Foreclosure homes starting to lose their appeal, data shows
05/26/2011 8:27 AM
05/26/2011 8:53 AM
Sales of homes in some stage of foreclosure declined across South Florida during the first quarter, a result of the recent "robo signer" controversy and perhaps a changing sentiment among buyers, observers say.
Palm Beach, Broward and Miami-Dade counties posted 8,878 foreclosure sales in January, February and March — down 11 percent from the fourth quarter and 20 percent from a year ago, according to RealtyTrac Inc., an Irvine, Calif.-based foreclosure listing firm.
The robo signer furor led to foreclosure freezes last fall, and processing has only started to resume.
Another theory is that buyers aren't as enamored of houses and condominiums that have been repossessed, are in default or scheduled for auction.
Buying those bargain-priced properties can take months. Also, once-stubborn sellers of homes not in foreclosure are dropping their asking prices to better compete with distressed properties, real estate agents say.
"I've had three or four recent buyers who specifically didn't want to look at foreclosed properties," said Michael Citron, an agent in Parkland and Coconut Creek. "I do feel that buyers are starting to get the idea that a foreclosure or short sale might not always be the best deal."
Scott Agran, head of Lang Realty in Boca Raton, said he hasn't noticed a drop in demand for foreclosed homes. Rather, there are fewer sales because banks have been slow to put these distressed properties on the market.
"We've been waiting for 14 months for foreclosures to be released in bulk, and it just hasn't happened," he said.
In September, major lenders began suspending foreclosures as they investigated possible paperwork errors. Bank employees, called robo signers, admitted in depositions that they signed off on thousands of foreclosures without knowing the details of the cases.
Following the freezes, foreclosure sales in South Florida declined in the fourth quarter of last year compared with the same period of 2009, RealtyTrac said.
"The foreclosure process is seriously gummed up," said Mike Larson, a housing analyst with Weiss Research in Jupiter. "It's not uncommon for a year or two years to go by from the first payment default and the foreclosure sale."
Banks are sorting out the problems and proceeding with foreclosures, which will lead to more distressed home sales in the months ahead, analysts say.
The average sales price of a foreclosed home in South Florida was $129,617 during the first quarter, this is 32 percent less than the average price of a home that is not in the foreclosure process, RealtyTrac said.
Nearly four in 10 South Florida sales involved a foreclosure.
Meanwhile, there were 25,052 foreclosure sales in Florida during the first quarter, down from 36,624 a year ago. Foreclosures accounted for 32 percent of all sales statewide.
Nationally, foreclosure sales were off 36 percent from the first quarter of 2010.
While the drop in foreclosure-related sales is keeping prices from plummeting, it also is delaying the housing recovery, RealtyTrac said.
There still are plenty of troubled homes that will need new owners, said Daren Blomquist, a RealtyTrac spokesman.
"As long as we have these distressed properties hanging over the market, I don't think we'll see home prices substantively improve," he said.
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