The Housing Bubble

The North County Times reports from California. “The area’s housing market reached a record-high median price of $655,000 for single-family houses last month, even as sales continued to tumble, according to a new report. As encouraging as the new price record is for some, it does not suggest the North County real estate market has rebounded, analysts said.”

“On the contrary, the median is artificially high, they said, because sales have fallen sharply in the lower price ranges in response to the meltdown of the subprime loan market.”

“The median price per square foot of home sold came in at $312, down 4 percent from $325 per square foot price the year before, the report shows. The May number was down 5.5 percent from the $330 per square foot peak of June 2006, when the previous record median was set.”

“‘Overall, just about everybody is selling for less,’ said Dennis Smith, a real estate agent in Carlsbad who follows market trends.”

“When it came to single-family homes, sellers sold 725 in May; 13 percent fewer than in May 2006 and 32 percent fewer than in May 2005, the report shows.”

“Single-family sales were off by 13 percent when it came to the amount of money that changed hands.Condo sales were much weaker than they were this time last year as well. The sales total of 262 condos represented a 29 percent decline from May 2006.”

“The decline was slightly steeper when it came to the amount of money changing hands. Sales volume fell by 32 percent from May 2006, the report showed.”

“When it came to single-family homes…in neighborhoods reporting approximately 30 or more sales last month, prices were down 15 percent in Carlsbad’s 92009; 13 percent in Carmel Valley (92130); 10 percent in Oceanside’s 92057; 8 percent in Carlsbad’s 92011, San Marcos’ 92078 and Vista’s 92081; 7 percent in Encinitas (92024); and 5 percent in Escondido’s 92026.”

“Regional economists say it is typical for prices to remain stubbornly high well after sales decline, marking the beginning of a down cycle. Ed Leamer, director of the closely followed UCLA Anderson Forecast, said in an interview last week that the 1990s trend was a classic example. Los Angeles-area sales totals fell by half from November 1988 to March 1991, while home prices continued to rise until June 1992, when prices began a long decline.”

“‘The most dramatic price declines come at the end, not at the start,’ said Robert Campbell, an independent San Diego economist. ‘That’s when the panic sets in.’”

The Los Angeles Business Journal. “The median home price in Los Angeles County rose for the fourth consecutive month in May. But the increase may reflect a lopsided market where higher-priced homes are selling faster than cheaper properties, which have been hurt by the implosion of the subprime loan sector.”

“The number of homes sold continues to swoon. In May, 5,666 homes changed hands in Los Angeles County. That was down 37 percent from May of last year, which itself was down 17 percent from May of the previous year. Likewise, April had seen a 29 percent fall in year-over-year sales. The figures are from HomeData Corp.”

“The California Association of Realtors data indicates that while every segment of the market has seen significant slowing, there is a greater inventory buildup of homes in the sub-$500,000 price range than in the higher-end of the market.”

“As of April, there was 14.6 months of unsold inventory in the county in the under-$500,000 price range. Meanwhile, there was 12.1 months of total unsold inventory for April, relatively better but still up sharply from 5.6 months a year earlier.”

“‘In essence, the low end of the market is falling out with a steeper drop in sales and greater price softness. The higher end is seeing a drop in volume, though not as severe, and some price gains,’ said Robert Kleinhenz, deputy chief economist for the state association.”

The Union Tribune. “The implosion of the subprime mortgage market is likely to prolong the national housing slump, Harvard University researchers said yesterday.”

“‘At a minimum it will slow any recovery,’ said Nicolas P. Retsinas, director of Harvard’s Joint Center for Housing Studies, which issued the report. ‘Add to that the overbuilding and the inventory correction and you can see why it appears, particularly for the new-home market, that this slump will last well into 2008.’”

“University of San Diego economist Alan Gin said he expected home prices to ‘ease downward some, possibly into 2008.’ However, Gin agreed that local wages have not kept pace with home prices.”

“A record 525 San Diego County dwellings were reclaimed by lenders or sold at auction in April, exceeding a previous record of 433 properties in March, according to DataQuick.”

“Some analysts blame Wall Street for the subprime crisis. Because of rising defaults, investors have lost their appetite for securities backed by subprime mortgages, said economist Edward Leamer, director of the UCLA Anderson Forecast. That means the subprime market ‘isn’t going to come back anytime soon,’ Leamer said.”

The Press Telegram. “It was the best of times, and with the housing market turning down, some communities may see worse times.”

