Saturday, June 16, 2007

Florida is Epi-Center of Real Estate Meltdown

Don't blame me for the real estate meltdown. I didn't create it, and I surely cannot fix it. If you have been reading this blog for a while, you have seen that I warned about this real estate bubble and its negative effects on Key West.

With that said, I think it is in the best interest to tell it like I see it - and hopefully people will gain from it. (Oh, and by the way, if you need real estate values to skyrocket in order for you to enjoy Key West, then, frankly, you moved here for the wrong reason. But, to each his/her own - its not my money you blew).

Recent statistics released by show that for the month of May, Florida leads the nation in foreclosures.The reasons are abundant - but mainly tied to the irrational speculative activity that persisted for the past 6 years. Basically, people gambled like crazy and developers responded to this increase in demand by building like crazy.

Here are some of the stats reported for Florida:

  • 1st in the number of homes entering the foreclosure process (29, 530).

  • 1st in the share of homes entering foreclosure that were either condos or townhomes (14 percent).

  • 2nd in the proportion of homes entering foreclosure (1 in every 245).

  • 4th in the rate of increase since April (22 percent).

Other statistics are confirming Florida as a main epi-center of the real estate meltdown.
For example, three of the nation's largest van lines moved more customers out of the state than into it last year, reversing a decades-long trend.

The bad real estate market here is taking its toll on residents and people contemplating moving here.

School enrollment is declining statewide: Public school enrollment, expected to climb by nearly 49, 000 students last school year, dropped by 3, 571, the first decline in 24 years.
And now, more Florida drivers are seeking licenses from other states compared to out-of-staters seeking a FL license.

All of this is part of the national real estate picture which is getting worse. Rates are rising (the Fed is likely to raise rates too), the glut of homes on the market continues, and foreclosures are spiking.

U.S. foreclosure filings surged 90 percent in May from a year earlier as more homeowners fell behind on their monthly mortgage payments, according to RealtyTrac.
There were 176,137 notices of default, scheduled auctions and bank repossessions last month, led by California, Florida and Ohio.

Prices have fallen in Florida (and nationally), but more substantial declines are likely. South Florida is still vastly overvalued, according to statistics compiled by National City Corp/Global Insight. According to their data, Naples is 63.4% overvalued and Miami is 59.2% overvalued (Key West was not in their data).

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