'The Unthinkable Has Happened' In Florida

Mike Thomas at the Orlando Sentinel sees a dire outlook if one market tanks. "Baldwin Park has been ground zero in the real-estate boom, the Promised Land of six-figure flipping profits. And since Baldwin Park is simply a souped-up microcosm of what is going on across Central Florida, it's a question that affects real estate across the region. As goes Baldwin Park, so go all of us." "That said, here are figures from the Property Appraiser's Office and real-estate listings: A house bought for $279,200 last March is on the market for $499,500. A townhouse bought in October for $337,700 is on the market for $445,000. A house bought in October for $403,000 is on the market for $670,000. I actually found a comparable house from a builder in a better location for about $60,000 less." "Baldwin investors have developed a sense of entitlement to fast, huge profits. But now those prices have caused a backlog of inventory. There are about 90 listings on the market, and many have sat there for months. The unthinkable has happened. Baldwin Park has become a buyer's market. And so for investors, the waiting game has begun. How long will they hold out for top dollar when faced with growing costs to hang onto their property?" "Baldwin Park owners face a variety of fees to cover maintenance, infrastructure costs and homeowner-association fees. Condo and town-house owners also pay a service-area fee. Consider someone who paid $330,000 for a town house, hoping for a quick flip. The various fees amount to about $5,000 per year. He faces another $3,000 or so in property taxes. Throw in a $300,000 mortgage, and the monthly tab comes to about $2,400." "So every month, these investors will be making payments, holding out for prices that are based on a real-estate frenzy that may no longer exist. If the market outlook dims, they do the math on what it costs to hold the asset versus the expected return of doing so. The kind of market forces I am talking about are in play across the region. They may well cause painful price declines in other developments or areas that have been subjected to heavy speculation." "Baldwin Park, however, is a premier place. If you live there, your investment is as bulletproof as real estate can be. If Baldwin Park takes a dive, we are all doomed. That will mean the Great Depression II is here. But we might see some froth settle as speculators are weeded out. Even if that does happen, I still couldn't afford the place."