Cutting Their Losses And Running In Florida
The St Petersburg Times reports from Florida. “Developer Joel Cantor proclaims it his ‘jihad mission’ to sell out his Signature Place condominium tower on the St. Petersburg waterfront. His lender, Fifth Third Bank, is putting 35 units up for auction next month at starting prices that are two-thirds less than what Cantor had been asking. Cantor is trying to put a happy face on a hurry-up sales strategy forced by the most hostile real estate climate in decades. ‘We really didn’t have a choice,’ Cantor said of the auction. ‘I’m going to look like I’ve gone under.’”
“‘It’s wildly below market value. It’s a starting point, hopefully. But who knows? That may be all the market will pay,’ said Jon Gollinger, president of auctioneer Accelerated Marketing Partners.”
“Cantor has been charging about $300 per square foot on units that cost him $417 per square foot to build. Auction prices will probably be lower. ‘This auction is not my idea,’ he said. ‘We’re for it, of course. But I feel for my customers.’”
“Signature Place condo owner Matt Bryant sees some value in speeding up sales. As treasurer of the building’s homeowners association, he would like to see the tower full. ‘No one wants to see their values go down,’ said Bryant, who paid $491,000 for a unit in June. ‘But we also want to see people paying HOA fees.’”
The Collier Citizen. “A messy foreclosure lawsuit involving Malibu Lakes has come to an end. The 356-unit lakefront apartment complex in North Naples has a new owner. The sellers paid $83 million for the apartments in October 2005, hoping to convert them to condominiums. The buyers paid $31,019,500 for the development before it reached a courthouse auction.”
“‘It was a negotiated deal. Somebody must have been negotiating directly with the lender,’ said Ross McIntosh, a Naples real estate broker. ‘The lender took a pretty good haircut.’”
The Palm Beach Post. “Four households in The Acreage filed a federal lawsuit Wednesday night alleging that pollution by defense contractor Pratt & Whitney is responsible for the cancer cluster that has caused fear and anger in the pastoral community in central Palm Beach County. Wednesday’s suit doesn’t allege that any of the plaintiffs has become ill, but it says the cancer cases and the resulting publicity have caused their property values to plummet. ”
“Edwin Reyes, one of the suit’s plaintiffs, said Wednesday night that he doesn’t have cancer but has had a skin ulcer since he moved in to his Hamlin Boulevard home about four years ago. ‘I moved out here, and I didn’t have anything,’ said Reyes. ‘It seems like it’s part of the water.’”
The Herald Tribune. “Foreclosures surged 150 percent in Manatee County last month when compared with a year ago, a probable sign that the new wave of foreclosures predicted by several state economists is under way. Michael Moulton, a sales agent who specializes in luxury properties, said the seeds exist for an increase in foreclosures in the high-end market in 2010. Moulton was involved in a $1.7 million bank-owned home sale on Tuesday. The property would likely have sold for $3 million or more during the boom.”
“‘There are people in my generation that were raised where you don’t want to be foreclosed on and have that stigma so they have been expending all the resources they have to stay current,’ Moulton said. ‘But at some point those funds run out and they’ll have no choice in the matter. I think many are approaching that point.’”
From TC Palm. “In Martin County, lenders set a new record for filing foreclosure cases last year and several experts said they expect the high level of foreclosures to continue for at least two years. There is no sign the foreclosure crisis will ease in the next two years, several local economists and government officials said. That means property values will continue to decline as lenders resell foreclosed residential and commercial buildings for lower prices and drive down the real estate market.”
“‘There has been absolutely no let up,’ said Marsha Ewing, the clerk of the circuit court in Martin County. ‘The foreclosures continue to be filed at a high value. We do not see any end in sight.’”
“William Pittenger, chief real estate economist for Seacoast National Bank, said high delinquency rates on mortgage payments combined with a backlog of foreclosure cases because the court system is so clogged leads him to believe the crisis will last until at least 2011, maybe longer. One reason for the persistence of the crisis is that interest rates are increasing on adjustable rate mortgages taken out on many properties bought when the real estate prices were going up, Pittenger said.”
“‘I do expect on the Treasure Coast, including Martin County, that foreclosures are going to stay elevated well into 2011 and perhaps into 2012,’ Pittenger said. ‘We’re not going to get out of this very quick. The demand just isn’t there to make that happen.’”
“Another reason is some homeowners who bought at the height of the market are withholding payments from their lenders, even if they can afford to pay, because the amount they owe is so much greater than the current value of the property they don’t want to throw good money after bad, Pittenger said. That’s a change in philosophy from the past when it was considered more shameful to walk away from a home.”
“‘The social and moral barriers to foreclosure are just falling all around us,’ Pittenger said. ‘People who you would never think would enter into foreclosure are doing it, just cutting their losses and running. They are thinking that, ‘I am never going to get out of this,’ and they’re probably right.’”
