Loan defaults on the rise
Mortgage loan defaults are on the rise again across South Florida. They are coming off a very low level after being halted due to COVID 19 moratoriums. At this point there really isn’t much to get worried about. After all, it takes years and sometimes as long as a decade for a lender to reclaim a property in Florida since it is a judicial state. Anyway, below are some numbers going back to 2015. What most people don’t realize is that we never really healed from the last crisis. Most foreclosures that were halted back in 2010 for the robo-signing litigation just resurfaced a few years later. We merely kicked the can down the road until the housing bubble reflated due to ridiculously low mortgage rates. They even halt foreclosures when the wind blows too hard. The big decline in 2017 that you see in the chart was after Hurricane Irma, followed by a massive spike in 2018.
There aren’t many deals closing in Miami, Fort Lauderdale and Palm Beach markets. This can be attributed to a very low inventory of available houses and condos for sale. We will show that in another chart. Here is a look at transaction volume.
It looks like residential inventory is finally making a slow bottom turn. During the month of June there were 9,641 houses and 11,269 condo properties available in the tri-county area. That is still a small fraction of the 72,241 properties that were on the market as foreclosures were halted as the last housing bubble popped. Take a look at the beginning (far left) of this next chart. In January of 2011 there were 30,768 houses and a whopping 41,473 condo properties on the market as lenders halted foreclosures due to the robo-signining litigation. Total inventory declined from 72,241 properties in January 2011 to only 34,993 properties by October 2012. Combine that with low mortgage rates and that provided footing for the housing market and a base for the next bubble to be created.
There has been a significant jump in mortgage rates that will impact housing affordability. Basically, rates have doubled so far this year. Real estate prices have been hooked on low rates for so long, this move will certainly leave a mark.
Average sale price
The sale prices of residential real estate are still in the stratosphere, but will gradually return to earth as the bubble pops. As we move into the fourth quarter of 2022 and into 2023, prices are going to normalize.
This real estate market outlook covers real estate activity in Miami-Dade, Broward and Palm Beach County, Florida. Here are just a few of the cities in each of these three markets:
- Miami-Dade – Aventura, Coral Gables, Miami Beach, Hialeah, Sunny Isles Beach, North Miami, Homestead, Doral, Miami Lakes, Downtown Miami, Brickell and Key Biscayne.
- Broward – Fort Lauderdale, Pompano Beach, Deerfield Beach, Hollywood, Hallandale, Weston, Parkland, Wilton Manors, Oakland Park, Plantation, Cooper City, Davie, Coral Springs, Sea Ranch Lakes, Lauderdale by the Sea and Lighthouse Point.
- Palm Beach – Delray Beach, Highland Beach, Jupiter, Palm Beach Island, Boynton Beach, Boca Raton, Highland Beach, Palm Beach Gardens, West Palm Beach, Wellington and Lake Worth.