UF Survey on Real Estate

[GoodWitch58]

http://www.cba.ufl.edu/fire/realesta...s/findings.asp

"It doesn't look like prices are going to fall anymore."
Wayne Archer, director of UF Bergstrom Center for Real Estate Studies.
Interesting data...

[Rambunkscious]

This is great news!!! Just in time!!! Bottom is in!

[GoodWitch58]

yeah, pass the word to everyone!

[SHELLY]

It's also good news that might aid UF's quest for students to enroll in its Master of Science in Real Estate (MSRE) Program too! (Application deadline is April 15th.)


"For the survey, UF’s Survey Research Center asked a series of questions of 318 industry executives, real estate lawyers, market analysts, title insurers, financial advisers, market research economists, real estate scholars and other experts in the field. This represents an increase over the 183 respondents in the last survey."

Seems they failed to survey buyers.

[robertsondavies]

It doesn't seem that enrollment in the Masters of Real Estate program would be going too well, unless they can convince enrollees that it's "all up" from here.

American barbers surveyed declare that Americans need an extra haircut per year.

[TooFarTampa]

http://www.cba.ufl.edu/fire/realesta...s/findings.asp

"It doesn't look like prices are going to fall anymore."
Wayne Archer, director of UF Bergstrom Center for Real Estate Studies.
Interesting data...

Boy you are on the ball goodwitch. There was a good article about this in the Business section of today's St. Pete Times.

Dr. Denslow, who is quoted in the story, is a highly regarded UF economics professor, by the way. The most interesting quote to me:

"We think prices will rise about 2 percent a year over the rate of inflation after this current period of adjustment," Denslow said. "I have to confess I don't know how long the adjustment will last."

So it pretty much says what many of us have been saying all along: Short-term things are tough, but long-term everything will be just fine.

http://www.sptimes.com/2007/03/10/Bu...et_prop_.shtml

[robertsondavies]

"The Survey of Emerging Market Conditions targets the experienced leadership and professionals of Florida's real estate development and investment community to gain insights and market intelligence on matters of fundamental importance to real estate practitioners and policy-makers across Florida. "

hmmmm...... let's survey the developers and others with their livelihood on the line in real estate - let's see if they're optimistic about their livelihood; let's see if they predict that prices will rise on assets they currently hold, and hope to sell at the highest possible price to someone else in the future, even it that means taking a loss, for some.

[Just_In_Thyme]

It doesn't seem that enrollment in the Masters of Real Estate program would be going too well, unless they can convince enrollees that it's "all up" from here.

American barbers surveyed declare that Americans need an extra haircut per year.

Whether the market is at the top, bottom, or in the middle what does that have to do with enrolling in an educational program?

[TooFarTampa]

Actually, let me correct myself. The Times article was in regards to a report released by UF's Bureau of Economic and Business Research.

Here is a link to it. It is much more detailed and rooted in economics than the page goodwich linked to. I have not read it yet.

http://www.bebr.ufl.edu/FloridaFocus...us3_2_2007.pdf

[robertsondavies]

Thanks for the link to the other U. Florida paper. I like how the 8 page paper, which you deem as really pithy, sums up the bearish real estate argument in one paragraph... on page 19 the "real estate can go down" view is easily dismissed, although it does mention that there is this study by a school called Harvard University, which their economists say real estate could be headed for larger than usual downturn, due to the larger than usual and historic run up in prices due to credit availability, and low rates.

The U. of Florida economists dismiss Harvards economists views as non concencus.

Harvard University, to my knowledge is not yet handing out Minors in Real Estate for undergraduates, or Masters in Real Estate (MRE) to Graduate Students as is the University of Florida.

[TooFarTampa]

Thanks for the link to the other U. Florida paper. I like how the 8 page paper, which you deem as really pithy, sums up the bearish real estate argument in one paragraph...

You are putting words in my mouth. I said I hadn't read it yet. I still haven't. (I am caring for my two youngest at the moment and will wait until this evening to read it.) I said it is more detailed and rooted in economics than the other link. A quick glance will tell you that it is.

If you are going to be the devil's advocate, great. That is actually welcome as long as you are accurate. But don't be a troll and put words in others' mouths, make assumptions or jump to conclusions.

[Rambunkscious]

We all know that Harvard University is almost without peer.

However, the University of Florida is closer to the Florida real estate market than is Harvard University.

I would believe the University of Florida before I would believe Harvard University on this one particular issue.

[Rambunkscious]

Kelly Bergstrom, who the UF RE school is named after, is primarily in commercial RE. I think getting into the graduate program would be a home run for anybody who is interested in RE.

