March 1, 2009

It’s Getting Ridiculous In Florida

The Naples News reports from Florida. “Marbella Lakes in Naples began its grand opening weekend on Saturday and will continue the event through Sunday. Patty Campbell, the company’s division president, had said Friday that she wouldn’t be surprised to see prospective buyers camping out overnight, or arriving as early as 6 a.m. Saturday to claim lots and homes. By 8:30 a.m. Saturday, there were no lines. However, the sales center quickly filled as the morning progressed. ‘Our grand opening specials include $15,000 off the price for a house under construction or $15,000 off in options for the lot for single-family homes and carriage homes to be built,’ Campbell said.”

“In addition, G.L. Homes is offering up to 3 percent toward the closing costs to entice buyers. Buyers can make reservations to purchase houses under construction or select a lot and build it to suit from a variety of options. ‘We have a lot of selections – we don’t do structural changes, but we do have a lot of options to make it your dream home,’ Campbell said.”

The Daily Business Review. “When it came to funding condominium construction in South Florida, there were few lenders as aggressive as New York-based iStar. And now that the condo bubble has burst, iStar…has more than $1 billion of loans scheduled to come due over the next seven months, has been unloading properties at substantial losses.”

“Many of iStar’s troubled properties were inherited when the lender purchased Freemont Investment and Loan in May 2007 for about $1.9 billion. Freemont had loaned millions of dollars in construction loans through out Florida. ‘They are in need of capital,’ said David Chiaverini, a BMO Capital Markets analyst who covers iStar. ‘I’m modeling for a loss of 86 cents per share.’”

The Miami Herald. “Rising from city bureaucrat to billionaire builder, Jorge Pérez became the great American success story, Miami style. The Cuban immigrant made the South Florida skyline his canvas, erecting high-rises from Miami to West Palm Beach. But not one of them can compare to his latest creation, the ICON Brickell, a sumptuous $1 billion glass-and-concrete city within a city that includes three soaring towers, a pool the size of a football field, 1,640 condos, a boutique hotel and five restaurants.”

“It is Florida’s most spectacular condo, Pérez’s masterpiece, his legacy. And, now, it may be his undoing. The ‘total meltdown that we are seeing today,’ Pérez said, is far worse than he ever imagined. ‘If I die and am worth $50 million as opposed to $3 billion, it is really not important,’ he said. Until his recent setbacks, Forbes pegged his wealth at $1.3 billion.”

The Palm Beach Post. “A November fire-sale auction of units in a West Palm Beach condominium has set a price for all sales in the building. Since November, The Edge condo along South Australian Avenue has sold 40 more units to buyers at nearly the same prices paid during the auction, according to Jay Jacobson, South Florida director for Edge developer Wood Partners.”

“For instance, recent ads show a two-bedroom/two bath unit that was priced at $436,000 now is available for $195,000. ‘For us, the auction set what the market value was. Anyone who thinks they can get more than what we’re getting in West Palm Beach now is drinking Kool-Aid,’ Jacobson said.”

The News Journal. “Condos in the proposed 202-unit Island Town Center on the New Smyrna Beach north causeway were selling well in mid-2005 when the real estate market was hot. But Jacksonville-based developers Urban Partners soon ran into a regulatory quagmire trying to get a permit for an associated 104-slip boat dock plan, the project’s major selling point. It’s a familiar story along the Halifax and Indian rivers of east Volusia County.”

“‘We had to print brochures that the docks were pending. Dozens backed out of buying. No one wanted to buy a waterfront condo without a boat slip — the Florida dream,’ said Ronnie Leinwohl, executive VP of Urban Partners. ‘It took us two years to get the permit from the water district, but, by that time, the housing market had crashed and the financing has dried up now.’”

“With the paint peeling and the fence broken in a couple of places, the home of Daytona Beach’s most famous apparition is taking on a ghostly pallor itself. The grande dame of the beachside, Lilian Place has a storied past. The $2.3 million price that the home was first listed at in 2006 made a date with the wrecking ball to make way for condominiums all but certain. Now, though, the price has dropped precipitously — to $699,999. But the inflated value reflected in its tax assessment is scaring buyers away, according to Aswin Suri, the real estate agent showing the property.”

“‘It’s a little bit in No Man’s Land,’ said Suri, explaining the seven-bedroom property is big for a residence but small for a bed and breakfast, particularly one with taxes assessed at $1.2 million. ‘The property taxes are so high on this property, it’s turned off at least seven potential buyers,’ he said.”

