Foreclosures, insurance cost, property taxes combine for perfect housing storm
Mortgage foreclosures became a reality for a record number of people along the Emerald Coast in 2007.
Many people blame foreclosures, soaring insurance premiums and property taxes for deflating the housing market.
“All three are combining to create the perfect storm,” banker David Braithwaite said in August. “A lot of people are finding themselves in bad shape … developers, homeowners. It’s across the board.”
The Daily News began tracking local foreclosures in August. Court records at that time showed that foreclosures in Okaloosa County had jumped by nearly 70 percent from 2005 to 2006 and are on pace to be about 83 percent higher in 2007 than in 2006.
Santa Rosa and Walton counties also showed record numbers of mortgage foreclosures, far outpacing 2005 and 2006.
Some industry observers say the trend is nowhere near finished.
“I don’t think we’ve reached the top as far as foreclosures,” said Shirley Parker, president of Parker Mortgage Services in Fort Walton Beach. “I think it’ll continue probably through next year.”
Parker, who has worked in the mortgage industry for 34 years, describes 2007 as “the worst year we have ever had in real estate.”
Too many home buyers were allowed to take out adjustable rate mortgages, negative adjustable rate mortgages and subprime loans — loans that promise dramatically low rates or waive qualifying requirements, Parker said.
Borrowers did not plan for the future, she added.
“You can regulate people all day long, but if they want something, they want it,” said Parker, who counseled many people out of buying more house than they could afford down the road. “I’d say to them, ‘At some point, this balloon is going to bust, and when it does, you won’t be able to afford this house note.’ ”
Foreclosures have also taken their toll on the local and regional economy, Parker said.
“The housing market dictates everything,” she said. “When you do not sell houses, you do not sell furniture. You do not sell cars. You do not go out to the beauty salon … It flows down. Everybody is feeling it.”
Parker encourages her clients and those who ask her for advice to pursue finance programs offered by the Federal Housing Administration.
“They’re very credit-friendly, meaning they don’t have a set credit score,” she said. “It may be able to help them. You don’t know until you try.”
One upside to the foreclosure crisis is the promise of some sweet deals in 2008.
“You’re going to see a $300,000 house … and a lender willing to take $200,000,” Parker said. “You’re going to see a lot of good deals on investment property.”