Zombies Declines 19% in Fort Lauderdale

Zombie Foreclosures dropped 19% in Fort Lauderdale and Broward County over the past year. 35% in Palm Beach County, according to a report from RealtyTrac covering the Third Quarter of 2014.

“Zombies” is the term used to describe empty homes in the foreclosure process which have been abandoned by their owners.

According to the 3Q 2014 Zombie Foreclosure Report from Realty Trac, Broward County had 3,437 owner vacated properties at some stage in the foreclosure process, which shows a decline of 19 percent from the third quarter of 2013.

Palm Beach County had 2,749 so-called Zombie Foreclosures in the same period, down 35 percent.

Abandoned homes supposedly impact the real estate market negatively because they are not being maintained, and as a result can drag down home values in the neighborhood.

Nationally, Zombie Foreclosures declined almost 23% as the distressed property crisis continues working through the inventory of toxic mortgages issued through the housing bubble which lead to the real estate crash and economic recession. Across the United States RealtyTrac reports 117,298 abandoned homes in the third quarter of this year, which is down from 152,033.

Among metros, the reporting area of Miami, Fort Lauderdale and Pompano Beach ranked second in the nation with a total of 9,869 Zombies. Only the New York area, encompassing Northern New Jersey and Long Island, reported more, with 13,366 abandoned homes.

Florida led all states with 35,913 Zombies waiting to be repossessed, with 5 metro reporting areas in the national Top 10. Not only was Miami-Fort Lauderdale 2nd, but Tampa-St. Petersburg was 3rd, Orlando-Kissimmee was 6th, followed by Jacksonville 7th and Palm Bay, Melbourne and Titusville 10th.

In spite of the impressive sounding numbers, however, we do not expect to see a tidal wave of foreclosure properties hitting the market. Florida is a judicial foreclosure state, which means the banks must go through the courts. Frankly, the lenders and the courts are simply too backed up to process these foreclosures quickly.

With this many distressed properties out there we will obviously see a steady stream of REOs coming onto the market into the foreseeable future, but every month as new reports are issued foreclosure filings have decreased double digits over the previous annum. Following the housing crash Lenders tightened their standards (you THINK?), so there are no more toxic mortgages and we are now seeing the light at the end of the tunnel.

In addition, with home values rising steadily, fewer and fewer home owners are underwater.

Unfortunately, nobody is tracking statistics of how much money people have failed to make listening to all those fairy tales about the fabled “shadow inventory.”

When our market stabilized in 2010 I advised my clients to start buying. Some listened, made nice profits. Others started telling me about stories on the Internet about the Shadow Inventory – the number of homes in some stage of foreclosure. This was basically anybody who was one payment late on their mortgage. So called experts claimed it was a looming tidal wave of REO properties which would swamp the market, send prices plummeting once again. I tried explaining about Florida being a judicial state, that the courts could never process foreclosures fast enough for that to happen, but unsophisticated “investors” did not listen.

As a result they missed a market move of 20-something percent.

Going forward we still have considerable upside in Fort Lauderdale Real Estate. Though we have come up significantly from out bottom, we remain well below our market highs.

For a comprehensive in-depth analysis of the prospects for appreciation in South Florida housing you should check out the “InvestorCentral” page of my website at Fort Lauderdale Beach Property (dot com).

Bubble? What Bubble?

Some interesting numbers coming out lately.

First the U.S. Commerce Dept. released a report new homes sales fell 2.4% in July. Then the Standard & Poor’s / Case-Shiller Home Price Index for June decreased 13.2% from May and 14.7% from April.

Well, those were the headlines. But don’t lash yourself to the mast quite yet.

Delving a little deeper into the stats, it turns out according Commerce new home sales are actually up 12% in the past year, and the S&P / Case-Shiller HPI shows an annual increase of 8.1% nationwide.

You gotta love the way the media tries to make this sound like this is somehow bad news. Only a few short years ago people were praying for the market to turn around. Now an 8% increase is a disappointment.

