October 8th, 2013 12:03 PM by Sherry Lee
Sales of distressed homes increased sharply across South Florida in August, a result of more foreclosures working their way through the court system, a new report shows.
Four in 10 Broward County sales last month involved homes in some stage of repossession, according to RealtyTrac Inc. Foreclosure-related homes accounted for only 21 percent of Broward sales in August 2012. In Palm Beach County, 36 percent of August sales involved distressed homes, up from 20 percent a year earlier.
"This is expected, given that over the past 18 months in Florida we've seen foreclosure starts increase. That's now translating into actual sales," said Daren Blomquist, a RealtyTrac spokesman. "This is a necessary step that the market needs to go through to clear the distressed inventory out and get it in the hands of new homeowners."
The figures from RealtyTrac, an Irvine, Calif.-based listing firm, are based on county deeds and include single-family homes, condominiums and townhomes.
The firm defines a distressed home as one in foreclosure or already owned by a lender. Short sales, in which the owner unloads for less than the mortgage amount, are considered distressed properties.
Some South Florida market watchers feared an increase in foreclosure-related sales would hurt overall home values, but demand is strong enough to keep prices from falling, Blomquist and other analysts say.
Broward's median price in August for distressed homes was $112,150, up 24 percent from a year ago, RealtyTrac said. Palm Beach County's median for distressed homes rose 21 percent to $110,000.
Despite the price increases, those homes still sold for about a third less than properties not in the foreclosure process, according to RealtyTrac.
"As quickly as the homes are put onto the market, they're gobbled up," said David Dweck, founder of the Boca Real Estate Investment Club. "Banks have gotten smarter and raised their prices accordingly."
Individual investors and large investment firms have been buying foreclosed properties over the past year, usually paying cash. In July and August, nearly seven in 10 sales across Palm Beach, Broward and Miami-Dade counties were all-cash deals, RealtyTrac said.
The investors add value through renovations, then turn around and sell the homes for a profit. Investment firms tend to rent the homes for a year or longer before selling.
The robust demand has helped the market rebound from the housing crash — but it also led to a shortage of homes that has kept many young families from buying, real estate agents say.