As Tampa Bay foreclosures plunge, prices jump

When it came time to list a certain foreclosed home in Tampa's Town 'N Country area in April, Realtor Irwin Wilensky figured $79,500 would be about the right price given its dilapidated condition.

He was wrong. Multiple offers poured in, and the house sold for $117,000 last month — $37,500 more than the asking price.

"It kind of tells you how crazy the market got,'' Wilensky said.

Both demand and prices for foreclosed homes are on the rise in Tampa Bay as the number of foreclosed properties dramatically shrinks. New foreclosure filings are at their lowest levels in years in Pinellas, Pasco and Hillsborough counties and are expected to drop even further.

"The foreclosure crisis is over,'' said lawyer Matt Weidner, who has represented hundreds of bay area homeowners since the crisis hit its peak in 2008-09.

According to a report Tuesday by the data analysis firm CoreLogic, 3.7 percent of Tampa Bay homes with mortgages were in some state of foreclosure in May. While higher than the national rate, that marked a decrease of almost 3 percentage points from a year ago and the lowest percentage since January 2014.

Also encouraging: The percentage of bay area homeowners more than 90 days delinquent on their mortgages — 7.53 percent — was the lowest in 18 months.

As the real estate bubble began to deflate in 2007 and interest rates rose on adjustable rate loans, tens of thousands of Tampa Bay borrowers found themselves unable to make their payments or sell their homes. Banks filed 21,884 foreclosure suits in Hillsborough in calendar year 2009 and 15,164 in Pinellas in the 2008-09 fiscal year — both all-time records.

But thanks to an improving economy and loan modification programs, the number of new Hillsborough filings plunged to 4,649 last year while Pinellas filings dropped to 4,534. And at the current pace, fewer than 3,000 foreclosure suits will be filed in each county this year.

"It's expected to bottom out,'' said Wilensky, whose SunRaye Realty specializes in bank-owned properties. "The high rate of foreclosure that we saw from 2008 to 2012 was the abnormal situation and what we're seeing now is getting close to normal, which is a rate of just over 1 percent. But when you look at a market like Tampa Bay that's still a lot of homes.''

With fewer foreclosures hitting the market, good deals are getting harder to find.

In June, the median price for foreclosed houses in Hillsborough hit $125,000, a jump of nearly 14 percent from a year earlier. In Pinellas, the median price shot up 16.7 percent, to $105,000.

Foreclosures "are not as great a bargain but the market is moving up so fast and the inventory is still so low that people are jumping in on whatever they can get,'' said Scott Samuels, a St. Petersburg Realtor who lists bank-owned homes. "It's a feeding frenzy.''

Samuels has noticed, though, that an increasing number of homes sold at county foreclosure auctions are going to third-party bidders instead of being repossessed by the bank. Lenders like Wells Fargo are letting some properties go for much less than the amount owed because they don't want the hassle of taking title and trying to resell the home.

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That can be a boon for investors and other third-party bidders, who are snagging houses in high-end areas for their tax-assessed value, typically much lower than the true market value.

"Let's take a house on Snell Isle (in St. Petersburg) where the defendant owes $700,000 but the assessed value is $350,000,'' Samuels said. "You're seeing banks taking $300,000 to $350,000 on a regular basis, so the way the markets are taking off you can make a 30 to 40 percent gain. Last Monday, there were 70 sales (in Pinellas) and 10 of them I wish I had money to buy because they were in good neighborhoods.''

Bidding on foreclosed properties at county auctions — which now are totally computerized — can be risky, though.

"There are good deals if you do your research well, but you've got to make sure their code enforcement liens are minimal at best,'' Wilensky said. "We're still getting a lot of properties that the foreclosure began five years ago and you know when they come through the pipeline that there's five years of neglect. I can almost assure you there are code enforcement issues going on.''

While St. Petersburg and Hillsborough County tend to reduce fines once a property is brought into compliance, "there are some municipalities like Dunedin that want that $30,000,'' Wilensky said.

Though new filings are down, Weidner, the attorney, compares the aftermath of the foreclosure crisis to "the wreckage left behind by a hurricane.''

"The bulk of the backlog has been chopped through,'' he said, "but the manner in which it was chopped through, quickly and recklessly, will make a whole lot of work going forward with title problems. The crisis is over, but we're still going to be cleaning up for many years.''

Contact Susan Taylor Martin at smartin@tampabay.com or (727) 893-8642. Follow @susanskate.