[NYTr] Boming Economy: "Blood in the Water" in Fla's Property Market

[All the News That Doesn't Fit]

 All the salad bars were empty
 All the quiche lorraine was gone
 I hear the yuppies cry as they vanished in the dawn
 Calling brand names to each other as they faded from my view
 They'll be networking forever down Columbus Avenue

 "Condos for sale...
 "Condos to buy..."
 Cry the yuppies in the sky

 "Yuppies in the Sky," by Tom Paxton


Reuters - Aug 14, 2007
http://www.reuters.com/article/newsOne/idUSN1230248820070814

Blood in the water" in Florida property market

By Tom Brown

CAPE CORAL, Florida (Reuters) - Phone books that were delivered but
never opened rot away next to empty driveways and overgrown lawns,
telltale signs that once-booming southwest Florida is now the center of
the U.S. housing storm.

Until two years ago, middle-class retirees vied with property
speculators for houses and apartments in Cape Coral, a town near Fort
Myers on Florida's sun-drenched Gulf Coast. Now almost every other
house on some of its streets has a for-sale sign outside.

With a bloated inventory of unsold homes and a growing number of
homeowners forced by mortgage delinquencies to sell -- thanks to the
subprime crisis and ensuing credit crunch -- southwest Florida's once
warm clime for property has turned stone-cold.

Linda Setterlund, 61, owns a pristine three-bedroom, two-bath, Cape
Coral house that has been on the market for about a year.

At a reduced asking price of $183,900, she said the house had been
priced to match what she and her husband owed on it, after moving in
three years ago with a 30-year fixed mortgage.

Setterlund said she and her husband had decided to leave the area to
join family in Tennessee, but their decision was also prompted by
growing real estate taxes and skyrocketing homeowner insurance rates
after an active 2005 hurricane season.

"They're saying that we're heading for a recession but I think we're
past that," said Setterlund, referring to the housing glut and its
effect across much of south Florida. "I think we're headed more into a
depression."

Setterlund and other local residents, many of them retirees from the
Midwest, complained of low wages in the Fort Myers area, where leading
employers include the Publix supermarket chain and the school board.

There was a nearly 27-month supply of existing single-family homes on
the Fort Myers market last month compared to a three-month supply at
the height of the local boom in housing in August 2005, according to
Denny Grimes, a top real estate agent in Fort Myers.

At the same time, more than 40 percent of single-family homes were
listed at prices below $250,000 versus just 18 percent at the market
peak.

"There's a lot of blood in the water and there's a lot more to come,"
Grimes said.

OVERSUPPLY IN "WORST" MARKET

Making things worse, Grimes said builders were still churning out new
housing units at big discounts in and around Fort Myers, where many
investors bought houses during the recent boom market without ever
considering the long-term cost of holding properties.

Fort Myers "is by far the worst housing market that we're in," J. Larry
Sorsby, executive vice president and chief financial officer of home
builder Hovnanian Enterprises Inc., told Reuters.

Hovnanian bought the largest home builder in the Fort Myers in August
2005 just as sales in the city were starting to dry up.

"They were the last one aboard the Titanic," Grimes said.

Ever the realtor, Grimes said now may be the time for buyers to seek
opportunity in adversity, since Fort Myers housing prices have fallen
back to levels where they could already offer buyers the potential deal
of a "lifetime."

"The best time to buy is when the sellers fear tomorrow is worse than
today," said Grimes.

While business is slow for Grimes and other real estate agents, it has
been booming lately for Jonas Elliott, a so-called "short sell"
specialist at Southwest Florida Home Buyer Services in Fort Myers.

Elliott specializes in buying properties from banks or other lenders
that are at a risk of foreclosure, usually at a large discount, and
then "flipping" them at a profit.

"In this particular county I have about five years of good business,"
Elliott said.

"I'm so inundated with properties I couldn't tell you," he added. "We
have a ton of inventory, a ton of new properties coming into inventory."

Noting that losses on local properties had hardly been limited to
medium-income retirees or "snowbirds," traditional residents of towns
like Fort Myers escaping the harsh winters of the U.S. Midwest and
Northeast, Elliott said one current customer of his was about to
swallow a $1.5 million loss on four properties he could no longer
afford to finance.

"That's a hefty sum of change," said Elliott.

© Reuters 2006. All rights reserved.