Why is no one too concerned about the failing sub-prime mortgages? Ownit Mortgage Solutions and Sebring Capital Partners closed this week...
All you guys who stated that the baby boomer population will move down to Florida to replace the current elderly retirees may not be correct. You should read the following links: http://www.forbes.com/2002/07/19/0719home.html "Nearly 40% of all boomers surveyed by the AARP said they "could not imagine [themselves] retired," and only 16% plan to stop working during their retirement years. They're stubbornly resistant to the idea of moving in general and are less receptive to the idea of moving into a smaller property." "Another study from the AARP (previously known as the American Association of Retired Persons before the name was dropped in 1999 to avoid reference to the "r" word) found that only 21% expect to move to a new geographic area, and only 35% expect to scale back their lifestyles during retirement." "Although many boomers are probably living in an empty nest for the first time--assuming they successfully kicked their kids out of the house or sent them off to college--there is no evidence that boomers are even beginning to downsize, according to Kermit Baker, a senior research fellow at Harvard University's Joint Center For Housing Studies." "Around 90% of all households would like to stay in their current home, and it's only financial or health issues that prevent people from doing that," Baker says. Instead, baby boomers have become prodigious remodelers. In fact, they are so eager to stay put and remodel their homes that the Remodelors Council of the NAHB rolled out a special program to allow remodelers to undergo training to become--believe it or not--a "Certified Aging-in-Place Specialist." These are remodelers that are "specially trained to do the kinds of home modifications homeowners want and need as they grow older in their homes," said Dan Bawden, of the NAHB Remodelors Council Board of Trustees in Houston, Tex. Remodeling Magazine's 2001 "Cost Vs. Value" study looks at the average cost of 16 different type of remodeling jobs across the country and found that while remodeling certainly improves a home's resale price, homeowners rarely recoup total costs of a job. (They can, however, make back somewhere between 60% to 80% on most jobs.) If the average homeowner can't recoup the expense of remodeling, it's not likely that baby boomers will be able to recoup the expenses of such "aging-in-place" conveniences as handrails, ramps and stair-escalators as do older homeowners that don't have the broad appeal of an upgraded kitchen. By staying put, though, boomers risk leaving themselves financially exposed to both economic and real estate downturns. While many of them may use their home to refinance nest eggs that evaporated in shares of drkoop.com and Qwest, if the economy continues to decline, they could even be forced to sell their homes in order to finance their golden years. But by carrying too much debt on their homes, many boomers run the risk of undermining the value of their property and further eroding their nest eggs. To insure against such an outcome, boomers whose primary asset is their homes may want to consider selling sooner rather than later. Not only do they no longer need the space, but they may find themselves even sooner needing the cash. ******************** So now I would like to do an informal survey. Does anyone here over the age of 55 plan on moving down to Florida like the retirees of the past to a sedentary lifestyle?
Here is another article on how Baby Boomers are planning to retire "in place". http://industries.bnet.com/whitepaper.aspx?&scname=Specialty+Contracting+and+Remodeling&docid=102079
See, that is a large part of the problem. You think the Florida real estate market is languishing, take a peak at Ohio, Indiana, Michigan, Wisconsin and certainly parts of Illinois. It is all a chain of events. Lack of liquidity in one locale effects the liquidity in another. Obviously, a large part of the east coast of Florida is from the Northeast. Property was easy to move in that area in recent years. The west coast of Florida has alot of Midwesterners. Im certain that played some part in the dramatic panicked selling at auctions in Naples. If you cant move your 4000 Sq Ft house in Bloomfield Hills, MI, you really dont want to be paying two large mortgages and tax bills simultaneously. There are alot of these little nuances that are playing a bigger part in this developing story. Why dont we mention skyrocketing property taxes for the recent buyers? What about property insurance? Neglible in some regards during a skying property market. A death sentence during a languishing, some might say seriously downward sloping market.
While there are a bazillion houses on the market in all of Florida, the prices haven't dropped much in Central Florida. I know South and Southwest Florida have taken a pounding tho. Central Florida's economy has been insane for the last 15 years... when I last looked there were around 50,000 unfilled jobs, in nearly every field, so the real estate market would be least hit. I haven't looked in the last few months, but it was #1 in fastest job growth in the US at some point this past year. South Florida and the coastal retirement communities might have it bad, but then, who'd buy a house in Naples or Sarasota just to retire? The prices for a 2 bedroom started at $350,000 2 years ago. Of course, those are probably the fastest dropping of the real estate. I've posted long long long boring rationales this whole month about real estate dropping and continuing to drop for the next 2-5 years, so I'm not going to repeat it here. But anyone saying that housing has bottomed is delusional or is trying to pump and dump housing and financials. That's not to say they'd be unsuccessful at pumping and dumping or forcing a market move on new traders who believe the news for lack of better tools. We all know that some writers/newscasters can cause a stock to spike, not to mention market manipulators who have much to lose when the reports come due, and it looks bad, so who knows what housing stocks will actually do. But IMO, anyone who falls for it is taking a huge risk if they aren't swing trading and ready to get out very very fast. I'm not going near housing with my money and I think those who do are nuts or foolish.
Just though you should know Homebanc had it largerst month for mortgages ever and they lend primarily to buyers in the South and Florida (they are publically traded by the way.) I just got that info because I am setting up a title company. First American title also saw a significant increase in activity. No predictions but I am beginning to think this is a very interest rate senstive market.
I'm very confused. On one hand I read of tumbling prices in Naples and then I read stories like this. "Naples Realtor Bruce Babcock today cheered the sale of a $14.9 million home in Port Royal. Despite a downturn in the local real estate market, luxury homes in Port Royal are selling for more than they did a year ago." http://www.naplesnews.com/news/2006/nov/30/port_royal_home_sells_149_million/?latest Prices in Naples west of Hwy. 41, (where the homes in the NYT story are located) are buoyant. I doubt they're on last years highs but certainly SOME are. There's many a humble home in Naples trading for ten times what they were 25 years ago. Sounds outrageous until you remember that the DIA is like 14 times higher. Vulture makes a valid point about the cause and effect of weak northern markets impacting demand in retirement destinations. In the mid range segment of Florida that's clearly true. If paying X in Florida is predicated upon getting X up north then if no X, no swap. However the higher income home buyers who support Florida's coastal communities are as likely to be "lotto" winners from their equity portfolios or inheritances as they are from real estate. I don't think many CME members are reigning in their ambitions in Florida because the place in Glencoe (that he's up 4x on) is still unsold. At the end of the day all of these markets, i.e. higher stocks, bullish commodities, higher home prices, weaker dollar, lower 30 year yield, are inextricably linked.
There is one advantage to Florida: Its population is INCREASING by 400K people per year. That is a lot of extra people who want to live somewhere. With the current trend the population should double by 2070....