Palm Coast/Flagler Make Front Page of Washington Post
Mostly about Obama’s reelection chances given the state of the housing market, Fletcher’s article focuses on Florida as a swing state and Palm Coast as emblematic of Florida’s real estate boom – bust
Palm Coast, FL – June 6, 2011 – The reputation of moving from the country’s fastest growing county to the state’s highest unemployment rate will dog Palm Coast and Flagler county for years. Palm Coast and Flagler County were Washington Post writer Michael Fletcher’s vehicle used to illustrate the recent boom/bust cycle of the housing market. The article contains many comments from locals, me included, but we were not the main subject. That would be the effect of this swing state’s housing recession and delayed recovery on Obama’s reelection bid.
The article is not particularly flattering in its depiction of Palm Coast and Flagler County. The photo gallery [Flagler County: Poster child for Florida boom and bust] accompanying the on-line version was even less so. It highlights some real problem areas; European Village, the foreclosed Tennis Club, and the nearly-vacant Roma Court. But it also includes dumpy shots of Volusia County’s abandoned Treasure Island Resort without adequately identifying it as non-Flagler. After taking at least 100 pictures of me at my Tidelands condo – entering the lanai, exiting the lanai, talking on the phone, sitting on the lanai, leaning on the TV – the photographer chose to use one taken through the lanai’s screen door. It looks like a mug shot.
Unfortunately, the story fails to mention the signs of a strengthening market. Neither does it display readily available shots of new construction or of our area’s abundant recreation venues. But we still made the front page of the Washington Post. As fellow Irishman Brendan Behan said, "There is no such thing as bad publicity except your own obituary."
Read the On-line story >>>> Swing states still struggling after housing bust pose challenge to Obama reelection
The demand for housing is there.
As a Flagler County Builder and past President of our local home builder association..I can speak to the fact that help is possible…but it has to come from the Federal side of the governmental control body.
One real way that the Obama Administration could help is to change POLICIES as they pertain to the Property appraising formulas for real estate in general.
Instead of throwing money at bail outs, if they could see that the appraisal calculation rules have become the regulatory tail wagging the dog of the housing market, and if they would choose to develop a more practical approach to setting property values through POLICY changes instead, then soon we would see a righting of the ship.
To insist upon using drastically skewed foreclosure values (a situation that they indirectly created via the TARP bail out for lenders) as a basis for new sales only creates a spiraling down catastrophe that shall never end. I have seen million dollar home sales comped with rat infested deserted foreclosed homes… houses that cost over $200 per square foot to build comped to a value of $70.00 per sq. foot…only to see of course that the "deal" totally implodes at the closing table. When a projects hard costs are valued to be less than half of actual cost…because of moronic policy rules…then nothing has a chance to recover in the housing industry or in the manufacturing industry that supplies many of the goods we use.
Instead of ignoring this white elephant "appraised value policy" in the room, we would be better served by a government willing to allow for more than a rule that insists upon using a "bottom of the barrel" approach to setting property value comps. How about a comp formula which allows for all market realities…the cost approach to build, the price that a willing buyer is prepared to pay, and yes, some short sales and foreclosures too to allow for a balance. Instead of 100% reliance upon the worst case scenario for property value determination, how about something like 50% cost approach for replacement value, 20% buyer perceived value, 15% shorts and 15% foreclosure values.
If they changed this currently dysfunctional policy to a sort of common sense formula instead, the value of taxpayer’s properties would start climbing appreciably and steadily instead of spiraling downward in a never to end "whirlpool of doom". Consumer confidence and spending would thus start to increase for those newly hopeful property owners who could actually then see a light at the end of the tunnel. New construction could restart creation for new job positions, and existing home sales would increase as well, relieving homeowners who want to retire and relocate to further spur on market growth.
The demand for housing is there. It is simply strangled by moronic appraisal policies and no one is screaming about it. For all the talk about stimulus, it is ironically only a policy change which is needed!
Palm Coast / Flagler County
Although the article lists European Village and shows numerous unflattering photos, it does not go into some of the prime reasons for owners default, ie, developer FRAUD, City of Palm Coast "ease" of building for its’ then favorite son peter roeher, Bank and Title company mis managemnent and possible fraud.
Good idea, fraudulent developer, bad and possibly criminal "hotel" management, lack of cooperation by the City and no police security / law enforcement.
These factors with the obvious economic situations nationally, state wide and locally along with greed are, to me, major contributors.
