As people trample over each other circa 2005 to secure their dream condo property, let’s take a step back and analyze the recent data for the Broward County, Florida and Fort Lauderdale area condo market.  We will begin with the continued decline in available condo/townhouse units available for sale.

You can see form the chart that after a quick beginning of the year spike in January, the inventory levels have resumed their decline that started back at the end of 2010 when the robo-signing litigation halted foreclosures and turned off the cut-off the steady supply of distressed properties entering the marketplace.  In a simple economics lesson of supply and demand, you will see how the reduced supply of condos impacts pricing in our next chart.

What types of deals are closing?

Wow!  Look at the spike in traditional sales compared to the REO and short sale transactions.  The recent uptick in prices has allowed a large number of condo owners to sell their units.  Many of these condo/townhouse owners were “trapped” or “underwater” due to negative equity, or just didn’t feel comfortable selling over the past few years.  The summary of the closed transactions in April 2013 is as follows:

• 74.5% of all closed condo/townhouse sales were traditional sales for a total of 1,239
• 13.5% of all closed condo/townhouse sales were bank owned REO/foreclosure sales for a total of 225
• 12% of all closed condo/townhouse sales were short sale transactions for a total of 200

Now that buyers are feeling that they “missed-out”, what type of data would give them some hope that they will get a chance to purchase their dream condo unit in the Fort Lauderdale area?

Please don’t give up hope or believe all of the headline hype of a real estate recovery.  All markets are different and as far as South Florida is concerned, we have a long road ahead.  The chart above shows the roughly 16,103 condo/townhouse units in Broward County that are currently in foreclosure.  If you take into account that 425 distressed sales closed in April and there were 16,103 condo/townhouse units in foreclosure, it would take over 3 years to sell all of those units, or 37.8 moths to be exact.  But wait, there’s more…..

The pace of new foreclosure filings in the Broward County condo/townhouse market remains elevated an will continue for awhile.  From January 2012 through March 2013, the monthly average of new foreclosure filings is 362.  Basically, if only 425 distressed condo/townhouse sales closed in April, but we average 362 new foreclosure filings per month, we are barely selling at a pace to keep up with new foreclosure filings!  Don’t forget that the average foreclosure in Florida takes close to 3 years to complete, as we are in a judicial state with a lengthy foreclosure process.  Almost everyone in Florida knows of someone or lives next door to someone who has remained in a property for 3-5 years without making a payment.

If you haven’t become familiar with “shadow inventory”, hopefully this final chart helps to put the current real estate market into perspective.  Basically, until there is a drastic reduction in the shadow inventory (red bar for a good reason), the Fort Lauderdale condo/townhouse market will not begin a sustainable recovery.