It's reaching the point where discussing month-to-month changes in Tampa Bay foreclosures is missing the point.
Take October. RealtyTrac says we had 6,216 foreclosure filings in October, down from 6,709 filings in September. Hip, hip, hurrah? More like hip, hip, horrible.
Here's the spread sheet: Download Realtytracoct09
We're missing the dinosaur in the den. Let's talk Lis Pendens, the Latin name for foreclosure lawsuits lenders initially file against delinquent homeowners.
Lis Pendens cases totaled 4,415 in October, a hair below the 4,586 Lis Pendens filed in September. But if RealtyTrac is counting properly, these are fresh cases each and every month.
Pasco County showed large declines in foreclosures measured month to month and year to year. Let's hope that continues. Pasco, together with southeast Hillsborough County, was the epicenter of over-construction through 2007.
How long can a housing market tolerate this never-ending assembly line of foreclosures? Where's the cut-off switch? We can only hope that economist predictions of another wave of foreclosures next year is untrue.
This isn't good news: Mortgage applications at lowest levels since 2000.
On the other hand, with cash purchases making up about a third of Tampa Bay home purchases, this might not be as troubling from our perspective.
Is this going to be like Cash for Clunkers? Remember how car sales in July and August cannibalized car sales in September and October?
We'll start by conceding that home sales in October 2008 were beaten down by last year's credit lock up. Nevertheless, it's none too shabby when sales rise 35 percent year over year.
The Greater Tampa Association of Realtors recorded 1,722 sales in October 2009 versus 1,279 a year earlier. The average sales price - Tampa Realtors used average instead of median - dropped 16 percent over those 12 months. A typical home sold for $156,775 last month compared to $186,424 a year earlier.
I don't put much faith in month-to-month zig zags, but Hillsborough County home prices fell almost 5 percent from September to October. That suggests plenty of cut-rate foreclosure homes are finding buyers, which weighs down average home prices.
Here's a detailed chart: Download Gtaroct09
This story from the AP says 650,000 homeowners are enrolled in the Obama administration's foreclosure prevention/mortgage modification program. But Florida has been less successful in attracting candidates to the Making Home Affordable program. Why? Blame the investors:
Launched with great fanfare in March, the plan got off to a weak start, but now nearly 920,000 loan modification offers have been sent to more than 3.2 million eligible homeowners. That works out to 29 percent, up from 15 percent at the end of July.
In California, about 130,000 homeowners have been enrolled in the "Making Home Affordable" loan modification plan, which President Barack Obama unveiled in February. That works out to about 19 percent of the state's homeowners who were either two payments behind or in foreclosure at the end of last month, according to Treasury Department data.Two other hard-hit states, Arizona and Nevada had similar rates of assistance as California, at 22 percent and 18 percent respectively. Florida, however, was much lower, at 12 percent, possibly because of high numbers of investor-owned properties that don't qualify for the program.
If you'll recall, the program is supposed to guarantee that homeowners current on their mortgage payments pay no more than 31 percent of their incomes toward monthly mortgage payments, including taxes and insurance.
To enroll, however, you have to prove a "hardship" that can include family illness, pay cuts and unemployment, etc. After a 3- or 4 month trial period, during which the bank checks if the homeowner can afford the lowered mortgage payment, the cheaper mortgage becomes more or less permanent.
I think it's a good program, considering the other options. These are people who aren't in foreclosure but fear they're headed that way. But let's not fool ourselves: This is a massive, hugely expensive, long-term subsidy for homeowners who in many cases bought too much house during a period of exuberance.
It's also subject to abuse, but much less so than other programs. Even at the risk of federal penalties, some Tampa Bay homeowners will certainly understate their incomes to exceed Washington's 31-percent-of-income cap.
Here are results from a Tampa Bay Realtor survey contained a larger national report from Credit Suisse:
Agents said that a poor economic outlook and the upcoming expiration of the $8,000 tax credit contributed to the October slowdown. One agent said, “Unemployment and low consumer confidence,” were responsible for the low traffic levels. Another noted that, “The $8,000 tax credit time limit,” to close on a home before Nov. 30th caused buyers to remain on the sidelines, as buyers who signed a contract in October had limited time to complete the closing process by the credit’s deadline. Yet, despite this timing issue, some agents saw a last minute rush of buyers trying to sign and close on a home to be eligible for the tax credit. This may create a greater potential slowdown for November, as traffic, which may not have existed in October without the credit, is pulled forward, leaving a void in November.
