Cape Coral Florida: From Boom to Bust

Tuesday
AS I drive up to the dusty fairgrounds of the German-American Social Club of Cape Coral, Florida, I see an abandoned white house with peeling paint and boarded-up windows across the street. Spray painted in large, black letters across the front of the home is the word "BUST". You won't find many homes that look quite like that in Cape Coral, but these days, "BUST" is hardly a unique condition. It's become so commonplace, in fact, that if every delinquent homeowner had a vandal's flair for the dramatic, defaced houses would be everywhere: one in every 71 houses here currently has a foreclosure filing.

Instead, wiped-out homeowners merely strip their properties for everything they can carry off--air conditioning units, appliances, light fixtures. Homes sit empty with wires dangling out of their stucco exteriors where sconces should be. Banks that own foreclosed properties might try to keep the weeds down, in hopes of attracting buyers. Might. Plenty of empty houses have front yards full of high grass, obscuring realtors' signs that beg passers-by to make an offer. This is ground zero in America's housing crisis.

Developers began building on the swampland of Cape Coral in 1958, erecting homes along a network of canals constructed to accommodate residents' speed boats. "America's Venice", some optimistically called it. Right along the warm waters of the Gulf of Mexico, some people retired there, while others merely bought vacation homes.

Around 2005, home purchases and home building began to spike. Home construction outpaced the city's ability to provide water and sewer services to new neighbourhoods. Speculators--many small-time investors looking to boost their retirement savings--bought up plots of land. Cape Coral was a boom town, rated one of the best performing cities in America. Contractors, financiers and everyday residents could buy big homes, cars and boats on credit.