A tale of two markets is the title for today’s post. We are noticing a large increase in foreclosure filings across South Florida while prices remain at multi-year highs since the financial crisis. First, we will look at the foreclosure filings.
A tale of distress
The first chart today will highlight the monthly foreclosure filings in Miami-Dade, Broward and Palm Beach counties. We have discussed this topic at length since the last housing bust. All of the foreclosure halts over the last decade have only prolonged the crisis and there still remains a massive overhang of distressed residential real estate in South Florida.
You will notice from the chart that we haven’t seen this level of new foreclosure filings in years. The FEMA halt in the fourth quarter of 2017 just helped stockpile additional distressed properties. The stats are below, with the numbers for the last four years. You don’t have to be an expert to see that there are tons of people not paying there mortgage down here!
A tale of high prices
The trend in sale prices has been strong over the last few years thanks to low mortgage rates.The problem with keeping rates so low for so long is that it encourages people to take on much more debt than they should. Hence, the rise in foreclosure filings. Just like the last housing bubble, people are somehow convinced that house prices only go up. Once you remove the cheap money, it should be interesting to see where prices settle. During the month of May, the average sale price of a single-family home in South Florida dipped slightly to $521,886. The average sale price of a condo in South Florida actually increased in may to $335,258. Moving through the summer months we will keep an eye on foreclosures, sale prices and mortgage rates.