Market conditions set the stage for more foreclosures.
Bubbles, like bull markets, end ugly. For proof, look no further than the battalions of homeowners and real estate investors being marched off into foreclosure in Florida.
Florida's foreclosure rate in February trailed only small states Nevada and Colorado nationally, with one foreclosure filing for every 382 households, according to RealtyTrac, an Irvine, Calif., foreclosure market firm. In total filings, Florida, with 19,144, led the nation. That number nearly doubled February 2006's count and was up 63.5% from January, RealtyTrac says.
But the depth of real estate sorrow, as shown by the accompanying charts, depends on the area and how much speculation and price run-up it saw since 2000.
The glut of unsold properties doesn't provide optimism that those chart numbers represent a peak. In the fall of 2006, Jack Connor of IRR Residential Appraisal Associates in Longwood appraised about one home a month that had a troubled loan. In March, he was appraising three a week.
Within individual markets, the anecdotal evidence is that the best locations -- the Winter Parks -- have some of the greatest unsold inventory problems. Investors and buyers, following the old saw about location, bid up prices highest in the best places.
Meanwhile, those who scraped into homeownership through subprime financing are falling out already. Coming next are those who went in with adjustable-rate loans expecting to refinance their way out of an interest-rate bump. They lack the equity to do it painlessly.
Recent new-home purchasers who are now selling face trouble. They're competing against builders desperate to unload unsold inventory. Also in jeopardy: Those who used home equity loans to turn their homes into piggy banks. Connor recalls one home he appraised that had had six refis in 18 months. The homeowners were well-equipped with a new pool, home electronics and new SUVs, but they were out of equity.
"We've got some real adjustments ahead of us," says real estate consultant, analyst and Florida Trend contributor Lewis Goodkin. That's especially true in the condo market. Buildings now under construction throughout the state will finish this year and next and then developers and their lenders will see how many contracts turn into actual sales. Says Goodkin: "The condo market is a genuine disaster."
NEXT PAGE: "Month-By-Month," and "Year-By-Year" Change in Foreclosure -- Charts