"The report said that Florida has approximately 28,000 properties in some form of foreclosure, accounting for 27 percent of the nation's total. With one new foreclosure filing for every 254 households, the state's foreclosure rate was more than four times the national average. '
Think about that - in addition to the 10+ month inventory of unsold homes in our state, there are now 20,000 more that will be coming on the market, all at below (or far below) market value.
'"Florida and the western states are known for their predominance of negative amortization loans in which mortgage holders pay only interest, not equity, on their properties..." '
Flippers and unsavvy buyers are now atoning for their greed.
'Industry forecasters recently estimated that more than $200 billion worth of adjustable rate mortgages will "reset" at higher rates in 2006 and more than $1 trillion will reset in 2007...'
That figure says it all - 5x more ARMs will reset next year than did this year. This is only going to compound the numbers of foreclosures.
Florida #1 in ForeclosuresMany thanks to one of our anonymous posters for this reference. In a related note to all our readers and posters: feel free to make up a screen name - this site is setup so that there is no login required to post your thoughts.
I know a guy (nice but not so smart) over in Tampa who bought a second home during the peak last summer (2005), hoping to flip it for a quick buck. Well guess what? The same neighborhood he bought in now has over a dozen other houses sitting around, for sale, and unoccupied. The alligator is eating him and his family, one payment at a time. And wait till the "Save Our Homes" NON-exemption kicks in for 2007 taxes.
ReplyDeleteYipes!
Why do these figures not surprise me AT ALL?!!!
ReplyDeleteMedian prices (real prices, not the BULLSHIT that the realtors are spewing forth) are 4-5x median income - it couldn't last. Just a blip in history...
"Johnny, remember 2003-2007? When people got greedy and thought that Florida actually could sustain California-level home prices? Wow, I still chuckle at those fools..."
So we sold "all" of our real esate holdings last year after the runup hit the top [guessed on the timing]...Moved from West Palm to Ormond Beach and are now renting in an upscale golf course community of homes in the $200k to $2m category.....
ReplyDeleteAny way, there's a guy from California who bought """ 5 """ houses on our block...I checked online with the tax acessor, and and he paid $1.3 million for the 5 houses, and he's got $1 million in mortgages on them....4 of the 5 are sitting empty, for sale or for rent...only 1 is rented @ $1350/mo.
Taxes in Volusia county here are @ approx 2.5%...
You figure the guys negative cash flow!!!!
Another guy from West Palm, has got 4 townhouses, he trying to flip....paid a cool million cash, all sitting empty...just dropped his price on all 4 to $285k/ea...
He'll be lucky to get out with his skin, as the developer still has units forsale....aprox 23 or more, and the developer is building more!!!!
Fantastic story, G!
ReplyDeleteSounds like that guy from Cali obviously has some money to hold himself over - but for what? The market's not coming back for many years to come (I forecast 7-8). If he's smart, he'll dump'em and write them off.
Especially with property taxes right around the corner.
The surplus in Florida right now is only getting started. You will see it grow and grow...month by month. Expect 20-30% drops in prices before the inventory actually starts decreasing again.
ReplyDeleteListen to me now and believe me later! - Hans and Franz
ZIP reply:
ReplyDeleteThe guy I'm renting from is a 'flipper'....He's from Connecticut, and has got 2 houses
I talked to him last week and told him I wanted a $400/mo reduction in rent...He nearly flipped....
Told me he had mortgage payments to make, taxes to pay, and insurance to carry....
I told him that I understood, ""BUT"" all those expenses go on whether I'm renting it or not!!!!
We agreed on a $250/mo reduction!!!
He's carrying a $200k mortgage on each of his properties and needs the cash flow....
>>>>>"""AFTER ALL HE'S A CERTIFIED FINANCIAL CONSULTANT"""<<<<
41 years old, and thinks all the baby boomers moving to Florida will be buying up the properties....
Seems to me that more people are moving out of Florida NOW, than moving IN!!!!
Neighbor of mine in Vero Beach put his house on the market in January 06 for 589k. Now at 469k and still no visible activity at open houses.
ReplyDeleteSeveral local unfinished subdivisions are up for sale; several more w/ very few occupants. Gonna be a long time before things settle down. NAR economist (Leary) makes me laugh. Does he really believe this is going to turn around in the first quarter of 07???
good observations Crazy G.
ReplyDeleteQ: will these 'investors' hand the keys back to the mortgage company? How are they ever goign to get out?
