Once again, analyzing these numbers illustrates why buying property in Fort Lauderdale is such a smart investment.
According to this report home values in the Sunshine State appreciated 7.5% in the 12 month period which concluded in September, 2016. That number tops the national average of 6.3% and ranks Florida the 6th best state in the country in home appreciation.
Delving a little deeper
into these stats, however, it is particularly intriguing to look at the
forecasts for the upcoming year. CoreLogic projects property values in Florida
will increase 7% over the next annum. That ranks 3rd best in the U.S. behind
California and Nevada, and illustrates the true strength of the Sunshine State's
real estate market.
Over the past few months
the Pacific Northwest has been very hot. In this Setember 2016 HPI the highest
home price appreciation was found in Washington state (10.3%), Oregon (10.1%),
Colorado (8.6%), Utah (7.8%) and Idaho (7.7%).
Florida ranked 6th at
7.5%.
Well, every dog has their
day. Anytime you see Utah leading the nation in anything other than great salt
lakes you have to know there's a story in there somewhere. In large part I
think this is because home prices nationwide have recovered unevenly. The whole
country took a hit when the nationwide real estate market collapsed. It took a
while to stabilize. The more desirable locations like Florida and California
snapped back first, then the recovery spread across the rest of the nation,
through the Northeast, Midwest and the West.
Still, while other states
cycled in and out of the Top Five, the Top 10 in home price appreciation,
Florida has remained near the top of the rankings. Maybe it wasn’t Number One
in the nation, but as these reports were released, month after month, year
after year, the Sunshine State was always in the Top Five.
A couple years ago the
Midwest was hot. Wisconsin ranked near the top of the nation high in home price
appreciation. Before that it was the Southwest; the highest increases in
property values were found in Arizona. Before that it was the Northeast – New
York and New Jersey.
Like hotshot gunfighters
riding into town, looking to make themselves a name, these states came and
went. Meantime, month after month, year after year, Florida remained high on
the list.
The real insight in this
latest report can be found not only considering at the appreciation over the
past year, but looking at the CoreLogic forecast for the upcoming annum.
Washington reported a
home price increase of 10.3%, but CoreLogic projects only 5.8% growth over the course
of the upcoming year. Oregon homes went up 10.1%, yet the forecast for the next
annum is only 6.1%. Colorado showed an 8.6% increase; projection for the next
12 months is 5.7%. Utah and Idaho reported increases of 7.8% and 7.7%
respectively for the year ending in September 2016, but over the next annum
home values in those states are only projected to rise 5.1% and 4.9%.
According to this
CoreLogic HPI home prices in Florida rose 7.5% in the 12 months which concluded
in September, 2106, but are projected to increase 7% over the next year. That
ranks 3rd in the United States.
What does this tell you? First,
it is relatively obvious these other markets are experiencing a temporary
uptick in high appreciation as the housing recovery cycles through their geographic
region. Secondly, that Florida's real estate market offers a much more
consistent, reliable appreciation. This is what has always made the state, and
South Florida especially, such an attractive location for investors, and
frankly anyone who wants to make money in real estate.
Florida is an
appreciation driven market, which has always operated on a boom and bust cycle.
In a normal year home prices will typically appreciate 7-8%. Perhaps once a
decade the market spikes and you’ll see property values increasing 10-12%,
sometimes even more, but those times are usually followed by periods of
consolidation when the market cools.
In Fort Lauderdale and
Broward County, specifically, home prices are projected to keep rising at a
significant rate. It is all but inevitable. Not only because Fort Lauderdale is
a tropical paradise with no state income tax and a relatively low cost of
living where you can swim in the ocean all year round and you must remember to
turn on your car heater every so often, not because you need it, but just to
keep it from rusting through.
It's a simple matter of
supply and demand.
There is an old adage
which is usually recited about beach front property: “They're not making any
more of it.”
That has never been truer
than it is in Fort Lauderdale, the primo location in the state of Florida.
There is only so much land. Broward County is not large, approximately 27 miles
north and south, perhaps 45 miles east to west. However, around 60% of this
geographic area is comprised of 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. The entire county is 1,320 square miles with 115 square
miles of waterways, but when you boil it all down this leaves only 471 square
miles of developable dry land.
At this point this
developable land is now 99.99% developed. There are no more swaths of scrub
forest east of US-27 and the Sawgrass which can be bull-dozed into housing
projects. Occasionally you see quotes from developers bemoaning the fact there’s
no more chunks of empty land. This is like a whaling boat Captain complaining
it’s getting harder to find Sperm Whales. You know, pal, if you weren’t there
SHOOTING THEM WITH HARPOONS, might be a few more of them around.
Still, drive the Sawgrass
Expressway 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.
The lack of land,
however, is not stopping the influx of people moving on down. Florida recently surpassed
New York as the third most populous state in the nation. This trend will
undoubtedly continue as Baby Boomers across the U.S. retire and seek a warmer
climate. You never have to shovel sunshine off your driveway. Broward County is
simply the most desirable part of the state. 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 over a half
million more residents – an additional 31% – moving into the same 471 square
miles of developable dry land.
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) The population is growing.
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 will undoubtedly be greater in prime real
estate such as waterfont homes, oceanfront condos, houses and townhomes in the
better nieghborhoods along the coast.
You can read a more detailed analysis of the prospects
for appreciation in Fort Lauderdale property values by clicking on this link to
the Investor Central page of my website at
Fort Lauderdale Beach Property (dot com).
