Palm Beach County Foreclosures Decline … But For How Long?

Foreclosure filings in Palm Beach County plunged in January, according to a report released Tuesday - but the good news will be short-lived as home prices fall and inventory climbs.

“Buyers are not solvent enough to carry their houses with a negative cash flow for months on end,” said Jack McCabe, owner of McCabe Research in Deerfield Beach.

“They’re choosing to turn in their keys.”

Nationally, foreclosure filings in January climbed to the highest monthly total since Irvine, California-based RealtyTrac began reporting them two years ago, said James Saccacio, the company’s chief executive.

In recent weeks in PBC, major home builders and Florida mortgage lenders have begun citing ballooning inventories of homes and bad loans as the primary cause of disappointing profits - and downgraded forecasts.

In Palm Beach County, the number of homes in some stage of foreclosure fell to 680 in January, from 1,173 in January 2006 - a 42 percent decline.

Despite the drop, the county’s foreclosure rate - one filing for every 818 households - remains above the national rate of one filing for every 886 households. In addition, January marked Palm Beach County’s third consecutive monthly increase for foreclosure filings.

Foreclosures in the once-booming Treasure Coast was a mixed bag in January. In Martin County, new foreclosure filings fell 14 percent last month, to 48 from 56 in January 2006. That’s one filing for every 1,364 households.

But in St. Lucie County - whose phenomenal boom-time growth once prompted front-page stories in The New York Times and USA Today - RealtyTrac says that new foreclosure filings in January more than quadrupled.

The number of new foreclosure fillings in St. Lucie County rose to 236, not a huge number until you consider that the county reported 54 new filings in the same month a year ago - making this year’s total a whopping 337 percent increase.

What’s more, the number of monthly foreclosure filings in the county has been trending upward since last summer, when problems with Florida home loans started becoming widespread among residents.

Speculators fueled St. Lucie County’s run-up in single-family home and condo prices, as they did in Palm Beach County and throughout the South Florida housing market.

McCabe estimates as many as 50 percent of St. Lucie County buyers were “investors buying to flip homes like a share of stock.” They didn’t intend to live in their homes, said Mike Larson, an analyst with Weiss Research in Jupiter.

Markets such as St. Lucie County, which had a lot of speculative buying, are experiencing the biggest increases in delinquencies and foreclosures. As the housing market cools and home prices continue to tumble, those buyers are now hurting.

“Where falling home prices have been good for buyers, they have not been good for people needing equity to consolidate debt or restructure their finances,” Florida mortgage broker Jim Sahnger, vice president of Palm Beach Financial Network in Sewall’s Point, said.

Indeed, some homeowners now owe more than their homes are worth. Nevertheless, St. Lucie County’s foreclosure rate of one filing for every 1,901 households is the best in the region.

Such good news is expected to be short-lived, though, as most experts forecast that the worst is yet to come on the foreclosure front as housing prices decline and more adjustable-rate mortgages reset this year.

“We’re going to see that 2007 may be the largest year that we’ve seen for foreclosures in a long, long time,” said McCabe, whose firm tracks South Florida real estate trends.

Next year will be even worse, he added.

“There are $2 trillion in these highly volatile mortgage loans adjusting in the next two years around the country,” he said, “and we will see the foreclosure rate multiply, exponentially.”

Analyst Larson agrees, predicting that the current buyers’ and renters’ markets will last through this year.

“That will keep the pressure on overextended borrowers, especially those who put little or no money down,” Larson said. “Foreclosures should climb for the foreseeable future as a result.”

In January, Florida home mortgage loan foreclosures - nearly always in the top 10 among U.S. states for new foreclosure filings - ranked No. 3 in the nation as a stunning 11,709 properties entered some stage of foreclosure.

That’s up 13 percent over the same month a year ago.