As Miami’s Booming Real Estate Market Spills Over, Fort Lauderdale Sees Luxury Listings Spike

 

 Single-family homes and new-build condo towers are now fetching record sums in the southern Florida city. By DAVID KAUFMAN - Robb Report

 

Few American cities continue to boom during the pandemic quite like Miami. From Golden Beach to South Beach, Indian Creek to Coral Gables, the South Florida metropolis saw a surge of newcomers lured by its open spaces and tax-friendly business environment. How big was Miami’s boom? Total home sales rose by around 50 percent in 2021, according to the Miami Association of Realtors, with median prices up nearly 20 percent from April 2021 to April 2022 alone. 

Unsurprisingly, much of Miami’s market momentum has spilled over into neighboring cities, most notably Fort Lauderdale—the canal-filled boater haven just 30 miles north of Miami and famous worldwide for its annual must-visit International Boat Show. Bustling and breezy with a major airport connected to Europe, Canada, Latin America and most US markets, the city has long stood as a modest-sized alternative to hustling-and-bustling Miami. But South Florida’s real-estate surge has hit Fort Lauderdale as well, with single-family homes and especially new-build condo towers fetching record sums, both along the waterfront and out to less-developed neighboring hamlets such as Pompano Beach and Hallandale Beach. 

Along the way, global brands such as Auberge, Four Seasons and Ritz-Carlton are lending their imprimatur to many of the priciest (and poshest) projects, helping to further solidify Fort Lauderdale’s status as an UHNW real-estate destination all its own. Longtime industry observer Jonathan Miller, president and CEO of Miller Samuel Inc. Real Estate Appraisers & Consultants, describes the city’s ascent as part of what a “market restructure looks like in Florida… [where a] pivot to the perception of a ‘good place to work’ from merely a ‘good place to visit’ has brought in more luxury brands” beyond the region’s better-known locales such as Miami and Palm Beach. 

Those brands are helping Fort Lauderdale reach prices unimaginable before the pandemic. In late September, for instance, a 6,000-square-foot penthouse at the Four Seasons Hotel and Residences closed for $15.4 million, the most expensive condo ever sold in both Fort Lauderdale and wider Broward County. The sale follows a previous Four Seasons penthouse that went for $13.6 million, another record tally. Both condos feature private pools as well as access to public spaces by hip London-based interior designer Tara Bernerd. The development, which is connected to an equally splashy hotel, is sold out. 

Those record-setting Four Seasons prices have paved the way for other Lauderdale-area developments. The Residences at Pier Sixty-Six, for instance, boast access and exclusive owner privileges to the restaurant-packed Pier Sixty-Six Marina. Pier Sixty-Six’s residences will initially offer 62 condominiums sized between two and four bedrooms and priced from $3.6 million. The development, which is expected to be completed in early 2024, offers rare direct access to the city’s marina, which buyers clearly covet. “The average Fort Lauderdale condo sale price in Q3 2022 for units over $3 million was up 51 percent year-over-year overall,” says Amy Ballon, director of sales for Pier Sixty-Six. “Properties with marina or boat-slip options in Fort Lauderdale were selling at a higher price per square foot than in Miami-Dade last year.” 

Also within Fort Lauderdale itself is Selene Oceanfront Residences, a 194-condo development close to the Four Seasons. Designed by leading local architect Kobi Karp, the project’s two- and three-bedroom homes are priced from roughly $900,000, with top-tier penthouses starting at $10.8 million. And then there’s Auberge Beach Residences & Spa Fort Lauderdale, set on a prime 4.2-acre beachfront plot with a hotel as well as 171 Meyer Davis–designed apartments spread among a pair of shimmering towers. The project sold out quickly after its debut in 2019, though resales are fetching strong numbers. Finally, Edition is also launching with a “boutique” 65-unit site priced from $3 million. The public spaces of the residences-only project will be designed by New York–based ODA while the design of the residences themselves will be executed by ethereal Irish designer Clodagh. 

