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Real Estate in Cape Coral, Fla., Is Far From a Recovery
Richard Perry/The New York Times
More than a quarter of single-family homes in the city have been touched by foreclosure in the bust.
By PETER S. GOODMAN
Published: January 2, 2010
CAPE CORAL, Fla.
On his foreclosure tour, Marc Joseph tells customers, “You cannot purchase the bricks and mortar, and build a house for what they're selling for.”
FELLOW adventurers, refugees from winter and armchair archaeologists, we are here on this shiny green tour bus to embark on a safari of sorts. We’ll be exploring the local habitat, as upended and reconfigured by an epochal real estate fiasco.
Our guide, Marc Joseph, stalks wildlife of the white-elephant variety. A real estate agent, he specializes in houses that proved financially disastrous for someone — the banker, the homeowner, the American taxpayer, often all three. Mr. Joseph’s bus is emblazoned with red letters spelling the name of this thrill ride: ForeclosureToursRUs.com.
As we navigate this speculator’s paradise turned financial wasteland, Mr. Joseph stands at the front of the bus in a green polo shirt, highlighting specimens like this one: a white stucco house fronted by palm trees and topped by a Spanish tile roof on a canal emptying into the Gulf of Mexico. It last sold in 2005 for $850,000. Yours today for $273,000.
“How much cheaper does it have to go before you say, ‘Well, that’s just craziness,’ ” Mr. Joseph beseeches as our tour group — mostly retirees from up North, basking in Bermuda shorts on another December day stolen from winter — examines the swimming pool and the Jacuzzi. “I’m telling you now, your opportunity is banging at your door.”
Yes, it has come to this in Cape Coral, a reluctant symbol for the excesses of the great American real estate bubble: foreclosed homes served up as tourist attraction. The struggles and pain that produced this ecosystem are neatly masked by the newly installed granite countertops, pristine carpets and fresh coats of paint that now ornament many properties on the tour.
I am on the bus because, two years earlier, I spent a week here looking at the myriad ways in which plunging home prices were undermining the American dream. Cape Coral and the Fort Myers metropolitan area were confronting an especially potent cauldron of troubles. Unemployment was soaring, and tax revenue was plunging, forcing cuts in government services and intensifying anxiety.
Now I am back to see what has happened.
The dominant pursuit of the moment here is cleaning up The Mess left behind by the era of easy money. The Mess is found in the glut of vacant commercial spaces; in the local unemployment rate, now pushing 14 percent; and in the discarded furniture at curbside and the overgrown front lawns left by some of those relinquishing their homes to foreclosure.
“We’ve been at the epicenter of this,” says Frank Cassidy, a retired Los Angeles police officer who heads Cape Coral’s code enforcement division, which carts away much of the detritus. “We’re the front line on blight.”
He lays out a satellite map showing the city of Cape Coral, a thumb-shape expanse jutting into the gulf. It shows 64,571 single-family homes. Each one touched by foreclosure over the last three years is marked red, as if the city were stricken with a rash: 18,575 red dots pockmark the map.
Kristy Clifton — at 30, the youngest member of the code enforcement team — patrols northwestern Cape Coral in her white Ford Taurus, summoning colleagues to help with the latest clean-out.
This is not work for the squeamish. Some people depart in a rage, leaving graffiti on living room walls (profane suggestions about how bankers might rearrange their anatomy), mounds of trash, dirty diapers, even piles of human excrement.
“It’s pretty gross,” says Ms. Clifton.
As she gathers the artifacts of lives gone wrong and deposits them into Dumpsters, she wonders what happened. “People can just up and leave, and it seems like they leave their whole lives behind,” she says. “Army medals. Photo albums. Framed photos of children. Cribs. Toys. I don’t know if they don’t have anywhere to go or anywhere to put this stuff. But you’d think that pictures of your kids you’d take.”
THE MESS is the product of The Story, the fable that waterfront living beyond winter’s reach exerts such a powerful pull that it justifies almost any price for housing. The Story propelled the orgy of borrowing, investing and flipping that dominated life here and in other places where January doesn’t include a snow blower.
