NYT: House flippers hear "the Sound of a Bubble Bursting"

[Amerigo Vespucci]

This Is the Sound of a Bubble Bursting

By PETER S. GOODMAN
Published: December 23, 2007

http://www.nytimes.com/2007/12/23/business/23house.html

Joe Carey was part of the speculative influx. An owner of rental property in Ohio, he visited Cape Coral in 2002 and found that he could buy undeveloped quarter-acre lots for as little as $10,000. Nearby, there were beaches, golf courses and access to the Caloosahatchee River, which empties into the Gulf of Mexico. Builders were happy to arrange construction loans, then erect houses in as little as six months. Real estate agents promised to find buyers before the houses were even finished. “All you needed was a pulse,” Mr. Carey said. “The price of dirt was going up. We took that leap of faith and put down $10,000.”

Backed by easily acquired construction loans, Mr. Carey’s investment allowed him to buy three lots and top off each with a new home. He flipped them immediately for about $175,000 each, he recalls. Then he bought more lots, confident that Cape Coral and Fort Myers — the county seat across the river — would continue to blossom. From 2000 to 2003, the population of the Cape Coral-Fort Myers metropolitan area grew to nearly 500,000 from 444,000, according to Moody’s Economy.com.

Lots that Mr. Carey once bought for $10,000 were now going for 10 times that. During the best times back in Ohio, he once earned about $100,000 in a year. At the height of the Florida boom, in 2005, he says he raked in $800,000. “If you just got up and went to work,” he says, “pretty much anybody could become an overnight millionaire.”

By October this year, the median house price was down to $239,000, some 14 percent below the peak. That same month, he and his partners shuttered his real estate office. In November, he closed the title company. On a recent afternoon, he went to his old office in a now-quiet strip mall to take home the remaining furniture. He was preparing to move to the suburbs of Atlanta. While speculators may find it easy enough to pack up and move on, they are leaving behind an empire of vacant houses that will not be easily sold. More than 19,000 single-family homes and condos are now listed on the market in Lee County. Fewer than 500 sold in November, meaning that at the current rate it would take three years for the market to absorb all the houses.



A model home in Cape Coral, Fla. In the wake of the real estate bust, the area is facing falling home values, foreclosures, municipal cutbacks and the loss of jobs.

[bahrbearian]

1. These guys don't know the meaning of "Work".

“If you just got up and went to work,” he says, “pretty much anybody could become an overnight millionaire.”

[Warpy]

2. Yeah, they'd have been in a corner in hysterical tears

within the first hour of one of my typical 12 hour night shifts.

[flvegan]

3. He owned the title company too? How convenient.

I pity his underwriter. Betcha they're going to be writing some checks in the next couple years.

[gristy]

4. That's quite an article

The housing bubble has clearly popped in Florida.

[FreakinDJ]

5. has a Republican administration NOT had some sort of crash

When has a Republican administration NOT had some sort of crash that bilked the tax coffers and working class out of billions of dollars?

The current RAT-publicans have had 2, one for each term in office. The prior Regan/Bush misadministration had the S&L crisis which was due to be paid off in 2025, (that was before Bush #2 began his War time deficit spending) and the Nixon/Ford administration had their spending spree in Vietnam.

I just jump for joy every time a Ratpublican runs for office any more

[HuffleClaw]

7. seems to me they'll have trouble selling a bailout during an election year

but who knows with this administration. they'll just slap some orwellian label on it and the democrats will cave as usual

[fudge stripe cookays]

6. I have no sympathy for "flippers"

Their greediness is part of the reason the market went batshit crazy, and bazillions of backwards inverted loans were issued.

This then led to more predatory lending to get gullible, not so savvy people into homes they couldn't afford. And now here we are.

Most people buy homes because it amounts to a dream to finally live in a home of our very own. We can make it a personal space, and customize it, and not have to answer to a landlord. Fuck every last flipper for their stupidity and greed.

[benld74]

8. Flip this !

[Historic NY]

9. I've been flipping my own house to myself...............

message put your money into the house you own and live in. Why should I fix up someone elses headache when I can make my house more comfortable, aesthetic and ungraded for me.

[BearSquirrel2]

10. I also have no sympathy ...

These folks are playing a high stakes game. I have about the same amount of sympathy for people who lose their paycheck at the blackjack table.

Recent stories have indicated that there are a whole class of people who go into real estate whenever things get hot. They return to their "normal jobs" when things get cold.