On a daily basis, I am asked to value residential properties for a number of large financial institutions in the form of Broker Price Opinions (BPO’S). Recently, I have noticed the amount of requests increasing dramatically now that the robo-signer settlement has been signed. With that being said, here are a few of my observations on the South Florida housing market:
- The current inventory is creating a false market. Buyers are citing reduced supply and sellers are temporarily benefiting by not having to compete with bank-owned properties. This can be attributed to the fact that foreclosure actions have been halted for over 14 months (since October 2010). My advice for anyone getting frustrated with the lack of inventory is to be patient. New supply from the banks will be hitting the market.
- Rents continue to climb. A foreclosure in Florida (a judicial state) takes over 800 days to complete. Add to that the past 14 months of halted foreclosure proceedings for a total of over 1,200 days. This lengthy process has created a squatter society of thousands of people who haven’t made mortgage payments and have been living for free for over three years. What’s the problem with that? Since the foreclosure proceedings take so long, these occupied properties haven’t been sold to either single-family occupants or investors to rent them out. That is why we are witnessing artificially high demand for single family homes and rentals.
- Moving forward, if the level of bank owned (REO) properties get released at a faster pace, the South Florida Market will hopefully see more competing listings for buyers and for renters. More housing supply released for sale and for rent will gradually ease prices for both and ease the pain that has been inflicted on consumers.
At Allied Realty Group, we understand that all asset classes experience market turbulence and fluctuations in value. Each segment of the real estate market will at some point be impacted by various economic conditions and cycles. We provide a full range of services designed to help our clients navigate today’s complex and dynamic real estate market and make well informed, intelligent decisions. Clients rely on our advisory services to make buy-sell decisions, understand debt /equity markets and their impact on financing products, shape long-term portfolio strategies, evaluate development or redevelopment options and optimize investment returns.