While buyers are taking advantage of the bargain prices, homes in some stage of foreclosure continue to cast a long shadow over the South Florida real estate market.
Today, according to RealtyTrac, nearly 4 in 10 Broward County homes sold during the second quarter were in default, scheduled for auction or bank-owned.
From April to June, Broward’s share of homes sold in distress was 38%, well above Palm Beach County‘s 24%, which also is the national average.
Broward had 4,978 foreclosure-related sales in the second quarter. That declined slightly from the first quarter but still was the most of Florida‘s 67 counties.
Palm Beach County had 2,245 distressed sales, a 21% increase from the January-to-March period.
The federal homebuyer tax credits played a role in reducing the number of foreclosure-related sales in some markets, James J. Saccacio, chief executive of Irvine, Calif.-based RealtyTrac, said in a statement. He called that “a temporary dip” and expects the April 30 end of the tax credits to send more buyers back to distressed properties. Many people looking to qualify for the $8,000 and $6,500 tax rebates dismissed foreclosures and short sales because they wanted to complete their purchases quickly.
Broward’s average sales price of a home in the foreclosure process was $121,500, and the average discount was 18%. The average sales price in Palm Beach County was $146,625, and the average discount was 23%. The South Florida metro area, which includes Palm Beach, Broward and Miami-Dade counties, led all areas across the state with 11,662 foreclosure-related sales during the second quarter.
A home would not be considered in the foreclosure process if the owner was current on the mortgage payment but still trying to complete a short sale. Foreclosure-related sales made up roughly a third of all transactions across Florida during the second quarter. In 2005, foreclosures represented less than 1% of all sales nationally. Distressed homes usually are in disrepair and are priced below market value. Some prospective buyers prefer to look at homes not in foreclosure because they’re in better condition.
Douglas Rill, broker of Century 21 America’s Choice in West Palm Beach, is surprised that only 24% of the sales in Palm Beach County were foreclosure-related. He said distressed sales account for about half of his firm’s business, and he never has seen such a high percentage in his 38 years in the business. He states: “The depth of this real estate recession is remarkable.”
Terry Story, a real estate agent for Coldwell Banker in Broward and Palm Beach counties, said many of her clients are “underwater,” owing more than the homes are worth. They’ve lost jobs or had sharp drops in income and are hoping to complete short sales and avoid foreclosure. She concludes: “I’m seeing pure, hard economic reasons why people are doing what they’re doing.”
