What they don't tell you about the Florida Real Estate Market

     Everywhere you look today you will see news reports and articles about how the economy is picking up and foreclosures are drying up.  As the broker for a Florida real estate company that specializes in representing home buyers, we are very careful to agressively negotiate the best price for our clients because we have no responsibility to the property seller.  Many people don't realize that it costs the buyer nothing to have their own real estate professional who's only responsibility is to assure their best interest. Kinda like going to court and using your opponent's lawyer.  The reason that a buyer's real estate agent doesn't cost them anything is because the seller pays the real estate commissions.  For this reason, you will hear a very different story from a buyer's agent than a seller's agent or other industry professionals such as mortgage brokers, businesses owners, even local tourism and media professionals.  So the question is, "who does a potential real estate buyer believe?".  The answer is "the facts!"  Those facts include not only sales and average price trends but ALL of the factors that can impact the housing market.

I can only speak for the Florida real estate market and your use of this information will depend on your particular needs.  Are you moving to the area?  Are you an investor looking for rehabs or rental income properties?  Are you a hedge fund manager looking to maximize your client's return?

So let me give you some facts about buying Florida Real Estate.

Distressed Property Numbers

• 306,000 Florida properties are in some state of foreclosure (20% of the nation)
• 750,000 Florida homes are underwater
• 90,500 (20%) Florida condos and homes were sitting vacant in 1st quarter of 201 (zombie foreclosures) - Florida has the highest number of zombie foreclosures in US
• Prices of Florida real estate are still down 40.3% from peak
• 1 in every 171 Florida homes are currently in foreclosure

So you might say this is a great time to invest in Florida real estate.  The answer is "maybe".  From this we know that their are a lot of foreclosure deals in Florida and there will be for some time so lets look at how foreclosures are impacting Florida real estate.

  
Florida Home Sales

• $125,000 - Average sales price of a Florida home
• $  91,151 - Average sales price of a Florida foreclosure home.
• 27% - Average price drop on a Florida foreclosure home. Some areas such as Tampa Bay foreclosure savings is as high as 45.5%

Still looks good for buyers of Florida real estate but not so good for Florida sellers.  So now look at the:

   
Economic Climate

• Jan 2013, over 102,000 Floridians became unemployed
• Obama's sequestration cuts began March 1, 2013
• Sequestration promises to benefits to Florida's unempoyed citizens by 11%
• Sequestion has earmarked $31.1 million cuts for teachers and teaching staff

OK, so maybe not so good for Floridians but still really good for Florida real estate buyers but there's one more factory that we need to consider when forecasting the Florida real estate market:

  
Political Climate

Florida House Bill HB87  and Florida Senate Bill SB1666 are currently before the Florida legislature and both propose using a significant portion of the $12 Billion dollars that banks paid in the robosigning "settlement" to hire retired judges to "streamline" hundreds of thousands of foreclosures that are sitting on the court dockets or getting ready to hit the courts into final foreclosure judgements.  There are other provisions that propose to remove Floridan's consitutional right to defend themselves and to get your home back if the bank wrongly foreclosed but this blog is about how these laws will impact the real estate market.  If Florida property owners (whether resident or not) want to know if the legislature is breaching their duty to protect you in favor of banks, visit the bill links above and become involved before it's too late.

Putting It All Together 

Everybody is telling us that real estate sales are picking up and foreclosure properties are drying up.  What they aren't telling us is that there are nearly 100,000 Florida zombie properties that the banks are holding back from the MLS and that pending legislation will dump another 300,000 pending foreclosures into the real estate market very quickly or that another 450,000 homes are underwater and could move into foreclosure. They are happy to tell you that foreclosure homes sell for up to 50% less so you better buy right now because prices are going to sky rocket.

I'm not done yet.  Unemployment is increasing and sequestration cuts will not affect President Obama's $900,000 Florida golf weekends, Michelle Obama's $10 Million vacations or VP Biden's $585,000/night hotel.  Instead sequestration cuts that just took place will increase Florida's employment rate which will cause even more Florida homeowners to lose their homes to foreclosure.  Is anybody starting to get the picture yet?

When sequestion cuts hit their full impact, banks put all of their zombie properties for sale and the Florida legislature passes laws to dump up to 750,000 more properties on the market that the bank NOW sells for up to 50% less than a non-foreclosure, what do you think that is going to do to property values in Florida?

So that's the truth, the whole truth so help me God.  Does this mean that I shouldn't buy Florida real estate right now?  Not necessarily.  What it does mean is that you are a fool if you let somebody blow smoke up your skirt/pants/***  and pay above market value and if you don't want to be upside down in 6 months to a year, you better have an agent that is a strong negotiator, knows the facts and will argue them for you.  As a real estate buyer, don't fall so in love with a property that you will pay anything. As a Florida property investor, you may want to wait to see what happens with HB87 and SB1666 before you invest, especially if you are not in it for the long term.  As a Florida seller, get involved with what your government is doing because even if you are not deliquent or have no mortgage on your real estate, you see your home value drop significantly in the near future.

Future Blogs

Lastly, even more factors may impact your decision including the instability of the US dollar which many investors believe is safer held in hard assets like real estate OR the marketability of titles that have been clouded by the banks failure to properly preserve the record by recording transfers.  Some audits have calculated these faulty titles to be as high as 50-70% of all real estate titles.  Stay tuned for more on those topics by subscribing to this blog feed.