Flippers Fuel Foreclosures in Florida Housing Market
Flippers and other speculators investing in single-family homes helped drive up prices in many hot housing markets during the boom. Now? They’re contributing heavily to Florida mortgage delinquencies .
Defaults in non-owner occupied houses are driving defaults in four of the states with the fastest rising default rates in the nation, according to a report released Thursday by the Mortgage Bankers Association. Florida is among them.
“Defaults are on the rise in most parts of the country, but…it is not always the case of a homeowner losing his or her home,” Doug Duncan, the MBA’s chief economist, said in a statement, “but [it’s] often the case of an investor gambling on a continued increase in home values and losing that gamble.”
Florida drew droves of investors from the Northeast, who spurred a rash of condo development in Miami, Ft. Lauderdale and other coastal towns. Single family home prices were also driven up in towns all over the Sunshine State.
As of June 30, in Nevada, 32 percent of all prime mortgages in default and 24 percent of subprime defaults were on non-owner occupied properties, according to the MBA. The numbers for Arizona were 26 percent prime and 18 percent subprime. In California, they were 21 percent and 15 percent respectively.
The default rates in Florida for non-owner occupied homes were 25 percent for prime loans and 14 percent for bad credit mortgages.
In the rest of the nation, non-owners accounted for just 13 percent of prime loan defaults and 11 percent of subprime.
“California, Nevada, Arizona and Florida were among the states with the fastest home price appreciation over the last five years. This…attracted both speculators and home builders, a volatile combination that led to an over-supply of homes that was beyond the capacity of the local populations to support,” Duncan said.
“When this over-supply became apparent and prices began to fall, many of these investors simply walked away from their [Florida mortgages].”
The subprime figures for non-owner occupied home purchases were 14 percent in Nevada and Arizona, 15 percent in the Florida real estate market and 7 percent in California.
SOURCE: CNN Money
