Posts Tagged ‘Real Estate’

Foreclosures in Florida continue to zoom higher and higher. The only good news is that Arizona has overtaken Florida in foreclosure numbers. Today the Sunshine State ranks 4th in the national foreclosure race according to RealtyTrac.

Florida had 35,264 foreclosure postings in April 2008. This was an increase of 16.6% from March 2008 and 146% from what it was a year ago in the same month of April. In the nation this number is the second highest trailing behind California. The foreclosure rate is 1:242.

Across the country, foreclosures increased by 4% from March of this year and 65% from April 2007. The properties affected numbered 243,000. This is the highest number since January 2005. It calculates to 2% of all the houses in USA being in foreclosure and these are crowding into the real estate markets causing more supply of houses than demand. The worst affected states are California, Florida, Nevada and Arizona. Property taxes are falling causing loss in revenue. Municipality budgets are at high risk. Things have reached an extreme point for Vallejo in California compelling it to file bankruptcy. It has the sixth highest foreclosure rate in the country.

Of the top 10 metropolitan regions Florida and California are responsible for 9 of the worst offenders. But there are variations. Tampa-St. Petersburg region is not amongst the top ten. The listed Florida metros are Cape Coral-Fort Myers (no.5), Port St. Lucie-Fort Pierce (no.9) and Fort Lauderdale (no.10). ReatlyTrac released these numbers.

Foreclosures.com has released a different set of numbers. According to it 44,825 houses were foreclosed in April. This was an increase of 2.4% from March and 22% from the January 2008. During the first four months of this year Florida noted 162,316 postings – it being the highest in the country. In Hillsborough County between March and April the foreclosure number remained flat but it was a hike of 46% from the start of this year. In Pinnellas County the increase is by 12% from March 2008 but has decreased by 8.1% from January 2008.

The blame is being put on the sub-prime floating rates when loans were easily doled out without asking questions about income. The valuations of houses were also falsely inflated to slice out bigger loan amounts. With money flowing in there was a housing boom and people snapped up properties not only for residential purposes but also for investment and speculation. This led to the bubble bursting – those states being worst affected where there had been the most building activity.

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So far Silicon Valley has been fortunate. The foreclosure attack on Silicon Valley has been relatively less severe in comparison to the rest of California. But real estate agents and tax experts believe that it is biding time – soon foreclosures will flood the valley.

At a recent meeting of Silicon Valley Association of Realtors, Pamela Simmons of Simmons and Purdy commented that foreclosures continue to rise as the state struggles through falling estate prices and at-risk mortgages. According to information complied by DataQuick, the Trustees Deeds numbered 47,171 during the first three months of 2008 as compared to 11,032 during the same period in 2007. This calculated to a jump of 327.6%.

About 18 months ago Simmons had noticed the first flow of foreclosure cases increasing. The first lot consisted of those who had no reason to buy a home at the very onset. They had no steady income and became easy targets of predatory lending tempted by nil down payment loans. These buyers were the first ones to succumb to foreclosures.

The second lot of foreclosure victims consisted of those in trouble for having contracted sub-prime mortgages with adjustable interest rates. These rates began to swing up throwing down the borrowers. It became impossible for them to keep pace with the upswing.

The third wave is now visible, says Simmons. These are house owners with negative amortization loans. It means these borrowers siphoned off equity from their house during the boom period but now that the prices of real estate have fallen they are getting entangled in the foreclosure net. For some the monthly payment has increased by as much as $3,000. The third group with multiple mortgages on their properties is referred to as ‘flippers’. It is like a game of musical chairs. Now that the music has stopped they do not have a chair to sit on!

Simmons further went on to explain the difference between judicial and non-judicial foreclosure. The former is processed through a court of law starting with the filing of complaint giving details of the debt. If the court is satisfied with the plea then it issues an order for the lender to proceed with an auction and realize dues together with incidental fees. The judicial process is extremely costly and may involve an expenditure of $100,000 for the lender. Non-judicial foreclosures are conducted without the mediation of the courts. Nearly all the foreclosures in California State are non-judicial.

