Predicting the future of the real estate market is not easy.
Foreclosure Documentation Crisis
We’ve gotten more efficient at handling distressed property sales. Now the foreclosure documentation mess has thrown a monkey wrench into the works. Some banks have gone so far as to suspended foreclosures. Others will certainly examine documents more carefully, slowing the process. Flagler County Clerk of Courts Gail Wadsworth reports that as many as two thirds of recent foreclosure filings are being withdrawn, probably because the validity of the underlying documents is suspect.
A Complicated Solution
The documentation problem will take time to fix. Foreclosures are very labor and paperwork intensive. The banks will sort out the problems, but it will take a long time. There’s bound to be extensive lawsuits as well. Watch the Chris Whalen interview on Bloomberg. Chris describes the problems concisely although one problem he identifies – the effect on property tax collections – will likely not affect Florida as much as other states. The Florida system of selling tax certificates (tax liens on delinquent taxes) funnels revenue to taxing authorities quite efficiently.
Recent Palm Coast and Flagler Home Sales
As the graph shows, the local market for single-family homes has remained stable for nearly two years. Prices remain in a narrow band while sales volume shows slow but steady gains.
Overall, foreclosure filings were decreasing; even before the documentation problems surfaced. Foreclosure of high value properties continues to feed a supply of distressed properties within that sector. Distressed properties bring prices down to a level at which buyers can be found. That trend will continue. There were 56 condominium sales during the third quarter 2009. In the third quarter 2010, the number of units sold climbed to 84 while the median selling price dropped from $313,038 to $202,500.
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