The condo short sale — a lender-approved transaction in which a unit sells for less than the total outstanding loan amount — appears to have all but disappeared in coastal South Florida, at least until the next tricounty real estate crash.
The disappearance of the condo short sale from the South Florida real estate market east of Interstate 95 is following a remarkably similar path to that of bank-owned condo resales — also known as Real Estate Owned (REO) properties — that were chronicled in a similar manner in my Business Monday column on Feb. 16.
Currently, less than 225 condo short sale units are available for purchase east of I-95 in Miami-Dade, Broward and Palm Beach as of Feb. 24, according to statistics from the Southeast Florida MLXchange.
Overall, more than 13,275 condos — a combination of units categorized as short sales, bank-owned and normal status — are listed for resale east of I-95 in South Florida. As a result, condo short sale units now account for about 1.7 percent — the lowest level in at least five years — of the overall condo resale market in the tricounty region.
The current supply of condo short sale units available for resale represents about 4.2 months of inventory based on the 2014 sales pace of about 53 condo short sale transactions monthly in 2014, according to the data.
The number of condo short sales to transact in South Florida in 2014 is down nearly 82 percent from 2011 — the most active year during the last real estate downturn — when nearly 300 short sale units traded monthly in the tricounty region.
Even though South Florida’s condo market hit bottom during the last cycle in about 2009, the condo short sale transaction activity did not reach a peak until 2011 for a number of reasons, including the lengthy bank-approval process required to complete a deal.
As the supply of condo short sale units available for purchase has decreased in recent years, the average transaction price per short sale unit has increased in South Florida as buyers looked for deals.
Currently, sellers seeking to short sell their units are asking an average price of $226 per square for their condos east of I-95 in South Florida.
In previous years, buyers of condo short sale units in the tricounty region paid an average price per square foot of $182 in 2014, $163 in 2013 and $140 in 2012. Back in 2009 when the South Florida condo market was bottoming out, the average condo short sale unit traded for $183 per square foot.
On a county-by-county basis, Miami-Dade still accounts for the largest chunk of the condo short sale transaction activity.
More than 125 condo short sale units are on the resale market at an average asking price of nearly $245 per square foot. The current asking price represents about a 19 percent premium over the $204 per square foot average paid in 2014 when about 28 condo short sale units transacted monthly.
Recently in Miami-Dade, buyers paid an average per square foot price of $186 for 71 condo short sale units monthly in 2013 and $152 per square foot for 132 units monthly in 2012.
In Broward County, the conditions for condo short sale units is similar with supply falling and prices rising.
Nearly 70 condo short sale units are currently listed on the resale market in Broward at an average asking price of $195 per square foot, representing about a 35 percent premium over the average transaction price of $144 per square foot achieved in 2014 when 15 units traded monthly.
Buyers purchased an average of 33 condo short sale units monthly at a price of $122 per square foot in 2013 and 57 condo short sale units for $119 per square foot in 2012.
In Palm Beach, less than 30 condo short sale units are available for purchase at an average asking price of about $100 per square foot.
Buyers purchased an average of 10 condo short sale units monthly in 2014 at an average price of $90 per square foot compared to 25 condo short sale units monthly for $106 per square foot in 2013 and 31 units monthly for $94 per square foot in 2012, according to the data.
Currently, the condo short sale inventory available for purchase in Palm Beach represents about 2.6 months of supply.
The unanswered question going forward is whether the disappearance of the condo short sale unit from the South Florida residential market is a temporary trend or a permanent systemic change.
Peter Zalewski is a principal with the Miami real estate consultancy Condo Vultures. Zalewski, a licensed Florida real estate professional since 1995 and founder of CVR Realty and Condo Vultures Realty LLC, advises developers, lenders and institutional investors. Zalewski also runs the preconstruction condo project website CraneSpotters.com in conjunction with the Miami Association Of Realtors.
CONDO SHORT-SALE MARKET EAST OF I-95
This chart summarizes annual condo short sales in Miami-Dade, Broward and Palm Beach counties
Status
|
S. Florida
|
Dade
|
Broward
|
Palm Beach
|
Available condo short sales as of Feb. 24
| ||||
Units
|
220
|
126
|
68
|
26
|
Months of unit supply
|
4.2
|
4.5
|
4.5
|
2.6
|
Average price
|
$226
|
$243
|
$195
|
$100
|
2014 completed condo short sales
| ||||
Units
|
641
|
335
|
182
|
124
|
Monthly short sales
|
53
|
28
|
15
|
10
|
Average short sale price
|
$182
|
$204
|
$144
|
$90
|
2013 completed condo short sales
| ||||
Units
|
1,547
|
850
|
396
|
301
|
Monthly short sales
|
129
|
71
|
33
|
25
|
Average short sale price
|
$163
|
$186
|
$122
|
$106
|
2012 completed condo short sales
| ||||
Units
|
2,635
|
1,585
|
678
|
372
|
Monthly short sales
|
220
|
132
|
57
|
31
|
Average short sale price
|
$140
|
$152
|
$119
|
$94
|
2011 completed condo short sales
| ||||
Units
|
3,542
|
2,213
|
997
|
332
|
Monthly short sales
|
295
|
184
|
83
|
28
|
Average short sale price
|
$152
|
$158
|
$140
|
$97
|
2010 completed condo short sales
| ||||
Units
|
3,116
|
1,777
|
965
|
374
|
Monthly short sales
|
260
|
148
|
80
|
31
|
Average short sale price
|
$167
|
$173
|
$154
|
$112
|
2009 completed condo short sales
| ||||
Units
|
1,775
|
1,064
|
545
|
166
|
Monthly short sales
|
148
|
89
|
45
|
14
|
Average short sale price
|
$183
|
$187
|
$172
|
$134
|
Source: Southeast Florida MLXchange
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