Morris Massre's Blog

Thoughts on South Florida Realty and the Planet in General

Housing’s Perfect Storm Erupts in Florida

South Florida's Perfect Real Estate Storm

South Florida’s Perfect Real Estate Storm

Housing Perfect Storm is Upon us

Housing Perfect Storm is Upon us

Welcome to Florida; The Hurricane State

Welcome to Florida; The Hurricane State

Some thought Hurricane Wilma of 2006 fame was the perfect storm that started the housing meltdown in South Florida.  Well, if you coupled that with mortgage fraud, rising home prices that were out of control, and unscrupulous realtors, mortgage brokers, and appraisers, then maybe it was.  I believe that it was simply the beginning of the end.

Today we have a perfect storm of other sorts.  I like to think of it as the perfect storm for our housing recovery.  Whether or not you like it makes no difference.  Housing is the single factor in the US economy that dictates whether or not we fail or succeed economically as a country.  Not Wall Street, not the auto industry, and not banking.  This is why everyone should be paying close attention to the market, especially here in your own backyard.  Housing’s success or failure has a domino affect on America’s economy.  Choosing to ignore it is simply not the right attitude. 

Sometimes I wonder if the Native Americans had it right all along because they had no concept of ownership of any kind, including their own country.  This is why they never had to worry about defaulting on a loan.  They shared in everything willingly.   And that is why it was so easily manipulated away from them though.  On the one hand they never had to worry about a mortgage payment, insurance, HOA dues, or even cutting the grass.  On the other hand, this type of cultural mentality led to their loss of land.  One could argue that there simply were not enough Indians to stop the influx of White immigrants flowing into the country and that it was bound to happen anyway, but if there were some kind of national government in place perhaps a deal could have been arranged to avoid the takeover. There is no going back now and we have to live with the current economic conditions.   

But Indians did not use money at the time, so an economic collapse due to housing would have been impossible.  But it sure would be nice to not have to think about money or bills for a while.  Today’s society has no concept of sharing because we are all out for ourselves when it comes to home ownership and getting the best deal possible.  Nobody cares about whether or not the sale of their over-priced home will have impact on the rest of the community as long as they get what they want.  Hopefully, we have learned from our mistakes and will be more conscience of  our actions in the future. 

What South Florida is experiencing now is not unlike pre-meltdown housing numbers, but make no mistake about it, everything has changed in the way we conduct business.  The perfect housing storm arises first from rising seller prices.  Although not enough to bring a lot of homeowners from the abyss, it is still enough to rescue many others.  Another factor that has been taking hold are buyers who are coming to the US to invest for various reasons, although mostly political.  All of the political and economic unrest in various parts of the world have led to foreign investment in US housing.  These buyers are coming in droves too, and this has led to a shortage of inventory, thus driving up demand and prices.  In particular, Canada, Venezuela, Argentina, Brazil, and China are the biggest movers and shakers in the home buying business. 

American buyers, on the other hand, are driven more by simple economics like interest rates.  Foreigners do not have to worry about that because they buy with cash, but with Americans who finance it is the single biggest factor in the purchase of a home.  Give out zero percent interest rates like the auto industry and the run on housing would be so great that we would surely run out of homes to sell in record time. 

So, given the fact that we have a great deal of buyers for homes, low interest rates, higher home values, and a shortage of inventory all point to a housing perfect storm.  This time, however, it is all for the better. 

 

 

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South Florida Shadow Inventories Leave More Questions than Answers

The debate as to whether or not South Florida’s struggling housing market is back on track or not is still up in the air as far as I am concerned.  If you asked one hundred agents here you would get a different answer from them all, but most would hinge on either a big time yes or a slowly but surely approach.

The problem with getting an accurate account of the recovery is simply tied into the shadow inventories, or the foreclosed homes that the banks are holding back on so as to not flood the market.  By doing so, the real estate market is left with a smaller inventory of homes, which generates multiple offers and higher demand.  Personally, as more of a listing agent than a buyer’s agent, I like the idea.  However, I do not like the false hope that it provides my customers.  Let’s face it, getting a loan today is like pulling teeth, so continuing to lower interest rates can only go so far.  So that pretty much leaves sellers with a whole lot of investment buyers, most of whom are foreigners.  On the other hand, if the market were to be saturated with thousands of foreclosed homes that would be a disaster as well.  Buyers would indeed come out of the woodwork like roaches, but their offers would be lower than usual, thus leaving the traditional sellers on the outside looking in because they are not the better deal.  This would probably also kill short sales since they close so much faster. 

I remember in 2006 and prior to when all the media could talk about was when the bubble was going to burst on the housing market.  Nobody paid attention to the warnings.  It was as if they wanted it to happen so that they would have something to talk about.  But now all they can talk about is the so called recovery.  What will the media talk about when that happens?  Make no bones about it – this is indeed an investor driven real estate market and without investors as buyers the South Florida market would look like Detroit.  It will lead to another bubble, however, that of the rental market because the area is being flooded with rentals now and landlords are gouging like tomorrow will be the end of the world.  It is sad at how people take advantage of others in their most time of need.  John Steinbeck’s, “The Grapes of Wrath” is a classic example of how the market collapsed during the depression and how those with took advantage of those without. 

So, as far as I am concerned the real estate recovery has to be divided into different parts of the country.  Some are better off than others, but Florida has a long way to go because it was probably the most greedy during the heyday.  The deeper you go into a real estate tragedy in terms of pricing and inventory, the longer you have to climb out.  Only time will tell how Floridians will bounce back from the deepest depths of the real estate abyss.  No media giant can ascertain that.

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Once Upon A Real Estate Time…

I ruled the rental world of South Florida with an iron fist.  When times were good, nobody wanted to touch rentals or property management.  It was beneath them.  And I thrived because I was the Wal-Mart of real estate rentals. I went where nobody else wanted to go.  And it paid off.  But as soon as the market tanked everyone was now a rental specialist.  Now these realtors were dipping into my territory and profits and there was really nothing I could do about it except keep giving out my superior service and keeping my clients informed that I was in it for the long haul and would never abandon them.

And four years into this recession from hell I am still here plugging along and my clients appreciate it.  They know that if I can hang in there and still at least help them through all of this then there is hope for us all.  The only thing that can set you apart as an outstanding realtor is service, especially now.  And yes, it is a cliche for most, but this is a philosophy I have always adhered to, not something that I came up with now because there are no other tools.  My clients speak for themselves and as professionals you too should strive to keep your clients happy and informed by always going the extra mile for them.  It always pays off in the long run.

However, it doens’t always work that way.  I thrive on referrals and the only way to get them is to impress your clients with superior service.  Others don’t so much.  This is why I make it a point to insist that my potential clients read my resume, call my references, and read my blogs.  How else are you going to know anything about your agent?  Just because an agent has a big, fancy ad in the paper or glossy magazine does not make them a specialist.  Do your homework.  The hiring of an agent, including one that specializes in rentals and property management, is just as important as a sale, and therefore, should be interviewed thoroughly.

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