Today, RealtyTrac Inc. issued a statement saying that nearly half of the homes sold in Broward County during the first quarter of 2010 were in some stage of foreclosure.
The share of Broward sales that involved a home in distress was 44%, well above the national average of 31%.
Foreclosures — homes and condominiums in default, bank-owned or scheduled for auction — involved 26% of sales in Palm Beach County during the first quarter.
According to RealtyTrac, an Irvine, Calif.-based research firm, the average sale price of a foreclosed home in Broward was $123,270, while Palm Beach County’s was $148,458. Buyers in each county paid 22% less for a home if it was in foreclosure.
James J. Saccacio, RealtyTrac’s chief executive, stated:
“First-time homebuyers and investors continue to buy foreclosure properties in large numbers, and at substantial discounts. As lenders repossess homes in record numbers, they’ll have to be careful to manage the inventory to prevent more dramatic price declines.”
Following the historic run-up in housing prices from 2000 to 2005, Florida was one of the nation’s hardest-hit markets for foreclosures. Broward consistently has one of the highest foreclosure rates among the state’s 67 counties.
Foreclosure sales made up 39% of all transactions across Florida during the January-to-March period. In 2005, foreclosures represented less than 1% of all sales nationally.
Coral Springs real estate agent Beverly Rothstein said nearly all of her showings are homes owned by banks or those in which the owners have fallen behind on payments and need to sell. She states: “Most of them are in disrepair. It’s always a pleasant surprise when you show a foreclosure that isn’t completely trashed.”
While longtime house hunters are fed up by the condition of foreclosed homes, Rothstein said her buyers are willing to renovate the properties if means they can get them for a steal.
She further goes on record stating: “If you want to make money in this market, you have to know the foreclosure business.”
Many buyers looking to qualify for the $8,000 and $6,500 tax credits dismissed foreclosures because they wanted to complete their purchases quickly, said Richard Barkett, chief executive of the Realtor Association of Greater Fort Lauderdale.
The expiration of the credits means that foreclosures will make up an even greater portion of overall home sales, he and other market observers say. That will drag down prices for all homes.
Moody’s Economy.com predicts prices will hit bottom in Broward and Palm Beach counties in the third quarter of 2011. “But most of the declines will occur over the next six months,” said Chris Lafakis, an economist for the West Chester, Pa., research firm.
Meanwhile, most sellers not in foreclosure don’t understand that foreclosed homes are hurting prices of nearby properties, said Michael Citron, an agent in Parkland and Coconut Creek.
“They say, ‘That other house is a foreclosure. Mine is better than that,’” Citron said. “When I sit down and explain that foreclosure values are becoming market values, they’re disillusioned.”
Starting in July, lenders and borrowers will be required to go to mediation before a foreclosure judgment can be issued. The American Arbitration Association will run Broward’s mediation program, while the Palm Beach County Bar Association will manage Palm Beach County’s program.
