The Equity Has Disappeared And The Bills Are Due
A report from the Florida Times Union. “The four-bedroom house on the bank of the St. Johns River was nice. Built in 1990, it sold for $715,000 at the height of the real estate bubble in 2006. Since then, the home was partially burned in a mysterious fire, a next-door neighbor said. Then it was abandoned and subsequently condemned, according to city records. The house’s story is one of more than 10,200 Duval County single-family home foreclosures in 2008, 2009 and 2010. Of those foreclosures, most — possibly more than two-thirds — were investor-owned when the bank took them, a Times-Union review has found.”
“The difference casts a new light on Jacksonville’s ongoing foreclosure crisis: The vast majority of foreclosed homes were owned by people who did not live in them. They were mostly investors who purchased those homes to rent or resell. ‘Money was easy come, easy go in the mid-2000s,’ said Jacksonville foreclosure attorney Chip Parker. ‘There were a lot of middle-class families taking their savings out, figuring they could make more money in the real estate market than on the stock market.’”
“Many did, until the real estate bubble burst and the market reversed. That was when some people began to choose to walk away from mortgages on homes that were losing value, Parker said. That decision is a lot easier to make when it comes to an investment property, Parker said, because there’s less sentimentality for those than there is for family homes. ‘Once you take the emotion part away, you see more walkaways. That is an absolute certainty,’ he said.”
“As for the Wayland Street house that was bought in 2006 for $715,000, the former owners did not respond to messages left at a telephone number listed for them in city documents. But according to the Property Appraiser’s Office, that home’s removal resulted in an assessed value loss of $209,000. The 1.2-acre lot was advertised for sale at the auction.com website with a starting price of $59,000 in an auction that ended June 13, The site indicates a bid is pending confirmation.”
“If the property sells at the starting price of $59,000, that would be 8 percent of its 2006 purchase price.”
From Hernando Today. “There were half as many foreclosures filings in Hernando County during the second quarter of this year compared to the same period last year. Local builder Dudley Hampton Jr. agreed the ‘precipitous drop’ in foreclosures can be attributed to better bank oversight. Hamilton alluded to the recent ‘robo-signer’ controversy. Banks are moving on the foreclosed homes and that is one positive sign, said Hampton, a member of the Hernando Builders Association.’
“Between January 2005 and December 2010, Hernando County has lost 2,531 positions in construction, representing 60 percent of that industry’s labor force, said Hamilton. ‘It’s not pretty,’ Hampton said. ‘There’s just a glut of houses on the market right now and until that inventory goes away I don’t see much of an uptick in the new housing market.’”
The News Press. “Demand for homes in Lee County is brisk and prices are headed up — that’s usually the sign of a healthy market. But hovering over that cheerful landscape is a cloud of houses that, while they aren’t officially for sale, are headed that way. It’s called ’shadow inventory’ and experts say it could hold down prices for years before it goes away.”
“5,000 to 7,000 foreclosures in the county have been pulled back by lenders unsure their cases are sound. The cases generally were dismissed without prejudice, meaning they could be refiled when paperwork and ownership issues are resolved. About 6,000 more properties are working their way through the county court system. Thousands of houses are owned by people who haven’t yet been foreclosed on but are far behind on their mortgages and have no prospects of catching up.”
“‘I’d make a case there could be as many as a million that haven’t made their way through the system but will sometime in the next 12-18 months,’ said Jack McCabe, a Deerfield Beach-based real estate consultant who tracks home markets on both coasts of Florida. When that happens, McCabe said, ‘It’s going to make it very difficult for people trying to sell.’”
The Orlando Sentinel. “Banks doing business in Florida are getting healthier, but many still remain troubled, according to the rating agency Bauer Financial. In Central Florida, a dozen banks (37.5percent) received ratings of problematic or worse, including CNLBank, the region’s largest locally based financial institution, which had a rating of one. That was four fewer banks with low ratings than at the end of the fourth quarter — but only because of the four bank failures.”
“‘The real-estate sector is still the cause of the problems that so many banks are struggling with,’ said Rod Jones, an Orlando lawyer and former state banking regulator.”
