Unfortunately, we probably haven't seen the bottom yet. I reported in the past how some quality rental properties in Detroit were going for as little as $5 a square foot. It costs more than that to lay cheap carpet down but the buyers were nowhere to be found. The reason? No jobs. I think that price level represents blood in the streets and so investors should be buying those up in anticipation of Americans going back to work in the future at lower wages which better compete with foreign labor rates. I don't know if Florida properties will get that low but Florida is not exactly an industrial powerhouse and tourism is not to be counted on as a reliable revenue source if things keep getting worse on the overall job front. I have recently seen a 2200 sq ft pool home with aluminum enclosure with single car garage in the Port St Lucie area going for $22 per sq ft and it was in very livable shape. The prices seem to just keep falling and falling. Lots of people talk about reversion to the mean in prices but in any mania collapse it is most likely that there will be a painful undershoot.
Banks in south Florida are still withholding properties from market ostensibly because they are afraid to flood the market and depress prices. That is a failing strategy and banks know it. Homes cost money to hold. You have to pay property taxes and maintain the yard and the house or it will lose value. If you turn your back on an unoccupied house then squatters will move in or vandals will rip the copper out of the walls in order to get $3.50 per pound from it, no questions asked, from the local metals recycler. So why are banks really withholding from the market? Because until the property is disposed of our corrupt accounting rules allow them to hold the assset on their books at fantasy valuations. If banks had to tell the truth about their capital losses in a true mark to market situation, many would go bankrupt overnight. So the banks are buying time for themselves but this is resulting in value loss for the economy as these homes go into disrepair. If government allows banks to play this game too long it could result in property blight in Florida as has been seen in Detroit.
If you are still wondering what the root cause of all these problems is, look no further than fiat currency and fractional reserve banking. If banks could not create credit from thin air and spend it into the economy as if it were real money then $60,000 homes would never have been bid up to $300k by leveraged buyers. People would not find themselves in over their heads today and banks would not be at historic levels of risk for bankruptcy. The carnage in the US is far from over. Government has been propping things up using increasing levels of debt and money printing but that is an unsustainable strategy, another con game that must eventually collapse. When it does I fear that housing prices across the nation are going to go down much further than most people think is possible. Houses are not worth what you paid or what you have into them in improvements. They are only worth what buyers can afford to pay. Today 90% of the housing loans are being sold to the government because banks are just originating them and passing them along. If government ever finds itself in a position where it can no longer do this, the housing market is going to plummet to the point where buyers can afford to buy without big loans.
Contrary to popular belief, sellers don't set the prices in the market place, buyers ultimately do.
