The Housing Bubble

The Sun Sentinel reports from Florida. “South Florida’s housing market keeps getting better, at least for sellers. Values are on an upswing this year as a lack of available properties give sellers more negotiating power. Most market observers insist that prices have hit bottom, though some analysts say the recent gains will start to level off once lenders list more foreclosed homes for sale. ‘I do not believe pricing will come back down,’ said Summer Greene, president of the Florida Realtors. ‘I think that time has passed.’”

“Douglas Rill, broker of Century 21 America’s Choice in West Palm Beach, said he recently listed a three-bedroom short sale with a pool for $89,900. He had 27 inquiries, 12 showings and six written offers in three days. ‘Does that sound like a slow market?’ Rill said. ‘The low-end is on fire, reminiscent of 2005.’”

“Gary Thomas, president of the National Association of Realtors, urged potential buyers to improve their credit scores so they can qualify for mortgages before rates increase. ‘Even with rising home prices, we’ll continue to see favorable housing affordability conditions over the coming year, but they won’t last forever,’ Thomas said.”

“Mike Larson, an analyst with Weiss Research in Jupiter wonders whether investors eventually will create a frenzy that leads to another bubble. ‘That certainly bears monitoring, but I think it’s something to keep an eye on rather than freak out about,’ he said.”

The Tampa Bay Times. “Although the $25 billion national mortgage settlement’s goal is to keep people in their homes, big banks are doing much better at ushering Florida homeowners out, as a new report shows short sales dwarfing other forms of relief as lenders’ atonement of choice. Short sales totaled $1 billion more in Florida than principal forgiveness for first and second mortgages, deficiency waivers and refinancing — combined. And many of those short sales would have happened anyway.”

“‘They’re getting credit for doing what they were already doing, and what the market was dictating,’ St. Petersburg foreclosure attorney Matt Weidner said. ‘They’re still throwing people out onto the street that could be making a mortgage payment.’”

“‘The banks are pushing everything towards the short sales,’ Keller Williams agent Steve Capen said. ‘There have been some principal reductions here and there, but it’s been at such a random level that you can’t even talk about it.’”

“‘There’s nothing more frustrating than a homeowner who has been working for years to get a (loan) modification and can’t, only for the bank to turn around and sell the house for cents on the dollar … to an investor who will rent it out to somebody,’ Weidner said.”

“Bankruptcy filings in the Tampa Bay area continue to drop from their 2010 peak, falling another 20 percent over the past 12 months to reach levels not seen in four years. But the plunge in new cases in the bay area has done little to alleviate a backlog that could be months if not years away from returning to normal levels. Moreover, strained courtrooms already operating with smaller staffs because of budget cuts may see the situation worsen if bankruptcy filings rise once more — which is exactly what many observers predict.”

“‘I think we’re going to be in for a huge storm,’ said St. Petersburg bankruptcy attorney Charles Moore. ‘I think we’re in a weird, artificially created low. … All of us are asking why (bankruptcy filings) are so low right now. The economy didn’t magically get better over the last two years.’”

“The temporary reprieve in new bankruptcies is rooted in the housing mess. Drawn-out efforts to modify mortgages along with the ‘robo-signing’ scandal over foreclosures that had to be re-filed because paperwork was faulty or forged have given many delinquent homeowners an extended reprieve from losing their homes. Terry Smith, a trustee for Chapter 13 reorganization cases for two of Tampa’s bankruptcy judges, sees more foreclosures being the inevitable driving force for more bankruptcies.”

“Delinquent homeowners — some of whom haven’t made a mortgage payment in years — will suddenly be forced to put money toward rent instead of other expenses. And bankruptcy, he said, may be their only alternative. Moore is already seeing it happen. ‘I had a client in here today who hasn’t made a mortgage payment in 31/2 years,’ he said. ‘They’re finally getting a foreclosure and coming to me’ to discuss bankruptcy options.

“Moore said there’s a common misconception that people who haven’t made a mortgage payment for years must have saved something to shield them from bankruptcy. ‘What bank account is that money in? It’s not there. People are living to what they have,’ he said.”

