The Daily Soak - September 30

$700 Billion Financial Bailout Fails; Dow Plummets 777 Points

And you thought Florida housing prices were dropping like a rock. The failure of Congress to reach an agreement on the proposed $700 billion financial bailout package pushed the Dow Jones Industrial Average over the cliff on Monday. The DJIA dropped 777 points (almost 7% of its total value) from Friday's close of 11,143 to 10,365. With only 38 days remaining until the presidential election, the finger-pointing and partisan-bickering reached a crescendo on Capitol Hill. And with the House of Representatives adjourned until Thursday, expect more market volatility in the coming days. With markets reeling and bailout opposition growing, desperate Florida homeowners should not hold out hope for a reversal of fortune (or home prices) anytime soon.


Curtains for Wachovia: Major Florida Home Lender Collapses

Charlotte-based banking giant Wachovia was one of Florida's most important mortgage lenders during the boom years. Once the industry standard for credit quality and low loan losses, Wachovia became one of the nation's most aggressive purveyors of high-risk mortgages. After acquiring Golden West Financial in 2006, Wachovia adopted GWF's now-notorious option ARM program called Pick-A-Pay and decided to roll it out nationwide. Bad idea. After dropping 73% in 2008, Wachovia's stock price closed last Friday around $10/share...by Monday morning it was a penny stock. Citigroup and the FDIC cobbled together a bailout of Wachovia over the weekend, and details were made public after the opening bell. Citigroup will assume the first $42 billion (yes, billion) of Wachovia's losses; the FDIC will assume losses in excess of the first $42 billion.


"They're Going to Shut Down Real Estate Completely!"

That's the sentiment from one Orlando realtor interviewed by the AP on Monday, as the bad news drifted down from Washington to Wall Street and finally to Main Street Florida where real people are losing their jobs, growing numbers of homeowners are facing foreclosure and consumer confidence is fading fast. The AP article summed it up like this,"Without a broad government response to the credit crisis, the economy, which many believe to be in recession or near it, would certainly worsen, analysts say. Unemployment, currently at a five-year high of 6.1 percent, could rise to double-digit levels as credit dries up." Mark Zandi, chief economist with Moody's agrees with that bleak assessment, "Businesses are going to begin shuttering operations and laying off workers. That will hammer all consumer spending and housing demand." In the words of Green Day, "Wake me up when September ends."

The Daily Soak - September 29

How Much Home $1 Million Will Buy Around The World

There's a new McDonald's commercial with an annoying guy running around town asking what $1 will buy. Forbes takes the same premise a giant leap further by adding $999,999 to the bargaining equation and sending readers around the world in search of $1 million listings. The usual suspects show up on the list of cities where $1 million doesn't buy much more than four walls, a roof, and a place to sleep: London, New York, Tokyo, Paris and Singapore. But interspersed among these pricey metros are Latin American destinations like Sao Paulo, Brazil; Heredia, Costa Rica and Buenos Aires, Argentina where you get a bigger bang for your peso. One of the most spectacular is the four-bedroom 18th-century house (pictured) on a colonial side street in Guanajuato, Mexico complete with an interior stone patio, stone archways, pomegranate trees, and a private chapel with a hand-painted ceiling. (SlideShow)


Florida Losing Its Luster for Many Approaching Retirement

Just ask a former Keys resident like Ron McMullan. He recently sold his home on St. Armands Key and moved to the Shenandoah Valley of Virginia. "The whole idea of retiring to Florida is a thing of the past," says McMullan, "Florida has kind of lost its glimmer for me." McMullan is not alone according to several real estate analysts cited in this article. They blame our high cost of home ownership for our waning appeal. States like Texas, Virginia, Tennessee and Mississippi are gaining ground on Florida and luring potential retirees with more benefits and a much lower cost of living. Just compare what $500,000 buys you in a city like Fort Lauderdale compared to cities like Austin, Nashville and Richmond. Factor in our exorbitant property taxes and insurance costs, and you can understand why Florida is losing ground.


The Case for Renting...For The Rest of Your Life

Jack Hough of SmartMoney.com has an un-American confession to make: "I rent an apartment, despite having enough money to buy a house. I plan to keep renting for as long as I can. I'm not just holding out for better prices. Renting will make me richer." With the bitter after-taste of "The Joys of Home Ownership" Kool-Aid still fresh in many Americans' mouths, Hough makes a compelling case for owning stocks (which typically return 7% per year over long-term periods) and renting houses (whose average return for owners over long time periods is 0%.) Anticipating a backlash, Hough prepared responses to some of the most common arguments current homeowners cling to like "Renting is for poor people." Hough responds, "Middle-income people buy houses. High-income people, presumably with a dose of financial savvy, often rent nice apartments instead of buying."

