Here's looking at you, Epicenter

The Financial Times pinpoints the center of the worldwide housing bubble, and finds, mirabile dictu, it can be pinpointed in Sarasota:

'Canary in the cage' tells of housing woes

By Eoin Callan in Sarasota County, Florida

Published: August 10 2007 03:00 | Last updated: August 10 2007 03:00

The seizure that gripped European financial markets yesterday can be partly traced to an unlikely place. Like the proverbial butterfly that flaps its wings and sets off a tidal wave on the other side of the world, Sarasota, Florida is at the centre of the US housing bust that sent shockwaves through global markets.

Mr. Callan goes on to make clear that Sarasota is by no means atypical of the 16-year threshing turbine known as Florida real estate:

The Sarasota district has experienced the biggest drop in house prices in the country, with foreclosures spiking after a drop of almost 15 per cent in the year to March.

Florida is the "canary in the cage", according to Jan Hatzius, chief economist at Goldman Sachs.

The precedent has alarmed Wall Street economists tracking the worst US housing slump in 16 years, as price falls in Sarasota have spread across the state and threaten to drag Florida into recession.

The Sarasota Herald-Tribune hastily rushes to correct the FT:

The Financial Times was wrong to single out Sarasota as the epicenter of the global financial crisis . . . said Jack McCabe, a Deerfield Beach-based real estate analyst.

"Naples, Fort Myers, the Cape Coral market has experienced the largest price drop in the U.S.,"

before acknowledging that it's a minor blemish in a bang-on portrait of a market:

"Florida is where the boom started and ended, and where the bust started," McCabe said. "Previous boom-and-bust cycles have started in California. This time, Florida is the state that experienced the height of speculative activity that drove the boom."

There were obviously other areas of the country that also experienced high levels of speculation -- Southern California, Phoenix, Las Vegas, Denver, Washington, D.C. -- but Florida was undoubtedly the epicenter, McCabe maintains.

After some lipflapping from experts, the FT finds the standard Florida apologist for shite business sighting the mandatory lining of silver:

But Joe Hembree, president of the Sarasota Realtors Association, says the local market will recover as flippers cut their losses. "There are great bargains to be had throughout the community as asking prices have dropped," he says.

And is soon outdone by the SH-T:

Kerry Kirschner, executive director of the Argus Foundation, agreed.

"I think this is positive for Sarasota," Kirschner said. "This will impress on people that they ought to look in Sarasota if they want waterfront property."

Lenders to your posts: a whole new round of sub-prime lending awaits.