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. 

 

 

Advertisements

Filed under: Real Estate, , , , , , , ,

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.

Filed under: Real Estate, , , , , , , ,

New Construction in Israel

I know what you are thinking. And no, what you see happening on CNN, Fox, etc. is truly NOT the face of Israel. As a matter of fact, the real estate business there is booming and there is no bubble because banks lend little, if any, money for residential sales. In fact, most of the buyers of the new projects on the Mediterranean are foreigners. Citizens of the country have to actually win the lottery just to buy a home.

Do not let threats from Iran or any of the other wacky Arab countries deter you from investing in Israel. I have been there four times and have never felt threatened. I actually find it to be quite a lovely and relaxing country that is incredibly friendly towards Americans especially. Getting around is a snap as everyone speaks English and all signage is in four languages. The security at all levels there is unmatched anywhere in the world. Why? Because there are no politically offensive or incorrect messages or policies that the federal government cares about using. Security is paramount and if you do not like the steps taken to ensure that, you can leave. We as a country can learn from that.

This brings me to my real estate point. If you like Miami Beach or Brickell, this is for you. The architecture is very similar with the art deco look,  and the amenities spectacular. But the best part of this project, Aviv, are the views of the Mediterranean. Underground parking abounds as well. This is about a two year project and deposit are being taken here with me at Fortune International Realty.  All contracts are assignable as well. 

Tel Aviv New

This building in particular is six floors with retail on the ground level and a garden area on the roof with shared “safe rooms” for everyone.  I liken these rooms to those of Americans in the 1950’s who had a bomb shelter in their back yard.  You can never be too safe in the government’s eyes.  Parking is underground and the beach is a ten minute walk.  Contact me at 954-214-6014 for additional detailed information.

Filed under: Real Estate, , , , , , ,

Understanding Florida’s Landlord/Tenant Act

This nifty little disclosure has literally gone from two pages to eleven overnight.  What once was used simply to protect the tenant from losing his or her security deposit has now gone to protecting both sides.  Afterall, landlords seemed to be getting the short end of the stick on this one time and again, espcially with all of the tenants refusing to pay rent in the event of foreclosure, short sale, or even a simple modification. 

I have since come to find out that a rental agreement between a landlord and tenant and an agreement between landlord and bank are two different things and should be treated as such.  Just because a landlord may not be making his or her mortgage payments does not relieve you of your duty to pay rent as stated in your lease.  It is your duty or your agent’s to check on the property’s status beforehand.  Why get yourself into something that is already in trouble?

But it gets better.  Included in the Act are both sides obligation to maintain the unit, the landlord’s access to the unit, termination of an agreement, holding over, prohibited practices, and my favorite, choice of remedies upon breach or early termination by tenant.  This last one has been ignored forever, but now a landlord can charge for liquidated damages for either in the amount of two month’s rent. 

Is that fair?  Absolutely.  My advice to all tenants now is to read every page of this act before signing a lease in the state.  It is so much more detailed and goes beyond the scope of a simple security deposit.  That is provided your agent gives you one.  Be sure and always ask for the landlord/tenant act before signing a lease in Florida, whether it’s from an agent or a by owner.

Filed under: Real Estate, , , , , , , ,

Landlord/Tenant Responsibilities

Anyone out there acting as a realtor or those practicing leasing on their own should know this;  tenants will always try to get away with as much as possible on a lease agreement simply because they either do not trust the landlord or just want control.  One of my favorites is when a tenant will want a clause written in a lease where they have the ability to repair anything that breaks down and bill it to the landlord. 

This is taboo as far as I am concerned.  It pretty much leads to the tenant simply calling anyone they wish to in the phonebook without a care as to how much it’s going to cost.  Most landlords, at least the experienced ones, always have someone that they work with that won’t rape and pillage them for a repair.  That is why this should never be allowed by a tenant. 

On the other hand, if you have a deadbeat landlord that never repairs anything, that’s another story.  But how is one to know that?  That is where your agent comes in.  If I had a landlord that I knew was a deadbeat I would do everything in my power to give the tenant the authority to make the repairs responsibly.  Other than that, your next best bet would be to hire a property manager.  As one myself, I have a handful of vendors that I specifically use for these purposes and because of my constant stream of business I get preferential treatment and prices.  Always look for  these types of clauses in the lease or agreement.

Filed under: Real Estate, , , , , , , , ,

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 1,121 other followers

http://twitter.com/#!/shoelessmoe