Of course, 6-7 months ago, when property values were increasing over 20% year-over-year, the media was screaming about a new housing bubble.

So thank your lucky stars. Twice. This is good news on a couple fronts. As I’ve said before, we were bouncing off a very low bottom. It only made sense to see a sharp uptick. Now you see the rate of appreciation moderating, it shows common sense, that we are avoiding another housing bubble.

Even so, many people who are not sophisticated real estate investors continue to fall for this baloney. In 2010, when the housing market in Fort Lauderdale had stabilized and was just starting to inch up I told clients to start buying. Some did, have made a lot of money. But others starting quoting stories off the internet about the fabled “Shadow Inventory” – this looming wave of impending foreclosures which were going to swamp the market once again.

For the record, we’re still waiting for that wave.

Even more important in these new numbers – home values across South Florida increased 11.5% in the past year. Please note that is still significantly higher than the national average, which was 8.1%.

If anyone's counting (like me, for instance) that's 41% higher than the national average.

Meantime, I do not understand how anybody can be sneering at an 11.5% return on an investment secured by real property. With savings accounts paying less than 1% interest, I don't understand why you are not dialing my cell number right now.

2 Good Deals on Single Family Homes Around Fort Lauderdale

As a Fort Lauderdale Real Estate Agent people are always telling me: “If you ever see a good deal, let me know.”

Okay. Here are two interesting properties I have come across in my many travels.

First is a Pool Home East of Federal Highway in the highly regarded Cove Neighborhood of Deerfield Beach. This is NOT a Short Sale or Foreclosure, so you will be dealing with an actual real live human being (always a plus these days). It is Listed for just under $300,000, and you should be able to buy this property in the high $200s.

Click Here to See More

 A spacious 1,432 square feet, this 2 Bed / 2 Bath is situated on a very large lot (9,000 square feet), features a free-form swimming pool (which seems to be in pretty good shape) and a one car garage.

This home has a lot of potential, a lot of upside. What I like is the wide open layout, You walk in the front door and you have a large living room. Beyond that is a Florida Room which was obviously a screened-in porch at some point in the past which has now been enclosed.

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The Kitchen probably needs to be upgraded if you plan on living in it, however, if you were buying it as an investment to rent out it would not take a whole bunch of money to whip it into rentable shape.

If you are looking to purchase a single family home to rent out, you can give me a call or shoot me an email and I can go over how the numbers break down, but houses in that neighborhood rent annually between $2,000 and $2,400 per month

The Cove neighborhood of Deerfield Beach is located between the Intracoastal Waterway and Federal Highway south of Hillsboro Boulevard. This home's location is convenient to the beach, to shopping and restaurants. It is five minutes up US-1 to Boca Raton, and 10-15 minutes down to Fort Lauderdale.

The second property is a Waterfront Home East of the Intracoastal in Hillsboro Shores, which is one of the premier beachfront neighborhoods in South Florida. One canal has been cut into this neighborhood. People who live in homes on this waterway are literally minutes from the open ocean. From this home you are less than a mile by water from the open ocean.

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With 80 feet of waterfront the house itself is large (2,300 square feet) with a wide open layout. You are not going to find anything in this price range and this kind of location which does not need updating, and this property is no exception, however the upside to this home is huge. Plus, as long as you have the space, there is plenty you can do with it.

Hillsboro Shores is a wonderful community located directly below the Hillsboro Inlet. There is a voluntary H.O.A. which you can join for a small annual fee and you get a key to the gated private beach access.

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I have been watching this property, for it’s been on the market for a while. The Seller stuck to his price for a while, then lowered it $50,000 in May. The home still hasn’t sold, so the Seller has lowered his price once again. This is what I call a capitulation. He is apparently quite motivated at this point, and often in these cases the first Buyer who submits a serious written offer can come away with quite a deal.

I do not expect the home to last long on the market at its current Listed price.

