All Forum Posts by: Ken M.

Miami Housing Market Hit By "Breathtaking" Collapse In Demand

(What? Me Worry?)

Nick Gerli, CEO and Founder of real estate analytics firm Reventure Consulting, has issued another troubling update on Florida's housing market—this time sounding the alarm about a collapse in demand across the Miami metro area. He described the plunge in sales as "breathtaking."

Quote from @Mike Klarman:

Ive seen it all too many times.  Deals look ok on paper, in theory, it looks like the investor should make money and then the deal plays out in practicality and all the intangibles hit and go against the investor and they get pummeled.

Agents/wholesalers inflate comp packages, GCs underbid estimates to get the job, market conditions can change from when you started till when the for sale sign goes up.  People end up in some horrendous scenarios.  In over their head, trying not to lose it all instead of winning anything. 

I think these educational platforms that glorify isolated results  and try to set them as a norm have lots to do with it.  I can't tell you how many times people told me they are breaking in to investing and they don't wanna use any of their own money and they heard its possible from a podcast.

My answer is usually for them to call the podcaster and see if THEY would like to stake you.

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A good "no money down" deal requires about $30,000.

Quote from @Gina Stern:

There will likely be a foreclosure condo tsunami, especially in Florida. People, seniors in particular, will not be able to afford the increasing HOAs and assessments, as insurance premiums are going through the roof. No one wants to make too many claims, as they could be dropped by their insurance companies. It is not a pretty picture that is forming out there!

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Your comment: "seniors in particular, will not be able to afford the increasing HOAs and assessments, as insurance premiums are going through the roof"

Is what concerns me the most at the moment. I saw somewhere that property taxes have gone up an average of 29% across the country as well. There is absolutely no justification for this.

Municipalities say that money goes toward education and infrastructure, well both have gone downhill for 30 years with higher and higher taxes.

There is no connection between the two anymore.

It becomes a "slush fund" for the political class and until property taxation changes, homes are going to be lost as un-affordable by tax and by insurance.

Quote from @Jay Hinrichs:

Ken your way to smart and experienced to know this answer LOL.. 

Just trying to get people to think, rather than just be wishful, maybe I'm on the wrong site? ;-)

Quote from @Dan H.:

Quote from @Ken M.:

Quote from @Marcos De la Cruz:

Quote from @Ken M.:

Quote from @Michael Plaks:

I have heard this claim before, but California-based attorneys who work with my clients do not agree with it. Did Clint offer any substantiation for his claim, like a code citation or a court case?

When we moved from Seattle to Arizona, California placed a lien on us, even though we had never done business in California, had no properties in California, had never lived in California, had no LLCs in, near, above, below or even thinking about being in California. 

I called, they wouldn't remove the lien (board of equalization or something like that) until I could prove it wasn't me. How does one even do that?  How do you prove a negative?
I believed the hype "innocent until proven guilty". Nope, that is not true in California.

So, from then on, no thought of even doing business California. Why would I subject myself to King George all over again. My people left him in the dust back in 1776. Apparently he moved to California.

 Don't get me started. The best thing about CA is the weather. And it is glorious, but everything else is atrocious.

Unbeknownst to Californians, Florida has great weather, Hawaii has great weather, lots of great weather in Texas, Southern Oregon is generally very nice, South Carolina has great weather, North Carolina has great weather, Georgia has generally very nice weather.
The list goes on.

You might miss the earthquakes and wild fires though. 
 

 Of your list only a few spots in Hawaii can match San Diego’s weather.  Earthquakes do not scare me.  Unfortunately fires do.   Not so much my health but losing valued possessions.

For those that avoid CA, they are ignoring a lot of stats that demonstrate CA has a lot of economic potential.   I am all for those that do not see the opportunity.  stay away!  I do not believe there is a shortage of opportunity but I have gotten a bit less motivated and like the opportunities to be obvious and easy.

Good luck

I agree, San Diego is a beautiful area. We prefer Laguna Beach, but that's just a hop, skip and jump away.

I forgot to mention the mudslides. 

What concerns me about San Diego, or any beach city in Southern Cal is everything is in the way to get away from the coast. In a major event like a  huge earthquake, there are millions of people who want to leave the area at the same time. Looking for shelter, gas, food, safety. 

One bridge goes down, the whole thing stops. And no porta potties.
Once they outlaw running out of gas on the freeway, getting into an accident, or overheating waiting for the line to move, then you've got something. 

