Housing sales are picking up in some of the hardest-hit markets. Will confidence spread?
(Source: Business Week)
Last year the Cape Coral area of Florida had the highest foreclosure rate in the country. Banks moved to seize more than 1 in 10 residential properties in the Gulf Coast community of 165,000. The reverberations are still being felt. Newly built McMansions sit vacant, dusty monuments to the great real estate boom. Smaller homes have been ransacked. Apartment buildings have been boarded up. Former owners are stripping whatever items they can from their homes before the locks get changed, says Kirsten Prizzi, a local real estate agent at AC Global Realty. “Knobs, appliances. Someone was selling windows.”
But a curious thing is happening in this blighted former boomtown: Buyers are swooping in. First-time home-owners are suddenly entering bidding wars with real estate speculators from as far away as Spain and Germany. Sales in February outpaced those at the peak of the boom, with some houses getting more than 50 offers and selling above their asking price. “I look for markets that are downtrodden,” says Rich Lehrer, a retiree and self-proclaimed “emerging-market investor” from Wilmington, N.C., who wants to buy several properties in the area. “I’m expecting to get better yields than I would get on my cash.”
Cape Coral isn’t the only bright spot in housing land. Some of the very regions that led the U.S. housing market into the abyss are beginning to show signs of life. Sales on the Gulf Coast of Florida, California’s Inland Empire near Los Angeles, and the Las Vegas metropolitan area surged by more than 80 percent in February vs. the same month last year.
Read Christopher Palmeri, Mara Der Hovanesian and Prashant Gopal’s full article “Housing: Signs of Life” in Business Week (April 7, 2009).