Is the Worst Really Over for Miami and Coral Gables Real Estate?

posted on March 7th, 2010 filed under: Financial Responsibility, Real Estate News

Have you been hearing that real estate has turned the corner — that sales are up and prices have stabilized?  While there’s some evidence for that, the future is by no means safe and sound.  And as poster children for the real-estate bubble, Miami and Coral Gables remain as risky as anywhere.

A huge number of properties have been languishing in pre-foreclosure for months or even years at this point.  Scheduled repossession dates are postponed as banks shun not only the property-tax and maintenance responsibilities that would come with repossession, but the mammoth losses that would show up on their balance sheets if they re-sold the properties.

A recent Standard and Poor’s analysis of the national market lends credence to this view, and paints a very disturbing picture:

[I]n Standard & Poor’s Ratings Services’ view, the mortgage crises may be far from over.  The overhang of homes heading toward liquidation suggests more delinquencies and lower home prices are to come.

The current “shadow inventory” (including all delinquent loans, not only those that are real estate owned [REO]) of troubled mortgages will likely take about 33 months — or nearly three years — to clear at the current rate of liquidation.

We believe that the recent reversal in housing prices is the result of a temporary constriction in the supply of foreclosed homes on the market. . . . [T]here is a rapidly growing shadow inventory of properties where borrowers are delinquent but foreclosure has not been completed.

Far from the wave of foreclosures being over, S&P points out in a simple chart that in 2005, the ratio of distressed loan balances outstanding to distressed loan balances closed was about 18 to 1.  Now it’s 31 to 1.

This wouldn’t be the first time that properties in Miami and Coral Gables emerged from a pounding only to find that it was just the eye of the storm.

Print Friendly

posted by // This entry was posted on Sunday, March 7th, 2010 at 8:24 pm and is filed under Financial Responsibility, Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed.

Both comments and pings are currently closed.

Comments are closed.