Much as Fort Lauderdale is experiencing a “spill-over” effect from Miami, so too are its closest neighbors. Just north of town, the new Ritz-Carlton Residences, Pompano Beach is currently rising on a wind-swept 2.25-acre slice of sand within a pair of residential towers: the 32-floor Beach Tower, with 117 homes directly on the Atlantic, along with a 14-floor Marina Tower, which has 88 residences set along the Intracoastal Waterway. The project is priced from $4 million to over $10 million in the Beach Tower and from $929,000 to $2.5 million in the Marina Tower. Also in Pompano Beach are a pair of projects from Related, the sold-out Solemar and the new-to-market Casamar, whose 119 waterfront homes begin at $1.5 million and feature architecture and interior design by, among others, David Rockwell. And just announced is Marina Vista Residences, a 121-unit condo on a rare unobstructed inlet between the Atlantic and the Intracoastal Waterway developed by the Chetrit Group. 

Lastly, just south of Fort Lauderdale, in Hallandale Beach, is 2000 Ocean, whose sleek, aquiline design is courtesy of Mexican architect Enrique Norten. The 38-floor waterfront glass tower has 64 homes—all at least a half-floor in size and priced from $3.2 million (penthouses start at $10.5 million). The development is among the first of its caliber in the Hallandale area, which is, says project developer Shahab Karmely with just a hint of hype, “now the epicenter of low-key cool, combining the excitement of Miami with a laid-back Malibu vibe.” 

Although Fort Lauderdale is now commanding record prices, the city still offers more mortar for your dollar than Miami. Smaller and lower-profile, Fort Lauderdale’s vibe will always serve as a sleepier and cozier alternative to Miami’s raucous energy. “Fort Lauderdale buyers don’t want Miami, but rather a smaller city with a lower density,” says Scott Gerow, executive director of luxury sales at Compass and principal of the Cotilla Beresh Gerow Luxury Team, which specializes in the Fort Lauderdale market. “High-rise construction has certainly pushed north from Miami, and Fort Lauderdale is reaping the benefits of that expansion.” 

Home sellers in South Florida made record profits last year

 By Amber Bonefont

FORT LAUDERDALE, Fla. – Home sellers in South Florida made record profits last year, even with the housing market slowing down in the latter half.

In South Florida, home sellers made about $159,300 profit on the typical sale, a 51% increase from the year before, according to a year-end report released by Attom Data, a nationwide provider of property data.

It represents some of the highest price gains seen in our area since at least 2008, in spite of the housing market taking a slight downward turn in the fall of 2022.

2022 started off still riding the high of 2021, with high sales volume and low mortgage rates before seeing a deceleration when interest rates reached highs of at least 7%, almost double what they were at the height of the housing boom.

“There’s a big supply problem and that is what is keeping profitability up,” said Jeff Lichtenstein, founder of Echo Fine Properties in Palm Beach Gardens. “With the low inventory situation, it’s to be expected that we don’t have a big drop in prices.”

The “Year End-2022 U.S. Home Sales Report” looked at seller profit margins, return on investments, and cash sales and found that overall, despite home values dipping in the last half of the year, sellers still made out pretty well.

On a national level, home sellers made about a $112,000 profit on the typical sale last year, a 21% increase from the year before. It was also a 78% increase from the profit made in 2020.

And sellers’ return on investment also jumped: There was a 51.4% return on investment compared to the original purchase price in 2022 on the typical home.

That’s compared to the 44.6% investment return in 2021 last year and 32.8% investment return for 2020.

And Florida had some of the highest increases in investment returns out of the areas studied by Attom Data.

“We had so much movement into Florida that was way up from previous years,” Lichtenstein said. “It makes sense in terms of profitability, if you have demand exceeding supply, it will drive up prices.”

On average, a seller had been in their home for about six years in South Florida before selling it.

However, it’s likely that home seller profits have peaked for the time being.

“I think we will see prices getting adjusted slightly in the next month as the season gets further along,” Lichtenstein said. “Buyers are waiting for the market to adjust or waiting until next year.”

© 2023 South Florida Sun-Sentinel. Distributed by Tribune Content Agency, LLC.

How Will ‘Renters Bill of Rights’ Affect You?

 By Brian O’Connell

The White House program didn’t take direct action to slow rising rental costs, and a future national rent-control policy is unlikely given prior court decisions.

