Has real estate really gone down that much?
The Keys News reports from Florida. “It took nearly an hour, but only a few minutes were needed Saturday for auctioneers to sell four residential properties and three commercial buildings. With less than 100 attendees at the auction, those in chairs seemed outnumbered by the agents moving around the room trying to generate bids.”
“A 2,000-square-foot home on Terry Lane sold for $800,000 and a 1,400-square-foot Terry Lane home sold for $500,000. In both cases, the bids were closed without any action from the crowd. Because of this, two similar properties on Terry Lane weren’t offered up for auction.”
“‘We didn’t feel like we were near where we could be, it was a disappointment,’ auction founder Ben Anderson said.”
“‘Has real estate really gone down that much?’ auctioneer Chris Camp asked after no one bid on a Third Street triplex that started out and sold for $600,000. ‘Yes,’ someone in the crowd retorted.”
“Anderson attributes buyers’ hesitation to the concern that the market hasn’t yet bottomed out. ‘It’s a buyers market and everything is shifting and changing,’ Anderson said, adding that buyers have ‘gotten off the bus.’”
“‘They’re going to walk around the block before they get back on,’ he said.”
The Montgomery Advertiser. “Colonial BancGroup Inc. has lent $6.4 billion for construction projects, five times the average for banks nationwide. Colonial lends money mostly to local homebuilders well known to loan officers, according to analyst Robert S. Patten.”
“Since 2000, Colonial has bought six Florida banks with assets of $3.5 billion. A seventh acquisition of a $1 billion-asset bank is pending. Many of the deals looked wise at the time because Florida’s economy was sizzling and home values were soaring.”
“Today, a Florida real estate bank must deal with plummeting sales and a growing list of abandoned projects, giving credence to the experts who told the Wall Street Journal that the state ‘is undergoing one of its worst housing recessions ever.’”
“‘Given that Colonial sees itself as primarily a real estate bank, they’re vulnerable,’ said Richard X. Bove, of specialty investment bank Punk Ziegel & Co.”
“Bove said the damage to banks with extensive Florida franchises has yet to show up in their financials. ‘Wait till next quarter,’ Bove said. ‘It’s not just Colonial. A lot of banks are going to have trouble. They’re all in a difficult environment right now.’”
The Sun Sentinel. “If home ownership is the American dream, the scene that plays out every week in Room 385 of the Broward County Courthouse is the American nightmare. ‘Case No. 06-19776,’ intoned the auctioneer, a foreclosure clerk named Barbara Pendergrass.”
“Near the back, Earl Lawrence leafed through his thick black binder and looked up the property, a small townhouse in Tamarac. Bought for $65,500 in September 2000, a foreclosure judgment for debts totaling $188,000 last December.”
“‘They borrowed themselves right out of a home,’ said Lawrence, of Hollywood, a real estate investor who has been coming to the public auctions for 25 years.”
“There were no bids on the Tamarac townhouse Thursday, apart from the minimum $100 that the foreclosing bank made to formally seize the property.”
“The real estate market has become so uncertain, and the debts racked up on these properties so high, even the vultures aren’t nibbling. ‘Would you buy a property for $420,000 if you could only sell it for $400,000?’ said Adnan Kabbara of Weston, a developer and contractor who has bought homes at auction for four years.”
“Properties that would have attracted a bidding war a year or two ago, when the real estate market was soaring, now stay with the lenders. The banks sell them through major national real estate firms, more frequently at a loss.”
“‘The party’s over,’ said Lawrence.”
“With more loans and homes skidding off the rails, the crowd in Room 385 isn’t going to thin anytime soon. As the auctioneer worked through the stack of folders on Thursday, investor John Derynda groaned that he should have brought lunch.”
“‘Two months from now,’ he said, ‘it’s only going to be worse.’”
“A few years ago, condo-hotels practically sold themselves. With real estate prices marching upward, the idea of owning a condo unit on the beach and covering some of the expenses through hotel rental payments seemed irresistible.”
“‘We weren’t salespeople, we were order takers,’ recalled Joel Greene, president of North Miami-based Condo Hotel Center.”
“Today, the market has sobered up. Condos aren’t selling and condo-hotels are caught in the same downdraft. In West Palm Beach, plans for The Harrick, a 138-unit condo-hotel at Lakeview Avenue and South Dixie Highway are on hold. ‘We’re redesigning it as a hotel,’ said developer David Gostfand. ‘The condo market is a little quiet at the moment.’”
“About 1,250 condo-hotel units have been opened in the past two years in Broward and Palm Beach counties, with another 2,500 units approved or under construction. That’s a small number compared with the 15,500 units proposed for Orlando or the 32,800 going up in Las Vegas.”
“Condo-hotel units that sold for $650 a square foot in the late 1990s are offered at $1,200 to $1,400 a square foot now. ‘The big question is with all these projects coming along at one time, are there enough luxury buyers?’ said (consultant) Jack McCabe.”
“Some developers concede that buyers must get a low price per square foot to have any hope of a return on their investment. Jim Clarke plans to begin construction on Clarkes Hotel, a 92-unit condo hotel in downtown West Palm Beach, within 60 days. ‘We’re virtually sold out, but our prices are low,’ said Clarke, who estimated an average unit costs $375,000.”
“Clarke cites a rule of thumb among hotel developers that to be profitable rooms should rent for a tenth of 1 percent of their building cost. If a buyer acquires a unit for $500,000, that translates to room rates of $500 a night.”
