Alan Greenspan et al. warn of Florida as local housing bubble.

[corey r.]

Link to credible news souce

This seems to go hand in hand with a conversation I had with a mortage loan officer for Market Street Mortgage this past weekend. She she the company is strongly looking into negative amatorization of house values. This means the house is worth 200k this year... 195k next.. and so on. They will only loan up to the lowest amount.

May 25, 2005 — WASHINGTON (Reuters) - The U.S. Federal Reserve is not yet done raising interest rates, but the central bank will watch economic data closely in an uncertain time for monetary policy, Atlanta Federal Reserve Bank President Jack Guynn said on Wednesday.

"Given the current outlook for the economy, my personal view is that we've not yet reached a neutral policy stance," Guynn said in prepared remarks to the Certified Professional Home Builders in Atlanta. The Fed released a text of his speech in Washington.

Treasury prices dipped on Guynn's comments, which were viewed as a sign of interest rate increases ahead. The benchmark 10-year note <US10YT=RR> slipped 12/32 in price, lifting yields to 4.08 percent from 4.04 percent.


The Atlanta Fed president added to recent warnings by Fed officials and others about possible regional U.S. housing bubbles. Investors gambling that housing prices will soar indefinitely are likely to be disappointed, he said.

"There are some local markets, especially in coastal Florida, where I've heard stories for more than a year about behavior that's got to be characterized as nothing other than speculation," Guynn said it response to questions after his speech.

"It makes me very uncomfortable," he added. "Some buyers, some builders, some lenders are going to get burned, could very likely get burned, in some of those local markets."

Guynn's remarks echoed the caution that Fed Chairman Alan Greenspan offered last week to Americans who speculate in real estate.

On Friday, Greenspan said he saw signs of "froth" in housing markets though he did not characterize it as a worrying national issue. "We don't perceive that there is a national bubble but it's hard not to see … that there are a lot of local bubbles," Greenspan told the New York Economic Club.

One factor fueling the booming pace of home building and sales of both new and existing homes is that long-term interest rates including for mortgages have remained low by historical standards and have even come down.

[XtremeVision]

[AustinSi]

Florida, especially Tampa, Naples, Sarasota, Clearwater, and St. Pete would not apply to rates increasing. Think about this scenario: Joe Schmo works for a financial firm in New York City, and continues to commute 5 days a week to his 2,000 square foot house in the suburbs of Northern Jersey who he is paying over 10 Grand a year in Property Taxes. He is on the verge of retirement and is tired of shoveling snow for 4 months out of the year. Where else to move than sunny, and cheap Florida? He can purchase a new house 20 minutes from the water with the same square footage in the Bay area for less than half the price. Florida is an incredibly attractive place to retire, and Tampa is becoming ever more popular. I bartend at a hotel, and I cannot tell you how many people I am meeting on a daily basis that come down from the Northeast trying to find either a vacation home, or a permanent residence. I have one friend alone that lives in North Jersey who's townhouse is worth over 650k. Interest rates will not apply to her since she can simply pay cash for something similar and still have cash in the bank.

[RoadRacer]

+1 what Austin said.

As long as long term interest rates are low, values will increase. What's interesting is even though the fed has been raising prime, 30 yr fixed rates have fallen over the last year.

chart

[orlando]

Originally Posted by AustinSi

Florida, especially Tampa, Naples, Sarasota, Clearwater, and St. Pete would not apply to rates increasing.

Quite the opposite...The richer neighborhoods are the ones that are not going to be affected since the richer people won't be affected by a rise in interest rates. The lower/middle class people who could hardly afford to buy the house now are the ones which wont be buying then which will drive prices down in < $300k neighborhoods

[AustinSi]

I respectfully disagree. Even if interest rates were to rise to 10 Percent, which would be about a three percent increase for the average loan, this would still be considered low. Remember, interest rates used to be in the 18% range years ago. Also about your comment about only richer neighborhoods not being affected, this is not true. As rates would increase, buyers, especially first time purchasers would look to the cheaper neighborhoods. You have to figure that with a nominal down payment, you can be close to the money you are spending on rent. Also, you fail to realize that most buyers in Florida aren't from here. They come from the NorthEast where prices are outrageous.

[Steve B]

makes you wonder, should you shit, get off the pot, or sit and keep trying to push.

