Banks Repo Over 100,000 South Florida Properties Since 2007

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According to Bal Harbour, Florida-based Condo Vultures, more than 100,000 properties - or an average of 2,300 per month - have been repossessed in the tricounty South Florida region since the real estate crash began in 2007.

Lenders surpassed the 100,000 threshold on Thursday, Aug.19, when 317 properties were repossessed in Miami-Dade, Broward, and Palm Beach counties, according to Condo Vultures.

For the year through Aug. 20, lenders have taken back more than 33,600 South Florida properties, which already outpaces the 30,400 tricounty properties repossessed in 2009 and the nearly 26,250 in 2008, according to the report based on the government records from Miami-Dade, Broward, and Palm Beach counties.

"To get a grasp of South Florida's real estate crash, consider that lenders have repossessed an average of 75 properties per day since January 2007, which is a span of more than 1,300 days," said Peter Zalewski, principal of Condo Vultures, LLC. "For context, consider that lenders are repossessing about 40 percent of all South Florida properties where a foreclosure filing has been initiated by a lender. Going forward, we expect the number of bank repossessions to slow as foreclosure filings for the year are down by about one-third in 2010 compared to 2009.

"The unanswered question is whether the bank repos will trigger another drop in the South Florida real estate market."

Despite the spike in repossessions, bank-owned properties still represent only about six percent of the 68,500 residences on the resale market in the tricounty South Florida region as of Aug. 16, said Condo Vultures. 

South Florida's residential inventory has increased on a weekly basis for nine of the last 11 weeks, representing a five percent jump in available product since May 31. Still, the overall resale inventory is down more than 36 percent from November 2008 when there were nearly 108,000 residences available in South Florida.

Another key reason the number of bank repossessions has increased rapidly this year is the implementation of a new online auction technology being used by the South Florida circuit courts to clear the backlog. The online auction technology now allows hundreds of properties to be auctioned off more efficiently, industry watchers said.

Before the online auction software was adopted independently in the first quarter of this year, each of three South Florida counties fulfilled the last step in the foreclosure process by holding courthouse auctions as many as five days a week in attempt to clear the backlog of properties. The problem was, only so many auctions could be held each day despite the best efforts by the court officials.

With the new improved online auction process, lenders are taking title to properties from defaulted borrowers at a much quicker pace but still not as fast as before the South Florida real estate crash, industry watchers said.

At the start of the housing crash in 2007, lenders estimated the typical foreclosure would take about six months to repossess a property at a cost of about $40,000 in the loss of debt service, damage, court courts, and attorneys fees.

By 2009 as the foreclosure filings were spiking, the process extended out to an average of 18 months with an estimated cost of at least $100,000 per repossession, according to Condo Vultures' report.

Halfway through the third quarter, lenders have already repossessed more than 9,300 properties in the tricounty area. At this pace, nearly 18,000 properties could be repossessed between July and September 2010, said the report.

This comes after lenders repossessed 15,100 properties in the second quarter of 2010, representing a 152 percent increase compared to the 6,000 properties repossessed during the same three month period in 2009.

In the first quarter of 2010, lenders repossessed nearly 9,200 properties, representing a 25 percent increase over the 7,300 properties taken back between January and March 2009, according to Condo Vultures.

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