What Do You Mean I Can't Buy This House?

I just can't seem to close on my dream vacation home.

I was supposed to wrap up the purchase of a lakefront property in Celebration, Fla., last month. Everything was going according to plan, and then came the bombshell: A former owner who was foreclosed on is appealing the decision. My lender can't obtain a clean title on the vacant property until the process plays out. Appeals should be quick and simple decisions, but Florida's Fifth District Court of Appeals has had this on the docket for more than 10 months without a resolution. 

It's not as if I knew what I was getting myself into. I didn't strike a purchase contract with the bank that foreclosed on the appellant. An investor bought this from the bank at an auction in January. I moved to purchase the home this summer. I thought any complications were in the rearview mirror until I was advised by my lender that the appeals process is ongoing.

Ouch.

View from the porch that should have been mine. 

You don't hear a lot about cases like this because the overall picture on the foreclosure front is encouraging. Housing data cruncher RealtyTrac reported last week that foreclosure filings plunged 27% in September relative to the same month last year. Filings have fallen for 36 consecutive months on an annual basis. 

This isn't a surprise. Ever since lenders came under fire for accusations of robo-signing foreclosure documents they've scaled back on the evictions. It also only helps that home prices and the economy have bounced back, leading more homeowners to stay current on their monthly payments. 

However, my situation points to the sticky situation in which a lot of the foreclosures that took place years earlier are being contested -- and that's holding back some sales from closing.

That's not the only place where cracks are starting to show in this once buoyant housing market recovery. Have you seen the shares of homebuilders lately? Bellwethers Lennar (NYSE: LEN  ) and Toll Brothers (NYSE: TOL  ) are now trading more than 20% off their all-time highs.

Toll Brothers merely met Wall Street expectations in last month's quarterly report after regularly blowing those profit targets away when the luxury developer was starting to bounce back. Lennar's performance beat analysts' estimates last month, but the prognosticators have been scaling back their expectations for fiscal 2014. The same pros who were banking on Lennar earning $2.54 a share three months ago, $2.52 a share two months ago, and $2.48 just last month are now perched on $2.45 per share in net income for next year. 

With interest rates likely heading higher in coming months, I wouldn't be surprised to go from finding a house that I can't buy to one that I may not be able to afford. 

The housing market isn't on firm footing these days, and that has nothing do with the sinkholes in Central Florida. 

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