It’s not a contest anyone wants to win – whose housing crisis was the worst in 2008. The contenders: Phoenix, Las Vegas, South Florida – all with year over year price declines of 30% or more.
But perhaps nowhere is there more despair and more signs of a meltdown than in Lehigh Acres, a huge exurb east of Fort Myers, Florida. Houses are abandoned, foreclosed, and in ruins. Even fast food restaurants are laying people off as the unemployment rate hit almost 10% in November. Thousands of dreams are in ruins, thanks to real estate falling from Fort Myers’ 2005 bubble prices of a median $322,200 to $106,900 in December, 2008 (Source: Florida Association of Realtors). In other words, a house in the Fort Myers Metro is worth 33% of what it was just 3 years before – the fall in Lehigh Acres is even worse. President Obama is due to visit the Fort Myers area on Tuesday, but residents characterized the visit in the New York Times as a “herbal remedy: it probably won’t hurt but it won’t do much good either”.
Meanwhile in Lehigh Acres things have gone from bad to truly desperate. One of the biggest examples of reckless overbuilding in the country, more houses were built in Lehigh Acres in the last 4 years than were built there in the previous 50 years. The market has completely unraveled; criminal activity is increasing with looting of empty houses, marijuana cultivation, and drug dealers. Residents are trying to sell everything they have for cash. Food pantries are overwhelmed with the need, and indeed recipients are increasingly trying to return food pantry items to grocery stores for cash. Houses are selling for $45,000, about one third of what they cost to build. Officials and residents are hoping that foreclosure and short sales will help clear out excess inventory, but no one is predicting that will be completed within a year or two.
Florida’s economy is also in a tailspin, so no one is expecting any relief there. Florida, which has always counted on unlimited population growth, is now stagnant; unemployment is high; and revenues are plummeting.
Meanwhile in other areas of the country, even those metros that had been unaffected up to now are now seeing declines as of the end of 2008. Atlanta, Charlotte, Portland, Seattle, and Dallas experienced record price declines according to Case-Shiller data. As they say in the movies – “no one is safe” right now.
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