The Story lost its magic amid the realization that speculators had simply been selling to other speculators, making the real estate market look like a Ponzi scheme. The ensuing crash was breathtaking. By the winter of 2007, median housing prices in Cape Coral and the rest of Lee County had fallen to about $215,000, down from a high of $278,000 in 2005. By October 2009, they had fallen to near $92,000.
Somewhere on that long, steep downhill path, what was once portrayed here as a momentary if wrenching setback seeped into the community’s bones, embedding lowered expectations and fear.
The first time I visited in 2007, James W. Browder, the Lee County schools superintendent, had recently scrapped plans to construct seven new schools. When I visited last month, he detailed how one-fourth of his elementary schools were now sending home weekly backpacks of food with students.
“One elementary school principal noticed parents going into schools with kids in the morning and sitting down in the cafeteria with them,” Mr. Browder said. “Then they noticed parents eating breakfast off kids’ plates. And then they noticed parents taking scraps home.”
In Texas, the all-consuming gauge of prosperity is the price of a barrel of oil. Here, it was once the value of a developable parcel of land. Today, it is the volume of foreclosures.
At the end of 2007, the pace was already grim here, with foreclosures running at 1,100 a month, a more than fivefold increase from early that year, according to RealtyTrac, a real estate research firm. By late 2008, the pace had quickened again, to about 2,000 a month.
By the fall of 2009, foreclosures had fallen to about 1,400 a month, prompting hopes that the worst was over. But real estate agents and mortgage brokers wary of optimism are focusing on a new term that has entered the housing lexicon: ghost inventory. Banks appear to be sitting on thousands of homes caught in limbo, neither foreclosing nor receiving any payments.
“We’re not in a recession,” says Bobby Mahan, an amiable broker here, describing conditions in the area. “We’re in a depression.”
Two years ago, Mr. Mahan’s office, Selling Paradise, displayed a sign that seemed unusual at the time. It invited customers to come in for a free list of available foreclosed properties. Now, nearly every surviving real estate agent seeks business with such signs.
Out in Lehigh Acres, a sprawling empire of cookie-cutter ranch houses, agents once worked in a strip of model properties, waiting in pristinely carpeted living rooms with plates of cookies for prospective buyers. Today, many of the models have themselves succumbed to foreclosure. Those still going are draped in banners offering foreclosure expertise.
Prices are now so low that inventory is moving. From the beginning of last year through October, the Fort Myers metropolitan area had already had 14,000 sales of single-family homes — more than in all of 2007 and 2008 combined. Roughly three-fourths of the deals were foreclosed homes and short sales, in which property sells for less than the bank is owed.
Yet about three-fourths of the buyers have been paying cash, an apparent indication that most are investors, not ordinary homeowners.
“That doesn’t give me a lot of confidence,” says Cape Coral’s newly elected mayor, John Sullivan. “Where are they going to sell these properties? The party’s over.”
For a select few, however, the party rages on.
Allen Olofson-Ring, a clean-cut, sandy-haired, Harvard-educated real estate agent from Boston, is enjoying his best year since entering the local real estate business seven years ago. He has parlayed longstanding relationships with mortgage companies — Chase, in particular — into the acquisition of exclusive rights to selling their foreclosed properties.
Back in 2006, the end of the bubble, Mr. Olofson-Ring sold about 27 properties for a total value of roughly $14 million. By December, he was on pace to complete 800 deals valued at $41 million. “These are the greatest times,” he says.
When he gets new listings, he visits the properties to see whether they are occupied. To get inside, he uses the tools that fill the trunk of his Nissan Altima: a power drill, specialty keys, flathead screwdrivers.
“It can get wild,” he says. “We’re about to break in the house — no, rephrase that — gain entry, and some guy comes out half-naked and says, ‘What you doing in my house, boy?’ ”
When he encounters residents, he offers them cash to vacate, from $500 to $3,000, while threatening eviction if they stay. Then, he puts the houses on the market, priced to sell.
“I get numb to it, I guess, because I’ve done so many,” he says. “It’s a little surreal. You feel bad. It gnaws at you. At the same time, what are you going to do? Life goes on.”
What are you going to do? This question has insinuated itself seemingly everywhere here, like a soundtrack stuck on an infinite loop.
