Today's Local Real Estate News

In an editorial today, The Palm Beach Post explains how artificially high home prices were the ultimate driver of our high taxes and insurance rates:

“Not only is the drop in home prices good for Palm Beach County, the Treasure Coast and Florida, prices need to go down more, and soon. The shakeout won't be easy, but it's necessary and overdue.”

“The energy-drink housing boom, which was fueled by a unique set of circumstances, jazzed the economy and made some people rich, but it harmed the state in several ways. It gave local government too much free money. It artificially increased the amount of hurricane insurance exposure, which drove up premiums, increased the cost of owning a home and made life even harder for buyers and sellers. It artificially priced too many working Floridians out of the housing market. It artificially drove up tax bills for anyone without Save Our Homes, increasing the unfairness of the tax system and prompting the bad tax-reform amendment that will be on the January presidential primary ballot.”

“A softening of home prices will loosen up the real-estate market. It could ease the insurance crisis and even bring some property tax relief. Obviously, a crash in prices would prolong the problems. Once emerging from the 1990-92 recession, however, the state's economy hummed along nicely throughout the past decade, with home values rising steadily, not spasmodically. For most of the 1990s, property tax collections increased each year by single digits, not the double-digit run-ups that began in 2001.”

The Miami Herald reports on a new law that will become much more relevant as more cash-strapped homeowners fail to pay their HOA fees:

“A new state law is making it harder for homeowner associations to foreclose on homes for delinquent dues.”

“But the new law comes at a price to struggling homeowners: It allows associations to collect interest on unpaid bills, a hefty 18 percent per year if the community's governing documents don't specify a rate. Previously, HOAs couldn't charge interest unless it was outlined in the documents.”

“Furthermore, the new law holds current owners responsible for unpaid dues, even if they were racked up by a previous owner.”

The Miami Herald also reports on a struggling Florida Keys developer:

“Fueled by investors' hunger for resort condominiums, Cay Clubs vaulted from a small start-up in late 2004 to a major developer whose 14 properties and marinas include eight in the Florida Keys. The firm, whose billboards dot the Overseas Highway, says it manages nearly 3,000 condominium units and more than 900 boat slips.”

“Now, the nationwide real-estate downturn has brought a cash squeeze that forced Cay Clubs to lay off dozens of workers, slow redevelopment plans, and ask roughly 140 buyers like the Parras to wait for their rent checks [for their lease-back program].”

“The ‘money is just not available to make the necessary payments and continue to maintain Cay Clubs' long-term viability during this down market,’ Chief Executive Dave Clark in May wrote to condo buyers awaiting lease-back checks.”

“The troubles that the Clearwater company faces symbolize wider concerns about South Florida's battered condominium market. Real-estate analysts say too many developers depended on investors who stretched their bankbooks buying condominiums during the housing boom on the assumption that others would buy or rent them only a year or two later.”

“Faced instead with anemic demand for real estate, those investors are left scrambling to pay the bills, said Jack Winston, a condominium analyst with Goodkin Consulting in Miami. ‘It's the same people: ‘Hey, let's invest in some real estate! We'll flip it. . . .’ Then, all of a sudden, they find they have to reach into their pocket every month to cover the mortgage. And it's a shock.’”