“Michael Riccitiello Jr. and his wife, Suzanne…bought the house with financing for 114 percent of its $524,900 sale price in 2002. County records show that mortgage was satisfied in 2006 — about 19 months after Suzanne Riccitiello’s death. But her husband, who couldn’t be reached for comment, then leveraged more financing on the house: This time for $1 million.”

‘Real estate agent Suri said the large amount of money owed on the property now in foreclosure is part of why the bank has not accepted any of the several contracts that he has proposed — or made any counteroffers. ‘The loss would be so substantial, they (the bank) keep pushing the loss from quarter to quarter,’ Suri said. ‘There’s a lot of stress on the lending institution to take that much of a haircut.’”

The Orlando Sentinel. “A group of would-be resort-home owners is attempting to force an Orlando developer into U.S. Bankruptcy Court, saying the company took about $34 million in deposits for never-built houses in Polk County. The 19 creditors, many British, filed an involuntary-bankruptcy petition Feb. 20 that seeks to freeze the assets of Superior Homes & Investments LLC so they can retrieve deposits made in 2004 and 2005.”

“The deposits, from $40,000 to $140,000 each, were for vacation homes in a 791-lot Davenport community called Oakmont Resort & Spa. Pictures on the development’s Web site show vast stretches of dirt lots littered with construction equipment. ‘Our question is: What did they do with the money? I mean, that’s a lot of money,’ said Wendy Anderson, a lawyer with the Winter Park firm Anderson & Badgley who is representing the group.”

From ABC News. “It was $3,500 Nickie Struthers couldn’t afford — but desperate to stave off foreclosure, the 45-year-old and her fiance, a surgeon, scribbled their signatures on the check they thought would yield salvation. She handed the check to someone she’d done business with in the past, a mortgage broker-turned-foreclosure rescuer. But months went by, and the broker seemed to disappear. He had promised to modify her loan, she said, ‘but he wouldn’t take our phone calls, e-mails, nothing. I never thought this would happen.’”

“She admitted that the Bradenton McMansion she and her fiance purchased at the peak of the market in the summer of 2005 was overpriced, and that they were underfunded. Shuffling through her papers, Struthers said her neighbor’s home recently sold for half the purchase price of their home, $817,000. Her home is now worth $465,000, she estimated, and she and Howard owe more than $800,000 on it.”

“But the man who admits he accepted Struthers’ check, Chris Campbell of the company Lionstar LLP, insisted he is not a scammer. Rather, he said he believes he may have been scammed by a subcontractor to which he passed along the money, which in turn was supposed to deal with Wachovia. ‘I think they deserve their money back and I will try to make it up to them,’ Campbell said. ‘I’m not a con artist. I’m just a former mortgage guy. I tried to find an alternative for them. It backfired on me.’”

The Herald Tribune. “Last March, someone who may never have set foot inside Sunset Ridge filed a simple legal document with the Polk County clerk of the court’s office and suddenly claimed ownership of the house with a full-sized pool. The document, known as a quit-claim deed, asserted that the home’s owners…had surrendered title for a mere $10.”

“‘Every second or fourth house is either empty or has got a ‘for sale’ sign on it in a lot of those neighborhoods,’ said Sgt. Vernon Noad, who leads an identity theft strike force for the Polk County Sheriff’s Office. ‘So it leaves a lot of potential for people to ride around up there and just run addresses through the property appraiser’s office.’”

“A plunging economy has brought the state to a place even the most zealous anti-growth forces never imagined: Florida has become a zero-growth state. Chuck Rizzo is among area business owners likely to wave goodbye. In 2001 he and his family left New York and joined the nearly 1,000 people a day moving to Florida. He got a job with Lee Wetherington Homes and bought a home.”

“He was laid off when the building market collapsed. He started his own business, but that is failing. Rizzo is making one final effort to find a job. But with the unemployment rate at nearly 8 percent he is not optimistic. ‘I had been through previous recessions, but I had never felt them,’ Rizzo said.”

“Manatee County Commissioner Joe McClash worries the flat growth rate could lead to further deflation of property values, which means less income for local governments and probably more cuts to sources feeding the state Treasury. ‘All those empty houses still don’t have people to buy them,’ McClash said.”

