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ISSUE: South Florida's skyrocketing housing prices

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Posted on Tue, Dec. 28, 2004

http://www.miami.com/mld/miamiherald/business/10510532.htm

THE ECONOMY

S. Florida prices for homes are going up, up and up

Home prices are soaring throughout South Florida, leading experts to wonder whether the boom is too much of a good thing.

By GREGG FIELDS

[email protected]

Home prices continue to surge, making South Florida a great place to own a house but a tough place to buy one.

The median price of an existing single-family home is shooting above $300,000 in Palm Beach and Broward counties, and the price in Miami-Dade is not far behind.

November sales figures released Monday by the Florida Association of Realtors reveal an unrelenting bull market in housing across the state, even in areas ravaged by hurricanes last summer.

Broward saw prices rise 28 percent in the past year, from a $237,200 median sales price to $303,300. It was a record for Broward, and only the second time median prices ever surpassed $300,000. The first was in July. (Median is the point where as many homes are priced above as below.)

Palm Beach County rose even faster, going to $343,300 from $252,800 in November 2003, a 36 percent increase.

And Miami-Dade climbed 25 percent, to $290,800 from $233,500.

Nevertheless, there are signs that demand may be leveling off, or even falling, in part because the higher prices are making it tougher for families to qualify for mortgages.

Furthermore, some experts note there is a downside to home prices' meteoric rise. For one thing, it tends to lock out from ownership those renters and young people whose incomes have not kept pace.

Stephanie Reneau, a Broward tech worker, is one example. She's been looking for a home to purchase since last summer. A single-family home, she says, is clearly out of her price range.

She has switched her search to town homes but still finds the prices daunting. ''They go for $200,000 or $225,000,'' she said. ``That's just too expensive. I've given up for awhile.''

DIFFICULT ASSET

Although the boom has produced thousands and even hundreds of thousands of dollars in home equity for families, that asset can be difficult to use. That's because the profit from selling in a hot market would likely go into the cost of buying a replacement at an inflated price, particularly once property taxes are factored in.

More broadly, high home prices could cause companies to look elsewhere when making relocation or expansion decisions.

''It does create the issue of attracting companies and jobs here,'' said Miami economist Tony Villamil. Much of the vitality of the Florida housing market, he said, comes from affluent retirees and foreign investors from Latin America and the Caribbean. Florida, for instance, now has more Puerto Ricans than live in metropolitan San Juan.

EXPENSIVE PLACE

But for those who live and work full time in Florida, housing makes the area ''a high-cost location,'' he said.

Frank Kowalski, a Miami Realtor and president-elect of the Florida Association of Realtors, echoed Villamil's sentiments.

''We're very concerned about affordable housing across the state,'' he said.

Statewide, Florida's median home price of $192,400 is roughly comparable to the national average of $187,000.

But Florida prices have been rising in excess of 20 percent annually, versus an 8 percent gain nationwide.

Furthermore, South Florida and other markets like Naples -- the state's most expensive, at $369,900 -- are well above the national average.

There are signs the flood of buyers is beginning to abate in South Florida, perhaps because of high prices. The number of sales in Broward declined by 3 percent in November and by 12 percent in Palm Beach. Miami-Dade was flat, with just one more sale than a year earlier.

Statewide, the number of sales climbed 9 percent over the previous November.

But the forces pushing Florida home prices upward appear likely to remain powerful factors in 2005.

These include rapidly growing population, with the state population rising by roughly 8,000 a week.

In urban regions like South Florida, the increasing population is putting a premium on existing single-family homes, which are in relatively short supply. In contrast, a number of observers have suggested other forms of housing, like high-rise condos, could be headed for a glut because of a construction boom.

CONDOS DIDN'T COUNT

In its latest survey, the Realtors group looked only at existing single-family homes, not condos or newly built houses.

Finally, in some sections of the state, like Sarasota and Stuart, growth management initiatives are creating a host of impact fees on new homes -- prodding developers to focus on building upscale housing whose sale prices can better cover the higher costs.

''Our values are up 85 percent over the last four years and 10 months,'' said Russell Grooms, president of the Florida Association of Realtors. ''That's much higher than the cost of living has gone up. Values, believe it or not, even went up in August and September,'' when four hurricanes strafed the state.

HURRICANE IMPACT

In fact, the ravages of Charley, Frances, Jeanne and Ivan are imperceptible in the housing market of the afflicted areas.

In the Fort Pierce-Port St. Lucie area, for instance, home prices in November were up 25 percent from a year earlier and the number of sales climbed by 7 percent. Punta Gorda prices are up 20 percent in the last 12 months while sales volume is up 6 percent.

