The Aftermath of the Housing Boom Leads to the Horrors of Foreclosures

Posted on November 19, 2009
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Florida is one of the worst foreclosure affected states. The general tendency has been to point the accusing the finger at the borrowers for contracting mortgages well beyond their means. But recent surveys are showing that a nexus between politicians, bureaucracy and financial entities caused the bubble and subsequently the burst. Ultimately the entire nation is paying for it in the form of the Great Recession.

Larry Pioli is in his early fifties and lives in New Tampa’s Grand Hampton development upscale region. He has been a developer for a long time and invested in properties. He own three houses – two of these have been foreclosed upon. Pioli points his accusing finger at others for his woes. He said, “I’m very disappointed in the mortgage companies, the banks, the government — everybody who let the market get out of control.”

The situation is not special to Hillsborough County. In Pasco County the speculators, heady with easy flowing credit merrily went on constructing and today these have turned into ghost towns. In Pinellas County the high prices have fallen to the dust having dropped by a third from 2006. In Hernando County the foreclosure numbers are close to that in the Tampa Bay region.

Professor Sean Smith of University of Central Florida said, “So many people thought they could make a lot of money flipping. They created their own demand for housing. Now we’re left with an excess supply. We’re in for a difficult time.”

It cannot be denied however that many of the homeowners in Hillsborough did get over ambitious during the years of boom. Some bought houses beyond their levels; others used their houses like piggy banks contracting second mortgages that caused them to be buried under a burden of debt.

Times analyzed 11,967 foreclosures and found a minimum of 44% did not have homestead-exemption – it being a tax-break given to those who use the house as their primary residence. These are the units that most probably have been bought by the flippers said Tim Wilmath of Hillsborough County Property Appraiser’s Office. These investors had a never ending greed for houses. This was satisfied at that time with interest rates being low and increasing property prices. The mortgages required practically no documentation and this pushed developers into a tizzy of house building in some regions off city limits where land was relatively cheaper. The whole show however entailed the tax payer putting in huge amounts to build the infrastructure – roads, water and sewer lines and police posts to name the few among the many requirements. This is what ultimately did happen.

Um dos estados mais afetados pela crise de foreclosures foi a Flórida. Muitas indagações são feitas a respeito da causa desse estouro, porém uma coisa é certa: toda a nação está pagando por ele sob a forma de a recessão grande.

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