January 3, 2012

Paying For The Privilege Of Breaking Even

NPR reports on Florida. “Florida is once again poised to play an important role in selecting the president in 2012. Its Republican primary on Jan. 31 is the nation’s fourth nominating contest. But Florida is a very different state than it was four years ago. It is reeling from the housing collapse and suffering from an unemployment rate well above the national average. Sean Snaith, an economist at the University of Central Florida, says unemployment affects the families of those who have lost their jobs, but the housing debacle goes much further. It has taken a personal financial toll on nearly every homeowner in the state.”

“‘The amount of wealth that was lost to the median family here in Florida is really staggering,’ he says. ‘If the median family of four in Florida were to save at twice the national savings rate, it would take something like 18 years to save back what they lost in home equity.’”

“The St. George’s Episcopal Church’s soup kitchen is open five days a week for lunch and dinner. But it’s not just those who come for meals who have been hit by Florida’s economic problems. Those serving the food have been affected as well. Many of them are retirees like Howard Evirs. Evirs says the housing bust wiped out half the value of his main nest egg — his home.”

“‘We had considered selling it just before the market broke,’ he says. ‘Then the value of the house went way down. So we made a decision — we’ll stay in there till we die.’”

The News Chief. “Sean Snaith, an economist at the University of Central Florida in Orlando that publishes quarterly and annual updates on local, state and national economies, compared 2011 to the ‘twinkling of a distant star’ rather than a bright sun. ‘This is, of course, better than a starless, black sky hanging over the economy, but we continue to wait for sunrise to arrive and warm Florida’s chilly economy,’ Snaith said in last month’s report. ‘Unfortunately, 2012 will not be the dawn of that day, as the year is shaping up to be another year of subpar growth.’”

“‘Florida’s housing construction sector hit the bottom of the Marianas Trench (the deepest spot on earth) in 2009 and has been wallowing in that trough for nearly two years,’ Snaith said. ‘Housing starts will climb to a slightly higher plateau in 2012 and begin to progress in 2013.’”

The Palm Beach Post. “Losses to South Florida home values are estimated to be $6.5 billion this year, an amount that, while daunting, is a considerable improvement from 2010. Last year, Palm Beach, Broward and Miami-Dade counties lost a combined $28.6 billion in housing values, according to Zillow.”

“While the thrashing to home worth has lessened, it’s not about to turn around completely, warned Stan Humphries, chief economist for Zillow. Some South Florida experts did agree on an extended market recovery time that will drift into 2013. ‘I thought that we were going to be in better shape in 2011 because we’d have more foreclosures moving through the system, but then we had the robo-signing scandal and it all got stalled,’ said Jack McCabe, chief executive of McCabe Research & Consulting in Deerfield Beach. ‘Now I think the rebound will be 2013 or even later, and that’s barring natural disasters or other debacles we can’t anticipate.’”

From CBS 12. “A new report out shows that out of the top ten cities in the nation where housing prices are actually increasing, six are here in Florida. ‘I’m very confident in saying that we’re at the bottom of an adjusted market and if you get in the market now and you’ve got a longer term prospective you’re going to make money,’ said Kevin Kent, Platinum Properties.”

“‘We’re coming back to full swing where Florida is going to again see a rise in property costs and I think you’ll see an influx of people,’ said Bonnie Lazar, 2012 Realtors Association of the Palm Beaches President.”

The News Press. “Local residents facing foreclosure will have no mediation program to take the place of a mandatory state program terminated by the state Supreme Court – at least for the near future. The mandatory mediation’s purpose was to provide ‘a really quick avenue to potential settlement with the bank so they don’t have to go to court,’ Charlie Green, Lee County clerk of court, said. ‘It was a great concept that ended poorly,’ Green said. Most of the time, homeowners didn’t show up and banks were not willing to participate, he said.”

“Jonathan Conant, president of the Conant Mediation Center, said he learned the local program was canceled in an email from the 20th Judicial Circuit. ‘The fear we have is most borrowers are unsophisticated. They are not going to know remedies, they are not going to know about robo-signing and other issues that come up in cases. They will not file answers. They will say ‘I haven’t paid my mortgage, it’s over.’”

“Meanwhile, foreclosures have increased from about 300 a month in spring to about 500 a month, and RealtyTrac, reports another wave of foreclosure filings is imminent in Florida. ‘This next year is gong to be horrific,’ Conant said.”

The Herald Tribune. “Nancy Cason, a real estate attorney with the Syprett Meshad firm, says she often faces people distraught over dwindling savings and increased expenses. ‘A lot come in and start crying before they can get a word out.’”

“Many bought, or refinanced, homes during the boom years from 2003 through 2007. Many were also in the real estate industry, working as mortgage brokers, real estate agents, construction executives, furniture sales people or other professionals dependant on real estate sales. Now, some of those same industry participants have lost their jobs and are unable to find anything else that pays even half as well. They have liquidated their savings and 401K retirement plans. Some have suffered medical problems, marital strife or divorce.”

“Here is what the numbers often look like: A couple bought a house at the height of the boom in 2005 for $250,000 and got a $250,000 mortgage, Cason explained. The house is now worth 40 percent less, or $150,000, and the couple is siphoning off their savings to make monthly interest payments. In a normal real estate market, they could expect the value of their home to increase by 5 percent, or $7,500, per year, Cason says.’

‘In today’s scenario, however, that means it would take 13.3 years for them to break even — if they could garner the appreciation at all. In the meantime, they would have to spend about $1,700 per month in interest, insurance and taxes. ‘That comes to more than $270,000 over 13.3 years that they would pay just for the privilege of breaking even,’ Cason says. ‘That’s just not in their family’s financial best interests.’”

The Florida Times Union. “The average foreclosure process takes 749 days in Florida. You can sing ‘99 Bottles of Beer on the Wall’ thousands of times while awaiting foreclosure eviction, but in the end, you will be homeless and very drunk. Two years is a long time without a house payment. You could sit back, relax, and spend all your money on beer…the problem is you come out the other side without a place to live and poor credit. If you are facing foreclosure, you need a plan, and you may need a legal defense to give that plan a chance.”

“You cannot have 99 bottles of beer on the wall if you do not have a wall to put the beer on. Foreclosure defense keeps the legal battle off the ramparts while the homeowner has the opportunity to pursue his or her plan.”

The Wilkes Journal Patriot. “Foreclosure filings in North Carolina dropped 33.6 percent in November alone to 2,710, compared with the same month a year ago, RealtyTrac Inc. reported. Assistant Clerk of Superior Court Julia Byrd said that compared to the last year, a significantly higher percentage of the properties foreclosed on in 2011 were fulltime residences and a smaller portion were vacant lots or part-time residences belonging mostly to people who live outside of Wilkes.”

“Mrs. Byrd said many of the vacant lots foreclosed on earlier were purchased by people with Florida addresses, apparently as investments. ‘For a while, it seemed like there were people who had bought property without ever looking at it’”

Bits Bucket for January 3, 2012

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