''For whatever reason, people still want to live in Florida,'' Grooms said. ``If you have choices, Florida is an option people like.''

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http://www.bizjournals.com/southflorida/st...24/daily23.html

S. Fla. home price rise outpaces state in Dec. '04

Both for the last month and the entirety of 2004, the median sales price of a South Florida home increased faster than the statewide median increase. Also, state numbers continued to show increases in the number of homes sold, while local numbers continued to fall, except in Miami, where the year-end number was higher.

In December, home sales prices increased from 22 percent to 31 percent in South Florida metropolitan statistical areas. The numbers, from the Florida Association of Realtors, tied or outpaced the statewide price increase, while the number of homes sold in the area fell.

With both the highest price increase and the largest decline in Realtor sales, West Palm Beach-Boca Raton reported a median sales price of $339,300 in December, up 31 percent from $259,800. At the same time, the number of homes sold declined 19 percent, to 1,171 homes from 1,439 homes.

With the next-highest median price increase, Fort Lauderdale Realtors reported selling 1,122 homes in December, about flat with the 1,282 homes they reported selling in December the year before, but at prices up 26 percent, to $302,800 from $240,900.

The median price in Miami matched the statewide median price increase of 22 percent. In Miami, that brought the average home price in December to $297,900 from $245,100. The number of homes sold declined 1 percent, to 1,098 homes from 1,105 homes.

Statewide, realtors reported the number of sales was up 1 percent, to 20,684 homes from 20,405 homes, with the median price for those homes up 22 percent, to $195,900 from $160,600.

Frank Kowalski, 2005 FAR president and broker-owner of Metro Dade Realty in Miami, said buyers from all over the United States, Canada, Europe and Latin America are attracted to Florida, and not just because of the climate.

"While median sales prices continue to rise - in part due to demand - residences in Florida offer great values for buyers worldwide," he said.

For the year, the largest South Florida price increase continued to be in West Palm Beach-Boca Raton. The area had a 25 percent increase in median sales prices during 2004, reaching $300,900 at year-end, up from $241,300 at year-end 2003.

The number of homes sold in the area fell by 1 percent for the year, to 15,186 homes from 15,417 homes.

Miami was a couple of ticks down in median sales price increase, falling 23 percent to $273,900 from $223,100, for year-end. The number of sales in that area actually increased, though. The less-than-a-percentage-point raise for the year was to 12,622 homes from 12,571 homes.

Fort Lauderdale's median price increase was just one percentage point down from Miami's, at 22 percent. That pushed the median price of a home in the area to $279,500 from $228,600. The number of homes sold in Fort Lauderdale declined 6 percent, though, to 14,266 homes from 15,163 homes.

Statewide, the median price of a home increased 17 percent, to $182,400 from $155,800. The number of homes sold during the year increased 11 percent at the state level, to 242,234 homes from 218,739 homes.

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Huge demand is behind soaring home prices in S. Florida

by Robyn Friedman, Special to the Sun-Sentinel

Posted January 31 2005

Looking for an affordable home? Join the club. Housing affordability across the nation has declined substantially since the beginning of 2004, and nowhere is that more evident than in South Florida.

"The market in Broward County is very good for sellers, but it's difficult for buyers," said Colleen Stobinsky, manager of the Coral Springs office of Prudential Florida WCI Realty, who has 197 agents working for her. "There's no inventory -- we have 10 buyers for every property."

That lack of inventory is leading to price wars for the homes that are on the market, with houses selling for more than their listing price.

Strong demand for housing has been spurred by low interest rates. The average 30-year rate in 2004 was 5.84 percent, the second-lowest annual average since Freddie Mac started tracking interest rates in 1971; the lowest was 5.83 percent in 2003. Those low rates, combined with the declining inventory of homes in South Florida because of lack of land and the ongoing population growth, have led to a severe lack of affordable housing.

Many people are being pushed out of the market. The median sales price of an existing single-family home was $302,800 in Broward County in December 2004, an increase of 26 percent over the year before. The price for a similar house in Palm Beach County rose to $339,300, up 31 percent from the prior year. In Miami-Dade, the median sales price of an existing single-family home was $297,900 in December, up 22 percent.

Interestingly, Stobinsky said that in Broward County, affordability is not really the problem, as those people selling homes have "huge equity" that they can put into a new home. "But I'm in an affluent area," she admitted.

