The Housing Bubble

A report from the Northwest Florida Daily News. “The number of homes sold in Okaloosa and Santa Rosa counties last month was lower than it was in April 2011, but there were positive signs in the local housing market. In April, Okaloosa County had a 6.7-month inventory of single-family homes on the market. That’s a reduction of more than 40 percent from last April, when the county had an 11.3 months’ inventory. Santa Rosa County went from an 11.5-month inventory in April 2011 to a 7.1-month inventory last month, while Walton County’s dropped from 17.6 months last year to 10.1 months last month. Those are decreases of 38.3 percent and 42.6 percent, respectively.”

“‘Buyers are seeing that finally the market has hit (bottom) and now it’s starting to bounce and they’ve got to get in if they’re going to get in at the bottom,’ said Judi Rutland, president of the Emerald Coast Association of Realtors.”

From TC Palm. “Like many Treasure Coast residents looking to buy a house, Mike Musitano isn’t sure when to jump in. Musitano said his biggest concern is housing values will fall further because of the so-called ’shadow inventory,’ homes in foreclosure that have yet to come onto the market. Concerns about the shadow inventory flooding Florida’s real estate market are ‘greatly overrated,’ Florida Realtors Chief Economist John Tuccillo said in a report. Tuccillo said lenders have no reason to flood the state’s real estate market with more homes if doing so would drive prices down and reduce the lender’s profit.”

“Veteran appraiser Bill Pittinger said the housing market has hit a bottom in the sense that the free fall in prices is over. ‘Still, we can expect at least another 18 months of erratic behavior where prices rise or fall by 2 to 5 percent,’ Pittinger said. Even once that happens, Pittinger said, a quick rise in prices in not likely.”

“‘We are more likely to bounce along bottom for quite some time,’ he said, noting that it took 19 years after the Great Depression of the 1930s for prices to regain pre-Depression levels. Pittinger said anecdotal evidence of rising prices is the result of declining inventory, not necessarily an increase in overall values.”

“Jack McCabe, CEO of McCabe Research & Consulting LLC in Deerfield Beach, said nearly 800,000 of Florida’s 11.1 million homes are in distress and will be have to be sold in foreclosure or short sales. ‘Until they’re sold or taken off the market, we’re not going to see prices bottom out,’ McCabe said. McCabe said 70 percent of Florida home sales are for cash to foreign investors. ‘That’s not an indication of a healthy market,’ he said.”

From Marco News. “The median price increased 22 percent overall from $185,000 in April 2011 to $226,000 in April 2012, according to a prepared statement that Naples Area Board of Realtors released. ‘While Naples’ total inventory is down to 7,130 units, the number of open foreclosure cases and mortgage loans that are 90 days or more past due dwarfs the Realtors’ listed inventory,’ McCabe said. ‘It’s my opinion that over the next year we are going to see fewer foreign buyers and an increasing number of distressed properties for sale that will have a negative impact in housing prices.’”

The Herald Tribune. “Since 1992, when he became Manatee County’s Property Appraiser, Charles Hackney has run unopposed in elections. In addition to overseeing a staff of 50 appraisers and IT specialists, he sits on the board of three non-profit foundations. Correspondent Chris Angermann interviewed him at his office in Bradenton. Q: How did the housing bubble affect you? A: They don’t tell you in the books for appraisals what to do when values are declining. With far fewer sales than in a typical market, it has been a real challenge. We’ve had neighborhoods where there weren’t any sales for two or three years.”

From Jacksonville.com. “Homebuilders pulled more permits in St. Johns for the first time in 2011. In the first four months of 2012, the gap widened with St. Johns racking up 566 permits while Duval had 345. Julington Creek homeowner Chuck Forcier said as long as the county stays ahead of the growth curve for its schools and recreational areas, he thinks families will keep moving in. He said what the county needs is more businesses to match the increase in residents.”

“‘The one thing I worry about,’ he said, ‘is where are all the people going to work?’”

The Tampa Bay Tribune. “Wells Fargo senior economist Mark Vitner likes what he sees in coastal southwest Florida. When the housing bubble sent area home prices soaring, Midwesterners who had served as prime buyers for that part of the state got priced out of the market. Not anymore. ‘Some people recognize Florida is a bargain again,’ Vitner says. People are buying housing here and can even do so now without the need to sell their own homes.”

“So what is Florida’s biggest change ahead? Responds Vitner: ‘We will be less dependent on growth itself.’”

“If Florida can grow more internally, the state may one day be able to shuck its unfortunate nickname: the Ponzi State. The state was so dubbed for its historical dependence on the wealth of newly arriving people to sustain the costs of the ones already here. ‘Ponzi State’ headlined a 2009 New Yorker magazine story by George Packer (who credits USF history professor Gary Mormino for the Ponzi reference).”

The Sun Sentinel. “More than 18,000 Canadians own homes — many of them beachfront condominiums — in Broward County as of last year, according to an analysis of Florida Department of Revenue tax data. That’s nearly triple the number from 2006. Less than two weeks ago, Toronto resident Mario D’Orazio bought a condo in Playa Del Mar on Galt Ocean Mile in Fort Lauderdale for $335,000. The two-bedroom unit needs major renovations — ‘It still looks like 1975 when you walk in,’ said D’Orazio, but it has a spectacular water view. He plans to vacation there three or four times a year.”

“The big price declines have eased and values are starting to climb. Canadians have noticed the recent price increases, said D’Orazio’s real estate agent, Michelle Farber Ross. About three-quarters of her business is Canadian buyers. ‘If they’re going to buy a piece of the South Florida lifestyle, now is the time to do it,’ she said.”

“Despite the recent rise in home prices, four in 10 Palm Beach County mortgage holders owe more than the properties are worth, Zillow says. For now, an underwater mortgage ‘is only a paper loss,’ Stan Humphries, chief economist for Zillow, said in a statement. Values will continue to rise in the months and years ahead, he said.”

“The figure, 43 percent, is up slightly from a year ago, and the lost value totals $11.1 billion. Nearly a third of the 107,482 ‘underwater’ homes are worth only half of what’s owed, Zillow said.”

The News Press. “A recent settlement marks the end of a three-year legal standoff between the loneliest condominium dweller in Fort Myers and a one-time billionaire developer. Weehawken, N.J.-based firefighter Victor Vangelakos, closed on his unit in the 32-story, waterfront Oasis I condo on the east edge of downtown for $430,000 in November 2008. Of the few who hung in, all but Vangelakos agreed to swap their units for similar ones in Oasis II next door.”

‘But Vangelakos, unable to persuade his lender to accept the swap, chose to stay in the otherwise deserted Oasis I. He sued Related to get his down payment back. He still owns the two-bedroom, two-bath unit, but it’s now worth only $108,300, less than a fourth of the original price, according to the Lee County Property Appraiser’s office.”

“Vangelakos and his family had the run of the place when they came to vacation, but the place was creepy: The silence of the tomb settled in when there was a pause in a conversation.”

“Vangelakos’ attorney, John Ewing, said that under a confidentiality agreement in a settlement of the lawsuit, neither side is allowed to comment. But he said the case was one of a rash of similar lawsuits filed after the real estate bubble burst at the beginning of 2006. ‘There’s no condo recovery litigation that’s new,’ Ewing said. ‘There’s a lot that’s been going on for two, three, four years.’”