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Democratic Party chairman Rod Smith, a former prosecutor who lost his 2006 gubernatorial bid to Charlie Crist, roasted Republicans in his speech at the party's state convention on Oct. 29, 2011, for being out of touch with middle-class Americans, the St. Petersburg Times reported. He used the housing crisis as an example.
"Think about it. When Republicans took over the leadership of Florida, most of you had never even heard the term 'underwater mortgage,'" Smith said. "Today 46 percent of all Floridians owe more on their home than it is worth.
"It is in a moment of crisis like we are (in) that a political party can revive itself, reinvent itself into a force that can re-center this nation, this state," he said. "Unlike the Republicans, we don't have some undying sworn oath that says we will keep supporting the same predatory practices that got us into this mess to start with. We're the only party situated where we can reach out and lead the entire nation."
We hear all the time about Florida's foreclosure problems and unemployment (10.6 percent in September). But Smith's figure for the number of underwater mortgages in this state is striking. Do nearly half of Floridians really owe more on their mortgages than their homes are worth?
Being underwater means a home owner owes more on their mortgage than the home is worth, and it's happened to many home owners since Florida's housing bubble went bust. Borrowers who owe more than their homes are worth sometimes opt to leave their homes and let the properties enter foreclosure. These "strategic defaults" contribute to foreclosures already clogging the courts, leading to even lower home prices.
We already know from this fact-check that the national percentage of underwater homes is around 22 and 27 percent, depending upon which real estate data-mining company you ask. If Smith is right, Florida's figure would be almost twice the national average.
We circled back to CoreLogic Inc. and Zillow.com, companies that analyze real estate data using county public records.
CoreLogic's most recent report, spanning April to June 2011, found Florida's rate of underwater homes was third-highest in the country at 45.1 percent, trailing Nevada at 60 percent and Arizona at 49 percent. The next-highest state is Michigan at 36 percent. By CoreLogic's tally, the number of underwater homes in Florida as of June was about 1.97 million.
Zillow.com typically does not typically measure states' overall rate of underwater homes, said spokeswoman Alison Paoli. The company did, however, have underwater data for Florida's metropolitan areas through the end of the third quarter ending in September.
The breakdown gives us some perspective about the places in Florida most plagued by sinking home values. Metro areas with the highest rate of underwater homes include Jacksonville (59.8 percent), Port St. Lucie (57.8 percent), Melbourne (54.8 percent) and Sarasota (51 percent). (Information for Orlando is not available). The lowest-rate places? Those include Panama City (37.4 percent) and Gainesville (39.8 percent).
Rod Smith claimed that nearly half, or 46 percent, of Floridians owe more on their mortgages than the value of their homes. The most recent rate of underwater homes in Florida is 45.1 percent, behind only Nevada and Arizona. And that estimate is actually pretty conservative compared to what several metro areas are experiencing. Given the implications for our housing market, we suspect most Floridians are sorry that his claim checks out.
What's not so clear is Smith's suggestion that Florida Republicans are somehow responsible for the ailing housing market. While he doesn't explicitly blame Republicans for causing the housing bust, he does suggest it, and that's enough for us to downgrade his rating. The housing bubble was a national phenomenon, at the heart of which were national lenders, and other states are feeling our pain. So we rate his claim Mostly True.
"Scott has Florida Democrats all riled up at state convention," St. Petersburg Times, Oct. 30, 2011
"More homeowners in South Florida and nationwide underwater, according to analysis firm," Palm Beach Post, Aug. 9, 2011
"South Florida overflowing with underwater mortgages," South Florida Sun Sentinel, Nov. 8, 2011
E-mail interview with Jordan Hassion, CoreLogic spokeswoman, Nov. 8, 2011
CoreLogic negative equity report, released Sept. 13, 2011
E-mail interview with Alison Paoli, Zillow.com spokeswoman, Nov. 8, 2011
E-mail interview with Brannon Jordan, Florida Democratic Party spokeswoman, Nov. 8, 2011
"Florida underwater mortgage rate down slightly but still third highest in nation," Florida Times-Union, June 10, 2011
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