Dave Robison has lived in northwest Cape Coral since 2002, when he moved down from Cincinnati, paying $160,000 for his house. He figured that he would stay until his house fetched enough to allow him to retire full time in Mexico. Now, he bitterly regrets that he didn’t cash in back in 2005, when the house was worth perhaps $400,000.
He walks his two greyhounds past a tan stucco house on the corner, where the grass on the lawn reaches three feet high, possibly sheltering possums and snakes. An official abatement notice is tacked to the front door, ordering the owner — someone in Reseda, Calif. — to cut the grass. A house across the street is similarly forlorn.
“You think you’ve got something and you don’t,” says Mr. Robison. “There’s nothing you can do but just ride it out.”
Farther down the block, another house sits cloaked in overgrown shrubbery with yet another abatement notice tacked to the door. Two years ago at this very house, I met the two women who were then living there — Elaine and Charlene Pellegrino — a mother and daughter. They were sifting through the belongings of Elaine’s husband, Charlene’s father, who had recently died, leaving them with two troubled businesses to run and debts they couldn’t manage.
Elaine Pellegrino, then 53, was disabled, living on Social Security. Her daughter was jobless. They had resigned themselves to losing their home and had stopped making the mortgage payments. Yet they were cognizant that they could stay for many months as their case worked its way through a local court system already overwhelmed by foreclosures.
Now their days there have ended. Tax documents sit in a rain-matted stack in front of the garage. A “for sale” sign lies warped and discarded in the weeds.
Inside the house, bills are scattered across the floor with playing cards, a March 2008 TV Guide and the innards of a VCR. A plastic trash bag brimmed with foreclosure documents. Behind the house, green slime chokes the swimming pool — the same green slime that now colonizes countless pools left to the elements in South Florida.
The Pellegrinos moved out in July 2008, Charlene explains. A bathroom pipe had burst, and mold had grown on the walls. She and her mother couldn’t afford repairs.
The strangest thing was how the bank implored them to stay, she says. Even after it became clear that they were not going to pay their mortgage, the bank figured that it would be better having them there to deter scavengers who would strip out the cabinets, the wiring, the toilets.
“They wanted us to stay on indefinitely,” Charlene says. “It was weird.”
When the Pellegrinos left, they found an upside to the bust: the seemingly limitless array of affordable rentals.
After walking away from their house and its $1,500 monthly mortgage payments, they rented a nearby four-bedroom home for $950 a month. Now Charlene, earning $2,400 a month as a home health worker, has designs on moving to a better place still, for $700 a month.
KEVIN JARRETT is also on the move, adding his own house to the growing stock of local ghost inventory.
Circumstances were already dire for Mr. Jarrett, a real estate agent, when I met him two years ago. He and his wife had arrived from Illinois in the mid-1990s, aggressively borrowing as they snared four properties. The peak came in the summer of 2007, when they paid $730,000 for a waterfront home in Cape Coral.
By the end of that year, Mr. Jarrett hadn’t closed a deal in months. He was falling behind on the mortgages for all four of his properties and had dropped his health insurance.
“Here we are, two years later, and there’s no end to this,” he says, leaning into a booth at the University Grill, a steak-and-lobster place he used to enjoy regularly during the boom years. “I make a mean Hamburger Helper now.”
Deals have shrunk to almost nothing. Three of his four homes have been lost to foreclosure. He remains in the place on the water in Cape Coral, though he has not made a payment in roughly two years. “Sometimes I think they just lost my file,” he says.
The house is mostly empty, owing to impromptu yard sales he conducts to keep food on the table. The piano, the sofa, the coffee table, the dining room table and chairs: all gone. His living and dining rooms are devoid, save for one piece of art he cannot bear to surrender: a statuette of Don Quixote.
“You know, dream the impossible dream,” he says. “It’s just one of those little remnants to keep dreaming, because if you don’t dream, you don’t get anything.”
His wife left in July 2008, he says, taking their daughter back to Illinois. (“Not having the finances to sustain the lifestyle you had is very trying on a relationship,” he says.)
Last winter, a repo man came for Mr. Jarrett’s boat, a 22-foot Hurricane power cruiser. In the spring, he sold his beloved yellow 2001 Corvette convertible for $13,500, paying $5,300 for a used 2000 Cadillac.