“Where it concerns housing, Long Beach is a veritable tale of two cities. And unfortunately for sellers who want to move their homes quickly, the stories for both the upper and lower class portions of the city may have similar outcomes.”

“Homes are sitting longer on the market, and price appreciation has slowed to a crawl.”

“‘There’s definitely a wide variety of price ranges in Long Beach,’ said Richard Daskam, of Keller Williams Los Alamitos. ‘Definitely the highest is going to get hit. And anywhere where they used the shaky mortgages, you’re going to see a lot of foreclosures come up.’”

“The problem is, ‘nobody can buy,’ Daskam added.”

“In North Long Beach, the Wrigley area and Central Long Beach, many families got into affordable communities with specialty mortgages that are beginning to reset to much higher rates, Daskam said.”

“Then there are areas of Long Beach like Belmont Heights, Belmont Shore and Virginia Country Club, where foreclosures aren’t the issue. It’s sluggish sales, ‘because there’s just not enough buyers who can move into these properties,’ Daskam said.”

“A 4-bedroom, 3-bathroom, 3,646-square-foot home (on) Pacific Ave. in the Virginia Country Club community has a ‘for sale’ sign in the spacious front yard on the 12,790-square-foot lot with ‘Reduced Price’ on top of the sign.”

“The $1.24 million asking price for the home, which has been on the market 121 days, was dropped from an original asking price of $1.39 million.”

The Record Searchlight. “Pulte Homes, parent of Del Webb Corp., continues to take its licks from the housing slowdown. The company announced late last month that it will cut 16 percent of its work force.”

“So do fewer jobs mean curtains for Sun City Tehama, the 3,700-home ‘active adult’ community Del Webb wants to build on 3,400 acres west of Interstate 5 about eight miles north of Red Bluff?”

“No, Del Webb spokeswoman Judy Bennett said last week. Sun City is still ’sort of in hibernation,’ Bennett said last week. ‘The market really isn’t conducive to us starting the project right now.’”

The Sacramento Bee. “The California Public Employees’ Retirement System has announced it is taking over the debt-ridden Towers high rise project on Capitol Mall. That means the 53-story luxury condo and hotel that local developer John Saca envisioned for the site near the Tower Bridge is dead.”

“The Towers was the first of a rash of high-rise condo plans put forward for Sacramento’s downtown when Saca proposed it nearly three years ago.”

“Saca broke ground last summer, but the project was $70 million to $80 million over budget by the fall and condo sales slowed to a trickle as the region’s housing market went soft. The site now is little more than a hole in the ground the size of a city block.”

Some housing bubble news from Wall Street, Washington and beyond. “U.S. home builder Standard Pacific Corp. said new orders in April and May fell 16 percent, citing prolonged weakness in the Florida and Arizona markets. The company’s cancellation rate for the period was 28 percent compared with 35 percent a year ago.”

“‘We think management began to respond with further price cuts in May and will continue to adjust price to improve sales,’ Bank of America Securities analyst Daniel Oppenheim wrote. Oppenheim also expected cancellations to worsen, ‘as buyers see another round of incentives/price cuts offered by the builders,’ he wrote.”

The Washington Post. “For the first three months of the year, Reston home builder NVR reported a $12.3 million charge for abandoning projects, up from a charge of $7.2 million for the corresponding period a year ago. For all of 2006, the company recorded charges totaling $174 million, up from $12.6 million in 2005.”

“Analysts say NVR may be forced to write off more in the coming months.”

“NVR said…it ‘experienced a noticeable slowdown in market conditions’ in the mid-Atlantic in the first quarter. NVR also reported reduced home buyer traffic and an 11 percent decline in the average sales price for new orders. In the Washington market, prices dropped by 16 percent.”

From Reuters. “Countrywide Financial Corp., the largest U.S. mortgage lender, on Tuesday said it made 15 percent more home loans in May as the pace of refinancings increased, though the foreclosure rate doubled.”

“Nonprime loans, including ’subprime,’ sank 43 percent. Countrywide said pending foreclosures as a percentage of unpaid principal balances rose to 0.90 percent from 0.45 percent a year earlier, and 0.85 percent in April.”

“Foreclosures based on the number of loans serviced rose to 0.71 percent from 0.47 percent a year earlier, and 0.69 percent in April, Countrywide said. Delinquencies rose to 4.71 percent from April’s 4.45 percent.”

From MarketWatch. “On a consolidated basis, Countrywide funded $2.3 billion in pay-option loans during the month as compared to $6.6 billion in May, 2006.”