Good people taken advantage by unscruplous builders, quick buck investors, and Washington’s allowance of profit taking in both Freddie / Fannie and with the lack of the SEC’s diligent oversight of Wall Street, in other words, the PERFECT STORM.
Negative input by the Media
It’s seems like the news media is only interested in printing the negative side of a story. Maybe they feel that’s what sells newspapers. But if they are going to use Flagler and Volusia county in their story, they should also show the positive side of that county as well. There were no pictures of our beautiful beaches, wonderful trails, and the wonderful lifestyle in Palm Coast, Florida and Flagler County. I know that the article was really a political article, but their one sided view of our county was not appreciated. ST
re – appraisals
I read Mr. Rinek’s comments about the skewed appraisals and gree with him wholeheartedly. To comp all properties with foreclosures and short sales is totally short sighted and unfair to sellers who do not fit into this category. There has to be another way to get this message across that adjustments need to be made in appraisals. While there are still short sales and foreclosures, the count is dropping. Due to negative media coverage like this article in the Washington Post, we still have many people come to Palm Coast thinking every seller should accept what is offered to them regardless of the circumstances.
Agreed on Appraisals
As a fellow builder in Flagler County, I agree with Charles Rinek. Our companies have seen recent appraisals hold up, deter and cancel perfectly fine and legitimate sales by comparing oceanfront homes with outstanding amenities in gated communities to homes one mile inland with zero amenities or security.
All this does is hurt the buyer, the seller, the community, the lender, etc. and effectively put a halt to any recovery or spike in business.
LG
Simple solution?
I am not a real estate expert.
However, I am always suspicious of simple, obvious solution to a complex problem.
In 2010 the Finance, Insurance and Real Estate special interest spent $473 millions on lobbyist to protect the industry’s interest. A simple "administrative change" would have been an easy project for the "K" Street lobbyists.
Simple solution?
I am not a real estate expert.
However, I am always suspicious of simple, obvious solution to a complex problem.
In 2010 the Finance, Insurance and Real Estate special interest spent $473 millions on lobbyist to protect the industry’s interest. A simple "administrative change" would have been an easy project for the "K" Street lobbyists.
Market to Market value
The appraisal for loans that are sold are now done for market to market sales. That means the mortgage is sold after the house is closed to any willing buyer. Those willing buyers want solid loan to value ratios for assurance of conformance. They want room for further property value drops.
That is the new policy as directed by the federal government that does not want to bail out banks and or mortgage companies. It is perhaps good for that alone but bad for builders that can’t build for what the properties appraise for. That too helps the sale of existing houses that are at 50% of todays cost to build.
Many want new and new only, and so they have to pay the price of cost plus profit for builders, which means they instantly have a home that is not worth what they paid for it. They do have a new house and sometime in the future it will be worth more than they paid for it, but when, nobody knows.
Being a retired Certified General Appraiser, and in real estate as a broker and sales person since 1973, I have only to say, it’s the job market that is the problem. In Washington DC the property values have gone up for years, as they have in other places of high employment.
It’s true we do have beautiful beaches and nice sea breezes, but this is not much more than the Walmart of the south, and unless the Chineese come in and start building house at the same 10 cents on the dollar as they produce goods for Walmart, we will have to bight the bullet and pay the builders for new or buy used. Many have done just that, but there is nothing like "BRANDYNEW".
Another Reporter Lacking Market Knowledge
Another perfect example of drawing conclusions without truly investigating the facts. To quote myself from the numerous interviews and articles that I have been part of over the past year, too many people assume that they know what is going on by either drawing the wrong conclusion by a simple drive-by visual assessmnet of a property or by listening to the many rumors that are spread throughout our community on a daily basis. Roma Court is under contract and the buyer is an end user and 100% of the building will be occupied. Stay positive my friends.
Failures in Congress
The appraisal method is not the only issue that has created the debacle in our real estate devaluations. The greatest proportion of the debacle rests with the U.S. Congress and the Finance Committee. Their programs to ease the requirements for obtaining Fannie and Freddie financing did nothing but endow those who could not afford, never intended to pay for and who used the system to their benefit. Unqualified congressional and administration economic advisor appointees, the 5th of these group of these losers of the administration to resign exemplifies this failed practice, among others.
Wide distribution
This story was also picked up by the St. Augustine Record and excerpted in the Sydney Morning Herald (Australia).