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Interest rate movement, transaction types, sale prices and lingering foreclosures

As we await new data for the South Florida residential real estate market, today we will look at some charts of interest rates, transaction types, sale prices and foreclosures throughout the Greater Fort Lauderdale/Broward County market.  Our first chart today illustrates the relation ship between the 10-year bond yield and mortgage rates.  The chart reflects interest rates as of 9/11/2014 and it is important to look at the spike in the 10-year bond yield in the past week.  The 1-year was at 2.55 yesterday and as of today it is already up to 2.60.  Mortgage rates don’t reflect the increase yet, but you will see it in the weeks to come and this movement is certainly is worth watching.

How about transaction types and median prices?  Here is a chart of the Broward County condo & townhouse sales through July.  As we have noted previously, residential prices appear to have peaked in the month of May.

Broward Condos - Median Prices

Now, here is a look at the single-family home data through the month of July.  Traditional sale prices have done well so far, but short sales and REO sales appear to be getting hit hard.

Broward Houses - Median Prices

How about the inventory of residential properties listed for sale?  It has increased 43% after hitting a low point in April 2013.  As of July, there were 6.252 houses and 7,986 condo/townhouse properties listed for sale in Broward County.  Condo inventory has been hovering around the 8,000 unit level for several months and the inventory of houses on the market has been in a solid uptrend.

Broward Inventory

Finally, how about that “other inventory” ?  Yes, the shadow inventory of properties in some stage of foreclosure remains at staggering levels.  As of 9/10/14 there were still over 50,000 houses and condos throughout Broward County in some stage of foreclosure. The local news and various trade groups don’t like to discuss this topic, but it is an important component as well as a precluding factor in any recovery. Feel free to click on the next chart to see how your city compares to others.

Shadow Inventory - Broward County

A larges percentage of these properties have been in and out of the foreclosure process since the housing bust in 2008.  We continue to remind people that a true housing recovery will not take place until this shadow inventory is cleared.  It should have been cleared back around 2008-2010, but all of the regulatory and legislative measures merely kicked the can down the road and prolonged the problem.  The “recovery” now faces some new headwinds and here are just a few factors that may lead to the popping of housing bubble 2.0:

  • Rising interest rates and borrowing costs
  • Rising available inventory and competition
  • Tighter lending standards
  • Higher insurance costs