St. Lucie Foreclosures Up - Way Up

From today's Palm Beach Post. Interestingly, the article starts off with better news in Palm Beach County, but then jumps right in with St. Lucie's numbers.

'Palm Beach County saw a dip in foreclosures in November, while at the same time, St. Lucie County saw its troubled real estate more than triple.

Analysts are blaming rampant speculation in St. Lucie's new-home market and exorbitant hikes in homeowners' insurance as the cause of its leap to 313 foreclosures from just 94 in November 2005.

The increase is the highest foreclosure level for the high-growth area in nearly two years, according to a new report from RealtyTrac, which documents foreclosures nationwide.

"Tons of new homes have been built in St. Lucie County in the past couple of years, and a big chunk of those were snapped up by speculators," said Mike Larson, an analyst with Weiss Research in Jupiter. "Now, some are finding they can't rent them out for enough to cover their mortgages. Others are likely getting whacked with big increases in insurance rates tied to the active 2004 and 2005 hurricane seasons."

When you add surging property taxes to this dangerous mix, Larson said, "the hardest-luck cases can even be forced out of their homes."'

Okay, this is now - what about the future?

'"The foreclosure train has left the station and is slowly picking up speed," said Jack McCabe, owner of McCabe Research and Consulting in Deerfield Beach. "Expect foreclosures to multiply in 2007 and 2008."

Besides plunging property values that hinder resale and rentals, so-called "creative financing" is a major reason the foreclosure wolf is now knocking on so many doors.

Adjustable-rate mortgages and interest-only loans have taken off since 2004. Indeed, they were the only way more than half of all local buyers could afford to buy a home, McCabe said.

These loans are scheduled for their first adjustments in the next two years, McCabe continued, and many owners will get smacked with 40 percent to 50 percent increases in their monthly payments.'

'Statewide, foreclosures rose 5 percent in November, to 9,362 from 8,872 a year ago.

That's one foreclosure for every 780 households in Florida - a rate that analysts expect will worsen next year.

Larson, the analyst, blames "excess speculation" for driving prices far beyond what fundamental economic forces dictated.

"Now, with prices falling, that irrational exuberance is being wrung out one foreclosure at a time," he said.'

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