St. Lucie Housing Market Sees Significant Rise in Florida Mortgage Defaults

While Palm Beach County saw a dip in foreclosures in November, the St. Lucie housing market saw its troubled real estate more than triple.

Analysts are blaming rampant speculation in St. Lucie’s new-home market and exorbitant hikes in homeowners’ insurance as the cause of its leap to 313 foreclosures from just 94 in November 2005.

The increase is the highest foreclosure/Florida mortgage default level for the high-growth area in nearly two years, according to a new report from RealtyTrac, which documents foreclosures nationwide.

“Tons of new homes have been built in St. Lucie County in the past couple of years, and a big chunk of those were snapped up by speculators,” said Mike Larson, an analyst with Weiss Research in Jupiter. “Now, some are finding they can’t rent them out for enough to cover their [Florida mortgages].

When you add surging property taxes to this dangerous mix, Larson said, “the hardest-luck cases can even be forced out of their homes.”

Meanwhile, after several consecutive months of year-over-year increases, Palm Beach County saw its foreclosures decline in November over the same month in 2005. Palm Beach, where speculators concentrated mainly on condominiums during the boom, had 494 foreclosures reported in November, down 12 percent from the 561 in November 2005.

Besides plunging property values that hinder resale and rentals, so-called “creative financing” is a major reason the foreclosure wolf is now knocking on so many doors.

Adjustable-rate Florida home loans and interest-only loans have taken off since 2004. Indeed, they were the only way more than half of all local buyers could afford to buy a home, McCabe said.

These loans are scheduled for their first interest rate adjustments in the next two years, McCabe continued, and many owners will get smacked with 40 percent to 50 percent increases in their monthly payments.

In Martin County, foreclosures dropped 68 percent in November, to 27 from 84 in November of the previous year. The numbers are too small to make the percentages meaningful, though.