Still boyish-looking at 50 despite his graying hair, Mr. Jarrett is starting over, moving down the coast to Marco Island, where houses sell for much more than they do here. A friend is offering a place to stay. His employer, Keller Williams, promises a desk in its local office.
He is full of gratitude, yet deeply unsettled by the reality that he is walking away from his dream home.
“You’re admitting failure,” he says. “You signed a note and now you’re not paying. As a human being, you have to process this. It’s as tough as going through a divorce. You promised to be with this woman, but in the end, it wasn’t working. Your neighbor is paying their mortgage every month. You feel that stigma that you’re a loser.”
He mows the lawn and trims the trees, in place of the landscaping service he gave up long ago. “I try to somewhat justify my existence here by knowing that the bank is not getting a distressed property,” he says.
On a recent morning, he turned the knob on his bathroom sink to wash his hands and discovered that the water had been shut off for lack of payment.
“What I’ve learned is the strength that you can reach down and get,” he says. “I’m the same guy. No matter what I had, I’m the same guy.”
THE MESS is not without its spiritual element: the cleansing power of separation from worldly possessions. Marina memberships are no longer so abundant, yet Cape Coral is enjoying a bumper harvest in these taking-stock-of-what-matters moments.
Michael Pfaff and his wife, Diane, still mourn the loss of the 40-foot catamaran they owned back when he was bringing in huge commissions as a mortgage broker. But they still enjoy the water, albeit from a motorized rowboat.
“We’ve been poor together, and we’ve been rich together,” Mr. Pfaff says. “It doesn’t matter that much to us. We prefer to be rich, though.”
Getting rich is a feat best accomplished here today by tapping into the inventory spawned by the unfortunate end to other people’s richness.
This is the sort of opportunistic thinking that prompted Mr. Joseph — our tour guide on today’s foreclosure safari — to buy a bus on Craigslist. After he bought the vehicle, which had previously been used to ferry parishioners to a Baptist church, he had it painted green, then added his new tour-company logo in red. (Another employer of the “‘R’ Us” designation, Toys ‘R’ Us, threatened legal action to force him to find another name, Mr. Joseph tells riders on his bus. He says he has agreed to change the name in the next few months.)
Tanned and sinewy with sunglasses nesting in his hair, Mr. Joseph looks and sounds like the comedian Ray Romano, minus the agita. He deals primarily in houses owned by Fannie Mae, the government-backed mortgage financier. He cleans and sometimes renovates them before putting them on the market, clearing away The Mess in the service of selling an updated version of The Story.
On a recent tour, eight potential buyers occupied the upholstered bench seats of his bus.
Norm Tardie, a semiretiree down from Vermont, is hunting for bargain investments. A retired heating and air-conditioning contractor from Massachusetts in a yellow Hawaiian shirt is looking for a possible vacation place.
Mr. Joseph indulges the classic shtick of the Florida sales pitch.
“Where we from?” he asks one couple, who conveniently hail from Illinois.
“How cold is it in Illinois today?” he asks.
Impressively cold.
“So we appreciate where we’re at today,” he says. “That’s the way we want you to feel when you walk into a house.”
These prices cannot last! This is Mr. Joseph’s essential message, one he expresses in a multitude of ways. “You cannot purchase the bricks and mortar, and build a house for what they’re selling for.”
He lavishes particular attention on Paulette O’Rourke, a tan, reddish-blond retiree from Cincinnati, whose pink nails and enthusiasm make her seem game. She just bought one house here, and she likes the thought of owning another, as an investment.
Not unimportantly, she has cash, roughly $100,000 in retirement funds from her old hospital job.
“You call up your financial guy,” Mr. Joseph is saying, adopting the tones of the liberation theologian. “You say, ‘I want to sell all my stocks and mutual funds,’ and you’re done. You call him up and say: ‘I’m taking control. I want to buy a house in Florida.’ ”
This idea is germinating as Ms. O’Rourke admires the swimming pool and the white ceramic tile at a house that sold for $350,000 three years ago and is now on the market for $164,500.
“It is that opportunity,” Mr. Joseph is saying. “It is that time.”
Richard Perry/The New York Times
More than a quarter of single-family homes in the city have been touched by foreclosure in the bust.
By PETER S. GOODMAN
Published: January 2, 2010
CAPE CORAL, Fla.
