The Real Deal Miami

Miami metro area ranks fourth in the nation for home foreclosure sales

By Sarabeth Sanders | June 30, 2010 12:00AM

The Miami-Fort Lauderdale-Pompano Beach metropolitan area ranked fourth in the nation for residential foreclosure sales volume last quarter with 10,685 distressed properties changing hands at an average discount of just over 30 percent, according to a report released today by RealtyTrac.

That number represents a 2 percent drop in foreclosure sales volume from the previous quarter but a 9 percent increase year-over-year — an anomaly at a time when most of the country experienced significant declines in both respects, said Rick Sharga, senior vice president for RealtyTrac.

The sales uptick could be more indicative of Florida’s foreclosure backlog making its way through the courts than of a general worsening of the crisis in the region, though continued unemployment and sagging property values aren’t helping matters, Sharga said.

Miami-Dade, Palm Beach and Broward counties all recently began conducting foreclosure auctions online in an effort to speed the sales process for distressed properties that have been clogging the system.

Foreclosures — defined as properties that are in default, scheduled for auction or bank-owned — also commanded a 39 percent share of all residential sales activity in the area last quarter, beating the national average of 31 percent, according to RealtyTrac.

That market share — though significant — is down 14 percent from the previous quarter and 33 percent from the first quarter of 2009, when 37 percent of all U.S. residential sales were of properties at some stage of the foreclosure process.

A total of 232,959 residential foreclosure sales were completed nationwide last quarter, the report says, as droves of first-time homebuyers and investors, driven largely by heavy discounts, arrived at the bargaining table. The government’s $8,000 tax credit likely also helped drive sales.

U.S. homes in foreclosure sold at an average 27 percent off the average price of non-distressed properties last quarter, according to the report. Discounts on foreclosure properties have been steadily increasing since 2006, when such homes were selling for 21 percent off.

As for what lies ahead for South Florida, Sharga said the coming months may bring an uptick in short sales, given that banks are becoming better able to absorb losses and that the federal government is incentivizing the process. (The Treasury Department’s Home Affordable Foreclosure Alternatives Program, which provides financial assistance for lenders and servicers who use short sales or deeds-in-lieu to avert foreclosure, took effect April 5).

“It’s probably too early to see whether that’s going to have an effect on those numbers…it may be that short sale numbers lag as much as a quarter or two from when the program started,” Sharga said.