The Wall Street Journal. “Economists are giving up on the idea that the U.S. housing slump will be quick and relatively painless. Instead, more are concluding, the downturn that began nearly two years ago will last at least through the end of 2007.”

“The culprits: a glut of homes for sale and growing caution among lenders who now regret being so free with their mortgages during the boom.”

“David Resler, chief economist at Nomura Securities International Inc., says he is surprised by the degree to which speculation caused builders to overestimate demand, leaving a glut of houses and condominiums.”

“Meanwhile, empty houses are multiplying. A recent Merrill Lynch report tallies a record 2.2 million vacant single-family homes and condos for sale nationwide, about one million above the norm.”

“Economists at Merrill Lynch admit it is hard to predict how the slump will play out from here. ‘We are not sure how deflating a $23 trillion asset class, the value of real-estate assets on the household balance sheet, will end, but we doubt that it will end well,’ Merrill economists wrote.”

From Dow Jones Newswire. “General Electric Co.’s WMC Mortgage Corp. and Merrill Lynch & Co.’s First Franklin Financial Corp. are among the first subprime home lenders to adopt proposed federal guidelines on underwriting low- initial-payment mortgages to people with flawed credit.”

“In particular, the guidance calls for lenders to take into account the highest possible monthly payments, as opposed to the initial low payments, when deciding borrowers’ ability to repay the loans.”

“Analysts at Credit Suisse’s asset-backed securities research group recently examined the subprime borrowers who last year took out the loans that have fixed rate for the first two years and then adjusts to market rates. Their conclusion: about a third of them wouldn’t have qualified for the loans had the lenders used the fully indexed rate, not the initial ‘teaser’ rate, in determining the borrowers’ repayment ability.”

“WMC Mortgage, which adopted the guidance in March, estimates that it will make 50% fewer subprime hybrid adjustable-rate mortgages as a result of the new criteria. ‘It will be a redefined business,’ said Eugene Ullrich, a spokesman at GE Money.”

“The U.S. housing market downturn could linger for years but probably does not pose a major risk to the overall economy, Lehman Brothers’ chief global fixed-income strategist said on Monday.”

“Lehman’s Jack Malvey said the subprime mortgage crisis that blew up in February had not completely played out, and that foreclosures ‘are probably going to accelerate.’”

“‘The problem will be for all the homeowners who thought they could roll over into another teaser adjustable rate mortgage’ but find that credit standards have been tightened, he said.”

From CNBC. “I’m blogging to you from the J.P. Morgan Basics and Industrials Conference in mid-town Manhattan, where I’ve never in my life seen so many freaked out CEOs.”

“Here’s what the CEO of Ryland Homes said when I asked for a quick interview: ‘No, you guys make us look like idiots, absolutely not.’ Said the CEO of D.R. Horton, ‘NO, not now, not after the presentation, NO.’ Said the CEO of Standard Pacific Corp., ‘Thanks for asking, uh, I don’t think so, no, real busy today, back to back meetings, nope can’t do it.’”

“Here I am, standing here with breaking news on foreclosures (thank you RealtyTrac)..up 90% year over year and a staggering 20% month to month jump, and not one of these guys will respond.”

“I’m just asking for YOU CEOs to tell me what to say, YOU guys to give me something to put on TV so I don’t have to ask another analyst, YOU, who have an open mike whenever you want it…we’ll give you 30 seconds full if it’s good, hell we begged you to go live), but your lips are sealed. It begs the question: What are you all afraid of?”

“Across the nation, over two dozen states are considering or have passed bills aimed at subprime borrowers who were given loans despite their damaged credit. Mortgage brokers, the agents who connect borrowers with lenders, and other loan vendors are coming under particularly tough scrutiny.”

The Boston Herald. “With foreclosures rising across the state, (Massachusetts) Gov. Deval Patrick yesterday unveiled a plan to crack down on the controversial subprime mortgage industry. Patrick called for criminal penalties for mortgage fraud and for a ban on so-called ‘foreclosure rescue schemes.’”

“Adjustable-rate deals would be banned for subprime borrowers unless the would-be homebuyers specifically opted out of a fixed-rate loan product.”

From Bloomberg. “Banks demanded that Inmobiliaria Colonial SA pay more interest to borrow 7.2 billion euros ($9.7 billion) because of the risk Spain’s second-largest developer will be hurt by a slump in property prices.”