On his foreclosure tour, Marc Joseph tells customers, “You cannot purchase the bricks and mortar, and build a house for what they're selling for.”
FELLOW adventurers, refugees from winter and armchair archaeologists, we are here on this shiny green tour bus to embark on a safari of sorts. We’ll be exploring the local habitat, as upended and reconfigured by an epochal real estate fiasco.
Our guide, Marc Joseph, stalks wildlife of the white-elephant variety. A real estate agent, he specializes in houses that proved financially disastrous for someone — the banker, the homeowner, the American taxpayer, often all three. Mr. Joseph’s bus is emblazoned with red letters spelling the name of this thrill ride: ForeclosureToursRUs.com.
As we navigate this speculator’s paradise turned financial wasteland, Mr. Joseph stands at the front of the bus in a green polo shirt, highlighting specimens like this one: a white stucco house fronted by palm trees and topped by a Spanish tile roof on a canal emptying into the Gulf of Mexico. It last sold in 2005 for $850,000. Yours today for $273,000.
“How much cheaper does it have to go before you say, ‘Well, that’s just craziness,’ ” Mr. Joseph beseeches as our tour group — mostly retirees from up North, basking in Bermuda shorts on another December day stolen from winter — examines the swimming pool and the Jacuzzi. “I’m telling you now, your opportunity is banging at your door.”
Yes, it has come to this in Cape Coral, a reluctant symbol for the excesses of the great American real estate bubble: foreclosed homes served up as tourist attraction. The struggles and pain that produced this ecosystem are neatly masked by the newly installed granite countertops, pristine carpets and fresh coats of paint that now ornament many properties on the tour.
I am on the bus because, two years earlier, I spent a week here looking at the myriad ways in which plunging home prices were undermining the American dream. Cape Coral and the Fort Myers metropolitan area were confronting an especially potent cauldron of troubles. Unemployment was soaring, and tax revenue was plunging, forcing cuts in government services and intensifying anxiety.
Now I am back to see what has happened.
The dominant pursuit of the moment here is cleaning up The Mess left behind by the era of easy money. The Mess is found in the glut of vacant commercial spaces; in the local unemployment rate, now pushing 14 percent; and in the discarded furniture at curbside and the overgrown front lawns left by some of those relinquishing their homes to foreclosure.
“We’ve been at the epicenter of this,” says Frank Cassidy, a retired Los Angeles police officer who heads Cape Coral’s code enforcement division, which carts away much of the detritus. “We’re the front line on blight.”
He lays out a satellite map showing the city of Cape Coral, a thumb-shape expanse jutting into the gulf. It shows 64,571 single-family homes. Each one touched by foreclosure over the last three years is marked red, as if the city were stricken with a rash: 18,575 red dots pockmark the map.
Kristy Clifton — at 30, the youngest member of the code enforcement team — patrols northwestern Cape Coral in her white Ford Taurus, summoning colleagues to help with the latest clean-out.
This is not work for the squeamish. Some people depart in a rage, leaving graffiti on living room walls (profane suggestions about how bankers might rearrange their anatomy), mounds of trash, dirty diapers, even piles of human excrement.
“It’s pretty gross,” says Ms. Clifton.
As she gathers the artifacts of lives gone wrong and deposits them into Dumpsters, she wonders what happened. “People can just up and leave, and it seems like they leave their whole lives behind,” she says. “Army medals. Photo albums. Framed photos of children. Cribs. Toys. I don’t know if they don’t have anywhere to go or anywhere to put this stuff. But you’d think that pictures of your kids you’d take.”
THE MESS is the product of The Story, the fable that waterfront living beyond winter’s reach exerts such a powerful pull that it justifies almost any price for housing. The Story propelled the orgy of borrowing, investing and flipping that dominated life here and in other places where January doesn’t include a snow blower.
The Story lost its magic amid the realization that speculators had simply been selling to other speculators, making the real estate market look like a Ponzi scheme. The ensuing crash was breathtaking. By the winter of 2007, median housing prices in Cape Coral and the rest of Lee County had fallen to about $215,000, down from a high of $278,000 in 2005. By October 2009, they had fallen to near $92,000.
