South Florida Sun-Sentinel
5:17 p.m. EST, November 23, 2009
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A tsunami of South Florida foreclosures in the pipeline is dampening hopes for a housing recovery, despite an optimistic report Monday on home sales and prices.
Sales of existing homes rose 32 percent in Broward County in October, to 826 from 625 a year ago, the Florida Association of Realtors said. The median price was $211,600, down 16 percent from a year ago.
In Palm Beach County, sales rose 36 percent, to 841 from 618, while the median price of $243,900 was down 8 percent from last October.
Although the percentage price declines narrowed in each county, foreclosures loom large in the months ahead, some housing analysts say.
Broward is second in the nation with 10.2 percent of first mortgages in default, according to Moody's Economy.com. These are delinquent loans on which lenders have yet to start foreclosure proceedings.
Palm Beach County is fifth, with 7.7 percent of first mortgages in default. Miami leads the country at 12.2 percent. The national average is 2 percent.
"There are still a lot of foreclosures that are going to happen, and when they do, it's going to knock down home prices," said Chris Lafakis, an economist for Economy.com. "The number one driver of home prices nationally has been foreclosures."
The West Chester, Pa., research firm expects South Florida home prices to keep declining through 2010 before hitting bottom in early 2011.
October sales of existing condominiums rose 68 percent in Broward and 59 percent in Palm Beach County compared with a year ago. Broward's median condo price fell 28 percent to $83,200, while Palm Beach County's median dropped 20 percent to $109,300.
South Florida home and condo sales have been robust since summer 2008. Investors are paying cash for low-priced distressed homes, while first-time buyers are getting into the market and taking advantage of an $8,000 tax credit that was set to expire Monday.
First-time buyers Blair Hyman and his fiancee, Rachel Rogozinski, last week paid $285,000 for a West Palm Beach house that once was priced at $369,000.
"We felt it would be foolish not to try and buy something now," said Hyman, 28, a lawyer. "Once the market gets to a better place, we'll be able to use this as a stepping stone to a much more substantial house."
The government recently extended the tax credit into next year, reducing the urgency to buy now and likely hurting sales in the near term, analysts say. Buyers have until April 30 to execute sales contracts.
"There could be a little bit of a pullback on sales and possibly a significant pullback," said Brad Hunter of the Metrostudy research firm in West Palm Beach.
Statewide, existing home sales increased 45 percent in October from a year ago, while the median price fell 17 percent to $140,300.
Nationally, existing home sales rose 23.5 percent from October 2008. The national median price was $173,100, down 7.1 percent from October 2008.
"We're trying to get back to normalcy," said Richard Barkett, chief executive of the Realtor Association of Greater Fort Lauderdale. "But we have a long way to go."
Paul Owers can be reached at Powers@sunsentinel.com or 561-243-6529 .
Copyright © 2009, South Florida Sun-Sentinel
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240 - stay renting for a while longer.
