Zillow talk and other false signs of a bottom

    In different times, the automatically generated email from real estate site Zillow.com that I received at 3 a.m. would have had me popping open a bottle of Dom Perignon for breakfast.  My "Zestimate," which is Zillow talk for an estimate of a home's value, indicated my Connecticut house had appreciated by a healthy 2.8%, or $17,000, in just the last 30 days.
    If only.
    Later this morning, I read that the index of pending home sales had risen 6.3% in December, and was up 1.6% in the South, which of course is this web site's area of concentration.  The pending sales report followed an earlier report that home sales had jumped 6.7% between November and December, the biggest such gain in seven years.
    On the face of it, these are positive signs for a battered market, but

they say little about the true condition of the housing market nationwide.  The superficial good news reflects the continuing spate of foreclosures and the desperation of both individual sellers and banks to offer deep discounts just to get out from under.  They are false positives, at least for now.  Once the foreclosures are flushed out of the market, we will have a purer understanding of what constitutes "good news."  Until then, some select few markets where prices have declined to near 2002 levels, or as much as 50%, might just be worth a close look and possible investment.  These include certain areas of southern California and the west coast of Florida (Naples and Ft. Myers areas), where indications are that some money is flowing back into the market now that prices have returned to Earth.  To paraphrase folk music lyrics from the ‘60s, those markets have been down so long (and far), it looks like up to them.

Part of the Florida housing market stinks, literally

    Florida homeowners can't catch a break.  Some real estate experts believe it could be as long as two decades before the Miami market, especially condos, returns to anything resembling normalcy.  That may be an overstatement, but who among us would double down on a Miami condo today, even at almost giveaway prices?  A dark mood has overtaken other markets in the Sunshine State.  I've been participating in online discussion boards dedicated to the Carolinas, and I wish I had a dime for every time a post begins with the words "I am relocating from Florida..."
    Now the Wall Street Journal, in today's op-ed column, paints a vivid disaster scenario for state residents.  All it will take for that scenario to play out would be for a Katrina-like hurricane to come ashore in the Sunshine State.  
    As we reported here, State Farm Insurance bowed out of the Florida market after the state rejected the insurer's request for a 47% rate hike.  That may seem like corporate usury, but it turns out that State Farm was losing 21 cents on every dollar of premium it charged in Florida.  Now, according to the Journal, the state has shifted the burden of insuring against catastrophic hurricane damages to the state-run Citizens Property Insurance Corp.  Citizens has about $3.4 billion in assets and a potential exposure of up to $400 billion for the worst kind of hurricane.  Should the worst happen, guess who is on the hook for paying off the losses?  In essence, the citizens of Florida are self insured...
    And then there is the lawsuit that major homebuilder Lennar has brought against drywall manufacturers in China, alleging that the gypsum in the sheetrock it has put into hundreds of its customers' homes in Florida emits a rotten odor and is also messing with the electrical coils in air conditioners.  Similar problems are alleged in Tennessee, South Carolina and Alabama as well. 

    It all makes one wonder what Florida has done to deserve this.  Come to think of it, Florida seemed just fine prior to 2000.  Could this be the curse of the hanging chad?