The Bradenton Herald. “Foreclosures shot up in Manatee and Sarasota in October. Home defaults in both counties have now posted double-digit increases for the past two months, after seesawing for much of the year. Officials peg the choppy numbers to the uncertainty surrounding the judicial foreclosure process in Florida, which has left attorneys still sorting out cases from the peak of the crisis three years ago.”

“A tough labor market also continues to feed new filings, with underwater homeowners who still can’t meet their monthly mortgage, said Joseph Lehn, a Sarasota foreclosure attorney. ‘The reprieve is over — foreclosures are on the rise, modifications are on the rise, short sales are on the rise,’ he said. ‘Banks are realizing they have to move these properties.’”

The Tampa Tribune. “Like thousands of people across the Tampa region, Cheryl Hunt will start preparing for her family’s Thanksgiving meal today. And they’ll give thanks for the meal, which wouldn’t have happened without the help of people they never met. The Hunt family is among the nearly 150,000 Hillsborough County households surviving on food stamps this Thanksgiving, according to the Department of Children & Families.”

“It’s a record number — and one that continues to rise month by month even as the unemployment rate falls. In October, the Department of Agriculture paid out nearly $38 million in food assistance in Hillsborough County alone, a 10.4 percent increase over the previous year. The Department of Children & Families says about a quarter of the Floridians receiving food stamps work.”

“‘It could be that even though people are going back to work, but maybe the incomes are not rising,’ said Patrick Mason, a labor economist at Florida State University. ‘They aren’t going back to jobs that are paying a lot.’”

“For the last three years, Cheryl and Johnnie Hunt have had little or no work. Johnnie used to run his own tile business, which went bust with the housing market. Cheryl worked for a title company. The family’s house is in foreclosure. They’re living on food stamps and scraping up whatever work they can get. They get help from friends and family, too. ‘I don’t know any other way to say it,’ Johnnie said. ‘It got bad.’”

“With the housing market showing signs of life, the Hunts hope next year will be better. ‘I don’t even care if I’m working steady — just more than now,’ Johnnie said as Cheryl loaded the family’s few bags of groceries into their minivan.”

The News Journal. “There’s nary a house in Flagler Estates. At least, not on the Flagler County side, which includes 2,771 acres of land that was subdivided and sold in 1970, mostly as lots of about an acre. More than 40 years later, nothing’s been built and the lots in Flagler County are likely to remain vacant into the foreseeable future.”

“Other stalled developments have occurred statewide, including in Volusia County. Dozens of these so-called ‘paper subdivisions’ were marketed throughout Florida as investments in the 1960s and ’70s. Buyers often purchased land sight unseen and now find themselves in some cases unable to find the property, much less build a house on it.”

“Lynne Bohannon and Jeff Hartdorn, who live in New Smyrna Beach, own at least 28 lots in Flagler Estates. ‘It’s simplistic to dismiss the purchasers of swampland as stupid,’ Jeff Hartdorn wrote in an email. ‘There was an incredibly well-choreographed industry to prevent victims from obtaining accurate information.’”

“Lots in the Flagler portion of Flagler Estates that initially sold in the 1970s for between $5,000 and $12,000, according to a sales brochure Bohannon has kept all these years, are today valued by the Flagler County Property Appraiser at $300 to $600. Still, some property owners remain hopeful that their land will regain its value one day — maybe just not in their lifetime. Jack Snider, who lives in Pleasant Prairie, Wis., is one of them. He paid $11,000 for 1.36 acres in 1984. Today it’s appraised at $300.”

“‘It’s been up and down,’ Snider said by phone. ‘Before the housing bubble burst, some lots were selling for $30,000. I’ll probably pass it along to my daughter, who may keep it for her children.’”

“‘I own land in Texas and other land in Florida, and it’s the most likely to eventually become viable,’ Snider said. ‘I was sucked in by the sellers.’”

“Snider remains hopeful his investment eventually will pay off. ‘It’s land,’ he said. ‘It’s always going to go up.’”