More than 97,000 foreclosures were filed in 2009 in Broward, Miami-Dade and Palm Beach counties, according to a Condo Vultures report released Monday.
Earlier last year, Condo Vultures and property tax appraisers were predicting that foreclosures in the tri-county area would surpass 100,000 in 2009, but that estimate was scaled back following new federal loan modification efforts.
``As projected, the number of foreclosure filings in South Florida failed to eclipse the 100,000 threshold,'' said Peter Zalewski, a principal with the Bal Harbour-based real estate consultancy Condo Vultures. ``The newfound willingness of lenders to suddenly work with borrowers to modify mortgages or approve short sales has undoubtedly had an effect on the number of foreclosure filings in South Florida.''
While foreclosures didn't surpass the psychologically significant 100,000 mark, they did increase 29 percent to 97,371 compared with 2008.
More than 97,000 foreclosures were filed in Broward, Miami-Dade and Palm Beach Florida counties in 2009, up from 32,396 foreclosures for the tri-county Florida area in 2007.
There were a mixture of reasons for this increase in foreclosures in Florida. We will review a few of them below.
First, a short selling spree where lenders finally faced taking losses on South Florida real estate and allowed owners to sell their properties for less than was owed on them. These properties ranged from mansion to condos. These short sales helped establish new bottoms in pricing for distressed real estate.
Miami, Florida was hit hard, with 3 new condo towers discounting prices by more than 30% over their previous highs. However, these drastic reductions created great interest and ended up increasing sales up to 68% over the previous year.
These reduced prices or short sales allowed investors to buy condo units in bulk which contributed to declines in unsold inventory in 2009. Many of the top buyers of these reduced condos are foreign investors who can pay cash for their purchase and not rely on financing I a tight market.
Another key factor in the Florida foreclosure rate is unemployment. Unemployment in South Florida hit crisis levels in 2009, with unemployment rates increasing sharply from 6.4% in 2008, to 10.9% in 2009. Miami-Dade hit a devastating rate of 11.5%. These steep increases in unemployment put Florida unemployment higher than the national unemployment rate.
The economic boom years in Florida were lead by the construction industry, which continues to decrease its number of workers. This decline in numbers is now also taking place in tourism and hospitality. This unemployment has a trickle down effect to the retailers, condo association and desperate homeowners trying to find a buyer for their property.
The seizure of Florida's Bank United was yet another strong sign that the financial crisis was firmly planted in Florida. It is estimated that this failure will cos the national bank insurance fund about $4.9 billion.
With the close of 2008 citizens were pondering the question, How bad will it get? The question now, after the close of 2009? Is the worst behind us? The University of Florida survey found that consumer confidence was ahead of the lowest reading in June 2008.
The hotel industry decline greatly effected Florida's economic picture, suffering the worst hotel industry decrease in a generation. This is credited, in part, to the steep plummet in consumer spending in 2009 and to the corporate sector which all but eliminated expensive conferences in Florida. Hotels are hoping to see an increase in revenues in 2011.
Housing prices in two South Florida counties are down 16 to 28% over 2008 levels, but there is some sign of improvement as the single family home market had its first consecutive price increase since 2007. This may indicate that the price free fall, down 50% from the peak of 2007, may have stopped. This could indicate that real estate prices are nearing bottom as some real estate consultants have stated. However, some forecasters are predicting a further price drop of 30% in 2010.
Ponzi schemes effected the entire country but hit Florida with an extra punch. Bernard Madoff's scheme coupled with Allan Stanford and Scott Rothstein devastated South Florida philantropic circles, Latin Americans, and small businesses.
For the first time since 1946, Florida's population declined in 2008. What remains to be seen is if this was just a pause or a permanent change. While this decline in population probably had little immediate effect on the economy, the collapse of the condo associations in Florida had a more direct effect. Condo associations were caught when homeowners defaulted and lenders had not foreclosed yet, which forced associations to file for bankruptcy, which ultimately make it harder to get residents into vacant units, so the spiral effect continues.
While we have listed a few of the significant factors effecting Florida foreclosures, there are underlying problems with the nation as well. The banking system, Wall Street, the declining dollar and aging population are all influencing the crisis in one way or another. One factor that is critical for homeowners to remember is that you must have a place to live, and while paying on a house that is worth less than you owe is hard to swallow, paying rent for something you will never own is the ultimate insult.
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