While stay-at-home orders are keeping people at home, many Floridians could be falling behind on mortgage and rent payments due to loss of employment and an economy on a downward spiral.
The real estate data-service provider, Attom Data Solutions, reported that 10 of Florida’s 67 counties are in the top 50 most vulnerable counties in the U.S. to the economic impact of the COVID-19 pandemic. Most of these counties are in either North or Central Florida, including Osceola, Hernando, Flagler, Clay, Lake. Surprisingly, Broward county was the most vulnerable of the South Florida counties.
The only state that ranked higher than Florida in this study was New Jersey with 14 counties in the top 50 most at risk in the nation. Also ranked near the top were New York, Connecticut, and California. Real estate markets in the Midwest and West are considered to be less likely to see big numbers of people losing their homes because of the virus outbreak.
483 counties throughout the US were studied to determine what percentage of homes we can expect that will be receiving foreclosure notices by the end of 2020 and what percentage of the local wages are needed to pay for homeownership. The study used data from the last quarter of 2019 to calculate the averages.
Central Florida has one of the lowest median incomes in the U.S. The local economy is largely dependent on tourism and convention revenue which could mean big trouble for homeowners. Many landlords are suffering right now… especially if they depend on rental incomes to pay the mortgages.
Central Floridian homeowners could be facing rough waters ahead
Realtors in Orlando are also starting to feel the pain. Activity has slowed for both buyers and sellers with only people who have no choice but to buy or sell eager to close. Home sales in Orlando are reaching the levels that we saw back in 2008 after the market crash. Orlando Realtors are losing almost $700,000 in daily commissions from the pandemic.
Right now it’s too early to say how this will all play out because we don’t know how effective the Federal stimulus will be in helping people through this financial rough patch. Banks are granting temporary mortgage forbearance to many homeowners and businesses will hopefully get enough help to pay employees through the crisis.
I believe lenders will have to step up and provide some major help to prevent foreclosures in Orlando and other Florida cities. In my opinion, it’s the only way to avoid large numbers of foreclosures and short sales in Orlando.
Potential for Mass Short Sales in Orlando
Like I said before, it’s too early to tell what will happen to Orlando real estate market as a result of coronavirus. However, I do think that if people don’t get back to work in the next couple of months, short sale Realtors in Orlando will be extremely busy by the end of 2020 and well into 2021.
Even lenders aren’t sure how everything will end up playing out because they don’t know how much time it will take for Floridians to get back to work. Short sales and loan modifications are used as an alternative to avoid foreclosure. The problem with loan modifications is that the homeowner will still be on the hook for the entire amount of the loan but with lower payments.
I’ve been a short sale Realtor in Orlando since 2004 and 9 out of 10 times when I present my clients with the terms of both a short sale and a loan modification, they choose short sale.
Doing a short sale, however, will allow the homeowner to sell the home for less than what’s owed on the mortgage. By doing this, the lender gets at least most of their money back and avoids a lengthy and expensive foreclosure process. The homeowner also benefits from a short because they can avoid having a foreclosure on their record and won’t be responsible for the difference between what they owed and what the home sold for.