NEW YORK – The Biden administration tries a new strategy on sky-high U.S. rents. The new White House “Renters Bill of Rights” isn’t exactly a nothing burger, but it doesn’t take any direct action against the sky-high cost of rentals in many sections of the U.S.

The new plan aims to give U.S. renters some relief in the form of government protection against landlords and rental property owners who might otherwise take advantage of any of the estimated 44 million U.S. rental consumers.

With the renter bill of rights, the White House seeks to:

• Guarantee safe, accessible, and affordable housing for renters.
• Mandate clear, concise, and fair rental leases.
• Offer education, enforcement, and enhancement of renter rights.
• Create the right for renters to organize. Provide eviction prevention, diversion, and relief for renters.

“The Renters Bill of Rights is a set of legislative proposals aimed at protecting the rights of renters and improving the rental housing market in the United States,” said Buying Jax Homes founder Nathan Claire. “The White House is trying to accomplish this by addressing issues such as eviction, affordability, and housing discrimination. The goal is to create a fairer and more stable rental market for renters by providing them with greater protections and rights.”

One standout aspect of the Renters Bill of Rights is the protection of renters from eviction without cause. The initiative could provide renters with greater stability and security in their housing, and prevent landlords from evicting tenants for arbitrary reasons.

“Additionally, the provision of access to legal counsel for renters facing eviction is another important aspect of the Renters Bill of Rights, as it would help renters better navigate the legal system and protect their rights,” Claire told TheStreet.

No direct action on rental prices

U.S. renters looking for specific relief from sky-high rental prices won’t find it in the Renters Bill of Rights. (U.S. rents rose 7.45% in 2022.)

“The ‘Renters Bill of Rights’ (RBoR) looks like a new directive to examine and investigate the housing market for unfair or illegal practices,” said BiggerPockets Money Podcast co-host Scott Trench. “It’s hard to find any new actions of consequence in the RBoR that aren’t items like a ‘request for information,’ ‘investigation,’ ‘process to conduct stakeholder outreach’ or ‘workshop,’ unless it is directing actions within government-controlled programs like HUD, USDA, or GSEs like Freddie Mac.”

The proposal’s specifics are somewhat vague, and are difficult to argue for or against – and that’s by design.

“The word ‘reasonable’ pops up frequently throughout the blueprint – and means very little in the current stages,” Trench said. “If a specific policy is recommended as a result of this Blueprint, we can begin discussing whether that policy is ‘reasonable’.”

As far as the proposal’s meat and potatoes, there’s no mention of direct strategies to curb rental costs that could really help renters.

“The RBoR mentions nothing about rent control, but says that increases in rent should be “reasonable,” Trench told TheStreet. “While this word means nothing specific at this stage, it’s not “unreasonable” for a reader of the plan to see it attempt at federal rent controls.

“But it’s a great way to ensure major media coverage.”

It’s not like the White House or Congress would support direct price intervention, such as rent price controls, in the U.S. rental market, anyway.

“The Supreme Court is more conservative. It is less inclined to let agencies assert authorities that Congress did not explicitly give them. Congress never empowered the FTC to limit how much residential rents may increase,” Cowen analyst Jaret Seiberg stated in a research note.

“It’s why we would expect the courts to reject this type of regime.”

An expanding U.S. rental market

Rental costs, like all housing costs, are a product of supply, demand, and administrative costs. While demand is high, supply hasn’t kept up – and that’s a problem for the real estate rental sector.

“The best way to help renters is to reduce the costs associated with supply and demand and keep them sustainably low to encourage more housing supply and a more efficient market (where all units are filled),” Trench noted.

The good news on this front is that the most housing supply ever is about to come online, with 900,000 multifamily units, and another 700,000 single-family units being built nationwide.

“This will come online in the South and West primarily,” Trench said. “That supply will absolutely have a softening impact on both rents and housing prices in many regions around the country.”

To further increase the supply of affordable housing, federal and state public policymakers could roll out initiatives such as tax incentives for developers to build more affordable housing units. Funding for non-profit organizations that build and manage affordable housing could also be made available.

“Additionally, implementing efficient zoning policies that allow for the construction of more housing units in urban areas can help to increase supply and drive down costs,” Claire said. “This, combined with protecting renters’ rights through measures like the Renters Bill of Rights, could help create a more stable and affordable rental market for renters.”

