A Florida Housing Development Stalls, and the Cows Move In

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cows FloridaJerilee Wei never expected to be living next to a cow pasture when she bought her home in Lakeland, Fla., in 2007. In her upscale community, newly constructed houses were selling for between $300,000 and $425,000. Then one morning she woke up and found some cattle had moved in.

It turns out that the developer had changed the legal status of the land, taking advantage of a "greenbelt classification" law that lowers taxes for farmers. The land once set aside for lakefront homes was now a pasture.

The developer had planned to build 600 homes but only 25 have been completed, and half of those are still empty. The pool and community center were built as planned, but not the tennis courts. Wei wonders how the few homeowners who are left will be able to pay for the upkeep of the community. The builder has pulled out his crews, and real estate agents have vanished -- and what was expected to be a gated paradise is becoming a ghost town with cattle for neighbors.

Fountains and Barbed Wire

The residents were given no warning about the change in plans. "We all stared in disbelief as the fencing went up. There was great speculation as to what was going on. Barbed wire and split post didn't exactly fit with the community's Italian resort theme," Wei wrote in a blog post about her experience. Then the cows were moved in overnight.

Before the cows arrived, the neighbors enjoyed a community with the "serenity of fountains and statues, cement benches overflowing with fragrant flowers," according to Wei. The homeowners thought they were buying into a wildlife preserve, with 60% of the land set aside to be preserved for conservation and 40% for homes -- but the wildlife they expected to see included sand hill cranes, wild boars, coyotes, foxes, eagles and alligators.

Florida ghost townsIn Florida, developers have saved hundreds of thousands of dollars in property taxes by having their planned developments re-designated as agricultural land. Today, these unfinished projects in central Florida's Polk County sit on land valued for tax purposes at $128,032. Without the greenbelt classification, the developers would be paying taxes on property worth $8.4 million. Those homeowners who bought before the crash are paying higher taxes on single homes than the developer's are paying on the undeveloped land they still hold in the developments. The developers can re-designate the land for housing whenever they want, so when they are ready, they can start building again. But until then, the homeowners are left in sparsely populated communities with property they can't sell.

What Comes Next?

Wei bought her house through a private real estate deal, so she didn't have a mortgage directly with the bank. After she was living the home it for two and a half years, she learned that the person who still had the mortgage had stopped paying on it. In the middle of 2009, she abandoned the property and bought an older house in historic Lakeland. She assumes that the development property has since been foreclosed upon. Wei lost $50,000, but she's thankful she didn't have the mortgage on the property and was able to get out quickly, and stop the financial bleeding without killing her credit score. Many others in the Florida ghost towns are not so lucky. They're stuck with underwater homes, plus the upkeep of expensive amenities and few people to pay for them.

When she's visited the property since moving out, she says she experienced a "frontier-like silence, reminding you of what it must have been like after a gold rush boom, as towns emptied out and people moved on to the next paradise."

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Ghost towns like the one Wei describes dot the Florida landscape. South Florida has been the hardest hit: Most of the homes built in 2006 are selling for half of their original price, if they can be sold at all. RiverTown in St. Johns County was started with a $13.9 million improvement bond, but today sits with finished streets and only a few homes.

Amazingly, those builders that still survive are starting to buy up failed developments with plans to resume construction. Avatar and Toll Brothers are two of the most active in planning to restart Florida development. I live in an Avatar active-adult community in central Florida where building has started again, though there are cows nearby (see the photo above). Perhaps someday other ghost towns may become living communities once again.

Lita Epstein has written more than 25 books including The 250 Questions Everyone Should Ask About Buying Foreclosures and The Complete Idiot's Guide to Personal Bankruptcy.
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