The Daily Soak - September 27

$541 Million: Florida Cleans Up With Foreclosure Relief Funds

The U.S. Department of Housing and Urban Development announced the "neighborhood stabilization grants" earlier this year and the agency has now decided how to allocate the $4 billion nationwide. As one of the nation's hardest hit housing markets, Florida snagged $541 million of the federal dollars, or 13% of the total pie. City and county governments will eventually be able to use those funds for "buying homes for affordable housing, demolishing abandoned homes, offering down-payment assistance to low-income families and creating 'land banks' for affordable housing." Miami-Dade gets the largest share of the Florida funds ($62 million), followed by Orange County ($27 million) in Central Florida and Lee County ($18 million) in Southwest Florida.


Looking to Unload Your McMansion? Don't Look to Generation X

That's according to a Florida real estate analyst who doesn't see the Florida housing market stabilizing until 2011. Falling prices and rising affordability are good news for interested buyers, but the current financial crisis is forcing lenders to raise the lending bar and demand much larger down payments. The analyst also points to the purchasing power gap between Baby Boomers who bought many of Florida's McMansions and members of Generations X and Y who are embracing "frugal chic. "They're going to have less money, and they're going to have a hard time getting a loan. They're not going to do what the Boomers did, which was every couple of years to move up, move up, move up." Tech-savvy GenX and Y are also more likely to pursue real estate services that cut Florida realtors and overpriced commissions out of the process.


Special Report: Foreclosure's Big Drag

The St. Pete Times presents a 7-step interactive guide to walk interested parties through the foreclosure process. Follow the housing trials and tribulations of two lanky stick Floridians as they encounter threatening letters, long lines at the bank and eviction-minded sheriff's deputies. The guide does a great job of explaining terms like deed in lieu, lis pendens and loan forebearance. While teaching distressed homeowners about the many home sale options at their disposal, the final slide is a painful reminder of the long-term consequences of the new "F"-word: Foreclosure can knock your credit score down by as many as 250 points, leaving people with excellent credit in the poor credit category. That can raise your interest rates on credit cards and car loans and make it harder to rent from landlords, who fear you'll skip out on rent."

The Daily Soak - September 25

South Florida Rising: Home Sales Post Highest Rate Since 2004

Florida fence-sitters and bargain hunters finally started pulling the proverbial trigger in August according to data released yesterday by the Florida Association of Realtors. Existing single-family home sales jumped 22% and 12% in Miami-Dade and Broward, respectively, versus August of last year. Condo sales also increased 13% in Miami-Dade but were flat in Broward. The sudden boost in sales activity is thanks in large part to the 30% decrease in median sales prices in Miami-Dade and 27% in Broward compared to last year. New homebuyers Adam and Jennifer Clarin just bought a 4-bedroom Palmetto Bay home for $405,000; the seller paid $670,000 for the same house two years ago. "The market is not horrible if you are a buyer right now," says Jennifer Clarin.


HousingBath Swallowing Years of Appreciation

A similiar scenario exists on the other side of the Everglades, according to the HeraldTribune. Those shopping for a home in Southwest Florida today are in the driver's seat, but those hoping to sell and retire on years of double-digit annual price appreciation can forget it. The HousingBath of short sales, foreclosures and abandoned homes has forced home prices down to late 2003 levels. And unlike Miami and Fort Lauderdale, the August sales numbers didn't provide any cause for celebration in either Sarasota (down 29% vs. August '07) or Bradenton (down 21% vs. August '07). Adam Chicoine of Sarasota-based Re/Max says the reality check is slapping some sellers in the face: "People have started to take notice that they definitely have to lower their price and accept lower than they wanted to sell their house."


U.K. Company Offers to Buy 22 WCI Units for $3.52 Million

WCI, the Bonita Springs luxury homebuilder, is apprently in a mood to make some deals with foreign buyers looking for bargains. The company has an offer on the table from Scotland-based Southern Caledonian to buy an entire 22-unit condominium complex for $3.52 million, or $160,000 per unit. While it may sound like a great deal for Southern Caledonian on the surface, someone should tell them to take a closer look at some comps on Trulia. Existing condo units for sale in the same Pelican Preserve community of Fort Myers are going for thousands less. A 1,300 square foot, 2/2 can be found for $139,900, while another unit is listed for $148,900. According to the Wall Street Journal, "The bankruptcy court will consider approval of the deal at an Oct. 8 hearing."

The Daily Soak - September 24

Revenue Plummets at Lennar; Posts $89 Million Loss

...but that's the bad news for the Miami-based homebuilder. The good news is that the $89 million loss is $424 million less than the $513 million loss Lennar posted in the third quarter last year. The company delivered only 3,791 homes in 3Q08 compared to 7,636 in 3Q07. Lennar CEO Stuart Miller put the quarter's challenges in perspective: "While we expected the housing market to remain constrained throughout the third quarter, the weakness in the market actually accelerated as a result of increased foreclosures, weakened consumer confidence and tightened mortgage lending standards.”


