Seeds of the Housing Market Crash: honest error, or, spontaneous creation? ... by gimleteye

On Sunday, the New York Times' Miami bureau chief Damien Cave wrote an excellent report from the foreclosure front line, in Fort Myers, "In Florida, Despair and Foreclosures". (Click 'read more' for the whole article.) The story could have been written from Florida City or Homestead. What the report doesn't stretch towards is the link to local politicians who were foster parents to the housing boom in the first place. That story can be told, in spades, throughout the ring suburbs of Miami-Dade stretching west and south where local builders conspired with local elected officials and their political appointees on boards to open developable areas in farmland and wetlands and in downtown vacant lots. Here's what St. Pete Times journalists Craig Pittman and Matthew Waite write in their just released book, Paving Paradise: "We found politicians from both parties who pay lip service to protecting the environment but really only care how quickly their contributors can get permits. And we found regulators whose work costs the taxpayers millions of dollars, yet they say their only power is to delay wetland destruction, not deny it. "It's a huge scam," one of them told us." It's a scam that lead directly to the worst economic crisis since the Depression. Voters who are angry are catching on.

Gonzolo Sanabria, who is running for Coral Gables City Commission, is an example: Sanabria has been trying to "greenwash" his record as a pro-development spokesperson on the county Planning Advisory Board. He has plenty of company among incumbents who were enthusiastic boosters of growth-at-any-cost and re-elected despite their roles. They seem impervious to criticism, like county commissioner Natacha Seijas or Joe Martinez, who is still pressing forward on stupid "shovel-ready" projects to make Parkland 2014 a new suburb.

To these politicians, the housing boom was simply an honest error, or, spontaneous creation.



February 8, 2009
In Florida, Despair and Foreclosures

By DAMIEN CAVE
LEHIGH ACRES, Fla. — Desperation has moved into this once-middle-class exurb of Fort Myers, where hammers used to pound.

Its straight-ahead stare was hidden amid the chatter of 221 families waiting for free bread at Faith Lutheran Church on a recent Friday morning; and it appeared a block away a few days earlier, as laid-off construction workers in flannel shirts scavenged through trash bags at a home foreclosure, grabbing wires, CDs, anything that could be sold.

“I knew it was coming,” said Gloria Chilson, 56, the former owner of the house, as she watched strangers pick through her belongings. “You take what you can; you try not to care.”

Welcome to the American dream in high reverse. Lehigh Acres is one of countless sprawling exurbs that the housing boom drastically reshaped, and now the bust is testing whether the experience of shared struggle will pull people together or tear them apart.

The changes in these mostly unincorporated areas outside cities like Charlotte, N.C., Las Vegas and Sacramento have been swift and vivid. Their best economic times have been immediately followed by their worst, as they have generally been the last to crest and the first to crash.

In Lehigh Acres, homes are selling at 80 percent off their peak prices. Only two years after there were more jobs than people to work them, fast-food restaurants are laying people off or closing. Crime is up, school enrollment is down, and one in four residents received food stamps in December, nearly a fourfold increase since 2006.

President Obama is scheduled to visit Fort Myers on Tuesday to promote his economic stimulus plan. But residents here tend to view it as the equivalent of an herbal remedy — it can’t hurt but it probably won’t heal. Instead, in church groups and offices, people call for “industry” and repeat one telling question: “What do we want to be when we grow up?”

“That’s one of the things we struggle with: What is our identity?” said Joseph Whalen, 37, president of the Lehigh Acres Chamber of Commerce. “We don’t want to be the bedroom community of southwest Florida; we don’t want to be the foreclosure capital.”

A Legacy of the ’50s

Lehigh Acres, like much of Florida and many suburbs nationwide, was born with speculation in its DNA.

The area got its start in the 1950s when a Chicago pest control baron, Lee Ratner, and several partners bought thousands of acres of farmland and plotted about 100,000 lots. With Fort Myers, 15 miles to the west, developers left little room for schools, parks or even businesses.

What they sold was sun and quiet living.

“They used to bring 20 busloads a day,” said Bob Elliott, a former salesman for Mr. Ratner’s company who struck out on his own in 1982. “We had 300 customers, seven days a week.”

By 2000, the lots had been sold, but most stayed empty. Only about 30,000 people were living in an area roughly four times the size of Manhattan. The builders really started to arrive in 2004, setting up model homes on Lee Boulevard next to Mr. Elliott’s office with the faded wooden sign that said “$50 lots.”

Bill Spikowski, a city planning consultant in Fort Myers, said that because Lehigh Acres had so many parcels and few restrictions on what could be built, smaller companies battled for customers. From 2004 to the end of 2006, developers completed 13,183 units in Lehigh Acres — nearly doubling the total stock of 15,216 that existed in 2000, according to Lee County figures.

Residents remember the boom for its noise, with dump trucks lining the streets and power tools heard in nearly every neighborhood. Housing prices doubled, then tripled, and jobs were plentiful, nearly all of them tied to real estate.

Signs of trouble were ignored. “Sometimes houses would sell three or four times in a few months, and no one would move in,” Mr. Elliott said.

Then in 2007, it all went quiet. Houses stopped selling. Foreclosures multiplied. The median home price in the Fort Myers area dropped to $215,200 in December 2007, from a peak of $322,300 in December 2005. It had fallen to $106,900 two months ago.

Work disappeared with the profits. According to the federal Bureau of Labor Statistics, Lee County lost a higher percentage of jobs (8.8 percent) from June 2007 to June 2008 than any other county in the nation. Unemployment in the county rose to 9.8 percent in November, from 3.5 percent in March 2007.

