With more and more people feeling like they are getting priced-out of the Fort Lauderdale area housing market, we are going to shed some light on what is really going on.  The local papers are talking about rising prices due to a “housing recovery”, but there are more factors below the radar screen that are causing this new bubble.  Today we are looking just at houses, not condo/townhouse properties.  First-up, here is a look at the single-family home inventory in Broward County Florida as of the end of August.

The good news is that after hitting a multi-year low of 4,089 houses listed for sale in April, the slightly higher prices have brought some more sellers out of the woodwork.  Inventory was 4,440 units available for sale in August which represents about a 9% increase since April.

In August, the average selling price of a house in the Fort Lauderdale /  Broward County area was $339,836.  After reaching $351,439 in June, prices have dipped slightly.  The increase in borrowing costs may be putting a temporary lid on prices, as borrowers now have to prove their income and ability to repay loans.

So what types of transactions are closing?  Our next chart breaks out the sales by transaction type.

Fewer short sales were completed in June and foreclosure/REO sales are still bumping along the bottom.  Here are the numbers for August:

• 1,009 traditional sales made up 73% of all closings in Broward County in August
• 158 foreclosure / REO sales were about 11% of all closings
• 229 short sales were 16% of all closings in the month of August

In summary, there were only 387 distressed sales in August when you combine the short sales and foreclosure/REO sales.  As our discussion moves toward the distressed property market in the Fort Lauderdale area, let’s first compare the amount of distressed sales each month to the number of new foreclosure filings.  Once again, please keep in mind that this is just the houses, not condo and townhouse properties.

The problem here is that the 387 distressed sales in August is still less than half of the new foreclosure filings of 886 in August.  How are were going to dispose of the over 50,000 houses currently in some stage of foreclosure in Broward when we cannot even keep pace with the new filings?  In simple terms, the green line (distressed sales) needs to stay above the purple line (new foreclosure filings) for a very long time, but that won’t happen anytime soon from the looks of things.  Next, let’s take a look at the existing shadow inventory chart below.  It is also important to note that each and every city throughout Broward County showed a 10-15% increase of houses in foreclosure over our last data run in early August.

You will notice from the chart that a few cities including Fort Lauderdale, Miramar and Pembroke Pines have over 5,000 single-family homes in some stage of foreclosure as of September 20, 2013.  A few other cities with an elevated shadow inventory are Hollywood, Pompano Beach, Coral Springs and Sunrise.  The total for this chart was 50,014 and that is a conservative number as our search results are capped at 5,000 per city and we have 3 cities already over the maximum and climbing.  Yes, there are currently over fifty-thousand houses foreclosure in the Broward County/ Greater Fort Lauderdale area!  At the pace of 387 distressed sales each month, it would take roughly 129 months or over 10.7 years to sell all of these houses and that is assuming there were no new foreclosure filings (which would not be too realistic).  I have already taken a sneak peek at the September foreclosure filings and it is safe to say that the banks and courts returned from summer break tanned, rested and ready to repo!  Just to show that the new filings aren’t going away anytime soon, here is the data through August in a standalone chart:

In 2012, the monthly average of new foreclosure filings for this segment was 953 and so far in 2013, the monthly average is 1,437 which represents a 66% year over year increase in the monthly average.  Also, there were 11,496 new foreclosure filings in the Broward single family home sector in 2012 and we have already reached 11,433 new filings in 2013 as of August.

Call me crazy, but with over 50,000 houses in some stage of foreclosure in Broward County and the pace of new filings not subsiding anytime soon, I think I will wait this one out before I get on the “housing recovery” bandwagon.  Stay tuned and we will drill-down on the condo/townhouse market next in order to put this latest housing bubble into perspective.  As a teaser, there were over 16,000 condo/townhouses in foreclosure in Broward as of 9/20/13.  For some fun with math, just add over 50,000 houses and over 16,000 condo/townhouses in foreclosure and that equals a “housing non-recovery”.