The situation in Palm Beach County is a bit different, and buyers are actually experiencing sticker shock when they go shopping. "The market is almost unaffordable for those trying to buy a single-family home here," said Gail Bass, a real estate agent with Keller Williams Realty in Boca Raton.

Bass said that one of her clients is a corporate transferee from Illinois. He sold his four-bedroom house there for $165,000. "He will have to pay twice that much to get something here," she said.

Some people unable to find affordable homes are turning their sights elsewhere -- many to St. Lucie County and parts north, where prices are lower (the median price of an existing single-family home in the Fort Pierce/Port St. Lucie area was $216,700). Others are settling for condominiums, smaller homes or those in need of renovation instead.

Are there any affordable homes left? Well, yes, if you're willing to travel. According to the National Association of Home Builders, Lima, Ohio, was the most affordable housing market in the country in the third quarter of 2004, the latest date for which statistics are available. In Lima, 90.5 percent of the houses are affordable to families earning the area's median income of $52,500. The median sales price of all homes sold in Lima during the third quarter was $82,000.

Ranked just after Lima for affordability were Cumberland, Md., and Mansfield, Ohio, for small cities; Saginaw/Bay City/Midland, Mich., Lansing/East Lansing, Mich., and Canton/Massillon, Ohio, for mid-sized cities; and Grand Rapids/Muskegon/Holland, Mich., and St. Louis, Mo., in major metropolitan areas.

Earning the dubious distinction of least affordable housing market was the metropolitan area encompassing Santa Barbara, Santa Maria and Lompoc, Calif., where fewer than 5 percent of the homes sold were affordable to families earning the area's median income, and the median sales price was $447,000.

Housing scramble

In the Southeast, the least affordable housing market is Naples. No city in Florida is ranked in the top 25 most affordable areas.

Housing Opportunity Index, Third Quarter 2003

Most Affordable Metro Areas

Lima, Ohio 1

Saginaw/Bay City/Midland, Mich. 2

Lansing/East Lansing, Mich. 3

Canton/Massillon, Ohio 4

Youngstown/Warren, Ohio 5

Cumberland, Md. 6

Mansfield, Ohio 7

Rockford, Ill. 8

Springfield, Ill. 9

Grand Rapids/Muskegon/Holland, Mich. 10

Least Affordable Metro Areas

Santa Barbara/Santa Maria/Lompoc, Calif. 162

San Diego 161

Salinas, Calif. 160

Los Angeles/Long Beach 159

Orange County, Calif. 158

Yolo, Calif. 157

San Luis Obispo/Atascadero/Paso Robles, Calif. 156

Santa Cruz/Watsonville, Calif. 155

Merced, Calif. 154

Stockton/Lodi, Calif. 153

Fort Lauderdale 119

West Palm Beach/Boca Raton 112

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Posted on Wed, Mar. 02, 2005

REAL ESTATE

U.S. housing prices go up; Fla. holds 5th highest rate

Housing prices rose at the fastest clip in 25 years -- 19 percent in Florida -- federal regulators said Tuesday in their quarterly House Price Index report.

BY JOSEPH REBELLO

Dow Jones Newswires

Florida house prices rose 19 percent in 2004, the fifth-highest rate of price appreciation in the country, according to the government's most closely watched barometer of the housing boom.

Around the state, the West Palm Beach-Boca Raton area experienced the highest increase, at 23 percent, ranking sixteenth in the nation among metropolitan areas.

Fort Lauderdale-Pompano Beach ranked 24th with 21 percent; Miami-Kendall ranked 31st with 20 percent.

U.S. house prices rose in 2004 at the fastest clip in 25 years, despite a slowdown in the last three months of the year.

The average price of a single-family home financed through Fannie Mae or Freddie Mac climbed 11.2 percent over the course of 2004, the highest annual rate since 1979, federal regulators said Tuesday in their quarterly House Price Index report.

The growth rate for the fourth quarter, however, was just 1.7 percent -- barely a third of the rate for the previous three months.

The numbers illustrated why Federal Reserve policy makers were mostly untroubled by the rapid buildup of household debt over the last five years -- and why they're starting to monitor house prices more closely.

Large house-price gains have allowed homeowners to build up enough equity to withstand anything short of a ''very deep'' reversal in prices, Fed Chairman Alan Greenspan has said.

But the central bank nevertheless is watching closely for signs of a reversal.

At a meeting last month, Fed policy makers warned that ''a marked slowing in home-price appreciation and possible increases in longer-term interest rates'' could cloud the outlook for consumer spending and house construction.