From Florida Today. “The federal government is sweetening the pot to encourage first-time homebuyers to jump into the housing market, improving on last year’s incentive with a new tax credit. Chris and Diana Foster closed on their Melbourne home, the first for both of them, in October. They’d planned to buy in order to build equity, regardless of tax incentive.”

“Realtor Abby Barclay, who helped the Fosters with their purchase, is finding few first-time homebuyers being spurred into action by the tax incentive. Most are happy to learn about the incentive, but already had been looking at homes. ‘We don’t see that it’s bringing anybody into the marketplace,’ she said.”

“Diana Foster admits to being disappointed that they could have gotten a better deal if they’d waited, but they’re philosophical about it. ‘Who knows what people are going to be getting in 2010?’ she asked.”

The Business Jacksonville. “The fourth quarter of 2008 was a blue period for residential real estate sales in Northeast Florida, according to…DataQuick. The ‘blues’ in Clay, Duval, Nassau and St. Johns counties represented drops in sales prices and volumes, giving a vivid portrayal of a real estate market that has shifted into reverse.”

“Ray Rodriguez, owner of the Real Estate Strategy Center of North Florida in Jacksonville, called the real estate market in the fourth quarter ‘very moderate’ and said he thinks it won’t turn around anytime soon. ‘Normally, the last quarter is when people rush to homestead their home, but with the economy being the way it is, they’re slowing down and not rushing to buy,’ he said.”

“Rodriguez said most buyers during that quarter likely planned to stay in their homes for five to seven years, because the market is no longer favorable to speculative buying. ‘They don’t look at real estate as being the investment that they used to,’ he said.”

The St Petersburg Times. “Tampa Bay area home prices took one of the largest one-month tumbles in history. The low-price-equals-brisker-sales phenomenon is more pronounced in Cape Coral-Fort Myers. Sales more than doubled in January. But it came at the cost of a 59 percent collapse in prices in the January-to-January period.”

“‘Right now, unfortunately, foreclosures are about the only game in town,’ St. Petersburg Realtor Jerry Sigler said. ‘If you’ve got a foreclosure to pick from, why go to a retail property?’”

“A Tampa auction of bank-owned homes earlier this month found bidders for 131 of 176 homes. The average price worked out to $77,000 per home. So influential have foreclosures been in setting the market that financially stable sellers feel compelled to cut prices. Deborah Farmer, head of Tampa’s Star Light Realty, recently bought a house with 180 feet of lakefront for $589,000. In a normal market it could have sold for $800,000, she said.”

“In the Tampa Bay area, prices have come down almost 50 percent from the peak in June 2006. ‘I think there’s a lot of fear,’ Farmer said. ‘Sellers think, ‘I’ve got equity in my home, and I’d better get out when the getting’s good.’”

“Though she has an 813 credit score, Farmer had to scrape up a 50 percent down payment on the lake house, a far cry from the 100 percent financing of 2005. As a small business owner with variable income, she couldn’t provide tax forms to qualify for better terms. ‘Banks have to loosen up,’ she said. ‘It’s getting ridiculous.’”

“There’s growing consensus this economic downturn is not only longer, deeper and nastier. It’s becoming clear this recession may prove transforming, potentially changing us personally, regionally, nationally — even globally — in fundamental ways.”

“‘This Is Not the End of America’ is hardly the typically numbing title of Wachovia economist Mark Vitner’s regularly published commentary on how things are going. But last week he chose that title because he felt he needed to respond to the extraordinary angst he encounters in his work and life. ‘Throughout this financial crisis,’ Vitner writes, ‘I have been approached repeatedly by people from all walks of life asking the question, ‘Is this the end of America as we know it? Is the American dream dead?’”

“This column’s headline is borrowed without apology from a lengthy cover story titled ‘How the Crash Will Reshape America’ appearing in the March issue of the Atlantic magazine. The provocative article was written by Richard Florida.”

“He’s honed his thoughts a lot and applies them well to our current financial predicament and to some old economic stereotypes. Among his most relevant insights: Stop fixating on owning a home. The burst housing bubble should send a message that home ownership is no longer on the ‘A list’ of the American dream. People wanting to be elsewhere are now stuck in homes they are trying to sell, often at a substantial loss. People are working in jobs they do not like or are beneath them because they are tethered to housing. His message? Don’t underestimate the upside of renting.”




Bits Bucket For March 1, 2009

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