What the housing turnaround will look like
Cape Coral, Fla., not long ago one of the foreclosure capitals of America, is now seeing a rebound as home prices hit once-in-a-generation lows.
Cape Coral, Fla.
The basic three-bedroom house at 711 S.W. 27th Terrace looks like a lot of other homes that are in foreclosure here, with its empty beige stucco walls and a child’s room done up in yellow and pink. And like many others, it is also sunk in an everglade of debt.Skip to next paragraph
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But by mid-June, the bank that owned the property was willing to deal. It no longer expected to get back much of the $359,000 borrowed on the house. Instead, it wanted to hand the keys over to someone else to mow the lawn and pay the electric bill. It asked real estate agent Denny Grimes to look for buyers.
He didn’t have to look very far: Potential buyers found Mr. Grimes – quickly. He describes one of the open houses as resembling a tryout for “American Idol.” Dozens of real estate agents lined up to trek through the house, now listed for $65,000, to inspect the tile floors in the bathrooms and the stainless-steel appliances in the kitchen. Within two weeks, Grimes had 34 bids spread out on his boardroom table –
several well above the asking price and some offering all cash.
The story of 711 S.W. 27th Terrace shows how the housing market in Cape Coral, not long ago one of the foreclosure capitals of America, is undergoing a revival – in what may be a harbinger for the nation.
Every day Lee County, on Florida’s west coast, auctions off foreclosed properties that draw everyone from professional investors planning to renovate and resell the homes to retirees from Ohio and Michigan. Real estate agents who spent most of last year on chaise longues are now starting to haul cash-laden buyers around subdivisions to check out the granite countertops. One company, Foreclosure Tours R Us, ferries potential buyers around by boat.
Behind the sudden renewed interest is simple arithmetic: Prices have dropped so low that many people now think this is a once-in-a-generation chance to get a piece of the Florida sun. “It’s not just the new home buyer,” says Grimes. “It’s also the guy who is retiring within nine years who knows this is the best opportunity he’ll see.”
While many parts of the country may not see a housing turnaround for another year or two – particularly given the vacuum-tight credit demands of banks – others are finally clawing their way up from the bottom. The first faint signs are there – stabilizing prices, an uptick in sales, and, most important, a reduction in the inventory of foreclosures compared with earlier in the year. The National Association of Realtors estimates that 45 percent of all home sales right now are “distressed” properties – many foreclosures. “This is part of the catharsis,” says economist Richard DeKaser of Woodley Park Research in Washington. “This is a sign we are at the bottom.”