What Florida foreclosures mean for Sunshine State real estate markets would make for a complete economics textbook that looks at how boom-and-bust economic models always assert themselves even in the greatest of economies. This means that even Florida isn’t immune to the natural cycles of economic behavior, though it managed to stave off those behaviors for quite a while, it seems.
The problem with this current bust, coming as it did and which has been causing drops in real estate values of at least 40% in the state, is that it is extremely deep and markedly widespread. This is so because much of Florida real estate valuation had no rational basis for quite some time. Homes were going up in value based solely on overheated demand that was bound to diminish sooner or later.
And as soon as a real recession began, that’s precisely what began to occur. People began to hunker down to ride out the recession, buying fewer homes and other goods and leaving many people, who’d speculated that the homes they’d bought over the last several years would be worth more than they’d paid out in the cold.
In hindsight and in looking at these properties, it becomes clear that many got into the market based on speculation that values would continue to go upwards. They bought homes on adjustable-rate mortgages or with very little equity and did not expect that the steep decline in home values would occur, leaving them with homes they couldn’t sell and without a way to make a profit from them even if they could.
For another, they were soon to face the fact that their original note — while initially nice and low in terms of repayment terms — was going to increase, sometimes drastically, and give to them a new payment they couldn’t come close to being able to afford. It’s no wonder, then, that foreclosure began to become an attractive option to many folks holding these properties.
In days past, these sorts of foreclosures were often looked at as a last resort by people and taken only in the most extreme of circumstances. However, a general shift in attitude among many people holding property these days has led to a phenomenon where many aren’t even stopping to consider other alternatives aimed at keeping the home. In a disposable culture, homes are now increasingly being looked at in that same manner.
Whether this attitude will continue to cause a rise in FL foreclosures or not can’t yet be determined, but there’s a dim hope, at least, in the fact that Florida continues to benefit from a general feeling that it’s the place to be for those looking for nice weather and nice homes. If any state can pull out of such a dive, in fact, it’s Florida most experts would say.
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