Florida Foreclosures Shift Financial Burden to Neighbors

The HeraldTribune takes a closer look at some Manatee County neighborhoods where rising foreclosures and cash-strapped homeowners are forcing neighbors to feel their pain. "The symptoms are 3-foot-high lawns, moldy walls and, increasingly, associations that lack the money to maintain the common grounds or pay the water bill, much less maintain abandoned homes." 20% of homeowners are behind on their association payments in communities like Las Palmas where the HOA has been forced to get creative. "They fired the landscaping company, bought some of their own equipment and hired extra staffers to tend the grounds."


Gilded Age: Miami Beach Penthouse Lists For $22 Million

CBS4 - "Can you imagine paying $22 million for an apartment? That's exactly how much a Miami Beach penthouse is selling for in South Florida's luxury condo market. Modestly billed as one of the most prestigious South Florida penthouses ever, the 68-hundred square-foot penthouse is priced at more than three thousand dollars a square foot. For that you get six bedrooms at the top of the new Apogee Tower with a private pool, private elevator, 7 and a half baths, staff quarters, 11,000-square-feet of terrace space, a 360-degree rooftop palazzo and a summer kitchen. There's also a 2.5 car private air-conditioned garage." (VideoClip)

The Daily Soak - September 23

McHard Times in South Florida

The International Herald Tribune reports on U.S. Census data released today showing the high cost of living for U.S. homeowners. To accentuate the negative, IHT came directly to Florida and interviewed an unemployed Davie man. Al Ray lost his engineering job last year, struggles to pay his $1,400 mortgage and $330 HOA fees, and only only eats on Wednesday and Sunday when McDonald's sells 49 cent hamburgers. "Ray is one of more than 7.5 million people — almost 15% of American homeowners with a mortgage — who are spending half of their income or more on housing costs...up from nearly 7.1 million the year before." And affordability is an even bigger problem for South Floridians. The Miami-Fort Lauderdale metro area is home to the most cost-burdened homeowners in the country where 58% of homeowners are spending 30% of their income on housing costs.


Homestead: Florida's "Comeback City"

The Wall Street Journal's Paulo Prada points to the devastation of Hurricane Andrew and the post-Andrew recovery as a model for Gulf cities currently recovering from major tropical storms. "Homestead demonstrates the difficulties of resuscitating a destroyed local economy but also how a community can redefine itself and return more robust than it was before the storm." Prada's article acknowledges the glut of unfinished, vacant homes around Homestead, but greater emphasis is placed on "retailers and other commercial developers (who) are flocking to Homestead to do business with the growing customer base. Where crops once grew, big-box developments have popped up to host stores including Lowe's, a soon-to-open Sports Authority, a multiplex cinema and a host of national restaurant chains."


South Florida Condo Q&A

Commercial Property News sits down with Peter Fitzgerald, COO of The Radco Companies, for a Q&A on the state of the South Florida condo market. The picture is bleak according to Fitzgerald who points to the current supply/demand imbalance in downtown Miami, the coming wave of 20,000 additional units and continued downward pressure on prices. "There are 10 high-rise condo developments on Biscayne Boulevard, six sites on Brickell Avenue and eight on the Miami River. There is simply too much inventory." He believes if developers want a winning exit strategy, they need to price their units very aggressively. The same goes for individual sellers, but Fitzgerald predicts the current "stalemate between buyers and sellers with a large spread between the buy/ask price" will continue.

The Daily Soak - September 19

Local HousingBath Hurting South Florida Banks

Sure, the volatility on Wall Street isn't helping matters, but the real strain on local banks is the local housing collapse. Miami's OceanBank, Coral Gables-based BankUnited and Fort Lauderdale's BankAtlantic are all dealing with mortgages that, according to the Herald, are "way past due or in default." The deteriorating loan portfolios and dwindling loan loss reserves are prompting regulators to demand fresh injections of new capital; BankUnited recently raised $400 million and added $130 million to reserves for bad loans. Eventually the banks would love to get out of the real estate business which they have inherited through foreclosures, because the costs associated with insuring and maintaining those properties is 2-3x higher than what actual borrowers pay.


Florida Attorney General: "This Is A Major Criminal Enterprise"

If you were making $30,000 a year and wanted to qualify for a million-dollar home loan in Florida, 2006 was a very good year. The Florida A.G.'s office just filed suit against 10 companies and 15 individuals in the Tampa Bay area for making $37 million in bad loans without verifying borrowers' incomes. The suit goes after one lawyer Allen Boyarsky and two real estate agents who allegedly conspired to "artificially inflate prices on home sales so Boyarsky and his co-defendants could get bigger loan amounts." The suit alleges one of the agents, Lori Polin, pocketed $165,250 in commissions while the other, Dawn St. Hillaire, walked away with $148,000. Their antics were mentioned earlier this year on another popular housing blog. Attorney General Bill McCollum put the lax lending environment in persepective, "Somebody that works at a car rental place was claiming they made $17,000 a month, but the bank never checked that out."


