Florida Real Estate News, 11/12/2008

 

The News Press reports from Florida. “The Fort Myers/Cape Coral metropolitan area ranks third nationally in foreclosures, a position not likely to improve with 20,000 homes on the market and another 29,000 in foreclosure. An estimated 40 to 60 percent of homes purchased during the boom went to speculators or investors. Problems also arose when individuals who didn’t have the means to own a home took ill-advised financial risks. ‘It was clearly a pace we couldn’t keep up,’ said real estate agent Steve Koffman. ‘Every waiter and waitress in town was buying a home.’”

“Now, the backlog of homes for sale is 22 months, and those in foreclosure would take another 24 months to sell. ‘We weren’t the only epicenter, but if you want to pick the poster-boy case, it is Southwest Florida,’ said economist David Jones.”

The Naples News. “Home resales in the Fort Myers area rose for the 10th month in a row in October. The median price fell to $119,000 last month _ 22.6 percent lower than it was in 2003. Brett Ellis, part of the Ellis Team for RE/MAX Realty Group in Fort Myers…said banks are selling single-family homes for less than $60,000 in Cape Coral and Lehigh Acres. In Cape Coral, Ellis recently sold a single-family home for $52,000. He has another one pending for sale in Lehigh in the mid-$40,000s.”

“Denny Grimes, president of Denny Grimes & Co. in Fort Myers, said about 60 percent of the sales made in Lee County today are bank-owned homes or short sales. He said prices continue to fall too because there are still so many homes on the market. He doesn’t see an end to the trend any time soon. ‘Are we close to the bottom now? We are not close to the bottom with the level of inventory we see,’ Grimes said.”

“But it’s got to stop somewhere. ‘It can’t go down to free,’ Grimes said.”

The Herald Tribune. “Alexis Wittrock stood in her front yard recently amid racks of her children’s old clothes, dishes, a small couch and other household items. She is slowly selling off a garage full of goods, downsizing for a move that she and her husband see as inevitable. They are planning to leave North Port, a Southwest Florida construction and growth boomtown that has fallen hard since the housing bubble burst.”

“In the most pronounced sign of the decline, North Port has issued fewer new home construction permits for the year — 119 — than it did during some weeks during the housing boom peak Wittrock’s husband, Mike Brooks, helped out at the yard sale before leaving for his job delivering pizzas, the only work he has been able to get in the past year. It is not enough to sustain the family of eight, which has had to drastically cut back since the days when Brooks made six figures as a construction manager and Wittrock managed contracts for a national home builder.”

“Jim Rahill, was laid off from (a) Venice window and door maker a year ago, and has managed to stay in North Port, though it has not been easy. Rahill has watched $62,000 in value bleed from his house. He took a two-thirds pay cut at a local manufacturing job, and rented out a room in his house to help cover the mortgage. He describes North Port as being ‘on life support and just won’t die.’ ‘I’ve got a lot of acquaintances that just don’t have jobs,’ he said.”

“Brooks and Wittrock say they cannot wait for a turnaround here. If Brooks finds a good job outside Florida, he will leave with plans for the family to follow later. He is not putting much stock in government efforts to spur an economic rebound. ‘If nobody’s working,’ he said, ‘it doesn’t matter.’”

The St Petersburg Times. “After about $1-million in renovations, the old Victoria Lodge has a new tin roof, turquoise shingles with white trim and a tropical landscape. But the only traffic Friday flew by: an egret, an osprey and a flock of small birds. Just inside the building, built in 1903, a photo of three smiling developers hangs near the door. And a big ‘Marina 200 Main Street’ sign hangs near an empty sales desk.”

“But now, another big sign has gone up on the Main Street side of the 1.6 acres: ‘Great Dunedin waterfront site available.’ Jim Egnew, Richard Gehring and Bill Kimpton are advertising for buyers or investors for their much-ballyhooed $30-million Marina project. After spending more than $2-million of their own money, the developers of the Main Street project are being sued by their bank for defaulting on nearly $5.7-million in loans.”

“Only someone who can afford to buy it and hold it will buy now and they will pay 30 cents on the dollar, said Mark Klein, a Clearwater real estate broker who’s familiar with the project. Klein said the real estate market took a similar dive in the late 1980s to early 1990s during the savings and loan banking crisis. ‘Banks took properties back … and finally let someone buy them for pennies on the dollar,’ Klein said.”

“Klein said his company also has vacant land for sale where condos were planned. ‘There is no market because supply has outstripped demand,’ he said.”

The Daily Business Review. “Corus Bank, one of the most active lenders to developers during the condo construction boom, is taking title to the twin, 26-story Tao Sawgrass condominium buildings in Sunrise in lieu of foreclosure. Although there have been no closings on the complex’s 396 units, purchase deposits are in place on about 80 percent of the project, according to John Barkidjija, a Corus senior vice president in Chicago.”

