Still In Denial
A commentary in the Daily Business Review. “Realtors can’t cry over condo mess they made.” By: Jack McCabe
Every now and then, I read an opinion piece from a local real estate person complaining about the condo depression in Miami that screams of “still in denial,” and which I opine to be an absolute shirking of the author’s personal responsibility in creating the mess to begin with.”
In an opinion piece in the Jan. 25, 2010, DBR, Jack Studnicky, a sales executive with International Sales Group, or ISG, blames banks and appraisal firms. “Banks holding boatloads of foreclosed Miami condos need to take a deep breath and stand firm on realistic pricing, which should be at least the cost of replacement. There is no need to comply with an archaic and misdirected appraisal process
as these bargain hunters are paying cash.”
ISG, along with several other South Florida sales groups, were responsible for hyping and fluffing the Miami condo market with multimillion-dollar international campaigns to develop a market of speculative flippers that artificially inflated sales and created the atmosphere for developers to overbuild true market demand.
Marketing programs and Web site ads were designed to attract investors to purchase multiple condo units, because as marketing materials trumpeted, they were a “can’t lose” investment.
Perhaps the best example of ISG’s own involvement in catering to speculative flippers can be found in a quote from ISG Principal Philip Spiegelman in an article by the Miami Herald on May 22, 2005, regarding the condo project Marina Blue (exclusively marketed by ISG). “One hundred percent of the
buyers were investors and speculators,” Speigelman said. “Anyone who tells you their projects are different are deluding themselves.”
I would recommend to representatives of firms that profited in the millions of dollars by prostituting Miami’s condo market that perhaps it is best to go play golf, go fish, go to Aspen and put a finger across their collective lips anytime they might wish to shine a light on the role they played in causing this debacle, and expose how they profited by it at the expense of the investors or flippers they sold to, and the banks that made the construction and mortgage loans.
To point the finger at anyone else or any other industry is not only ludicrous, but hypocritical and delusional. Time for some to take a good, hard look in the mirror.
Jack McCabe is a Deerfield Beach-based real estate analyst and CEO of McCabe Research & Consulting
The Herald Tribune. “Troubled homeowners in Sarasota and Manatee counties will soon be guaranteed a meeting with lenders to try to save their properties from foreclosure. Every homesteaded property will be referred to a new mediation program under a Florida Supreme Court order, and the lenders will have to pick up the cost. The homeowners will get credit counseling, as well as a trained mediator to guide the meeting with the lender about short sales, loan modifications or other alternatives to foreclosure.”
“‘It’s one more layer of protection from the unnecessary loss of the home,’ said Elizabeth Boyle, a lawyer with Gulfcoast Legal Services in Venice. ‘It’s a large step forward for homeowners.’”
“The program could resolve more foreclosure cases before they end up in the courts, where they are clogging civil dockets. One of every 19 homeowners in Manatee and Sarasota counties received a foreclosure notice last year, a total that pushed Florida to third in the nation for its distressed property rate.”
“The main hurdles to starting the new program: it must be run by a proven nonprofit group that is politically and professionally neutral, and there are upfront startup costs. For anyone looking to take on the task, the ‘good news’ is ‘there will be no shortage of clients,’ wrote Twelfth Circuit Judge Lee Haworth, in a letter to the legal community.”
“‘We expect the flood of residential foreclosure cases into our civil divisions to continue through 2010 and into 2011, so there should be thousands of cases eligible for mediation,’ Haworth wrote.”
“There are questions about how effective the program will be. A leading real estate expert, Jack McCabe, says homeowners might get a loan modification through mediation, but many slip back into foreclosure in less than a year because lenders are not reducing the amount owed.”
“Half the state’s mortgages are for more money than the property is worth, and could stay that way for the rest of their owners’ lives, McCabe said. ‘They’re upside down and they’re getting deeper in debt,’ McCabe said. ‘We’re going to continue to see this high and escalating number of foreclosures.’”