[SHELLY]

Those who think stories that say Florida RE has bottomed and is back on its way up are "good news," may find they actually aren't, since there are still numerous conflicting stories about the uneasy state of real estate markets (booming vs bursting, bottom vs still sliding, fat inventories, credit tightening, etc.) state- and nation-wide. "Good news" stories only serve to make sellers stick to their unrealistically high 2005 prices, while the contrarian stories keep buyers sitting on their bag o' cash on the sidelines. That leaves the folks that service the industry (realtors, mortgage, title, appraisers, etc.) waiting, waiting, and waiting for someone to blink. Result: Not much moves.

"Good News" stories in a declining market make realtors lives tougher when it comes to convincing their clients to come down off the roof with their asking prices.


.

[Bobby J]

Those who think stories that say Florida RE has bottomed and is back on its way up are "good news," may find they actually aren't, since there are still numerous conflicting stories about the uneasy state of real estate markets (booming vs bursting, bottom vs still sliding, fat inventories, credit tightening, etc.) state- and nation-wide. "Good news" stories only serve to make sellers stick to their unrealistically high 2005 prices, while the contrarian stories keep buyers sitting on their bag o' cash on the sidelines. That leaves the folks that service the industry (realtors, mortgage, title, appraisers, etc.) waiting, waiting, and waiting for someone to blink. Result: Not much moves.

"Good News" stories in a declining market make realtors lives tougher when it comes to convincing their clients to come down off the roof with their asking prices.


.

You are dead on here Shelly! We are having a surge locally because folks "were" getting real on the prices but lately every listing appointment the sellers are thinking they can get crazy prices. Some are catching on but alot of them do not get it....

[mf]

However, the University of Florida is closer to the Florida real estate market than is Harvard University.

that only makes UF more suspect!

[mf]

You are dead on here Shelly! We are having a surge locally because folks "were" getting real on the prices but lately every listing appointment the sellers are thinking they can get crazy prices. Some are catching on but alot of them do not get it....

also, few developers here understand the buyers. i sense you get alot of people who make assumptions about what people with deep pockets want, since they have no real life personal or professional experience with that demographics. particularly in a luxury/second home market. the lack of business sense in developers here is shocking. i'm not sure if it's ignorance or arrogance or a combination.

but this sense of entitlement will not sell homes. when they've used every square inch of land to turn sowal into a cluster of "suburbs on the sea" it will be too late when they realize that they aren't worth anything without value of amenities, local color or infrastructure.

[SHELLY]

You are dead on here Shelly! We are having a surge locally because folks "were" getting real on the prices but lately every listing appointment the sellers are thinking they can get crazy prices. Some are catching on but alot of them do not get it....

And the ones who "don't get it" also "don't get" the concept of how carry costs eat away profits as their properties linger on the market.

Another month of taxes; another month of insurance; another month of interest payments; another month of maintenance and upkeep; another month of utilities; another month of HOA fees........death by a thousand payments.


.

[Indigo Jill]

but this sense of entitlement will not sell homes. when they've used every square inch of land to turn sowal into a cluster of "suburbs on the sea" it will be too late when they realize that they aren't worth anything without value of amenities, local color or infrastructure.

Sowal will never have "suburbs" - suburbs are the districts located immediately outside a city (or town). That said, all of the state owned forest will minimize the sprawl one sees in a suburbarn area. Even though Destin is choke full and almost entirely built out, there is only so much land so it, too, is minimized. Go to Atlanta and you can drive an a few hours through the "sprawl".

Amenities ... I've been here now almost 7 years and we are slowly getting the ammenities. And infrastructure is being worked on as well...maybe not up to everyone's standards, but it is.

[Bobby J]

I think the SoWal area will be fine. Jill has very good points. Most of my clients are quite content with the infrastructure. They actually like less... The problem we run into is the price. Which seems to be working out. Or as Shelly says, "it will" work its way out. The buyers will win this battle. The mortgage clock is ticking and those that have to get out will see that the only way is to lower the price. The buyer will come. The problem is the seller tends to think we need to change the way we are marketing or advertising. The bottom line is price!

[TooFarTampa]

Curious, Bobby, at what price point are properties moving right now, in your experience. mid or late 2003, mid 2004 ...?

[bdc63]

That article doesn't address what I think to be the single biggest risk to housing prices ... lending standards and availability of money to be lent.

Everyone can see it happening in subprime ... there is barely a subprime market today, as everyone has raised their minimum FICO score and eliminated all the "exotic" type loans. Many people suspected that this would happen, but the speed at which it is occurring is UNREAL. Economic events usually happen at glacial speed, but this has been a steamroller.

Most analysts on TV say that it is contained to 'subprime'. I suspect that a more correct statement is that it is contained to "exotic" loans, which means we'll see the impact in pricey neighborhoods as well as entry level.

