Less distressed housing, higher prices
In what real estate brokers are saying is the latest sign of the industry’s turnaround, fewer “distressed properties” – including foreclosures, short sales and homes owned by banks and other lenders – came to market this year.
And when they did, these houses and condominiums commanded higher prices than last year.
Nearly half of all the deals closed in the county in June 2012 were for distressed properties, according to latest report from the Miami Association of Realtors. But this past July, that number had fallen several points to 35.4%, compared to 47.3% about one year earlier.
And foreclosed single-family houses were selling for a median price of $147,000 – about 9.3% more than last year, while condo prices climbed 27.8% to $115,000.
“The distressed property market of three to four years ago no longer exists,” said Arden Karson, the senior vice president who oversees The Related Group’s distressed debt and strategic acquisitions division. “Then, we were buying notes at 20 to 30 cents on the dollar. That market no longer exists.”
In some cities, offerings are down up to 50% and 60%, brokers said.
“You can still buy foreclosures at auctions and in second and territory markets,” Ms. Karson said. “But in major metropolitan markets, there are very few deals that haven’t been spoken for at this point.”
The new investment opportunity involves repositioning properties bought at deep discounts a few years ago and gearing them for lease or sale. With the market strengthening, these once-foreclosed properties have risen in value, creating opportunities for investors who held on to non-performing notes.
About eight months ago, for instance, Miami-based Related Group bought the $120 million judgment on Casa Costa, a waterfront condominium development in Boynton Beach. The company did not disclose the purchase price, except to say it acquired the property at “a significant discount.” Today, it’s selling beach suites from $160,000 and one- and two-bedroom units from $200,000.
“We are now able to sell Class A condos at a significantly reduced cost, selling below $300 a square foot, as opposed to $500,” Ms. Karson said. “That’s a great opportunity for our customers.”