SEBRING - In 2005 - the last of the good old days - less than 400 foreclosures were filed with Bob Germaine's office. Then the housing bubble burst, and the numbers snaked up to 1,508 by 2009.
Equally troubling to the Highlands County clerk of court were pending foreclosures: cases filed by the bank but never completed.
"The ones that have just been sitting there," Germaine said Thursday.
Germaine began tracking pending foreclosures, counting 1,381 in December 2011. That number rose to 1,471 six months later.
At the time, Germaine and real estate agents feared all those foreclosed homes would inundate the market at same time.
"I don't think we're going to get a glut now," Germaine said. Instead, the number of pending foreclosures have dropped to 1,260, and 2013 is on a pace to see fewer than 900 foreclosures this year.
Instead of a flood, "I think it's going to be Chinese water torture," said Steve Fruit, an agent with RE/MAX Realty Plus II Lake Placid.
The court - that would be Circuit Judge David Langford - is pressuring banks to complete those pending cases, Germaine said.
"He sends out an order to appear before the judge and explain why the case isn't moving forward," Germaine said. "If it's been over a year with no activity, he'll dismiss it, and they'll have to refile and pay that filing fee all over again."
Although the rate of foreclosures is edging slightly upwards again this year, Germaine said, "We're getting them moved through the system."
Fruit isn't sure why, he just knows that banks haven't dumped forecloses on the market. "To a financial institution, a loan is an asset. It may be non-performing, but it's still an asset. As soon as they take it back, it goes on the other side of the balance sheet."
He's also seeing houses auctioned, with bidders - some are private investors, some are private equity firms - paying pennies on the dollar. One company he's dealt with is Condor Capital.
"You know what a condor is? It's a vulture," Fruit laughed. "They were bidding on a package of seven or eight homes. Ultimately they did not get them."
"Distress sales, that is, short sales and those sold after foreclosure, totaled 23 percent of January sales," Orlando real estate analyst Bill Pittenger wrote in March at BillPittenger.com. "Foreclosures, on average, sold for about 20 percent less than an otherwise comparable property that was not in foreclosure, while short sales sold for about 12 percent less. Those ratios are consistently trending down, but the overhang of distress transactions is still great enough to keep a lid on price increases in locations not subject to low inventory levels."
Home sales are jumping again, but Pittenger isn't predicting light at the end of the tunnel just yet. "Looking forward at distressed transactions, there may be another dark cloud moving in. Pre-foreclosure notices, the first step in the foreclosure process, surged in the second half of 2012. Many will
turn to foreclosure, then auction, and the properties will likely come back to market at distress-level prices, perhaps beginning as early as mid-2013."
"In our view," Pittenger wrote, "the overall housing market has regained enough strength to withstand this modest storm and generalized price declines are not likely. Nevertheless, some metro areas could experience modest but temporary price decline."