The Housing Bubble

The News Press reports from Florida. “Michael and Judith Van Dress have a lot of privacy and not a lot of competition when they use the brand-new fitness center at their condominium in Concordia. They moved to the north Cape Coral community a year ago, just as construction of the project was grinding to a halt in Southwest Florida’s floundering residential real estate market.”

Living at Concordia is a strange mixture of sparkling new amenities and subtle signs of decay, says Judith, who with her husband retired from Ohio. ‘There’s not a lot of occupants here,’ she said.”

“Welcome to life at the half-builts, the many projects large and small that sit largely vacant and partly completed - left high and dry when the housing market tide went out.”

“Experts say the wave of speculation that peaked at the end of 2005 - when the median resale price of a home was $322,300 - caused a spurt of construction at prices nobody could pay. According to figures released Thursday, the median resale price in June was $172,400.”

“There are no exact statistics on how many such developments there are in Lee County, but ‘you’re not talking about a few units,’ according to commercial real estate broker Jim Simon.”

“‘It’s in the thousands,’ he said.”

“A typical condo in Concordia can be had for about $100,000. That’s 63 percent less than the $267,900 the Van Dresses paid in April 2007.”

“Concordia’s sales office is still open, but the developer ran out of money last summer when its main lender pulled the plug on financing and filed a foreclosure action for $23.4 million on the partially completed, 34-building, 340-unit condominium.”

“Robert Thomas signed a pre-construction contract to buy a condo in the new Green’s Edge development in December 2005, at the height of the housing boom. The market crashed the following month and his unit was never built at the huge project off Colonial Boulevard in Fort Myers.”

“Now he’s trying to get his $84,000 down payment back from builder Harp Development, because the builder never put up his building and he counts himself lucky. The project sits empty.”

“Thomas freely admits he was buying the Green’s Edge unit as an investment. He hoped to sell it for a profit after it was built.”

“‘I had no intention to live there,’ Thomas said.”

“For the Van Dresses, a little peace and quiet isn’t all bad, but ‘there’s a lot of little things you see that are going to wrack and ruin,’ Judith Van Dress said, such as clotheslines and basketball hoops and people walking large dogs without the use of pooper scoopers - all in violation of the community’s regulations.”

“‘It isn’t one thing, it’s a lot of things,’ she said. ‘It wouldn’t attract people to buy the property. I would never buy it at this point.’”

The Herald Tribune. “Gloria Chaignet’s attempt at real estate ‘flipping’ three years ago has left her life upside-down today. Chaignet and hundreds of others were trying to tap into the frenzied real estate market where homes and condos often ‘flipped,’ or resold, one or more times while being built — each time leaving many a buyer with a bucketload of money.”

“So with an eye out to help her children, Chaignet and some co-workers got wind of a can’t-miss deal — and bit.”

“But it turned out that pretty much everyone lost. ‘It wasn’t done by greed,’ Chaignet said. ‘I’m a single mom with two kids going into college and I thought this could help pay for their college.’”

“Ground was never broken on Chaignet’s North Port home, but the builder continued to take draws on the mortgage loan she signed for, that one that seemed oh-so-easy to get. She said her builder stopped returning phone calls. E-mails to the company bounced back as undeliverable.”

“‘It sounded like a really great deal, but the more we got involved in it we found out differently,’ she said. ‘They probably never had any intention of building any of the homes.’”

“She said her sons will still be able to go to college, but it will be paid for by a lot of credit cards instead of investment returns. ‘I feel like I was raked over the coals,’ she said. ‘I feel like I was part of a bank scam and I feel like I was completely snowed.’”

The Cape Coral Daily Breeze. “The tide of low sales in Cape Coral and Fort Myers may be turning, according to a June 2008 report from the Florida Association of Realtors. Last month 719 single family homes were sold in the region, an increase from 558 sold in June 2007. Some Realtors may consider these sales good news because it decreases the unprecedented vacant home supply, but while sales continue upward, prices dropped 32 percent.”

“Median prices for single family homes dropped from $253,900 a year earlier to $172,400 today.”

“‘In my opinion anytime we are up is a good sign,’ said Tommy Lee, president of the Cape Coral Realtor’s Association. ‘There is no doubt property is moving. It is the land of affordable properties again.’”

“Gloria Tate, a Realtor with Raso Realty, said that the sales increases are a result of the banks dealing more swiftly with pre-foreclosures and short sales. ‘A lot of listings we have are short sales. People are making offers on short sales and banks are getting a little more quicker on their response time making it easier to close,’ said Tate.”

“Today there are 4,835 pre-foreclosure properties in Cape Coral, according to Realty Trac. According to Tate, lower prices and an expedited foreclosures process ‘is making it affordable for people to own a home in Cape Coral.’”

