REAL ESTATE OVERVIEW
The historically low interest rates have gone a long way into injecting added competitiveness to Greater Fort Lauderdale’s real estate market. According to Freddie Mac, the average commitment rate for a 30year, conventional, fixed-rate mortgage decreased to 2.94% in August 2020, down from 3.02% in July 2020, while the average commitment rate across all of 2019 was 3.94%. Low interest rates, especially historically low rates, create a highly competitive purchasing environment where sellers have multiple buyers placing bids on their homes. Case in point, the Miami Association of Realtors reported South Florida’s residential sales reached $44.1 billion in 2020 with the aggregate sales of its three counties. As long as rates remain at this historic low, which the Fed has signaled is likely until at least 2023, the expectation is Fort Lauderdale and Broward County in general to remain primarily a seller’s market. Despite this performance, COVID-19 did push up mortgage defaults and delinquencies in the residential market, although not as badly as had been expected at the outset of the pandemic. As of October 2020, CoreLogic reported 8.4% of South Florida mortgages were either seriously delinquent — at least 90 days past due — or in some stage of foreclosure. In comparison, the figure was at 7.1% in June 2020 and just 2% in July 2019. Affordability challenges As is the case with any booming region, the housing performance in Broward County has not been without its challenges. The rapid appreciation of home values raises serious questions over the viability of maintaining housing affordable, parallel to costs of living. Moreover, new construction is also facing rising materials and construction costs, which ultimately are passed onto consumers. In December 2020, Fort Lauderdale’s Laudertrac, the Commission Priorities Tracker for 2020, reported a pipeline of affordable housing totaling 331 units from four projects. “This has to be a top priority,” said Kim Briesemeister, principal at Redevelopment Management Associates, when asked by Invest: about the role of affordable and workforce housing in the firm’s approach to community redevelopment. “Sometimes, unfortunately, some cities have a disproportionately high amount of low income tax credit housing, and when those projects are clustered, there can be a negative effect. It’s important to ensure these housing types are well-distributed. Our CRA client in Pompano Beach just approved a residential property on the east side of the federal highway that will include 53 workforce units. That is fantastic because people who
Perspectives: Industry trends & changes
Jeff Burns Founder & CEO – Affiliated Development Just 4% of workforce-level renters live in product that was built after 2010. This means 96% of our workforce population in South Florida is living in older, substandard housing. Our goal is not just to offer better rent levels, but also a first-class luxury experience.
Tom Godart Managing Director – Godart Real Estate Investments Senior housing is a difficult place to play these days, for all the obvious reasons. Occupancy is falling in existing senior housing facilities, although there’s still a built-in demand to build luxury senior housing in urban cores. Financing is going to be difficult in those sectors, I believe, because of what’s going on with COVID. The largest number of COVID cases came out of the senior housing world.
Lyle Stern President– Koniver Stern Group Pre-COVID, we were seeing stores adopt technology platforms where you could go into the store, pull up inventory online and order online. We anticipate seeing more of that, added to stores carrying less merchandise. There has been a big lesson learned in terms of inventory, how you do it and how much you need, as well as what happens when you get stuck with too much of it.
Tom Stravecky President, Broker & Owner – ERA Infinity Properties Somebody who might have been perfectly satisfied with a two-bedroom house now absolutely wants three. They need a place to set up home offices or a den. Similarly, we are seeing an increased demand for homes with guest houses or mother-in-law suites. Those spaces are now being used as work spaces, especially in a household where both adults may be working.
Jaime Sturgis Founder & CEO – Native Realty We will continue to grow the residential and property management divisions. They are complementary to our clients and they help us be more vertically integrated. We will continue to grow the commercial division, with a focus on quality over quantity. We are starting to see activity pick back up and it seems like we have rounded a corner. We are cautiously optimistic that things will continue to get better.
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