The report Tuesday, released by the Office of Federal Housing Enterprise Oversight, provided little evidence of a pronounced slowdown. The fourth-quarter slowdown, for example, followed what the office described as an ''exceptionally large'' increase in the third quarter.

Still, far more metropolitan areas registered house-price declines in the fourth quarter than in the third -- 31 in the fourth quarter compared with five in the third quarter, OFHEO said.

''This report reflects a slowing of the tremendous house-price appreciation we've seen recently, but it is still growing at a strong pace,'' said Armando Falcon, OFHEO's director.

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Posted on Tue, Apr. 26, 2005

REAL ESTATE

Dade home sales plunge 28%

Miami-Dade County registered a 28 percent drop in single-family home sales, the steepest percentage drop in a decade. In Broward, the drop in March was 10 percent.

BY MATTHEW HAGGMAN

[email protected]

It is getting increasingly hard to buy a single-family home in South Florida: A dwindling number of homes for sale has created a supply crunch while intense demand continues pushing home prices to record levels, according to figures released Monday by the Florida Association of Realtors.

Full article: Miami Herald

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If there is a real estate bubble anywhere in Florida, it is in Miami. People there make less than they do in Jacksonville but have these exorbinant housing prices. Except for second home buyers from outside the area, it doesnt seem justified. I would be surprised if there wasnt a correction.

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It's the law of supply and demand. Supply has dwindled to rock bottom as the article suggests. As long as Miami remains a popular place and the dollar stays low against the euro, there will be rising prices. There may be a condo bubble but land is the one thing we aren't making more of.

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And more specifically, it's the single-family housing stock that is in very short supply in this article. Naturally that will drive up prices. The suburbs are seeing more two-story homes, townhouses, and smaller lots.

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S. Florida prices for homes are going up, up and up
The suburbs are seeing more two-story homes, townhouses, and smaller lots.

That's true.I live in a townhouse and back when we bought it(1998),it cost like $100,000.But now I noticed that it rose to like around the +$200,000's.It rose really fast,and the city helped to raise the land value ,by fixing the road,the pipes and putting trees along the sidewalk.

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Prices getting too high for their own good. A double dose:

Lack of affordable housing could stall business growth in S. Florida

The lack of affordable housing is the critical issue for South Florida in attracting new business and building a biotech community, economic and business leaders said Thursday.

Regional collaboration will be the key to solving housing, work-force and branding issues, according to the report of the three economic development organizations at South Florida Economic Summit 2005 at the Westin Diplomat Resort & Spa in Hollywood....

http://www.sun-sentinel.com/business/local...-business-front

Housing prices raise concerns

And the news was generally good. South Florida is one of the fastest-growing parts of the country. It is leading the state in job creation, at a time when Florida is leading the country.

And one-time concerns about public safety and crime issues aren't even on the radar screen when companies come calling anymore.

''We have gone from Paradise Lost to Paradise Found,'' said Frank Nero, president of the Beacon Council, Miami-Dade economic development agency.

But the price of prosperity has been a real estate boom that is creating headaches for the local economy....

http://www.miami.com/mld/miamiherald/11751142.htm

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The median price of a singlefamily home is now $367,000 in Broward and $354,900 in Miami-Dade.

A "lack of inventory," as Realtors call it, coupled with mortgage rates below 6 percent

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It keeps going up...this is getting pretty ridiculous. Basically, owning a single family home in south florida is a pipedream for most working people unless you are willing to live in the ghetto, or an hour drive out in port st. lucie on the north end and homestead on the south.

http://www.sun-sentinel.com/news/local/sou...-home-headlines

In Broward, the median home price rose to $378,000, or $85,700 more than last year at the same time. Palm Beach County's median home price topped $400,000 in June for the first time.

The median price of a home, which means half the homes sold for more and half sold for less, was $406,800 in Palm Beach County. That means buyers paid $94,800 more in June than they would have a year ago. Miami-Dade County's median price in June was $363,100, up 27 percent from last June. The data does not include prices or sales of condominiums or town homes.

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Mind boggling... not going to get any better, either. Still not as as just about anywhere in California, though.. although that's still not very comforting. What is sad is that wages haven't kept up. Is this why you're considering a move to the Tampa Bay area?

A single-family home is next to impossible to find for a decent price. A friend of mine had her heart set on a house somewhere in Broward but downsized her options once she saw the prices. Also a lot of sellers are upsizing their prices for way beyond appraised value because they know can get away with it. She ended up purchasing a townhouse of decent size, comparable to a single-family house, with the compromise of a smaller yard, for under $300k.

