Local News

Foreclosure market settling back to normal

SEBRING — In 2009, the worst of the housing bust, banks completed 1,508 foreclosures in Highlands County.

In the first half of this year, Clerk of Courts Bob Germaine has completed 214, putting the county on a pace for about 425.

“We are headed back to where we were before the bubble even started,” said Property Appraiser Raymond McIntyre.

If the trend continues, 2014 will boast the smallest foreclosure rate since 2005 – before the Great Recession started.

The number of short sales was also cut in half during the past 12 months, said Steve Fruit, a RE/MAX Realty Plus II agent in Lake Placid.

“I’m not really sure why,” Fruit said. Banks are harder to deal with on short sales, the U.S. Congress didn’t renew a law that allows homeowners to exclude the proceeds from a short sale as income, and the median price of a short-sale home is usually about $10,000 higher than foreclosed homes.

Even better, home sales are up 100 units from the previous 12 months, said Fruit, who was headed to a closing as he was speaking on the phone. And, Fruit said, the total number of distressed properties on the market has fallen from 34 percent to 28 percent, according to Highlands County statistics he pulled from the Multiple Listing Service.

In the past five years, the prices of distressed properties ruled the real estate market. “Short sales and foreclosures still have a significant impact,” Fruit said. “Just not as much as it was. But property values seemed to have stopped falling.”

Actually, McIntyre said, home prices are up 4 percent. “That’s for the first time since they started tracking down in 2007.”

By 2010, the foreclosure rate had dropped to 983, then to 599 in 2011. But Germaine worried about a foreclosure bubble: 1,471 were still pending in May 2012. What would happen, he asked, if banks resolved those cases and pushed hundreds of foreclosed homes onto the market in a short time?

That didn’t happen, or perhaps Highlands County was in the bubble at the time and just didn’t realize it, Germaine and McIntyre agreed. Instead, the number of pending foreclosures in circuit court were reduced steadily: 633 remain on the books today, Germaine said.

“Our judges are really working on them hard,” Germaine said. “Judge Estrada, he brings the parties in and finds out why the case is still pending. Sometimes, they weren’t ever going for a judgment, they just filed it and they intended to work it out later.”

“As for the bubble, I think we have seen it,” Germaine said. “The banks seem to be working a little more with people, so I don’t have a big bubble coming. I’m not sure why. I think maybe the people that are going to walk away from their homes have already done it, or gotten their loan modifications.”

Nationally, a report by real estate research firm RealtyTrac shows foreclosures filed have fallen 19 percent from the previous six months.

The rate of new foreclosures is at its lowest level since July 2006.

Florida is still troubled by foreclosures.

In Orlando, the Sentinel reported last week that legal filings increased 20 percent in June from a year ago. The region ranked second nationally for its foreclosure rate, according to RealtyTrac.

Miami posted the highest metro foreclosure rate in the USA, followed by eight more Florida cities in the top 10: Orlando, Port. St. Lucie, Palm Bay-Melbourne, Tampa-St. Petersburg, Lakeland, Deltona-Daytona, Ocala, Jacksonville.

Orlando’s deeper foreclosure rate during the last year may reflect bank impatience at holding onto vacant or distressed properties, especially at a time when home values aren’t increasing much, said Daren Blomquist, vice president of RealtyTrac.

However, business is getting back to normal at the Highlands property appraiser’s office, which means basing the just value of a home or business or farm on recent arms-length sales of neighborhood properties.

“We don’t used distressed sales; those aren’t arms-length transactions. If you have 10 properties for sale in a neighborhood, and five of them are foreclosures and short sales, they affect the prices of the other five,” McIntyre said. Assessors had to reach into other neighborhoods to find qualified sales. “Once they are absorbed and cleaned up, we’ll get back to an arms-length market.”

“We’re still reaching into the large geographic areas,” McIntyre said, “but in some neighborhoods, the market is very active, and we go back to the regular neighborhood houses.

“This is good,” McIntyre said. “We’re recovering. We keep hearing from our coastal neighbors that they’re back in a growth mode, and we’re usually about 18 months behind them. We’re getting back to normal – a 4 percent rise in residential values. And I can tell you from experience, 3 to 4 percent was a typical growth rate for 20 years prior to the boom.”