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Economic Hurricane

By Staff | Feb 7, 2009

Americans lost $1.4 trillion in home values in the last three months of 2008, more than was lost in all of 2007, according to a report from Zillow, an online company that gathers real estate data.
The fourth-quarter losses pushed the total loss in home values for 2008 to $3.3 million. Overall, home values have lost $6.1 trillion since the housing market peaked in 2006.
“A witch’s brew of economic insecurity, foreclosures and tightened lending standards are helping to keep hard-hit markets down and to widen the scope of markets showing declines in home values,” said Dr. Stan Humphries, Zillow vice president of data and analytics in a news release.
Last year, the Cape lost an estimated 12 percent of its overall property valuation. The city is projecting a loss of tax revenue of up to 35 percent this year, based on another wave of declining values.
Cape Coral, which claimed the dubious honor of having the highest foreclosure rate in the nation for 2008, is one of the hardest-hit areas of the housing crisis.
Sales numbers, though, are climbing as bargain-basement prices attract buyers.
According to some local experts, we are witnessing the early signs of a turnaround.
Fresh off a year in which the median sale price of a single-family home in the Cape Coral-Fort Myers metro area fell 38 percent from $254,700 to $158,000, according to the Florida Association of Realtors, there may be light at the end of the tunnel.
“We can physically see the bottom,” said Elmer Tabor, owner of Wonderland Realty.
Aided by a sharp year-over-year increase in sales, home values could be stabilizing, albeit only after steep declines from the peak values. The median sales price for a single-family home in December held firm at November’s median price of $106,900, according to FAR statistics.
“(The prices) are stabilizing. I mean they’re low, but they’re stabilizing,” said Realtor and Cape Coral Councilmember Gloria Tate.
Low prices, however, are attracting a dubious type of buyer many think helped contribute to the housing crisis back to the Cape — the investor, or speculator buyer.
Tate said she tries to avoid those type of sales.
“When I get phone calls from people saying, ‘I want to rent this property out’ or, ‘I want to flip this property,’ I try to steer away from that,” she said.
Besides the first-time home buyer and the investor, there is another type of home buyer that is being attracted to the increasingly affordable Southwest part of Florida. People who plan to retire a few years from now are trying to lock in current prices in anticipation of their move.
Tate recalled speaking to one Chicago couple recently that was four years away from retirement.
“They realized if the market comes back they’ll have missed their opportunity,” Tate said.
How much of the jump in sales (there were 8,217 existing single-family homes sold in the Cape Coral-Fort Myers metro area in 2008, a 43 percent jump from the 5,753 sales in 2007) is related to the influx of snowbirds during tourist season is still unclear.
“What we don’t know is come April (the end of tourist season) if there’ll be a drop off,” Tabor said.
Lenders and banks, which are also grappling with new economic realities resulting from the prevalence of bad mortgages, also are dealing with a spike in short sales, or sales in which the lender agrees to reduce the amount of the loan to the sale price.
During a foreclosure workshop in Cape Coral last month, Freddie Mac representative Robin Migala said mortgagors are currently training real estate agents to handle short sales.
The training process takes time, and Tate said it is taking too long for a short sale to work through the system.
“In all the opportunities the lenders have had to help people they put on a good face, but it’s not working in the trenches,” Tate said.
The short sale process may be long and arduous, but credit markets themselves aren’t necessarily “tight”, just smarter, Tabor said.
“It’s almost a complete misnomer that credit is tight. The banks just aren’t doing anything stupid anymore,” he said.
The positive signs Tabor and Tate see in the local housing market will be cold comfort to the 96 percent of homeowners in the Cape Coral-Fort Myers metro area whose homes lost value in 2008.
Real estate data in the coming months is likely to reveal a clearer picture of whether the positive signs are the end of the storm or merely the eye of the current economic hurricane.