2011 to be record year for foreclosures

Wanted to see what local/realtors thought of this and how it will affect Sowal.

I thought 2011 was supposed to be when we had big issues with commercial loans, but it seems like it's going to be another rough year for residential.

Over 1 million Americans seen losing homes in 2011 - Yahoo! News

NEW YORK ? The bleakest year in the foreclosure crisis has only just begun.
Lenders are poised to take back more homes this year than any other since the U.S. housing meltdown began in 2006. About 5 million borrowers are at least two months behind on their mortgages and industry experts say more people will miss payments because of job losses and also loans that exceed the value of the homes they are living in.

One in every 45 U.S. households received a foreclosure filing last year, a record 2.9 million of them. That's up 1.67 percent from 2009.

Foreclosures are expected to remain elevated throughout the year, pushing home prices down another 5 percent nationally before finally bottoming out.

The pain likely will be the most acute in states that have already suffered the worst. For the most part, it will be states that saw the biggest housing booms: Nevada, Arizona, Florida and California. They will be joined by states hit hardest by the economic downturn, including Michigan and Illinois.

More than half of the country's foreclosure activity came out of five states in 2010: California, Florida, Arizona, Illinois and Michigan. Together, these states recorded almost 1.5 million households receiving a filing, despite year-over-year decreases in California, Florida and Arizona.

One in every 17 Arizona households got a foreclosure filing last year, while one in 18 received a notice in Florida.

Many of the conditions are ripe for a rebound. Most news articles now, like the one you've linked to, are glass half empty and negative; In 2005, all news articles were positive, talked about flipping and making money, talked about the endless supply of boomers retiring, talked about the relative value of U.S. vs. European real estate, or within the country, compared areas like South Walton, to Naples or West Palm Beach and trumpted the valuation catch up that still will LIKELY occur, according to most trusted authorities, sources, etc etc. on real estate.

Now the horse is out of the barn, the articles are for the most part still very negative, particularly they were last year, all they can foresee is the "other shoe to drop."

I'm growing more optimistic by the day here really.
News covergae is typically a good contrarian indicator (think Newsweeks 1980 Cover "Death of Stocks" before stocks went up thousands of percentages in the ensuing couple of decades)

Whats a leading indicator, that may move up, when things still feel and seem bad? Stocks.

The one stock tied to South Walton? JOE.
Stock in St. Joe Company (JOE) is up 35 % in the last few weeks alone !!!!!!!!!!!

giddy up

Well, that is why I wanted to hear from the peanut gallery and hear how this applied to our local markets - but this does not seem to be based on opinions or negativity, but pretty straight forward numbers.

Do you dispute any of their stats? I couldn't believe the 1/18 households in Florida getting a foreclosure notice - especially once you factor in that just being one year's stat and how many people completely own or rent their homes, but I also know that many people I know are dealing with this right now.

P.S. I don't think Joe's performance is a very good indicator - never been a fan of their long term thinking (or short term for that matter, but that's my personal opinion). They are "corporate" instead of long term/community based IMO. Not to mention I think the stock market is too high for current conditions and we are ripe for a dip.

Well, that is why I wanted to hear from the peanut gallery and hear how this applied to our local markets - but this does not seem to be based on opinions or negativity, but pretty straight forward numbers.

Yes, the negative gospel is not even opinion anymore , once everyone is so negative (or positive as in 2004), it becomes fact based right? Those who argue against the overwhelming majority are doing so in futility, based on cold hard facts. I hope everyone agrees with you frankly.

Do you dispute any of their stats?

No I do not. Hey, do they have any forward looking stats?

I couldn't believe the 1/18 households in Florida getting a foreclosure notice - especially once you factor in that just being one year's stat and how many people completely own or rent their homes, but I also know that many people I know are dealing with this right now.

P.S. I don't think Joe's performance is a very good indicator

I don't "like" JOE per se either, but don't dislike them either. Coincidentally it is about to be under new management (Bruce Berkowitz, the Warren Buffet of the last two decades), repleat with all long term thinking.

- never been a fan of their long term thinking (or short term for that matter, but that's my personal opinion). They are "corporate" instead of long term/community based IMO. Not to mention I think the stock market is too high for current conditions and we are ripe for a dip.