Busted American Dreams in South Florida

In this report from the Jerusalem Post, real-estate broker Katerina Brosda one-ups McCollum in recounting the 2006 frenzy: "At one point I was walking around with 57 checks for $100,000 each in my pocketbook. Each one was a deposit for a new condo. I had a couple of associates who were sleeping out in a tent waiting to get into the sales office to buy a condo, and I personally saw people fighting over units, hitting each other over who was going to get the last unit." Reporter Jonathan Franklin's piece has several colorful anecdotes and interviews with some real South Florida characters including a Hollywood pawn shop manager inundated with Palm Pilots, Bose speakers, gold teeth and Guess watches. "It is better to lose your ring than your house," the manager says.

The Daily Soak - September 18

Sotheby's Announces Central Florida Luxury Home Auction

Stirling Sotheby's International Realty today announced the upcoming auctions of luxury residential properties in three of Ginn Resorts' Central Florida communities: Bella Collina, Hammock Beach and Reunion Resort. During the October 25 auction, the developer anticipates selling 20 homes priced from $300,000 to $3.82 million. Bella Collina is an entry-level lakeside community with a Nick Faldo golf course, Hammock Beach is a beachside resort with two golf courses and Ginn Reunion Resort is a fully-amenitized luxury golf community with three courses. Stirling Sotheby's is launching a global marketing campaign in hopes of attracting foreign buyers especially from the U.K., Europe and Canada. For more information, visit the Stirling Sotheby's website.


171 New Tampa Condos Will Be Sold As ONE Unit Next Month

Last month, HB.com reported on the pending auction of 171 unts at The Place at Channelside, a 245-unit development in an emerging Tampa neighborhood. Now the auction date has been set (October 15) and the Court has chosen Fisher Auction Company and Cushman & Wakefield to market and sell the remaing units. Don't be surprised if a private equity group steps forward, buys up the whole enchilada and rents the units for 3-5 years, because the minimum reserve price is only $17.25 million. That translates into $100,877 per unit for condos that range in size from 600-square-foot studios to a 3,600-square-foot penthouse. That's amazing considering discounted 2/2 resale units can be found on Zillow for $300,000. The $17.25 million would also include over 12,000SF of retail space. For more information, visit the Fisher Auction website.


First Book Your Hotel...Then Go Buy A Condo

Miami-based Condo.com, the website with over 600,000 listings of condominiums for sale or rent in the U.S. and 70+ other countries, just formed a partnership with Hotels.com to facilitate online booking of vacation rentals and hotel accommodations. Condo.com CEO Richard Swerdlow explained the rationale behind the new offering, "When we launched Condo.com we expected to focus exclusively on buying and selling. We learned over time however that a large percentage of our customers are looking for vacation rentals and condo hotel rooms for short-term stay." The Condo/Hotel integration will also benefit condo shoppers traveling outside of their home markets to consider a second home purchase in another city, state or country. For more information, visit the Condo.com Travel Center.

The Daily Soak - September 16

Wall St. Meltdown Won't Make Florida Home Loans Any Easier

Just your average Monday on Wall Street: Lehman Brothers filed for bankruptcy, Merrill Lynch was rescued in a Bank of America buyout and the Dow dropped over 500 points, the largest one-day drop since September 2001. While you were sleeping, Asian indices posted major losses, so can there be more bad news on the horizon? "Yes," especially if you are currently house hunting and simultaneously fishing for a home loan. According to TheLedger.com, University of Florida economist David Denslow "said the uncertainty could further limit lenders' willingness to provide the needed loans to buy homes - the core of Florida's economy." Denslow's prediction is already proving accurate. One of Florida's leading home lenders, WaMu, had its credit rating cut to junk this morning by S&P "because of the deteriorating housing market."

Smaller Florida Counties Also Feeling Foreclosure Pain

Some corners of Florida don't have large metropolitan areas and the large numbers of foreclosures we're seeing in markets like Miami and Orlando. But Flagler County is still feeling the impact of defaults and decreased tax revenue in cities like Bunnell, Palm Coast and Flagler Beach. The typical foreclosure in Flalger is a middle class home in working class Palm Coast in the $150,000-$300,000 range or a $750,000 luxury high-rise in the WCI development Hammock Dunes. Local realtor Sandra Negron says foreclosures are tapering off in Flagler, but "many homeowners are still overleveraged with either zero, or worse yet, NO equity in their property. Many are filing bankruptcy. Others are trying to short sale through a realtor." In an attempt to curb the oversupply situation, Palm Coast officials will not grant new building permits unless contractors can produce a valid sales contract.

