In my daughter's neighborhood in Marion County, Florida, lies a house that was built in 2007, about the same time her home was completed. The house is approximately 1,600 square feet, and has been on the market for a couple of years. In 2009, it was rented for about six months by horrible tenants, who basically destroyed the home. Since that time the house has been abandoned.

Like many foreclosed homes, the grass is growing to the eaves, it appears it may have been broken into, and during a wicked spring storm last month a tree fell on the roof. In 2010, as the home was becoming very distressed, I researched the property and found out that Countrywide Mortgage had filed a foreclosure suit against the owner, an older woman who lives in California. I contacted the attorney who was handling the foreclosure to find out if the parties would be interested in a short-sale. After several calls to the attorney, it was discovered that the attorney's office couldn't find the property's paperwork even though court records showed they filed the suit. I was told to keep an eye on the court case and that I might be able to purchase the property after the foreclosure. The attorney was absolutely no help and had no interest in doing the right thing.

I've been monitoring the legal status of this property since 2010. As each month goes by the house is becoming even more distressed. At the end of last year, I noticed the foreclosure suit had been set for a summary judgment hearing in March, so I noted the approximate time to check on the foreclosure to see if the plaintiff might be interested in a distress sale. The foreclosure suit went before the judge and the case ended up being dismissed because no one showed up to the hearing. Yes, Countrywide Mortgage didn't show up, their attorney from Miami didn't show up, and the Defendant didn't show up.

My next thought was that the property taxes hadn't been paid and Marion County will wind up with possession of the property due to non-payment of property taxes. Guess what? The taxes were paid by someone and I could never find out who. Besides the mortgage, the only lien that remains on the property is a $3,000 fine from Marion County Code Enforcement for not maintaining the property. I have since tried to call the homeowner, who does not take calls, and I've even written her a letter to which I've received no response. The bottom line is this: Here's a house with its owner living in California, a lien on it from a mortgage company that won't show up to its own foreclosure hearing, and it is literally decaying in the neighborhood.

The sad thing is that this home is not the only one like it. Within a one mile radius of this home there are at least four other homes just like it. In fact, there's a house a few blocks from this one with two vehicles in the front driveway, weeds grown-up to the rafters, and furnishings inside. It appears the homeowners said, "to hell with it" and left the house, cars, and furnishings for the banker to deal with. What these banks are missing is they could sell their foreclosed homes, like the one near my daughter's house, for a lot more money than they will eventually get. In addition, the community would be a lot better off. Ultimately, I think the state of Florida and local communities are going to have to revisit condemnation laws and ordinances to motivate the disorganized and incompetent lending institutions to take action.

Florida's foreclosure issue is not as bad as many analysts think. In a few years, these homes will either wind up being sold as distressed properties for pennies on the dollar; they will be sold to investors who will pay the property taxes and then rent them out; or, they will be destroyed by cities when the urban renewal projects kick in. There's also another factor that analysts need to wrap their hands around - someone who wants a new home won't purchase a distressed property like the one I've described in this column. The filth and mold in many of these foreclosed homes will be major issues, and a couple wanting a dream home will only see nightmares in properties like this.

I've been throughout Central Florida over the last three weeks, and I suspect 40 percent or more of foreclosed properties are in some major form of a distressed state. There's a house in Leesburg, Florida, that just five years ago was a mansion. Because of serious legal problems encountered by the owner the home has been abandoned, is in the process of foreclosure, and has been gutted by thieves. I can't imagine anyone but a bottom-feeding investor buying this property, certainly not a new home buyer. With each day that passes due to the banks and courts dragging out these foreclosures the worse these properties become, as thieves rip out wiring and stealing air conditioning units, appliances, and anything else of value. Don't forget, in hard times desperate people will take desperate action.

The biggest cause of problems in these distressed, foreclosed homes is Florida's hot and humid weather. It's a good bet that the vast majority of these homes have broken windows and doors from disgruntled owners or thieves, and this time of year is the best for growing very toxic, black mold. Heck, if you're a homeowner who takes care of your property in Florida, you know all about mold. Can you imagine those homes with broken doors, broken windows, and leaking roofs with mold forming and varmints making house inside? A few more years of this and most of the foreclosed homes will be condemned for tear-down or turned into practice houses for the local fire department.

Florida's existing home and condo sales in March compared to February were up a whopping 36%, the best improvement since 2005. March sales were 12% better than the previous year without the federal housing tax credit. Housing inventories are going down nicely. For example, in Lake County, Florida, inventories are down 15% just this year to their lowest level since this Great Recession began.

The numbers are starting to correct themselves, and I believe with the passing of each day the foreclosure market will have a lesser affect on the new housing market and more of an affect on the rental market. Multi-family housing construction in Florida has basically stopped for the last two years and in the next few years the state could face a real shortage of rentals. Permitting and funding processes for multi-family units are much slower than residential housing. As a result, most of these foreclosures will turn into rental units.

I'll break my observations into real terms: The retiree from upper Michigan is not going to travel to Marion County, Florida to buy a mold-infested, varmint-infested, ransacked house to escape the horrendous winter like last year's winter. This individual has no intention on buying a fixer-upper to spend the rest of his golden years trying to rehab. By the way, even if he wanted to buy it he couldn't because no one knows who actually owns the darn thing!

Don Magruder is CEO of Ro-Mac Lumber & Supply in Central Florida and former chairman of the Florida Building Material Association. This article originally appeared in FBMA's March 3 newsletter.