In Southwest Florida Housing Market, Silence is Deafening

Phone books that were delivered but never opened rot away next to empty driveways and overgrown lawns, telltale signs of a once-booming Southwest Florida housing market now at 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 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 rising bad credit Florida mortgage crisis and ensuing global 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 has now been priced to match what she and her husband owed on it, after moving in three years ago with a 30-year fixed-rate Florida 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 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 effect across much of the South Florida housing market.

“I think we’re headed more into a depression.”

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

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,” said
Denny Grimes, a top real estate agent in Fort Myers.

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

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 housing market 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.”

Of course, there’s no telling whether the Florida mortgage you apply for today won’t be available to you cheaper next week if the price falls yet again.

That mentality is one of the central components of the market crunch.

Follow our link to continue reading this article by Reuters on the fall of the Southwest Florida housing market and the discounts available …