5-year Broward Real Estate Market Snapshot

The Sales data recorded in the MLS* for Broward County for the last 4.5 years 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.   Please 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 numbers because they usually tell a far different story than what’s rumored to be true.  I’ve had people tell me how they remember what a hot year 2007 was for local Real Estate because prices were still high, when in reality, Inventory was at very high levels, average days on market were very lengthy, and  sales had decreased significantly.

Recent activity is that prices have decreased significantly since several years ago, Inventory has decreased, days on market have decreased, and sales have increased.  At the peak of Inventory,  in April of 2008, 14,489 Single Family Homes were for sale.   Now, there are  8,403 Single Family Homes for sale in Broward County.    At the lowest point of Inventory, in March of 2005, only 2,234 Single Family Homes were for Sale and Broward County and you constantly heard, “we went to place an Offer on the House and it was already sold.”

At the current rate of Home purchases for 2010, it appears that more Homes will be sold this year than last year.

Since sales have increased, I’ve noticed a significantly marked decrease in the numbers of Sellers who are offering Closing Cost assistance and similiar Offers (something I saw A LOT of in 2007 and 2008).  During that time, many Houses were sitting on the market forever.  Someone asked me the other day if it’s a Buyer’s or Seller’s Market (actually their question was more of a statement wanting confirmation that it’s still a Buyer’s Market). My response was that “it depends on which segment of the market you’re referring to.”  With the decreased inventory and increased number of sales, the $350,000 and under price range feels very much like a Seller’s Market instead of the Buyer’s Market that it was for a couple of years and, with Waterfront Properties, the same is the case with the $600,000 and under price range.  Many Properties within this price range that are in great condition, good location, have other very desireable features, are priced at or slightly below current market value as soon as they’re listed, and are Regular Sales or Bank Owned Foreclosures, have been going under Contract and Closing within 30 – 60 days or less from the time they were listed, and have multiple Offers quickly. I didn’t include Short Sales in this Category because many Buyers will first attempt to purchase a regular sale or Bank owned Foreclosure since they aren’t interested in the lengthy review and approval process required for Short Sales.

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 recent news report on CNBC, Diana Olick stated “…Homes just aren’t selling after that Tax Credit.”  While that’s certainly true in some Markets, IT DOES NOT APPLY TO ALL MARKETS and while we’ve had some sale increases because of the First Time Home Buyer Tax Credit, many areas in South 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.

Homes here are still selling.   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 very 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 you and your area or not.

The following facts are reasons that point to First Time Home Buyers NOT being the majority of purchasers in our local Market:

• Approximately 50% of sales in the current Market are Cash sales.    Although some First Time Home Buyers are Cash Buyers, most are not.  Most Cash purchases are made by Investors and others who don’t require Financing.
• Of 9,327 Condos, Townhouses, and Villas purchased in Broward County in 2010, 7,168 are indicated to have been Cash purchases.
• Of 6,899 Single Family Homes purchased in Broward County in 2010, 2,542 are indicated to have been Cash purchases.
• As prices have declined, large numbers of Investors have re-entered the Market and are purchasing properties to Lease to Tenants or renovating properties and selling them at current market value.
• The basic Single Family Home/”Starter Home” that’s often of interest to many First Time Home Buyers (the 3 Bedroom, 2 Bath Home with a Garage and Pool) still costs, on average, much more than the “under $200,000” highly requested price range for such a Home.  We aren’t an area where the average Single Family Home costs $100,000.   Sure, there are Houses available within that price range, but most don’t have the condition, size, location, or other features that are considered most desireable.  Of 3,625 Single Family Homes purchased for a maximum of $200,000, 1,766 of those are indicated to have been Cash purchases.  Of 1,693 Single Family Homes purchased under $100,000, 1,303 are indicated to have been Cash purchases.   Regarding price range, yes, there are First Time Home Buyers who purchase Houses that are $400,000+, but many Buyers in that price range aren’t First Time Home Buyer or wouldn’t financially qualify for the First Time Home Buyers Tax Credit anyway (Income Limits applied to eligibility for the Tax Credit) or just weren’t motivated to buy because of the Tax Credit.
• Florida, particularly South Florida, remains number 1 in the United States for the number of purchases of vacation property 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.   Keep in mind that this group of Buyers DOES NOT qualify for the First Time Home Buyer Tax Credit since it applies to primary Residences only.
• To qualify for the First Time Homebuyer Tax Credit, you had to be under Contract/have a signed Contract to purchase Property by April 30, 2010 (the most recent extension of the Tax Credit was for the Closing date, not the “under contract” date).  We’re more than 3 months past April 30th and pending sales haven’t seen a serious decline.  Currently, there are 5,157 pending sales of Single Family Homes and 6,277 pending sales of Condos, Townhouses, Villas, and Co-ops.  Yes, Contracts can and do fall through, but a Property’s status in the MLS being changed to “Pending” is the only way to get an approximate idea of how many Properties are currently under Contract to be purchased.

Is more improvement needed in the market?  Of course, particularly in the area of distressed properties, however,  increased sales are definitely positive, as well as the large numbers of Buyers who are purchasing properties with Cash.

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

Related information:

• January – June of 2010 Broward Foreclosure Market Report
• Cash Buyers of South Florida Homes