Friday, July 07, 2006

'Foreclosures Are Back' In Florida

The Herald Tribune has this on Florida defaults. "After three years of happy times and quick sales, real estate foreclosure is back. The U.S. real estate market has cooled, and foreclosure rates are notching upward and are almost certain to head higher. The distress isn't limited to Joe Six-Pack. Many pros and semi-pros are starting to wish they owned fewer homes than they do, especially if they bought recently."

"In May, there were 1,441 homes listed in North Port, but only 80, or 5.5 percent, sold, says Dave Hofer, who keeps statistics on the area. In Port Charlotte things were worse: 1,543 listings and 72 sales, or 4.6 percent."

"Down in Venice, George Huhn, a commercial real estate broker with an investor following, helped a couple of banks by taking over problem loans in 2001-02. Now, banks are starting to call him again, asking him to relieve them of problem first mortgages they held onto, before they become foreclosure actions."

"Banks do it for two reasons. 'No.1, for reasons of negative publicity and image, the banks don't want to be involved in foreclosure actions,' he said. Secondly, during the boom years, some lenders all but disbanded the departments performing the difficult work of foreclosure. 'Now they are looking at some hard choices, and what they are electing to do is outsource, and that is where we come in,' Huhn said."

"Even the pros and semi-pros in the Sarasota Real Estate Investors Association are feeling some distress these days. At one recent meeting, investor Peter Magnuson acknowledged the issue in a pep talk to the 75 or so members present. 'There's a little bit of blood in the streets,' Magnuson said. 'I think that is the people who overcommitted themselves and are looking for a way to unwind what they got into.'"

"'People who bought these pre-construction deals hoping to make big money on them and now they're stuck with them and it is eating them out of house and home,' he said."

From the South Florida Business Journal. "With interest rates and insurance premiums rising sharply while housing prices level off, some local real estate industry experts expect a surge of foreclosures, perhaps beginning as soon as this summer."

"'I expect we will see minimum increases [foreclosure filings] of 25 percent year-over-year, starting the second half of this year and it would last for several years,' said Rhonda Light, who monitors foreclosure filings at courthouses in South Florida's counties."

"Daniel Herz, a Plantation-based adviser to borrowers and lenders offers an additional warning: 'Until last year, with the rising home prices, if you got in trouble you could bail out by selling your house. Now, there is a glut of homes on the market.'"

"The pace of restructurings is rising rapidly this year for so-called 'hard money' or equity-based borrowers in South Florida, Herz said. Those borrowers either don't qualify for bank loans or want loans more quickly than banks can provide them."

"If they can put significant equity into a home or commercial property, usually at least 35 percent, Herz helps them get loans from individuals. 'I am getting more calls from borrowers who are behind in payments and their brokers, asking for help in finding a refinancing,' Herz said, adding that, because of the large amounts of equity involved, he is finding some new lenders in some cases."

"Many homeowners who made low down payments, often under 5 percent, and are facing their first big ARM increases will not be able to restructure loans, he said, and might have no alternative to foreclosure."


At 6:07 PM, Blogger Chip said...

None too soon. Prices have been crazy and the failure of politicians to address the excess revenues from property taxes will torpedo a lot of the growth that was predicted for my state. For that matter, those taxes probably will drive me out -- the people who bought the place I cashed out of will be paying almost 5 times the property tax I paid. I can't afford to replace it with anything near the price I received. Good time to be a philosophical sort.

At 9:54 PM, Blogger confused said...

Property taxes are never mentioned when looking for a property. Amazingly most so called experts will tell you that a $300,000.00 property at 6% equals a $150,000.00 property at 12%. Not so and not even close.. I have many friends who were shocked to see how much their property taxes had "gone up" from when they first bought and temporarily "ineherited" the prop tax from the seller. At around 2.6% an median home of 350K will cost around $8000,00 in prop tax a year! This makes it hard to sell and re buy somewhere else in the same city, but also adds a hefty amount to the monthly "painments"..
It simply can not sustain itself. The properties bought in 2004 are now on the market for often more than double the price and were attractive for the same kind of people in 2004 because of low interest rates, lower taxes. Now those same properties still attract the same type of people but are no longer affordable.
I am currently renting and am keeping my safings in CD's and ING direct waiting for prices to go down to a level I can feel comfortable with. I have been feeling very worried for the past 7 months but things do not add up and I really believe prices will come down. Also this does not nec mean people who bought will loose money. Given a nice appreciation of 10% a year those who bought in 2004 should in my opinion still be able to sell for a 20% -30% profit. problem is this idioted notion of "entitlement' where many put their units on the market for 100K and up more than what they paid for it 2 years ago. I think for those who bought in 2005 with ARMS this might be a problem if they bought with the idea to sell.
We'll just going to have to see and wait. To earn more than the median income ( our fam income is around 70K per year) with one child and not being able to afford a home and put food on the table ( no car payments or credit card debt) is ludricous. Many many in this town ( Miami) earn less and pretty soon we'll have a homeless population of people with jobs that pay over 30K per year ..
maybe one day soon people will realize that the emperor is really walking around naked after all and a shit hole will be a shithole again instead of a charming home :-)


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