As of the end of August Florida has jumped to the number 2 spot for the highest number of foreclosure filings and the number 3 spot for the highest rate of foreclosures in the country according to Realtytrac. The number of foreclosure filings jumped to an astounding 33,932 filings meaning this figure jumped 77% in a month’s time.
All this sounds like breaking news but most people in the industry had an idea this was coming. Our first clue was towards of end of 2006 when everyone knew that many of the sub prime mortgages would start becoming due in the second quarter of 2007 meaning the rates of these adjustable rate mortgage were scheduled to increase. This in turn made it harder to pay the mortgage that is rapidly becoming more and more every month. The mortgage companies knew that many of these exotic mortgages were in Florida.
The foreclosure process doesn’t happen overnight. It takes around six months so the number of filings should be going up. In the next few months, the number of actual foreclosures should be way up. It will be a great time to buy in Florida if you’re a bargain hunter but the best time to buy these properties is pre-foreclosure or short sale situation where the banks haven’t spent $60,000 on the process. The foreclosures in turn should drive prices down. Oops.
I’m gonna go out on a limb and say the recovery from this market we’re in will not happen for another 3-5 years. I say this because that’s how long it took to recover from the bear market caused by the S&L scandals in the late 80’s. The market in this case did not recover until 1996. There’s a lot of similarities between these periods of time in the market. A Bush is president and a lot of financial institutions were going bankrupt.