Mike Morgan is telling me that his email basket is filled up with responses from the Wall Street Journal article Hot Homes Get Cold In Once-Booming Markets Such as the Florida Coast, Housing Sales Languish. April 12, 2006; Page B1
I was pleased to beat the WSJ to that story by several days in The dreaded “D” word surfaces Sunday, April 09, 2006.
Here is the latest report from Mike Morgan:
I’ve received a variety of emails and voice mails from people all over the United States today in response to a very minor mention of my name in the WSJ. 75% of the communications are people that think I am a sleaze for selling junk to my clients. Little did they know, my clients are fine. We warned about this more than a year ago.
Anyway, take a look at the email I received below. If that doesn’t drive home the seriousness of what is just only beginning to unravel, I will send you a dozen more emails I received . . . like the email I received from the Dad of a young wife that is getting a divorce because the husband lost it all at the craps table in Vegas – strike that – I meant to say the husband lost it all buying flip properties in Vegas. By the way. She has 2 young babies and is moving back home with Mom and Dad. Or the email from the couple (68 and 70) that were getting ready to retire to Florida in 3 years. Guess what? They’ll retire, but the husband lost so much money buying straddled foreign exchange derivatives on Italian lira – strike that – I mean to say five spec condos in Naples (Florida) to make some extra money to buy a special retirement home, that they are not going to retire in the style they thought. They still haven’t sold the condos, so they are in for a big surprise. As he put it in the email, the 40 years of trust built up in that marriage has been wiped out. He wanted to know what I could do to help him. I’m not the Easter Bunny.
I bought an $850,000 a year ago on a little less than a quarter acre of land and with barely 2000 sq ft. under air. I made the “wise” choice to purchase it with no money down! This home was just on the threshold of my affordability…even with the wife working. Oh did I mention I have an ARM mortgagte…so now my payments are going up up up! S@@@…we are paying more for the same house…but not building any more equity! This sucks! Then the wife comes home after just sending the daughter to the orthodontist to get her teeth fixed, and declares …”Tom, did you see that the Klevelands just put their house up for sale?” “No, I din’t, I thought they really loved the area”…so with a little digging, I find that they are asking $800,000 for their home…and it is just about the equivalent to ours. Then your mind races…what is going on? Then you realize 3 months latter that their house is still up for sale, with a neon lights above the realtor sign, that says REDUCED (to $750,000)…not only that, but there are now 20 other for sale signs up in your neighborhood…THAT IS WHEN THE SHOCKING REALITY SETS IN…you will never get that $850,000 out of your house, and all the interest you have been paying is just that…a fart in the wind…and sallys orthodontist bills are pilling up, and our credit card is maxed from all the new furnishings we decorated our $850K home with…not to mention that there are rumors at work, that the company is sending more jobs to India, to save a buck, and you panic. Now I am staring aimlessly into my newly adjusted mortgage bill thinking, “HOW THE F@@@ DID I GET MYSELF INTO THIS”. So I will sell my useless home at a loss..upside down and all, move to a region with cheaper homes, maybe a “fixer upper” take a lower paying job with a commute and sell the sports car and the boat, so I can with a clear conscience look at little Sally with a mouth full of wires and crooked teeth and smile, all the while thinking, ok, now how the f@@@ am I going to pay for her college! I was one f@@@@@@@ idiot…I hope no one besides my wife ever finds out. This has just about destroyed my marriage. Oh, one more thing. Did I mention I bought another home in here as an investment flip that we closed on four months ago. I can’t sell it for what I paid. I can’t even find a renter. I haven’t had a showing in more than 2 weeks.
If you want to either buy or sell in Florida and want to know what is really happening, give Morgan Florida a call.
Stories like those are just starting. There will be more and more of them, and more than likely those affected will blame the media and messengers like Morgan. I have proof of that already. Here is a snip from the WSJ article above:
Some Floridians blame the media and even Wall Street for scaring people away. Mr. Linsley recalled a headline in a local paper declaring that the local housing market was overvalued. The headline type was so bold that it looked as if the nation had just declared war. “The media is killing the investors,” Mr. Linsley says.
To Mr. Linsley I have some questions for you.
- Where were your complaints when the media was reporting about people like yourself snapping up 2 and 3 units at a time after a multi year boom in which prices had already doubled?
- Where were your complaints when the media reported that some people were camping out all night just to get in line to buy a condo?
- Was the media not reporting on that too?
- Shouldn’t that have been some sort of sign of a top?
Perhaps Mr. Linsley if you want to know who is to blame for the crash, then I have four answers for you, one in the form of a question:
- The Fed by slashing interest rates too far.
- Fannie Mae and loose lending standards everywhere.
- Congressional policies to make housing affordable. Those programs are now backfiring.
- I suggest you look in a mirror and ask yourself “What the heck was I doing fueling a bubble like that by buying three houses at the peak of insanity?’
The Fed and Fannie Mae and lending standards provided the money, but you Mr. Linsley pulled the trigger. I have no doubt that sometime down the road when bankruptcies start soaring, there will be a Congressional investigation that ends up blaming everyone but those responsible.
To everyone: On behalf of the Easter Bunny, enjoy the holidays.
Mike Shedlock / Mish/