[EZICIT]

JustNancy-
JN - I've been looking at real estate lately and almost every listing in Florida seems to be a short sale.
EZ - There are a LOT of properties listed as 'short sales'. Some of them are real - (i.e. 'Approved ' by the Lender). Others are 'wanna be's' (Trying to get you to make an offer which they will only THEN submit to the Lender.
JN - Correct me if I'm mistaken, but doesn't a short sale mean that the homeowner has to be behind in mortgage payments by at least 3 months?
EZ - Different lenders have different requirements. But you can safely assume that the homeowner is WAY behind if they are trying for a short sale.
JN - So what's going to happen to all of these short sales?
EZ - In our area of N.Central Florida, homes prices had gotten way out of range for the average working person. Then, when the economy crashed, no-one felt safe in buying a home. Now, we are seeing a slow, but steady 'thawing' in the market. Buyers are beginning to come out and look at homes again, simply because homes have now, again, become 'affordable'.
JN - Even if someone sells a home for a bank approved short sale price, the seller is still obligated to pay off the loan.
EZ - This is where it gets REALLY tricky for the Homeowner/Seller. None of the 'professionals' (Realtor/Attorney/Title Insurer/Escrow Agent etc) is charged with ensuring that you, as the seller, are protected.
EZ - Some lenders do cancel the debt (Mortgage & Promissory Note). But many do not!
EZ - A few are, in fact, sell your unpaid balance to speculators who are gambling that they can make you pay - sooner or later!
EZ - I'm a Realtor & Appraiser not an attorney, but it's my understanding that they can legally chase you for the next 25 YEARS to get their money!
Hope this helps . . . . .

[chaotix]

Originally Posted by justNancy

I've been looking at real estate lately and almost every listing in Florida seems to be a short sale. Correct me if I'm mistaken, but doesn't a short sale mean that the homeowner has to be behind in mortgage payments by at least 3 months? So what's going to happen to all of these short sales? Even if someone sells a home for a bank approved short sale price, the seller is still obligated to pay off the loan.

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Excerpt, Washington Post, March 12, 2010
New round of foreclosures threatens housing market

The housing market is facing swelling ranks of homeowners who are seriously delinquent but have yet to lose their homes, and this is threatening a new wave of foreclosures that could hit just as the real estate market has begun to stabilize.

The impact of the coming foreclosure wave will vary by region. The Washington area has a "shadow inventory" of about 67,000 properties that could go into foreclosure this year, an 11-month supply at the current sales rates, according to research by John Burns Real Estate Consulting in Irvine, Calif. That is slightly higher than the national average but far less than the hardest-hit communities, such as Orlando and Miami, where there is two-year backlog.

New round of foreclosures threatens housing market - washingtonpost.com

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[housingcrashsurvivor]

According to MLS stats given to me by a realtor trying to get my listing, as of Jan 2010, the Fort Lauderdale area had an 11-month supply of single family & a 12-month supply of condos at the current absorption rate. I think we had about a 40-month supply back in 2008. Sales were up year over year 42% & 82%, respectively, from the very few 2009 closings. Current inventory consists of 34% single family & 32% condo foreclosures, while sales consisted of 31% & 33% foreclosures.

[chaotix]

The Wall Street Journal reports, foreclosure backlogs remain the longest in so-called judicial states, including Florida, Illinois and New York, where judges are required to sign off on foreclosures. Markets in those states generally have the slowest rates of properties that go into foreclosure and back to the bank, and while that could ease the pain on the way down, it also threatens to delay any recovery as Florida has been one of the hardest hit with foreclosures

Then there is the hard to measure shadow inventory once those foreclosures are finalized, seems like it will be a long time before we see any stability, hence, unless the job market improves here, it will be hard to find buyers for all those foreclosed homes, and prices could again lurch lower and/or remain weak.

If all this holds true, then it is safe to conclude that the housing market in Florida will not see the same rates of appreciation, if ever, for a very long time.

[justNancy]

Originally Posted by EZICIT

The average homebuyer, borrows most of the purchase price and pays for the typical 10-12 years of ownership, before they move on to their next home and start over. Thus, relying on long-term appreciation to match inflation.

I know this is true, but I never agreed with this practice. When I was growing up, people stayed in the same house for 50 years.

Originally Posted by EZICIT

As long as individual people, businesses large & small and our local, State & Federal Governments live on credit - nothing good is going to happen.

I agree. I was in retail for for several years and people would spend thousands on credit. Often when an application was declined, it would indicate a couple had been to several other stores trying to get credit. I know people who are broke and can't pay their utility bills, but that didn't stop them from buying a 52" LCD HDTV!

On the other hand, spending keeps the economy moving. If people stopped buying new furniture, new cars, new electronic devices, new homes, then how would those businesses survive? In Southwest Florida, many stores closed their doors when consumers had to stop spending so much. As you know, the housing slump has affected a lot more than real estate.