The Daily Soak - June 9

Fire sale Pricing Leads to 41% Sales Increase in Cape Coral

Few Florida cities have seen the extremes of the Housing Boom and Bath like Cape Coral. The median home price reached $340,000 in April 2005; today that figure is a more sobering $200,000. According to locals, the revised median price comes courtesy of mortgage companies that have slashed prices of foreclosed properties. Thanks to fire sale prices, the number of homes sold in Cape Coral jumped 41% this year, the best year-over-year increase in Florida. And while this has been good news for interested buyers, some are describing the recent uptick as a "boomlet." In other words, most of the vacant lots and existing homes are being snatched up by just another wave of investors. Out of this boomlet, The Waterfront Wonderland may garner a new nickname, Vultures' Paradise.

Unsold Homes Keeping Florida Seniors Out of Nursing Homes

Some Tampa Bay area retirement communities have seen vacancy rates rise to near 20%, as interested new residents have been unable to sell their homes. And they need that equity tied up in their primary residences, considering the hefty $50,000-$500,000 entrance fees required at continuum of care facilities like University Village. One Florida life care expert says these communities used to be willing to purchase and resell the homes of new residents, but they are simply not taking that risk in today's HousingBath. The President of the Florida Healthcare Association sums up the challenge facing seniors with one foot at home and the other in the nursing home, "They move in thinking surely the house will sell before they run out of assets. But it doesn't and they end up having to move in with a relative."

Postcards From the Next Miami....Panama City

An investment letter reveals the truth about the next big condo mess in this hemisphere and warns the rapidly cooling environment "may discourage short-term investment strategies." (See "Speculation"). The article notes that 70 to 80 percent of the buyers in Panama City are foreign speculators, a statistic I can vouch for from my experience working for a local developer of what is perhaps the tackiest high-rise in the whole city. The only buyers were Europeans lured by the favorable exchange rate, but those days are over considering the looming credit crisis across the pond. The Euros did absolutely zero due diligence prior to making deposits on $300,000, 1 bedroom units in high-rises with no balconies on the banks of Panama City's sparkling brown waterfront. With demand plummeting and 42,000 units remaining to be delivered, the Panama City condo implosion will make downtown Miami look like a mild housing hiccup.