The American Dream In High Reverse
The Miami Herald reports from Florida. “Gov. Charlie Crist and a throng of supporters packed the lawn of Keith and Elizabeth Markowitz’s Orlando home to launch the Amendment 1 property tax campaign with a promise: if the referendum passed, they would no longer be ‘trapped in their homes.’ A year later, the amendment has overwhelmingly passed and the Markowitzes are still trapped — now by the plunging real estate market. As they’ve waited for the market to return, their property value has dropped from $300,000 in 2007 to $230,000 last year.”
”’We are still anxious to move, but we haven’t sold our house,’ said Keith Markowitz, who took his house off the market after 16 months. ‘I’ve got too many foreclosures around me.”’
The International Herald Tribune. “Welcome to the American dream in high reverse. Lehigh Acres is one of countless sprawling exurbs that the housing boom drastically reshaped, and now, the bust is testing whether the experience of shared struggle will pull people together or tear them apart. On a recent Friday morning…laid-off construction workers in flannel shirts scavenged through trash bags at a home foreclosure, grabbing wires, CDs, anything that could be sold.”
“‘I knew it was coming,’ said Gloria Chilson, the former owner of the house, as she watched strangers pick through her belongings. ‘You take what you can; you try not to care.’”
“Residents remember the boom for its noise, with dump trucks lining the streets and power tools heard in nearly every neighborhood. Housing prices doubled, then tripled, and jobs were plentiful, nearly all of them tied to real estate. Signs of trouble were ignored.”
“‘They used to bring 20 busloads a day,’ said Bob Elliott, a former salesman…who struck out on his own in 1982. ‘We had 300 customers, seven days a week. Sometimes houses would sell three or four times in a few months, and no one would move in,’ Elliott said.”
“Then, in 2007, it all went quiet. Houses stopped selling. Foreclosures multiplied. The median home price in the Fort Myers area dropped to $215,200 in December 2007, from a peak of $322,300 in December 2005. It had fallen to $106,900 two months ago. Home sales in Lee County are picking up, running roughly even with foreclosures. But no one here would describe Lehigh Acres as out of the woods. Real estate agents said the homes that were selling here typically went for only about $45,000, a third of what they cost to build.”
The Palm Beach Post. “A Wellington couple have managed to do what many who bought at the market’s peak are dreaming of: escape a new-home contract. A Miami-based arbitrator ruled in January that the contract Kurt and Micheline Moeding inked with Kolter Homes violated federal law, and that they should get their $76,114 deposit back. The couple signed up for the $629,580 home at Kolter’s Verano community in Port St. Lucie in 2006 - before home values plummeted.”
“The problem, according to the arbitrator’s Jan. 22 decision, is that Kolter gave itself wiggle room by stating it wouldn’t be bound by the two-year deadline if weather or other obstacles interfered. ‘The arbitrator ruled that it really wasn’t a firm commitment,’ said the Moedings’ Coral Springs-based lawyer, Scott Gelfand. ‘I expect that this will open up the floodgates,’ he said.”
The Naples News. “Creditors are lining up by the thousands in hopes of getting paid back by WCI Communities Inc. WCI filed for bankruptcy in August of last year as it struggled to pay off about $2 billion in bank debt. One of the biggest claims comes from Bank of America. The bank filed as an administrative agent, saying it and other lenders are owed more than $535 million. The Bank of New York Mellon Trust Co. has three claims, adding up to more than $665 million.”
“There are small claims, too. John Dier, owner of A Able Locksmith in Naples, said he’s owed $221.30 for his services on two different bills. His company would often change out the locks when homes were turned over from the builder to a buyer. His amount is unsecured, putting him at the back of the line to receive any money.”
“‘If they come through that’s great,’ he said. ‘It’s out of WCI’s hands anymore. It’s in a lawyer’s hand now.’”
The Tampa Bay Business Journal. “Rising 36 stories above the St. Petersburg skyline, Signature Place is the final relic of a housing boom now becoming a fading memory. As just weeks remain before the $170 million tower welcomes its first residents, Gulf Atlantic Communities Inc. is offering buyers ’significant’ reductions on pre-construction prices, a bid some observers believe is a consequence of unfriendly appraisals.”
“Even buyers who may have been intent on paying full price and moving in three years ago may not be open to it now. Those who are still packing their bags to move in could end up needing to hop some obstacles laid out by banks in the tightened credit climate to make it happen.”
