In order to identify whether the current market trends remain intact here in South Florida, we will drop the raw numbers into charts and take a look.  It appears that the single-family housing inventory continues it’s slide as apparent in our first chart.

The decline in residential inventory in South Florida started back in late 2010 when foreclosures were halted for the robo-signing litigation against the major banks and available inventory continues to slide.  To put things into perspective, take a look at all of the foreclosures in Broward County in the chart below.  As of April 26, 2013, there were over 38,400 single family homes in foreclosures just in Broward County.  The City of Fort Lauderdale is now “maxed-out” at over 5,000 houses in foreclosure.

Now that you know which cities in Broward County have elevated levels of foreclosures, the next chart compares the existing inventory of 4,089 homes to the overwhelming 38,400 foreclosures (in red of course).  In the middle, we used a percentage of 30% of the currently listed houses as distressed properties.  The math is pretty simple:  If there are 38,400 houses in foreclosure in Broward County Florida and 1,227 homes listed for sale as “distressed”, it would take 31 months to sell all of the currently listed foreclosures and short sales at the current sales pace.  That is a best case scenario and does not include the shadow inventory.  Below is a chart which breaks down the types of transactions in the single family home market:

In April, there were 140 REO properties and 281 short sale transactions closed for a total of 421 distressed sales completed Broward County.  At that pace of 421 per month, that would take 91 months or 7.6 years to dispose of all 38,400 single family homes in foreclosure in Broward County.  Also keep in mind that ignores new foreclosure filings, which isn’t too wise, because Broward County has averaged 951 new foreclosure filings in the single family home market each month over the last 15 months.  Basically, over twice as many new foreclosures cases are filed than distressed sales are closed each month.

And, just so you can put the level of new foreclosure filings into perspective……..

Finally, everyone keeps talking about the housing market strength.  Yes, we are currently experiencing firm pricing, but it has been artificially created by the following:

• We are only 1/3 of the way through the housing correction.  Foreclosures were halted back in 2010 and the shadow inventory looms and continues to grow daily.
• The average foreclosure in Florida takes nearly 3 years to complete and most people stretch it way beyond that.
• There will be a steady flow of distressed properties entering the market to cool off the current overheating that we see.
• The Fed buys a total of $85 billion monthly of Treasuries ($40 billion) and mortgage backed securities ($45 billion).  This can not and will not last forever.  The Fed created the last bubble in the mid-2000’s and just now realized they are headed for round 2.  The massive debt buying will eventually taper, rates will increase and the music will stop.