A recent New York Times story about climbing home sales – and, more important, declining foreclosure inventory – in South Florida seemed so incongruous with the area’s reputation for real estate devastation that we wondered for a moment if the heat had finally gotten to us.
But there it is: a 16% increase in home sales in the first half of the year over year-ago figures, and the best spring sales since 2007, according to real estate analytics firm DataQuick. What’s more, sales of properties listed for $2 million or more were up 13% from January through June. One key to this mini surge is banks’ self-imposed lag in delinquency processing as they try to address the foreclosure-mill mess. The lag has given moneyed investors time and opportunity to scoop up some of the country’s cheapest real estate, much of which tanked in value by 50% from its pre-cash high.
It is telling, though, that two thirds of the sales that closed during the first half of 2011 were all-cash deals. As the Times pointed out, lending requirements are very stringent; most of the buyers are “investors, rich people, or foreign citizens benefiting from a weak dollar.” Current inventory in Miami is just under 50,000 – less than half of what it was as the crash unfolded three years ago.
Lenders are still trying to negotiate their way out of liability for document fraud that led to the current suspension of much of their foreclosure processing, but allegations that paperwork problems persist popped up again this month. So it’s not clear when lenders will resume processing delinquent mortgages at full tilt. In Miami-Dade County, the Times story noted, foreclosure filings jumped 30% in May, although the filing rate is still only a third of what it was a year earlier.
It’s also not clear investors will swarm devastated housing markets in Las Vegas, Phoenix, and Southern California if foreclosure processing continues to drag along, but their behavior in South Florida at least provides a glimpse of what happens when they smell blood in the water.
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Bentley Bay, a 170-unit condominium complex in Miami’s South Beach. The condos range in size from 837 to 2158 sq. ft., and are priced from $400,000 to $925,000.
