Entrepreneurs adapted. Horizon Realty, with offices throughout Southwest Florida, trained several hundred agents in the fine art of the short sale—finding distressed homeowners and negotiating a lower payoff with lenders to allow a quick, commissionable sale. Software developer David Moskowitz started Domuswap.com to facilitate property swaps for the Sarasota, Manatee and Charlotte markets.

MORTGAGE MANIA

You didn’t have to listen hard to hear the sounds of agony as mortgages reset. While inventories built up and prices went down, many homeowners found themselves with mortgages that had started to “adjust” to levels they couldn’t afford.

Many who bought at the top of the market in 2004 and 2005 discovered they owned a home worth less than they’d paid for and were unable to refinance or sell.

Some people walked away from their homes; others waited for the painful foreclosure process to begin. Desperate hand-made “must sell” signs started appearing on roadsides. Last summer, Florida’s foreclosure rate hit No. 2 in the nation, with Sarasota at 11 and Bradenton at 17 in the state; Sarasota had one foreclosure for every 258 homes and Manatee one for every 284.

Coast Financial Holdings was the first local major lender casualty. Problem loans and questionable practices by its former owners caused the bank to careen towards failure until it was rescued by a $22.1 million purchase by First Banks Inc. (which was pending at press time).

Coast was just the beginning of a nationwide meltdown in the subprime market, with big national companies such as First Magnus and American Home Mortgage closing offices and leaving thousands of workers without jobs.

As business dwindled for the construction and real estate industries, Southwest Florida’s low unemployment rate climbed to 4.5 percent—a tick below the national average. All sorts of businesses that depend on the housing industry suffered, too. Furniture retailers—the second canary in the mine—had 30 percent fewer sales in 2007, according to the Florida Department of Revenue.

TAX TURMOIL

Charlie Crist’s election to the governor’s office last year wasn’t a surprise, but his attack on the insurance industry caught both Democrats and Republicans off guard. The solution lawmakers came up with was to put the state in the reinsurance business. Hopes were high that insurance companies would pass double-digit savings on to businesses and homeowners. Much to voters’ discontent, that never materialized; ditto with tax reform.

Almost all year, state legislators scrambled to overhaul our property tax system, with both the House and the Senate firing off a series of compromise plans, but there was still no solution or certainty that lawmakers would be able to get a constitutional amendment on the Jan. 26 ballot to change the way property taxes are levied.

In the meantime, state-mandated cuts in the tax rate sent politicians to the cutting board. Both Sarasota and Manatee cut library and park hours and trimmed hundreds of jobs. The city of Sarasota hit the override button to get around mandated cuts, leading the Sarasota Landlords’ Association to seek a recall of all the city commissioners.

Everyone was expecting property taxes to go down, but then came the property tax notices in August. Because the law requires values to be computed based on the previous year’s comparable sales, assessed values went up by about 10 percent, enough to wipe out any tax rate cuts. A Sarasota Herald-Tribune study showed 89 percent of Sarasota’s commercial property owners and 75 percent of Manatee’s had higher assessments than last year.

COMMERCIAL SHINES

Commercial real estate was the bright spot in the market, with Westfield Sarasota Square finishing up a massive expansion that included a 12-screen theater and 20 new retailers, and Benderson Development snagging both Nordstrom and Neiman Marcus for its upcoming University Town Center at I-75 and University Parkway.

New business parks, such as the 200-acre Creekwood East Corporate Park in Lakewood Ranch and a handful of new retail-office projects in Venice, kept commercial builders active and brought over one million square feet of office space to the area.

Some residential builders, such as Bruce Williams Homes and John Cannon Homes, turned to commercial construction to pick up the slack left by the residential downturn.

HOTELS ON THE HORIZON

2007 was the year for hotels, on paper at least, after the region lost thousands of hotel rooms to condo development in the first part of the decade because of the real estate boom. About a dozen marquee mixed-use condo projects were scrapped, and some morphed from condos to hotel rooms.

In Sarasota, the $1 billion Proscenium mixed-use project calls for a Waldorf-Astoria hotel and an 800-seat theater owned by Broadway’s storied Nederlander family. Several blocks away on Main Street and Orange Avenue, Benderson Development is planning a 16-story hotel next to its Bank of America building.