The Palm Beach Post reports from Florida. “In a hopeful sign for the moribund condo market, the developer of a struggling downtown condominium decided not to sell 156 units in a discounted bulk sale – a decision that has West Palm Beach condo owners breathing a sigh of relief. Instead of a fire sale, Wood Partners is keeping the units at The Edge and renting them. Wood began building the 307-unit Edge during the boom but didn’t finish until the bust had set in.”
“With vulture investors shopping for condo bargains in South Florida, real estate brokerage CB Richard Ellis approached Wood with the idea of marketing the units to hedge funds and other institutional investors, said Jay Jacobson, a partner at the development firm..”
“That process yielded ‘offers at a price point that bordered on insulting,’ he said. So Wood decided to rent the units at The Edge instead.”
“There are 1,200 units coming on the market soon. How many buyers of those units will close and how many will walk away from their deposits remains a mystery.”
“In the meantime, Wood Partners is working with reluctant buyers who have contracts but can’t or don’t want to close. Wood has agreed to pay closing costs, cover association fees for a year or two and, in a couple of cases, cut the price 5 percent to 10 percent.”
“‘We’re doing anything we can to get those units closed,’ Jacobson said.”
“At first glance, a proposal to build 2,700 homes at the Briger tract along Interstate 95 sounds like folly. After all, Palm Beach County’s housing market is glutted with unwanted homes.”
“But on closer inspection, the Lester family’s plans for the land just south of Donald Ross Road makes sense, housing analysts say. By the time homes are built on the site, the housing market is likely to be healthier – and critically short on vacant lots, said Brad Hunter, a housing analyst at Metrostudy.
“Palm Beach County’s housing inventory includes 5,425 vacant lots, he said. ‘Even though we have an oversupply of homes, we have a shortage of lots,’ he said.”
The Daily Business Review. “The developer of a struggling condominium conversion project in Pembroke Pines has sold a substantial portion of the development to real estate investment trust, Equity Residential.”
“The units average 1,052 square feet in size and sold for about $147,000 per unit.”
“Equity Residential paid $68 million last week for 24 buildings with 464 units. The seller, Deaktor Development, paid more than $142 million in October 2005 for the entire 764-unit, 44-acre complex.”
“In today’s distressed condo market, the most logical strategy for Equity Residential is to convert the complex back to rental units, said Brad Capas, senior director of apartment brokerage services at Cushman & Wakefield’s Fort Lauderdale office.”
“‘What Equity bought was intact and well positioned to operate as a rental,’ Capas said.”
“Deaktor had trouble with a similar condo conversion project in Kendall during the spring. Miami-Dade County delinquent tax records released in May indicated the company had not paid $1.12 million in taxes on The Residences at the Falls. Deaktor is now stuck with about 370 units at that site.”
The News Press. “The slow rise in permits for single-family homes in Lee County was short-lived. Cape Coral, which saw an increase the past two months, had the biggest drop. The city’s building department issued 14 permits, down 59 percent from the 34 issued in May and a drop of 80 percent from the 69 issued in June 2007, city spokeswoman Connie Barron said.”
“In unincorporated Lee County, Bonita Springs and Fort Myers Beach, 74 permits were issued. That’s a 7.5 percent drop from the previous five-month high of 80 in May. June’s total was an 83 percent decrease from the 448 issued in June 2007.”
“The number of foreclosure actions last month in Lee County was 2,390, which is up 147 percent from the 968 foreclosure actions in June 2007, said Jeff Tumbarello, director of the Southwest Florida Real Estate Investors Association. He added that banks lost an average of $170,000 per mortgage on which they foreclosed.”
“Michael Gay, general manager of the Fort Myers division of Adams Homes, doesn’t think he will see anything like the good old days of the early 2000s. ‘I think it will be several, several, several years before we see something like that again,’ Gay said.”
The Naples News. “Once again records were broken in June in Lee and Collier counties but not of the good kind. In Collier, new foreclosure filings jumped to an all-time high of 716. In the first six months of this year, there were 3,827 filings. That’s more than the 3,266 for all of last year.”
“Glenn Ginsburg, a broker in North Naples, said he saw the trend coming in early 2007. ‘I just never envisioned it would get this bad,’ he said. ‘I knew we would see an increase, but not like what we’ve seen.’”
“He said ‘it’s hysteria that’s setting in’ because owners have seen their values go down so much that they’ve decided they don’t want to own their homes anymore, so they are stopping their mortgage payments and ‘turning them back in.’”
“The discount signs printed on computer paper are in the windows of home decor store Reflections of Naples in Third Street Plaza. It’s a moving sale, the signs announce.”
“‘We were so hard hit. Nobody was coming,’ said Reflections owner Larry Harris. ‘(Reflections) was fun. I enjoyed it. I just went into this too big.’”
“In the past two years, The Good Life, a cookware store, left the Plaza; so did Bountiful, Artful Diva, Femme Fatale, Dominique Design Studio, Giggles and Glitz, Via Mediterranee, and ilSandalo. On Gallery Row, the side that faces Broad Avenue, Gallery Matisse is gone, too.”
“With nine storefronts out of 23 vacant after this weekend, and six of the 10 office spaces empty on the second floor, spirits are low among the remaining tenants. ‘The pompoms are on the ground,’ said Tricia Lund, sitting in her store. ‘My cheerleading (for the plaza) is over.’”
