Underwater Owners in Southwest Florida; Third Wave Coming



News out of Lee County shows an increasing number of homeowners facing negative equity situations. The News-Press shares a Zillow bar graph showing the percent of homeowners who are upside down in their mortgages by year of purchase. Those who bought at the market peak in 2006 are hurting the most (78%), while 2005 and 2007 buyers aren't faring much better, at 60% and 64%, respectively. Today's buyers are breathing a little easier considering the median sales price of an existing single family home in Florida has fallen a dramatic 54% from the peak of $322,00 in December 2005 to $146,900 in August of this year. Chris Lafakis, Florida analyst for Moody's, sees more foreclosures on the horizon, "The third wave is coming from people who are underwater who are suffering disruptions to income. That includes losing your job or repairing your car or a death in the family. It’s a combination of declining home prices and a weakening job market."


S.S.D.C.: Same Story, Different County

Brevard County homeowners are also wrestling with negative equity situations, and the pain distribution is identical with Lee County, leaving one to believe this scenario is playing out statewide. Just look at the similarities between the distribution of underwater homeowners in Brevard County by year and the Lee County numbers. 2006 was the worst year in Brevard County from a homebuyer's standpoint, while 2005 was the best year to be a mortgage broker. In 2005, when lax lending standards and interest-only ARMs reigned supreme, 11,749 new mortgages were issued in Brevard County. Since then, only 12,609 new mortgages have been issued during 2006, 2007 and 2008 combined. Some homeowners like Maria Acevedo feel trapped, "The only thing keeping us here in Florida is our house." Acevedo probably would have broken even considering she purchased her home in 2004. It was her cash-out refi that finally put Acevedo underwater.


Canada's Elites Eyeing Florida Bargains

Kelvin Browne, a columnist for Canada's National Post, is one of those buyers who pulled the trigger on a Florida condo in 2006. Browne doesn't believe he is underwater...yet: "I suspect these paper profits will soon evaporate. I worry what happens when all those new towers with units to sell go on the market. Oversupply of new units isn't going to make my place more attractive." Still, Browne says many upper-class Canadians are weighing both the 30-40% drop in Florida home prices and the relative (although easing) strength of the Canadian dollar versus the dollar, "For months, the theme at the dinner tables of the well-heeled has been whether now was the time to buy property in the U. S. (And) while most of foreclosure land isn't what elite Canadians covet, there are wonderful properties in Florida, Arizona and California that have plummeted, too."

From the Daily Soak.