TICK TOCK TICK TOCK.......

Now that the bursting of the Real Estate bubble cannot be denied by the NAR and the rest of the cheerleading REIC, what is in store for South Florida's FB's?


As reported in today's Sun-Sentinel , it's not good. For regular readers of this blog, you have known about this for over a year. Now that everyone is running for the lifeboats, who will be left to rearrange the deck chairs?



"A deluge of South Floridians are falling behind on their monthly house payments, raising fears that many of the delinquent property owners will lose their homes to foreclosure this year and next."Who knows how bad it's going to get," said Richard French, a manager with SunTrust Mortgage and president of the Broward County chapter of the Mortgage Bankers Association. "It's a little scary to think about."



"Escalating home values from 2000 to 2005 caused buyers to overextend themselves. Many took out short-term, adjustable-rate mortgages and are seeing their loan payments spike as interest rates rise. Higher property taxes and insurance premiums also are putting homeowners in peril."



"Broward had 1,168 property owners with late payments in March, a 331 percent increase over the 271 a year ago, according to Realestat.com, a Plantation-based firm that compiles local housing statistics. Palm Beach County's late payments climbed 288 percent, to 888, from 229 last March.Late home loan payments in both counties increased in each of the first three months of 2007. "



"The rise "bodes ill for actual foreclosures down the road," said Mike Larson, an analyst with Weiss Research in Jupiter.Marc Thomashaw, a vice president for Realestat.com, was more blunt."We're set for an explosion [of foreclosures] to happen between now and the next six months," he said Monday."



" Foreclosures in Broward and Palm Beach counties also rose in March, but at a smaller rate than late payments compared with a year ago, according to Realestat.com.Broward's foreclosures hit 543 last month, more than double the 247 from last March. Palm Beach County had 205 foreclosures last month, up 19 percent from 173 a year ago.Nationwide, the number of homes entering foreclosure in the January-March period doubled from a year earlier, according to California-based Foreclosures.com."


'In recent years, some of those owners avoided foreclosure by refinancing or simply selling the homes, making large profits.But refinancing isn't as easy because lenders are tightening credit standards....What's more, South Florida's slumping real estate market is holding down prices and preventing recent buyers from selling quickly to get out of financial trouble."


"Mark Zandi, chief economist with Moody's Economy.com, a West Chester, Pa., research firm, agrees that short-term investors and others who bought within the past few years are most at risk of losing their homes. Still, he said more mortgage delinquencies and foreclosures are inevitable due to a "noxious mix" of aggressive lending, falling home prices and borrowers facing large increases in their monthly payments."



It's obvious in my opninion we are in the beginning of a major correction in prices. People like Ken Heebner, Bill Gross, Sir John Templeton, and other highly respected individuals are calling for a major pullback in prices. I encourage readers to use the tools on this site. Look at the inventory numbers, track teh number of foreclosures, use the rent vs. buy calculator on this site. Plug in the numbers. Do the math. I believe prices need to come down some 20-30% or wages need to go up some the same to reach equilibrium. Which do you think is most ikely?




As always, the opinions expressed by myself and the readers are just that- opinions. You should always seek out the advice of professionals when making a major purchase decision such as an attorney, CPA, finacial advisor, etc. Please do your own research and due diligence.