing home improvements and buying all the other stuff new owners like to get. But if they drag the decline out over 5 years the rest of the economy will suffer. Businesses will close, construction workers will go broke and the cascade effect will take out other businesses not connected to housing. That's my biggest fear, that the gov will tank the entire economy by trying to prop up home prices.

But on a happier note I got my 4% raise, unfortunately inflation is running about 10%......

jack said...

True, some of that was due to the mid and low priced home sales grinding to a near halt.

auto auctions