The Sun Sentinel. “On an old dairy farm in southwestern Broward County, Armando Codina and Jim Carr hope to disprove the theory of a housing slump. The heavyweight builders are working together on Monterra, a 1,600-home community in Cooper City that’s the only new residential development for 20 miles. The sales center opened a month ago, and 25 buyers have signed contracts so far.”
“Ryan and Kim Scholten signed a contract at Monterra for a four-bedroom home with a loft for $399,900. At first, they looked at existing homes in the area and made offers on three properties, only to lose out to other bidders paying cash. They’d tour 10 short sales and foreclosures in a day, and many of the homes had problems such as mold or missing appliances. ‘It was so frustrating,’ said Ryan Scholten. ‘We were so discouraged. The Realtors would say, ‘No, no, you just have to envision it.’ And I said, ‘Yeah, I envision having to put $100,000 into this house.’”
“Jeff and Dawn Lucas waited six months on a short sale before the owner told them she was keeping the home after all. The disappointment became a blessing in disguise. At Monterra, they’re getting a new house with a pool and are picking out all their own countertops and flooring. ‘It’s a new community, and we hear there will be a lot of young people,’ said Jeff Lucas. ‘It should be a really good set-up.’”
The Tallahassee Democrat. “The U.S. Department of Housing and Urban Development presented the Tallahassee Lenders’ Consortium with a check for $62,464 Wednesday, money that will be used locally to assist potential first-time home purchasers and offer counseling services. In Leon County, the TLC sponsors classes for first-time buyers that cover such questions and help the individual avoid the pitfalls on the road to owning a house.”
“‘It’s not a dream if you can live in a house you’ve bought for a year or so, then are confronted with an interest rate that kicks up or a situation that you can no longer afford. That’s not called a dream,’ said J. Nicholas Shelley, director of HUD’s Jacksonville field office. ‘That’s a nightmare.’”
The Miami Herald. “While the real estate industry in South Florida and across the country may be showing some glimmers of hope, there still is likely to be more pain in 2010 — particularly when it comes to commercial real estate financing. That was the consensus Tuesday from a variety of local and national industry leaders gathered for the Urban Land Institute’s South Florida Economic & Development Outlook.”
“One of the major problems looming is a commercial real estate finance crisis, as commercial mortgages come due for refinancing on projects that are underwater. ‘This crisis could have a long tail,” said Stephen Blank, senior resident fellow in finance for ULI. ‘The aftershocks could go on forever.”’
“The issue is what the industry has dubbed the game of ‘extend and pretend.’ That refers to a tendency by lenders to extend the term of a loan in order to avoid writing down the value of the asset, which could have seen as much as a 50 percent decline. Some speakers blamed the government for failing to do anything about the problem and propping up the banks with federal support.”
“The question is whether what happened during the savings and loan crisis — when properties were sold off at fire-sale prices by the Resolution Trust Corporation — would have yielded better results. Troy Taylor, president of Algon Group, which specializes in distressed asset workouts nationally, says the key to a successful workout is getting both lenders and owners to accept the new reality of what projects are worth. Until that happens on a large scale, any recovery is going to be hampered.”
“‘You’re not going to see the bottom until you blow through all this stuff,’ Taylor said. ‘Let’s go have surgery and put it behind us.”’
“‘There is no catalyst today for things to move,’ said Merrick Kleeman, managing partner of a real estate private equity firm. ‘Last time the government was the enforcer. This time they’re the bartender.”’
The Naples News. “It has been one year since President Barack Obama paid a visit intended to stimulate Southwest Florida and the nation into supporting the American Recovery and Reinvestment Act of 2009. At Harborside Event Center in downtown Fort Myers on Feb. 10, 2009, Obama shared details of the stimulus plan, which the White House later estimated would save or create 8,700 jobs by 2011 in the area’s 14th congressional district alone.”
“‘I expect to be judged by results, and I’m not going to make any excuses,’ Obama said as he opened the town hall. ‘If stuff doesn’t work and people feel like I haven’t led the nation in the right direction, then you’ll have a new president.’”
“The $787 billion spending bill was signed into law seven days later. Today, economic indicators show only small signs of an improving economy. Lehigh Acres had been particularly devastated by the housing crisis, with nearly all streets in the northeast Lee County area having a foreclosed home. Bo Turbeville was helping the Lehigh Acres Community Planning Corporation draft a land use plan when Obama visited.”
“‘If I was to be blunt, I would say that the only thing it has done for Lehigh Acres is make the people of Lehigh Acres realize that they need to stand up and do things for themselves if they want to see anything be done,’ he said.”
“Businessman and Lee County Democratic Party Chairman Will Prather said he is looking forward to better opportunities for credit, which he said have yet to materialize. Like Turbeville, Prather said that not much has changed since the stimulus act was passed and that citizens have to take matters into their own hands.”
“‘We need strong leadership and we need to start looking at ourselves,’ Prather said, after criticizing both political parties’ conduct. ‘We can’t keep looking to government to solve all of our problems, and as a community we need to learn how to inspire ourselves.’”
