Posted on 07/13/2007 7:21:34 AM PDT by doc30
California still leads in raw home numbers, but Florida is quickly closing the gap.
When it comes to home foreclosures, California, land of the million-dollar Silicon Valley shoeboxes, tends to dominate the list.
But in foreclosure statistics released this week by Bargain.com, Florida is making a run on California's dominance.
With less than half of California's population, Florida had 78,408 homes entering the foreclosure process in the second quarter of 2007. California was slightly ahead with 83,210 homes.
Trends suggest that while California foreclosures might have peaked, Florida is poised for more pain.
Compared with the first quarter of the year, 7 percent fewer California homes flirted with foreclosure in the second quarter. The opposite was true in Florida. The Sunshine State reported 23 percent more foreclosures in the second quarter than the first.
Nationwide, about one in six homes entering foreclosure was in Florida. Slumping sales, combined with a glut of homes bought on speculation during the 2004-05 boom, have left properties vulnerable to bank repossession. Exploding taxes and insurance premiums make monthly house payments even less affordable.
Bargain.com, a California company that makes money selling lists of distressed properties, suggests that foreclosures may have peaked nationally in the first quarter. Thirty-four of 50 states reported fewer homes entering foreclosure in the second quarter.
But aside from California, Sun Belt states coming off the boom continue to suffer. Arizona, Nevada and Texas joined Florida near the top of the foreclosure list.
Ann Guiberson, head of the Pinellas Realtor Organization, sees a glimmer of hope in California's improvement. That state tends to be a national leader that Florida eventually follows.
"Florida follows a different drummer. When a lot of markets were down ours was still up," Guiberson said. "Now when others are bouncing back, we're probably trailing a little further back than some."
Gains in homeowner pain
In Florida, the number of homes entering the foreclosure market is still on a sharp upswing.
Taxes and insurance costs combined are killing the FL real estate market.
A lot of people did buy homes they could initially afford. Home prices here aren't anything like those in California. Mortgage payments for an average home are high and do max people out. But when new home buyers move in and the second year they pay taxes, the bill can go from a few hundred dollars to several thousand dollars. And you have insurance bills that are even bigger!
So for many home buyers, their insurance and taxes payments into escrow are actually bigger than their mortgage payments! And the big tax increase happens the seconf year the home is occupied. So you could have a $1000 mortgage payment plus $2-300 in escrow for the first year, for a total payment of $12-1300. Then that escrow jumps to $1000 per month to make up for the reappraised value of the house after resetting of the homestead excemption.
So now you have a >$2200 payment on a house you thought you'd be paying about $1300 a month on. Guess what. You can't afford these extra costs and you lose your home.
Even with the insurance reform Christ had done, there are now 25-30% increase on insurance after multiple years of doubling. So now about half that escrow payment is going up almost a third.
This is going to push a lot of mortgage holders out of their homes. It is going to start hitting the 30 year fixed mortgages as well as the people with the ARM mortgages which are resetting.
Watch Florida to be the leader in foreclosures in the country.
As a side point, in the Tampa Bay area, this is the first year after decades of growth, where school enrollment decreased. People are pulling up stakes and moving elsewhere. Fl is not a liveable state anymore.
It's nice to know our Lord and Saviour is keeping busy.
Darn it. I made the same typo AGAIN! Charlie needs a differnet surname!
“Even with the insurance reform Christ had done...
It’s nice to know our Lord and Saviour is keeping busy.
“
Why does he get blamed for everything. Jeez. lol.
Floridians need to press the pedal to the metal and scarf up on the great deals in foreclosures and rent them out for positive cash flows and rake in when those foreclosures appreciate.
Existing homeowners can usually get homeowners insurance renewed from year to year and the companies have to be somewhat carefully about how much the increase is.
1) People moving in (like us) are taken to the cleaners. The existing policy paid for by the seller will not be re-written or transfered, it’s called new business even though the insurance company may have a clean record on the property. A new buyer will be quoted, without regard to what the seller paid for coverage, and is screwed on his h/o insurance from the get-go.
2) The existing homeowner in most cases has been paying greatly reduced taxes (Florida’s save our homes 3% per year cap on increases) and the tax bill stays reduced for the new homeowner for that tax year. But 15 to 18 months out the buyer is whopped with a hug tax bill, one never paid in that amount on that property all so that the existing residents can pay 3 to 4 times less.
The greed of the long time residents is backfiring and the population shift is changing to out from in for Florida. The tax break is ending and eventually the tax burden will shift back.