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Foreclosures are gobbling up exclusive towns – not even the sophisticated exclusive ones like Nantucket, Edgartown and Weston. This shows that the foreclosure debacle in Massachusetts is going further downhill. Today some the richest towns are being bitten by the foreclosure bug. The sky jump in these areas is more than the average of the state.

Massachusetts’s foreclosures have risen by 37% in the first quarter compared to the same period in 2007. The exclusive zones of the state have caught up late with the foreclosure crisis. The buyers who purchased ritzy villas or gated accommodations in the exclusive zip codes are now struggling to meet mortgage payments like the others in the state. This is further weakening the economy and causing real estate markets to tumble. There are no boundaries anymore. Foreclosure the great leveler is hard at work. Jeremy Shapiro opines that ‘communities rich and poor, urban and suburban and rural are all being impacted.’

In the forefront are towns with triple digit jumps – Belmont, Oak Bluffs and Nahant with 200%, 217% and 240% spikes respectively. Many rich suburban towns are also entering the club of Bay State communities of 25 members where the foreclosure rates have doubled. On the islands foreclosure numbers skyrocketed in Edgartown, Tisbury and Nantucket by 100%, 150% and 113% respectively. In some of the fancy western suburbs there were dramatic increases in foreclosures. In Medfield, Boxboro and Weston it increased by 114%, 144% and 138% respectively.

With the sliding down of the general economy and especially the real estate market even the wealthy are finding it difficult to wiggle out of the foreclosure net. To add insult to injury there are numerous job losses. The alternative of selling the house and escaping the ignominy of foreclosure is no longer available. The loan amount, more often than not, is greater than the fallen value of the mortgaged property. At the root of the problem is the real estate slump.

There is talk that those investing in real estate might avail of a rare opportunity on student rentals in Boston. In the two neighbourhoods of Allston and Fenway, packed with students, 518 apartments and 24 properties are up for grabs. The sale of so many is raising eyebrows. With rents at an all time high it is feared that the investors are out to put on the squeeze taking advantage of foreclosed victims searching for houses.

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Foreclosures are proving to be a challenge and in each corner of the country the people and the administration are rising to face it with solutions.

Baldi together with Brad Peterson is spearheading operations to prevent people from being thrown out of their houses. They are witnessing the carnage caused by increasing flood of foreclosures. In each quarter more people are seeking help from this FCCA conducted help programme. It rose from 12 persons in the third quarter to 24 in the last quarter of 2007. In the first quarter of 2008 the number is 48.

Keith Patterson is a real estate agent based in Frederick. He blames the foreclosure debacle to defective government policies. The authorities, he said, ‘closed their eyes, knew what was happening and didn’t think it would go wrong.’ But it did. While the banks hardly took any down payment on the sub-prime mortgages at the time of the housing boom, the government looked the other way.

Comptroller Peter Franchot, one of the top officials of the state, echoes the views of Patterson. He opines that the responsibility for this catastrophe lies with the Congress. Franchot cynically remarks ‘the last sever years of Washington have been like the Wild West.’ It has been a free for all and today the people are paying the price for the lack of regulation.

Frederick is rising to the challenge. Peterson and Baldi are repeatedly asking the victims to seek help before succumbing to foreclosures. Advice is being given free of any charges to the residents of Frederick. There are many options but if the individuals concerned delay then all the doors will close.

Maryland had started help operations (Bridge to Hope) from January to help those who qualify with the sanctioning of $7,000 to $15,000. Baldi was realistic when he admitted that each and everyone cannot be saved but by working together a lot can be done to clear the gloom. Another programme sanctioned by the state is The New Lifeline Refinance Mortgage Program. People in need of help are enabled to refinance with low interest loans. Each programme however has certain preconditions. Help is not limited only to those who are victims of the sub-prime fiasco but also for those who have lost a job and are in need for guidance and support for some time. A financial arm-twisting can also cause foreclosures. When the situation is too complex legal opinion is sought.