Unfinished Vero Beach Development Facing Foreclosure

The bank providing financing for Eagle Trace, a 107-home community in Vero Beach, wants to foreclose against developer Mizner Grande and related-company principals, Richard Rendina and Stephen Siegel. Seacoast National Bank initiated the foreclosure process back in December, and a Vero judge is going to set the sale date. Rendina is not a real popular guy with current Eagle Trace residents like Gloria Walker, "He was given a lot of money. People didn't get their homes. Contractors didn't get paid. My question is, 'Where's the money?' It's sad that your neighborhood has to go into foreclosure, but it has to at this point to get rid of him." In a partial response to Gloria's "Show me the money" question, The Wynn Resort & Casino in Las Vegas has an $85,000 judgement against Rendina for an unpaid gambling debt.

The Daily Soak - September 15

Southwest Florida One of Nation's Bottom 5 Job Markets

Three years ago when the housing boom was in full swing, jobs were abundant in cities like Naples and Fort Myers. Homebuilding, real estate sales, mortgage lending, pool construction, hurricane shutter installation...basically anything related to homes and condos was in high demand. But once the housing frenzy dried up, so did the job market. And a new nationwide ranking shows just how non-diversified the Southwest Florida market really is. A Naples News editorial contrasts the nation's best job markets with the local labor status quo: "A look at the biggest winners shows they tend to be close to universities, technology and research. That workplace strength drives those area’s housing markets, while in our area we look to housing itself to be the driver."


As Foreclosure Rate Slows, Some Contractors Going Back To Work

The RealtyTrac data released last week showed Florida falling from the second-highest foreclosure rate in the nation to the fourth-highest. That's been good news for some contractors and construction companies in Northeast Florida. Stucco company owner Malcolm Willis sees signs of a turnaround, "The last sixty days, it's really picked up. We've been very busy. I'm seeing a lot of building going on around town. I think the market is starting to change. I'm getting calls from a lot of people trying to close on homes and get stuff fixed." Ted Walker of SEDA Construction Company is overseeing construction of a 500-home community in St. John's County and says SEDA is selling 25-35 homes per month. "It's down from our heyday, but these are very good numbers," Walker said, "It's good business."


Cape Coral Couple Face Prison Time for Mortgage Fraud Scheme

New Yorker Ronald Luczak did time a decade ago for his role in a stock-trading scam, but 30 months in prison apparently wasn't enough to change his ways. The ex-con relocated to Cape Coral in 2005 and along with his wife opened Cape Coral Equity and Development Group. Apparently "Equity and Development" was a euphemism for "Mortgage Fraud and Phony Appraisals." Last week in court, Luczak confessed to buying homes at one price, having them appraised at an inflated value and pocketing the difference as "assignment fees." The scheme involved at least 37 properties and $27 million in home loans. The Luczak's received help from a colorful cast of characters in both New Jersey and Cape Coral including several "straw buyers," a former Cape Coral police officer turned Florida realtor and a loan processor who pleaded guilty to wire fraud.

The Daily Soak - September 14

The Next Miami: Panama Condo Bubble Poised to Explode

Panama City real estate analyst Daniel Quesada pens a brilliant analysis of the condo boom and coming bust in that capital city. Quesada knows the market and sees the parallels with recent cycles in states like California and Florida. When strippers and cab drivers start peddling condos on the side, Quesada says the end is near. Such is the case in Panama City where over 100 high-rises representing over 20,000 units are coming out of the ground thanks entirely to foreign flippers. (No sane end-user would consider paying $500,000 for a 900-square-foot unit in a foreign country.) Aside from pure greed, Quesada says naivete will be the developers' undoing: "Many Panamanian developers have never been through a true real estate cycle before, so many don't know what it is like. (They) are about to learn a very valuable lesson."


Incredible Shrinking Inventory Another Positive Sign

Interested buyers like Stan Kassan had plenty of homes to choose from earlier this year around Palm Beach and the Treasure Coast, but the Palm Beach Post reports today's options are not as generous. Outstanding inventory has dropped from four years to two years thanks to the freeze on new construction coupled with frustrated sellers pulling their homes off the market. At the peak of the housing boom, housing inventory for sale was a meager 3 months. That figure skyrocketed to 46 months in January of this year but has settled down to 28 months today. Real estate analyst Jack McCabe says excess inventory is only one of Florida's lingering housing problems: "We still have way too much inventory, way too many foreclosures and prices that are out of whack with incomes."


Central Florida Condo Board Picks On Amputee, Weiner Dogs

Ah, the joys of living in sunny Florida in perfect harmony with one's neighbors under the cozy blanket of an authoritarian set of HOA bylaws closed to interpretation that everyone can agree one. OK, at least the sunny Florida thing was accurate. A Longwood condo board has been sparring with an amputee resident for six years, because he walks his two miniature dachshunds with 24 foot leashes rather than the board-approved 4 feet. The Florida Attorney General's office recently filed a suit against the board accusing members of discriminating against Kent Nauman. In the board's defense, Nauman has been diagnosed with schizophrenia and takes no medication for the condition. "I'm not a very popular person," Nauman says.

