The Housing Bubble

WFSU reports on Florida. “Florida Realtors President Summer Greene says she’s seeing a trend across the state indicating the housing market has not only stabilized, but it’s also gaining ground. She says home prices are rising in many markets even with 33-percent drop in homes up for sale in July from a year ago. ‘People are getting off the sidelines and they’re recognizing that ‘hey, if I don’t buy a home now, I’m missing out! Interests are going to start creeping out, I won’t be able to take advantage of the historically low interests rates, and the prices are going to bump on me,’ remarked Greene.”

The Pensacola News Journal. “Perdido Key’s inventory of unsold properties has dropped to 185 — the first time it’s been less than 200 in several years. What’s more, beach property brokers are noting that many of the recent buys are all-cash sales, a good indicator that smart investors are moving in and scooping up steals. ‘Sellers are pricing close to the buying point, and buyers think prices are not going to go down further,’ said Perdido Key Realtor Alison Davenport.”

“Perhaps the most active end of the market are those units that were on the market at $1 million and above and now have dropped into the high six-figure range. ‘People with that kind of money who can pay cash didn’t get there by making stupid decisions,’ Davenport said.”

From Marketplace. “Dundee is a town of 3,500 people, in the middle of Polk County. But not too long ago, Dundee was preparing for a population 10 times that size. At the height of the housing boom, developers thought this little town could become a bedroom community for nearby cities like Lakeland and Winterhaven, and maybe even for Orlando. Mark Wheeler grows Valencia oranges in and around Dundee. Back then, speculators were paying so much money for land, Wheeler couldn’t say ‘no.’ He sold two groves.”

“‘Put a lot of time and sweat equity and money into them,’ Wheeler recalled. ‘But it got to the point where the prices were just crazy.’”

“One of the first developers to get to Dundee was Ron Ben-Zeev. Ron Ben-Zeev has spent these last few years trying to get out of the development business, trying to get rid of the land here. ‘We are in negotiations with a bank to try to come up with a solution that makes sense, although right now, it seems to be hard to do,’ he explained. ‘And we’re trying to find some way to stave-off the losses as best we can.’”

The Herald Tribune. “Faced with slumping sales, Gibraltar Homes LLC appears to be having the kinds of difficulties many residential builders weathered three years ago. Gibraltar president Albert Sanchez Jr. blames the setbacks and affiliated layoffs on slowing sales. ‘In 2011 we sold about 50 homes,’ Sanchez said. ‘That was really great. We geared up for it, we added some people. Then you go through a period where you sell very few, and then all of a sudden you are overstaffed again.’”

“Florida is suffering from the recent retrenching by consumers. Nationally, 70 percent of the economy is consumer-driven but the number is much higher in the Sunshine State, said Don Grimes, a University of Michigan economist who has a home in Sarasota. Grimes questions the Federal Reserve’s policy of keeping interest rates low for so long. While low rates are aimed at spurring the economy — particularly business investment — that does not appear to be working.”

“The policy has been particularly detrimental in Southwest Florida, eroding investment returns for retirees and keeping consumer spending slow, Grimes said.”

“In 2011, the economy grew at a 7.6 percent clip, nearly twice this year’s rate. But Florida’s economy — led by double-digit growth in Miami — had been surging at a 9 percent pace during the first four months of the year, only to see that rate fall to 4 percent in May and June. ‘The economy has decelerated,’ said Sean Snaith, a University of Central Florida economist. ‘This is not the most sweeping recovery that’s lifted a lot of boats at the same time and at the same amount. There’s been a lot of holes in it.’”

The Sun Sentinel. “When South Florida’s housing bubble burst and home prices plummeted, they never fell far enough to make rents or single-family homes affordable for the average family. The median home price in Broward County last year was still $47,611 more than the median household could afford, according to an assessment performed by Florida International University’s Metropolitan Center. The gap was $47,263 in Palm Beach County and $60,243 in Miami-Dade County, the report said.”

“More than half the renters in Broward County – 107,107 in 2010 – are ‘extremely cost-burdened,’ spending more than half their income on rent, the report showed. ‘For people that are lower-income, even with low interest rates and low payments, they still can’t come up with the down payments that are now required,’ said Ralph Stone, director of Broward County’s Housing Finance and Community Development Division. ‘The foreclosure inventory is not making any kind of dent in the affordable rent housing.’”

“The city’s Affordable Housing Advisory Committee says the affordability gap will continue to widen as the housing market rebounds. ‘I think Fort Lauderdale is a different community than Coral Springs and Davie. It’s the urban center of Broward County. There’s a greater need,’ developer and committee member Peter Henn said. ‘When people’s kids can’t come back to Fort Lauderdale because they can’t afford to live here, that’s when [people] realize there’s a problem,’ Henn said.”

From USA Today. “Connerton is one of the places where the early 21st-century building boom went bust and America’s suburban frontier stopped in its tracts. Its predicament illustrates broader issues facing President Obama and Mitt Romney, including foreclosures, jobs, the environment and infrastructure. Here, hundreds of grassy building lots are served by nicely paved roads, alleys and sidewalks. There are evocative street signs (Billowy Jaunt Drive, Wonderment Way) as well as street lights, fire hydrants and electrical transformers. Utility lines sprout from the ground, waiting.”

“There’s everything you need for a complete town — except enough houses and people. Pete and Ellen Rundel arrived in 2007, paying $600,000 for a 3,500-square-foot house on Winsome Way that’s now worth $280,000. It’s not their only disappointment. ‘It’s sad what’s not here,’ says Ellen, pausing from her front-yard weeding. ‘This was supposed to be like Reston,’ the densely-settled planned community outside Washington.”

“Although they live in one of a few built-up parts of town, six vacant lots are visible from their yard. Two houses on the street are in foreclosure. The Rundels love their own house, Ellen says, ‘but we did expect restaurants.’”

“Randy Cook is a self-employed online security consultant who built a $900,000 house here in 2006, just before the crash. ‘I’m disappointed by how it’s gone, but who isn’t in the USA right now?’ he asks. ‘I have no intention of leaving. It’s just going to take time.’”