“Since buyers have not closed on any of the condos, ‘the project is worth less than the capital loaned on it,’ said Tom Bartelmo, CEO of J.I. Kislak in Miami Lakes.”

“Corus Bankshares president Robert Glickman described the ‘current housing calamity’ as worse than even the severe downturn the company had expected. The overall credit market collapse, and Corus’ focus on condo construction loans, have led to significant increases in bad loans and operating losses, Glickman stated. ‘Unfortunately, we anticipate these difficulties will persist for some time,’ he said.”

The Biscayne Times. “According to statistics from the Miami-Dade County clerk’s office, as of the end of September, there were 40,342 foreclosures filed countywide, compared to less than 27,000 the year before, and fewer than 10,000 in 2006.”

“Condos are a problem, no doubt, because that market was driven to a large degree by speculation. ‘That’s still the $64,000 question,’ quips William Hardin, director of real estate programs at Florida International University’s Department of Finance. ‘Who will be the end-user in the condo market?’ (Of course, the joke, courtesy of the Daily Show, is that ‘thanks to Lehman Brothers, Morgan Stanley, AIG, Freddie Mac, and Fannie Mae, the $64,000 question is now worth $1,324.86.’)”

“‘The risk in some of these large buildings is that they aren’t all sold, or you have a number of units in foreclosure and they aren’t paying their assessments,’ he says. ‘So you may get a good deal but you’re buying into a management problem. Some of what we built is too large.’”

“He sees tough times for a mega project like Midtown Miami because it’s too big, too isolated, and a little too far from the Boulevard and Biscayne Bay to compete in this market. That’s why much of the sales effort there has turned to the rental market. ‘It’s a great project,’ he says. ‘The question is the scale of it. Can you draw in literally thousands of people to that area? In ten years, it will happen. The question is what it will look like between now and then.’”

The Associated Press. “It took John Cicero and his wife an appraisal, some convincing by their real estate agent and some hard-to-swallow facts to get them to lower the $525,000 listing price on their five-bedroom home in Valrico, Fla. They closed two weeks ago for about $380,000. ‘We didn’t really understand the severity of the market,’ Cicero said. ‘We lost close to $100,000 in equity so we were walking away from real money.’”

“They built the stucco home four years ago for $380,000 and poured more than $80,000 into it, putting in hardwood floors, granite countertops, ceiling fans, blinds, drapes and a built-in surround-sound stereo system. They also expanded the deck by the pool, turning it into what Cicero called an ‘executive entertainment area.’”

“‘You think you have this wonderful home and people will want to buy it,’ he said, ‘but you’re wrong.’”

The Palm Beach Post. “Known for preaching the power of positive thinking, Realtors heard an uncharacteristic outpouring of pessimism during the four-day gathering of the National Association of Realtors that ended Monday. In educational sessions and news conferences, the 23,000 people in attendance heard speaker after speaker use downbeat tones to describe a still-cratering housing market.”

“There was National Association of Realtors Chief Economist Lawrence Yun saying 2008 will be the worst year for home prices since the Great Depression. And there was Gary Keller, head of national chain Keller Williams Realty, invoking another d-word. ‘It is dire,’ Keller said. ‘Make no mistake about that. These are tough times.’”

“St. Louis broker John Mayfield summed up Realtors’ quandary during a session on keeping agents motivated. In this boom-to-bust market, agents gripe about the lack of business, while brokers lose money and consider closing offices. ‘We’ve got all this stuff running through our head, but we’ve got to sound excited,’ Mayfield said.”

“‘Property Crisis,’ the headlines read in 1950. In 1982, it was ‘Analyst warns of big bankruptcies.’ The year 1991 saw ‘Washington is crippling the economy.’”

“History repeats itself, and America will emerge from the current economic fiasco to one day suffer another, real estate expert Michael Cannon told members and guests of the Developers and Business Alliance at Mar-a-Lago last week. ‘Each decade, we have the same crisis that’s the worst crisis that we’ve had since the previous crisis,’ said Cannon, executive director of Integra Realty Resources in Miami.”

“Most of the speakers shared positive views and hopes for the economy, including DBA Honorary President Evangeline Gouletas, who encouraged the international audience to invest in South Florida real estate. ‘This is not the time to sell,’ said Gouletas, CEO of Skyline Equities Realty in Miami. ‘This is the time to buy. I wish I had a zillion dollars and I could buy, discreetly, as much as I want. The prices will never be lower.’”

“When it came time to answer perhaps the most pressing question – when will this dismal decline end? – Cannon covered all bases with a cautious prediction. ‘We’ll probably see this period to further expansion – I’m not going to say ‘boom’ again – take place probably in the next 36 to 48 months. That’s the optimistic side,’ he said. ‘The pessimistic side? It could take 10 years. I don’t believe it will take 10 years, because this country is too antsy to do that.’”