“A more growth-friendly Orange County Commission plans to consider whether to revive two massive development proposals in the sensitive Econlockhatchee River region, both of which were voted down last year. One is Innovation Way East, a 6,343-home project. The other, Rybolt Park, is a 5,000-unit proposal.”
“Commissioner Fred Brummer voted against Rybolt but said recently that he didn’t feel it got a fair hearing. ‘They are certainly savvy enough to count noses,’ Brummer said. ‘They didn’t just fall off a turnip truck.’”
The Palm Beach Post. “During the height of the boom, new home prices at Azura, a luxury home community outside Boca Raton, were pegged at between $1.6 million and $3 million. But after the property fell into foreclosure, Toll Brothers scooped up the unfinished project and dropped the homes’ prices to the $900,000 range.”
“Now, after selling only three homes in 18 months, Toll Brothers has taken a chain saw to its pricing. Earlier this year, the company slashed prices nearly $200,000 per unit. For instance, at the end of March, prices on one model plunged to $790,995 from $975,995. ‘There’s no doubt we’re reducing pricing to be where the market is today,’ said Jim McDade, Toll Brothers’ vice president. ‘Once you’re open for a year, you get a flavor for where things are.’”
The Naples News. “One of Southwest Florida’s heavyweight developers is seeking an extension on its plans to build a massive residential and golf course community at the eastern end of Bonita Beach Road. The Ronto Group filed for the extension with the city of Bonita Springs for two projects well east of Interstate 75 that are permitted for nearly 2,000 housing units as well as a golf course and retirement community.”
“‘Everything’s there (ready to finish development),’ Ronto Group Executive Vice President Anthony Solomon said after the meeting. ‘There just aren’t any new homes there now.’”
“Mayor Ben Nelson said the extension request could be a sign that the housing market is recovering in Bonita. ‘It’s a good sign that someone is moving forward with a development,’ Nelson said. ‘People realize now that their paychecks and pocket books are tied to their community.’”
The Tampa Tribune. “Credit scores in Florida have dropped at triple the rate of credit scores in other states since the recession started, in part because of Floridians’ heavy reliance on home equity, according to the Experian credit bureau. That means Floridians may find it harder to get new car and home loans, or at least pay higher interest rates.”
“Some people in Florida, Las Vegas and other once-hot housing markets treated their homes as ATMs and used their home equity to pay bills, said Michele Raneri, a vice president of decision analytics for Experian. Now, their home equity has disappeared and the bills are due.”
“‘It was an artificial cash flow from their house and when the cash flow stopped, they weren’t able to afford some of the things they had already bought, including the house,’ Raneri said.”
The St Petersburg Times. “Starting Oct. 1, home buyers seeking government-insured mortgages will have to pick lower-priced houses if they want the federal government to back the loans. Freddie Mac, Fannie Mae and the Federal Housing Administration are lowering the maximum loan amounts that the agencies will guarantee in more than 850 counties in the United States.”
“The new limits were supposed to take effect in January 2009, but the economic downturn led Congress to delay the implementation. In the Tampa Bay area, the FHA is reducing the maximum insured loan for single-family homes from $292,500 to $271,050.”
“‘I believe this will cause widespread defaults and foreclosures,’ said Andy Wood of American Mortgage Services in Tampa. ‘If this is not stopped, it will be the thing we look back on as the straw that broke the housing market’s back.’”
The Largs and Millport News. “A couple who live much of the year in sunny Florida, USA have warned that Largs is building too many houses. Mr and Mrs Brian Forbes who have a home in Acre Avenue, Largs have read the controversy over plans for hundreds of new houses around the Brisbane Glen area.”
“Mr Forbes told the ‘News’: ‘When the economic environment there is tight, just like it is here, who is going to live in all these new ‘homes’ or are they to stay empty and then look like “%#%&^^$” after a couple of years? That is what has happened here in Florida. All these ‘new’ homes, yet no one to live in them as there is no money, jobs, etc. so they stay empty and no revenue comes in; just an eyesore and destruction of the local enviroment.’”