© Copyright 2023 Jackson Progress-Argus. All rights reserved.

U.S. Pending home sales rose for the first time in six consecutive months

 By Kerry Smith

Economist Yun says home sales’ low point “is likely over.”

WASHINGTON – December pending home sales increased for the first time since May 2022, breaking a report-after-report decline that lasted six consecutive months.

According to the National Association of Realtors® (NAR), the Northeast and Midwest recorded month-over-month declines, while the South and West posted monthly gains. However, all four U.S. regions saw year-over-year drops in transactions, with the West having the largest decline at 37.5%.

The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – improved 2.5% to 76.9 in December. Year-over-year, pending transactions dropped 33.8%. An index of 100 is equal to the level of contract activity in 2001.

“This recent low point in home sales activity is likely over,” says NAR Chief Economist Lawrence Yun. “Mortgage rates are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market.”

Pending home sales regional breakdown: The Northeast PHSI dropped 6.5% from last month to 64.7, a decrease of 32.5% from December 2021. The Midwest index shrank 0.3% to 77.6 in December, a decline of 30.1% from one year ago.

The South PHSI rose 6.1% to 94.1 in December, dropping 34.5% from the prior year. The West index advanced 6.4% in December to 58.6, decreasing 37.5% from December 2021.

“The new normal for mortgage rates will likely be in the 5.5% to 6.5% range,” Yun says. “Job gains will steadily become important in driving local home-sales markets. The South, in particular, is set to outperform the rest of the country, thanks primarily to better job market conditions … compared to other regions.”

© 2023 Florida Realtors®

Case-Shiller U.S. Home Price Index Update: Still Up by Year, Down by Month

 By Kerry Smith

In the latest 20-city index, U.S. home prices rose 7.7% year-to-year and dropped 0.6% month-to-month. But two Florida cities, Tampa and Miami, had the highest one-year increases.

NEW YORK – The latest S&P Dow Jones Indices released on Tuesday and covering November 2022 found a repeated pattern: The index measuring U.S. home prices year-to-year was up 7.7%, but the index measuring month-to-month changes found prices down 0.6% compared to the month before.

The price index is generally considered one of the most reliable and incorporates 20 U.S. cities, including two in Florida, Miami and Tampa.

In the U.S., prices dropped 0.3% month-to-month, from October to November.

In Miami, prices were down a bit less – 0.2% month-to-month – but seasonally adjusted, the Index found 0% change comparing October to November. Only two other cities, Chicago and Cleveland, reported no month-to-month change after a seasonal adjustment. All other U.S. cities in the study saw prices increase.

Miami also saw an 18.4% year-to-year price increase compared to the national average of 7.7%.

Tampa is the other Florida city used for price comparisons. The study found a 1.0% price drop month-to-month, seasonally adjusted to 0.9%. Year-to-year, prices in Tampa were up 16.9%.

“November’s best-performing cities were clustered in the Southeast,” says Craig J. Lazzara, managing director at S&P DJI. “Miami (up 18.4%) was the best performer, followed by Tampa (up 16.9%).

“November is the eighth consecutive month that one of our Florida cities has been the national leader,” he adds. “The month’s bronze medal went to Atlanta (up 12.7%), narrowly edging out Charlotte (up 12.6%). Unsurprisingly, the Southeast (up 15.1%) and South (up 14.3%) were the strongest regions and the West (up 4.0%) was the weakest.”

Lazzara says November 2022 marked the fifth consecutive month of declining home prices in the U.S.

© 2023 Florida Realtors®

Report: Housing Market Has Started to Recover

 By Kerry Smith

While the phrase “not out of the woods yet” is still used, Redfin economists say the market probably hit its cycle-low trough the second week of Nov. 2022.

SEATTLE – The housing market has begun to recover after hitting a low point in the second week of November, according to a report from Redfin.

The reason for Redfin’s estimation: The number of its customers requesting first tours has improved 17 percentage points from the November trough, and the number of people contacting agents to start the buying process has improved 13 points. Year-to-year, home tours and service requests are down 23% and 27% respectively, but that’s still an improvement from the November when both were down 40%.

