All over the state of Florida, the ‘F’ word is gaining momentum. Foreclosures have reached levels unprecendented since the 1980s with the collapse of the Savings and Loans institutions and the crisis that ensued. This time however, the banks have provided themselves a parachute assuring a soft landing in a tumultuous market, as they now own the largest of mortgage entities.
For example, with the aquisition by Bank of America of Countrywide and World Savings by Wachovia, smaller mortgage businesses will disappear and the banks as lenders will be in a position to provide coveted loans to small investors with good-to-excellent credit.
These loans ensure confident bidding on the steps of the courthouse where a 5 per cent payment seals a bid and by 2:00 p.m. that same day the balance of sourced funds is paid to the cashier.
This awesome process carries rules and responsibilities but heavyweights lustily jab the air with determined fists to win bids, and must also carry the burden of knowing that they buy another man’s tears.
Real estate is fundamentally about people and how we pay attention to matters that can make or break us. Real estate runs in cycles – expansion, oversupply, recession, and recovery- in that order. A recession period is on, so we are in anticipation of recovery.
In real estate these cycle indicators are not exact in time or levels but they occur, describing price patterns based on emotional, governmental and financial factors. The length and depth of effects these cast upon people, different market regions and property types forms the basis of wealth or bankruptcy. Matched cycles do not exist nor are they predictable. Meaning, one cannot use the up-cycle of 5 years ago to plan 2 cycles ahead and win. Real estate markets exist locally, yet are affected by policies legislated in Washington that have global impact.
How much can a person take? The fact that it is not a liquid asset, has a long shelf life, operates with incomplete information, is a target for tax law changes excludes any quick fixes for whatever ails this industry. Thus abandoning borrowers to wade through the tide of lender’s policies, unfettered greed which accompanies any money making venture, plus every other phenomenon including the whims of powerful oil magnates half a world away, causing one to genuflect in supplication for financial relief.
The real estate industry in South Florida is huge, and the affected are feeling the burn of sweet deals going sour. This has taken a toll right across the board, delivering a blow in the solar plexus to handymen, landscapers, pool people, sign makers, car dealers, real estate brokers, mortgage brokers, title companies, insurance companies, many other careers and small businesses we know of personally.
Credit yourself with enough sense (or cents) to pay attention to your best interest. Take a class in some aspect of financial management or real estate and mortgage, seek out professionals who do these things daily, in the same way you schedule your annual check up, dentist, oil change etc. When you hit the big time you’ll need an attorney on retainer, so cultivate a relationship with a good attorney.
We are at the beginning of a serious downturn in real estate, and though there is a cry of woe echoing across state lines, for those prepared there is another market, hot with the potential of creating a plethora of new millionaires and real estate moguls when the fires of foreclosure subside.
Valerie Germain is still an active realtor in South Florida and may be contacted at email@example.com