Why Property Values in Lighthouse Point Almost Have to Increase

Over the past few weeks a series of interesting statistics have been released. 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 Lighthouse Point Real Estate market.

1. Not Making Any More

It’s usually recited about beachfront 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 Lighthouse Point, one of the primo locations 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% 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 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

Withn a year or two Florida is expected to surpass 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 sections of the state, but Broward County is arguably the most desirable part of Florida. 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.

 

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 the November 2013 summary report for sales of single family homes and condos across the state. Click on the links if you wish to see these reports, but I can save you the trouble. They show the median price increased 13.3% year over year (from November to November) in single family, and 17.2% in condos.

Florida Single Family Summary Nov 2013

 

Florida Condo Summary Nov 2013

 

Closer analysis of these numbers confirms an assertion I have been telling my clients for the last couple years – that the better properties will outperform the statewide average.

This is illustrated in the two reports below

Look at the November 2013 reports for sales in the reporting area of Miami, Fort Lauderdale and Pompano. Median Price went up 20% (again year to year, from November 2012 to November 2013) in single family and 23.6% in condos.

Fort Lauderdale Single Family Summary Nov 2013 

Fort Lauderdale Condo Summary Nov 2013

 

These numbers are a bit skewed, for the reporting area is quite large, encompassing all of Miami-Dade and Broward Counties. However, were you to distill them down to Broward County, the best location within that reporting area, these numbers would undoubtedly go up even further. And if we could isolate a prime suburb such as Lighthouse Point, higher still.

 

4. Equals Four

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 Lighthouse Point 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.

Welcome to The Party, Pal

Fabled “Shadow Inventory” In Sharp Decline After Costing Investors MILLIONS!

Last couple years, as the Lighthouse Point Real Estate market stabilized and began bouncing back, I told my Clients to start buying. Some listened, and have made money. Median Prices for single family homes and condos across South Florida have risen over 20%. Still, that’s an average encompassing all of Broward County. Prime property, waterfront and ocean view in more desirable neighborhoods, have shot up even farther.

Many clients, however, were seduced by the dark side. They kept quoting crap they read on the internet about the fabled “Shadow Inventory” – this wave of distressed properties supposedly looming on the horizon, which was going to sweep in like a tsunami and tank prices all over again. I tried to explain that was almost impossible. Once the banks got caught with their cookies in the candy jar, basically forging paperwork, and they had to start foreclosing legally, they would simply not be able to release waves of foreclosures like they had done in past years.

This literally cost people MILLIONS in potential profits.

Now in past weeks two highly respected housing data tracking agencies – RealtyTrac and CoreLogic – released reports which show the distressed property market in serious decline.

According to CoreLogic’s National Foreclosure report, 48,000 foreclosures were completed in the United States in October (2013), where the bank actually took possession of the property. That’s down from 68,000 in October 2012 for a year over year decrease of 30 percent.

As for the “shadow inventory,” as of October 2013, according to CoreLogic, approximately 879,000 homes in the U.S. were in some stage of foreclosure – still owned by a mortgage holder but at risk of being taken over by a lender – compared to 1.3 million in October 2012 for a year-over-year decrease of 31 percent.

The RealtyTrac number were very close. According to their Foreclosure Market Report for November foreclosure filings – all default notices, scheduled auctions and bank repossessions – decreased 37%.

While this drop reflects all homes somewhere within the foreclosure process, a decline in the number of homes receiving their first foreclosure notice reflects a stronger improvement. A total of 52,826 U.S. properties started the foreclosure process for the first time in November 2013, down 32 year over year, hitting its lowest level since December 2005

In Florida the percentage of home owners receiving a first-time foreclosure notice also dropped dramatically. The Sunshine State had 6,744 foreclosure starts in November, a 45.9% decline year to year.

The number of Florida foreclosure completions also dropped, 15.59 from the previous November.

Personally I felt many buyers focused too much on Foreclosures, which in many instances were in rough shape. Some investors made money buying fixer uppers, fixing them up and flipping them, but these days the banks themselves are putting some work into the properties so they can command a better price.

The thing to remember is that a good deal is a good deal, it doesn’t matter if it’s a foreclosure or not. An expert professional realtor who knows the market – me, for instance – can still help you find a good deal. Just give me a call.