The pros and cons of a booming residential market

The pros and cons of a booming residential market

2022-07-14T04:25:42-04:00August 26th, 2021|Economy, Greater Fort Lauderdale, Healthcare & Life Sciences|

John Knox Village

Writer: Cameron Saunders

broward3 min read August 2021 —The pandemic spurred a movement away from densely populated metropolitan areas such as New York and San Francisco. Florida has been one of the primary beneficiaries of this movement as people have recognized all the state has to offer. This increased demand has created a perfect storm that has sent Broward County home-prices skyrocketing, raising some serious questions about housing affordability in the region.

Broward County home sales have gone through the roof, growing by 103.1% year-over-year, from 5,827 to 11,832. Other areas of the residential real estate market have shown similar growth: single-family home transactions were up 67.7% (from 3,112 to 5,219) and condo sales rose 143.6% (from 2,715 to 6,613). Indicative of the types of people drawn to Broward, the luxury market did even better, with single-family homes at $1 million and up, surging 288.4% year-over-year and luxury condo sales jumping a whopping 385.7%. 

Naturally, this growth is reflected in prices. From May to June 2021, for instance, the median price of a single-family home grew by 7%, from $463,750 to $498,203 (the price for condos increased by 5% in the same time).

Inventory has not been able to keep up with demand. For single-family homes, there is 1.4 months worth of inventory and 2.3 months for condominiums. This illustrates a significant imbalance in the market, where six to nine months worth of housing inventory is deemed healthy. In one year, from 2Q20 to 2Q21, the number of active listings went from 12,088 to 6,256, representing a drop of nearly 50%. 

Such numbers are making it especially hard to buy homes right now in Broward County. People are paying more than the asking price and preference goes to cash buyers. It is a telling fact that, in 2Q21, the median percent of the original list price was 100% for single-family constructions and 96.5% for condos. The time from listing to contract is down. 

The strong housing market in Broward, as good as it may be for many areas of the economy, underscores the housing disparity across the county. Many have reported that growth in the South Florida housing market, where a full-time worker now has to earn $29 an hour just to afford a two-bedroom apartment, has been pricing out lower income residents. The picture is even bleaker for renters, who constitute 31% of Broward County residents and would need to work more than one full time job to afford a $1,500-a-month rent. 

Affordable housing construction is fast becoming a priority. 

One such project, in which the Housing Trust Group will work with the Broward Housing Authority to construct housing in Deerfield Beach, is hopefully a harbinger of more to come. On a site that was formerly public housing (demolished 15 years ago), the project, currently in the rezoning process, would see 155 homes built with the majority of apartments going to people earning 60% of the median income. The design has also allowed room for a community building, a playground and a dog park. 

While more projects such as this will be necessary if the housing shortage is truly going to be addressed, there are already signs that balance is returning to the market. Mortgage rates are moving up, there are more new builds under construction, and, with more sellers listing their properties, home prices have already started coming back to earth. The question remains: will Broward County continue to be a hot market in the coming years? All signs point to yes.