Steady Progress towards Recovery Though Foreclosures Remain High

More buyers and less inventory are the ingredients for recovery.

Palm Coast, FL – March 13, 2012 – Flagler County February home sales were brisk, and it wasn’t only because of the extra day. The number of homes sold was up 53.3% from February one year ago. This gain follows a 52.5% gain in January and marks the tenth consecutive month of year-over-year gains. The total transaction value of February’s home sales was $21.4 million, up 50.4%. January’s total was up 27.4%. No doubt, the market is turning the corner.
In spite of tight credit and appraisal guidelines, the local housing market is surprisingly healthy. There are only 950 single-family homes listed for sales on MLS. This represents only 6.7months of supply at the current sales rate. An additional 581 homes are under contract. Fully 56.7% of Flagler’s home sales were cash transactions, significantly above the national average. Of 33 condos sold via MLS, 27 were reported as cash sales.

Distressed properties continue to dampen prices. Lender-owned (via foreclosure or deed in lieu) and short sales represented 48.2% of all February MLS single-family home sales. The national average is about 30%. There were 32 lender-owned sales and 36 short sales.
Banks have picked up the foreclosure pace again. The Clerk of Court logged 138 new filings during the month, the highest mark since August 2010 but still well off the record 280 filings in July 2009. Some analysts credit the recent $25 billion foreclosure settlement between five major banks and 49 state attorneys general for the increase in foreclosure activity.
A foreclosure filing is only the beginning of a long process. The majority of foreclosed properties do not reach the final stage; a foreclosure sale. Still, 100 Flagler properties did so in February. Refinancing, loan modification, short sales or deed in lieu often terminate the process. Banks have begun to realize that foreclosure sales are the most expensive way for them to settle. Alternative options are less costly.
Foreclosing lenders are facing more opposition too. Homeowners are increasingly educated to alternative strategies. Many attorneys have become versed in foreclosure defense. Short sales are still problematic, but buyers, real estate practitioners, closing companies and lenders have become more proficient. I look for a continuing trend towards short sales.
Homeowner associations and condominium associations will also benefit from a shift to short sales. To clear title, association liens for unpaid assessments must be paid, with one exception. When a lender holding the primary mortgage takes possession through a foreclosure sale, it is only responsible for up to 12 months of past due fees or 1% of the original loan amount, whichever is less. Some associations carry delinquencies representing several years of non-payment. For them, collecting past due fees at a short sale closing will be a welcome outcome.
Condominium sales showed strong year-over-year sales gains last month too. counted 46 condo sales during February, 50% over one year ago. Condominium communities with the most active sales include Palm Pointe, Tidelands, Bella Harbor and European Village. These communities were hit hardest by the housing market collapse. But declining inventories have reduced the choices available for bargain hunters. Declining inventory and increasing demand lead inevitably to price increases. Tidelands, where I purchased last year (Toby is Moving to Tidelands: Anatomy of a Real Estate Decision), has 14 units listed with only four on the Intracoastal Waterway. Half the listings are short sales. A couple of years ago, virtually all of the 60 units available were short sales. There have been over 50 sales in the past year.
Realtors® with whom I speak are excited. Buyer inquiries are more numerous since the beginning of the year. They are beginning to notice the dearth of inventory, prompting them toward quicker decisions.

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