In shadow of Miami’s residential boom, foreclosure market heats up

Miami /
Dec.December 17, 2012 12:45 PM

The foreclosure document scandal in late 2010 led to a large-scale freeze on foreclosure processing and foreclosure sales activity, particularly in South Florida, one of the nation’s foreclosure epicenters.

At the same time, the next two years saw one of the tri-county area’s largest residential booms, with nearly 70 percent of residential resale inventory being traded since 2008, according to Condo Vultures, in many ways overshadowing the lingering problem of the foreclosure market.

Now, as foreclosure processing has begun to pick up, and foreclosure sales have increased, buyers’ attention once again seems to be turning to South Florida’s foreclosure inventory.

Foreclosure sales activity rose 42 percent in the third quarter compared to the second quarter, according to data from the analytics firm RealtyTrac, with a total of 8,167 sales from July to September. In the same period, South Florida also saw a 57 percent increase in REO (real estate-owned) sales — that is, properties owned by lenders after foreclosing on them.

“I think it could be influencing the banks to push these [distressed] properties to sale more quickly, because they realize that there’s this kind of unique time in the marketplace where there’s a lack of available inventory,” Daren Blomquist, vice president at real estate analytics firm RealtyTrac, told The Real Deal. “That could be a good time for them to go and sell their distressed inventory — and have a good amount of demand for it.”

The question is the role the dwindling inventory in the non-distressed market has played in driving those numbers: Are buyers, faced with fewer options in the non-distressed market, now turning to foreclosures? Or are banks simply responding to a strengthening market?

Jack McCabe, a real estate analyst in Deerfield Beach, said it’s the latter — that banks, seeing an improved market, are finally getting back in the game and deciding to unload properties on which they’ve been sitting for several years. “The banks have been holding back, and it’s paid off for them —the prices have gone up in certain markets in Florida over this year,” he said.

But there’s another factor at play, McCabe said: online foreclosures. In 2010, Florida moved its foreclosure system online, meaning a rash of inventory left brokers’ hands. That meant that, over time, the number of foreclosed properties actually listed on the market by brokers began to plummet. And that reduced inventory led to increased prices — giving banks a reason to put their distressed inventory back on the market.

“What’s happening now is the banks have seen some increases in prices due to the lower Realtor inventory, which has raised the price of the distressed properties they’ve been holding on to,” he said.

The change has been drastic according to Lloyd Feinberg, a Coldwell Banker broker who focuses on the bank-owned market in Hollywood and Hallandale. “I have one property that’s in a lousy location, that has a lot of issues, and we’ve got over 25 offers — it’s selling for almost double the asking price,” he said.


Related Articles

arrow_forward_ios
Ari Pearl, Jonathan Leifer and 9540 West Bay Harbor Drive. (Wyndam Hotels, PPG Development, L3C Capital Partners)
Ari Pearl, Jonathan Leifer acquire Bay Harbor Islands hotel out of foreclosure
Ari Pearl, Jonathan Leifer acquire Bay Harbor Islands hotel out of foreclosure
Lexington Realty Trust's Wilson Eglin and 5600 Broken Sound Boulevard, Boca Raton (Google Maps)
HSBC to take over Boca Raton office building following foreclosure auction
HSBC to take over Boca Raton office building following foreclosure auction
Victor Ballestas and 6060 Indian Creek Drive, Miami Beach (Credit: Google Maps)
Embattled Sixty Sixty condo-hotel’s units in Miami Beach sell for $15M
Embattled Sixty Sixty condo-hotel’s units in Miami Beach sell for $15M
Lord Balfour Hotel
Mezz lender forecloses on Ocean Drive hotel in South Beach
Mezz lender forecloses on Ocean Drive hotel in South Beach
Josh Zegen of Madison Realty Capital and 777 North Ocean Drive, Hollywood (Google Maps)
Madison Realty closes on Costa Hollywood Beach condos for $43M
Madison Realty closes on Costa Hollywood Beach condos for $43M
3601 North Miami Avenue with Francisco Arocha
Midtown Miami development site in foreclosure hits the market
Midtown Miami development site in foreclosure hits the market
Florida Gov. Ron DeSantis (Credit: Joe Raedle/Getty Images)
Florida allows eviction moratorium to expire
Florida allows eviction moratorium to expire
Kelly Beam, Ricky Trinidad , and 3265 Bird Avenue (Credit: Google Maps)
Miami developer Metronomic files for bankruptcy
Miami developer Metronomic files for bankruptcy
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...