In-Depth Analysis & Projections
Home Price Appreciation in Fort Lauderdale Inevitable
As a professional full-time realtor I pay a lot of attention to housing statistics. Not just some housing statistics. ALL the statistics. Sherlock Holmes used to say: "Always fit the theory to the facts, not the facts to the theory." CoreLogic, RealtyTrac, S&P / Case Shiller, the National Association of Realtors and the Florida Association of Realtors all release real estate market reports on a monthly basis. Yet, I read articles where people seize upon selected data supporting their position, neglect to consider all the facts.
I don't know if there is any place this has cost people more money than around Fort Lauderdale and South Florida. We have a unique market. It is highly shopped, extremely active, dynamic.
Over the past few months and years some very interesting statistics have emerged. Taken individually these numbers are all compelling on their own, but when you add them all together I think they paint a pretty clear picture of what's in store for the Fort Lauderdale real sstate market moving forward.
1. Not Making Any More
It's usually recited about beach front property, but there's an old Real Estate Adage: "They're not making any more of it."
That has never been truer than it is in Fort Lauderdale, the primo location in the state of Florida. There is only so much land. Broward County is not large to begin with, approximately 27 miles north and south, perhaps 45 miles east to west. However, around 60% of this geographic area are wetlands which cannot be developed without cutting off their own water supply. They can no longer build any anything else beyond the Sawgrass Expressway and US-27, which are somewhere between 10 and 15 miles from the coast. So the entire county is 1,320 square miles with 115 square miles of water. Boil it all down this leaves only 471 square miles of developable dry land.
At this point this developable land is now 99.99% developed. There are no more swaths of scrub forest east of US-27 and the Sawgrass which can be bull-dozed into housing projects. Drive the Sawgrass Expressway through northern Broward you see housing developments and commercial properties along the east side of the road, and along the west side of the highway it is literally The Everglades – whip grass, wading birds and alligators.
2. Come On Down
Recently Florida surpassed New York as the third most populous state in the nation. Well, you never have to shovel sunshine off your driveway. Admittedly the population is increasing rapidly through Central Florida, but Broward County is arguably the most desirable part of the state. In 1960 they took the Census, there were 60,000 residents. Ten years later in 1970 there were 600,000. Currently the population is around 1.75 million and projected to climb to almost 2.3 million by the year 2020.
That's 550,000 more people – or an additional 31.4% – moving into the same 471 square miles of dry land.
That's an additional 1,167 people per square mile, with the current density being 3,715 residents per square mile.
3. Location, Location, Location
In addition to geographic limitations and population growth projections we also took note of some intruiging statistics compiled by the Florida Association of Realtors concerning the continued rise in the median price for both single family homes and condominiums.
Below are links to Year End Summary Reports for sales of single family homes and condos across the state. Click on the images if you wish to see these reports, but I can save you the trouble. They show the median price increased 15.9% year over year in single family, and 20.1% for townhomes and condos.
Closer analysis of these numbers confirms an assertion I have been telling my customers for the last couple years – that better properties will outperform the statewide average.
This is illustrated in the report below: Florida Residential Market Sales Activity, Statewide by Metropolitan Statistical Area.
In the reporting area of Miami, Fort Lauderdale and Pompano, Median Price for Single Family Homes rose 20.3% year to year, 26.2% in condos and townhomes, versus the statewide average above, 15.9% in single family, 20.1% for townhomes and condos).
These numbers are still a bit skewed, however, for companies that compile these statistics use a very large reporting area for South Florida, typically encompassing all of Miami-Dade, Broward and Palm Beach Counties. Were you to distill these stats down to Broward County, the better location within that reporting area, the numbers would undoubtedly increase. And if we could isolate the east side of Fort Lauderdale, they'd go up even higher.
Statistics for real estate sales and median home prices are not micro-tracked by specific neighborhood, however we do have other market reports which graphically illustrate our point.
Below are two interactive charts from RealtyTrac showing Foreclosure Activity in Broward County and Fort Lauderdale. Run your mouse over the city names and Zip Codes. In the first chart you will see less Foreclosure Activity in Fort Lauderdale than in Pompano Beach and Hollywood. In the second you can see premier neighborhoods in Fort Lauderdale such as Harbor Beach, the Las Olas Isles and Coral Ridge, located in Zip Codes along the coast – 33316, 33301 and 33308. As you position your cursor over these Zips you will see significantly less foreclosure activity in these neighborhoods. Less foreclosure activity, naturally, indicates stronger property values.
Foreclosure Rates, Broward County
(Run your mouse over the Zip Codes to see)
4. Connect The Dots
Talk about a No Brainer, this would seem to be a simple matter of connecting the dots, what this should mean for property values in Fort Lauderdale and throughout Broward County. 1) We don't have much land. 2) Population is growing. 3) Demand is increasing. And 4) Prime property will outperform the overall average.
Add these factors up significant appreciation in property values seems relatively inevitable. In addition, whatever rate of appreciation you might wish to forecast for the overall county-wide average, it shall be markedly greater in prime real estate – waterfont homes, oceanfront condos, houses and townhomes in nice nieghborhoods along the coast.
In My Professional Opinion
We are looking at a pretty good stretch into the foreseeable future, barring Acts of God, asteroid impacts and/or the total collapse of Western Civilization. Bouncing off the bottom real estate values jumped across South Florida, increasing almost 30% through 2012-13. People were talking about another bubble, but the market consolidated through 2015, then got back on track in 2014. Meantime, depending upon which market reports you are quoting, property values have increased for the last 40-50 consecutive months. The most current reports project 2016 shall mark a return to normalcy nationwide, but a "normal" market in South Florida real estate typically means annual appreciation of 8-10%.