Lehigh Acres was particularly hard hit because it relied on construction. This was where the carpenters and exterminators of southwest Florida lived because it was more affordable or close to work. And by last spring, life as they knew it had come to an end.

The Downward Spiral

Trinkets for $1 were an early sign of trouble. Early last year, garage sales and estate auctions became more common in Lehigh Acres as families sold what they could to survive. No one seemed interested in buying whole houses, and foreclosures soon gave way to empty homes that became magnets for crime.

Thieves stole air conditioner parts for scrap. And on distant roads with only a few new homes and faded blue street signs from the ’50s — on Narcissus Boulevard, on Prospect Avenue — drug dealers moved in.

In 2007 and 2008, the Lee County Sheriff’s Department shut down more than 100 houses in Lehigh Acres where marijuana was being grown. In 2008, the police confiscated nearly 3,000 plants valued at nearly $7 million.

Last winter, Charlotte Rae Nicely, executive director of Lehigh Community Services, noticed something else. More people were going hungry. Demand was increasing at the food pantry she runs at a nondescript office park, with dozens of new faces appearing week after week, even as the population was declining.

Wondering what other social service agencies were experiencing, she decided to form a group that would coordinate assistance. It was the first sign that Lehigh Acres was fighting the recession in an organized way, and the group’s mission appeared in its name: Team Rescue.

The monthly meetings now include about a half-dozen churches, nonprofit groups, business owners and representatives from county government, including the sheriff’s office.

Discussion at one recent gathering centered on the host of troubles that follow unemployment — issues that until recently had rarely been seen in new American suburbs. Hunger was chief among them.

The organizations offering food in Lehigh Acres have seen demand increase by as much as 75 percent in the last year. And the people being served are no longer just the chronic poor.

The line at Faith Lutheran included a mix of ages, races and former income levels.

Luis Oquendo, 38, said he had been showing up for his weekly bread allotment since last fall, after full-time construction work disappeared.

Fred Csifortos, 62, a retiree surviving on $650 a month in disability payments, said the free food left more money for his medications.

Megan Brown, standing in line with her well-dressed daughters, Kayley, 2, and Sydney, 4, had come because she feared the worst. Her husband still had his job, she said, “but things are getting more and more tight.”

Team Rescue, of which Faith Lutheran is a member, considers itself successful, not just because it has helped more families but also because organizers believe that the links they are forming will be the foundation of a tighter community.

Ms. Nicely said she was especially encouraged by the Sheriff’s Department’s new “weed and seed” program, intended to revive Lehigh’s most troubled neighborhoods by involving residents in community policing and cleanup.

And home sales in Lee County are picking up, running roughly even with foreclosures.

“Six months ago, you might get one out of 20 houses with a multiple offer,” said Kevin Williamson, a real estate agent who has lived in Lehigh Acres for 22 years. “A couple of weeks ago, I had one with 13 offers.”

But no one here would describe Lehigh Acres as out of the woods. Real estate agents said the homes that are selling here typically go for only about $45,000, a third of what they cost to build. They predict that foreclosures will continue to keep prices low for two more years.

Job growth is also still nonexistent. Randy Burns, 50, the gregarious owner of Lehigh Discount Furniture, says he now receives 15 to 20 calls a week from people asking him to buy their furniture or help them move out of town — and he said he planned to leave, too.

“Until there’s jobs and foreclosures stop,” he said, “nothing’s going to change.”

The Latest Battle

Creating a community in a deepening recession, many here now say, feels harder than dealing with a Category 5 hurricane. Panic is a powerful headwind.

Voters defeated a proposal last year to incorporate Lehigh Acres, partly because residents feared higher taxes. And Team Rescue, for all its strength as a unified front, is still trying to figure out how to curb the spread of desperation.

Most recently the group has been struggling with a growing wave of families that either visit multiple food pantries using aliases or return the food to supermarkets for money or other items.

Ms. Nicely, at Lehigh Community Services, said that in November she started using a magic marker to blacken UPC symbols on cans so grocery stores would not accept them as returns.

“We even had to do that on the toys for Christmas,” Ms. Nicely said. Without such limits, she said, the neediest families might not be served.

Still, she often feels torn, saying, “I can’t be sure I wouldn’t do the same thing if I was a single parent and my kids were hungry.”

“The needs are so strong now,” she added, noting that there were more canned peas than peanut butter on her shelves because of growing demand. “They’ve never been this big before.”

A similar struggle between cohesion and chaos was also evident at a recent evangelical men’s meeting, where 8 of the 15 members said they had been laid off in the last year. Even as the group had helped some of the men cope, others said their families had been broken up by the stress.

And then there is Ms. Chilson. She lost her house partly because of the boom (if not for easy credit, she might not have refinanced her mortgage a few years ago), the bust (which led to her husband being laid off from his pest control job) and overspending (which led to more than $20,000 in credit card debt).

She and her husband had lived in their simple green ranch house for 18 years, and the night they were kicked out, they stayed across the street with an elderly man whom Ms. Chilson had often helped with his medication.

Ms. Chilson put her couch in an old friend’s house, her frozen steaks in another. And as she scrambled to find work and a place to rent, she decided to thank those she could.

At one point, she tried to vacuum a neighbor’s house as an act of appreciation.

But the vacuum stayed quiet. Ms. Chilson discovered that the electricity had been turned off because the bill had not been paid. Any day now, she said, her neighbor will be leaving Lehigh Acres with all the others.


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