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During the first quarter foreclosure numbers showed signs of rising in the metro areas. This is in comparison to the figures of the first quarter during the previous year of 2007. Most areas saw double digit and even triple digit rises. There were however few exceptions – Loudoun County, Manassas, Fairfax and Falls Church. James J. Saccacio of RealtyTrac comments that there is no denying that ‘most regions of the country are seeing more foreclosures.’ There are 100 metropolitan areas in US. Washington area stood 22nd. Maryland came 12th, while Virginia ranked 15th.

In Maryland Prince George’s County had the most concentrations of foreclosures with one out of 95 houses slipping into its net. During the first quarter there were 3,334 postings that calculates to a jump of 34.06% over the previous quarter – the last three months of 2007.

The 7th position went to Montgomery County with 1,642 foreclosure listings in the first quarter of this year. This showed a rise of 42.91%. One out of 219 houses were in foreclosures.

In Virginia the top rankers were
Prince William County, Manassas and Loudoun County. In Prince William one out of 35 houses were in foreclosure – an increase of 91.36% with 3,764 foreclosure listings. Manassas recorded 151 foreclosures during the first three months and showed a decrease of 50.81% from the last quarter of the previous year. Here the ratio of foreclosure was one out of every 85 houses. In Loudoun County the increase was a modest 0.73% from the last quarter with 1,110 foreclosure postings. The proportion was one out of 89 houses were stained with foreclosure.

Fairfax ranked 8th with an increase of 101.96%. The number of foreclosure noting was 3,189 and the ratio was one out of every 123 houses being in the dreaded zone.

Arlington County and Alexandria saw three fold increases but the proportion was low with one out of 399 and 351houses being in foreclosure respectively. There were only 20 postings in Fairfax City, which showed a decrease of 64.29%, with 56 postings. Falls Church had merely three foreclosure listings after having notched 11 numbers in the last quarter.

Economist Paul Carrilo of George Washington University opines that foreclosures are the cause behind the fall in real estate markets. If incentives can be increased to rope in more buyers to avail of cheap bargains then the markets will again find its bearings.

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One has to be brave to think about buying in Las Vegas or Tampa where the real estate market is sliding down from bad to worse. But in other cities there are growing signs of stabilization and one can try to snap up a bargain in foreclosed properties. The best places are Charlotte, Raleigh, Oklahoma, San Antonio and Albuquerque. Right now these five cities are the top five best options for the buyer to go to.

The largest 100 metro areas have been categorized according to the number of foreclosures within the ranges covering 3% to 4%. Riverside is 3.8%, Detroit is 4.8% while Seattle is 0.4% and Austin 0.8%. From these figures the buyer should be able to gauge the mood of the real estate market.

Apart from taking foreclosures as an yardstick there is another method related to correct valuation of the house. Undervalued houses do not always mean a sound investment. For instance a house in Detroit may be relatively cheap but the economic atmosphere here is bleak and this tells on the market. If Detroit had more jobs then the picture would have been different.

The other cities that measured up to quality of life as regards local economy are Raleigh and Oklahoma where foreclosure numbers were low while economic climate was also good.

The next point of focus was how real estate had been performing since 2006. In no city had there been big jumps but nevertheless in San Antonio prices had increased between 2006 and 2007 by 8.24%. Thus this city carries far less risk than others like Sacramento where prices had dropped during the same period by about 10%.

Having sifted through all these angles it was now necessary to see the gap between average prices and the foreclosure prices from reliable data to find out where the largest discounts were being offered by the banks. Stubborn sellers will not negotiate but cling on to their demands. Those who want to short sale are the best options for here the house is offered at a price that is less than the loan amount. On this count Charlotte is a good bet. Here the houses of foreclosed units are 28% below the average thus causing an average saving of $56,874. It is nothing to be ignored in a market where the average sale price stands at $147,299.