Somewhere on that long, steep downhill path, what was once portrayed here as a momentary if wrenching setback seeped into the community’s bones, embedding lowered expectations and fear.
The first time I visited in 2007, James W. Browder, the Lee County schools superintendent, had recently scrapped plans to construct seven new schools. When I visited last month, he detailed how one-fourth of his elementary schools were now sending home weekly backpacks of food with students.
“One elementary school principal noticed parents going into schools with kids in the morning and sitting down in the cafeteria with them,” Mr. Browder said. “Then they noticed parents eating breakfast off kids’ plates. And then they noticed parents taking scraps home.”
In Texas, the all-consuming gauge of prosperity is the price of a barrel of oil. Here, it was once the value of a developable parcel of land. Today, it is the volume of foreclosures.
At the end of 2007, the pace was already grim here, with foreclosures running at 1,100 a month, a more than fivefold increase from early that year, according to RealtyTrac, a real estate research firm. By late 2008, the pace had quickened again, to about 2,000 a month.
By the fall of 2009, foreclosures had fallen to about 1,400 a month, prompting hopes that the worst was over. But real estate agents and mortgage brokers wary of optimism are focusing on a new term that has entered the housing lexicon: ghost inventory. Banks appear to be sitting on thousands of homes caught in limbo, neither foreclosing nor receiving any payments.
“We’re not in a recession,” says Bobby Mahan, an amiable broker here, describing conditions in the area. “We’re in a depression.”
Two years ago, Mr. Mahan’s office, Selling Paradise, displayed a sign that seemed unusual at the time. It invited customers to come in for a free list of available foreclosed properties. Now, nearly every surviving real estate agent seeks business with such signs.
Out in Lehigh Acres, a sprawling empire of cookie-cutter ranch houses, agents once worked in a strip of model properties, waiting in pristinely carpeted living rooms with plates of cookies for prospective buyers. Today, many of the models have themselves succumbed to foreclosure. Those still going are draped in banners offering foreclosure expertise.
Prices are now so low that inventory is moving. From the beginning of last year through October, the Fort Myers metropolitan area had already had 14,000 sales of single-family homes — more than in all of 2007 and 2008 combined. Roughly three-fourths of the deals were foreclosed homes and short sales, in which property sells for less than the bank is owed.
Yet about three-fourths of the buyers have been paying cash, an apparent indication that most are investors, not ordinary homeowners.
“That doesn’t give me a lot of confidence,” says Cape Coral’s newly elected mayor, John Sullivan. “Where are they going to sell these properties? The party’s over.”
For a select few, however, the party rages on.
Allen Olofson-Ring, a clean-cut, sandy-haired, Harvard-educated real estate agent from Boston, is enjoying his best year since entering the local real estate business seven years ago. He has parlayed longstanding relationships with mortgage companies — Chase, in particular — into the acquisition of exclusive rights to selling their foreclosed properties.
Back in 2006, the end of the bubble, Mr. Olofson-Ring sold about 27 properties for a total value of roughly $14 million. By December, he was on pace to complete 800 deals valued at $41 million. “These are the greatest times,” he says.
When he gets new listings, he visits the properties to see whether they are occupied. To get inside, he uses the tools that fill the trunk of his Nissan Altima: a power drill, specialty keys, flathead screwdrivers.
“It can get wild,” he says. “We’re about to break in the house — no, rephrase that — gain entry, and some guy comes out half-naked and says, ‘What you doing in my house, boy?’ ”
When he encounters residents, he offers them cash to vacate, from $500 to $3,000, while threatening eviction if they stay. Then, he puts the houses on the market, priced to sell.
“I get numb to it, I guess, because I’ve done so many,” he says. “It’s a little surreal. You feel bad. It gnaws at you. At the same time, what are you going to do? Life goes on.”
What are you going to do? This question has insinuated itself seemingly everywhere here, like a soundtrack stuck on an infinite loop.
Dave Robison has lived in northwest Cape Coral since 2002, when he moved down from Cincinnati, paying $160,000 for his house. He figured that he would stay until his house fetched enough to allow him to retire full time in Mexico. Now, he bitterly regrets that he didn’t cash in back in 2005, when the house was worth perhaps $400,000.
