Florida's Real Estate Meltdown

It is old news that the country, world even, is in the midst of the longest, and deepest financial crisis since the Great Depression. From an outsider's perspective the twists and turns of the story lines sound like a whodunit – for people personally touched by the crisis – its a nightmare. It all started around 2001 when real estate values were climbing rapidly. By 2005, real estate was red hot. Everyone was talking about real estate prices. There was buzz. Everyone wanted to be an investor. There were dollar signs in their eyes. First time home buyers bought, enticed by low interest rates, low qualification standards, and eager lenders. Many homeowners sold and bought bigger better homes; also taking advantage of low interest rates; low qualification standards; and eager lenders. For a time while the big boom party was going on, nobody considered that the appreciation rate was unsustainable. There were TV shows about home investing, and house flipping. People were giddy at the prospect of getting something for nothing.

Boom to Bust to Rocket Docket

As the housing market boomed -- it busted. Fast and furious. And so far, now looking ahead to 2013, there are conflicting predictions. The dismal stats remain. Twenty percent of the homes in South Florida are now worth less than the mortgaged amount. Equity and appreciation are remembered with nostalgia, like lemonade stands and grandma's homemade pie. Foreclosures have bogged down the court system. Some circuits created “Rocket Dockets” to move cases along – often at the sacrifice of due process. Robo-signing and fraudclosure are household expressions. Banks were bailed out by the government to prevent more harm to the general economy. Banks quit lending to anyone with less than perfect credit. The housing market stagnated. Foreclosures languish on the market for months and years, slowly decaying. Bank owned homes, the very homes the banks were first so eager to lend on, then so eager to foreclose on, sit empty.

People Fight Back

Some homeowners seek mortgage modifications, others choose deed in lieu, others short sell. Each of these are compromises that come with consequences that are often unwelcome and unexpected. Mortgage modifications can be time consuming, frustrating, and expensive. Many lenders refuse all offers for deeds in lieu of foreclosure. And short sales, are a world of their own. Few homeowners who sell their homes short fully realize the increasingly common consequence of the suit for the dreaded deficiency judgment that comes later. People fight back. Some homeowners facing foreclosure only seek to stall the process long enough to find somewhere else to go. Others seek to stall the process as long as as possible; and live rent free while the foreclosure process winds its way through the courts. Others fight with the aim to win, to beat the unscrupulous lenders at their own game. The goal is to have the foreclosure suit dismissed with prejudice, so that the lender can never bring suit again. Florida is a judicial foreclosure state. In theory, because there is no rights of redemption after foreclosure, court rules and legal procedure must be strictly followed so that the homeowners rights are protected.

Our country and our economy can never completely recover until most of these foreclosures have been absorbed. In some Florida areas the housing inventory is small, mainly because builders have not been building new homes for the past couple of years.

Some "experts" claim that the real estate crisis has run its course. Others stare into the abyss - and tell us things will get worse before they get better. The fact is no one seems able to predict what will happen next. Our economy remains shaky, our housing market struggling to recover.