patrick.net

Panama City Beach down about 3% from peak prices set July 2022. Consider also income has gone up about 10%.
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In Bradenton, FL currently. Haven’t looked at real estate but I can tell when an area goes south. Pretty normal here. Didn’t see a lot of for sale signs.

We’ll see over the few days. Our Orlando leg seemed pretty normal considering the Disney backlash. Every chair was taken at Typhoon Lagoon waterpark. Not a super warm day either.

I don’t frequent this part of FL too often, but the vibe is good. I know some are tourist but have noticed they’re pretty fat in this part of FL. Unattractive 20-35 year olds. I think the chicks that age from TN, AL, GA, MS all drive to rich parents rental properties in the panhandle and not this far south. Or go to Miami.

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https://www.cnn.com/2021/07/01/us/surfside-champlain-towers-condo-board-members-quit/index.html

See above. In October 2018 the engineer who inspected Champlain Towers in Surfside (Miami Beach) said that they needed major structural repair.

In September 2019 the HOA President and most of the HOA board resign out of disagreement. They estimated $9 for repairs.

By 2021 the board agreed to $15 million for starting the repairs.

They waited at least 3 years to make those repairs ? If they started those repairs in 2019 then it could have prevented the collapse.

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AD says

See above. In October 2018 the engineer who inspected Champlain Towers in Surfside (Miami Beach) said that they needed major structural repair.

In September 2019 the HOA President and most of the HOA board resign out of disagreement. They estimated $9 for repairs.

Five members of the Champlain Towers South condo association’s seven-member board – including its president, Anette Goldstein – decided to resign in the fall of 2019, when the association was debating multimillion-dollar repairs, the Washington Post reported, citing board meeting minutes and Goldstein’s resignation letter.

I bet a lot of the other condo association seven-member board had something in common with Anette.

zzyzzx says

I bet a lot of the other condo association seven-member board had something in common with Anette.

Well man, its the Miami metro area so its like you asking if there are any soul food restaurants in Atlanta or south Chicago, or kosher delis in Hollywood or Los Angeles :-/

Its just that there is a relative decrease in their demographic size. Look at the Presidential vote for Palm Beach County in 1988 to 2000.

Then examine how it was in 2020 for the Presidential race and also the Governor's race in 2022, particularly for Palm Beach County.

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As predicted about 2 years ago with the insurance legislation signed by Governor DaSantis.

The governor even stated he expected to see more insurance companies to enter the Florida insurance market when the legislation was being debated in the state house and senate.

https://www.wptv.com/money/real-estate-news/8-new-property-insurance-companies-approved-to-enter-florida-market

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https://www.newsweek.com/florida-house-prices-slashed-multiple-cities-1887185

Florida House Prices Slashed in Multiple Cities

Some prices are being slashed by sellers in Florida at a much faster pace than in the rest of the country, according to the latest data from online platform Zillow.

February data released by the real estate brokerage show that 33 percent of home listings in the Tampa metropolitan area had a price reduction in the same month—the highest number for a metropolitan area in the entire country and up 3.7 percent compared with a year before. At the national level, 20.1 percent of home listings had price cuts, up 2 percent from a year ago.

Headline should probably say match instead of exceed:

AD says

looks like rent is going down even in the nicer part of the Florida panhandle

Back to normal! $1500 in Orlando for a 2 bed. Two years ago it was close to $2000. $1250 would be pre-COVID, I'd be surprised to see it go that low given costs and inflation increases.

zzyzzx says

Five members of the Champlain Towers South condo association’s seven-member board – including its president, Anette Goldstein – decided to resign in the fall of 2019, when the association was debating multimillion-dollar repairs, the Washington Post reported, citing board meeting minutes and Goldstein’s resignation letter.

I posted that story. The board was in favor of an assessment for structural repairs. Then some smartass owner came in to the meeting and yelled about fixed income and not being necessary right now, and the property owners themselves agreed with him and voted against the assessment.

The President resigned in disgust that the majority of owners voted against the structural repair work and was frustrated that with an entire year of hearings and reviews over the damage and expense required to fix it, nobody showed up or expressed concerns until the day of the final vote.

So Ms. Goldstein was for fixing the problem.

A year after a 2018 engineering report showed the Champlain Towers South condo was in dire need of extensive structural work, squabbling about what to do next led to board resignations, inactivity and confusion that delayed repairs. The cost, which at the time would have been an estimated $9 million, skyrocketed over the next few years. In an internal letter obtained by The Washington Post dated Sept. 4, 2019, Champlain Towers South Condo Association president Annette Goldstein announced she was quitting as the board’s president, citing frustration over the inability to proceed with the work. Five other members of the seven-person board quit later that fall. “We work for months to go in one direction and at the very last minute objections are raised that should have been discussed earlier and resolved right in the beginning,” Goldstein wrote in a letter sent to all 135 unit owners.