One of my friends is in deep trouble right now. He and his wife bought a modest (1700 sf) house in early 2003 for $165k-ish. Young engineer earning roughly $65k a year, married to a nice girl who was probably making $25k or so. Affordable situation, no problems.
ReplyDeleteBut they got house envy.
"All of our friends" were buying bigger and fancier houses closer to work. They decided to upgrade to a similar house for $440k. After all, house prices were only going UP, so there was little risk in stretching the budget for a few years...
The modest house was getting appraisals in the $330k range, so they had phantom equity to use for a downpayment. Did a Home Equity LOC on the small house to make the downpayment on the big one.
They moved into the big house in June '06. That was later than they expected, due to some delays with the builder. The small house was listed with a realtor hours later for $330k. So, now they're carrying three large loans. As far as I can tell: roughly $150k, $130k, and $310k (Interest only). But that's just temporarily, until the small house sells and they can satisfy two of the loans...
Of course, it's not selling.
One child (well under a year old), and the wife has finally started working part-time again after recovering from some post-delivery medical issues.
By my rough calculations, the mortgage debt is close to 80% of their take-home pay. The small house has been dropped to $290k, which might be a break-even price after commissions, but hasn't seen much interest.
A year ago, this plan would have worked out fine...
Rick
Rick, another great story!
ReplyDeleteHouse envy - so sad. But that key phrase "schaudenfreude" (I have no idea if I spelled that correctly) kicks in. How could they be so freakin' GREEDY?
It's happening all over the state, and it looks like this couple are going to be adding to that long list of foreclosures in FLA.
Let the bad times roll...(for the greedy).
Chip, I am a professional who is very close to the business (not in it, but very close). I can tell you right now, without any hesitation:
ReplyDeleteThe condo market in Florida is DONE for a minimum of 5 years.
Write that down on your calendars, folks. Don't expect a turnaround in the Florida condo market AT LEAST until 2011.
One day.
ReplyDeleteWe held the lead in foreclosures for just one freaking day before California passed us to claim the title.
http://www.centralvalleybusinesstimes.com/stories/001/?ID=3251
(via www.forsakencraft.com)
Yea, then I see that Colorado is now claiming that THEY are #1 in the nation. Something's telling me these guys aren't looking at each other's numbers.
ReplyDeleteAt least the latest numbers.
So the question was?
ReplyDelete""How are the 'flippers' going to get out???"""
Right now in our developemt, the builder/developer, is trying to scale back BIG TIME..."FIRED" most all of his crew...""BUT", and this is a BIG """BUT""
>>>They probably have near 100 houses, coming on stream, in various stages of building<<<
The developer is a private company, so you have NO idea of their finances, etc???
Their cost on those houses, have got to be in the muli-millions, for sure....
"IF", and that's a big "IF"...they have got financing, they will be pressured into lowering their prices...
Which I personally think are VERY, VERY high...>$200/ sq. ft....
Toll Bros, houses are going for $150/ sq ft....
"IF" and "WHEN" this thing turns...
>>>IT'S GOING TO BE A TOTAL BLOOD BATH<<<
I read yesterday that California was #1 with 14k foreclosures. How can that be? We have 28k foreclosures. We're #1.
ReplyDeleteIs it because 1 foreclosure in California equals 3 foreclosures in Florida? Maybe someone could come up with the total dollar amount for foreclosures, in order to rank who is really is #1.
Well!!
ReplyDeleteI just read an article out of the Palm Beach Post, dated 10/14, in which reporter Linda Rawls stated that Palm Beach County had 873 foreclosures in September '06...
In a previous article, "IF" I can remember correctly, the Post had forecast 10,000 homes to be sold in Palm Beach County in '06...Comparing it to the 11,000 or so listed reaaltors....
Anyway...My point is this....
"IF" the trend continues, it appears there will be more foreclousers per month than there are realtor sales!!!!!
>>>>JUST SOMETHING TO THINK ABOUT<<<<
G, that's hilarious. Talk about front-page news (that the papers would never publish - can't bite the advertising hand that feeds them, dontchaknow....).
ReplyDeleteMissy, I really liked your writeup, though it sounds like you're in a "still inexpensive" part of the state. You can barely get a cardboard shack for under $150K in O-Town, Tampa, or the entire SE Coast.
Anon,
I'm positive that California and Colorado hadn't seen Florida's numbers before writing those articles. We have much lower incomes than those 2 states, and rely much, much more on the construction industry than they do.
So it should be no surprise that we're WAYYYY ahead in foreclosures, and will be for a long time.