I’ve been seeing plenty of generators for sale on craigslist. Floridians moving out of state and don’t want to bother to take the generator that they probably won’t need elsewehere.
That's the problem. Sure you can scarf up a good deal, but what good is it when you are paying more for insurance and taxes than you can rent it? And your payment goes up exponentially every year becasue of insurance costs! The mortgage part of the payment is secondary. What is important is if you can pay the doubling taxes and insurnace every year. Moreover, Florida is still on the lower end of the distribution curves for incomes.
The natural consequence is that property values continue to fall until the combined monthly payment of the mortgage, insurance and taxes are affordable. That's whet the dupply and demand curve will cause. Double taxes and insurance costs and the market will respond by reducing housing prices. That great deal you grabbed very well could become upside down in the FL market.
“That great deal you grabbed very well could become upside down in the FL market.”
Unless you bought at the top!
Those of us paying taxes at the top have only one hope. We hope to have enough capital to stay here. But as sale prices decline, we can force the assessments down and have an immediate impact on our taxes. At the same time all the long time residents will see their tax rates climb at 3% a year. That’s the bright side.
Note Renters/Landlords must pay taxes at the full assessment and never get the benefit of Florida’s “Save Our Homes” law. So what was said about rental conditions is so true - the rents collected can’t cover cost of the property and taxes. And nobody pays anything decent down here either.
The tax situation, as much as the Legislature wants to change, isn't. The Legislature overstepped it's bounds when it froze property taxes and enacted changes to the homestead excemption. The FL constitution clearly mandates the municipalities set the property tax rates and assessments, not Tallahassee. And to make changes to the homestead excemption requires changing the FL constitution through a ballot initiative. Most residents I know are dramatically opposed to a system where taxes can go up dramatically as properties increase in value.
I don't see the situation changing much in the near future unless incomes rise considerably in FL. But this is a state where $11/hr is considered good money.
I’m not trying to get personal.
Can we agree that there are many more long time residents than new residents? So the vote is skewed to the majority whose taxes are capped. If you know the taxes are capped and that the newbies will be paying the bulk for your government programs where is the incentive to stop-spending.
Not your fault, but isn’t this is a form of socialist or elitism. Where someone else pays a bigger share.
Sorry to offend, I probably used harsher words than I should have. Greed is not appropriate.
And those long time residents are bitching because they thought that their taxes would be frozen, too! THey don't understand how far below their assessed value they are.
I'm in a bit of a different situation. Since I'm in the process of getting my green card, I can't get homestead excemption. I'm treated like a snow bird. I have to pay the full assessed value on my home every year. Next year, I can get the homestead excemption so I am very happy about that. I bought just before the big run up, so I'm OK there. But I did hear prices went down another 5% in June.
But Citizens did something dirty to me, and to everyone else so they can raise premiums without raising rates. They claim that the cost of rebuilding my home is greater than the cost of the appraised value of my structure and land! So my premium went up 10%. Now Citizens is sending me to a small FL based insurance company. Since it is smaller than the top 20 companies in FL, they can charge rates higher than Citizens. Found out I'm going from $3K per year to between $6-8K per year. the best thing I can do is move to another house and be forced back into Citizens because this company is only taking over FL policies, not writing new ones! At least I don't have to worry about the tax hit since I'm paying the max anyway.
Good point! BlabItGrabIt can try to make money on a property whose taxes and insurance costs are greater than whet the rental market will bear! That’s one reason why property values are dropping like a rock. Lots of people tried that bright idea and are selling like crazy. That why there a re nine times as many homes on the market now than there were last year! And prices continue to plunge. What was $350K last summer is now in the mid to low $200K’s and prices are still dropping. People are getting buned big time down here right now.
FL needs to cut back on all the shiny new libraries and fire departments. The days of rolling in the property tax money will be over soon if no one is buying.
Boy, $3 to 5k ouch. I’m on a farm 25 miles inland and I dumped Citizens (@$4,100) and got Farm Bureau to write at $2,200
I’m a lucky one I guess. My taxes are still over $4k while I have neighbors paying under $1k.
What opportunities are there for someone who just wants a cheap cabin (low taxes and not worth insuring) for a vacation home near the beach in a rural area? Is rural land still cheap?
And will need rental houses, apartments, and trailers. Ka-ching! ka-ching
Oh cry me a freaking river.
You carpetbaggers move down here and starting whining about the inequity of the tax structure when you probably bought property down here that cost about 30 to 40 cents on the dollar of what you sold property for in New England.
But that's ok, isn't it? Not your fault you could buy property for a song from us stupid Floridians.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.