So, I guess I see the dominos falling like this:

(the first 4 have already fallen): RE market boom cycle ends; subprime loans default; secondary market that buys those loans dries up; lending stardards tighten on subprime; the more exotic alt-a and prime loans start to default (I/O, Neg ARMS, ect.); secondary market for exotic loan investment disappears; lenders significantly tighten all loan products while they lick their wounds; housing prices begin to fall such that the "median" homebuyer can afford the "median" home with the mortgage products that are available; the next time you go to apply for a loan you find yourself looking across the desk at a stern banker with a pile of pay stub rather than at a 22 year old kid with a wink and a smile in a strip mall.

[Bobby J]

That article doesn't address what I think to be the single biggest risk to housing prices ... lending standards and availability of money to be lent.

Everyone can see it happening in subprime ... there is barely a subprime market today, as everyone has raised their minimum FICO score and eliminated all the "exotic" type loans. Many people suspected that this would happen, but the speed at which it is occurring is UNREAL. Economic events usually happen at glacial speed, but this has been a steamroller.

Most analysts on TV say that it is contained to 'subprime'. I suspect that a more correct statement is that it is contained to "exotic" loans, which means we'll see the impact in pricey neighborhoods as well as entry level.

So, I guess I see the dominos falling like this:

(the first 4 have already fallen): RE market boom cycle ends; subprime loans default; secondary market that buys those loans dries up; lending stardards tighten on subprime; the more exotic alt-a and prime loans start to default (I/O, Neg ARMS, ect.); secondary market for exotic loan investment disappears; lenders significantly tighten all loan products while they lick their wounds; housing prices begin to fall such that the "median" homebuyer can afford the "median" home with the mortgage products that are available; the next time you go to apply for a loan you find yourself looking across the desk at a stern banker with a pile of pay stub rather than at a 22 year old kid with a wink and a smile in a strip mall.

I do not really feel this pertains to the SoWal market. Especially 30A Area. Majority of the buyers can close cash if they need to. I still am seeing some competitive loans out here.

[SHELLY]

I do not really feel this pertains to the SoWal market. Especially 30A Area. Majority of the buyers can close cash if they need to. I still am seeing some competitive loans out here.

Oh but it does. The care and upkeep of SoWal/Destin area is totally supported by service workers (many of them barely getting by on meager wages) who depend on subprime mortgages and refi's. Additionally, lots of the visitors and even some high-powered residents' well-being is teathered to the real estate/retail/tourist market whose care and feeding depends on the availability of easy money and cheap labor.

It may be true that folks with "means" are in a better position to sit on properties and absorb losses as the market "corrects"....but that can also mean they are in a better position to leave their money on the table, walk away, and add the property to the growing inventory too.

.

[bdc63]

And how about all of the flippers that are sitting on properties and leveraged to the hilt, waiting for the market to turn? I'm going to go out on a limb and guess that none of them paid cash or put 20% down on a 30year fixed.

I actually think that in this market correction, both the filthy rich and the dirt poor will come out at par. It's the middle class and the upper middle class that are over leveraged (and need a constant supply of easy money) and it all could come down like a house of cards.

My antidotal story: The country club that I belong to, several families have "quit' since the first of the year (walking away from a substantial upfront fee), and the wives are suddenly going back to work. The entire time I've been there, I can't remember anybody ever leaving until now. People have been living beyond their means, and acting like the easy money would always be there ... its time to pay the piper.

[Bobby J]

Curious, Bobby, at what price point are properties moving right now, in your experience. mid or late 2003, mid 2004 ...?

Really hard to get a read on it. Often in the real estate section people post comments that seem across the board. It is almost as if they get their info from MSN.com. In some areas the market was way under value and it will go only go back to 2005. In some cases it was already too high so it may go back to 2003. It is impossible to get an exact read on an entire market. I know we are selling Real Estate. I know it will be better then 2006. I know it is not as bad as many of these boards portray. The season is just starting and their are allot of folks in town wanting buy Real estate in SoWAL. Price it right and they will come.

[Bobby J]

Oh but it does. The care and upkeep of SoWal/Destin area is totally supported by service workers (many of them barely getting by on meager wages) who depend on subprime mortgages and refi's. Additionally, lots of the visitors and even some high-powered residents' well-being is teathered to the real estate/retail/tourist market whose care and feeding depends on the availability of easy money and cheap labor.
.

This debate has been going on since 1980. It seems "we" workers always find a place to live.

[SHELLY]

This debate has been going on since 1980. It seems "we" workers always find a place to live.

In the 1980's and early 90's a bunch of kids from NJ or NY would crowd into a Mom & Pop motel in Destin or PCB and work at the bars and resturants, make a good bit of cash, pay minimal living expenses and head back up north when the season ended. Life was good.

In the early 80's there was not very much between where Destin ended and PCB began except for Seaside and some really great seaside towns. Living was cheap and locals were able to easily fill the jobs. Life was good.

