From the Palm Beach Post via Florida Trend:
Shelly. . . . .?
During the region's historic housing boom, home ownership was a can't-miss way to build wealth.
How quickly things have changed.
Most area homeowners who jumped on the housing bandwagon during 2005, 2006 and 2007 owe more than their homes are worth, according to a study released this week by Zillow, the Seattle-based Web site best known for its estimates of home values.
Fully 76.2 percent of homes bought in 2006 in Palm Beach, Broward and Miami-Dade counties are now worth less than the balance on the mortgages, the study says.
In the Treasure Coast, a whopping 80.5 percent of borrowers who bought homes in 2006 are upside down.
"It's pretty startling," Zillow spokeswoman Amy Bohutinsky said. "This is what leads to foreclosures."
Not everyone who is upside down on their loan will go into default, of course. Most borrowers can afford to ride out the downturn until the market improves, Bohutinsky said.
But selling now nearly guarantees a loss for those who bought during the boom. In South Florida, 29.2 percent of homes sold during the second quarter of this year fetched less than the seller had paid, Zillow found. In the Treasure Coast, 36.2 percent of homes sold in April, May and June created a loss for the seller.
Nationally, 45 percent of borrowers who bought homes in 2006 owe more than the homes are worth, according to Zillow. Because of the steep rise and fall in home prices in Palm Beach County and the Treasure Coast, higher numbers of borrowers are upside down.
"I'm not surprised by that," Neal Taslitz, a foreclosure attorney in West Palm Beach, said of Zillow's numbers. "This is a tsunami, and it's getting worse."
In a separate study released today, RealtyTrac said Florida foreclosure activity in July increased 14 percent from June and 139 percent from July 2007. The state had 45,884 properties with foreclosure filings, second highest in the nation.
The housing meltdown is hurting not just high-risk borrowers who overreached. Even cautious borrowers are feeling the squeeze, said mortgage banker Bill Davis, head of Private Funding Specialists in Palm Beach Gardens.
"This has gone from subprime to prime," Davis said. "People with 700 credit scores are getting crushed. Those are the ones who break your heart, because they've done everything right."
Davis offers this example: Say you paid $400,000 for a home in 2006 and made a down payment of 10 percent - a hefty sum in those days of loose lending standards. Today, though, the home might be worth only $325,000 - significantly less than your $360,000 mortgage.
If you want to sell your home, you'll have to write a check to the lender. Many homeowners have little choice but to go into foreclosure, Davis said.
Some Realtors questioned the accuracy of Zillow's figures. After all, the company's so-called automated valuations of homes are notorious for making dubious comparisons when calculating home prices.
"I have a very skeptical view of Zillow," said John Mike, chairman of the Realtors Association of the Palm Beaches.
Scott Agran, president of Lang Realty of Boca Raton, also criticized Zillow's numbers. He agreed that the market has been in a deep downturn, but he predicted that home values will come back strong.
"We've been in free-fall since 2005," Agran said. "We're back to 2002 pricing. This is a tremendous buying opportunity."
Shelly. . . . .?