South Florida Distressed Property Market

It sure seems that we have been talking about the distressed property market in South Florida for a very long time.  It has actually been close to a decade that short sales and foreclosures have been a factor in the residential real estate market.  Cracks in the market started to surface as far back as 2006 and grew for the next 3-4 years.  Most foreclosures were halted in October of 2010 because of the nationwide robo-signing litigation which provided a respite. Recently, the pace of new foreclosure filings has been climbing as distressed property sales have been on the decline.  In the month of July there were 955 residential distressed property sales in Miami-Dade, Broward and Palm Beach County, while there were 1,578 new foreclosure filings.  Take a look at the red line in the chart below.  The overall trend of new foreclosures has been climbing since the beginning of 2015.  Short sales and foreclosure sales have been on the decline for the same period.  If new foreclosure filings continue on this track, we will eventually see the overhang of distressed properties climb.

Transaction Volume in South Florida

Transaction volume declined 15% from June to July.  We always say that one month does not make a trend, but this number is worth watching.  In June there were 9,103 total residential transactions and that figure dropped to 7,728 in July.

Average Sale Prices in South Florida

The average sale prices of houses and condos in the South Florida market have been holding up so far.  Typically a few months of declining sales volume will begin to impact prices as properties sit on the market longer.  The average sale price of single-family homes slipped only 1% from June to July.  Condo prices declined 7% month over month.

Pace of New Foreclosure Filings

The pace of new foreclosure filings climbed in July, with a total of 1,578 filings in July, representing a 37% increase month over month.  Palm Beach County remained steady, while Miami-Dade and Broward Counties showed noticeable increases.

We will continue to monitor the pace of new foreclosure filings and their impact on residential real estate prices.  Keeping interest rates artificially low for so long has reflated prices but will not repair the damage from the financial crisis.