Posted on 08/09/2006 10:05:34 AM PDT by ex-Texan
Mortgage trouble is creating some of the biggest bargains this side of eBay, allowing buyers to snap up homes for tens of thousands of dollars less than what they might have paid just a few months ago.
"People are doing whatever they can to sell" in order to avoid foreclosure, said Brad Geisen, president and chief executive of Boca Raton-based Foreclosure.com. Notices of pending foreclosures are piling up, in what many believe to be the first wave of a trillion-dollar tsunami: The dollar volume of home loans with interest rates that will be ratcheted upward over the next several months.
New Palm Beach County foreclosure filings rose by 34 percent in June compared with June of last year, according to figures compiled by RealeSTAT.com, a commercial data service. Foreclosure.com's July numbers show a similar upward trend, not just for Palm Beach County, but for the state as a whole.
"It's just going to get worse and worse," said Jeff Pashkow, president and chief executive of Foreclosure Clinic, a Loxahatchee investment firm that buys homes before they are auctioned by the lender, and resells them.
Clients these days are from such well-to-do areas as The Acreage and Wellington, he said. "They're mostly (middle class) people who have financed it to the hilt, and there's really not much you can do for them."
However, Foreclosure.com's numbers also pinpoint the emergence of unlikely rescuers: bargain hunters. Nationally, almost one in every three homes at risk of foreclosure was bought in July, according to Foreclosure.com.
RealeSTAT.com's local figures show that even as larger numbers of mortgages slip into default, the number of homes actually going to auction is decreasing.
Unlike Texas, where a foreclosure can be final in as little as three weeks after the homeowner gets his or her first notice of a mortgage default, Florida homeowners get about six months between the time they are first notified they are facing foreclosure and the time the lender actually auctions off the property, said Geisen. "Longer if they play their cards right," he adds.
The smart money, said Brad Hunter, a real estate analyst with the West Palm Beach office of MetroStudy, "is ready to go looking for deals."
Such investors are usually first in line to carve profit out of a sale of distressed properties. But it's not just investors. Diane Corbin, a Realtor with Exit Realty Neighbors, said she's had calls from house-hunters asking whether a property was in foreclosure.
These "third-party buyers," said attorney Stuart Gitlitz, are elbow to elbow. "There are more than we have ever seen before, and I have been doing this for 20 years," said Gitlitz, a Miami attorney who represents lenders in Palm Beach County foreclosures.
Small wonder:
It's a fraction of the $582,000 average Palm Beach County home price in May reported by Trend Graphics.com, which compiles listings. And it is almost exactly the amount considered affordable for a worker earning the median income in West Palm Beach, according to the Florida Housing Coalition.
The fire-sale prices have their drawbacks. For one thing, the deals may be one reason new homes are sitting empty. The inventory of homes waiting to be sold in Palm Beach and St. Lucie counties is rising, said MetroStudy's Hunter.
Corbin, the Realtor, cites the case of a local developer who was selling a home a week — and who is now selling a home a month. "It's killing them," said Corbin.
The lure of a quick profit may also be attracting some of the same buyers who seized on buying homes and condos at the height of the market and flipping them. However, buying a home out of foreclosure can be more complex, said Foreclosure.com's Geisen; and diving headfirst into such deals can hurt inexperienced speculators the same as the downturn in housing prices.
Homeowners have reason to be cautious, too. It's not unusual for owners notified of a mortgage default to be swamped with unsolicited offers of help, said Gitlitz — some more genuine than others. "There is a lot of fraud going on," he said, one reason state lawmakers took steps this past session to tighten protections for homeowners willing to sell their property before a foreclosure is final.
Many homeowners are successfully unloading properties, adds Geisen. "Usually there's enough time for a seller to sell and get out."
From March through May of this year, the average sale price of a home in Palm Beach County sold at foreclosure was just $195,705, reports RealeSTAT. That's more than $200,000 less than Palm Beach County's median home price in June 2006, which was $405,500, according to the Florida Association of Realtors.
A couple of weeks ago, I traveled over to the coast to talk to realtors. They frankly admitted that coastal properties were caught in the bubble. For sale signs have been going up like crazy. People are trying to dump their properties rapidly. If you want to educate yourself further, just visit my FR Page For the the naysayers out there, I repeat your favorite mantras: "Nothing to see here. Not in my neck of the woods. Not here, not now. Lock your doors and windows. Time to move on."
"Mortgage trouble is creating some of the biggest bargains this side of eBay, allowing buyers to snap up homes for tens of thousands of dollars less than what they might have paid just a few months ago."
One person's loss is another one's gain.
idunno about all that. but I see the market doing its job.
*Ping*!
But all the realtors were screaming buy now or be priced out forever!
I would never buy a house unless I was sure of 2 things:
1. I could put at least 10% down with closing costs.
2. I could afford 125% of the total payment (insurance, pmi, payment, utilities, taxes).
Prices are up by hundreds of thousands over the past few years (for that area), so how does "tens of thousands of dollars less than months ago" become a screaming bargain?
More like buy now, I need a commission check.
Does any of this matter to me if I'm not buying or selling my house, and I don't live on a coast?
Methinks no.
The market didn't cause mortgage rates to plummet and make the financing of enormous sums possible on nearly stagnant take home pay. We'll see if history assigns the blame for the bubble to Greenspan, or blame for the crash on Bernanke.
Up from 1% to 1.34%
Real estate values in South Florida have gone whacky the past few years. Way overvalued IMHO. There is going to be a correction, and I believe it has already started. Its the market doing its job, as another poster has indicated. some will get hurt, alot of speculators may get burned, but thats how it goes.
On the other hand, Realty Times has just reported:
I lived down by the Jersey shore. I sold my home at the top of the market and bought a bigger home in San Antonio for 1/3 the price.
As soon as I leave Jersey, Corzine raises taxes and my home value goes down by 10%.
I thought John Travolta played in that movie.
Forclosures are about to explode all over Florida because of the cost of housing insurance. Many low-middle income families can't afford their new insurance rates and can't sell because everyone else is doing the same thing.
My co-worker's home insurance got canceled so had to go searching for insurance. She got a quote yesterday that was $500 more than a quote from the same company that is two weeks old. Her rate on $220,000 has gone from $1500 to $3500. We are expecting our insurance to go from $3,000 (double from a year ago) to $5,000 in December.
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