South Florida Housing Market Brings the Heat
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CASE STUDY: BOCA RATON REFLECTS PRESSURES THROUGHOUT NATIONAL INDUSTRY By M AT T W EAVER , S PECIA L TO M ORTGAGE BAN KE R M AG A ZIN E
he trends happening across the country in several major housing markets—low housing inventory, higher sales, soaring home prices, and competitive bidding on homes—are happening in south Florida and the area of Boca Raton. In other vacation destinations like Cape Cod, Lake Tahoe, and even President Biden’s vacation home of Rehoboth Beach, Delaware, sales and home prices have picked up substantially. However, South Florida is really heating up as homeowners flee big cities in the Northeast for warmer climate—a trend due, in part, to the COVID-19 pandemic. The National Association of Realtors reported existing-home sales fell 2.2 percent in the Northeast from December 2020 to January 2021 and 4.4 percent for the West region. In the South, however, for the same timeframe, existing home sales grew 3.2 percent. In our home of Boca Raton, sales have soared by nearly 50 percent from one year ago. Meanwhile, home prices have increased by nearly 15 percent over the past year and housing inventory is down by nearly 50 percent. This is an unprecedented level of activity, and it’s happening throughout south Florida, in Palm Beach, Miami Beach and Key West. Further northwest, inside and outside of Tampa, home prices are also growing substantially. It probably goes without saying that it is full steam ahead for originators, but it also reminds lenders of how valuable their real estate relationships are—because none of us would be able to survive without them.
WHY EVERYONE LOVES SOUTH FLORIDA
Boca Raton has always been a popular destination for retirees and people looking
24 MORTGAGE BANKER | MAY 2021
for a second home and warmer weather. But right now, we are seeing unparalleled demand from homebuyers relocating from New York, New Jersey and even from California. This past summer, ICG World’s Miami Report reported that nearly 1,000 people were moving to Florida every day. There are other factors fueling the local housing market besides the search for a sunnier climate. For example, most of Florida has remained open during COVID-19; there are very few restrictions involving gyms, restaurants, and other public spaces. It’s also one of the most taxfriendliest states in the country, as there’s no personal income tax and no inheritance tax. But the droves of people moving to our state is creating some pandemonium in the housing market. Boca Raton is a microcosm of a national trend. Homeowners can work remotely, from anywhere in the country as long as they have a computer, company software and a secure Wi-Fi network to guide them. As a result, remote work has opened the door to moving to not only closer to a vacation or possibly a retirement destination but, in some cases, closer to family. In Boca Raton, like other areas of South Florida and across the country, housing inventory is at the lowest level we’ve
ever seen, and multiple offer situations are occurring at every price point. It’s not uncommon to get five, 10 or even 15 offers on a property. Homebuilders have been caught completely off-guard as well. As with other areas of the country, housing developers and homebuilders need to put out more product, but it’s not happening fast enough. Local buyers are particularly struggling right now. If you’re trying to sell your home to move up to a bigger home, you’re suddenly competing with a large number of out-of-state buyers for a smaller number of properties. Many such buyers have no idea how long it’s going to take them to find the right house and get an offer accepted. For this reason, post-settlement agreements, which enable home sellers to continue living in their home until they find a new one, are becoming extremely popular.
LOYALTY AND TRUST
Most lenders work at building and nurturing real estate partners. But in this climate, the bond between agent and lender has never been more essential to survival. In fact, as challenging as the current market is for lenders, it’s the real estate agent who is tasked with putting and keeping deals CONTINUED ON PAGE 26
IT PROBABLY GOES WITHOUT SAYING THAT IT IS FULL STEAM AHEAD FOR ORIGINATORS, BUT IT ALSO REMINDS LENDERS OF HOW VALUABLE THEIR REAL ESTATE RELATIONSHIPS ARE— BECAUSE NONE OF US WOULD BE ABLE TO SURVIVE WITHOUT THEM.
