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CoreLogic U.S. Housing Policy Update- A Deeper Dive on Florida

December 2015

Faith Schwartz    |    Housing Policy, Videos


From the macro view of national and state figures, the recovery is well underway in the housing market as the U.S. continues to make gains from the nationwide downturn seen in the mid-2000s. Mortgage loans in delinquency continue their downward trends, and negative equity continues to subside even as the CoreLogic national Home Price Index (HPI) posts positive gains in home price appreciation. Though these positive signs are welcome, the narrative of the localized recovery storyline varies from jurisdictional boundary to boundary. To look beyond the national and state spotlight, CoreLogic, recently took a deeper dive into Florida as one of the states most acutely impacted by the Great Recession in order to track activity in key counties.

From 2009 to 2013 Florida experienced an average serious delinquency rate of 16.2 percent. As one of the states most severely impacted by the housing crisis, Florida was the recipient of a over $1 billion dollars in Hardest Hit Funds allocation from the Making Home Affordable TARP funding through the U.S. Treasury Department (Figure 1). These funds were established to provide local support for programs administered by local housing finance agencies in distressed markets. The programs assist in stabilizing communities and helping prevent foreclosure through loan workout programs designed at the local level.

As of June 2015, the Florida Hardest-Hit Fund has assisted nearly 23,234 homeowners through six of its active programs which include: unemployment mortgage assistance, loan reinstatements, modifications, principal reduction, elderly mortgage assistance and, as of April of this year, a down payment assistance program. Though these programs have made an impact, criticisms have been made that allege the dollars and programs have not been utilized as effectively as intended. Other major recipients such as California have already allocated over a billion dollars to participants in their programs, while Florida has lagged, only exercising half of its programmatic dollars as of mid-2015.

From the perspective of home prices, the CoreLogic Florida HPI is still 38 percent below its peak value. Taking a look at different counties within Florida further highlights the discrepancies in recovery at the local level. By looking at current home prices as a percent of their peak values, we find that of the 50 counties for which CoreLogic generates an HPI, more than half show home prices that are below 70 percent of peak value. For instance, Miami-Dade, Walton, Monroe and all coastal counties registered index values above the national index as of August, but despite that growth were still 25 to 30 percent below their respective peaks during the run-up.

Negative equity – when homeowners owe more on their homes than they are worth – continues to persist within Florida, particularly in the central region where Osceola, Polk and Orange counties continue to have greater than a 20 percent share of mortgages in negative equity as of July 2015 (Figure 2). The central region and interior counties also rank highest when measured by the number of seriously delinquent loans, with Glades, Okeechobee and DeSoto counties still in double digits as of July 2015. Out of all 67 Florida counties, 25 have serious delinquency rates twice that of the national rate of 3.51 percent.

Despite these lagging trends within Florida, the state has been leading the pack in the number of cash sale transactions (Figure 3). In early 2011, cash sale transactions peaked at nearly 60 percent of all sales within Florida versus the peak of 46 percent at the national level for the same period (Figure 4). Debates continue over whether these transactions should be viewed as a positive trend, injecting new capital into neighborhoods and communities and bottoming out the downturn; or whether cash transactions might be converted into poorly maintained rental communities with a high risk of mass sell-offs in distressed communities. Considering the volume of cash purchases in highly urban areas it will be important to ensure that dense areas of cash transactions continue to recover along with the rest of the traditional purchase transactions.

States that were significantly impacted from the housing bust often need localized support coupled with national solutions.  The Hardest Hit Funds, mediation and housing counseling are all tools that are used to help navigate the loss mitigation of severely delinquent loans.  With nearly half of the Hardest Hit Fund dollars still waiting to be used in Florida, it will be important that they are exercised efficiently and in a surgical manner given the differing pockets of distress within a highly diverse state that remains ever-important to our economy.

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