It's been more than six years since Florida's spectacular housing crash made the Sunshine State a poster child of the crisis.
Home values fell as much as 50% from their 2006 peak.
Today, Florida remains a poster child of the meltdown's aftermath. Despite recent median price gains amid tighter supply and a sales shift into higher price bands, home values statewide are still more than 40% off their peak.
Homes will likely be bargains for at least a couple more years as a huge backlog of distressed properties hits the market, experts say.
In January, Florida's foreclosure rate led the nation for the fifth month in a row, according to a report from RealtyTrac on Thursday.
One in every 300 housing units in the state was hit with a foreclosure filing, more than twice the national average, up 20% from the year before to a total of 29,800 in January.
After a lull in 2011, foreclosure filings in Florida picked up last year. Scrutiny over "robo" signings had bogged down the process.
Florida courts, which are required to sign off on foreclosures, were overwhelmed by the volume. And many lawyers who had been handling foreclosures went out of business.
Homes that went into foreclosure last year will start listing for sale this year and next, says Daren Blomquist, RealtyTrac's vice president. That's because of the long delays in Florida from filing to listing, about twice the national average.
New filings this year won't likely turn up on listings for a year or two.
What Will Happen To Prices? "It's going to weigh down overall home prices," Blomquist said. Foreclosed homes typically sell at 30% discounts, short sales at lesser markdowns.
Discounts are music to the ears of investors and foreign buyers, who have been making a beeline to Florida with cash in hand.
But rather than zero in on just condominiums, the investment of choice a few years ago, they're scooping up single-family homes to put into rental programs.
Investor-buyers include everyone from large hedge funds such as the Blackstone Group (BX) to small investment groups and individuals looking to diversify portfolios.
"Their strategy is to refurbish them if necessary, rent them out for five to seven years and sell at a profit," said John Tuccillo, chief economist for Florida Realtors.
These investor-buyers are targeting demand from the "new rental class," he says, former homeowners who've lost their properties but still want to live in a single-family home.
Nearly half of all the Sunshine State's single-family home closings in the fourth quarter were cash sales, according to Florida Realtors, up 28% from a year earlier.
Cash sales still dominate condo and townhome sales but were up less than that, 12%.
"There's going to be hundreds of thousands of properties in Florida that will be sold as distressed, offering buyers good opportunities for the next couple of years," said housing consultant Jack McCabe of McCabe Research & Consulting in Deerfield Beach, Fla. "These hedge-fund guys are not dumb. They saw this coming.
But regular homebuyers looking to purchase with a low-interest mortgage "are being left out in the cold," McCabe said. One reason is that lenders have particularly tough standards in Florida. Another is the tough competition.
"First-time homebuyers just can't compete with the cash buyers," he said. "I keep hearing that they put (bids) on five or 10 homes and the homes keep being sold to cash buyers.
The Palm Bay-Melbourne-Titusville market, on the Space Coast midway up the state's eastern seaboard, will lead the U.S. in foreclosure activity this year, RealtyTrac says. The region is reeling from layoffs from the end of the space shuttle program at the Kennedy Space Center.
Lakeland, Tampa-St. Petersburg, Jacksonville and Orlando also made RealtyTrac's top-10 foreclosure list for 2012. Miami-Fort Lauderdale also ranked high at No. 12.
As distressed homes hit the market at lower prices, analysts expect recent double-digit percentage year-over-year price gains to moderate to mid-single digits or even slightly negative growth later this year.
An Upside Downer Sales of bank-owned homes "will probably mute some of the runaway upside we've been seeing in this inventory-constrained environment," said ZipRealty (ZIPR) CEO Lanny Baker.
ZipRealty included four Florida markets among the biggest median-price gainers in 2012, of 33 U.S. metro areas it surveyed using multiple listing services, or MLS, data.
The four were Miami, with a 23% year-over-year gain, Palm Beach 16%, Orlando 14% and Tampa 13%.
Statewide, the median price of a home in Florida rose 11% in the fourth quarter from a year earlier to $150,000, according to Florida Realtors. The median price doesn't measure appreciation, but rather the midpoint where half the homes sold for more and half for less.
"Median prices have been going up rapidly," Tuccillo said. "Investors have bought up lower-priced properties and now more sales are in higher-priced properties so the median price is higher.
Meanwhile, housing inventory in Florida has been falling for five years and is now below five months' worth of supply, Tuccillo says.
"That's a very low number," he said. "A balanced market is about 5.5 months. In 2008, inventory was at 25 months.
Homes in Florida are also selling faster as inventory falls and competition to buy rises, Baker says. In Orlando, for example, 14% of listed homes are selling in less than seven days vs. 11% a year ago, he says.
"If you're a buyer, you better be ready to move fast," Baker said.
After a lull in 2008 and only marginal gains in 2009 and 2010, Florida's population has been growing again. The state's population, at a little less than 19 million, grew by about 235,000 in 2011 and is expected to increase between 235,000 and 275,000 annually for several years, according to government forecasts.
Some of that growth will come from retiring Baby Boomers, McCabe says. Will they buy or rent
"People moving to Florida now are most often moving into rentals," McCabe said. In 2006, he notes, 29% of Florida's population were renters. At the end of 2012, 38% rented.