“‘It’s being affected by the slowdown in the housing market,’ said Roger Ramos, managing director of investment banking at Fortis in Madrid. ‘Colonial is a very good company but it’s not paying enough given the timing. A year ago, it would have been no problem to syndicate the loan.’”

The Edmonton Journal. “Soaring land values pushed Edmonton’s new-housing prices up 40.5 per cent from April 2006 to April 2007, the biggest bump in Canada. Calgary was a distant second place, with prices up 27.4 per cent.”

“Michael Mooney, executive director of the Urban Development Institute, Mooney praised city staff for working with industry to streamline the processing of development applications. ‘The best way to limit price increases is to increase the supply on the market,’ he said.”

The Edmonton Sun. “We’re into June now with the dog days of summer up ahead. But suddenly there appears to be a chill in the air. And with the Great Alberta Energy Boom hitting the stupid money phase, the discipline of the business cycle couldn’t come at a better time.”

“The signs of stress started last week when the Realtors Association of Edmonton reported a big buildup of inventory on the resale market last month. Combined with what ComFree Edmonton has on its books, there were over 4,400 properties on the market.”

“Last year the real estate board had 2,416 in inventory while ComFree revealed its property listings has jumped 120% from last May’s total. So why do so many folks want to dump their property?”

The Leader Post. “Buyers beware: House prices are rising all across the Prairies. The four major cities in Alberta and Saskatchewan saw the largest one-year increase in new home prices over the past year, Statistics Canada said Monday.”

“‘We’re seeing a very strong increase in Saskatchewan and Alberta,’ said Randy Sterns, prices analyst with StatsCan. ‘Prices are on a significant rise in those cities.’”

“Rising new home prices will further amplify Regina’s already tight resale market, Regina realtor Jeremy Cossette said. Buyers now routinely make offers greater than the listed price, yet still miss out on homes.”

“‘I have buyers who have been looking for several months, and made offers $15,000 to $20,000 above asking and are still looking,’ he said.”

“Larry Hiles, president of the Regina Regional Economic Development Authority, urged buyers to keep rising prices in perspective. ‘What you see is Regina finally starting to catch up with the rest of Canada,’ he said.”

“U.S. notes extended their declines after the Treasury Department’s $8 billion 10-year note sale drew the smallest demand from a group of buyers that includes foreign central banks since March 2006.”

“‘The U.S. market is part of a global move to higher rates,’ said Jay Mueller, who manages about $3 billion of bonds at Wells Fargo Capital Management. ‘The momentum has clearly turned negative in the bond market globally.’”

“‘Real yields are rising across the board and the U.S. has caught on,’ said Brian Brennan, a portfolio manager who helps oversee $11 billion in fixed income at T. Rowe Price Group Inc. ‘You have some big players in the market changing their mind’ about Fed monetary policy.”

A report from the Virginia Pilot. “Owners of about 2,800 properties in three of the city’s more affluent neighborhoods received a rare notice in the mail last week: Their home assessments had decreased. Virginia Beach Real Estate Assessor Jerry Banagan sent letters to residents in North Beach, Lago Mar and The Reserve at Great Neck that their home values were down by an average of $10,000 to $85,000 from the notifications they received in March.”

“‘These properties still received a healthy increase in assessments,’ Banagan said. ‘We just backed off a little.’”

“In most neighborhoods, officials found only slight differences from the March assessments, Banagan said. That wasn’t the case in the three affected neighborhoods. ‘Sales prices just took a nosedive out there,’ Banagan said. ‘To go back and change an entire neighborhood is pretty rare, but the data was pretty compelling.’”

“Real estate agent Susan Pender said investors who were flipping properties were pushing up prices of homes in North Beach two years ago. But in recent months, homes have been selling for $100,000 to $150,000 below the March assessments, she said.”

The Examiner from Virginia. “Demand for housing construction has slowed considerably since the Prince William County board installed a de-facto moratorium on new subdivisions on Jan. 1, though it is unclear if the new rule or the unfriendly real estate market deserves the credit.”

“Application fees are down 80 percent this year compared with the same period in 2006, county Director of Planning Stephen Griffin said.”

“Because the change dovetailed with an overall chill in the home market, assigning responsibility is a difficult matter, Griffin said. ‘The timing is such that we can’t tell the difference,’ he said.”

“‘In my opinion, the market was making the correction on its own, and there was enough inventory with the major builders that they had plenty on their plate and were not going to build anyway,’ Cherokee Homes President Shawn Cody said.”