Read more at: https://www.miamiherald.com/news/local/community/miami-dade/miami-beach/article252505623.html#storylink=cpy

Sorry, that JQ puzzle piece can't be trimmed; it just don't fit! Although in fairness it was probably some other cheap Brooklynite that marshalled the against repairs/assessment vote. But that just proves that the magik Jew telepathy command broadcast tower doesn't exist

zzyzzx says

Some prices are being slashed by sellers in Florida at a much faster pace than in the rest of the country, according to the latest data from online platform Zillow.

February data released by the real estate brokerage show that 33 percent of home listings in the Tampa metropolitan area had a price reduction in the same month—the highest number for a metropolitan area in the entire country and up 3.7 percent compared with a year before. At the national level, 20.1 percent of home listings had price cuts, up 2 percent from a year ago.

Have you seen the SW, like Port Saint Joe and Clearwater? Collapsing.

According to my understanding, one of the big issues facing the FLA real estate market is the dramatic increase in home/flood/hurricane insurance, that is, if you can even find a policy to purchase. Many FLA insurance companies have either pulled up stakes or have gone out of business. Add to that the big increases in property taxes and maintenance fees for Condos and FLA real estate loses a lot of its appeal. All of that should result in an ongoing negative impact on prices.

RayAmerica says

one of the big issues facing the FLA real estate market is the dramatic increase in home/flood/hurricane insurance

https://www.wptv.com/money/real-estate-news/8-new-property-insurance-companies-approved-to-enter-florida-market

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We're having some insurance cancellations in CA. State Farm has all but pulled out. Mostly fire risk.
Thanks, PG&E!

rocketjoe79 says

Thanks, PG&E!

Thanks, Coastie Greens who think Forests don't need management, that prohibited PG&E from trimming back undergrowth and dead branches and trees all set to go up in smoke.

AD,

Thanks for the update ... it appears that the FLA insurance situation is improving.

https://www.newsweek.com/florida-house-prices-slashed-multiple-cities-1887185

Florida House Prices Slashed in Multiple Cities

IMO, FLA could be just the beginning of another real estate collapse along the lines of 2006-2008.

Virtually all of the abuses that led to 2006/8 were amplified during this long, artificial run up in prices. Added to those abuses was nearly a decade of historically low interest rates. We're now witnessing what happens to the real estate market when interest rates increase, and there appears to be no decrease in sight.

zzyzzx says

https://www.newsweek.com/florida-house-prices-slashed-multiple-cities-1887185

Florida House Prices Slashed in Multiple Cities

But the R/E Experts on PatNet (mostly circa 2022)....

Florida is not going to have a "collapse" in real estate prices, because they've already gone up 100% in a few years.

clambo says

Florida is not going to have a "collapse" in real estate prices, because they've already gone up 100% in a few years.

They won't be the only area to have a collapse. It's going to happen across the board ... IMO.

The worst possible combination for real estate prices:

1) Artificially inflated prices.

2) Historically low interest rates that were artificially kept at those levels for over 10 years.

3) Poor economy, along with high inflation and rising interest rates.

4) Terrible housing market for 1st. time homebuyers. Not only is the inventory low, but the borrowing power for the 1st. timers is extremely poor, as the high paying jobs are simply not there, and, many are saddled with tuition loans, which count against them on the debt side, further diminishing the amount that they can borrow.

5) VERY few 'investors' such as pension funds, insurance companies, etc. that are willing to buy the all-important Mortgage Backed Securities, which provides literally 95+% of all financing for residential real estate.

6) With prices coming down, more and more homeowner's that have mortgages will find that they are 'upside down' on their mortgages. Look for foreclosures to come back in a big way in the next 12-18 months.

RayAmerica says

6) With prices coming down, more and more homeowner's that have mortgages will find that they are 'upside down' on their mortgages. Look for foreclosures to come back in a big way in the next 12-18 months.

So, what about Blackrock and the other corps buying them up? They have to value them mark-to-market on their books, right?

And they are having problems renting them out for what they want/need, especially in Florida

So when do you think there will be a follow up dump onto the market with these properties?

clambo,

What happens to the FLA homeowners if they 'bought' at or near the peak and prices come down to say, 20%, which isn't beyond the realm of possibility at all. For them, it's going to be a 'collapse,' and it will be a potential repeat of '06.

RayAmerica says

What happens to the FLA homeowners if they 'bought' at or near the peak and prices come down to say, 20%

If the homeowner doesn't plan to move, what difference does it make? He has the same payment as before, and his real estate passement may even go down and thus lower his tax. a 2.5% loan at peak price may be pretty much the same payment as a 7.5% loan at that 20% lower price.

I see my mutual funds drop 20% but I don't feel the need to sell them.
Likewise, if I have a house that serves its purpose, why do anything if it drops in value?
My car has dropped in value and I still like driving it, so I'll keep it.

