Just over half of 2013 is in the bag and we are almost at the end of summer, so let’s see what the condo market looks like in the Greater Fort Lauderdale area.  First, we will take a look at existing inventory of condo/townhouse units for sale  as of July.

Really not much of a change in listed inventory for sale.  In July there were 5,985 condo/townhouse units listed for sale in Broward County, up slightly from 5,962 in June.  Now, let’s look at the average selling price.

The average sale price dipped slightly in July to $156,396, down from $159,568 in June.  We always say that one month does not make a trend, so we will have to see a another month or two of data to see the impact of higher borrowing costs.

One thing were are sure of is that there is still a large shadow inventory of foreclosures that still haven’t made it to the market yet.  This next chart provides a city-by-city glance at where these foreclosures are located.

As of August 1, 2013, we counted 15,119 condo/townhouse properties in foreclosure throughout Broward County, Florida.  Some of the areas with elevated levels of  foreclosures as of 8/1/13 are as follows:

• Fort Lauderdale – 1,163 condo/townhouse properties in some stage of foreclosure
• Hollywood – 1,192 condo/townhouse properties in some stage of foreclosure
• Pompano Beach – 1,160 condo/townhouse properties in some stage of foreclosure
• Coral Springs – 1,285 condo/townhouse properties in some stage of foreclosure
• Lauderhill – 1,140 condo/townhouse properties in some stage of foreclosure
• Tamarac – 1,009 condo/townhouse properties in some stage of foreclosure

As for the pace of new filings, it has remained strong throughout 2013.  The new filings appear to have taken a brief vacation in July, but will most likely ramp back up in August  and September.  In 2012 the monthly average of new foreclosure filings for the condo/townhouse segment in Broward was 379 and there were 4,550 total filings.  So far through 2013, the monthly average is 631 and the total filings sit at 3,785 just halfway through the year.

So what types of transactions are closing?  Let’s take a look at this next chart that gives a breakdown of closings by transaction type.

Traditional sales still made up the bulk of all closings in July at roughly 68% of all condo/townhouse deals.   The bank-owned REO transactions were 18% of all closings and short sales were 14% of all closings in the condo/townhouse segment.  Finally, let’s see how the distressed sales look compared to the new foreclosure filings.

What we saw in July is what needs to happen for an extended period.  In July there were 303 new foreclosure filings in the Broward County condo/townhouse market and 479 distressed sales (combining the REO and short sale closings).  The only way for the massive shadow inventory of over 15,000 condo/townhouse properties in foreclosure will be reduced is to sell more distressed properties and have less new filings.  Although July was a low number of new filings, we don’t expect the new filings number to remain low for very long.  Even if there were no new filings, it would take about three years to sell the 15,119 existing distressed properties at the current pace of only 429 per month.  Simply divide the existing shadow inventory of condo/townhouse foreclosures (15,119) by the current pace of distressed sales (429) and you will get 35.2 months.  Once again, that is assuming that there are no new foreclosure filings!  Just to see how the shadow inventory of foreclosures outnumbers not only the amount of condos listed for sale, but the properties that are listed as “distressed”, here is our last chart.

Until the condo properties in foreclosure number is drastically reduced, the market will not be able to have a sustainable recovery.  People keep talking about low inventory.  Well, “low inventory” is not a positive market indicator when there is a mountain of distressed properties not currently listed for sale.