If you are interested in pursuing the acquisition of either of these fine homes, contact me immediately.

Make Money Flipping Houses in Fort Lauderdale

As a real estate agent in Fort Lauderdale with a prominent internet presence I get one or two calls every week from prospective investors who have heard about all the money they can make “flipping” houses. Some have gone to seminars (some even PAID) where so-called experts tell them about fortunes others are making buying homes, fixing them up, selling them again for huge profits. Other people have simply heard stories. Like they went to a party once, met a guy who had a cousin who picked up a hitchhiker who was drinking in a bar one night, talked to this guy who used to work with somebody who read about it on the internet.

Well, according to the internet I win the Nigerian Lottery three times a week. I have to explain to these poor folks just how hard it is in Fort Lauderdale to make much flipping homes.

For one thing this is not exactly an original idea. The Fort Lauderdale real estate market is renowned. Fortunes have been made here. But it is a unique market, and you need to understand how it works.

Most people don’t realize how highly this market is shopped. At least 10 people get off every plane that lands at Fort Lauderdale International Airport, thinks: “Man! I would LOVE to live here!” And that’s during the warm months. When it’s snowing up north, people board planes in Chicago, Boston, Newark and Philadelphia, walk out of the terminal at Fort Lauderdale International into sunny 70-degree weather, start wondering why they should ever go back to that sub-arctic craphole they call home.

It never ceases to amaze me how so many people can want to live in South Florida, are then surprised to discover it’s not that cheap. Like they’ve never heard of supply and demand.

The Big Leagues.

If you want to invest in real estate in Fort Lauderdale, you are playing in The Big Leagues.

In Fort Lauderdale home prices stratify. An updated 3/2 pool home in a specific neighborhood is worth a certain amount of money. A property listed for less will invariably require repairs and/or improvements which, when added to the purchase price, will total about that same amount.

Now if you are in construction and you can do your own work, you might be able to save enough to create a small profit. If you are not in construction, however, you best remember that you are competing with people who are.

Earlier this year a foreclosure came on the market in Lighthouse Point for a 3/2 Pool Home listed at $285,000. The property needed around $50,000 of work, but everything else in the neighborhood was $400,000. I sent out an email blast to my Client List and one of my clients called, put in a cash offer of $315,000. We did not get the deal. In three days these Sellers got NINE offers.

Do the math. Add $50,000 of improvements to a purchase price of $325,000, along with $3-4,000 in Closing Costs, six months of Insurance (approximately $3,000) and (maybe $2,500) Property Taxes. Also remember at $400,000 you will be paying $24,000 in Real Estate Commissions.

How’s that working out for you?

Now I’m not hosting seminars. This is a real deal, a property that was on the market.

Here’s another one. A real deal, right off the MLS.

Clickon this link to see the actual MLS Listings.

This home was in Imperial Point, a nice neighborhood in Northeast Fort Lauderdale. It was purchased on March 28th for $263,000. You can see the before and after photos. The Investor put in a new Kitchen with granite and stainless steel, new baths, painted, re-coated the pool, put new carpets in the bedrooms. Looks like around $40,000 worth of work. In addition, there were Closing Costs, Insurance and Property Taxes, which might be another $8,000, and at a Sale price of $350,000 there will be $21,000 in Real Estate Commissions. That means after selling the property for $350,000 the Investor might’ve made a profit of $18,000.

Honestly, this is about the largest profit we have seen anyone make lately.

Now there are ways to make better money in this market and I will be more than happy to discuss them with you if you give me a call. To really prosper in South Florida you need to work with an accomplished expert who knows this dynamic real estate market inside and out. Simply flipping houses is probably not going to get you there.

The Relative Inevitability of Appreciation in Fort Lauderdale Real Estate

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 Fort Lauderdale 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 Fort Lauderdale, the primo location 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 the east side of Fort Lauderdale, 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 Fort Lauderdale 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.