Miami Foreclosure Recovery Not Nearly as Robust as Reported
While many analysts have offered commentary on the “rapidly-recovering” housing market in Florida and throughout the country, the reality is those figures are largely misleading.
New home sales, which serve as one indicator of the market health, have been steadily rising in recent months. However, this seemingly positive indicator is undercut by the fact that many of these sales are not going to traditional home buyers. In reality, these are all-cash buyers – hedge funds, foreign buyers, private equity investors.
Our Miami foreclosure defense lawyers know that most first-time home buyers have no shot at competing with these entities, which are snapping up properties by paying for them in full, in cash, upfront.
And we’re not talking about high-priced, waterfront luxury condos or veritable mansions by the sea. These are comparatively lower-priced homes – the kind to which first-time home buyers tend to gravitate.
According to RealtyTrac, all-cash purchases accounted for more than 42 percent of residential home sales in December. That represents a nearly five percent uptick from just a month earlier and a 133 percent increase since December 2012, when cash deals made up just 18 percent of residential home sales.
So what exactly does this mean for the economy?
It’s a particular bust for younger Americans. These are individuals who are already saddled with soaring student debt, poor wage increases and mediocre credit scores.
The National Association of Realtors reports that while first-time buyers of homes usually comprise about 40 percent of the home-buying market, this past December, they only made up about 27 percent of the total.
So what do these wealthy (often foreign) investors want with lower-priced homes in America? Rental property.
Investors are snapping up these properties through traditional sales, as well as through bank auctions and foreclosures.
First-time homebuyers say that in order to begin competing with cash offers, they have been asked to pay far more than the initial asking price. For example, CNBC reports that in San Francisco, one couple has been edged out of numerous deals by cash buyers. In one case, the seller said he would allow them to purchase the $1 million property over the cash buyer – but only if they agreed to pay $300,000 over the asking.
This kind of practice could ultimately lead to a new wave of underwater homeowners, owing far more on their homes than what they are actually worth.
Last year, RealtyTrac reported that distressed homes made up roughly 16 percent of all home sales. That was up from 14.5 percent a year earlier. The majority of these properties are priced under $100,000 – which is exactly the kind of price range most new home buyers are seeking.
But more frequently, homes aren’t selling at that price point, unless they are going to cash buyers. Sales of homes in that price range fell 11.5 percent last month. Meanwhile, sales of homes over $250,000 spiked by nearly 15 percent in December.
Another roadblock for first-time buyers is that many mortgage lenders are mandating higher down payments, particularly for those whose credit is less-than-stellar. In the past, new home buyers might have sought assistance from parents, but today, many older Americans are hurting financially as well.
Our Miami foreclosure attorneys would urge careful consideration for all first-time home buyers. As eager as you may be to purchase a home, stepping into a deal that has you owing more money on a home than it’s worth right out of the gate could put you on the fast-track to foreclosure.
If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.