If 8-10% annual appreciation in an active market which will allow you to sell your property and take your profit isn't good enough for you – good luck and God bless.
In 2010 I told my customers to start buying. The housing market in Fort Lauderdale had stabilized, had started inching upward. I told customers as soon as real estate investors noticed prices going up in South Florida we'd have a mini land rush. Well, I was right. Customers who listened have already seen great appreciation. Others started citing stuff they were reading on the Internet about the "Shadow Inventory" – this mythical tidal wave of impending foreclosures that was going to swamp our market like a tsunami. Now those people are sitting in a little rubber raft on the beach in their rain slickers and their floppy hats, waiting for the big wave. Meanwhile, people who listenend are lounging on the balcony of their luxury oceanfront residence sipping mojitos and laughing at those crackpots in the rubber rafts, wondering what we pay the Police for anyway.
Explosive Long Term Growth
Much has been made of the volatility of the South Florida Real Estate market, especially in the past few years, but I think it's important to put this all in proper historical context.
The best indicator of this may be the Standard & Poor's / Case-Shiller Home Price Index. This highly regarded index tracks the values of the same houses over time. Some analysts argue that's a better measure than the median price.
Below is the most recent chart tracking home values in the reporting area of Miami-Dade, Broward and Palm Beach Counties versus the (green line) U.S. average.
I don't think I've ever seen the strength of the South Florida Real Estate market more graphically illustrated.
First thing that hits you, of course, is that big spike, how crazy the market must've been from 2003 to 2005 – that sharp up-tick and that steep decline. It happened on a national level as well, just not as dramatically. Even so, remember that spike represents a bunch of money that was made. Many people lost it all, and then some, pouring it back into the market, but that's on them. It does not change the fact that big profits were made.
Perhaps most fascinating, however, is the long term overall trend. Look at this second chart below where I have added the blue trend line, following the overall upward trend of home prices in South Florida dating back to the mid-70s. Home prices went crazy from 2003 to 2005, shot up and then plummeted, but in the end price levels still wound up a little higher than they probably whould've been given their historical upward climb.
Particularly impressive is what the South Florida market has done since 2011 or so. Not only has it risen faster than the overall trend, but if you consult the first chart above you will see our property values have risen much faster than the national average.
Appreciation All But Inevitable
As previously stated, taking all these factors into consideration I feel that buying property in South Florida, especially Fort Lauderdale, is pretty much a No-Brainer.
South Florida Real Estate has always followed a boom and bust cycle. Fortunes have been made here. As long as we've got the Atlantic Ocean and the Gulfstream, palm trees gently swaying in tropical Trade Winds off a turquoise ocean – and heaters we only use two weeks of the year – significant appreciation of home values is relatively inevitable.
Some years ago I got into my car, found the carpet and floor mats soaked. Took it into the shop. The mechanic told me the water had sat in my car heater so long without circulating it had rusted right through the pipes.
Where else in the country is that going to happen?
So buy now or forever hold your "piece" – of Cleveland, Newark or Detroit.
Fort Lauderdale Home Values Showing Almost 10% Appreciation in Past Year
Real estate values in Fort Lauderdale and Broward County continue to soar. According to data from the property appraiser released June 29, 2015, Broward County posted a 7% increase in real estate values over the previous year.
Construction of new homes, condos and businesses added $1.3 billion to property tax rolls. Between the higher values and new development real estate in Broward County is worth a total of $150.7 billion.
Values have now risen four years straight, pulling Broward within 15% of the peak total of $175 billion in 2007.
Below we are re-printing the percentage increases for the entire county and it's 31 cities.
Percentage Increases in Property Values
Source: Broward County Property Appraiser's Office
(First number represents overall increase in value including new construction or annexations added to the roll; second number shows net increase, without new buildings or annexations, of existing values)
Broward County: 8.08% including new construction; 7.14% increase of existing properties
Unincorporated Broward: 2.1 percent (unincorporated area became smaller); 2. 8 percent
Coconut Creek: 11.59 percent; 7.3 percent
Cooper City: 6.6 percent; 5.7 percent
Coral Springs: 6.2 percent; 6 percent
Dania Beach: 7.5 percent; 6.2 percent
Davie: 7.2 percent; 5.8 percent
Deerfield Beach: 8 percent; 7.4 percent
Fort Lauderdale: 9.7 percent; 8.4 percent
Hallandale Beach: 9.7 percent; 9.5 percent
Hillsboro Beach: 5.4 percent; 5.5 percent
Hollywood: 9.1 percent; 8.9 percent
Lauderdale-by-the-Sea: 7.8 percent; 5.5 percent
Lauderdale Lakes: 8.2 percent; 8.1 percent
Lauderhill: 8.3 percent; 7.9 percent
Lazy Lake: 7.6 percent; 7.4 percent
Lighthouse Point: 5.6 percent; 5.1 percent
Margate: 7.9 percent; 7.8 percent
Miramar: 8.1 percent; 6 percent
North Lauderdale: 8.4 percent;
Oakland Park: 8.2 percent; 7.9 percent
Parkland: 12.8 percent; 5.5 percent
Pembroke Park: 4.4 percent; 4.2 percent
Pembroke Pines: 7.4 percent; 6.4 percent
Plantation: 5.7 percent; 5.5 percent
Pompano Beach: 7.4 percent; 6.9 percent
Sea Ranch Lakes: 5.4 percent; 4.9 percent
Southwest Ranches: 7.5 percent; 6.4 percent
Sunrise: 7.6 percent; 7.4 percent
Tamarac: 8.5 percent; 8.4 percent
Weston: 6.2 percent; 6.1 percent
West Park: 9.2 percent; 9 percent
Wilton Manors: 8.9 percent; 8.6 percent