While the average selling price of single-family homes has been decreasing over the summer months, the average selling prices of condo/townhouse units in Broward County have remained firm and have even increased.  Take a look at our first chart of average selling prices through August:

In August, the average selling price of a condo/townhouse unit in Broward climbed to $168,461, which is up from $156,396 in July.  That represents an 8% month over month increase in average selling price.  How about available inventory for sale?

In August, the available condo/townhouse inventory in the Greater Fort Lauderdale / Broward County market rose slightly to 6,152 units listed for sale, up from 5,985 in July.  You will notice from the chart above that the available inventory has been bumping around the lows since bottoming-out at 5,877 units in April and the incremental climb to 6,152 in August represents a 3% month over month increase from July and 5% off the lows set in April.

So what types of transactions are closing?

Here is the breakdown of the 1,513 closed condo/townhouse sales for the month of August:

• There were 1,120 traditional sales which accounted for 74% of all closings.
• There were 224 Foreclosure/REO transactions which accounted for 15% of all closings
• There were 169 short sale transactions which accounted for 11% of all closings

As traditional sales still dominate the closed transactions data, it is disturbing that there were only 393 total distressed sales when you combine the Foreclosure/REO sales and short sales.  Why is this so troubling?  Take a look at the shadow inventory of over 16,000 condo/townhouse properties that are currently in some stage of foreclosure throughout Broward County, Florida:

This foreclosure search was conducted on 9/20/2013 and there were roughly 16,251 units in foreclosure.  Some of the cities with over 1,000 units in foreclosure are as follows:

• Fort Lauderdale – 1,269 condo/townhouse units in some stage of foreclosure
• Miramar – 1,007 condo/townhouse units in some stage of foreclosure
• Hollywood – 1,256 condo/townhouse units in some stage of foreclosure
• Pembroke Pines – 1,008 condo/townhouse units in some stage of foreclosure
• Pompano Beach – 1,256 condo/townhouse units in some stage of foreclosure
• Coral Springs – 1,366 condo/townhouse units in some stage of foreclosure
• Lauderhill – 1,260 condo/townhouse units in some stage of foreclosure
• Tamarac – 1,101 condo/townhouse units in some stage of foreclosure

As for the “housing recovery” that is plastered plastered all over the local newspapers, almost every city throughout Broward County had a 10-15% increase in shadow inventory of foreclosures in the condo/townhouse market in August over the July figures.  So if you take the 16,251units in foreclosure and divide by the anemic distressed property sales pace of 393 units in August, it would take roughly 41 months to sell all of the distressed properties in the best case scenario.  We call it “best case” because that assumes there are no new foreclosure filings going forward.  Our next chart shows the pace of distressed property sales vs. new filings.  Luckily the new filings slowed over the past few months, but I have already seen the September numbers and it looks like the foreclosure train is leaving the station again and will finish Q4 of 2013 with a bang.  Basically, if you want to remove some of the shadow inventory overhang, the green line (new foreclosure filings) needs to remain substantially lower than the purple line (distressed sales) for an extended period of time.

Finally, here is a chart of the new foreclosure filings for the condo/townhouse property sector in Broward County.  In 2012, the monthly average of new filings was 379 and so far through 2013, the monthly average is 509.  After a spike in June, it looks as is the banks and courts took a break in July and August and are coming back well rested in September.

In summary, regardless of what the headlines tell you, there will not be a housing recovery until the massive overhang of shadow inventory gets processed through the court system and sold to buyers who will actually pay the mortgage, taxes and insurance (don’t forget the new flood insurance rates).  There is really no way around it and anyone who has bought into this false recovery is going to be stuck holding the bag…….again!