The Daily Soak - September 13

Florida Condo Associations Feeling Cash Crunch

HB.com has covered the financial challenges facing many Florida condo associations in detail. High foreclosure rates, disappearing flippers and condo residents opting to not pay their HOA fees have created serious budget shortfalls in several developments. Sensing a real business opportunity, a savvy Miami start-up is bridging the funding gap for cash-strapped condos. Association Financial Services gives cash advances to associations and takes over both accounts receivable and debt collecting duties. Over 40 Florida condo associations are already on-board with Association Financial, and inquiries are pouring in from other foreclosure-laden states like California. More information is available on the AFS website.


Developer Markets East Coast Homes to Orlando Workers

And you thought you had a bad commute. A Brevard County developer is marketing single-family homes on the East Coast to Orlando commuters. Touted as "A Secure Waterfront Community That's Fit For A King," the 21 luxury homes at Avalon Estates will be built on Merritt Island. Despite being 45 miles from downtown Orlando, the brokers promoting the project describe it as "ideal for Orlando commuters." With the dreaded I-4 corridor traffic and gas prices pushing $5 again, it's tough to imagine potential home buyers wanting to make this trek five times a week. Still, kudos to the developer for a.) breaking ground on an ambitious project, and b.) challenging the way we think about Florida suburbs.


Positive Data: Defaults, Auctions Moderating Nationwide

Forbes puts a positive spin on new data released this week by RealtyTrac. While the number of U.S. homes in some stage of foreclosure rose 12% in August and 25% over August 2007, only 1 in 416 U.S. homeowners are at risk of losing their homes. RealtyTrac CEO James Saccacio credits new legislation in several states that extends grace periods and the increased willingness of many lenders to help underwater borrowers find a home-saving solution. Forbes describes foreclosures as "a necessary prelude to the recovery of the U.S. housing market. As opportunistic buyers snap up fire-sale properties, home prices will eventually stabilize. That should create a buyers market in which inexpensive properties are widely available." Click here for the full RealtyTrac report.

The Daily Soak - September 11

Auction Update: Fort Lauderdale, Tampa & Vero Beach

Alabama-based auctioneer J.P. King today announced the upcoming auction of a 6 bedroom/6.5 bath tri-level Mediterranean townhouse in Fort Lauderdale. The company's website lists the ocean estate's amenities including "a luxurious pool and spa, gated entry, commercial elevator and sleek modern bar. This waterfront community is adjacent to several mega-yacht marinas, top rated golf courses, private executive airports, fine dining establishments and numerous chic boutiques." The home will be sold at absolute auction on October 16. In other auction news, the Antilles auction in Vero Beach had a solid turnout and all 21 properties were sold. Meanwhile, the Bella Sol auction south of Tampa was not as successful last Saturday. 23 condominiums were offered at absolute auction; however, only 9 were sold. 14 of the properties are still listed online as available priced from $275,000 for an "End unit" to $575,000 for a "Penthouse Waterfront unit."


Prudential Florida Drops "WCI" From Real Estate Name

The letters "W," "C" and "I" have been dropped from the Prudential Florida Real Estate name and company logo. The Bonita Springs-based homebuilder recently filed for Chapter 11 bankruptcy protection, so those three letters--once synonymous with luxury high-rises and gated golf communities in Florida--have lost some of their luster in recent months. Company spokesperson Rei Mesa did not comment on WCI's financial situation and described the decision as "strategic." The company did not waste time making the changes online. While the old Purdential WCI domain is still active, the redirect takes you immediately to a Prudential real estate site without any mention of WCI. Posters on the Naples News site had their own unique opinions about the rationale for the name change.


Online Scammer Used Craigslist to Rent House He Didn't Own

What is it with crazy Craigslist posts and Florida connections? First there was the Palm Beach Gardens divorcee who was offering the package deal of her house and her hand in marriage. Now, word out of California that a man has been posting on Craigslist offering to rent a condo he did not own. Four victims apparently took Michael Eugene Blair up on his generous offer. In reality, Blair had been living in the Sacramento condo until he was evicted by the real owner. According to the local news team, "Blair portrayed himself as the owner of the property and collected thousands of dollars in deposits and rent from at least four victims. He was allegedly in the process of defrauding other victims at the time of his apprehension." Blair faces fraud charges in both Colorado and our beloved Sunshine State where he committed assorted "theft-related crimes."

