Six Months To Bottom?

H: Richard, I am in the Northwest Florida market, Destin-Fort Walton Besch area. We have a one to six year inventory of houses, a six year inventory of condos, and a 10 to 14 year inventory of lots.  I do see more buyers when the prices drop enough, as it should be. I think there will be another year before hitting bottom, then flattening and finally resuming normal appreciation starting two years from now.  Wendy

Hi Richard, I think the big problem besides the oversupply of homes is taxes. That joke of a tax rebate that passed last year is no help. I've said it before, Florida is an outside investor driven state, and they will not pay outrageously high property taxes. The other problem is wages to home value ratio in South Florida. Most people in South Florida don't earn enough to afford a $200,000 plus home(and also pay for their H2 Hummer). That's why a lot of people got sucked into investing, that had some equity in their home, refinanced it and used it to purchase homes to flip, never looking at the down side. They were figuring they could double their yearly salary. Now guess what, not only did they loose the investment property, they lost their personal home too. We also have a couple of years till all the arm reset. I think this much bigger than a normal cycle!

The one thing that I have learned is that in real estate everything takes much longer then you think it will.  I gave up trying to predict when a market will bottom and just look for signs that it is starting to bottom.

seller's didn't predict the top, and buyers won't find the bottom.

they'll be a fair amount of whining about how they missed it.

 

Richard:  Can't speak for Florida, but Northern Virginia will probably not be close to recovering until 2010 at the earliest.

When we first started our downward journey a couple of years ago I thought that we should be out of it by the end of 2008.  Now, I'm seeing something that I didn't originally know to account for and that is STUPIDITY.  Originally I figured most of 2008 and first part of 2009 would be spent going through the foreclosure inventory but now more and more I'm coming across people at listing appointments that just want to let their homes go because they no longer have equity in them.  Not because they can't pay or they are having considerable financial hardship - just plain selfishness and stupidity.  Because this idiot let's his house go then his neighbor decides well "screw it, what's the point" and they let their home go.  A good example of this phenomenon is evident on a certain street in my neighborhood Wisteria Dr or as I like to call it "Wisteria Lane" like on DESPERATE HOUSEWIVES.  Out of 18 homes on this block, 5 are foreclosures/short sales.  That's 28% on 1 block - absurd!!!  Unless you're tied into the real estate market directly can you tell me how all these people can't seem to pay their mortgage from one year to the next?

The one item that needs to be taken into account is the individual state foreclosure statutes.  In some states it can take 12-18 months just to get title to the property.  This prolongs the time till the bottom.