They'll Take Your Houses

South Florida's real estate forecast calls for pain

The money's gone. The piggy bank's closed. And Ben Bernanke's rate cuts and the politicians' politically motivated attempts to bail out banks and often-irresponsible homeowners won't work.

In fact, they might make things worse by adding to inflation, which is already the worst it's been since 1981.

"They are only prolonging the pain," McCabe says.

Jack McCabe
c. stiles
Jack McCabe

It's easy to get carried away with a doomsday scenario. And some are betting that emerging markets in China, India, and South America will save us from recession.

But the news keeps getting worse, especially in South Florida, where housing prices are going down and inflation is rising faster than anywhere else in the United States.

Just last week, the CEO of the Delray Beach-based Office Depot chain blamed the recession and the housing slump in Florida and California for a startling 85 percent drop in the company's profits.

This past Friday, the McClatchy Co., which owns the Miami Herald, wrote down a loss of nearly $1.5 billion — almost twice its market value — blaming the economic turmoil in Florida and California.

But if you really want to gauge the South Florida real estate industry, just talk to a real estate agent.

"It's not a good time," says Kimberly Spitnale, who specializes in beachfront properties. "Nothing's selling. There's not a lot of buyers out there right now. The most inquiries come from Canada and people overseas."

Ah, foreign buyers — another sign of how bad things are. They come to buy houses at a discount from previous years at a time when the dollar, which hit a new low last week and has lost 12 percent of its worth in recent months, is worth half a British pound and two-thirds of a euro and has even fallen under the Canadian loonie.

The British are definitely coming: for your houses.

"If you're a developer or a broker here in Florida, you already know that today your local market is dead," says Patrick Jeary, an Englishman who recently started a company called Property Options to connect agents to international clients. "You've got to attract the international buyer."

"There's not going to be any turn in this market in the immediate future," says Marvin Kessler, an agent in Coral Springs. "There are too many foreclosures each and every day and not enough buyers."

McCabe says all that won't change until sellers "get real" — and that means lowering prices so far it may feel like cutting to the bone.

Now, where's that bar?

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