Article Courtesy of The Sun Sentinel
By Rene Rodriguez
August 30, 2018
Hurricanes have given Florida a break thus far this
summer. But a stealthier kind of storm has already hit the state.
A new study by Attom Data Solutions shows Florida had one of the highest
rates of foreclosure starts in the U.S. in July, compared to the same
period last year. The report, which tracked foreclosure filings issued
by county governments on single-family homes and condos, shows one in
every 1,180 housing units in Florida a 35 percent increase
year-over-year was subjected to a "lis pendens," which is a filing by a
bank warning of pending foreclosure activity due to late payment.
Only three other states New Jersey, Delaware and Maryland had higher
rates of foreclosure starts.
The reasons for the surge differ by market. But the increase is not the
start of a reprise of the 2008 financial crisis.
The rate of foreclosures in the U.S. is actually down to 0.5 percent,
according to CoreLogic the lowest since 2006.
But at a metropolitan level, the Attom study shows the number of
foreclosure starts in Miami-Fort Lauderdale-West Palm Beach jumped 29
percent in July the third consecutive month of year-over-year spikes
(starts went up four percent in May and 35 percent in June).
South Florida was one of three regions in the study's list of top 10
metros, ranked by population, to feel the foreclosure heat this summer.
Los Angeles and Houston were the other two.
Daren Blomquist, senior vice president and analyst at Attom, said ups
and downs in foreclosure start rates are normal. He also said last
year's busy hurricane season, which impacted 4.8 million mortgaged
properties, could have contributed to the increase. (According to CNN
Money, loans that fell 30 days past due or longer rose 48 percent in
Irma-affected areas and 67 percent in Harvey-affected areas.) Some banks
and lenders granted mortgage forbearance extensions that could have
lasted as long as May.
But Blomquist said the spike in other bellwether housing markets in the
U.S. such as Austin, Fort Wayne and San Diego suggests the rise in
foreclosure starts could have deeper implications.
'The tip of the spear'
"Foreclosures are the tip of the spear of distress entering the housing
market," he said. "Those upticks could result in more underwater homes,
because when distressed properties hit the market, they can drag down
overall home values."
According to Attom's 2018 second quarter report, one in 10 U.S.
properties or 10.1 percent of all properties with a mortgage is
seriously underwater, defined as properties whose market value is 25
percent lower than its current balance of loans. That's a radical
improvement from the second quarter of 2012, when 29 percent of all
homes in the U.S. and 46 percent of Florida homes were seriously
Still, the gradual uptick in foreclosure starts in markets such as
Miami-Dade, where income inequality and stagnant wages continue to
worsen, is a troubling sign.
. Ned Murray, associate director of the Florida International University
Metropolitan Center, said that although exact figures aren't yet
available, his research confirms the foreclosure-start activity in South
Florida has increased significantly. The neighborhoods primarily
affected are Homestead, Opa-locka, City of Miami, Hollywood and Pompano
Beach all working-class areas.
"It's a disturbing trend, especially when you see the biggest impact is
in less affluent communities," he said. "This is the older, less valued
Ironically, Murray said one possible cause of foreclosure starts in more
modest neighborhoods could be growing real estate values.
"Because values have increased steadily over the last five to six years,
some homeowners took out second mortgages and equity loans," Murray
said. "But wages have remained flat and housing costs such as insurance
keep going up."
Analysts warn this new wave of foreclosure starts could even impact
higher-priced homes, such as the oversupply of expensive condos in the
downtown Miami area.
"The condo situation is starting to mirror the way it looked
pre-recession in terms of price drops in Miami," said Michael Sichenzia,
president of the Deerfield Beach-based consulting firm Global Advisors.
"Prices have dropped considerably while supply keeps increasing, and
there's still a ton of product that has yet to come to market. I think
that the next two years do not bode well for prices in general in Miami.
The market is overheated again and you're seeing the beginning of that