Today's Local Real Estate News

The Ocala Star-Banner reprinted a great Stephen L. Goldstein editorial:

“WARNING: Without a miracle, quality of life in Florida is doomed to be the lowest of the lowest of the lowest.”

“The Catch-22 in Florida's economic "strategy" is finally dinking us. For decades, we've been losing the proverbial dollar on every state resident, but making it up in volume. We're on an unavoidable collision course with ourselves.”

“Increasingly, Floridians have discovered that they are the suckers left holding the bag in a state-sponsored Ponzi scheme. Developers in cahoots with elected officials opened the floodgates to people migrating into the state. They made it seem as though not only the moon belongs to everyone, but the best things in life are free under the Florida sun.”

“Each year, the Legislature does the equivalent of rearranging the deck chairs on the Titanic. Some people still think we're unsinkable. Others don't realize that we've already hit an economic iceberg. Those who know we're in trouble don't realize we don't have enough lifeboats.”

“Thousands are already fleeing Florida's sinking ship - and they're not rats. Anyone choosing to stay should pray for a miracle, an economic epiphany in the Legislature - or, your best bet, piles of dough to pay the tolls on your privatized roads.”

From Florida Trend Magazine:

“The fallout from the downturn in Florida’s housing market: More than 21,000 new foreclosure cases in June alone — up 144% from a year earlier — and a skyrocketing number of complaints against home builders over construction defects. Meanwhile, home builders in financial trouble have simply abandoned hundreds of customers, many of whom end up paying twice. ‘Contractors and consumers had both better hold onto their chairs,’ says one attorney.”

“Florida law, in fact, carries felony-level punishments for contractors who intentionally misapply construction funds. But proving intent is tricky, and many law enforcement officials consider it a civil matter, not a crime, when a contractor takes a down payment or makes hefty bank draws from a customer’s construction loan, does little to no work and abandons the job. Criminal prosecutors tend to leave abandonment cases in the hands of prosecutors for state agencies like the Department of Business and Professional Regulation. Officials there can do little more than take away a contractor’s license and encourage victims to apply for relief through the state’s Construction Recovery Fund, which can provide limited compensation for homeowners who’ve been harmed financially by a contractor.”

“For years, Florida’s home building industry has fought off most attempts to make contractors more accountable, including killing proposals that would have required licensing bonds or mandated that contractors have more money upfront. This year’s Legislature, however, tightened several requirements, allowing the Construction Industry Licensing Board to establish a minimum credit score for contractors, to require bonds for those who don’t meet the minimum and to require criminal background checks. The Legislature also ordered a review of Florida’s construction lien law due in October.”

The Briny Breezes sage continues:

“The owners of Briny Breezes have chosen to sell their town to a developer for $510 million. The mayor and five aldermen stand to earn millions from the sale. First, however, they have to rewrite the town's growth plan to the developer's specifications, then approve it.”

“The Florida Commission on Ethics said Friday that there's nothing unethical about the mayor and aldermen being in this position. They would benefit from their votes the same way all town landowners would benefit. In other words, lining their pockets based on their willingness to change the growth plan is no different than if they were voting to pave a road that they - like all town residents - would drive on.”

“The ethics panel may be right on the law, but there's a big difference between paving a road and selling for millions. Based on the shares each official has in the corporation that owns the town, the mayor and aldermen would earn a combined $7.9 million from the sale. Mayor Roger Bennett stands to make $2.1 million. Four aldermen would make $1 million-plus each. The fifth alderman would get $876,902.”

“Given those paydays, opponents suspect that the board will do whatever developer Ocean Properties asks. So far, the Briny board has done just that. But the plan put forth by the developers and approved by the aldermen drew 23 objections from the state Department of Community Affairs. The plan for 12- to 20-story condos on the 43-acre barrier island between Ocean Ridge and Gulf Stream offered no coordination with neighbors and no setbacks for tall buildings, and didn't account for employee housing in traffic projections. It failed to consider regional goals by proposing disaster-prone housing incompatible with neighbors.”

The condo-hotel scheme represents the housing bubble so well. Anyone who wasn’t irrationally exhurberent about real estate boom could see that they were nothing more than a ponzi scheme – the modern version of the timeshare. Now, the Orlando Sentinel is reporting on the downfall of the condo-hotel (just as most of us expected):

“Condominium hotels may go down as one of the briefest fads ever to sweep the real-estate industry as the market slumps in Central Florida -- only a year after it peaked.”

“Potential buyers are disappearing and financing commitments are falling flat, leaving condo-hotel developers with an uncertain future.”

“’Our sales were good in the beginning, but it got bad, bad, bad and then even worse,’ said Barry Greer, an owner of The Lexington at Orlando CityPlace. ‘The market was red-hot when we started this, but it folded up before we could close it out.’”

“Greer said nearly 100 people placed deposits on rooms in the 227-unit hotel but then backed out. According to the bankruptcy filing, just 31 units were sold.”

“’Until the market improves, you won't see anything getting built,’ Greer said.”