The Daily Soak - June 30

The Next "Victim" of the Florida Housing Crisis: Government

BusinessWeek says state and local governments will be the next victims of the housing crisis. The article paints a picture of governments that got fat and happy on a buffet of rising property, sales and income taxes from 2000-2006. According to BW, "The Florida housing slump is one of the worst in the nation and only appears to be getting worse. The $66 billion Florida budget for the coming year is about $6 billion less than the one approved last year." One of the most profligate squanderers of public funds in recent years, Palm Beach County is facing $653 million in education budget cuts over the next five years, but BW says county officials should look on the bright side...Palm Beach County's population has decreased every year since 2004. Hopefully Floridians will vote their local "victims" out of office in favor of fiscally responsible elected officials. (Slideshow)


Bad Timing for Florida Congressman's Real Estate Deals

The Sarasota Herald Tribune examines recent real estate deals undertaken by U.S. Representative Vern Buchanan (R-Longboat Key) and his partners in Southwest Florida. Two Sarasota purchases have been the most disappointing for Buchanan including a 5,200-square foot bayfront home bought for $3.2 million (currently listed for $2.6 million), and a luxury condo in the Ritz-Carlton Residences bought for $1.9 million in 2005 which sold 22 months later for $1.6 million. But the long-term outlook is brighter for some of the non-residential properties that Buchanan and partners purchased between 2004 and 2006 for $33 million. A Wingate Inn under construction in Bradenton is scheduled to open next January, and a $2.5 million penthouse unit at Sarasota's Plaza at Five Points is in line with current market pricing.


Opportunity Funds Forming to Purchase Florida Real Estate

Real Estate Florida interviews Craig Studnicky of Aventura-based International Sales Group (ISG). ISG recently partnered with a Dallas firm to create a real estate fund geared toward purchasing undervalued properties, also known as an opportunity fund or vulture fund. Studnicky explains that the fund will probably not be in acquisition mode in South Florida until the last third of this year (Sept.-Dec.) when he anticipates prices will have bottomed out in many markets. ISG plans on renting out many of the acquired properties for the next 2-3 years and waiting for prices to recover. If more opportunity funds take a similar approach, the removal of thousands of vacant units from the MLS would have a positive impact on inventory levels, median prices and--perhaps most importantly right now--consumer confidence of potential buyers.