Ft Myers mighty well be the poster child for the crippled hosing market and how housing prices have tanked since 2005. Today Obama goes to Ft Myers on the "Pork Tour" to sell the stimulus plan.
However the primary contributor to this crisis may well be the Federal Government . HUD, Fannie and Freddie are driving home prices in the gutter and will bankrupt millions of Americans and in the process destroy their net worth.
Through 2000-2005 we watched a meteoric rise in Florida Real estate values after a period of only modest gains like the rest of the country. Florida Real Estate has always been a little more pricey than other parts of the country. With warm climate, strong tourist based economy and millions of retirees it was always viewed as a safe place to buy a home or retire.
Speculation and huge development drove up prices, The federal government encouraged lenders to make loans to people that in all honesty shouldn't have qualified. FHA routinely made loans on properties with values that far exceeded their actual worth. Fannie and Freddie guaranteed loans absoled lenders of any real responsibility.
Eventually in a greed filled world a relatively small group of people bought properties they knew they couldn't afford and other took out equity loans that far exceeded the actual value of their homes using them like ATM's. Many warned that the bottom would fall out of this market and in 2005 it did.
Property values tanked and no one was buying. Many of these greed driven people simply walked away from these properties. Builders filed bankruptcy . Fannie and Freddie found themselves stuck with thousands of properties as did HUD. Home inventories have risen to record highs.
The market has made a big correction and home values are starting to reach "real world ' levels. However unless stopped, the Federal Government, ( HUD) and Fannie and Freddie both recipients of billions in federal bail out monies will systematically bankrupt not only the Florida real estate market but the country as well.
This collapse will occur because HUD, Fannie and Freddie are engaged in wholesale 'dumping' of property far below current appraised market value or even tax value. The wholesale dumping of property by them has resulted in people unable to sell their homes even at "short sale" rates.
In compiling this piece I reviewed data from the Florida MLS, the Lee County Assessors office, Reaty Trac, HUD and Fannie Mae. The results are somewhat shocking.
I wanted to look at "average" homes so we looked at 1600 sq foot homes 3 bedrooms, 1or 2 baths. A typical middle working class home in a decent neighborhood. In 2005 this home would have cost you 250-350K depending on age , neighborhood and condition. Most experts would agree that this was an inflated value, yet that is what loans were being written for and Builders were selling these homes for about 165.00-195.00 a square foot.
In 2000 , before the run up, a 1600 square foot home in this part of Florida would have set you back about 125,000.00.
Most homes fitting this criteria are on the market at about 135-150K today a great many of these are short sales and are being sold for far less than the assessed value put on them by the county. Tax based assessments tend to normally be lower than "real world ' values and it is interesting to note when I was doing my research most of the homes on the market were listed at less than their assessed value which based on history have declined about 20-40 percent according to county tax records. One could say that these "short sales values probably represent the real world values of these properties today.
In looking at HUD properties and Fannie and Freddie properties I noticed a disturbing trend.. One HUD property, a 1600 square foot home was listed at only 62.900.00! This property was assessed by the county at 134,500.00. HUD was "dumping" this property at its assessed value in 1994! well before any run up in real estate. The list price was 40 cents on dollar of tax assessed value and in looking at closed sales I found that HUD was accepting offers that were as low as 20-30 cents on the dollar!
Fannie and Freddie Foreclosures were even worse. I found one property listed at 89,000.00, appraised by county at 169,000.00 and they accepted an offer on 24,650.00! Yet another property was listed at 84,900.00 was assessed at 147,000.00 and was sold for 19,650.00!
So the federal government, Fannie and Freddie, funded and supported by your tax dollars is engaged in the wholesale "dumping" of property on the market at 1980's prices! Continuation of this practice will decimate home values, put more Americans (even those who NEVER refinanced) upside down in their homes.
There is no Government regulation of the "dumping" of these properties, nor is there any orderly 'release' of these properties on the market so the markets aren't 'flooded". In fact, we continue to use Taxpayer monies to prop up Fannie and Freddie while they dump properties and make the problem worse driving down the value of Mortgages they have guaranteed that are not on the market or in pre- foreclosure making refinancing impossible..
So while Obama is on the stimulus "Pork Tour" trying to sell this stimulus and get the real estate market "on track" the federal government is making it worse by allowing the wholesale dumping of properties.
What will help fix the housing crisis is the following.
Stop wholesale dumping of properties, restrict HUD, Fannie and Freddie from selling at less than 50 percent of value. A six month moratorium of listing government HUD, Fannie, Freddie foreclosures for sale allowing the housing demand to catch up. Followed by a systematic time release of these properties on the market to prevent further glut. Use Jobs corps /Americorps to maintain these homes instead of costly management agencies, keeping people working.
The Government needs to slow down and like the stimulus Bill devise a REAL PLAN!