6-year Broward Real Estate Market Report

Sales are up and Inventory is down

Sales data recorded in the MLS* for Broward County for the last 6 years + 1st Quarter of 2011 is in the Table below.   Properties sold through Real Estate Brokers comprise the vast majority of Properties sold, however, there are also private Sales and Sales conducted through Developers that were not listed on the MLS.   Note as well that this information is not indicative of the entire Real Estate Market since I only report on Single Family Homes and Condos**.  Other property types that are sold include Commercial Property, Land, Docks, and Multi-Family Property such as Duplexes.

It’s always very interesting to see the actual numbers because they often tell a far different story than what’s rumored to be true.

Current Market activity is that prices have decreased significantly,  Inventory has decreased significantly, days on market have decreased significantly, and sales have increased.  In fact, Sales are the highest they’ve been in 5 Years.

Unfortunately, many people are mindlessly repeating old Market Stats and claiming that we still have more than 5 years of available Inventory for sale when that’s far from accurate!

Many Buyers who are just now entering the Market are VERY surprised to find that levels of Inventory are significantly lower than they thought and that it’s no longer the extreme Buyer’s Market that it once was.   Many deals that were previously available have been purchased by Buyers who made purchases in 2009 and 2010.  This isn’t to say that there aren’t deals available at all, just saying that they aren’t available in the quantity that they once were.   In many cases, it’s like arriving late for the big Sale and finding out that what’s left is the “picked over” stuff because the other Shoppers bought the best already.  In fact, in certain very desirable price ranges and in areas that are East and Waterfront, there’s insufficient Inventory to meet the current level of demand.   With such Properties, it’s once again become very common to hear that they have already gone under Contract for purchase after just being listed for Sale–within less than 30 days of being placed on the Market.

It’s important to note that very low priced properties are not the only ones that are selling and Luxury properties are experiencing a significant increase in sales as well.  In our current Market, I refer to sales that are $500,000 and above as “Luxury” since sales within that price range are the top 10% of our local Market in terms of purchase prices.

A significant number of purchases in the current Market are Cash purchases.   In the Condo Market, approximately 80% of the purchases are Cash and in the Single Family Home Market, approximately 50% of the purchases are Cash, so if you’re a Cash Buyer, be prepared for plenty of competition.

Distressed Properties are being purchased quickly, particularly in the case of Bank Owned Foreclosures, which typically sell in 30 days or less once being placed on the Market for Sale.

It’s not 2007-2008 anymore!

During 2007 -2008, we had the lowest number of sales locally, prices were much higher, Inventory was at very high levels, and the average number of days on market for Properties was very lengthy.

The lowest level of Inventory for Single Family Homes in Broward County was March of 2005 when only 2,234 Single Family Homes were for Sale.

Currently, we have 7,037 Single Family Homes for Sale in Broward County.  The highest level of Inventory of Single Family Homes in Broward County was April of 2008 when 14,489 Single Family Homes were for sale, so Inventory has decreased 50% since that time (the same is the case with our Condo Inventory).

When you drill down further into Inventory levels in various areas and price ranges, the number drops even lower.  In Ft. Lauderdale, for example, only 1,080 Single Family Homes are for Sale.   Of the 1,080 Homes, 591 are located in East Ft. Lauderdale.  Of the 591 Homes, the average list price is $815,000.   In all Broward Cities that offer Waterfront Properties and properties that are located East of U.S. 1, East of I-95 and close to the Beach, the total Inventory of such properties is approximately 25% of the entire Inventory.

Sellers vs. Buyers

With increasing sales, decreasing Inventory, and decreasing number of days on the Market, a large number of appropriately priced Properties and properties in desirable locations are selling quickly and selling very close to their list prices.  Additionally, there is a very marked decrease in the numbers of Sellers who are offering Closing Cost assistance and similar Concessions to Buyers.

As typically happens when there are Market shifts, disbelief is one of the first reactions.  When the Market shifted to a Buyer’s Market several years ago, Sellers were very resistant and refused to believe the truth for a long time until they realized they were really left with no choice.  Now, our local Market is shifting away from the extreme Buyer’s Market that it previously was and many “would-be” Buyers are greeting the change with resistance and disbelief.  They are asserting that the Market hasn’t changed and that conditions will be the same a few years from now, when the reality is that the Market is already changing drastically in a very positive direction.

“But I heard…”… “But the Media said…”

Media Reports and “word on the streets” are that significantly increased sales can primarily be attributed to the First Time Homebuyer’s Tax Credit and that sales have significantly decreased after the end of the Tax Credit.  In a news report on CNBC, Diana Olick stated “…Homes just aren’t selling after that Tax Credit.”  Other reports point to the lack of a significant increase in the levels of Employment and assert that it’s impossible for Home sales to increase significantly without an accompanying increase in Employment.

While that’s certainly true in some Markets, IT DOES NOT APPLY TO ALL MARKETS and, while we experienced some sale increases because of the First Time Home Buyer Tax Credit, we weren’t significantly affected by it because most areas in Southeast Florida ARE NOT areas that are primarily driven by First Time Home Buyers.     We are very fortunate to be an area that has a wide variety of Buyers who purchase property.

