Tuesday, June 21, 2011

When was the last time housing prices were this low ?

The Great Greenspan Depression of the Millenium's relentless destruction of value persists and the much talked about double-dip is here. The National Association of Realtors reported that Existing-home sales fell 3.8% to a seasonally adjusted annual rate of 4.81 million in May from a downwardly revised 5.00 million in April. This is off 15.3% from May 2010 a year ago.

The national median existing-home price for all housing types was $166,500 in May, down 4.6% from May 2010. Distressed homes accounted for 31% percent of sales in May, down from 37% in April.

An NAR survey found that Distressed homes “typically sold at a discount of about 20%.”

You don't get something for nothing, however; the reason for the lower valuations is that distressed properties also happen to be properties that have been neglected in repairs and maintenance. Most of these have years of deferred maintenance that have come due and buyers of these properties have to budget those costs in their offers.

Plain logic tells us that the last thing a homeowner who cannot pay his mortgage will do is invest his precious remaining cash in repairing or maintaining the home that he will most likely lose soon. Feeding the kids will always take precedence.
The chart below reveals the seasonal pattern by showing actual sales numbers prior to any adjustments:

Housing Prices Decrease for May 2011

There are bright spots, however; while it certainly looks painful in those areas in the chart, there exist high-demand areas have actually experienced price increases or stability and higher volume sales.

Take, for example, Key Biscayne in South Florida. Homes priced over $10 million are actually increasing in value during this depression.

We all know that the Great Greenspan Depression has been nothing but a transfer of wealth from the illiquid unlucky to the liquid lucky; Nothing more. Other pockets that defy the statistics are Cocoplum near Miami, long considered a haven for beneficiaries of the looting going on in Latin America, most notably Venezuela. These local aberrations of the economy are actually fed in part by people fleeing corrupt countries with their loot, seeking places to invest before the sure-to-come popular revolt and subsequent prosecution. Miami, with its multi-cultural heritage and abundance foreign bank branches is a shoe-in for these cash-rich emigrees looking for the easy life after having enjoyed political office and its spoils.

Another pocket that defies the depression is the Spruce Creek Fly-In. There we don't see the migration of banana-country-corrupt-politicos and military but actually a number of savvy individuals that have found a private and safe enclave that happens to have its own airport and country club, all within its secured and guarded gates.

Located in North East Florida, The Spruce Creek Fly-In is the world's largest and most famous Residential Airpark. Originally a navy airfield during WWII, it evolved into the world's largest residential fly-in community. Today, almost 5,000 residents, 1,300 homes and 700 hangars share a unique life in this private gated village with immaculately groomed homes and common grounds. The first thing a visitor sees after driving through the security gates is a sign that summarizes the spirit of this community: “CAUTION Children and Adults at Play”.

A championship golf course and Country Club and 24-hr patrolled security complements the safety, privacy and enjoyment of the residents. Frequent community-wide events and social clubs for most any interest from flying to book reading and gardening ensure a tightly knit and friendly community hard to duplicate anywhere. John Travolta and many other celebrities have enjoyed the Spruce Creek Fly-In lifestyle and privacy.

While other areas have seen price decreases, the high demand and limited supply of Spruce Creek Real Estate at this desirable community ensure stable prices while others suffer.


  1. Absolutely right. I keep finding prospective buyers who insist on seeing only "foreclosure and short sale" properties and then they complain about the condition they are in.

  2. I agree Connie! It can be very frustrating. However I am lucky where I am at, because I can have a home built for less than most short sales and foreclosures.

    How is the market doing in Florida? Any light at the end of the tunnel?

    Justin Robins
    Market Edge Real Estate
    Utah Real Estate

  3. Truer than true. One cannot believe how uninformed many propsective buyers of short sale properties really are. They are also amazed at the poor condition of homes once they get inside them. There's a reason why the price is below the presumed market value.... the condition is also below market value.



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