Headlines – Week of August 8, 2010
August 14, 2010
South Florida home values see nation’s biggest drop in a year
According to a national report by Zillow, South Florida home values suffered the worst decline of 25 large metropolitan areas in the second quarter of this year, falling 15% compared with 2009.
The data in the report indicates the median home value in South Florida (Palm Beach, Broward and Miami-Dade counties) fell to $146,500, down nearly 7% from the beginning of this year and 52% from housing’s peak values in 2006.
Zillow found that 44% of South Florida single-family homes with mortgages are underwater. Nationally, 21.5% of homes with mortgages had negative equity in the second quarter.
Nationally, the median home value, including townhomes and condominiums, fell 3.2% from the same time in 2009.
While Florida and Arizona continue to drop, some areas of California such as Los Angeles and San Diego have increased slightly compared to 2009.
Other negative news regarding the South Florida market also came out this week from Miami-based Condo Vultures.
In the first half of 2010 as buyers purchased 36 new condo units at an average price of $267 per square foot.
While more than 95% of the 5,100 new condos created in Downtown Fort Lauderdale and the Beach since 2003 have been sold as of June 2010, this year’s average price ranks as the second lowest amount paid since 2003, and represents a 46% discount off of the 2007 peak pricing of $499 per square foot,
In Downtown Fort Lauderdale and the Beach, developers sold nearly 1,400 new condos in 2005, 1,300 in 2006, and 722 in 2007. Sales fell off to in 2008 to 238 and in 2009 to 65.
In another report from Condo Vultures®, nearly half of the 27 new condominium projects developed in Sunny Isles Beach during the latest real estate boom still have a combined 1,300 unsold units available despite steady sales in the first half of this year.
Of the 13 projects with developer inventory, four towers have failed to sell a single unit while an additional five projects still have between 40% and 70% of the original inventory remaining unsold.
The company estimates, that Sunny Isles Beach has about three years of new inventory remaining based on the current sales pace of 37 units per month.
And while no bulk deal has closed in Sunny Isles Beach for new condo product, there has been almost 60 bulk deals for new condos have closed since July 2008 in the tricounty South Florida region, accounting for more than 5,200 units and 6.4 million square feet of saleable space changing hands.
The bulk buyers – about 40 percent are foreign entities – have spent more than $1.5 billion to acquire the distressed units at an average of $238 per square foot in Miami-Dade, Broward, and Palm Beach counties.
Recently, an institutional investor acquired 132 units in the Miami condominium Vista Lago at the Hammocks for $161 per square foot, representing a 34 percent discount off the average sales price to date.
Homes lost to foreclosure up 6% from last year
According to a report by RealtyTrac, Inc., the number of U.S. homes lost to foreclosure surged in July, another sign lenders are moving quicker to take back properties from homeowners behind in payments.
Lenders repossessed 92,858 properties last month, up 9% from June and an increase of 6% from July 2009.
July makes the eighth month in a row that the pace of homes lost to foreclosure has increased on an annual basis. Banks have stepped up repossessions this year to clear out the backlog of bad loans.
Initially, lax lending standards were the culprit for foreclosures; however homeowners with good credit who took out conventional, fixed-rate loans are now the fastest growing group of foreclosures. Economic woes, such as unemployment or reduced income, are now the main catalysts for foreclosures.
RealtyTrac estimates more than 1 million American households are likely to lose their homes to foreclosure this year.
In all, 325,229 properties received a foreclosure-related warning in July, up 4% from June, but down 10% from the same month last year, RealtyTrac said. That translates to one in 397 U.S. homes.
Nevada posted the highest foreclosure rate in July, with one in every 82 households receiving a foreclosure notice. Rounding out the top 10 states with the highest foreclosure rate last month were: Arizona, Florida, California, Idaho, Michigan, Utah, Illinois, Georgia and Maryland.
Las Vegas continued to be the city with the highest foreclosure rate in the U.S., with one in every 71 homes receiving a foreclosure notice in July – more than five times the national average.
Some Experts Conclude the Worst is Over
In some positive news, a recent Reuters poll indicates, home properties in the 20 biggest U.S. metro areas could end up with a small rise in value this year.
However, with a slowing recovery and tight lending standards, most economists predicted it could take at least five years for average home prices to rise to heir 2006 peaks.
Most economists believe a major double-dip in the housing market is unlikely, but they do expect a modest summer decline due to the expiration of government programs that drew demand forward and propped up home values earlier this year.
The poll indicates a pullback could drag average prices down another 4.5% for a cumulative drop of about a third from where home values peaked in 2006.
Home prices as measured by the Standard & Poor’s/Case-Shiller 20-city index should rise a meager 0.2% this year, followed by another 1% increase in 2011.
Posted by Scott R. Lodde