Let’s End The Daytona Beach Real Estate Crisis

The finger in the dike approach is not working. The national and Daytona Beach condo and home market is being flooded with short sales and foreclosure properties. More distressed properties are entering the market than are being sold. The result? Prices keep dropping. This will go on and on until the people in Government and mortgage lending stop sticking their fingers in the dike and actually take the only action that will stop the flood.

Keep People in Their Homes

The solution to dropping prices, eroding equity and national calamity is to keep people in their homes. The answer is mortgage mitigation. Simply, let’s figure out how to re-write existing mortgages so that people can stay in their home. Keeping people in their homes will stop the flood of distressed homes on to the market.

In the Daytona Beach MLS, we have over 6,000 homes and condos listed. Based on November sales, that 30 months of inventory. CNBC ran a report today that 36% of mortgages modified in the 1st Quarter of this year are in default afer three months. That’s means that the mortgages being modified are not being modified so that people can stay in their homes. I submit that many of the mortgages are modified so that the lenders can get a little more money out of the borrower before default, not so that people can stay in their homes.

What I’m suggesting will not be easy. It can’t be solved with the wave of a government pen. It will require a reverse of direction of what has been happening to date – the socialization of financial institution losses. The banks continue to dump properties into a saturated market, and they continue to accept 60-70 cents on the dollar for short sales. Meanwhile government bailouts help them through the process.

Mortgage mitigation will require a change of focus of the government and probably a forced change of focus with the mortgage holders. If mortgage mitigation does not happen, the expect prices to remain depressed for several more years while the foreclosures and short sales work their way through the system.

What do you think? I would appreciation comments.