[zexyintegra]

Im tired of reading threads started by people with little knowledge in real estate. The Bradenton/Sarasota market is totally different then the Tampa/St Pete market. Not to mention house prices will not drop. They may level but will not drop. We are in a increasing housing shortage. And its not going to improve. Example population keeps increasing. Not enough homes and even less rentel props. being produced. Its simple economics, Supply and Demand. And untill god decides to create some more coastal property, I dont see land values dropping.

[Malevolent X]

I agree land value is going to keep increasing. I don't even see them leveling off any time soon. I am currently in Michigan for another month and houses are half of what your houses there are going for. Here houses go for around $1000 per sq. ft. So far in most of the real estate i have researched down there I will be lucky to find a decent 3 bedroom home for under $200K. This would buy me a damn nice house here.

[Scott]

Very misleading title to this thread since Greenspan had one little statement in the article which was also the same statement that was in a post I made last week.

The rest were personal comments by Jack Guynn "Atlanta Federal Reserve Bank President". So now Jack is a expert on Florida Real Estate ? Heck he said it himself, " I've heard stories ". He heard stories, enough said.


Some great replies prior to mine.

[Joe]

Is everyone here blind?

The guy said specifically "coastal florida".... Do you know where he is talking about?

Try Naples, West Palm, etc...

But then again... maybe he's right, everyone should avoid buying homes in places like Tampa, Orlando, etc... I need to be able to buy more with less competition...

[gator]

i am not smart the like rest of the TR real estate tycoon crew.

just a drift ants crew here

[Rob.M]

Eventually, the market will correct its self, the question is just when. The problem lies in that while transplants from places with greater household incomes such as NY can afford to move here and pay the inflated prices for housing, those of us whom are middle class native Floridians will no longer be able to afford the cost of housing as the price exceeds the $300K mark for an acceptable home. As those people are gradually removed from the market it may effectively "pop" the bubble at some point and allow for a price correction. My personal hope is that this correction happens sometime in the next three years, so as to facilitate my entry into the market post law school, but in reality I know that it may take far longer for such a correction to transpire.

[Scott]

Slow down yes, pop in our area very very unlikely especially since MacDill is taking on a lot of new positions because of other base closings and because of many other major businesses are moving there corporate offices here.

The median price of homes nationwide is over $200k and $200k still buys a nice home in our market. And when you have Cali median prices at over half a million we are still a bargin.

I posted some stats a while ago that shows Tampa metro is barley 1% inflated in comparison to markets like Miami that are 16%. I post these stats from the people that compile them (NAR / FAR / Etc.) and not media outlets like ABC news that have their own slant so that people can make their own informed decision.

Those that are sitting and waiting for some sort of correction in the local market are doing nothing but making it more costly for themselves when they finally get off the fence and buy.

[dnstommy]

Bradenton was #2 last year and #1 this year. Here a POS house is 175k. When the rates are back @ 8% and it costs 1500 a month for that POS, the price will drop. There is no way for Bradenton to hold its housing values. Maybe Lakewood ranch, but not Bradenton.

[Joe]

Originally Posted by dnstommy

Bradenton was #2 last year and #1 this year. Here a POS house is 175k. When the rates are back @ 8% and it costs 1500 a month for that POS, the price will drop. There is no way for Bradenton to hold its housing values. Maybe Lakewood ranch, but not Bradenton.

That would be true if the population in the Tampa area were constant. As you and I know, the population in Tampa is increasing quickly, thus shitholes will still be worth money...

[BigBadBuick]

Originally Posted by zexyintegra

Its simple economics, Supply and Demand.

Exactly. I've heard that Florida is projected to double in population by 2030. I don't see any 'corrections' happening before then

[Rdline1]

we are currently looking at houses that are more than 1,000 square feet less than our current home and cost $50k more.....and we moved in 4 years ago. The prices are going nowhere any time soon

[BigBadBuick]

Originally Posted by onefastcavyz24

Do you have proof of that?

Nope, none, nobody wants to live in Florida, I'm actually a moron for believing that. I apologize for misleading the people of TR.

[Joe]

Originally Posted by onefastcavyz24

Do you have proof of that?

Have you seriously been living under a rock?


http://www.censusscope.org/us/s12/chart_popl.html

Do the math...