Online there are details of all the houses listed but it is wiser to go through renowned routes

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With rising foreclosure numbers, real estate agents and mortgage houses are closing shop. In this melee there is plenty of work for those dealing with foreclosure advice. The Carlsbad Company named You Walk Away plans to increase its staff by five times. It is the same with HomeFreeMe a similar company kicking off in San Diego. Other copycats are following – Walk Away Smart and Walk Away Plan in Los Angeles and Arizona respectively.

The surfeit of foreclosure advice giving companies is causing concern for some housing advocates who are recommending the government supported agencies that offer free advice. The promises of these new companies do not ring true – underlying it seems to the greed for fishing in troubled waters. People are so desperate that they will cling at any straw. The advice companies that have sprouted overnight argue that for a fee the victims will get peace of mind and swift personal attention.

Since the beginning of this year the banks have bought more than 4,000 foreclosed houses in San Diego County. This a 250% rise as compared to the same period in 2006. In February – in just a month – 3,000 borrowers received foreclosure notices – this being the first step in the foreclosure process.

HomeFreeMe and You Walk Away also provide for consultation with legal experts and discuss plans for credit repair. The same services are offered free with non-profit bodies like Community HousingWorks being backed by the government. They too have their offices in San Diego and Escondido. You Walk Away takes $995 for its services while that of HomeFreeMe is slightly lower at $897. Jon Maddux, a representative of the former says that their services are better and swifter than the non-profit groups. Perhaps the non-profit groups help but they do not give personalized service. It is little wonder then that these private advice groups are simply flooded with work. It is difficult to get an appointment with Community HousingWorks – sometime one has to wait for a month. Throughout the counties families are being helped. 60 telephone calls are pouring in each day and the filing cabinets are overflowing with folders. The job is very sensitive. Once a 60 year old gentleman sat down crying and could hardly talk. In the last 6 months out of 215 families 28 have been able to get their loans modified. In some cases the advice is given on steering through the foreclosure process.

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Foreclosures in Florida more than tripled in the fourth quarter of 2007 from what it was during the same period on 2006. More buyers are flocking to foreclosed house auctions as the real estate markets continue to nose dive.

America’s giant auctioneers Hudson & Marshall is scheduled to auction more than 500 foreclosed bank owned units from 7th to 13th April. In Miami alone 200 houses will wait for the anvil. In Orlando and Tampa the number is 100 and 80 respectively. The asking price ranges from $34,000 to $700,000 for houses whose insurances have been paid and title deeds clear.
A representative of Hudson & Marshall, Dave Webb comments that a frenzy of buildings and increased number of foreclosures have led to Florida leading other states in this crisis. But this is a great time for buyers who shied off during the boom housing price rise. A bargain can be picked from the auctions as banks are anxious to be relieved of the weight and agreeable to sell them at massive discounts.

A survey notes that in January 2008 the prices of single family houses continued to slide in the country. Las Vegas and Miami reported 19.3% decline – the steepest among all the metros.
Hudson & Marshall would auction foreclosed houses during April at Fort Myers, Jacksonville, Daytona and Port Charlotte, Port St. Lucie, Melbourne and Tampa as well as Miami, Fort Lauderdale and Orlando. The houses would be sold on an as-is basis. Prior to bidding the prospective buyers could inspect the units on 5th and 6th April during 2 hours in the afternoon. Further details are available on their website.

The winning bidders are expected to be prepared with cash or cheque deposit of $2,500 or 5% of the sale price – whichever being higher. By going online buyers can bid. Sellers generally call back within 24 hours. The auctions are reserved – the sellers have a right to accept or reject the offer. So far of all the auctions conducted by Hudson & Marshall none have been rejected.
Hudson & Marshall is a name in the auction business having been in operation for the last 40 years. It has set a standard for satisfactory service – a yardstick that it continuously endeavours to maintain and excel. Both buyers and sellers are satisfied with their handling of the matter. Their clients range from individuals to medium and corporate bodies.

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