The Foreclosures are Coming, the Foreclosures are Coming!
The cries of Paul Revere come to mind as I keep hearing “The foreclosures are coming” and “Wait until that shadow inventory comes to the market. No doubt there are signs of higher foreclosure numbers coming but to date the opposite has been true. As you may recall, we reported in this column that 1st quarter foreclosures in Palm Beach County were down about 28% from year ago levels. Since then the trend remains the same and this week we hit a new 8 week low.
The chart above shows you the six-month trend of foreclosures in Palm Beach County which accurately reflects the trend over the past 180 days. For the 2nd week in a row we have seen a significant drop in foreclosure numbers after hitting a quarterly high 3 weeks ago. This week a total of 175 properties were foreclosed upon which was below the 184 we had last week. With that number we stay well below the 6 month average of 213 per week and even further below the 386 units we saw foreclosed on during the same week in 2011.
Interest rates now sit at new lows and Realtors are finding very few options for ready, willing and able buyers in many market segments. The investor grade market has gone bonkers over the past few weeks and I can show you direct comparisons where prices of some properties are higher as much as 80% in less than a year. Last week one investor put a bid in on a property 10% over list price and ended up as the lowest offer out of 13 received so you can see where prices in this segment are going. Investor interest continues to grow and you see that at the foreclosure auctions where they are snapping up deals every day of the week.
As the word spreads that the right south Florida real estate investment is a “no-brainer” the numbers of investors chasing the same properties has dramatically increased and competition is stiff. With home prices at historically low levels and rental rates on the rise many investors are finally seeing what we have been telling them for years; that there is no more compelling investment than some of these deals. However, due to the huge increase in demand one must be careful and look under rocks for unique opportunities. The amount of cash flowing into the market is impressive and we will continue to watch to see where prices go from here.
There are many rocks dotting the landscape but finding the right one is...........
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