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500 bank-owned condos on the resale market

Zalewski
Zalewski

South Florida’s distressed condo market appears to be in the final stages of the clean-up process from the real estate crash of 2007.

Fewer than 500 bank-owned condo units — also known as Real Estate Owned (REO) properties — are available for purchase east of Interstate 95 in Miami-Dade, Broward and Palm Beach counties as of Feb. 11, according to statistics from the Southeast Florida MLXchange.

Overall, more than 13,150 condos — a combination of units categorized as distressed and normal status — are listed for resale east of I-95 in South Florida. As a result, bank-owned units now account for about 3.7 percent — the lowest level in years — of the overall condo resale market in the tricounty region.

The current supply of bank-owned units available for resale represents about 2.3 months of inventory based on the 2014 sales pace of about 215 REO condo transactions monthly in 2014, according to the data.

The number of bank-owned South Florida condos to transact in 2014 is down nearly 35 percent from 2011 — the most active time in recent years — when nearly 330 REO units traded monthly in the tricounty region.

Even though South Florida’s condo market hit bottom during the last cycle in about 2009, the bank-owned condo resale activity did not reach a transaction peak until 2011 for a number of reasons, including the lengthy foreclosure process that had taken years for properties to be repossessed by lenders.

As the supply of bank-owned condos available for purchase has decreased in recent years, the average transaction price per REO unit has increased in South Florida, especially with cash buyers searching for attractively priced deals.

Currently, lenders are asking an average price of $226 per square for REO condos in South Florida.

In previous years, buyers of bank-owned condos in the tricounty region paid an average price per square foot of $175 in 2014, $162 in 2013 and $144 in 2012. Back in 2009 when the South Florida condo market was bottoming out, the average REO unit traded for $127 per square foot.

On a county-by-county basis, Miami-Dade — the most populous of the region — still accounts for a large chunk of the REO condo activity.

As of the latest listings, more than 285 bank-owned condos are on the resale market at an average asking price of nearly $245 per square foot. The current asking price represents about a 30 percent premium over the $187 per square foot average paid in 2014 when about 125 units transacted monthly.

Recently in Miami-Dade, buyers paid an average per square foot price of $183 for 118 units monthly in 2013 and $167 per square foot for 111 units monthly in 2012. In 2009, more than 160 REO condos traded monthly at an average price of $131 per square foot.

The conditions for bank-owned condo units is similar in Broward where available supply is falling and prices are rising.

Nearly 130 REO condos are currently listed on the resale market in Broward at an average asking price of $176 per square foot, representing about an 18 percent premium over the average transaction price of $149 per square foot achieved in 2014 when 48 units traded monthly.

Buyers purchased an average of 47 bank-owned units monthly at a price of $125 per square foot in 2013 and 57 REO units for $108 per square foot in 2012. Back in 2009, buyers purchased an average of 86 REO units monthly at an average price of $115 per square foot.

In Palm Beach County, buyers purchased an average of 42 bank-owned units monthly in 2014 at an average price of $107 per square foot compared to 34 REO condos monthly for $96 per square foot in 2013 and 26 units monthly for $94 per square foot in 2012, according to the data.

In 2009, buyers in Palm Beach purchased an average of 14 bank-owned condos per month at a price of $95 per square foot.

Currently, fewer than 75 bank-owned condos are available for purchase at an average asking price of about $241 per square foot in Palm Beach. The current REO inventory in Palm Beach represents about 1.7 months of supply.

The unanswered question going forward is whether the disappearance of the large supply of bank-owned condo resales available for purchase of recent years will contribute to an overall increase in the average transaction price per square foot east of I-95 in South Florida in the upcoming years.

Peter Zalewski is a principal with the Miami real estate consultancy Condo Vultures. Zalewski, a licensed Florida real estate professional since 1995 and founder of CVR Realty and Condo Vultures Realty LLC, advises developers, lenders and institutional investors. Zalewski also runs the preconstruction condo project website CraneSpotters.com in conjunction with the Miami Association Of Realtors.

South Florida bank-owned condo resale market east of I-95

This chart summarizes annual bank-owned (REO) condo resales in Miami-Dade, Broward and Palm Beach counties.

Status

S. Florida

Miami-Dade

Broward

Palm Beach

Available bank-owned condo resales as of 2/11/’15

Units

487

286

129

72

Months of unit supply

2.3

2.3

2.7

1.7

Average resale price (per square foot)

$226

$244

$176

$241

2014 completed banked-owned condo resales

Units

2,585

1,501

576

508

Monthly resales

215

125

48

42

Average resale price (per square foot)

$175

$187

$149

$107

2013 completed bank-owned condo resales

Units

2,384

1,412

561

411

Monthly resales

199

118

47

34

Average resale price (per square foot)

$162

$183

$125

$96

2012 completed bank-owned condo resales

Units

2,320

1,326

686

308

Monthly resales

193

111

57

26

Average resale price (per square foot)

$144

$167

$108

$94

2011 completed bank-owned condo resales

Units

3,947

2,432

1,186

329

Monthly resales

329

203

99

27

Average resale price (per square foot)

$126

$134

$112

$82

2010 completed bank-owned condo resales

Units

3,823

2,334

1,285

204

Monthly resales

319

195

107

17

Average resale price (per square foot)

$118

$121

$111

$89

2009 completed bank-owned condo resales

Units

3,129

1,930

1,033

166

Monthly resales

261

161

86

14

Average resale price (per square foot)

$127

$131

$115

$95

SOURCE: Southeast Florida MLXchange

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