Check out the index numbers in addition to the chart graphics. Even the index numbers seem uncannily alike to me. A housing drop of even half the amount the SPX dropped percentage wise would cause a world of hurt to leveraged homebuyers grazing away.
Tales of the Absurd
I happened to speak with David Donhoff at No Bull Mortgage today and we started discussing the book “Flipping Properties: Generate Instant Cash Profits in Real Estate”. He had some interesting tales. Here is one of them:
I’m getting 3-10 contacts a day from people seeking “hard money” loans for their flipping deals. They ask for “hard money” because they have ravaged credit, and zero cash. I have a difficult time explaining to these would be flippers that nobody in their right mind would pay the appraisal price they are shoving at me. Seriously, the only use for some of the absurd appraisals I am seeing is for use as emergency toilet paper if someone runs out of it. The fact is that some of the properties people want to buy with zero% down at full “appraised value” have been sitting for sale without success for 6 months. This does not ring a bell in the heads of these would be flippers.
Meanwhile, the Florida condo craze hit a new absurd height as Jorge Perez, a condo developer now has over 40 projects going on at once. “We are in territory we have never seen before with Jorge,” said Ezra Katz, chairman and chief executive of Coconut Grove-based real estate investment firm Aztec Group. “There is no precedent anywhere in the 34 years I have been in real estate. I have never seen anything of this magnitude or production.”
“He is very careful with his money,” said Matthew B. Gorson, a Greenberg Traurig lawyer who is Perez’s attorney. “He watches things, that is why he has done so well. Jorge is extremely disciplined.”
Perez said he has socked away loads of cash and carefully selected properties that are either near the water or in a city center. Such sites, he contends, will not dramatically lose value in a downturn. And if need be, he said, he can rent rather than sell units until prices rise to new heights.
He has 40 “carefully selected” condo projects going on at the height of this boom that will “not lose value” in a downturn? In addition we are supposed to believe he is “very careful” with his money? Yeah right.
Then again Jorge quips “If you find me under a bridge, you’ll know I made the wrong call.”
Note: I did two posts this evening scroll down for A Conundrum About Conundrums./