Here is a quick analysis of where the distressed property market stands as of early August.  We will start with the overhang of roughly 60,000 residential properties in foreclosure throughout Broward County, Florida:

As of August 1, 2013, there were an estimated 44,356 houses and 14,995 condo/townhouse properties in some stage of foreclosure throughout Broward County.  A few cities with high levels of residential property in foreclosure are:

• Fort Lauderdale has 4,662 houses and 1,142 condo/townhouses in foreclosure
• Miramar has over 5,000 houses and 957 condo/townhouses in foreclosure
• Pembroke Pines has 4,777 houses and 956 condo/townhouses in foreclosure
• Hollywood has 3,855 houses and 1,165 condo/townhouses in foreclosure
• Sunrise has 2,903 houses and 796 condo/townhouses in foreclosure

The largest barrier to the South Florida housing recovery is the turtle pace of foreclosure processing.  Most of these properties have been in and out of foreclosure since 2008 thanks to failed attempts by the federal government to intervene, mortgage modifications designed to fail and foreclosure defense attorneys who have managed to keep people in their houses without paying their mortgages.  Finally in June, the Governor signed House Bill 87 which will hopefully streamline the foreclosure process in Florida, which currently has one of the longest foreclosure timelines in the country.    By looking at the next chart, it appears that lenders were on the sidelines and ready to pounce in June:

The monthly average of new foreclosure filings in Broward County is still over 2,000 at 2,056 after release of the July data.  In July, there were 814 new foreclosure actions filed in the single-family home market and 303 filings in the condo/townhouse segment.  Just past the mid-year point, the new filing average is still up substantially (54%) over the 2012 average of 1,332 monthly.

Finally, let’s take a look at how the level of properties in foreclosure (shadow inventory) compares with the amount of properties that are currently available for sale:

When you see how few houses and condos are listed as “distressed” properties, compared to the level of houses and condos in foreclosures, the difference is staggering.   The South Florida residential market will not recover until the shadow inventory of foreclosures is reduced.  Less than 3% of the houses currently in foreclosure are listed as a REO or short sale, and less than 12% of condo/townhouse properties currently in foreclosure are listed for sale as an REO or short sale.  That clearly shows that South Florida residents are perfectly o.k with squatting in homes that they don’t pay for.  Remember Loki Boy who filed adverse possession paperwork to stay in the waterfront home in Boca Raton?  It certainly appears as if we have a surplus of squatters currently living in Broward County, roughly 60,000 of them!  Until the banks replace the non-payers with actual payers, South Florida will continue to “squat” in a housing non-recovery.