Polled Redfin agents report that bidding wars are even back in some markets, including Central Florida, along with Seattle and Richmond, Virginia. Demand is still down from early 2022 highs, but Redfin calls it a “new phase” and says well-priced listings sell quickly.

Homebuyers return

In fall 2022, many buyers saw their dreams disappear when mortgage rates rose about 7%. But as a result of acclimating to 7% rates, recent drops closer to 6% now seem to more buyers like an unexpected opportunity. Some qualified buyers are even managing to score a rate in the high 5-percent range now.

“I’ve seen more homes go under contract this month than in the entire fourth quarter. Listings that were stagnant in November and December are suddenly getting one to two offers,” says San Jose Redfin agent Angela Langone.

Mortgage applications are up 28% compared to early November, and the typical homebuyer’s mortgage payment is down 10% (about $180) since fall.

The rise in demand has even led to bidding wars in selected metros. Eric Auciello, Redfin’s team manager in Tampa, has seen three modest single-family homes priced around $300,000 wind up in bidding wars in central Florida this month, with 16, 17 and 23 competing offers, respectively.

Further south, in Palm Beach, most well-priced homes are getting multiple offers, but competition is nowhere near 2021 levels, according to local Redfin agent Elena Fleck: “Homes in coveted locations with recent upgrades or renovations – those are the homes getting multiple offers.”

© 2023 Florida Realtors®

Golman Sachs Predicts Declines for 4 Cities – None in Florida

By Jeremy Tanner

Goldman Sachs 2023 prediction includes a 2008-type housing crisis, but only in four U.S. cities it considers “overheated”: San Jose, Austin, Phoenix and San Diego.

NEW YORK – Goldman Sachs is predicting dark days in 2023 for some of the pandemic’s red-hot U.S. housing markets. The investment bank shied away from predicting a nationwide crash, but warned that residents in four cities in particular could see plummeting values that echo the 2008 housing collapse, according to a note to clients obtained by the New York Post.

The “overheated” markets mentioned in the note were: San Jose, California; Austin, Texas; Phoenix, Arizona; and San Diego, California.

Goldman now believes that interest rates will remain high longer than expected, and notified clients that the bank is raising its forecast for the 30-year fixed mortgage rate to 6.5% for year-end 2023.

September 2022 marked the first time since the 2008 housing crisis that the average long-term mortgage rate surpassed 6%.

High mortgage rates, combined with soaring home prices, are currently driving some buyers away and contributing to a cooling housing market.

Austin, ranked the hottest real estate market in the U.S. in 2021 by Zillow, has fallen to 30th for 2023. The company’s report called the market “ice cold” and stated that homes are now spending an average of 68 days on the market, more than any other major U.S. metro. The Austin Board of Realtors has pushed back against the report, saying that there is still “incredibly high demand.”

But just how bad could things get in 2023?

Prices are expected to fall less than 2% in cities like New York and Chicago, according to Goldman, and even grow in others, like Baltimore and Miami.

In cities where valuations have drifted far from fundamentals, the decline is expected to be far more devastating, according to the note.

“This [national] decline should be small enough as to avoid broad mortgage credit stress, with a sharp increase in foreclosures nationwide seeming unlikely,” Goldman Sachs wrote. “That said, overheated housing markets in the Southwest and Pacific coast, such as San Jose MSA, Austin MSA, Phoenix MSA, and San Diego MSA will likely grapple with peak-to-trough declines of over 25%, presenting localized risk of higher delinquencies for mortgages originated in 2022 or late 2021.”

National Association of Realtors Chief Economist Lawrence Yun said in his 2023 forecast that he sees “hopeful signs” for the country as a whole and expects housing prices to be flat on average.

“Half of the country may experience small price gains, while the other half may see slight price declines,” Yun said. The exceptions, however, are markets like the San Francisco Bay Area, where San Jose is located, which he predicts will see potential 10-15% drops in 2023.

“Mortgage rates are the lifeblood that drive home sales,” Yun said. The average rate on a 30-year loan was 6.15% this week, nearly a full point below the 7.08% high of September 2022.

The same rate was 3.56% at this time last year, according to Freddie Mac.

© 2023 WKRG, Nexstar Broadcasting, Inc. All rights reserved.