The St Petersburg Times. “For two years, real estate agents have had no luck finding a buyer for the 3,800-square-foot home David Frishman built as an investment on Bradenton’s exclusive Hawk Island. Now, stuck with $12,000 monthly payments, Frishman is trying to sell the house in a less conventional way - he has put it up for bid on eBay.”

“With a day left to go, the responses have been disappointing. ‘Most are just sort of predatorial,’ says Frishman, who has heard from people wanting him to refinance or take less than his $1.5-million starting bid.”

“As of Sunday, eBay’s real estate category had 4,029 listings, a tiny but growing number of the site’s 17-million listings. Among the properties offered for sale were 348 in Florida.”

“A five-bedroom canal-front home in the MiraBay development of southern Hillsborough County. Bought for $695,000 in 2005 at the peak of the boom, it was foreclosed by the lender and is now listed for $399,999.”

“A two-story, lakefront home in the Lee County town of Estero for $265,000. The owners, who paid $346,800 for the house in 2005, need to sell because they have another place in foreclosure proceedings.”

“At a starting bid of $1.5-million, the assessed value, the Hawk Island house would seem a great deal in a new gated community where some lots alone are listed at the same price. But while the auction has drawn 3,804 views, not one bid had come in as of Sunday.”

“‘We’re just trying anything at this point,’ Frishman says of his eBay auction, which ends today. ‘It certainly wouldn’t be our first option, but when you’re trying to save your home, you don’t leave any option unturned.’”

My Fox Tampa Bay. “The Greater Tampa Association of realtors says home sales are up by 76% since January. At the same time, California based Realty Trac reports we have double the rate of home foreclosures.”

“All this conflicting information leaves some people feeling as though they’re caught in the middle. Morgan Barfield is one of them. He put $80,000.00 worth of renovations into a south Tampa home.”

“‘Countless people have come by offering just a real low ball offer, probably a third of the value,’ Barfield said.”

“If there is one statistic everyone can agree on, it’s the price of a home. It’s down by nearly 8% since January.”

The Palm Beach Post. “Melbourne-based Mercedes Homes continues to cleanse its books of land in Port St. Lucie. The latest deal: The builder’s 29.5-acre Savanna Trace development sold for $1.35 million this month. The buyer was not a house builder - it was a house of worship.”

“Mercedes was approved to build 80 homes on the property, but the market flagged and construction never started. The company bought the property in 2004, St. Lucie County property records show. Last year, it transferred it internally for $1.9 million, records show.”

“In December, the firm got rid of 130 of its vacant lots in Port St. Lucie, selling them for $2.52 million to investor William Brisben. Brisben snagged some of the lots for as much as $70,000 less than what Mercedes paid for them.”

The Orlando Sentinel. “Former Darden executive Doug Doran, who had partnered with Veranda Park developer Kevin Azzouz to develop restaurants for the Italian-themed town center in MetroWest, said last week he has parted ways with Azzouz.”

“Doran said he stopped working with Azzouz in late March as a result of the sharp downturn in the real-estate market. Doran, who had formed a partnership with Azzouz called Group Four Restaurants, said the ‘horrible economic’ environment made it ‘tough’ to open additional restaurants in Azzouz’s development.”

“‘It made no sense,’ Doran told the Orlando Sentinel.”

“Azzouz has run into financial trouble with condo developments in Veranda Park, facing several foreclosure lawsuits.”

The News Herald. “The population of every city in Bay County, except Panama City Beach, decreased between July 2006 and July 2007, according to recently released annual estimates from the U.S. Census Bureau. For Panama City, it was the third straight year of decline, from 37,526 in July 2005 and 37,227 in July 2006 to 36,805 for July 2007.”

“Panama City Mayor Scott Clemons was not alarmed by the numbers. ‘Our growth has been flat for many years,’ he said. ‘Our area has been affected by the economy, it’s more expensive to build and we’re landlocked, with the exception of northern Panama City and the current airport property.’”

“‘Our decrease in population in other municipalities could be due to the many Katrina evacuees that are slowly moving back to their home states,’ said Carol Roberts, president of the Bay County Chamber of Commerce. ‘In addition, individuals are also moving to unincorporated areas of our county, pursuing more affordable housing.’”

“Bay County Economic Development Alliance Executive Director Ted Clem said it’s hard to cite one cause of population decline in the area, but he believes the construction slowdown is a main player.”

“‘From 2003 to 2006, construction was our strongest engine for job growth. Since then, we’ve had 3,000 workers displaced’ in that field, he said.”

“Lynn Haven Commissioner Joseph Ashbrook said the minimal dip could be due to some people getting fed up with living in hurricane- and flood-prone areas, and new residential construction ‘isn’t selling.’”