“‘That’s kind of hard to sustain down here,’ Clarke said.”
“A 2,000-square-foot home on Terry Lane sold for $800,000 and a 1,400-square-foot Terry Lane home sold for $500,000. In both cases, the bids were closed without any action from the crowd. Because of this, two similar properties on Terry Lane weren’t offered up for auction.”
“‘We didn’t feel like we were near where we could be, it was a disappointment,’ auction founder Ben Anderson said.”
“‘Has real estate really gone down that much?’ auctioneer Chris Camp asked after no one bid on a Third Street triplex that started out and sold for $600,000. ‘Yes,’ someone in the crowd retorted.”
“Anderson attributes buyers’ hesitation to the concern that the market hasn’t yet bottomed out. ‘It’s a buyers market and everything is shifting and changing,’ Anderson said, adding that buyers have ‘gotten off the bus.’”
“‘They’re going to walk around the block before they get back on,’ he said.”
The Montgomery Advertiser. “Colonial BancGroup Inc. has lent $6.4 billion for construction projects, five times the average for banks nationwide. Colonial lends money mostly to local homebuilders well known to loan officers, according to analyst Robert S. Patten.”
“Since 2000, Colonial has bought six Florida banks with assets of $3.5 billion. A seventh acquisition of a $1 billion-asset bank is pending. Many of the deals looked wise at the time because Florida’s economy was sizzling and home values were soaring.”
“Today, a Florida real estate bank must deal with plummeting sales and a growing list of abandoned projects, giving credence to the experts who told the Wall Street Journal that the state ‘is undergoing one of its worst housing recessions ever.’”
“‘Given that Colonial sees itself as primarily a real estate bank, they’re vulnerable,’ said Richard X. Bove, of specialty investment bank Punk Ziegel & Co.”
“Bove said the damage to banks with extensive Florida franchises has yet to show up in their financials. ‘Wait till next quarter,’ Bove said. ‘It’s not just Colonial. A lot of banks are going to have trouble. They’re all in a difficult environment right now.’”
The Sun Sentinel. “If home ownership is the American dream, the scene that plays out every week in Room 385 of the Broward County Courthouse is the American nightmare. ‘Case No. 06-19776,’ intoned the auctioneer, a foreclosure clerk named Barbara Pendergrass.”
“Near the back, Earl Lawrence leafed through his thick black binder and looked up the property, a small townhouse in Tamarac. Bought for $65,500 in September 2000, a foreclosure judgment for debts totaling $188,000 last December.”
“‘They borrowed themselves right out of a home,’ said Lawrence, of Hollywood, a real estate investor who has been coming to the public auctions for 25 years.”
“There were no bids on the Tamarac townhouse Thursday, apart from the minimum $100 that the foreclosing bank made to formally seize the property.”
“The real estate market has become so uncertain, and the debts racked up on these properties so high, even the vultures aren’t nibbling. ‘Would you buy a property for $420,000 if you could only sell it for $400,000?’ said Adnan Kabbara of Weston, a developer and contractor who has bought homes at auction for four years.”
“Properties that would have attracted a bidding war a year or two ago, when the real estate market was soaring, now stay with the lenders. The banks sell them through major national real estate firms, more frequently at a loss.”
“‘The party’s over,’ said Lawrence.”
“With more loans and homes skidding off the rails, the crowd in Room 385 isn’t going to thin anytime soon. As the auctioneer worked through the stack of folders on Thursday, investor John Derynda groaned that he should have brought lunch.”
“‘Two months from now,’ he said, ‘it’s only going to be worse.’”
“A few years ago, condo-hotels practically sold themselves. With real estate prices marching upward, the idea of owning a condo unit on the beach and covering some of the expenses through hotel rental payments seemed irresistible.”
“‘We weren’t salespeople, we were order takers,’ recalled Joel Greene, president of North Miami-based Condo Hotel Center.”
“Today, the market has sobered up. Condos aren’t selling and condo-hotels are caught in the same downdraft. In West Palm Beach, plans for The Harrick, a 138-unit condo-hotel at Lakeview Avenue and South Dixie Highway are on hold. ‘We’re redesigning it as a hotel,’ said developer David Gostfand. ‘The condo market is a little quiet at the moment.’”
“About 1,250 condo-hotel units have been opened in the past two years in Broward and Palm Beach counties, with another 2,500 units approved or under construction. That’s a small number compared with the 15,500 units proposed for Orlando or the 32,800 going up in Las Vegas.”
“Condo-hotel units that sold for $650 a square foot in the late 1990s are offered at $1,200 to $1,400 a square foot now. ‘The big question is with all these projects coming along at one time, are there enough luxury buyers?’ said (consultant) Jack McCabe.”
“Some developers concede that buyers must get a low price per square foot to have any hope of a return on their investment. Jim Clarke plans to begin construction on Clarkes Hotel, a 92-unit condo hotel in downtown West Palm Beach, within 60 days. ‘We’re virtually sold out, but our prices are low,’ said Clarke, who estimated an average unit costs $375,000.”
“Clarke cites a rule of thumb among hotel developers that to be profitable rooms should rent for a tenth of 1 percent of their building cost. If a buyer acquires a unit for $500,000, that translates to room rates of $500 a night.”
“‘That’s kind of hard to sustain down here,’ Clarke said.”
posted by Rob warner | 2:06 PM
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