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I live here in downtown Tampa, FL and over the past five years have seen numerous condominiums built that have no occupants/buyers, then they slowly fill up by converting to rental properties. My wife and I are renters. Each year that goes by, we are more thankful to be renting.

The median home price for a single family home in the Tampa Bay area has fallen from $239,600 to $113,400 since 2006 (the height of the market). What is more of a concern is that the banks down here are still holding numerous properties that, when they hit the market, will put further pressure on pricing. In what was a positive spin on recent real estate news, the number of homes sold has increased in the area but buyers have been mostly investors looking to rent the homes they are buying at distressed prices. These problems represent more than the fallout of a real estate ?Bubble?, these are the remnants of a massive fraud.

This week?s guilty verdict in the Lee Farkas case (Taylor, Bean Whitaker Mortgage Co. out of Ocala, FL) was closely followed here in Florida. Farkas is looking at spending the remainder of his life in prison for selling the same mortgages his firm originated to different financial institutions. But there are other frauds associated with housing on our local news each night. Most of these had been going on for years.

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This week in Tampa, seven people were arrested for a scheme estimated to be an $8.8 million mortgage fraud. The fraud involved initiating mortgages on multiple homes within the conspiracy ring but nobody actually ever moved into the home. Of those charged, there were three sets of married couples involved?.keeping it all in the family.

In Sarasota, just south of Tampa, 14 people were charged last month in a mortgage fraud that spanned over 10 years and involved over $47 million in loans. Again, homes were being purchased amongst a group of buyers who never took possession of the homes but were simply having homes built to defraud the banks. When you build a home for $200,000 and then convince a bank to put a $300,000 mortgage on it, that?s a $100,000 profit. That was the model used by many here in Florida to either commit fraud or, ?legally?, provide a homeowner with some big cash through home equity loans. Now the fraud has been exposed and the honest homeowner owes more on the debt of the home than the home is worth. Half of the homes in Florida are worth less than the debt owed on them. The more prices of homes continue to decrease in the state, the worse this problem will become.

The result is that in this environment of fraud and over indulgence, contractors actually believed the housing market numbers here in Florida so they built more homes. Not only were scammers scamming but their actions were creating data that real estate professionals relied upon to make decisions (build more, lend more, sell more). Those unintended consequences are the ones we are living with today here in Florida. From a report in 2005 about the Florida housing market, ?A continuing tight supply of homes available for sale, low mortgage rates and high demand impacted Florida?s housing market??. If you were a builder in this market and got this news, what would you do? BUILD, BUILD, BUILD. The truth was, a number of these home sales were outright fraud.

Even current positive news (increases) on home sales in Florida is deceptive as investors, who intend on renting the properties, are ones who are buying. So while there are buyers of homes, this does not mean that anyone should go build more of them any time soon. Builders, are you listening this time?

This is going to take a while to unwind. If you are looking to buy a house in Florida, COME ON DOWN, THE PRICE IS RIGHT?.AND GETTING ?RIGHTER?. We only have one request?please live in the house you buy!!!

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Source: http://silvager.com/real-estate-in-sarasota-florida-floridas-real-estate-pain-continues-fraud-and-the-unintended-consequences/

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