He walks his two greyhounds past a tan stucco house on the corner, where the grass on the lawn reaches three feet high, possibly sheltering possums and snakes. An official abatement notice is tacked to the front door, ordering the owner — someone in Reseda, Calif. — to cut the grass. A house across the street is similarly forlorn.
“You think you’ve got something and you don’t,” says Mr. Robison. “There’s nothing you can do but just ride it out.”
Farther down the block, another house sits cloaked in overgrown shrubbery with yet another abatement notice tacked to the door. Two years ago at this very house, I met the two women who were then living there — Elaine and Charlene Pellegrino — a mother and daughter. They were sifting through the belongings of Elaine’s husband, Charlene’s father, who had recently died, leaving them with two troubled businesses to run and debts they couldn’t manage.
Elaine Pellegrino, then 53, was disabled, living on Social Security. Her daughter was jobless. They had resigned themselves to losing their home and had stopped making the mortgage payments. Yet they were cognizant that they could stay for many months as their case worked its way through a local court system already overwhelmed by foreclosures.
Now their days there have ended. Tax documents sit in a rain-matted stack in front of the garage. A “for sale” sign lies warped and discarded in the weeds.
Inside the house, bills are scattered across the floor with playing cards, a March 2008 TV Guide and the innards of a VCR. A plastic trash bag brimmed with foreclosure documents. Behind the house, green slime chokes the swimming pool — the same green slime that now colonizes countless pools left to the elements in South Florida.
The Pellegrinos moved out in July 2008, Charlene explains. A bathroom pipe had burst, and mold had grown on the walls. She and her mother couldn’t afford repairs.
The strangest thing was how the bank implored them to stay, she says. Even after it became clear that they were not going to pay their mortgage, the bank figured that it would be better having them there to deter scavengers who would strip out the cabinets, the wiring, the toilets.
“They wanted us to stay on indefinitely,” Charlene says. “It was weird.”
When the Pellegrinos left, they found an upside to the bust: the seemingly limitless array of affordable rentals.
After walking away from their house and its $1,500 monthly mortgage payments, they rented a nearby four-bedroom home for $950 a month. Now Charlene, earning $2,400 a month as a home health worker, has designs on moving to a better place still, for $700 a month.
KEVIN JARRETT is also on the move, adding his own house to the growing stock of local ghost inventory.
Circumstances were already dire for Mr. Jarrett, a real estate agent, when I met him two years ago. He and his wife had arrived from Illinois in the mid-1990s, aggressively borrowing as they snared four properties. The peak came in the summer of 2007, when they paid $730,000 for a waterfront home in Cape Coral.
By the end of that year, Mr. Jarrett hadn’t closed a deal in months. He was falling behind on the mortgages for all four of his properties and had dropped his health insurance.
“Here we are, two years later, and there’s no end to this,” he says, leaning into a booth at the University Grill, a steak-and-lobster place he used to enjoy regularly during the boom years. “I make a mean Hamburger Helper now.”
Deals have shrunk to almost nothing. Three of his four homes have been lost to foreclosure. He remains in the place on the water in Cape Coral, though he has not made a payment in roughly two years. “Sometimes I think they just lost my file,” he says.
The house is mostly empty, owing to impromptu yard sales he conducts to keep food on the table. The piano, the sofa, the coffee table, the dining room table and chairs: all gone. His living and dining rooms are devoid, save for one piece of art he cannot bear to surrender: a statuette of Don Quixote.
“You know, dream the impossible dream,” he says. “It’s just one of those little remnants to keep dreaming, because if you don’t dream, you don’t get anything.”
His wife left in July 2008, he says, taking their daughter back to Illinois. (“Not having the finances to sustain the lifestyle you had is very trying on a relationship,” he says.)
Last winter, a repo man came for Mr. Jarrett’s boat, a 22-foot Hurricane power cruiser. In the spring, he sold his beloved yellow 2001 Corvette convertible for $13,500, paying $5,300 for a used 2000 Cadillac.
Still boyish-looking at 50 despite his graying hair, Mr. Jarrett is starting over, moving down the coast to Marco Island, where houses sell for much more than they do here. A friend is offering a place to stay. His employer, Keller Williams, promises a desk in its local office.
He is full of gratitude, yet deeply unsettled by the reality that he is walking away from his dream home.