The full report is here: Download Creditsuisse. It talks Tampa turkey on page 25.
Who says Tampa Bay is toxic for home builders?
Home Dynamics Corp., based in Fort Lauderdale, has begun building in Pasco County’s Lakeshore Ranch neighborhood. It’s only the second new builder to leap into one of the most depressed housing markets in Tampa Bay history. Minto Communities LLC arrived earlier this year in New Tampa’s Grand Hampton’s neighborhood.
Home Dynamics has been a player in southeast Florida, and took advantage of lower lot prices to buy into Lakeshore Ranch, one of a string of badly-pummeled new home subdivisions on U.S. 41.
About a dozen builders have declared bankruptcy, left the area or closed shop, including Smith Family Homes, Windjammer Home Builders, Engle Homes and Nohl Crest Homes.
Tampa Bay housing starts are on a record low pace for 2009, although the trough of the market seems to have been last winter.
Home Dynamics' motto is Home of the Affordable American Dream. How affordable? The company president is David Schack, but don't hold the name against him.
Tampa Bay home prices fell 2.2 percent between the 2nd quarter of 2009 and the 3rd quarter of 2009, according to Zillow.com.
As of September 30, home values stood at $126,600 in the region, Zillow said. Realtors published a median home price of about $137,000 in September, but remember that Zillow counts the sale of condos and other lower-priced homes.
Which neighborhoods rose and fell in price the most? Let's say only a handful saw price appreciation, but they were mostly clustered in north Hillsborough County: Cheval, Lutz, Odessa and Keystone. What they have in common is larger, semi-rural lots within easy commuting distance of Tampa.
Port Richey also rose in price from June 30 to Sept. 30, but I'm not sure if waterfront homes accounted for the rise.
The most depreciated neighborhoods were in places like Brooksville, Spring HIll, Dade City and Ruskin. These are on the northern and southern extremities of suburbia.
I made a case last week for expanding the first-time home buyer tax credit to include investors. But a couple of Tampa Bay Realtors made an equally valid case that my position was wobbly.
Most interesting was a response from a Realtor at Prudential Tropical Realty. Investors don't need the subsidy, she said. In Tampa Bay, they're already outbidding first-time home buyers on short sale homes without the help of the government. Giving investors an extra $6,500-$8,000 would tip the scales even further to cash buyers.
The main reason I disagree with your rationale is that in the past month, I cannot get my first time home buyers (under $150K) under contract to save my life. Every offer I write goes to multiple offers and my little buyers, most using FHA loans, are getting beat by cash or better-financed loan buyers. It is really frustrating for all of us. So the last thing we need with the extended time to close the first time buyers and have them get their tax credit is more competition on the limited supply of quality properties in their price range.
Good point. But isn't this good news? Cash buyers are offering more money for a limited supply of homes. That means the market believes some homes are undervalued. Won't that give home prices some needed loft?
The Realtor is frustrated that her deals - and her commissions - are falling through. Understandable. But this offers more evidence that Tampa Bay home prices hit their bottom in January and have nowhere to go but up.
The volume of foreclosure cases in Tampa Bay and Florida continued to grow in September, measured both annually and monthly. According to First American CoreLogic, 8.82 percent of Tampa Bay mortgages are under a foreclosure cloud. That's up from 8.58 percent in August.
The default pipeline is also getting more jammed. First American said 14.34 percent of Tampa Bay mortgages were 90 or more days late in September, up from 13.98 percent in August.
As you can see in the chart below, the year-to-year increases are even more dramatic, though it's worse in the rest of Florida.
| Location | 90+ Day Delinquency Rate September 2009 | 90+ Day Delinquency Rate September 2008 | Foreclosure Rate September 2009 | Foreclosure Rate September 2008 | Change in Foreclosure Rate | REO Rate September 2009 | REO Rate September 2008 | Percentage Point Change in REO Rate | |
|---|---|---|---|---|---|---|---|---|---|
| Florida | 16.76% | 9.09% | 10.24% | 5.55% | 4.69% | 0.65% | 0.84% | -0.19% | |
| Tampa-St. Petersburg-Clearwater, FL | 14.34% | 7.91% | 8.82% | 4.93% | 3.89% | 0.40% | 0.58% | -0.18% | |
| US | 7.27% | 4.38% | 2.93% | 1.67% | 1.25% | 0.46% | 0.81% | -0.35% |
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