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Also, it's mindboggling how much the price of building materials, especially concrete and steel, has gone up... I don't have the numbers in front of me right now, but a developer told me the current price of concrete is double what it was several years ago, and the price of steel per pound has quadrupled.

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Plywood and lumber is also rising in price.

The odd thing is that as prices are rising, sales are slipping. Even though prices are high, people are holding on to their homes. There's not the turnover that we had years past.

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A lot of people aren't leaving because they couldn't afford the property tax increase of moving into a new property if they did... That's one flaw in the "Save Our Homes" amendment, that the property tax cap doesn't travel with you.

A few ideas:

  • Make a new condition allowing the "Save Our Homes" 3% property tax cap to transfer to a new house at least once. That way you can downsize or upgrade without being slammed with, in some cases, quadruple the taxes.

  • It should be easier for people living in areas preparing to gentrify to become homeowners, so that they can get locked in paying a mortgage close to the rate they currently pay for rent.

  • With today's housing market, the Homestead Exemption needs to be increased. I'd go as far as saying that it should be adjusted for inflation as well.

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The problem with all those tax ideas is where is Florida going to get the income it needs for transportation, education and other needs?

Remember, we don't have a state income tax. And we aren't going to ever have one if the voters have anything to say about it.

The taxes have to come from somewhere and that somewhere is property taxes.

Yeah, I'm looking into Tampa because compared to South Florida the prices are much, much better. Homes and condos in nice neighborhoods that would go for $400-$500k in South Florida cost about half that in Tampa.

Basically, my job would pay almost the exact same in Tampa that it would in South Florida, with housing costs cut in half, at least now. If I wait a few years to move, I probably won't even be able to afford Tampa. :rolleyes:

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Point taken... I know it's not perfect but unless cost of living is readjusted for what it really costs to live here, I'm not sure what other solution we have.

If the state gave back a more proportionate amount of the monies it receives in sales taxes, I don't think that local governments would have to raise their property taxes as high. The urban counties don't receive their fair share of state monies and a lot of that money get porked into rural counties. As an example, in the most recent legislative session, they changed the formula that determines how much state money school districts get, and the new formula gives less money to urban school districts, who will be gypped into the tens of millions of dollars in comparison to what they used to get in previous years.

I'd hate to see this become an exclusively super rich or super poor place.

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Some more stuff on housing costs in South Florida.

With Broward at build-out, homebuilding has fallen 60% to an average rate of 4000 per year (compared to 11,000 at its peak). Most new projects will be priced above $400k, less than a third between $250-300k.

http://www.sun-sentinel.com/business/local...iness-headlines

Median home price in Palm Beach County is now $406,800 according to the Florida Association of Realtors. Half of new homes to be built will be priced about $500k, and one-third will cost over $750k.

http://www.palmbeachpost.com/localnews/con...whome_0729.html

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The South Florida home prices have been running on overdrive.

Oddly enough my husband has business interest in the Broward and Palm Beach County area. We went down to Boca in November and February looking at homes in Boca. All I can say was ummmmmmmmm.....and scratch my head. Even the school where our eldest daughter would attend St Andrew's is higher than the one in Atlanta.

Needless to say, we decided to stay in metro Atlanta for now and he has to fly back and forth. Interesting enough, one of the same houses we looked at sold in March and it was even higher than what we saw listed in November. WOW!

I certainly hope the public schools in Boca are very good because by this November I will have four children ages 4 and under. :unsure:

Are there any neighborhoods that are family oriented, gated, in a great school district, near great shopping, close to the beach, on or near water, close to cultural amenities, nice size yard, 6 bedrooms and in southern Palm Beach county for under $900,000?

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By virtue of it being in southern Palm Beach County, I highly doubt you'll find all of what you're looking for that price...

If you look a bit farther north or south beyond Boca, you might have better luck... The closer you are to the beach, naturally, the higher the costs (but then most of southern PBC isn't more than ~10 miles from the beach anyways)... There are a lot of lakefront, canalfront homes within a 20 mile radius of Boca. Be willing to sacrifice yard size, but with a 6br house it would still be decent.

All of Palm Beach County is within the same school district... I don't know much about the schools in the area except, like most of Florida, there are issues with overcrowding, a bit more so in middle and high schools. There are also public charter schools that you have the option of enrolling your kids in. There's usually a waiting list but once the oldest child is admitted, the siblings have higher priority in admission when they reach schooling age.

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Look in Deerfield Beach, Delray Beach, Boynton Beach.

There are houses there that meet your criteria. You are probably out of luck in Boca.

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