Sunday, April 12, 2009

Riskiest Places for U.S. Homeowners

While slumming about Yahoo, I came across the alarmist article "Riskiest Places For U.S. Homeowners." This, in turn, was linked to a Forbes' slide show (pictures, some words, but nothing in depth, as usual) showing the 25 worst places to invest in real estate. I've grabbed the locations from Forbes' slide show, since it's much better to have that information in one convenient form. So, in ranking from worst (#1) to least (#25), I re-present the 25 worst places to own a home (according to Forbes).
  1. Mission, Texas
  2. Detroit, Michigan
  3. Miami, Florida
  4. Brownsville, Texas
  5. Merced, California
  6. Lakeland, Florida
  7. Bakersfield, California
  8. Fort Lauderdale, Florida 
  9. San Bernardino, California
  10. Visalia, California 
  11. Stockton, California
  12. Modesto, California
  13. El Paso, Texas 
  14. Ocala, Florida
  15. Port St. Lucie, Florida
  16. Fort Myers, Florida 
  17. Flint, Michigan
  18. Fresno, California
  19. Orlando, Florida 
  20. Memphis, Tennessee
  21. Daytona Beach, Florida
  22. Las Vegas, Nevada 
  23. Rockford, Illinois
  24. Tampa, Florida
  25. Valejo, California
Orlando is ranked 19th. Hurray for us.

An interesting set of paragraphs about why Florida is in such dire straights bears quoting. From the Yahoo article:
[I]n central and southern Florida the market was affected by those who took advantage of lenient rates to buy and "flip" second homes. Florida towns and cities make up one-third of our list.

According to Fleming, buyers in these trouble spots are simply walking away as home values plunge, even if they can still afford to make their mortgage payments. That explains why foreclosure rates in these towns are double or triple the national average of 3% [Orlando is 9%], even though unemployment rates are relatively consistent with the national average [again, Orlando is 9%].

Home-flipping Floridians were in a lower-risk credit tier than the Central Valley's first-time buyers. Able to access unusually generous loan terms, they took on more leverage and wound up on thinner ice than their subprime counterparts. First American's most recent market survey shows delinquencies among this group rising faster than among the highest-risk borrowers.
I remember several engineers from the early 2000s who were into flipping homes. One in particular had three at one time. His wife was helping him. They were using the money made from flipping to help finance their dreams; in particular it was helping him pay for flying instructions. We soon parted ways (he left the company we were both working at), so I have no idea how much longer he and his wife continued flipping home. I sincerely hope they made it out in one piece. It's easy to wish ill on someone under adverse financial pressures, especially for speculating in real estate, but I've personally been under such pressure due to medical reasons, and I will never wish that kind of pressure on anyone.

In the meantime I need to figure out how to move to another area. We've been in our current house since we bought it back in 1985. I want to get the wife her "dream home" even if it isn't very large (compared to today's McMansions). We'll see. We've been here for 25 years, so I suspect we can wait one or two more before making our final move in life. But we have noticed some life in the housing market. It's certainly not all foreclosures and doom and gloom.

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