I'm fine with not debating "corporate" vs. "community based" in the context of this thread about real estate values. Again, I hope everyone agrees with you now, that South Walton is going to hell in a hand basket in 2011, and further that that forecast is solely "fact" based.

I've never understood the anti-Joe sentiment so consistently expressed by many of the frequent posters on sowal.com. The watercolor and Watersound developments are phenomenal and both kept a tremendous amount of natural undeveloped space rather than cram lots into every available square foot. While rivercamps hasn't sold much it also is a terrific use of land. Joe has, in my opinion, exponentially increased the value of it's land holdings, as well as those who own land close to their developments for the very long term in sowal. I don't think any board of directors would have approved the airport project based on short term goals. 20 and 30 years from now, our area will continue to benefit from the "corporate" approach Joe has taken.

I've never understood the anti-Joe sentiment so consistently expressed by many of the frequent posters on sowal.com. The watercolor and Watersound developments are phenomenal and both kept a tremendous amount of natural undeveloped space rather than cram lots into every available square foot. While rivercamps hasn't sold much it also is a terrific use of land. Joe has, in my opinion, exponentially increased the value of it's land holdings, as well as those who own land close to their developments for the very long term in sowal. I don't think any board of directors would have approved the airport project based on short term goals. 20 and 30 years from now, our area will continue to benefit from the "corporate" approach Joe has taken.

I couldn't agree more. You couldn't have a finer corporate citizen, to promote the sustainable long term development of the area, considering what any private land owner could have done with their 30A holdings over the last two decades. I don't get the whining about JOE either at all, but then again, we're probably just in the silent majority that also supports the expansion of usage of green vehicles like LSV's on 30A, by making a couple very very minor modifications.

I've never understood the anti-Joe sentiment so consistently expressed by many of the frequent posters on sowal.com.

Careful now , 7 out of the 10 most frequent posters are about to rise up and now take sides against you on this issue (no matter the issue), to support their frequent poster buddy

The watercolor and Watersound developments are phenomenal and both kept a tremendous amount of natural undeveloped space rather than cram lots into every available square foot. While rivercamps hasn't sold much it also is a terrific use of land. Joe has, in my opinion, exponentially increased the value of it's land holdings, as well as those who own land close to their developments for the very long term in sowal. I don't think any board of directors would have approved the airport project based on short term goals. 20 and 30 years from now, our area will continue to benefit from the "corporate" approach Joe has taken.

tttttttttttt

I think WaterColor was masterfully done, and WaterSound still offers the most expansive beach and massive dunes along 30A. Especially when you consider what Joe could've done with those properties, I believe they took the high road on development. Are they dense? Yes, but very well done.

JOE still has towns to build. Their holdings in Bay Co are impressive and with the future growth around the airport industry, Bay Co will have more than tourism dollars flowing in. All of the "forgotten coast" is also potential for resort creations by JOE. You can call it unwanted land if you want to, but many locals called the land where Seaside now sits as "unwanted" for years.

We have a wave of recasts coming, and a wave of pent up foreclosures that got put on hold last fall. I'd expect a record year for REOs. I think 2010 had something like 1.1 million foreclosures, while 2011 is supposed to have close to 2 million. A lot of prime borrowers are up at bat this year, I wonder how that will effect some of the more exclusive areas.

Prices though aren't going to plummet, but they may fall bit more, while inflation eats away at value.

Yeah, the article thought it would only lower prices by maybe 5% - not forecasting huge drops or anything.

And their estimate of foreclosure numbers was lower than those you just posted too.

That was a rather sudden shift to "Joe bashing" - I only brought them up because their stock price was mentioned as the only evidence that the article was wrong.

Didn't think it was any secret that I am not a fan of most big corporations or the type of thinking they typify. Papa Scooterbug calls it the "MBA mentality," when short term balance sheets and poorly thought out new policies from management needing to make their mark trump long term planning, common sense, and local/community needs.