Meanwhile, it takes just one silly nilly to get on the freeway with an empty gas tank and when they run out, you're stuck behind them for good. It takes just one connector bridge to collapse and that route is no longer viable.

and there are very limited evacuation routes

Survival 101, always have an escape route . . .  and a backup
and don't drive around silly nilly Southern Californians

Oh? It's different this time? Lol

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Major repairs can now cost what previous generations paid for an entire house, and no, this isn't just inflation; it's the result of the decline of quality across the board and the gutting of labor skills to cut costs.

Here's the Case-Shiller Index of national housing prices. Housing Bubble #2 far exceeds the extremes of unaffordability reached in Housing Bubble #1:

Quote from @Marcos De la Cruz:

Quote from @Ken M.:

Quote from @Michael Plaks:

I have heard this claim before, but California-based attorneys who work with my clients do not agree with it. Did Clint offer any substantiation for his claim, like a code citation or a court case?

When we moved from Seattle to Arizona, California placed a lien on us, even though we had never done business in California, had no properties in California, had never lived in California, had no LLCs in, near, above, below or even thinking about being in California. 

I called, they wouldn't remove the lien (board of equalization or something like that) until I could prove it wasn't me. How does one even do that?  How do you prove a negative?
I believed the hype "innocent until proven guilty". Nope, that is not true in California.

So, from then on, no thought of even doing business California. Why would I subject myself to King George all over again. My people left him in the dust back in 1776. Apparently he moved to California.

 Don't get me started. The best thing about CA is the weather. And it is glorious, but everything else is atrocious.

Unbeknownst to Californians, Florida has great weather, Hawaii has great weather, lots of great weather in Texas, Southern Oregon is generally very nice, South Carolina has great weather, North Carolina has great weather, Georgia has generally very nice weather.
The list goes on.

You might miss the earthquakes and wild fires though. 

Quote from @Michael Plaks:

I have heard this claim before, but California-based attorneys who work with my clients do not agree with it. Did Clint offer any substantiation for his claim, like a code citation or a court case?

When we moved from Seattle to Arizona, California placed a lien on us, even though we had never done business in California, had no properties in California, had never lived in California, had no LLCs in, near, above, below or even thinking about being in California. 

I called, they wouldn't remove the lien (board of equalization or something like that) until I could prove it wasn't me. How does one even do that?  How do you prove a negative?
I believed the hype "innocent until proven guilty". Nope, that is not true in California.

So, from then on, no thought of even doing business California. Why would I subject myself to King George all over again. My people left him in the dust back in 1776. Apparently he moved to California.

Quote from @Bruce Woodruff:

Quote from @Jeremy H.:

Just cut it and see what happens - ideally slowly and with an escape route 

"Just cut it and see what happens"

Well that is one way to find out, Lol.... But sometimes it's th easiest way on a really complicated framing job. The idea of the ceiling joists running perpendicular doesn't always work out.
It really s**ks when your sawsall blade gets stuck because the weight of the house comes down on it....been there done that....

All of the houses I flipped early on were built between 1900 & 1940. I saw everything. Even add on walls that made no sense and weren't nailed in, just shoved into place and held by friction. 

Most original walls were lath & plaster. Can't really repair lath & plaster and make it look good. Some walls were unidentifiable of the material and suds were just totally not there. Funky stuff.

Typically we'd remove it all, rewire while we're at it and put up new sheet rock. I don't think that's the solution she's looking for though. ;-)

Quote from @Chris Seveney:

Over the past few years, I’ve been vocal about the rise of inexperienced fix-and-flippers jumping into real estate with little more than YouTube tutorials and optimism.

Now? The cracks are showing.

In just the past week alone, I’ve seen loan pools totaling over $200 million in defaults cross my desk. These aren’t isolated deals—they’re systemic. And the brokers I’ve spoken to are saying it’s just the beginning. We also have heard rumbling KIavi is moving out of Florida (Ironically more than 50% of these loans are in Florida with heavy concentration in Tampa /  Port Charlotte area)

Most of these loans are tied to rehab projects that were either under-budgeted, mismanaged, or never should've been funded in the first place. Rising rates, labor shortages, and inflated ARV projections have pushed a lot of these deals underwater.

It begs the question:

Is real estate finally going back to being a complex business again?

For the past few years, it felt like anyone could throw money at a deal and come out ahead. Now, it’s becoming clear that experience, underwriting, and risk management matter again.

If you're a lender—have you started tightening your standards? Or seen others doing the same?

Would love to hear what others are seeing out there.

One analyst said that the number of new builds is the highest it's been in years. Seems some hedge funds are building to "rent to own". But I agree, flipping is for those who know the market and can turn the product quickly with desirable design.