The Daily Progress from Virginia. “The Charlottesville region’s real estate market has cooled since the record-shattering year of 2005, but housing prices remain at a level beyond many people’s ability to pay.”

“‘Affordability is a huge, huge, huge problem,’ said real estate agent Ray Caddell. ‘It used to be that I’d try to figure out how to get a house for the checker at the grocery store or the maid at the local hotel. It’s very, very hard to do that anymore.’”

“‘The problem is that people’s income hasn’t kept up with the housing prices,’ he said.”

“The Charlottesville area real estate market is in transition, shifting from a seller’s market to a buyer’s market. Prices are beginning to drop slightly and homes are staying unsold for longer”

“In the first quarter of 2007, the median sales price for the region dropped 9.2 percent over the same period in 2006. The region’s homes-for-sale inventory is also increasing, giving buyers more choices and slightly lower prices. There are currently 3,443 active listings in the region, representing a three-fold increase over three years ago.”

The Morning Call from Pennsylvania. “The number of new listings for homes in the Lehigh Valley hit an all-time high in May, while the number of homes sold fell year-over-year for the 12th month in a row. It’s a continuation of trends that started last year as the booming housing market of 2004 and 2005 began to fade.”

“The high number of homes for sale is slowing the pace of transactions, and possibly depressing prices. New listings rose 16 percent last month to 1,864 units, compared with May of 2006, which had also been a record. The number of new listings was about three times the number of homes sold in May.”

“Prospective buyers are reaping the benefits of lots of homes on the market because they can be choosier and make offers below asking price.”

“‘As the price of housing goes up, everyone and their uncle wants to list their house, even if they really were not planning on leaving,’ said Bethlehem economist Kamran Afshar, who publishes the quarterly Lehigh Valley Economic Review. ‘You have more houses on the market than otherwise would have been because it is such an attractive market.’”

“Last month, there were about 3,400 homes listed by real estate agents for sale, or about 1,000 more than the number of real estate agents who work in the Valley.”

“Home sales fell last year for the first time in at least 10 years. New listings outpaced home sales by nearly two-to-one last year, according to the Realtors’ association.”

“Higher-end homes are taking much longer to sell, compared with past years. According to the association’s multiple listing service database, there are more than 1,000 homes for sale that are priced between $300,000 and $400,000.”

“The average price of a new four-bedroom home last month was $378,000, based on 16 sales. That’s down 16 percent from last year.”

“The Lehigh Valley Builders Association said nearly all builders doing business locally have experienced slower demand. Some of the national builders with subdivisions in the Lehigh Valley have had to offer incentives here, officials said.”

The Miami Herald reports from Florida. “Boca Developers is considering a bulk sale of unsold units at three South Florida projects, in a proposed deal that shows how builders are grappling with the ongoing slowdown in the housing market. Boca Developers CEO Brian Street said the Deerfield Beach company is considering all options to sell its inventory.”

“‘These are the worst of times for condo development,’ said Street, whose company is among the biggest condo builders in South Florida. ‘Everybody is trying to get inventory reduced and debt threshold diminished. Everyone is trying to get some sort of deal done, us included. But we simply aren’t there yet.’”

“Under the proposal, many of the units would be rented following the bulk sale with the idea of later trying to sell them when the residential market improves.”

“‘This is a sign of the times,’ said real estate analyst Michael Cannon. ‘We see this in every real estate cycle. When a project in not marketable the capital investor wants to either get out of the project or minimize his investment. In this case they are trying to get a vulture fund to buy and hold.’”

“Street’s efforts to unload units come a year after he made a major bet in South Florida residential real estate by buying out his partner in the Biscayne Landing project. The massive development in North Miami is ultimately supposed to have some 6,000 residential units.”

“‘I don’t regret buying Swerdlow out,’ Street said. ‘It was the right decision. Do I like our timing? Of course not.’”

The Bradenton Herald. “The move by developers of Tarpon Pointe, a two-tower condo project approved for downtown a year ago, to seek an extension doesn’t come as a surprise to city planners.”

“A slowdown in condominium sales has several projects stalling, with other developers having applied for similar extensions and rethinking how they’ll do their projects.”

“As to whether the delays are a negative omen for the future of downtown projects, those invested in them shake their heads no. ‘It’s not a wait-and-see attitude,’ said project co-developer Ron Allen. ‘But we’re going to move cautiously until the market tends to rebound itself some.’”

“Local Realtor Leslie Wells has seen some parts of the market stay steady, and from a Realtor’s perspective, now is the time to buy property. But for developers, she said, ‘they just need to see how long can they hold on and how long can they wait.’”