I don't plan on moving from our current home, so yes, price fluctuations mean next to nothing for someone like me.

However, many people are forced to sell for a variety of reasons, such as; death of a spouse, divorce, job transfer, diminished income, job loss, increase of crime in surrounding area, downsizing because the kids are all gone, can no longer afford the utilities, taxes, insurance and cost of up keep, etc., etc.

clambo says

I'm beating a dead horse, but I have a bunch of friends in Santa Cruz who have houses and no money.

They sometimes brag about their houses being worth a lot of money.

That's what my dad did. He did sell some of the real estate assets and eventually became a $3-5M wealth guy in 2001 at about 50. So solid money for age and time. Lost it all except a few joint partnerships on industrial real estate with my uncle and another friend that ended up 8-9 figure wealth. My mom did get about $1M out of it. So not a total loss. He did file BK though.

It ain't money until it's in the account. I also think residential RE is trash. I know there's property management companies, but I can't deal with liars every month to have a profitable business. Residential tenants are the worst. I could cashflow $800/mo on my current house when we move. I'd rather get the cash now. $10k/yr really isn't worth it regardless of depreciation and tax benefits. Already running around repairing family members homes for free with no men in their lives and if there is they don't know shit.

I fucked up and didn't buy my neighboring towns post office building. USPS ain't gonna move, so the lease was solid forever. Literally zero new construction in 3 decades. So no need to expand to a different building. Another office space in the building. Only $400 cash flow, but only $110k at full list. Reinvest the cash flow over 2-3 decades and inflation and it would have been a low risk $500k to who knows what above that by the time I'm 60-70. I fucked up. $25k down for $500k and still invest my income and a tax write off on my high income earning years. No personal relationship. Government contract. Easy.

https://www.cnbc.com/2024/05/01/florida-real-estate-struggles-as-motivated-sellers-flood-market.html

Florida real estate struggles as ‘motivated’ sellers flood market

https://fortune.com/2024/05/01/is-south-florida-housing-market-bubble-real-estate/

Study finding South Florida homes are 35% overvalued sparks bubble worries: ‘This trend does concern me’

All of Florida is cool or very cool as far as housing market according to Realtor.com, and Panama City area is third from bottom :-(

Still rents are holding steady at least as a 3 bedroom , 2 car garage townhome within 2 miles of the beach rents still between $2100 to $2300

zzyzzx says

https://fortune.com/2024/05/01/is-south-florida-housing-market-bubble-real-estate/

Study finding South Florida homes are 35% overvalued sparks bubble worries: ‘This trend does concern me’

The general rule is that for every 1% increase in the 30 year rate mortgage rate, there should be a 10% drop in price.

When housing prices peaked in early 2022, the rate was around 3%. Hence if the rate is now 7%, then that means there should be a 40% drop.

However, income has gone up about 10% since early 2022.

So adjusting for that, it would be safe to assume that housing should only drop around 30% in South Florida to make it fairly valued.

If Panama City Beach townhome values drop 30% from peak price then that means they return to early to mid 2020 price levels :-(

That would wipe out the COVID pandemic price gains :-(

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Rent in some of the biggest cities in Florida declined in April compared to a year ago, according to real estate platform Redfin, at a time when some residents are relocating away from the state.

Jacksonville saw median asking rent in the city drop by 5.6 percent. Meanwhile, Miami reported a decline of 5 percent, Tampa's fell 4.3 percent and Orlando also saw its rent asks go down 3.2 percent according to Redfin's data, in what were among the biggest drops of the month.

https://www.newsweek.com/florida-rent-drops-people-flee-state-1901951

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WookieMan says

Another office space in the building. Only $400 cash flow, but only $110k at full list. Reinvest the cash flow over 2-3 decades and inflation and it would have been a low risk $500k to who knows what above that by the time I'm 60-70.

So is office space building the best investment in commercial real estate? If not, then what is?

gabbar says

WookieMan says

Another office space in the building. Only $400 cash flow, but only $110k at full list. Reinvest the cash flow over 2-3 decades and inflation and it would have been a low risk $500k to who knows what above that by the time I'm 60-70.

So is office space building the best investment in commercial real estate? If not, then what is?

TL:DR - I wouldn't touch office spaces unless you have a long term, solid tenant.

I was more or less being super specific to my location. The main tenant was USPS and they never move. The town it's in doesn't build new construction. The other small office would have been a bonus. $20k down. $400/mo in cash flow. Was a safe and solid investment, I inquired, but didn't pull the trigger. Would have reinvested the cash flow. Appreciation over 20-30 years and it could have easily added 5-8 years of retirement money beyond what I already have going.

