Is Florida's Housing Bubble Imploding?

Statistics recently published reveal that the Florida housing market is in serious trouble.

After years of wild speculation, enormous home sales and price gains, and record numbers of new homes and condos constructed, it now appears that Florida real estate market may be in serious trouble.

While the nation as a whole saw a year-over-year decline in October housing prices, some of Florida's communities were among the nations biggest decliners. Meanwhile, the foreclosure rate for Florida has significantly spiked upward, foreshadowing continued problems for the real estate market.

Here are some of the details of the statistics recently released:

Three Florida metro areas were hit hard by price drops. In Sarasota, the median home now sells for $320,700, off a whopping 9.4 percent from last year; Palm Bay/Melbourne/Titusville prices sank 9 percent to $193,600; and Cape Coral prices plunged 8 percent to $255,400.

RealtyTrac, an online marketplace for foreclosure properties, reports that 115,568 properties entered into some stage of foreclosure in October, a 42 percent increase over last year and an incidence of one for every 1,001 U.S. households. The comparison with October of 2005 was particularly dramatic because that month in 2005 recorded the highest foreclosure rate last year, according to James Saccacio, chief executive officer of RealtyTrac.

The newest data continued a strong trend from the past three months that shows foreclosures definitely moving upward, according to Saccacio. That puts more pressure on an already strained housing market.

In the month of October 2006, Florida had 11,413 foreclosure filings. That equates to 1 in 640 household - a fifty percent increase over the past 12 months.

Here in Key West, the housing picture looks bleak. The speculation of the past 5 years has driven many local residents off the island, as affordable housing vanished from the Keys. This is the county's number one problem, yet unfortunately they seem to have been unable to find a solution. With a record number of residential properties on the market in Key West (and more continue to be built), and nearly none of them selling, prices will have to fall much further before finding solid footing.

Maybe I was right: everyone in America cannot suddenly afford a second home. The aberration was caused by banks loosening their lending practices (remember interest-only payments?) - eventually building up a pyramid that required new buyers to pay every higher prices. Once prices had reached their peak, a cascade of sellers glutted the market. It was a bit of financial trickery led by aggressive lending practices, and it very well may shake the banks themselves. They have lent too much money for too little equity.

It will be a long time before this housing bubble collapse is over.

Now where are the realtors that were practically promising their customers huge gains? I believe more than one said "You can't lose".

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Reef Relief Holiday Auction

This year's Reef Relief Holiday Auction is underway! This year's auction has great items - plus, by bidding, you'll help out an important cause, saving our coral reefs. You might find that perfect holiday gift too.

Thanks to generous donations by over 100 business including many from Key West, you can bid on art from Key West artists, exciting boat trips, excursions, and other wonderful items. All proceeds will benefit Reef Relief's efforts to save the coral reefs and educating the public about our marine environment.

Check out the desirable items and get in on the bidding action at http://www.reefreliefauction.cmarket.com/

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Key West: Highest Rent Does Not Equal Best Tenant

Whoever told the City of Key West Florida that the best tenant is the one who can pay the most has done the community a disservice.

The City should view it's tenants as partners - and should do what is in the best interest of both.

Just because someone else will pay more rent for a property does not mean they are the best tenant. They are unproven and don't necessarily have a good business plan. Plus, are they displacing a business that is loved by the community and that loves the community?

The City should look down the road to the possibility of a rent deficit when these highest-rent-paying businesses fail. Then who will take their place? How will the City deal with a shortfall then? Raise taxes of course.

Should the mom-and-pop businesses in this town have to pay a ridiculously high rent because a big box retailer is willing to pay more? I say no way. And who wants big box retailers in Old Town Key West? I do not.

One by one, the City of Key West is squeezing mom-and-pop businesses out, and I am worried that the City is sacrificing the community's character and amenities in the pursuit of maximum rents.

I mention this because the local beloved grocery store The Waterfront Market has been in a protracted lease negotiation (10 months and counting) with the City of Key West. The market is located at the Key West Bight, which has been raising rents through the roof on many businesses, forcing many to shut their doors. The Waterfront Market is a true community resource, supplying fresh fish to local restaurants and citizens, along with the island's most impressive grocery selection.

If the City stays on this course, they may one day lose their stable tenant base. This is a far greater cost than the benefit of temporarily higher paying tenants.

The value of a tenant cannot simply be viewed as the rent he can pay. Instead it is a combination of the value to the community + the rent the business can afford. The Waterfront Market adds a lot of value that isn't reflected in the rent numbers, and the City should recognize this and work with Buco (the owner of the Waterfront Market), view him as a partner, and charge a rent that does not force him out of business.

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Navy to TAMPOA - Gates Are Not Acceptable

The local press today reports that the Navy opposes any plan to place gates on Southard Street in Truman Annex. On the morning radio show, the second in command for the Navy in Key West said that they will not show identification to TAMPOA nor will they allow gates that restrict access. This is good news for those in the general public that are concerned about restricted access.

The Truman Annex Master Property Association (TAMPOA) has been battling the City of Key West over control and ownership of the portion of Southard Street that runs though their Truman Annex neighborhood. That street is used by the Navy for access to its property. The public also uses the street to acces Fort Zachary State Park and the Truman waterfront property. TAMPOA has stated that if they don't gate off that street then their wealthy-yet-conformist neighborhood will no longer be considered a "gated community" and therefore lose value. Looks to me like TAMPOA is in a lose lose situation.

It is time for TAMPOA to recognize the importance of the street to the Navy, the citizens of Key West, and the general public. TAMPOA, please stop planning to restrict access. Either that, or face the wrath of the public, the will of the City of Key West Commission, and the bottomless pockets of the US Government.

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NO DEAL: Key West vs. Truman Annex

Recent reports in the local press stated that Commissioner Verge had presented a compromise agreement to TAMPOA (Truman Annex Master Property Assn) over the use of the portion of Southard Street that runs through Truman Annex. Those reports said that the proposal would allow unfettered access for the public during the day, but at night gates would be locked and the public would not be able to use Southard Street. Frankly, I couldn't believe that the City of Key West was willing to give up so much on this important issue.

But according to the Bahama Village blog, no such agreement was ever offered. Let's hope so.

Most Key Westers don't want to see Southard Street gated and closed to the public.

It is time for the City Commission to show its political will and do whatever it can to have control of this important street.

To me, this is all a head fake by TAMPOA, who it seems is really interested in controlling what is outside of its gate at the adjoining Truman Waterfront property the City received from the Navy.

Again, I implore City Commissioners to not lose will on this battle. The citizens are behind you. If you must use emininent domain to take the street (and according to TAMPOA effectively removing them from being a gated community) then get your money's worth and open up all the streets in Truman Annex.

And don't listen to the huffing and puffing of the "Manics in the Annex" about the cost of eminent domain. Remember, these streets are still going to be streets. But now, the public will be allowed to use them. It won't be cheap, but control of a major road is well worth it.

By the way, the developer of Truman Annex seems as disgusted as most Key Westers are over TAMPOA's behavior. Pritham Singh has publicly warned TAMPOA to back down and come to their senses. So far, TAMPOA still has it's head stuck in the gate.

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