The Herald Tribune. “New construction in the region was down more than $2 billion last year, a leading factor in pushing local unemployment rate to a 15-year high. New construction in North Port totaled $193 million last year, a 70 percent drop from the $655 million reported in 2006. New construction dropped 62 percent in the unincorporated parts of Sarasota County.”
“Sarasota County Property Appraiser Jim Todora said he did not think the county’s new construction would top even $1 billion last year. But several condominium projects that were nearly complete in 2006, but were not finished until 2007, pushed the figure higher than expected.”
“‘A lot of this, remember, are carryovers from the prior year,’ Todora said. ‘Sometimes there are properties that are 90 percent done but they don’t go on the roll for another year.’”
“Based on the first half of this year, the numbers for 2008 will be a lot worse, said Dale Friedley, an analyst with the Manatee County Property Appraiser’s Office. ‘My projection right now is we’ll be around $400 million,’ Friedley said.”
“Ed Hunzeker, Manatee’s county administrator, said the county should not add the extra money to its budget since more bad financial news is likely around the corner. There are still tax appeals filed by local landowners that have not been settled. The county could lose those appeals and the taxes that go with them.”
“The increase in home sales in Manatee, Sarasota and Charlotte counties, coupled with new user-friendly FHA loans and new loan limits, seems to be helping to lift mortgage applications out of the basement rate of the past two years.”
“Frank Fontanetta, president of Sentinel Mortgage Co. of Sarasota, said he has seen an increase on the purchase side, though refinancing remains very slow. ‘We’re not going crazy with volume,’ Fontanetta said. ‘There’s no one I know in this business saying things are gangbusters.’”
“The tough standards are not so much new as they are a return to the traditional methods of qualifying borrowers before the housing boom, said John O’Neill, CEO of Century Bank in Sarasota. ‘You could say the market is returning to the home prices of five years ago, and that we’re returning to the lending practices of five years ago.’”
“New guidelines by Freddie Mac and Fannie Mae have meant that banks have to scrutinize new loan applications like never before — particularly when it comes to condominiums, said Fontanetta.”
“‘If you’re talking about a condo, even a borrower with 40 percent or 50 percent down and good credit, it’s not a slam dunk,’ he said. ‘Everything that wasn’t as important before is suddenly much more important.’”
The Bradenton Herald. “The year is barely half over, but 2008 is already a record for foreclosure filings in Manatee County. Lenders filed 478 foreclosure lawsuits in Manatee County Circuit Court in June, nearly three times more than the 167 they filed in June 2007, the Manatee County Clerk of Court’s office said.”
“That pushed the total number of foreclosure actions filed in the first six months of 2008 to 2,660, breaking the old annual record of 2,620 set last year.”
“‘We’re still having a tremendous amount of boxes being dropped off and delivered to us,’ said Very Reyna, a court clerk who handles foreclosure actions as they are filed. ‘It’s not letting up.’”
“And with six more months to go, each new suit sets a mark that some predict could reach 4,000 by year’s end.”
“‘It’s really a perfect storm out there right now,’ said David Freed, president of a mortgage brokerage based in Bradenton. ‘I personally don’t think it will clear up in the short term.’”
The St Petersburg Times. “It was supposed to be a perpetual prosperity machine powered by the eternal sunshine. For several years the fevered land flipping, home building and road grading transformed the Tampa Bay area.”
“But just as people were counting their profits toward early retirement, a hurricane pulled the plug on the hyperactivity. Buyers turned cautious. Property could be had for 50 cents on the dollar. Paper fortunes vanished, and banks shuttered. Disillusioned Floridians pined for the hills of North Carolina.”
“Sound familiar? It’s an outline of the 1920s Florida real estate boom and bust. But historical amnesiacs can be mistaken for assuming it describes the real estate roller coaster that’s recently rocked our region.”
“‘Most people today have almost no historical sense of the boom and bust of the ’20s,’ said Ray Arsenault, history professor at the University of South Florida, St. Petersburg. ‘When I bring it up, many people don’t know what I’m talking about.’”
“As the Times described them in 1925, business practices foreshadowed those of the recent boom: ‘Sales are usually made with a small amount of cash being put up as ‘binder money.’ The investor who does not really have any use for the property except for profit on quick resale gets busy and resells it before the first payment falls due.’”
“By late 1925, the smart money sensed the fever would break. The boom had run out of fuel. Walter Fuller, who lost millions in the bust from building neighborhoods like Jungle Terrace, blamed a ‘greedy delirium to acquire riches overnight without benefit of effort, brains or services rendered.’”
“‘We just ran out of suckers,’ Fuller said with the hindsight of several decades.”
The Star Banner. “Marion County’s gravy train of growth, which has fueled its construction-based economy and allowed local governments’ budgets and services to swell, is moving in reverse.”
“The county’s assessed taxable value, which local governments use to determine how much property tax revenue is coming in, shrunk 6.7 percent from a year ago, according to Marion County Property Appraiser records.”
“Property Appraiser Villie Smith’s assessment for the county is based on values determined up to January 2008. ‘We’ll probably see another reduction next year based upon what we’ve seen after January,’ he said. ‘Sales prices have continued to go down.’”
“‘That’s the first decrease ever since I’ve been in here [in the Property Appraiser's Office] and that’s 33 years,’ Smith said. ‘And I’m sure it goes back farther than that.’”