The Daily Soak - September 9

Former Flippers Desperately Seeking Loopholes

The high-rise HousingBath in South Florida has hundreds-if not thousands-of buyers scouring their contracts and glossy pre-construction brochures hoping to find material and adverse differences between what was originally promised and what was actually delivered. According to the Wall Street Journal, the loophole seekers may be out of luck. The majority of recent rulings in South Florida have sided heavily in favor of developers and against plaintiffs with no real bonafide contract disputes. Holland & Knight attorney Robert Chasnow says there rulings are drawing nationwide attention given Florida's unenviable leadership position. "The market in Florida is two years ahead of other parts of the U.S., like California or the Sunbelt states, in both the heavy downturn in prices and the lawsuits following it."



Dealing With The Eyesore Next Door

Dania Beach resident Anne Watzke lives next door to a home that was abandoned ten months ago, and she has several visual and fragrant reminders. "There's something dead back there, " said Watzke as she surveys the tall grass around the abandoned property teeming with rats and snakes. The Sun-Sentinel shares a report card on code enforcement efforts in several Broward County cities where the number of abandoned homes are growing like the weeds that surround them. Plantation authorities haven't spent a dime on abandoned homes, while Dania Beach has spent over $9,000 including the demolition of one property. Meanwhile, other municipalities are looking to the future. Boynton Beach officials have only spent $3,025 on abandoned home maintenance this year, but they are allocating $40,000 for nuisance abatement in the next budget year.

With Fannie/Freddie Bailout, Forbes Sees "Hope for Housing"

But first the bad news. Lenders have repossessed over 650,000 properties this year, and that figure should top 1 million by year's end. 102,000 U.S. homeowners lost their homes to foreclosure in August, a figure that is 80% higher than August 2007. And finally, 1.45 million homeowners have faced some sort of preforeclosure action by their lenders in 2008. But Forbes' Ruthie Ackerman sees this week's Fannie/Freddie bailout announcement as cause for optimism for both homeowners and interested buyers. According to Ackerman, "The bailout is expected to lower borrowing costs which will support demand for mortgage-backed securities in the secondary market, offering a key source of capital for lenders. Home prices should recover and lower borrowing costs should make it easier for homebuyers to buy already-foreclosed homes." Let's hope she's right.

The Daily Soak - September 8

Vero Beach Auction: "Tonight We're Gonna Party Like It's 1999!"

Or at least that's the feeling of euphoria shared by the auctioneer and winning bidders last weekend in Vero Beach. On Saturday, the Delray Beach-based developer of The Antilles, a gated community north of Vero on US1, auctioned off 19 single-family homes in the development. At the height of the boom, homes in The Antilles were selling for over $700,000, but winning bidders on Saturday were paying less than half that amount. The lowest priced home on Saturday sold for $320,000 while the highest priced home sold for $385,000. A crowd of over 300 turned out for the auction including Norman and Roxanne Schulman who picked up a new 4,000 square foot home for $365,000. "I think we got an outstanding price," gushed Roxanne. Other attendees like Frank Bosh were apparently looking for steals not deals. "I think people got caught up in the heat," Bosh said. "Tomorrow, people are going to wake up with a big hangover."


FHA Loans, State Money Good News For First-time Buyers

Just ask John and Kelly Pollak. The couple started looking for a home in Palm Bay exactly a year ago. Their lender told them they were qualified for a $125,000 home purchase, so they didn't have too many attractive options in the local market. What a difference a year makes. The abundance of distressed properties has forced more homes down into the Pollak's range of affordability. Meanwhile, coming up with the down payment was no problem thanks to a combination of state and federal government programs. FHA loans often only require a 3% down payment, and that was easily covered with a $10,000 interest free loan from the state of Florida. This Florida Today article offers some good advice for those seeking both FHA and conventional loans: 1.) Pre-qualify with a lender and 2.) Request a copy of your credit report and address any lingering issues.


Naples Construction Company Was Prudent, Proactive

Kraft Construction is one of Florida's largest commercial construction companies. During the boom years, Kraft helped transform the skylines of Southwest Florida with several luxury high-rise towers like Veracruz on Marco Island and the Plaza at Five Points in Sarasota. Kraft's fortunes and deal flow were closely tied with luxury developers like WCI, but that well went dry in 2006. Rather than waiting for a residential recovery, Kraft started ramping up government, institutional and medical projects like Ave Maria University buildings, a courthouse annex in Naples, and a police station in Sarasota. That strategy paid off for Kraft which has more than weathered the downturn. Kraft was recently purchased by Oklahoma-based Manhattan Construction Group and will operate as a subsidiary of Manhattan here in Florida. Kraft boss Fred Pezeshkan says the partnership will allow Kraft to bid on larger projects like the Boston Red Sox training facility, if the team decides to relocate. "With our new partner, we will be all over that," Pezeshkan said.

