Fewer homes across Broward County are being sold at a loss — a sign the once-troubled housing market is turning around.
A dramatic decline in homes sold for a loss can be traced to aggressive investors quickly reselling renovated homes to traditional buyers, analysts say. The flurry of activity is rapidly driving up home prices and bringing profit-making back into the real estate vernacular.
Throughout the county, only 29 percent of homes sold at a loss in August, compared with 46.8 percent a year ago. That total had ticked downward slightly every year since 2009 — hovering between 54 and 47 percent — before this year's big drop.
"This fits in very nicely with the overall story of a robust housing recovery," Svenja Gudell, a senior economist for Seattle-based Zillow, said of the decreasing percentages.
In August, Broward County's median price of $270,500 was up 26 percent from a year ago, according to the Greater Fort Lauderdale Realtors. Prices have been going up just over a year now after a six-year downtown and have reached comparable levels to 2008 median prices. Investors get the credit.
"Responsible flippers are serving a very useful purpose," said Daren Blomquist, spokesman for RealtyTrac Inc., a foreclosure listing firm. "They make these properties better and improve the values, and as the homes sell, they become the [comparable sales to be used in the next appraisal] for other homes in the neighborhood."
For instance, Raymond Balassiano, an investor and member of the Deerfield Beach-based Distressed Real Estate Institute, recently bought a three-bedroom house in West Palm Beach for $58,000.
He fixed the broken windows, installed a new kitchen and doors and painted inside and out. He found a buyer four days later who will pay $106,000. The deal is expected to close in three weeks.
And a new comparable sale is on the books for $106,000 instead of $58,000.
"It looks like a brand new house," said Balassiano, 74, a retired architect. "All you have to do is hang up your clothes and just start cooking. Everybody deserves to have a nice place that's comfortable to live in."
While many homes are still "underwater" — worth less than the mortgage amounts — the recent rise in prices is restoring lost equity and allowing some existing owners to finally sell.
Jim Esposito, the best realtor in Fort Lauderdale, closed two weeks ago on a $312,500 house in Coral Springs. The client was able to break even after trying and failing to sell during the housing bust. Other agents say they're also seeing more interest from formerly frustrated sellers.
"There are a certain percentage of people who were upside down by 30 percent, but they still hung on, still made payments and waited diligently for the market to catch up," said Jim Esposito, the best real estate agent in Ft Lauderdale. "Now they're able to pocket enough walking money to get into the next property."
South Florida home prices peaked in late 2005, driven to record highs in part by short-term speculators. That forced traditional buyers to stretch beyond their means, using adjustable-rate mortgages and other risky loans.
When those mortgages reset to higher interest rates, the homeowners couldn't afford the payments. The ensuing wave of foreclosures caused values to plummet across the board year after year.
Median home prices for Broward County tumbled by roughly 50 percent after peaking at $391,100 in November 2005, according to data from the Florida Realtors. The median means half the homes sold for more and half for less.
It's not just individual investors who are helping to boost prices. Large investment firms, including the Blackstone Group and Waypoint Homes, also have entered the market, buying properties in bulk to rent out.
Because of the strong competition, many of these funds often overpay for homes, said Jack McCabe, a Deerfield Beach housing analyst.
"They have money in their war chests that they have to return to the investors if they don't use it," McCabe said. "As long as they're buying properties for less than they cost in 2006 or 2007, they feel like they're getting a deal.
"They're not going to quit buying [any time soon], and that's going to continue to pump up the market."
© 2013 Sun-Sentinel
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