Anyone who thinks this recession is going to be over by year’s end just isn’t paying attention. If you think housing is about to rebound, you’re delusional. The latest casualties of the housing bubble is just now starting to rear their ugly heads. Check out these stories from Reuters:
MIAMI (Reuters) – Rust pokes through the peeling paint on the railings, pest control has been curtailed and the palm trees are no longer being fertilized at the 1940s-era Miami Modern condominium building in Miami Beach.
The condo association has been forced to cut expenses because the owners of 11 of the 28 apartments in the modest two-story building are delinquent, victims of a mammoth U.S. real estate collapse that has hit Florida especially hard.
With so many cash-strapped owners failing to pay their monthly fees for upkeep, the condo board last year had to raise $40,000 with a special levy to fill a giant hole in the $80,000 annual budget, but only managed to collect $19,000 from the owners who are still able to pay their bills.
Florida’s condominium and homeowners’ associations are facing what experts call a trickle-down disaster from the property crisis. Dozens and perhaps hundreds of condo buildings have budget shortfalls as thousands of owners, under water on their mortgages or in foreclosure, stop paying monthly fees.
“I call it a death spiral,” Miami Beach city commissioner Jerry Libbin said. “It’s a catastrophe in the making.” …
and the New York Times:
SOUTH BEND, Ind. — Mercy James thought she had lost her rental property here to foreclosure. A date for a sheriff’s sale had been set, and notices about the foreclosure process were piling up in her mailbox.
Ms. James had the tenants move out, and soon her white house at the corner of Thomas and Maple Streets fell into the hands of looters and vandals, and then, into disrepair. Dejected and broke, Ms. James said she salvaged but a lesson from her loss.
So imagine her surprise when the City of South Bend contacted her recently, demanding that she resume maintenance on the property. The sheriff’s sale had been canceled at the last minute, leaving the property title — and a world of trouble — in her name.
“I thought, ‘What kind of game is this?’ ” Ms. James, 41, said while picking at trash at the house, now so worthless the city plans to demolish it — another bill for which she will be liable.
City officials and housing advocates here and in cities as varied as Buffalo, Kansas City, Mo., and Jacksonville, Fla., say they are seeing an unsettling development: Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal — from legal fees to maintenance — exceeds the diminishing value of the real estate. …
So, on the one hand, owners suddenly finding themselves unable to pay the bills, abandon their condominiums in favor of feeding their families. On the other hand, banks refuse to take possession of houses they officially own because it’s not financially viable to do so. In both cases, the city affected is left with a run-down, unoccupied building that’s a magnet for crime, rats and other vermin.
I’d like to say “good riddance” to the condominiums, but there really isn’t a silver lining in this. Florida’s coastline is covered with these hideous, environment-destroying monstrosities, and I really doubt any of them are going to be torn down any time soon. Imagine our nation’s most beautiful coastlines dotted with thousands of derelict high-rise buildings, crumbling to ruin and empty but for the garbage and detritus of human existence, monuments to human greed and selfishness.
Now consider the other side of it, millions of foreclosed houses abandoned by owners and banks, falling to ruin and vandalism. Monuments to a failed philosophy of an “ownership society” and the lie that “real estate always goes up”.
This is the future we’ve created. Welcome to it.