Foreclosures Are Rising in South Florida

June 3rd, 2009 | Tags: Foreclosures

Homeowners in South Florida are grappling with a tough economic condition. They are sinking deep into the mortgage debt and foreclosures are on the rise. In some counties, however, home sales are on the rise. About 71 per cent home owners in the two counties of Miami-Dade and Broward are experiencing an “upside down” phenomenon meaning their homes have less value today than what they owed in the market. This was revealed by real estate services firm Zillow.com.

The market is in a tumultuous condition in South Florida meaning that even those residents who bought homes recently are finding themselves going deeper into debt. The condition of those residents who bought homes in the period between 2005 and 2007 is particularly bad. Average prices have plummeted by as much as 50 per cent in Miami-Dad.

In Boward prices have plunged by 41 percent. About 88 per cent of those who bought homes in 2006 are deep in the red. Home values have plunged so much that a resident — Andres Duque – does not even know if he will get some value for the one-room apartment that he bought three years ago for $175,000. Duque is aghast that homes are selling for merely $25,000. He says that he had no idea that home values would plummet so much and Duque is not alone in this.

About 77 per cent of owners who bought homes in 2005 have now hit the rock bottom. The median equity is now a negative — $40,652. At the national level, 20.4 million home owners were in what you call upside down – meaning they owe more than what their homes are worth. Las Vegas was at the top of the list, where 67 per cent of home owners are in deep debt. In comparison, 30 per cent of owners in South Florida are underwater. As home values plunge, people like Duque are willing to walk away than hold on to a depreciating asset.

Mortgage broker of Southwest Ranches, Melinda Payan, says that the recent relief programs started by the federal government have not helped the South Florida owners because they have not even considered the ‘upside down’ residents. Payan says that there is no way that the principal of home loan will be reduced in the plan put forth by President Obama. Obama announced another plan “Making Home Affordable” which modifies loans for homeowners. Residents have now pinned their hopes on this.