The story of Florida’s housing market continues to be one of foreclosures and distressed sales. It is expected that over one million distressed homes will hit the market over the next year or so. This backlog of distressed homes leads to the expectation that this increase in inventory would cause prices to plunge.
However, despite some continuing foreclosures, bank-owned homes have not hit the market in large numbers. It appears that many, perhaps most foreclosures, are in the past. In fact, prices have increased as some real estate companies have fewer properties available this year than last. Of the available homes, surprisingly few are foreclosed homes in Broward County, Palm Beach County, and Miami Dade County.
Prices may very well fall when distressed homes reach the end of the foreclosure process and banks strategically release their stockpile of inventories. Still, with many homes simply tied up in a nearly three-year long foreclosure process, it’s difficult to predict the future of Florida’s residential real estate market. Increasingly, banks are skipping out on the process by negotiating a settlement to modify mortgages or approve a short sale, costing money but saving time in the process.
The slowdown in foreclosures is likely due to the Robo-signing scandal, in which companies admitted to cutting corners and using false documents in the foreclosure process for thousands of homes. Meanwhile, the Florida Supreme Court is set to rule on whether the banks can re-file proper paperwork for bad foreclosures. The decision will have significant consequences for real estate prices in the state.
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