I wouldn't touch office space right now without a solid lease from a tenant you knew was going to stay I guess is my point. I think the snapback from covid and WFH is going to piss off employees. At least the ones that got their job done during covid.

Not going to name the company but the the town I was looking to buy the building in, another office has about a 70 space parking lot. This is rural, so that's big here. Lot was full every day. Maybe 5-10 cars parked there every day now. Company owns the building outright. They can just move the people that show up to a section of the building and shut down the rest.

But this is my anecdotal evidence that WFH is here to stay. Companies trying to bring it back are dealing with pissed off employees that now have to pay commuting costs again doing the same job they were for 2 years at home.

https://www.dailymail.co.uk/news/article-13739993/florida-real-estate-crisis-condo-owners-slash-prices.html

Florida hit by 'worst real estate crisis in decades' as desperate condo owners slash prices by up to 40%: 'It's paradise lost' ...

Florida condo owners are slashing prices by up to 40 percent as they strive to dodge massive incoming repair costs.

Some units have had almost half a million wiped off their asking price as safety fears trigger a wave of sell offs in what realtors have described as the worst real estate crisis in decades.

One three-bedroom, two-bathroom condo in Saint Petersburg was listed at around $1.2million at the start of the year.

But still without a buyer, the owner slashed the asking price first to $898,000 and last week to $715,000.

State legislation brought in following the 2021 collapse of the Champlain Tower South in Surfside, Miame-Dade County, which killed 98 people, means hundreds of thousands of condo owners must now fork out hefty sums for previously neglected maintenance.

Many could face fees greater than their mortgage payments, sparking a wave of distressed sales in the Sunshine State.

I think the fundamental issues are much deeper than just deferred maintenance. Prices are grossly beyond the fair value as determined by annual rent divided by current long-term mortgage rate.

Example crude fair value calculation:

$2,000 / mo rent = $24,000 /year

$24,000 / 0.06 = $400,000 fair value

Of course that's just a first-order approximation. There are many more variable to consider, but they won't change the result all that much.

Patrick says

I think the fundamental issues are much deeper than just deferred maintenance. Prices are grossly beyond the fair value as determined by annual rent divided by current long-term mortgage rate.

Example crude fair value calculation:

$2,000 / mo rent = $24,000 /year

$24,000 / 0.06 = $400,000 fair value

Of course that's just a first-order approximation. There are many more variable to consider, but they won't change the result all that much.

here is a good example and gem which is only about a 2 mile walk to the beach and 10 minute walk to the nearby Dollar General and strip mall (vape/smoke shop, Guthries Chicken, laundry mat, nails saloon, Jamaican grocery store, Cricket Wireless, and Asian massage parlor)

it likely could sell for $260,000 easily , which was same price likely back at high-water mark of the housing bubble in 2006 , and its monthly expenses are $425 HOA fee, $150 property tax, and $150 property insurance (plus $300 a month for rental property management and maintenance/repairs if the landlord rather not directly manage it)

it could easily rent for $2000 so if someone lays down $270,000 in cash (includes closing costs), then their monthly net income based on 10% vacancy is $1800 minus $1025 which is $825

($825 x 12) / $270,000 x 100% = 3.7%

Conservatively assume a 3% annual appreciate rate, and hence the total ROI would be 6.7%

https://www.zillow.com/homedetails/1702-Annabellas-Dr-Panama-City-Beach-FL-32407/87637913_zpid/

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My father saved a combined $12,000 per year in income and property taxes by moving to Florida around 2012.

The Florida real estate trend will continue as those who 1. have money 2. can do arithmatic move away from states like New York, New Jersey, Connecticut, etc.

Around North Palm Beach County I have seen numerous residential projects in just a few years, with thousands of units.

An example is Nautilus 2020, another one nearby is Ritz Carlton Residences; in Jupiter Azure and Alton, Caretta under construction in Juno Beach.

Locals will not be buying the new ones, nor Azure; some locals and young transplants are in Alton.

clambo says

My father saved a combined $12,000 per year in income and property taxes by moving to Florida around 2012.

The Florida real estate trend will continue as those who 1. have money 2. can do arithmatic move away from states like New York, New Jersey, Connecticut, etc.

Around North Palm Beach County I have seen numerous residential projects in just a few years, with thousands of units.

An example is Nautilus 2020, another one nearby is Ritz Carlton Residences; in Jupiter Azure and Alton, Caretta under construction in Juno Beach.

Locals will not be buying the new ones, nor Azure; some locals and young transplants are in Alton.

That is true, but it makes real estate in places like Connecticut cheaper, where nice Waterfront mansions have slipped below $2MM over the years of the business and people exodus from the state.

mell says

That is true, but it makes real estate in places like Connecticut cheaper, where nice Waterfront mansions have slipped below $2MM over the years of the business and people exodus from the state.

just like housing is "cheap" in the high income, property and sales tax shitholes like Illinois

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