Real Estate Blog

South Florida Repos Jump 79% To 54,400 Properties In 2010

February 19th, 2011 1:09 PM by Sherry Lee

Banks repossessed more than 54,400 South Florida properties in 2010, representing a 79 percent increase on a year-over-year basis compared to 2009, according to a new report from CondoVultures.com
 
Lenders took title through the foreclosure process to 23,000 properties in Miami-Dade County, 20,400 properties in Broward County, and 11,000 properties in Palm Beach County, according to an analysis by the licensed Florida brokerage Condo Vultures® Realty LLC. 
 
Lenders have repossessed more than 121,000 properties - also known as real estate owned by banks or REOs - since the real estate crash began in 2007. The year 2010 represents the single-greatest number of repossession in a year. By comparison, lenders repossessed 30,400 properties in 2009, 26,250 properties in 2008, and 10,100 properties in 2007, according to the analysis based on Clerk of the Court records in all three South Florida counties. 
 
"The year 2010 proved to be a record year for bank repossessions in South Florida," said Peter Zalewski, a principal with the Bal Harbour, Fla.-based real estate consultancy Condo Vultures® LLC. "Nearly as many properties were taken back by lenders in 2010 as in the previous two years combined. It is worth noting that bank repossessions in 2010 are the result of a lengthy foreclosure process that probably began back in 2008 or 2009."
 
"If there is a bright side, it is that certain rental markets - primarily where there was an overbuilding of condos - should be poised for high occupancy levels and strong rental rates for the foreseeable future."  
 
Foreclosures, repossessions, and rental rates are topics scheduled to be discussed at the upcoming Condo Vultures® 3rd annual "State of the South Florida Condo Market" event on Jan. 25 at the Miami City Club at the top of the Wachovia Financial Center in Downtown Miami. 
 
Zalewski  is scheduled to discuss all seven South Florida coastal markets, and provide an update on the number of total units constructed per market compared to unsold new units as of Dec. 31, 2010. Pricing, resale inventory, and emerging trends will also be discussed.  
 
The markets to be discussed are Greater Downtown Miami, South Beach, Sunny Isles Beach, Downtown Fort Lauderdale and the Beach, Hollywood / Hallandale Beach, Boca Raton / Deerfield Beach, and Downtown West Palm Beach and Palm Beach Island.  
 
As large as the 2010 bank repossession numbers are, the overall total represents only 46 percent of the 265,000 foreclosure filings initiated in South Florida since 2007, according to the Condo Vultures® Foreclosure Database™
 
Going forward, it is unclear what the year 2011 will mean for bank repossessions as foreclosure filings - the first step in the repossession process - were down 41 percent in 2010 to 58,000 actions. In 2009, lenders filed 98,000 foreclosure filings, up from 76, 000 actions in 2008, and 33,000 notices of default in 2007, according to a recent Condo Vultures® Market Intelligence Report™
 
Administrative irregularities in the foreclosure process that surfaced in late September 2010 created a "foreclosure freeze" that forced lenders to file 61 percent fewer notices of default between October and December 2010 compared to the same three-month period in 2009, according to the report
 
Additionally, industry watchers are debating whether the number of foreclosure filings will decrease in 2011 as Massachusetts' highest recently ruled that two of the nation's largest residential lenders - Wells Fargo and US Bancorp - "failed to prove they owned the mortgages when they foreclosed on homes," according to the New York Times
 
It is unclear what this ruling will do to investor confidence given concerns that the purchase of a bank-owned property could lead to title issues in the future, industry watchers said.  
 
Even before the concerns about the legality of thousands of bank repossessions surfaced in the second half of 2010, lenders had already started to slow their foreclosure efforts due to the rising costs and difficulty involved with repossessing properties from borrowers in default.  
 
Prior to the real estate crash, lenders generally expected the foreclosure process to take about six months to complete at a cost of about $40,000 in loss of debt service, unpaid taxes, damage, court fees, and attorney costs. 
 
Between 2007 and 2010, the South Florida court system was overwhelmed with foreclosure actions. In South Florida today, lenders now plan for an 18-month repossession process with a cost of about $100,000 per property, industry watchers said. 
 
In the end, bank-owned properties offered on the open market generate a lower average price than properties that are sold as shortsales. In 2010, the average shortsale price was $173,700 per residence compared to an average of $110,900 for a bank-owned property.  
 
The strategy shift by the lenders has led to a 49 percent spike in shortsales, reaching nearly 16,800 transactions in 2010. Simultaneously, the number of bank-owned properties transacting in South Florida in 2010 decreased by six percent to 19,800 single-family houses, condominium units, and townhouses, according to a recent CondoVultures.com report.
 
Of the 64,700 South Florida residences on the resale market as of Jan. 17, some 28 percent are shortsales and seven percent are bank-owned properties, according to the licensed Florida brokerage CVR Realty™.  
 
On the shortsale market, there are 10,300 condos and 7,700 single-family houses available. In terms of bank-owned properties available, there are 2,400 condos and 1,900 single-family houses, according to the report.   

Condo Vultures® LLC is a real estate consultancy and marketing company based at 1005 Kane Concourse, Suite 205a, Bal Harbour, Florida, 33154. You can reach Condo Vultures® LLC at 800-750-0517. 

 

 

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Posted by Sherry Lee on February 19th, 2011 1:09 PM

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