I'm no expert, and not a realtor, but I have lived in the area since 1987 and seen the many ups and downs of the market here. Unfortunately I graduated college and came home to find the now infamous "up" in 2004. I remember looking for a place to buy that summer and in doing a search in Okaloosa county the only thing I could find under $200,000 was a 1964 trailer on a quarter acre in Val-p. I also drove through sowal trying to find "hidden" locations that only us locals knew about, only to find lots well north of 30a for $300,000+. I cant begin to tell you how dis-heartening it was to discover that I had been priced out of the area I grew up in and love. I was continually urged by friends and family to still buy whatever I could to flip and strike while the iron was hot, but my morals got in the way (in hindsight a good thing). I thought then as I do know, that a home should be just that, a home. A place that you buy to live, enjoy, raise a family, etc. Unfortunately its taking this housing "recession" for more people to realize this. Money comes and goes but a home should be a more permanent fixture in our lives. I began looking again this past week for properties and from what I've seen thus far I have to agree with the 2011 forecast. After going through parcel map after parcel map on the property appraisers website its obvious that there is still some trouble ahead. Its amazing to see how many properties are owned by banks, and also seeing how much some of them were purchased for. In all honesty I think its a good thing though, as the uncertainty will hopefully keep away the fly by night investors, allowing those of us that live and love it here to once again have the chance to own a piece of property in this paradise we call home, the only catch being that financing is more of a challenge and will continue to be for some if not all of 2011. Another challenge the market is facing is deliquent property taxes. Anyone familiar with the process knows that holders of tax liens have to wait two years before they can petition the court for a foreclosure/forced sale. I think we will see a spike in these in 2011 as holders of 2008 tax liens (a year of very high prop taxes) can begin this process mid year. I truly hope that there is a silver lining behind all of this, and believe there is in the form a more communal community, where our residents are more permanent which in turn forms a more involved and tightly knit sowal.

Thats simply my two cents and hope 2011 is a year where balance is found, dreams become realities, and homes become homes again...and hopefully I can find my own!

WoolyFSU- Good Luck! Here's hoping you're able to find the perfect home! There are silver linings to nearly every cloud.

(I would encourage folks to approach any financing needs with LOCALLY known lenders... private even.)

Wooly, I agree with everything you said. The problem is that there are way more housing units here (in sowal, I mean) than can be supported by local residents alone, based on available jobs. And those jobs don't pay anywhere near what it takes to pay the notes on those houses, even in this down market. I took a retail job for the Christmas season, and my found most of my coworkers are working two and three jobs just to pay rent - forget about ownership. Perhaps you were referring only to flippers in your post, and I think we an agree that that market is all but dead right now. But unless and until the job situation here changes dramatically, we will need all the investors we can find to ease us out of this mess. We are, for better or worse, a vacation destination. And as such, full-time resident owners will remain in the minority.

have no fear, the bottom was here already.

I would also add that just because a property is for sale by a bank, doesn't mean the price is set properly. I see a lot of property, particularly lots, listed too high. The banks though tend to be more reasonable, I also see REOs selling for deep discounts off list!

Pricing may stay low, but what about mortgage interest rates. Aren't they expected to rise? What's the best guess as to how much and how fast? Will rising rates exert more downward pressure on prices?

I don't expect large drops in pricing but I do expect more volume of better priced homes, and a lot of bumping along the price bottom as things continue to stabilize. There's no need to rush in, prices aren't going to suddenly head northward any day soon. The local market will be stuck in a bottom forming phase for another two or three years.

good luck to you sir, seriously. I doubt you'll get your wish. happy shopping.

I would also add that just because a property is for sale by a bank, doesn't mean the price is set properly. I see a lot of property, particularly lots, listed too high. The banks though tend to be more reasonable, I also see REOs selling for deep discounts off list!

totally agree, some reo's are steals. WHEN THOSE ARE GONE, AND THEY WILL BE IN THE NEXT FEW MONTHS, then stabilization is going to look a bit like a pop. not a pop like 2004, just an across the board, 20% hike, that all of a sudden the sellers stop selling, and buyers start buying type environment.
good luck comrades

hey but what do I know?

US Banks Reporting Phantom Income on $1.4 Trillion Delinquent Mortgages - Robert Lenzner - StreetTalk - Forbes

US Banks Reporting Phantom Income on $1.4 Trillion Delinquent Mortgages

Jan. 12 2011 - 8:36 am | 16,017 views | 0 recommendations | 45 comments
By ROBERT LENZNER


The giant US banks have been bailed out again from huge potential writeoffs by loosey-goosey accounting accepted by the accounting profession and the regulators.