“Empty houses are multiplying. Florida’s Miami Dade County has a 31-month supply of existing condos on the market. About 20,000 new ones will be completed by the end of 2008, says Jack McCabe, a consultant in Deerfield Beach, Fla.”

“He says about two-thirds of those have been sold, but many buyers are canceling orders rather than taking possession of a depreciating asset.”

The Herald Tribune. “The Manatee condo market is not only plagued by a lengthening list of unsold residences and plummeting prices, but developers are being hit by a flurry of lawsuits filed by buyers who want out of their contracts.”

“Twenty-one suits have been filed in the past 18 months, with most of them arguing that developers breached terms of sales agreements by failing to complete construction in two years.”

“At the same time, condo buyers in Manatee have defaulted on 22 loans since January 2006, forcing bankers to put properties back on the market at the worst possible moment.”

“But instead of easing back on construction in the face of these trends as their counterparts in Sarasota are doing, Manatee developers are planning to bring 3,307 units out of the ground by the end of 2009, Orlando economist Hank Fishkind’s projections show.”

“‘Stuff has to come off market one way or another,’ said Scott Norris, a condo specialist in Bradenton. ‘We have to get rid of supply.’”

“‘When the market was booming, quite a few investors were thinking they could buy and flip for a profit,’ said Chris Kawcak, a Manatee county condo specialist. ‘For a period of time, it worked great. But it gave developers a false sense of demand. That’s why so many rushed to do conversions and put up buildings.’”

“In Miami alone, developers will deliver 8,000 units this year and 12,000 next year. That comes on top of the more than 20,000 unsold units already clogging the market.”

“In Southwest Florida, the situation is proportionally similar. The result is that Sarasota County’s inventory of unsold condos reached 2,588 in March, a 447 percent increase from March 2005.”

“In Manatee, inventories rose twice as fast, swelling 851 percent to 2,246 during the same time period. But Norris thinks inventory numbers do not tell the whole story. ‘Developers and condo converters have not put everything they have in the MLS,’ Norris said. ‘They are holding quite a lot back.’”

“Given the bleak market situation in Manatee, it is no wonder buyers have responded the way they have. As in Sarasota, many have put their units back on the market. Others are walking away from deposits, believing it better to lose $60,000 now than to tie up $600,000 and assume the monthly carrying costs of a condo that cannot easily be sold.”

“‘We’re seeing an incredible amount of walkaways statewide,’ said consultant Jack McCabe.”

“Some buyers are not satisfied with walking away from their contracts, though. They want their deposits back. That is why the number of lawsuits filed by buyers against developers is way up this year. Fourteen have been filed in the first five months of 2007, compared with just seven in all of 2006.”

“Lawyers representing developers said the real reason their clients were being sued had nothing to do with the stated reason in their lawsuits. ‘They obviously bought for investment purposes and no longer think the condo is worth the contract price,’ said John Chapman, a Sarasota attorney who represents the developers of the Bel Mare condo tower. ‘If they did, they would close on the properties and flip them.’”

“In the meantime, 19 Manatee condo buyers have defaulted on $7 million in mortgages since January 2006. One of them, Ron Frohlich, failed to make payments on three loans after buying two condos in the WaterCrest and another in Laguna at Riviera Dunes.”

“Manatee County court documents show that Frohlich was a classic real estate investor. He spent $2.4 million to buy 12 properties in Manatee County during the past 10 years and sold them for a $1.8 million profit.”

“Court documents also show that the Frohlich began defaulting on three condo loans this year. But when bank representatives went to serve him and his wife with foreclosure suits, they found the couple had disappeared.”

“‘Their current residence is unknown. There is no phone listing for the subjects. No employment information could be found,’ wrote Hugh Heath of Tampa-based Accu-Search in his April 20 report.”

“Manatee Fruit Co. increased the prices of its condo units at its Terra Ceia Bay development and still managed to sell six units in seven weeks this spring. Chris Teeters, a real estate investor from Jupiter, said he bought one of those units because the price was right and he believes in the project.”

“‘I paid $265 per square foot, and I don’t think that price can be duplicated again,’ Teeters said.”

“Though he considers his Terra Ceia purchase a great deal, Teeters said he is not optimistic about Florida’s condo market in general. ‘Back in the early ’80s, the condo market went through a similar transition and it took 10 years to work through. I think it will take 10 years this time, too.’”

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