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A county in southwest Florida achieved a distinction earlier this year. In February, Florida's Lee County had more foreclosures than any other place in America. It's the same pattern we've seen elsewhere. Prices rose rapidly just a few years ago, and now many people owe more than their homes are worth. But in Lee County, the decline is so extreme that some people are walking away from their properties.
NPR's Jim Zarroli has more.
JIM ZARROLI: If you want to understand what's happened to Florida real estate, you can start by visiting Cape Harbour. It's one of numerous gleaming new developments that have popped up in recent years. There's a pair of condo towers overlooking the Gulf of Mexico, a shopping area modeled on a Mediterranean village, and a sun-drenched marina packed with boats bobbing gently in the water. Real estate agent Robin Speronis says three years ago, people lined up to buy property here.
Ms. ROBIN SPERONIS (Real Estate Agent, Florida): It was very exciting. In the second high rise that went up, all the units were sold within hours. It was a lottery. They were almost lined up overnight to get their lottery tickets in order to - the opportunity to purchase a condo.
ZARROLI: If you were lucky enough to own a home in Cape Harbour, like Speronis and her husband, people were offering tow or three times what you paid for it.
Ms. SPERONIS: In 2005, we saw what was going on. We sold it. We made over $300,000.
ZARROLI: How could you know what was going on in 2005?
Ms. SPERONIS: Because we went through it in Massachusetts in the late '80s, early '90s. So when they offered about $600,000 for my property that I paid 260 for in 2000, I'm like, sure. You can have it.
(Soundbite of laughter)
ZARROLI: The couple traveled for a few years. Then they returned to Cape Harbour and bought another place. Only by then the boom was over.
Ms. SPERONIS: You've got your laundry room over here, dining room, living room, kitchen.
ZARROLI: Today, Speronis takes me through an empty condo next door to her own. The owner couldn't sell it, and now the bank is seizing it. Of the 24 units in this area, Speronis counts at least four that are in foreclosure or heading there. Another has a lien for nonpayment of condo fees, and the owners of yet another are in bankruptcy.
What's happened here has happened all over Lee County. In 2005, almost 30,000 new homes were built here, twice as many as the population growth warranted. Today, there are 19,000 unsold homes - six times as many as two years ago.
Professor SHELTON WEEKS (Real Estate, Florida Gulf Coast University): It was a classic case of a real estate bubble, where the market builds and builds and builds until the point that it's overbuilt, and then it collapses.
ZARROLI: Shelton Weeks, professor of real estate at Florida Gulf Coast University, says much of the real estate fervor in Lee County was driven by speculators. He says in some condo towers, as many as three-quarters of the units were bought by investors. Weeks says he even had students who were buying and flipping houses. When the boom ended, so did their real estate careers.
Prof. WEEKS: Unfortunately, most of those folks ran into some significant difficulty about 12 to 18 months after that peak.
ZARROLI: They're people like 47-year-old Marcus Netto. Today, he's driving me around Fort Myers to see the remnants of his real estate empire. Three years ago, he moved here and bought a townhouse. He also bought a condo as an investment and a timeshare in Orlando. Then Netto's wife left him, and his mortgage rate readjusted upward. He now has to work two jobs to pay all the mortgages and taxes he owes.
Mr. MARCUS NETTO: I got almost $4,000 every month. That's a lot of money for me. I don't make that.
ZARROLI: But he also can't sell any of his properties. They're not worth what he owes. So Netto is trying to arrange short sales, basically a way of getting the bank to absorb the losses on his properties.
Real estate agent Robin Speronis says a lot of people in Lee County are looking for ways to bail out of their mortgages. Speronis says prices have come down so much that some people are even choosing to abandon their properties because they can get a better deal somewhere else in the area.
Ms. SPERONIS: I talk to buyers every day that are paying their mortgage, that can afford their mortgage, but are not going to pay it anymore. They're going to buy a house, either a foreclosure or something that's really low in price, and once they get the loan for that, they're going to stop paying on the other property.
ZARROLI: The result, she believes, is going to be more and more foreclosures coming on the market. The glut of bank-owned properties is beginning to draw bargain-hunters. That, combined with the fact that few new homes are being built, means the huge inventory of unsold homes in Lee County may be starting to shrink. But Fishkind and Associates, a consulting firm, says prices probably haven't hit bottom yet.
Shelton Weeks says the backlog of unsold homes is affecting market psychology.
Prof. WEEKS: We have a lot of folks who are, I think, are here and interested in buying that would take some of this inventory off the market, but nobody wants to be that first mover. They would all like to wait until they're sure we're at the bottom.
ZARROLI: And the problem's being aggravated by the economic downturn. Real estate is a major industry in Lee County, and with construction at a halt, unemployment is 6 and a half percent, well above the Florida average. So many construction workers are leaving, which means fewer buyers and more abandoned homes.
With a flood of baby boomers heading toward retirement, Lee County will inevitably recover from the real estate crash. But with so many homes on the market, that probably won't happen anytime soon.
Jim Zarroli, NPR News.
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