“You’re admitting failure,” he says. “You signed a note and now you’re not paying. As a human being, you have to process this. It’s as tough as going through a divorce. You promised to be with this woman, but in the end, it wasn’t working. Your neighbor is paying their mortgage every month. You feel that stigma that you’re a loser.”
He mows the lawn and trims the trees, in place of the landscaping service he gave up long ago. “I try to somewhat justify my existence here by knowing that the bank is not getting a distressed property,” he says.
On a recent morning, he turned the knob on his bathroom sink to wash his hands and discovered that the water had been shut off for lack of payment.
“What I’ve learned is the strength that you can reach down and get,” he says. “I’m the same guy. No matter what I had, I’m the same guy.”
THE MESS is not without its spiritual element: the cleansing power of separation from worldly possessions. Marina memberships are no longer so abundant, yet Cape Coral is enjoying a bumper harvest in these taking-stock-of-what-matters moments.
Michael Pfaff and his wife, Diane, still mourn the loss of the 40-foot catamaran they owned back when he was bringing in huge commissions as a mortgage broker. But they still enjoy the water, albeit from a motorized rowboat.
“We’ve been poor together, and we’ve been rich together,” Mr. Pfaff says. “It doesn’t matter that much to us. We prefer to be rich, though.”
Getting rich is a feat best accomplished here today by tapping into the inventory spawned by the unfortunate end to other people’s richness.
This is the sort of opportunistic thinking that prompted Mr. Joseph — our tour guide on today’s foreclosure safari — to buy a bus on Craigslist. After he bought the vehicle, which had previously been used to ferry parishioners to a Baptist church, he had it painted green, then added his new tour-company logo in red. (Another employer of the “‘R’ Us” designation, Toys ‘R’ Us, threatened legal action to force him to find another name, Mr. Joseph tells riders on his bus. He says he has agreed to change the name in the next few months.)
Tanned and sinewy with sunglasses nesting in his hair, Mr. Joseph looks and sounds like the comedian Ray Romano, minus the agita. He deals primarily in houses owned by Fannie Mae, the government-backed mortgage financier. He cleans and sometimes renovates them before putting them on the market, clearing away The Mess in the service of selling an updated version of The Story.
On a recent tour, eight potential buyers occupied the upholstered bench seats of his bus.
Norm Tardie, a semiretiree down from Vermont, is hunting for bargain investments. A retired heating and air-conditioning contractor from Massachusetts in a yellow Hawaiian shirt is looking for a possible vacation place.
Mr. Joseph indulges the classic shtick of the Florida sales pitch.
“Where we from?” he asks one couple, who conveniently hail from Illinois.
“How cold is it in Illinois today?” he asks.
Impressively cold.
“So we appreciate where we’re at today,” he says. “That’s the way we want you to feel when you walk into a house.”
These prices cannot last! This is Mr. Joseph’s essential message, one he expresses in a multitude of ways. “You cannot purchase the bricks and mortar, and build a house for what they’re selling for.”
He lavishes particular attention on Paulette O’Rourke, a tan, reddish-blond retiree from Cincinnati, whose pink nails and enthusiasm make her seem game. She just bought one house here, and she likes the thought of owning another, as an investment.
Not unimportantly, she has cash, roughly $100,000 in retirement funds from her old hospital job.
“You call up your financial guy,” Mr. Joseph is saying, adopting the tones of the liberation theologian. “You say, ‘I want to sell all my stocks and mutual funds,’ and you’re done. You call him up and say: ‘I’m taking control. I want to buy a house in Florida.’ ”
This idea is germinating as Ms. O’Rourke admires the swimming pool and the white ceramic tile at a house that sold for $350,000 three years ago and is now on the market for $164,500.
“It is that opportunity,” Mr. Joseph is saying. “It is that time.”
Doing a brief recce on Zillow left me thinking prices are STARTING to look attractive, if it wasn't the fear of rising crime, rising taxes/fees, shrinking services, and the fear of my kids growing up with malaria, yellow/dengue fever if things got worse.
I think we might wait for Cuba to open up......they're used to living on the cheap......but I reckon Brazil is the best long term tropical bet.
. Maybe there is a correlation between those two observations.
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