5 Reasons why Foreclosures will be Minuscule in South Florida

Lemons are on my mind this week and I’ve had enough of them! See, we are on a family vacation in Italy before dropping off our daughter Jade for summer school in Florence. We flew into Rome and then stayed in Sorrento while touring the Amalfi Coast. There are lemons everywhere. Lemon slushies, lemon sorbet, lemon drops, lemon paintings, lemon ceramics, bathing suits with lemons, hats with lemons, dresses with lemons, lemon soap.  Lemons, lemons, lemons!

The dark side of the lemon also made me think of my Grandpa Gerry. In the last day of his life, he instructed my dad to write out all sorts of loose ends on a yellow pad. He had one more thing to do after saying goodbye to loved ones. Grandpa Gerry wanted his money back on a Cadillac under the lemon law. It was in the shop 7 times and qualified as a lemon.

Lemon laws were set up for consumer protection against bad products. While the mortgage crisis of 2008 isn’t talked about as a lemon law, the loan product and practices fit the description. Regulations on fraudulent loans, massive adjustable rates, and no verifications smell like a sour lemon to me.

So last week there were lots of buzzes that forecloses were up, with Florida leading the way. Buyers got full of zest for bargains!

I was interviewed by CBS 12 on the matter last week. You can watch that here.  And for those of you looking for cheap buys, sorry to be the sour lemon but coming up are 5 Reasons why the foreclosure stand will stay relatively bare and you shouldn’t pucker up….

I talked to a few sources including a law firm that processes the most foreclosures in the United States. They are seeing an increase.

The current jump is due to a backlog of no foreclosures happening during the pandemic. The second reason is a higher cost of living that hasn’t kept up with wage increases.

Still, it’s all relative. A slight increase multiplied by near nothing is still near nothing. I think Slats Grobnick said that once when talking about the infamous Chicago Bears quarterback, Bob Avellini and his throwing stats. Avellini improved from throwing 8 touchdowns and 15 interceptions in 1976 to 11 touchdowns and 18 interceptions the next year. Anyway you looked at it, despite his touchdown increase, Avellini was a lemonhead. It took Mike Ditka to finally realize that when life gives you lemons, throw them back as Joe Jonas from the Jonas brothers once wrote. Avellini was sacked in 1984. Furthermore, I don’t see them (foreclosures not interceptions) increasing much and here are the reasons why….

1.Regulation

This was basically the lemon law regulation that needed fixing.  The end of no verification loans and making sure people are good on paper as well as a host of regulation in Dodd Frank.

2. 3% interest rates

A large percentage of the marketplace purchased homes with a 3% mortgage rate or refinanced at one time. The “Precious” 3% fixed interest rate is a golden ticket now. It’s also keeping inventory low. Loans not adjusting up to a high interest rate keep foreclosures at bay.

3. Low unemployment

The marketplace is at full capacity.  People who have jobs, can afford to pay their mortgage.

4. Soft landing with 4% inflation

Inflation was only at 4% last month. It’s been just over a year since interest rates moved up.  What the FED has done appears to be working.  Remember we were at 9.1% inflation last June.  It’s a remarkable turnaround.

5. Lack of inventory

The 3% interest rates discussed earlier, lots of excessive buying during the pandemic, builders who quieted new construction during the past few years, continued movement to Florida, and no land left to build on east of 95/Turnpike have kept supply limited.  Those areas have some built-in immunity to foreclosures.

And if you’re curious, my Dad was able to return my Grandpa Gerald’s lemon Cadillac. My Grandpa was always good at turning lemons to lemonade (you knew I had to use that saying somewhere!).

Jeff Lichtenstein, originally from Chicago, got his start in the home furnishings textile business where he traveled over 35 weeks a year selling fabrics. After the family business was sold, Jeff moved to Florida and became a real estate agent. Today he is the owner and broker of Echo Fine Properties, a luxury residential brokerage voted best brokerage of the year. Jeff manages a non-traditional model of real estate that mimics a traditional business model. Echo has 80 agents, an average of one million dollars per transaction and over 500 million in annual sales. Between traveling for work and annual family trips to national parks with his wife and 2 now adult children, Jeff has visited 49 states. He is also one of the few Chicago White Sox fans you’ll ever meet.  Some publications he has been quoted in.

Feel free to ask him a question directly at jeff@EchoFineProperties.com including a complementary  valuation of your home.