Have the dark clouds begun to part in the Sunshine State? Florida, arguably among the hardest hit states in the housing bust, seems to be showing signs of recovery. Florida is heavily represented in a recent Realtor.com list of the top 10 turnaround cities in the country: Miami tops the list,which also includes seven other Florida cities.
According to the Miami Association of Realtors, home sales have picked up, foreclosures have slowed down, and inventory has decreased. Home prices have also been inching back up, after taking a severe hit in the bust. Much of the activity is led by people buying second homes on the cheap.
However, things still look pretty gloomy to me. While cities like Miami and Orlando attract foreign investors and snow bunnies, other less exciting locations aren’t faring as well. After California, Florida leads the nation in underwater mortgages, where buyers owe more than their home is currently worth. Figures vary, but nearly half of mortgages in the state are underwater.
Having an underwater mortgage certainly makes foreclosure more likely, and the state is already in foreclosure crisis: Fannie Mae reports that as of the end of 2011, Florida accounts for 30% of its loans in foreclosure. And foreclosure proceedings are likely to pick up (if not at robo-signing lightning speed) in the aftermath of the $25 billion settlement between the government and five mortgage-servicing giants.
Florida continues to be a thorn in the side of certain businesses, too. Regional banks such as Regions Financial, BB&T, and SunTrust have once again reported the risks related to their Florida mortgage portfolios in their 10ks, as have national lenders including Wells Fargo and Bank of America. Florida real estate developer St. Joe has seen its sales plummet since the bust and has lost money every year since 2008. With Florida representing much of its sales, manufactured home company Palm Harbor went bankrupt and sold itself to rival Cavco last year. Countless local homebuilders went out of business at the height of the crisis, and larger builders are still taking it easy with new construction activity.
It is said that when things are rock-bottom, the only way to go is up. Let’s all hope that the signs of Florida’s recovery prove to be more than wishful thinking.