Downbeat news from JPMorgan: Florida homes could nearly halve in value
No way to sugar coat this.
blogs.tampabay.com
In a presentation to investors in late September, JPMorgan Chase & Co., hot off of announcing its purchase of Washington Mutual Bank, predicted Florida home prices would fall another 16 percent.
It could get even worse. In the event of what it called a "deeper recession," the bank projected Florida prices falling another 21 percent. A "severe recession" could bring prices crashing a further 36 percent.
JPMorgan assumes Florida prices have fallen 28 percent, which corresponds to what most home price indices say. So the bank is betting on a peak-to-trough decline of 44 percent in Florida (the 28 percent drop we've already experienced + another 16 percent).
How rotten is this news? Consider this: JPMorgan predicts further home price drops of 10 percent in California and 8 percent nationally. So our decline could be twice as bad as the nation's and 60 percent worse than California's.
Worse than California.
I promised I wouldn't sugar coat the news, but I fibbed. Northern Florida is experiencing the worst home price plunges these days, so the depreciation could disproportionately affect communities like Ocala, Gainesville, Pensacola and Tallahassee.
Feel better? Probably not.
(Thanks to SoldierRenter for the JPMorgan tip)
Posted by James Thorner at 5:39:36 PM on October 6, 2008
in | Permalink Comments
please tell the city/county governments this, my house taxes STILL went UP 17% this year!
Posted by: cedric h. | October 07, 2008 at 10:52 AM
Great! So why are they're executives getting so many tax breaks again? They're not helping our economy by having these meetings and guessing where prices will go. They're also the ones that came up with gambilng on bonds, shared derivatives, told the Fed and State they didn't need any regulation, and then blew up the entire finacial system. I bet if we tax them a little more, they'll find better things to do with their time rather than fan the fire.
Posted by: Snoz | October 07, 2008 at 12:19 PM
So the bank is betting on a peak-to-trough decline of 44 percent in Florida (the 28 percent drop we've already experienced + another 16 percent).
Surprise, hardly as the indicators have been pointing at this for some time. Me thinks the drop will be about another 20% partly due to the current inventory which includes the "hidden inventory" so many deny exists, the credit crunch and the current state of the economy in the Tampa Bay region.
However, the 16% decline will bring home values back in-line with incomes for the Tampa Bay area.
Posted by: Fuzzy Bear | October 07, 2008 at 12:41 PM
Unless I am reading your posts wrong, 28% drop already occurred, plus 16% drop expected, equals a 39.5% drop total overall. The key here is that it is a 16% drop from current levels, not a 16% drop from the original highs. 0.72*0.84 = 0.6048, or a drop of 39.52% from the highs.
Posted by: spackle | October 07, 2008 at 11:55 PM
Just when you think bottom is around the corner. I just can't decide which condo tower to jump off. I mean there are so many to choose from. There's that great half finished condo tower downtown Orlando with the crane on the roof. I think perhaps that's the one. Or maybe I should drive to Tampa or something more exotic in Miami??
Posted by: Marcus | October 08, 2008 at 08:10 AM
I totally agree, a 50% drop is going to be realized, and then some. However, if prices have fallen that far in Florida will somebody please tell the folks who are trying to sell their properties? The MLS and FSBO listings are filled with the same overpriced stuff we've been seeing for two years now. It's like sellers in Florida are in a state of denial, playing some huge poker game and chasing the pot while holding nothing. BUYERS BE SMART - use public records before you decide what to offer on a piece of property - stainless and granite does not mean the property is worth twice what the owner paid for it.
Posted by: Val Orlando | October 08, 2008 at 08:47 AM
I totally agree, a 50% drop is going to be realized, and then some. However, if prices have fallen that far in Florida will somebody please tell the folks who are trying to sell their properties? The MLS and FSBO listings are filled with the same overpriced stuff we've been seeing for two years now. It's like sellers in Florida are in a state of denial, playing some huge poker game and chasing the pot while holding nothing. BUYERS BE SMART - use public records before you decide what to offer on a piece of property - stainless and granite does not mean the property is worth twice what the owner paid for it.
Posted by: Val Orlando | October 08, 2008 at 08:47 AM
It's like sellers in Florida are in a state of denial,
It is my belief that the consumer has been in the state of denial. The next stage is acceptance that property values have dropped and that the consumer selling the property must bring the property in-line with current market values.
Posted by: Fuzzy Bear | October 08, 2008 at 08:56 AM |
