Lately we have been trying to highlight the recent trends in South Florida residential sales, foreclosure filings and the level of inventory listed for sale. Our first chart today shows how the available inventory of houses and condos on the market in Miami-Dade, Broward and Palm Beach County, Florida is on the upswing.
In February, the residential inventory listed on the market in the tri-county area reached 44,372 properties. Inventory has not been this high since April-May of 2012. There are a number of factors that have contributed to the rising inventory and some of them are as follows:
- Slowing sales pace – After reaching a recent high of 9,053 closings in May of 2013, the amount of monthly closings dropped to 6,125 in February 2014. That is a 32% drop!
- Tighter lending standards. Now with the Qualified Mortgage regulations, buyers now have to show the ability to repay their loan and lenders need to share in the risk.
- Slightly higher rates – Interest rates spiked last May-June and stunted the pace of sales. Just look at the next chart to see the sales drop after rates climbed last May-June.
- Steady pace of new foreclosures – Look at our next chart and you will see that South Florida continues to receive a steady dose of monthly foreclosure filings and still has a serious shadow inventory of properties in foreclosure. Also, since the Mortgage Debt Forgiveness Act expired in December 2013, less short sales will be completed and more properties will continue on the track to foreclosure.
In February, there was a total of 6,125 total residential transactions closed and 5,833 new foreclosures filed in Miami-Dade, Broward and Palm Beach County. We have showed how the pace of new foreclosures always outpaces distressed sales, but it is certainly more problematic when new foreclosure filings measure-up to all of the residential sales in the area. We just ran a new search of existing foreclosures in each of the three counties and we tabulated roughly 140,000 residential properties in some stage of foreclosure. Our estimate is a conservative count, since there are several cities that have exceeded our limit of 5,000 houses or condos in foreclosure. Take a look at the chart below and you will hopefully understand that any monthly additions to this massive shadow inventory will further postpone any “housing recovery” that you may have heard about in the news.