"Reviving the Economy: Real Estate"-Rising From The Ruins
Monday, April 06, 2009SUSIE GHARIB: Uncle Sam is cracking down on mortgage fraud and foreclosure rescue scams. The Treasury and Justice Departments are working with other Federal and state agencies to find and prosecute criminals who rip off homeowners trying to refinance mortgages. The FBI is already investigating 2,400 mortgage fraud cases -- a 400 percent increase over five years ago. Today, Treasury Secretary Timothy Geithner cautioned Americans to beware of help that sounds too good to be true and warned scammers they'll be caught.
TIMOTHY GEITHNER, TREASURY SECRETARY: We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar. And we will aggressively pursue individuals involved in mortgage rescue scams.
GHARIB: Those frauds are rampant in the nation's foreclosure hot spots, like Southwest Florida. Last spring, in a series of reports we called "A Tale of Four Cities," we looked at slumping housing markets around the nation. This week, we're revisiting those same four cities to see how they're faring now. In "Reviving the Economy: Real Estate," Jeff Yastine returns to Cape Coral, Florida, where a decimated residential market is showing new signs of life.
JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Early last year, this community of 165,000 was the nation's foreclosure capital. Even now, distressed properties are easy to spot -- overgrown with vegetation, children's toys tossed aside, a driveway covered by weeds. But those things don't tell the story now. The story now is that buyers are back. People like Mike O'Connor, a retired fireman from upstate New York, are descending on this city in record numbers. So these are real bargains?
MIKE O'CONNOR, HOME BUYER: I think so. I mean if you can't find something here, you're out of luck anywhere. Because they are, I mean you're looking at houses, $64, $65, $66.
YASTINE: Thousand dollars?
O'CONNOR Right, even the high-50's, three bedroom, two bath home, two car garage, nice size lot. How could you go wrong?
YASTINE: Many people seem to agree. January 2008 marked a low point in sales of existing homes in the region and sales rebounded through the second half of last year. The city's huge inventory of unsold homes is being whittled down. A year ago, nearly 5,000 homes were for sale. Today, that number stands at about 3,200. Last year, realtor Annette Barbaccia felt the city's housing market might be stabilizing. Twelve months later, her prediction came true.
ANNETTE BARBACCIA, REALTOR, COLDWELL BANKER COMMERCIAL: I think people are feeling the change. I think with respect to the market, there's not much lower that we're going to go and I think we're there already frankly.
YASTINE: Of course, the reason why home sales are up so much around here is because the prices have been marked down by as much as 50 percent or more just in the past 12 months. Banks, it seems, have decided to move all those foreclosed assets off their books and the homes are being priced accordingly. Since January 2008, median home prices for the region fell from $210,000 to $93,250 -- a 56 percent decline. When we interviewed veteran broker Jeff Miloff last year, one of the homes he was selling was his own -- a new, large waterfront property. It's still for sale. This time, Miloff showed us a foreclosure.
JEFF MILOFF, PARTNER, MILOFF AUBUCHON REALTY GROUP: Some of these vacant homes we've had some challenges with things being taken out of the house.
YASTINE: 2,000 square feet, three bedrooms, two baths and a pool. At the height of the market, this house could have sold for anywhere between $350,000 to $400,000. Today it's on the market for $169,000. Miloff says this kind of home -- heavily discounted and decently maintained -- is popular with buyers.
MILOFF: We're seeing people from all over. And in saying all over, we've got the European buyers, the Canadian buyers and we're also having a lot of people from the north that couldn't afford to buy back at the height of the market. Now they're coming down seeing that they can live in Florida. It's very affordable. YASTINE: Realtor Thomas Gunkelman notes another hopeful sign of a housing bottom here.
THOMAS GUNKELMAN, REALTOR, COLDWELL BANKER: At this time, we're seeing many, many cases of multiple offers, homes going for considerably higher than the list price because of the number of offers that are made on these properties and so forth.
YASTINE: Many here believe the city's real estate demise was a leading indicator for the U.S. economy. They hope its rebirth is a leading indicator as well. Jeff Yastine, NIGHTLY BUSINESS REPORT, Cape Coral, Florida.