“The fact they have a great location and a beautiful project helps, but it is ‘only going to carry it so far,’ said T. Sean Lance, managing director for NAI Tampa Bay. ‘At some point, reality has to be faced where people aren’t qualifying for mortgages, units aren’t appraising where they’re supposed to be and measures are going to have to be taken to come up with other solutions. The next 60 to 90 days are going to be telling.’”
The Herald Tribune. “A University of South Florida professor, quoted in The New Yorker explaining what went wrong with Florida’s housing market, used a now familiar term. ‘Florida, in some ways, resembles a modern Ponzi scheme,’ Gary Mormino said.”
“The buyers did come for years. But when the Ponzi scheme ran out of new suckers to pay the absurd prices, it all collapsed. We are in the rubble now, wondering if the collapsing is done. The problem is that near-peak-market home buyers owe ridiculous amounts of money on homes not worth anywhere near as much, no matter what some bank-approved appraiser once told them.”
“‘It took us 14 years to buy our first home, in North Port,’ a woman who works for Sarasota County told me. She and her husband chose a humble house that cost $129,000, and paid $20,000 down. ‘Now it is worth probably $45,000, at best. There are 17 empty houses on my street. We are now talking ourselves into walking away.’”
“Another North Port owner told me he left the state and stopped making payments two years ago when he lost his job, but his disabled sister still lives there. It seems mortgage servicers are too busy to file foreclosure.”
The News Chief. “In 2008, more than 9,400 foreclosures were filed in Polk County, courthouse officials said Friday. That’s compared to about 5,100 foreclosure filings in 2007. In Central Florida, which includes Tampa, Orlando and Sarasota, 315 homes with the program are in short sale, which means their current market price is less than their value. Owners have defaulted on their loans but no paperwork has been filed to classify the homes as foreclosed. There are homes in short sale by Fannie Mae in Polk County, but representatives connected with the company could not give an exact number.”
“A slumping housing market might have been one of the reasons behind the current economic recession, but now it also means lower home prices, local Realtors say. ‘If I had the money, I’d be buying homes all over Polk County,’ said Pauline Dickson, the association executive for the East Polk County Association of Realtors. ‘This is a very good time to buy.’”
“It’s a spacious 2,500-square-foot stone-and-brick-facade home with four bedrooms, a walled-in yard and an efficiency apartment in the back. Three years ago, someone paid $240,000 for it. But in about 45 days, Carline Jeudy, a single mother of four and a renter until now, expects to close on her purchase of the bank-owned foreclosure in Opa-locka for just $90,000.”
“”I never thought I would be a homeowner because of the money I’m making,’ said Jeudy, 33, a buffet attendant in downtown Miami, whose take-home pay is about $22,000 a year. ‘I never thought I could afford it by myself.’”
“At the end of January, the number of homes for sale fell by 4.6 percent…but there were still 70,495 properties for sale in both counties. Buyers need to proceed with caution when buying in new condominium buildings, said Lucas Lechuga, of Keller Williams Realty. ‘It’s extremely difficult to get financing in those buildings, and that’s why prices will continue to go down,’ Lechuga said. ‘If you have cash, though, you can name your own price.”’
“‘Eduardo Fernandez, a small-business owner in Little Havana, proudly showed off the four-bedroom Florida City home he has under contract for $47,500 cash. It needs work and will cost an estimated $20,000 to repair vandalism inflicted by the former occupants. Fernandez plans to rent the homes and sell them down the road when prices go back up.”
”’This is the only opportunity, I think, for the next 30 years,’ Fernandez said. ‘There won’t be another opportunity.’ He added that he was also bidding on a second property in the area.”
The St Petersburg Times. “Contemplating the wasteland of vacant houses in the southwest Florida community of Cape Coral, economist Hank Fishkind opined this week that some of this housing won’t be sold ‘at any price.’”
“He assumes Lee County will suffer 85,000 further foreclosures this year. By contrast, the much-more-populous Hillsborough County anticipates 40,000 new foreclosure cases. Hillsborough’s comparatively ‘happy’ foreclosure forecast allowed Fishkind this week to announce the bottom of the Tampa Bay area housing market, though he assumes we’ll grovel on that bottom for a couple years.”
“I can’t help thinking he’s overly optimistic based on household formation statistics for Florida. Don’t look for the government to rescue us. Congress has flopped trying to play Zorro with bad mortgages. According to the Associated Press, the Hope for Homeowners program, designed to let 400,000 troubled homeowners swap risky loans for traditional 30-year fixed-rate loans, has refinanced only 25 loans since it started in October.”
“At that pace it will take 5,000 years to help the promised 400,000. Hope you got the extended warranty on the Owens-Corning shingles.”
