Hype, Fluff, Optimism, Greed, Avarice, And Fraud
The Naples News reports from Florida. “In Marco Island, existing single-family home sales rose 27 percent to 415, up from 328 a year ago, according to the Florida Association of Realtors. In Fort Myers-Cape Coral, they grew 43 percent to 8,217, up from 5,753 in 2007. Last month, Fort Myers-Cape Coral had 1,064 single-family home sales, up 146 percent from 432 a year ago. The median price dropped 50 percent to $106,900, down from $215,200 last year. Homes that sold for as much as $300,000 a few years ago in Cape Coral are now going for less than $100,000.”
“‘There are some real bargains out there,’ said Bruce Barron, general manager for Century 21 J.B. Novelli in Fort Myers. ‘The price ranges are totally different than they were two or three years ago.’”
The News Press. “Buyer Mike Dascoli, 23, of East Amherst, N.Y., recently worked with Valerie Busic, a Realtor with Busic, Chesser & Associates, to buy a foreclosed home in northeast Cape Coral as an investment property. Dascoli paid $83,000 for a home that sold for $240,600 a little more than three years ago.”
“‘I’ve got it rented out and it’s doing well,’ Dascoli said. ‘I will probably turn a little cash flow on it and when the market turns around, even if it is five years from now, I should be in good shape.’”
The Herald Tribune. “The December median price hit $160,000 in Sarasota-Bradenton, harking back to April 2002. December’s median was a drop of $82,000 from where it may have been under a projection developed by the Herald-Tribune, one aimed at determining where prices would be with a generally accepted 6 percent annual appreciation rate and no three-year housing boom.”
“The median in Charlotte County-North Port was $102,400 last month, up 4.8 percent from $97,700 in November, but down 37 percent from $163,200 a year ago. The $97,700 figure was on par with June 2001. The foreclosure phenomenon is having one positive effect, said Joel Ament, a broker with Port Charlotte-based ERA Advantage Realty, which manages more than 300 rentals. The fourth quarter saw a 35 percent increase in annual rentals when compared with a year ago.”
“‘The city that we’re dealing with the most right now is North Port. It’s very hot for rentals,’ Ament said. ‘It was ground zero during the boom, so a lot of those homes are coming back around as rentals. You can get some pretty good deals.’”
“A 1,400-square-foot, three-bedroom, two-bath home in North Port can be rented now for $850 to $900. During the boom, that same house would have commanded $1,200. ‘There has been a lot of downward pressure, and these rentals are very aggressively priced,’ Ament said. ‘They have to be, because there’s so much inventory out there.’”
“‘We had one hell of a party for a lot of years. Guess what? Now we’re dealing with the hangover,’ said Dennis Black, a Port Charlotte-based appraiser. ‘And there’s only one thing that will cure the pain — that’s time.’”
From Florida Today. “A day after Mercedes Homes Inc. filed for Chapter 11 bankruptcy, subcontractors emerged Tuesday to voice concerns about unpaid work and other Brevard-area builders assessed their own finances amid the troubled economy. Almeida Enterprises of Brevard Inc. is owed at least $70,000 for soffit and gutter work done on Mercedes’ Brevard homes, according to Dawn Almeida, who owns the small Palm Bay company with her husband.”
“She said Mercedes representatives continuously reassured her that business was simply slow and that the company was on solid financial ground. Almeida said she and her husband now face having to file for bankruptcy if that money isn’t forthcoming.”
“‘We’d been asking them for months, ‘Are you going to file for bankruptcy? Do we need to slow production?’ Almeida said. ‘They told us there was nothing to worry about. I am just livid.’”
The St Petersburg Times. “In the Tampa Bay area, 23,615 homes sold last year at a median price of $169,580. Local home prices have crashed 39 percent since topping out at $239,600 in June 2006. Tampa real estate broker Jim Knetsch said foreclosures make up close to half of sales in some areas. He expects a further wave of foreclosures to hit the market as banks find agents to list homes they’ve already repossessed. Until more homesteaders appear to suck up the surplus, Knetsch expects home prices to remain strained.”
“‘It’s just a race to the bottom right now,’ Knetsch said. ‘Where the bottom is, I don’t know.’”
The Orlando Sentinel. “Lake Buena Vista Resort Village & Spa is hoping the lure of permanent U.S. residency will eventually persuade well-heeled foreign investors to help it expand near Walt Disney World. The condo-hotel resort received government approval several months ago to serve as a ‘regional center’ for foreign investment. Under federal immigration policy, an approved foreigner whose investment is supposed to create 10 full-time jobs in the U.S. can get a conditional visa to live here — and can ultimately secure a regular ‘green card’ good for permanent residency.”
