Today's Local Real Estate News

The Real Estate Downturn is Affecting the Rest of the Economy

Florida legislators are calling a special session in September to determine how to slash the State’s budget in response to reduced revenues. The Miami Herald explains:

“Even though legislators passed a new budget in May, collections of state sales tax -- the major revenue source -- have consistently fallen below forecasts. Although Florida can borrow money for some things, the state Constitution requires a balanced budget.”

“Normally conservative state forecasters had already projected that taxes on real estate documents would decline this year but didn't seem to anticipate the fast pace of the state's economic slowdown, which is reflected in the low volume of sales statewide and declining corporate income taxes.”

The Bradenton Herald reports:

“’We are now confronted with the challenging but necessary task of reconciling our budget with the anticipated reductions in state revenues,’ Rubio said in a memo to House members.”

“The action was all but inevitable, considering a budget shortfall of more than $1 billion. That is the product of a depressed real estate market and weakened retail sector, which together have shrunk state revenues from documentary stamps and sales taxes.”

The private sector is also seeing revenue shortfalls. Recent earnings announcements highlight the deep economic impact of our housing downturn. BankAtlantic Bancorp, Inc. explained in their announcement today:

“Approximately twelve loans in this portfolio, aggregating approximately $135 million, are characterized as 'Builder Land Loans'. 'Builder Land Loans' were made to borrowers who have agreements to sell the underlying collateral to national and local home builders pursuant to option contracts. However, due to the deterioration in the Florida housing market, some of these option contracts have been cancelled or modified. We continue to monitor the impact of the weak homebuilding environment on this portfolio. Although our non-accrual loans declined $3.9 million in the quarter from the first quarter of 2007, we may have additional downgrades and additional provisions relating to the portfolio if the housing market does not improve.”

Whitney Holding Corp. explained that their reduced earnings were partially due to Florida’s real estate market:

“’A decrease of approximately $100 million in loans serviced from Florida operations was not unexpected in light of market conditions that are restraining the pace of new real estate project financing in Florida,’ the release said.”

TIB Financial Corp. also explained that their reduced earnings were due to “softness” in the residential real estate market:

“We continue to closely monitor economic activity in our regional and local markets which have slowed considerably due to the softness of the residential real estate market. Our operating environment remains challenging and our loan growth is muted due to loan payoffs and a lower level of loan origination and funding during the first half of the year. During this period of slower economic activity we are maintaining our disciplined underwriting standards and prudent risk assessment practices.”

The real estate slowdown has forced some Realtors® to find new and creative ways to make money. Palm City Realtor®, Jim Weix certainly found a creative way. Somehow, Mr. Weix convinced a Nigerian email scammer to send him $51,000:

“The 57-year-old real estate broker knew the story was bunk but ‘thought it would be fun to play along’ with a man named ‘Bryan Lewis,’ who claimed he would be helping with the transaction.”

“After a series of phone calls and e-mails, Weix thought the game was over last Wednesday when he told Lewis he would never disclose his Social Security number or send him money.”

“’I told him, I own a real estate company in Martin County for God's sake. We're in a depression,’ Weix said. ‘I didn't think I'd hear from him again.’”

“But just a few days later, Weix said he began receiving money from Lewis. It came in two wire transfers to separate credit cards — one for $29,000 on Saturday and another for $22,000 on Sunday.”

“The money virtually wiped out all of the debt Weix had accumulated on the two cards.”