Even though Broward County home prices rose this past September, a long-term recovery hinges on the depth and duration of foreclosure freezes by several big lenders.
Yesterday, according to Florida Realtors, the county’s median price of existing homes sold last month was $214,200, a 7% increase from a year ago and sales fell 16% to 673.
In Palm Beach County, the median price dropped 7% to $225,900, while sales rose 7% to 801.
Prices in the two counties have been up and down for most of the year. And that could continue following the recent clamor over foreclosure paperwork.
During the past month, Bank of America, GMAC, JPMorgan Chase and PNC Financial Services halted all or parts of their foreclosure processes in Florida and other states, reducing the number of cases handled in the courts.
A spokesman for the Palm Beach County Clerk said courts there cancelled more than half of the 1,700 sales of foreclosed homes, during the month of October through Monday.
According to the Clerk of Courts office, in Broward County, figures for October were not available. But in September, almost 38% or 1,411 of the 3,762 scheduled foreclosure sales were cancelled during the month.
The number of cases moving through the court system “is very light,” Broward Chief Judge Victor Tobin said. He states: “Last week was very slow and this week is slow.”
Analysts predict that if the foreclosure delays spread to other banks and last into next year, the resulting backlog will keep the housing market depressed.
Distressed homes, including foreclosures, accounted for 35% of sales nationwide in September.
Real estate agents and mortgage brokers expect prices to increase temporarily because fewer foreclosed homes are available for sale. But once the freezes are over, those properties will flood the market, causing prices to fall again, as they have for much of the past five years.
Tom Meyer, chief executive of Kislak Mortgage in Miami Lakes, said roughly half the home loans his firm is working on have been suspended. Loan officers tell him that borrowers now are interested in non-foreclosed homes because they don’t want to worry about potential problems postponing or canceling sales. He states: “I think that indicates that prices will stabilize and increase, albeit for a short period of time. But that won’t be a fundamental reflection of a stronger housing market.”
Moody’s Economy.com doesn’t expect the foreclosure freezes to last long enough to hurt housing’s supply and demand. Chris Lafakis, an economist covering Florida for Economy.com states: “It may just be a matter of weeks.”
On Monday, which was supposed to be the day Bank of America re-started its foreclosure process, the nation’s largest mortgage servicer pulled back from its announced schedule. A bank spokesman said its attorneys had asked courts in the judicial foreclosure states not to proceed with 102,000 cases. In a statement, he insisted “the bases for our foreclosure decisions have been accurate.”
According to spokesman Dan Frahm said, the average borrower in foreclosure in the third quarter was 18 months behind on payments and one in three properties was already vacant.
Bank of America said it has reviewed its process and has put in place new steps and controls.
Foreclosure defense attorneys are skeptical that the process can be re-started smoothly.
Attorney Gary Handin of Coral Springs concludes: “I can’t understand how they can have tens of thousands of foreclosure cases resolved quickly. I’m a small office and if you asked me to go through every one in my office it’d probably take us a month.”
For builders, spec homes built without a signed buyer is usually a risky venture – they are stuck paying the bills until the house sells. That’s manageable for the average spec, since they are usually priced between $100,000and $300,000. But what about the carrying costs of an $84 million house?