The Daily Soak - September 6

1 in 7 Florida Borrowers Behind on Mortgage Payments

The number of Florida homeowners either falling behind on their mortgage payments or falling into foreclosure continues to rise according to the Mortgage Bankers Association's new monthly report. Almost 14% of outstanding home loans in Florida are now at least 30 days past due, while 6% of home loans are in foreclosure. The 6% number is troubling for two reasons: it's the highest in the nation AND statistics show the number of subprime borrowers entering foreclosure is actually declining. So who's taking their place? Prime borrowers facing adjustable rate mortgage resets and much higher monthly payments. Bradenton mortgage broker Pete Minarich summed up the situation like this, "I think we're seeing just as many people choosing not to pay as those who can't pay. I think we'll be looking at this for at least another year or two."


Signs of a Bottom in Vulture-Friendly South Florida

A funny thing happened last month in Miami. Condo giant Related Group sold the last 120 units in a high-profile tower to a partnership made up of a private equity firm and Related itself. The partnership plans to rent the units for 5 years until market prices firm up in downtown Miami. Bloomberg points to these types of creative deals and growing willingness among banks to take real estate-related writedowns as signs of a bottom in South Florida. Real estate analyst Jack McCabe believes patient investors have earmarked upwards of $30 billion for distressed property acquisitions in Florida. And for those who think reaching the bottom means increased sales activity and price appreciation are around the corner, McCabe offers this caveat: "There's a purging going on. It's my belief that the vulture buyers would form the bottom of the real estate market, and we're almost there. That bottom may last for three years as foreclosure sales go on.''


Bidders Wanted: $88M in Distressed Florida Real Estate Assets

New York-based real estate banking firm Carolton Advisory Services announced they have been retained by an institutional client "to market and sell approximately $88 million of performing and nonperforming commercial mortgage loan assets." All of the assets are located in Florida with some of the larger properties concentrated in Miami, Orlando, Tampa and Jacksonville. According to Carlton, "the portfolio is characterized primarily by loans secured by single family home subdivisions as well as residential and office condominium properties in various stages of completion. The larger assets include condo loans (two with marinas), a town home project and a large equestrian-oriented land development." Interested bidders will be able submit sealed bids for individual assets, groups of properties or the entire portfolio. Interested parties should contact John MacConnell, Vice President, at 561-207-6250.

The Daily Soak - September 5

Canadianflux: Number of Canadian Buyers In Florida Has Doubled

Renting has always been a popular option for our neighbors to the north, but falling condo prices in markets like Tampa Bay are convincing more and more Canadians to buy. With Meet the Nouveaux Neighbors, June Fletcher of the Wall Street Journal reports the 7,200 Canadian buyers this year is more than double the 3,500 buyers last year. The change is evident in some Tampa Bay condos where unit owners watch hockey games together, order Bloody Caesar's at local watering holes and greet each other with the occasional Bonjour on the condo elevator. Even HOA documents and monthly newsletters are being translated into French to accommodate the influx of French Canadians in condos like Hawaiian Gardens in Lauderdale Lakes. And while U.S. banks are making it more difficult to secure financing, Canadian banks are doing just the opposite. Toronto-based RBC recently slashed its down payment requirement for Canadians from 50% to 25% and the number of condo loans has doubled.


Class Dismissed: Enrollments Down at Florida Trades Schools

Bradenton-based Manatee Technical Institute offers several career prep programs for aspiring home and boat builders. The Residential Carpentry track is a 1,200 hour program covering all aspects of rough, trim and finish carpentry, while the Boat Building program promises students will "learn the fabrication process for immediate employment in the industry or continue their studies." But with "immediate employment" no longer a guarantee in Florida's bruised boating and housing markets, many students are opting to pursue other careers. Sarasota County Technical Institute Instructor David Stinnette understands the hesitation: "I think parents are a little bit reluctant to let kids go into it when the newspapers are full of stories about companies moving away." Manatee-based Chris Craft is moving several jobs out of Florida which worries Boat Building students like Alana Kochno. "So far, looking around, here there's not a lot of work," Kochno said, "I'm trying as hard as I can."


Raise Your Hand If You Were Duped By the Condo-Hotel King

A fascinating story in The New York Times about the King of the Condo-Hotel, Robert Falor, who partnered with celebrities like Nicky Hilton and claimed to be developing $1 billion in projects. The Times describes Falor as a great storyteller and a professional name-dropper with an "almost flawless appreciation of the currency of celebrity." Like many developers during the boom, Falor turned to celebrities to bring instant cachet and lure buyers to his projects. This "Heartbreak Hotels" graphic charts the rapid rise and fall of Falor's celebrity partnerships and high-profile developments like the Royal Palm on South Beach and the Hilton-endorsed Nicky O. (formerly the Edison Hotel). But alas, Falor's promise to deliver the units was as shallow as the Nicky O. press release back in 2006, "The lobby of the hotel will include a giant chandelier and lots of marble which Nicky has already called 'hot.'" Squatters ended up moving into the Edison last year before the building was finally auctioned off this spring. Like, that's so not hot.