The Lee County Real Estate Market is improving for some folks and getting worse for others.
According to an article in the Business & Money section of the News-Press this morning, "Foreclosures hit new high". Foreclosure "actions" filed in Lee County in April spiked up sharply to a new high of 2160. By "actions filed", one would assume "Lis Pendens", meaning that the mortgage holder has initiated the first legal step of filing notice to the homeowner and the rest of the world that they are beginning the process of taking the home. for each of the homeowners, there is still a long road ahead before the home is actually changing hands. In some cases, the home is taken by the bank in just a few months and it is quickly put back on the market. In the article, Mortgage Broker and Investor Jeff Tumbarello, is quoted as saying that mortgage holders selling after foreclosure typically lose 50 to 60 percent of what they lent.
In our experience over the last year, we have seen many banks delay the process of completing "the take" because of this impending Big Loss. Whether they are trying to time the loss for reporting to their shareholders or whether they are trying to let a short sale happen, I don't know. But I have seen a couple of these situations drag on for over a year, still to be concluded.
Homes put back on the market at huge discounts, have attracted many investors and home buyers in the last four months. Investors, as opposed to speculators. Looking for a three to five year turn as opposed to a 60 day "flip". Particularly, new or nearly new homes that sold for $250,000 in 2005-2006, are now being sold as re-pos for about $100,000 if they are in like-new condition. Distressed homes are going for less. $75/sq ft is typical for a like-new property and $60/sq ft is typical for one with some issues. Typical issues are missing appliances, missing air conditioner, needs paint inside and/or outside, and occasionally some actual damage to walls or ceiling. It is unusual to find a foreclosed home without landscape issues.
A bright spot on the horizon is the lack of new building activity. While a couple of development builders don't seem to have "gotten the memo", most everybody else is hunkered down and avoiding new building efforts. Cape Coral reported 13 permits in April, up from 12 in March. This compares to April, 2007 when 115 permits were issued to some folks hopeful that the building recession would be a short one. Hope springs eternal! single family permits in unincorportated Lee County were 47 for both March and April. Tha'ts down from 262 issued in April, 2007. Remember, by April, 2007, the boom was officially over and we were deep in the throes of a home sales BUST.
Disturbing to me out of all this is that one third of the new foreclosure action in April were for owner-occupied homes. This building recession has spread to a lot of folks who don't fit the profiles perceived by the media. Sure, some of them were sub-prime borrowers to start with, but many were not. When is Congress going to act? We just cannot afford to sit back and watch homestead properties get foreclosed and go vacant. In other circumstances, maybe. But the country is teetering on the edge of a major recession. Politics aside, I hope that all of you are writing letters to your congressperson to express your opinions.