As we head into the month of August, it appears that the shadow inventory of foreclosures continues to grow in the Broward County residential real estate market.  As of August 1, there were 44,356 single-family homes and 14,995 condo/townhouse  properties in some stage of foreclosure throughout the county for a total of 59,351 “distressed” properties.  If only these properties could get listed on the market and into the hands of buyers willing to pay for them, this market would finally turn the corner.  Until that happens, we will be stuck with this growing shadow inventory of foreclosures.  Our first chart shows where nearly 60,000 distressed properties are located throughout  Broward County:

Some of the cities with the highest level of distressed properties as of August 1, 2013 are as follows:

• Fort Lauderdale has 4,662 single-family homes and 1,142 condo/townhouse properties in foreclosure
• Miramar has over 5,000 single-family homes and 957 condo/townhouse properties in foreclosure
• Pembroke Pines has 4,777 single-family homes and 956 condo/townhouse properties in foreclosure
• Hollywood has 3,855 single-family homes and 1,165 condo/townhouse properties in foreclosure
• Sunrise has 2,903 single-family homes and 796 condo/townhouse properties in foreclosure

Those are just some of the “leaders” of the list.  Feel free to comb through the chart to see how your city stacks up.  The shadow inventory of distressed properties continues to grow because it takes way to long for banks to foreclose on properties in judicial states like Florida, where the average foreclosure takes close to 900 days to complete.  A good portion of the properties in the chart above entered the foreclosure process as far back as 2008 when the housing bubble burst.  In addition to the existing properties in foreclosure, the new foreclosure filings are increasing in 2013.  Take a look at this next chart:

Check out that spike in the June filings.  Does this look like a leading indicator for a housing recovery?  The answer is no.  In 2012, the monthly average of single-family and condo/townhouse foreclosure filings in Broward was1,332.  Through June of 2013, the monthly average is 2,213.  The next chart illustrates the trend in new filings which broke out over 3,000 total filings in June.

Finally, let’s address the limited inventory of residential properties for sale.  Quite simply, if all of the foreclosures made their way to the market, we could reverse that situation rather quickly.  The perma-bulls in the real estate industry have attributed the low supply to the “housing recovery”, where it is actually due to the fact that the housing market has not recovered.  Just to put this into perspective, notice how the shadow inventory of foreclosures in each category towers over the listed inventory (9X for houses and 3X for condos) and grossly outweighs the amount of properties that are actually listed as “distressed”.

It has been about five years since the last housing bubble burst and yes, we are in a bubble once again!  The shadow inventory that has yet to hit the market will assist in the continuation of the housing market correction.  If you add to it the gradual rise in interest rates, they will serve as the 1-2 punch to put things back in check.  Luckily, there was a stinker of a jobs report today, which prevented another spike in rates for now.  The June increase is already rippling through the market and will show up in the July sales data for certain.