No More Sperm Whales in Fort Lauderdale

As home construction picks up around the nation, it remains at a low level around Fort Lauderdale.

According to the U.S. Commerce Department housing starts increased 26.6% in June (2015) year over year, and Building Permits were up 30% through that same period.

Around Fort Lauderdale and Broward County, Florida, however, home building is hovering around an all-time low. From 1992 through 2006 the South Florida reporting area – which encompasses Miami-Dade, Broward and Palm Beach Counties – typically averaged between 20,000 and 30,000 housing starts per year.

Now, those counties average around 7,000 housing starts per year, with Broward accounting for the fewest – only a projected 1,200 for 2015.

There’s a very good reason for this – we simply don’t have any more land.

In all Broward County there is only 471 miles of developable dry land and at this point it is essentially all developed.

Saw an article last year where a developer was bemoaning this fact, explaining wistfully: “There aren’t any more open green fields.”

That’s like whaling boat captains complaining it’s getting harder to find sperm whales.

Well, pal, maybe if you weren’t out there, you know – shooting them with HARPOONS – there might be a few more of them around.

Ponce de Leon landed in Florida in 1513. Developers discovered it in the Sixties. The U.S. Census in 1960 reported the population for Broward County at 60,000. Ten years later in 1970 the population was 600,000. Through the 70s and 80s, aside from tourism and serving alcohol the only industry in South Florida was construction. People moved to Fort Lauderdale and got jobs building houses for the next bunch of people who showed up. Developers drained swamps, bulldozed scrub forest, built miles of tract homes. Eventually they reached the edge of the Everglades, were not allowed to go any further, since it would be cutting off our water supply.

As a result Fort Lauderdale is now a perfect example of that old real estate adage – they’re not making any more of it.

Broward County, Florida

Broward County is fully developed, but people keep moving here from those sub-arctic urban crapholes up north. Late night comedians might crack jokes about Florida, but you don’t have to shovel sunshine out of your driveway. After two brutal winters folks up north are now bracing for what is predicted to be a “Godzilla” El Nino, so the exodus to the South is not likely to slacken. Our population stands currently around 1.75 million and some projections expect this number to climb to 2.3 Million by the early 2020s. That’s an increase of 30% within the next 5-6 years.

The effect this shall have on our property values should be truly profound.

The Fort Lauderdale area is quite simply the best part of Florida. It is not a Third-World urban city like Miami, nor the tractless waste which is Palm Beach. Broward County is not large, only 1,323 square miles. The western portion of the county, however, over 60% of it, is wetlands – the Everglades – which is the water supply for all South Florida, and therefore cannot be developed. Boil it all down that leaves only 471 square miles of developable dry land, which as we’ve pointed out is fully developed.

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 should be markedly greater in prime real estate such as waterfont homes, oceanfront condos, houses and townhomes in better neighborhoods along the coast.

In my professional opinion we are looking at a pretty good stretch into the foreseeable future in South Florida – barring Acts of God, asteroid impacts and/or the total collapse of Western Civilization. Bouncing off the bottom real estate values have already come up sharply, then consolidated. Better locations throughout Fort Lauderdale and Broward County are up almost 30% in recent years. Don't listen to skeptics who act like this is somehow a bad thing. You are not going to get 20% a year on your investment. That is simply unsustainable. Still, property appreciation might average 8-10% over the next four to five years. If that's not good enough for you, good luck and God bless.

In 2010 I started telling customers to start buying. The housing market in Fort Lauderdale had stabilized, had started inching upward. I told people as soon as real estate investors noticed prices heading up in South Florida we’d have a mini land rush. Well, I was right. Customers who listened have already seen nice appreciation.

Others, however, started citing stuff they were reading on the Internet about the “Shadow Inventory” – this mythical tidal wave of impending foreclosures that was going to swamp our market like a tsunami. Well, according to the Internet I win the Nigerian Lottery three times a week. Again, I tried to explain with Florida being a judicial foreclosure state there was simply no way the banks could ever release waves of REO properties again, especially once they got caught in that whole “Robo-Signing” scandal. Meanwhile, statistics released by leading real estate data sources such as CoreLogic and RealtyTrac showed foreclosures dropping by double digits month after month. The latest stats (the CoreLogic Foreclosure Report for June, 2015) shows the foreclosure inventory in Florida dropped 54% year over year, and completed foreclosures declined 17% in that same people.

So now those people are sitting in a little rubber raft on the beach in rain slickers and floppy hats, waiting for the big wave, while customers who listened lounge on the balcony of their luxury oceanfront residence, sipping champagne and laughing at those crackpots in the rubber rafts.

For an in-depth analysis of how the projected increase in the population of Fort Lauderdale and Broward County should effect our home values, check out the “Investor Central” page of my website at Fort Lauderdale Beach Property (dot com).