They are allowed to accrue interest on non-performing mortgages ? until the actual foreclosure takes place, which on average takes about 16 months.


All the phantom interest that is not actually collected is booked as income until the actual act of foreclosure. As a resullt, many bank financial statements actually look much better than they actually are. At foreclosure all the phantom income comes off gthe books of the banks.


This means that Bank of America, Citigroup, JP Morgan and Wells Fargo, among hundreds of other smaller institutions, can report interest due them, but not paid, on an estimated $1.4 trillion of face value mortgages on the 7 million homes that are in the process of being foreclosed.


Ultimately, these banks face a potential loss of $1 trillion on nonperforming loans, suggests Madeleine Schnapp, director of macro-economic research at Trim-Tabs, an economic consulting firm 24.5% owned by Goldman Sachs.


The potential writeoffs could be even larger should home prices continue to weaken, placing more homes in the nomnperforming category on bank balance sheets.


About 6 million homes are still at risk, according to Schnapp, and at least 10% of them are 25% underwater, meaning their market value is 25% less than the mortgage? but the owners are still paying interest to their banks.

US Banks Reporting Phantom Income on $1.4 Trillion Delinquent Mortgages - Robert Lenzner - StreetTalk - Forbes

US Banks Reporting Phantom Income on $1.4 Trillion Delinquent Mortgages

Jan. 12 2011 - 8:36 am | 16,017 views | 0 recommendations | 45 comments
By ROBERT LENZNER


The giant US banks have been bailed out again from huge potential writeoffs by loosey-goosey accounting accepted by the accounting profession and the regulators.


They are allowed to accrue interest on non-performing mortgages ? until the actual foreclosure takes place, which on average takes about 16 months.


All the phantom interest that is not actually collected is booked as income until the actual act of foreclosure. As a resullt, many bank financial statements actually look much better than they actually are. At foreclosure all the phantom income comes off gthe books of the banks.


This means that Bank of America, Citigroup, JP Morgan and Wells Fargo, among hundreds of other smaller institutions, can report interest due them, but not paid, on an estimated $1.4 trillion of face value mortgages on the 7 million homes that are in the process of being foreclosed.


Ultimately, these banks face a potential loss of $1 trillion on nonperforming loans, suggests Madeleine Schnapp, director of macro-economic research at Trim-Tabs, an economic consulting firm 24.5% owned by Goldman Sachs.


The potential writeoffs could be even larger should home prices continue to weaken, placing more homes in the nomnperforming category on bank balance sheets.


About 6 million homes are still at risk, according to Schnapp, and at least 10% of them are 25% underwater, meaning their market value is 25% less than the mortgage? but the owners are still paying interest to their banks.

so 90% of homes are ABOVE water.
and the 10% that are underwater are only underwater 25%. So the performing loans in the UNDER watercategory, will be ABOVE water in four or five more years, and that's without the real estate market going up?

Fear not young man, fear not

Nowhere did that article say that 90% of the mortgages were above water.

It said AT LEAST 10% of them were 25% under water.

So all of the many mortgages 1-24% under water were not part of that 10%.

Now back to the real issue - when the hell are these banks and accountants going to get a flipping clue!!!!

It isn't income until you get paid. It's a debt owed you. 2 very different things.

Pricing may stay low, but what about mortgage interest rates. Aren't they expected to rise? What's the best guess as to how much and how fast? Will rising rates exert more downward pressure on prices?

It's highly unlikely the FED will alter rates this year. Next year they may rise a little smidgen, if that. The only thing that could change that would be a jump in inflation, and there's little evidence of that happening currently.

totally agree, some reo's are steals. WHEN THOSE ARE GONE, AND THEY WILL BE IN THE NEXT FEW MONTHS, then stabilization is going to look a bit like a pop. not a pop like 2004, just an across the board, 20% hike, that all of a sudden the sellers stop selling, and buyers start buying type environment.
good luck comrades

hey but what do I know?

What are you basing that on? Foreclosure data doesn't indicate this, in fact, it indicates the exact opposite - that we'll be seeing even more foreclosures this year than last.