Silver Sands opened in the early 90s and things took off from there. More and more service-worker-sucking businesses popped up as working-class neighborhoods were bought up and turned into "upscale" subdivisions and condos.

Lower income service workers were forced out of the South Walton County area to more affordable areas like FWB and PC which also experienced a retail/restaurant boom of their own--providing service-sector jobs so folks living in those towns didn't have to commute for hours on steamy, dangerous, traffic-clogged roads only to make a few shekels more per hour.

In the last 5 years the disappearance of affordable housing in SoWal has made it a no-man's land for low-paid service workers. With the increase in property prices, gas prices (again), insurance, property taxes, and stagnant wages, FWB and PC are also finding it difficult to fill all the jobs.

I've lived through 1980 here...it IS different this time. Unless someone can turn back the clock, the chances of businesses finding enough good, reliable and affordable people to fill all the current and growing number of service sector jobs that support life and tourism in SoWal will be impossible.

[Bobby J]

This debate has been going on since 1980. It seems "we" workers always find a place to live.

[Mango]

Oh but it does. The care and upkeep of SoWal/Destin area is totally supported by service workers (many of them barely getting by on meager wages) who depend on subprime mortgages and refi's. Additionally, lots of the visitors and even some high-powered residents' well-being is teathered to the real estate/retail/tourist market whose care and feeding depends on the availability of easy money and cheap labor.

It may be true that folks with "means" are in a better position to sit on properties and absorb losses as the market "corrects"....but that can also mean they are in a better position to leave their money on the table, walk away, and add the property to the growing inventory too.

.

Shelly, I would be curious to know how many subprime mortgages were made in the Sowal market. I would be be willing to bet an extremely small percentage. I never personally did retail subprime loans myself (did not like working with that type of Borrower), but did buy them for Banks a looong time ago, and the majority of subprime loans were made to individuals purchasing in low income neighborhoods, or owned a house free and clear (inherited) and had credit issues, etc.
I do not see Sowal as being that type of market.
Perhaps in less expensive markets like Fort Walton Beach or north of Sowal, but not sowal.
Subprime loans should really be band-aid loans until they can qualify for prime mortgage.(Yes, I know, you'll say that brokers just wanted to do the loan, who cares if they pay or not)
The folks who do have these types of mortgages in the service industry who took them in the last 3 years (since 3/1 arms were mostly offered, 30 yrs were available, but why take it if you plan to clean up your act so you can refi) will be the ones to get hurt trying to refinance now.
Before that, there should be sufficient equity to refinance into a prime loan considering if they paid on time, and have no other major derogatory credit issues. I am still betting though, that they are a small minority of the working class. It's not like you saw this huge influx of service workers migrating to the area to work over the last 3 years.

I have some friends who work at HSBC, and I am going to see if I can get some information from them regarding where the largest defaults are occurring. I would be willing to bet in the Florida market it will be the Miami -dade area as opposed to the sowal/destin.

[John R]

I have some friends who work at HSBC, and I am going to see if I can get some information from them regarding where the largest defaults are occurring. I would be willing to bet in the Florida market it will be the Miami -dade area as opposed to the sowal/destin.

or possibly orlando. it was amazing to see, while i down there last week, signs at intersections offering "must sell this week"... this was in the windermere area.

[Bobby J]

Here is an article fresh from MSN.com. This is the type of stuff I am always talking about that people get their info from.... This stuff does not effect our market but put more "fear" and doubt in buyers.



link to article

[Indigo Jill]

Really hard to get a read on it. Often in the real estate section people post comments that seem across the board. It is almost as if they get their info from MSN.com. In some areas the market was way under value and it will go only go back to 2005. In some cases it was already too high so it may go back to 2003. It is impossible to get an exact read on an entire market. I know we are selling Real Estate. I know it will be better then 2006. I know it is not as bad as many of these boards portray. The season is just starting and their are allot of folks in town wanting buy Real estate in SoWAL. Price it right and they will come.

I have heard from several Realtor friends they are busy right now - let's hope that translates into sales!! Good to hear you are seeing a pick up in your business and are having a good year so far, too, Bobby!

As far as the issue of not being able to find service labor due to the fact we don't have affordable housing ... Sowal is NOT unique in this dilemma and, compared to many other resort areas around the country, this is a new phenomenon for us. As such, the area is still in the preliminary stages of looking at the problem and, hopefully, will at some point rally together to find viable solutions. We need to look to those resorts that have been dealing with this for a long time for input and feedback.

This is our new reality, folks, and I personally don't think it will ever change. It will always be a core issue so instead of boo hooing about it, we need to start a dialogue of how we can accomodate the change and work with it. If we don't, the integrity of small business ownership is threatened (actually, I think that is already the case with the insane commmercial lease prices and insurance prices here - anyone notice how many "FOR RENT" signs there are around Sowal!) and those that "make it" here will be those with deep pockets.