In order to accurately assess the Market, ALL pieces of the equation have to be considered, not merely pieces of it.

Florida, particularly South Florida, remains number 1 in the United States for the number of purchases of vacation properties to International and Domestic Buyers.  As such, they account for a high number of Sales locally and the huge reduction in prices has increased their level of interest and purchases even more.   A decrease in the value of the U.S. Dollar is also very attractive to Foreign/International Buyers, in addition to the fact that U.S. Real Estate is a huge bargain when compared to Real Estate in a number of International locations.  A large number of Investors have returned to the Market as well and are purchasing many of the lowest priced Properties, particularly Bank Owned Foreclosures, many of which they are renovating and Leasing or renovating and re-selling at current Market value.

As I mentioned earlier, a very significant number of purchases in our local Market are by Cash Buyers.  That being the case, the recovery and health of our local Real Estate Market IS NOT dependent upon Buyers who need Financing and Employment.

Regardless of the fact that the South Florida Market was hit very hard during the Real Estate decline, Homes in South Florida are once again selling at significant levels.  No, it’s not a lie that us Real Estate Agents are telling you.   You must at all times consider that Real Estate is not only local, but hyperlocal.  Real Estate Market conditions are VERY SPECIFIC to various States, Counties, Cities, and Neighborhoods (and, in the case of Condos, very specific to each Building).   There are Neighborhoods and Buildings that are very healthy and others that are unhealthy, some that are even in very close proximity to each other.  Most Media Reports are painted with a very broad Brush and you must determine if what you hear/heard applies to your Home search and your area or not.

Average Prices

Of the total Inventory of Single Family Homes for Sale in Broward County, the average list price is $200,000, however, when you narrow the search to areas that are East of U.S. 1, East of I-95,  Waterfront, or Luxury, the average price is $500,000+, so is significantly higher than the average for other locations, and even within those locations, vast price differences exist based on proximity to the Beach, type of Waterfront, Neighborhood, etc.

Of the total Inventory of Condos for Sale in Broward County, the average list price is $120,000, but as with the Single Family Homes, when you narrow the search to East and Waterfront properties, the average price increases significantly.  For 2-Bedroom Waterfront Condos in Broward, the average price starts at $250,000 and, for Oceanfront and Luxury Condos, the average price is even higher.

Price differences based on location are another very crucial item that the Media usually doesn’t differentiate in their Reports.   Most of their Reports indicate the average prices for an entire County or several Counties combined.  In turn, Buyers hear about all the great bargains, then I receive inquiries from them about Homes on the Intracoastal for $300,000, and they are disappointed to learn that such properties are selling for more than $1,000,000 in the current Market.

So, what’s Selling?

Notes about the 11,308 Condos that were purchased for under $100,000:

• 8,007 are non-Waterfront Properties
• 21 are Oceanfront Properties
• 126 are Intracoastal front Properties
• 50 are located on Ocean Access Canals
• 12 are Riverfront Properties
• The remaining Waterfront properties are those that are located on non-Ocean access Waterfront such as Lakes, Creeks, and Lagoons

According to my Crystal Ball…

Hmmm….I never had one and never claimed to.   I’ve found that Buyers and Sellers like very specific answers about the future of the Market, when the reality is that no one knows exactly what’s going to happen.   What we do know is the history of what has already happened and the reality of current conditions.   Continued improvement would definitely benefit the Market, particularly in the area of distressed properties, and there are many signs that are pointing toward consistent and continued positive outcomes.

In reference to the Shadow Inventory that’s mentioned frequently, I’m aware that Foreclosures will continue to be released into the Market, but if they continue to be purchased within 30 days or less, as they have been in our local Market, then I think there’s little cause for concern.    Yes, 30 days or less are the average number of days on the Market for Bank Owned Foreclosures once the Bank releases them/lists them for sale through a Broker.  Fortunately, they’re not piling up unsold.

And about the dreaded Double Dip?  Double Dip is for Ice Cream!  We’re not experiencing a Double Dip in our local Market, particularly not in East and Waterfront areas.   Again, Real Estate conditions are VERY local and hyperlocal.

When will we reach the Bottom?  NO ONE KNOWS in advance when the bottom will be reached, so the funny little thing about the bottom is that it will have already passed by the time people figure out that it was reached, however, I will remind East and Waterfront Buyers of  very important information.  East and Waterfront properties are the smallest segment of Land in Broward County and are the highest in demand by Domestic and International Buyers of Vacation properties and by locals who enjoy living very close to the Beach.  The majority of Properties are located West and are non-Waterfront.  That being the case, East and Waterfront properties are the smallest portion of Inventory, hold value better, have higher value appreciation, and will reach the bottom a lot faster than areas that have significantly higher levels of Inventory, both distressed and non-distressed.

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*-The MLS is the database where information is stored about active, pending, sold, and expired Listings that are sold through Brokers
**-When I refer to “Condos”, that includes Condos, Townhouses, Co-ops, and Villas

Related information:

• Recent purchases of Luxury Single Family Homes
• Recent purchases of Luxury Condos
• Foreclosure Inventory and Purchases
• Cash Buyers of South Florida Homes