The Housing Bubble

The Palm Beach Post reports from Florida. “April’s existing-home sales report released Friday dashed all hope that the spring selling season would pull the local real estate market out of its post-boom doldrums. The inventory of unsold homes from Boca Raton to Hobe Sound soared to a stunning 43-month supply in April, according to Illustrated Properties Real Estate.”

“In Palm Beach County, the median price of an existing single-family home fell to $376,300 in April from $386,500 a year ago, the Realtors association said. In the Treasure Coast, the median price dropped to $239,700 from $258,000.”

“Statewide, existing-home sales fell a dismal 26 percent, while the median price of an existing home in Florida dropped 4 percent to $236,000, the association said.”

“‘We’re going to see some downward pressure on those properties that weren’t priced properly to start with,’ said Ellen Bitton, CEO of Park Avenue Mortgage in Palm Beach.”

The St Petersburg Times. “Realtors couldn’t sell Paul Swisher’s house. Maybe his rhapsodies will. Frustrated by a home on the market for nearly 15 months, the St. Petersburg resident has taken a new tack to attract potential buyers: a 3-by-4 whiteboard on his lawn.”

“‘Hey, what’s up with this?’ he wrote this week. ‘Do I have to hit somebody over the head with a brick? This is a truly beautiful home. Are you going to force me to stand out here in a clown suit?’”

“The answer may be ‘yes’ if housing numbers released Friday are any indication. In the Tampa Bay area, the number of existing homes sold in April plunged 35 percent from April 2006, and 56 percent compared with April 2005, during the housing bubble that’s now a fading memory.”

“Since listing his house in March 2006, he’s dropped the price by $86,000 from $425,000, which his Realtor recommended, to $339,000. He’s also gotten rid of the Realtor.”

“Swisher hopes that a ‘For Sale’ flag he just ordered, which he’ll hang from the 20-foot flagpole in his yard, will attract some inquiries, too.”

The New York Times. “As dozens of condominium towers conceived during Florida’s real estate boom near completion, investors who snatched up units in the preconstruction phase in hopes of turning a quick profit are increasingly trying to break contracts, even walking away from fat deposits.”

“‘I get two or three of these calls a day,’ said James Ryan, a lawyer in Boca Raton who said he had 40 clients looking to get out of condo contracts. One, Mr. Ryan said, abandoned a $340,000 deposit rather than close on a $1.6 million unit that lost its appeal as the market faltered.”

“‘I see buyers unleashing all possible means to try to get out of contracts,’ said Gary Saul, a lawyer in Miami for developers, adding that in some projects, 20 percent of buyers want their money back.”

“Tom Leon said he planned to give up $200,000 in deposits on two condo units in Miami, priced at $500,000 each, after finding ‘no loopholes’ in his contracts. He said he was not especially bitter, since he had made money flipping other properties at the height of the boom.”

“‘There are some people that mentally can never bring themselves around to that, especially in real estate. But there’s a time to hold and a time to fold, and in my opinion, this is a time to fold,’ said Mr. Leon, adding that he never had any intention of living in either of the units.”

From TC Palm. “Sales of existing homes in Indian River County continued to slide last month, as prices inched down. ‘I wish it was better, but it could be worse,’ said Karen Hall, president of the Realtors Association of Indian River County.”

“Sales were off 18 percent while the median price of existing homes fell 7.5 percent to $217,400 from April 2006.”

“‘My fear is that a lot of people are not lowering their price because they can’t,’ said Brad Hunter, director of West Palm Beach-based Metrostudy. ‘There is no negotiating room left.’”

The Sun Sentinel. “The spring home-selling season is proving to be a misnomer. Many buyers are holding off. They’re waiting for prices to keep falling, experts say.”

“New data released Friday shows that sales of existing homes in Palm Beach County dropped 17 percent last month from a year ago, according to the Florida Association of Realtors. The county’s median price was $376,300, a decline of $10,200 from $386,500 a year ago.”

“‘Home builders have dropped their prices like a rock,’ said consultant Brad Hunter. ‘People can buy a home discounted by $100,000 or $150,000.’”

“Palm Beach County had about 36,000 properties on the market at the end of April, up almost 30 percent from a year ago and triple the number from 2005, according to Keyes Co.”

From Florida Today. “Daryl Adkins hopes the end of the school year means an ample pool of willing buyers in Brevard in the next month or so, and that the three-bedroom Indialantic home he is trying to sell will catch someone’s eye.”

“After two years and a couple of price reductions without a buyer, Adkins is hopeful, but not too confident. ‘I think houses are selling,’ Adkins said. ‘The problem is there is just too many of them. The market is just flooded.’”

“Adkins purchased his home for $245,000, and did extensively remodeling to the property. His initial asking price was $329,000, although he has reduced it to $233,000.”

“Gary Corbett of Melbourne also isn’t getting a whole lot of buzz for his three-bedroom home, which he has listed for $225,000. That’s also a lower price than what he originally was asking.”

“He’s not confident that he’ll sell the house any time soon, but that doesn’t worry him. ‘I’m not in a hurry,’ Corbett said. If it doesn’t sell, I can stay here. It’s just a lot of house for one person.’”

The Miami Herald. “South Florida home sales suffered through their slowest April in at least 10 years, dropping 37 percent from a year ago. Prices mostly inched up, although Broward condominiums sold for 8 percent less than they did in April 2006.”

“The condo market is cold. Sales dropped 22 percent in Broward to 683 units and 30 percent in Miami-Dade to 722 units. The demand drop cut into prices in Broward, as the typical unit went for $197,800, about $17,000 less than in April 2006.”

“Single-family home sales plunged compared to a year ago: down 16 percent in Broward to 580 houses and down 37 percent in Miami-Dade to 531. Those are the lowest April numbers recorded on the Realtor group’s website, which contains data back to 1997.”

The Herald Tribune. “Pat Neal, president of Neal Communities, has seen changes in the market. ‘Our May results are better than May of 2004, 2005 and 2006,’ Neal said.”

“The average price for one of Neal’s homes is down about $125,000 since the market softened early last year.”

“‘Because underwriting standards are much more difficult now, many of the lower priced homes may well find their way back onto the market through foreclosure,’ he said.”

“Amanda Stark of Fort Myers, and her husband, Bill Berry, bought their three-bedroom house a year ago for $229, 000, with a subprime mortgage and no downpayment. The interest rates were steep: 8.75 percent on 80 percent of the mortgage, and 11.25 percent on the other 20 percent. ‘Every time I say it,’ Stark said, ‘it just kills me.’”

“‘We thought, ‘For two years, we’ll struggle and get by, and after two years, we’ll refinance,’ said Stark.”

“But Berry, a carpenter, has had a hard time finding work since the housing market slowed. They’d been paying $1,000 a month in rent; now, they’ve got an $1,800-per-month mortgage, and another $600 in property taxes and insurance. ‘This could be a farewell party, too,’ Stark said.”