Statewide, the increase
was even higher, leaping 82 percent from 175,707 to 319,147. The hike
puts Florida in second place for the biggest shadow inventory increase
in the country, behind New York’s 129 percent. New Jersey had the
third highest increase in shadow inventory at 49 percent.
The report is the first
time RealtyTrac has released its shadow inventory measure, something
Realtors have speculated on at the local level throughout the market
crash and recovery. The information is gained from a cross reference
of the company’s foreclosure data and Multiple Listing Service
RealtyTrac vice president, said a restart of foreclosure filings
following the National Mortgage Settlement, is part of the reason the
shadow inventory has grown. The $25 billion settlement between the
nation’s largest banks and its attorneys general penalized lenders
for foreclosure wrongdoing and contained guidelines for banks on how
to handle foreclosures — rules they were awaiting before resuming
foreclosures full force.
But the pileup in the
shadow inventory is also a case of banks not wanting to take a hit on
distressed properties, said Ken Thomas, a Miami-based banking
consultant and economist. Lenders don’t want to reduce a home’s
value by 40 percent on their books and pay thousands of dollars to
rehab it for sale, he said.
“They basically just get
up every morning and pray the market is better that day,” Thomas
said. “In the meantime, these homes just sit and accumulate.”
inventory increased 12 percent from the beginning of 2012 to today.
Holly Cook, who lives on
Pot o’ Gold Street, three blocks from Happiness Street and Rainbow
Avenue, said she’d like to see the homes there go on the market.
She’d consider buying at least one as an investment, but for now
they are locked up in the shadow inventory, not for sale, and not
occupied — at least by legal tenants, she said.
Rainbow Avenue house, where overgrown weeds catch garbage like a net,
was purchased in 2006 for $239,000. Court records show a foreclosure
was filed in March 2009 by SunTrust bank with a final judgment issued
against the homeowner just more than a year later.
But the case was handled
by the Law Offices of David J. Stern, a so-called foreclosure mill
that collapsed in early 2011 following accusations it had filed flawed
or fraudulent documents with the courts.
The collapse left an
estimated 100,000 foreclosures in limbo statewide, and in June 2011,
SunTrust dismissed the whole case against the Rainbow Avenue house. It
was refiled just last week (March 26).
“I’m pretty sure there
are squatters in there because the gate is pushed open and there’s
an open door in back,” Cook said. “I’m afraid the banks aren’t
going to follow through with foreclosures on homes they think aren’t
Palm Beach County isn’t
waiting for the bank to take back the home on Happiness. The property,
which is little more than a blackened shell after a fire several years
ago, is on a list for demolition, said Doug Wise, building official
for Palm Beach County. The demolition will be paid for with money from
a program that requires banks to pay $150 to register their
foreclosures so county officials can better track them.
Bought in 2005 for
$245,000, the Happiness Street home went into foreclosure in October
2008. The case was also handled by the Law Offices of David J. Stern.
In May of last year, the bank dismissed the foreclosure.
“In this case,
demolition is an improvement to the neighborhood,” Wise said.
“We’re not in the business of improving private property, but we
are in the business of protecting folks.”
Palm Beach County’s
inventory of homes for sale was just 5.8 months in February, down 47
percent from the year before.
The dearth of homes,
especially those priced under $250,000, has some Realtors eager for a
release of shadow inventory.
More than 111,000 homes in
South Florida — Palm Beach, Broward and Miami-Dade counties — are
counted as shadow Inventory in RealtyTrac’s report.
Realtor Shannon Brink of
RE/MAX Prestige Realty in West Palm Beach said there is so much
pent-up demand for homes, he’s more concerned about another real
estate bubble than worried that the shadow inventory will weaken sale
we don’t see more inventory, and buyers outpace sellers, it may
increase prices too much in too short of a time period,” Brink said.
“We are going from one extreme of too much inventory to too