“So far, it has no takers for its million-dollar-visa offer. The recession and global financial turmoil have taken ‘a bit of a bite’ from the program’s potential, said Larry Behar, an immigration lawyer working on the project. ‘There seems to be less interest of people immigrating to the United States,’ Behar said. ‘When you compound that with a million-dollar investment, it becomes complicated.’”
The Sun Sentinel. “Sales of existing homes in Broward County skyrocketed last month, but it wasn’t enough to offset the worst year for housing in South Florida in more than a decade. Broward sales jumped 52 percent in December, as buyers rushed to take advantage of falling prices, the Florida Association of Realtors said. The county’s median price of an existing home last month was $217,700, down 34 percent from December 2007.”
“Mortgage rates have plummeted to near 5 percent and sellers are offering major concessions, but many potential buyers still are holding off. Some can’t qualify for mortgages, and others fear for their jobs. There’s also the belief that prices will keep falling.”
“Ed and Bobbi Miller want to move to the Ocala area, so they put their two-bedroom house west of Boynton Beach on the market in November. Their real estate agent, Bob Melzer, says the property is competitively priced at $289,000, and it gets plenty of showings, but they’re still waiting for a buyer.”
“‘Everybody walks in and says, ‘Your house is immaculate and wonderful, yada, yada’ and then I never hear back from anybody,’ Bobbi Miller said.”
“Another factor that could hammer housing this year: Two weeks ago, lender Fannie Mae imposed new requirements on mortgages for Florida condominiums. Fannie says, for example, that it won’t approve loans for buyers in a condo building where more than 15 percent of the owners are delinquent on association dues.”
“That’s likely to include many buildings in South Florida where the housing bust has ravaged the condo market because of the investor-led buying frenzy during the boom years.”
The New Times. “His thin, 81-year-old frame draped in a tan suit, his sharp eyes shaded by wraparound sunglasses, Tibor Hollo stands before a rusted fence bearing a spray-painted ‘No Trespassing’ sign. Beyond the chainlink, strewn with weed-choked bottles and crushed cans, two of the finest acres in Miami stretch to the edge of Biscayne Bay, where turquoise water laps against a concrete barrier and Fisher Island swims on the horizon. Hollo has just given it all away. For three years, the city gets the land for $1 a year and the promise to maintain a public park there.”
“No moment better captures the Zeitgeist of the South Florida condo bust than this, the legendary developer handing over land that his competitors would have killed for a few months ago. It’s now nearly worthless, sunk by a burst bubble so profound that entire 30-story condo buildings rise dark above the bay and more than 25,000 units languish on the market.”
“South Florida has seen more than $14.2 billion worth of property foreclosed in the past year alone — an all-time record. Owners sold a laughable 3 percent of more than 22,000 condos on the market in Broward County in the last months of 2008. Statewide, banks foreclosed on more than 261,000 homes last year.”
“In places such as West Kendall and Miramar, whole blocks sit empty, spray-painted plywood slapped over windows and saw grass creeping over driveways. Squatters and prostitution rings have moved into vacant homes. Companies hired to clean out abandoned residences pile belongings in front yards, letting neighbors pick through remnants of someone else’s life.”
“Condo owners and developers, desperate to get the cash flowing to keep mortgages and construction loans intact, are trying everything: giving away Lamborghinis and Mini Coopers with purchases, slashing prices in half, selling units in bulk packages to vulture firms or equity groups. Condo owners who bought at the top of the market, meanwhile, steam while their neighboring units are rented out at pennies on the dollar and their condo associations struggle to scrape together enough cash to keep basic services such as garbage collection and maintenance.”
“The ones most at fault in this bust, Hollo says, are the inexperienced and the unscrupulous who flocked in droves to the region during the middle of this decade as subprime loans, lax oversight, and outright fraud pumped America’s housing bubble to increasingly absurd heights.”
“‘There are lots of professional developers in the industry, and some of them are very good,’ Hollo says. ‘But there are also lots of what I call ‘dentists from New York’ who don’t know a damned thing. They could see people were making money here, so they buy land and they jump into business without knowing anything.’”
“‘You know those animals in California who can sense an earthquake coming before it happens?’ asks Tibor. ‘This is the ninth time I’ve been through this cycle, and back in 2006, I got that feeling: Something is not right here.’”
“‘It was the perfect storm of hype, fluff, and optimism, coupled with greed, avarice, and fraud that artificially inflated values and produced this overdevelopment,’ says Jack McCabe, a real estate consultant and researcher.”
