Sales of Distressed South Florida Properties Jump 23%

Sales of distressed properties in the Vultures Database™ increased by 23 percent in April, triggered by a surge in discount buying in Miami Beach, Fort Lauderdale, Sunny Isles Beach, Hallandale, and Hollywood, according to a new report from Condo Vultures® LLC.

Buyers purchased 116 condos, townhouses, and single-family homes east of I-95 in Miami-Dade, Broward, and Palm Beach counties in April compared to 94 acquisitions in March. For the year, 408 distressed properties in the Vultures Database™ have traded, according to the report.

At this pace 1,224 properties in the Vultures Database™ would be sold in 2008, representing a 3 percent increase on the 1,194 homes that traded in 2007.

In 2008, the average discount for a Vultures Database™ property that sells is -37 percent, or -$297,130, but only after sitting on the market for an average of 498 days. In 2007, the average discount for a closed sale was -29 percent, or -$255,955, with 402 days on the market, according to the data.

“As the overall discount grows, evidence is building that certain submarkets are strengthening in price as all-cash buyers pursue attractive product in well-established areas, primarily on the water,” said Peter Zalewski, a principal with the Bal Harbour, Fla.-based consultancy Condo Vultures®.

The international tourist destination of Miami Beach has had 83 distressed properties in the Vultures Database™ sell this year, with 23 transactions in April alone, at an average discount of -34 percent off of the historical high asking price.

Coastal Fort Lauderdale, a popular destination for North American visitors, ranks second for the number of distressed sales closed by submarket in April with 18 transactions, and 48 deals this year. The average discount is -36 percent, according to the data.

Another area where distressed properties are selling at a steady pace is the stretch of Sunny Isles Beach, Hallandale Beach, and Hollywood in northeast Miami-Dade county and Southeast Broward county.

These three contiguous submarkets recorded 36 transactions in April and 99 sales this year. The average discount is about -36 percent, slightly stronger than the market average of -37 percent.

“Today’s buyers are opting to compromise on the price discount and the quality of the property in hopes of securing the best possible value amidst stepped up competition,” Zalewski said. “The influx of buyers with strong foreign currencies searching for beachfront property is a phenomenon that many people are being forced to consider.”

As the number of closed sales jumped in April, the average discount on condos in the Vultures Database™ remained steady at a -28 percent drop for a second consecutive month, according to the data.

In April, the average condo had been discounted by -$174,821 and been on the market for 586 days. A month earlier in March, pricing on a typical condo had been reduced by -$174,765 after sitting on the market for 570 days, according to the data.

There are 4,284 properties in the Vultures Database™, which tracks South Florida properties east of I-95 from Cutler Bay to West Palm Beach that have been reduced in asking price by at least 10 percent or $100,000 from the historical high price.

Condominiums represent 70.3 percent, or 3,012 properties, of the total inventory, and single-family houses the remaining 29.7 percent, or 1,272 properties.

The average discount on a single-family house in the Vultures Database™ works out to a drop of -$343,947, according to the data.

Discounts in the Vultures Database™ increased in 16 submarkets but remained unchanged in 15 submarkets. No submarkets experienced a strengthening in pricing.

Peter Zalewski is a principal with the consulting company Condo Vultures®LLC and a licensed real estate broker with Condo Vultures® Realty LLC. Peter can be reached at 305-865-5629 or by email at peter@condovultures.com. Don't forget to sign up for our weekly Market Intelligence Report.

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