Broward County in South Florida was one of the hardest hit areas in the country during the housing crisis. Home values in towns like Oakland Park and Margate plummeted 65% in 2006. What was once $259,000. became $168,500. That kind of slide definitely gets someone’s attention.
Today, Oakland Park’s median home value is $189,600. That 107% increase over April, 2012 median home value is also attention getting. Zillow tells us that Broward and Palm Beach Counties have doubled its median home values when compared to 2012 values. A handful of cities (Lake Park, West Park, Tamarac) in these counties fell just short of 100% increases.
Communities with the biggest price gains made over these five years from 2012 are communities made up of modest homes in working class neighborhoods. “These markets got hit hard with the debacle of the Great Recession,” said Mike Papas, president of the Keyes Real Estate Company in South Florida. “In ’08, ’09, ’10, seven out of 10 sales were short sales and foreclosures. Investors popped up in 2012 and began picking up these homes, some for less than $100. and launched major renovations.”
Mike Smith, an engineer, bought one of the homes in 2012 and paid $168,000. for it in a short sale. He still owns it and has no intention of moving. (The previous owner had paid $305,000. for the home in 2005.) Allie Greenstein, an investor, bought one of the bank owned homes in 2015 and paid $129,000. for a three bedroom house that didn’t have a roof. She renovated it, rented it for a year and just sold the house above its listing price of $239,000. Greenstein said, “I saw right away after I purchased it that the value was skyrocketing. It still is.”
Because home values are “skyrocketing,” some wonder whether or not another housing crisis is soon on its way. “No.” says Val Chiasson, a South Florida home appraiser based in Boca Raton. “…Home value jumps are occurring from the bottom up…what’s more, now there are stricter lending standards designed to prevent a repeat of what happened.” The third factor is the lack of affordably priced new homes. Chiasson thinks the severe shortage of new workforce housing has driven values of existing home higher. (A major consequence of this we discussed last week…middle income workforce workers such as police, firefighters, teachers, etc. are being priced out of the market.)
Mike Smith, the engineer who bought his house in a short sale for $168,000., says that the way things are going in terms of increasing home values where he lives in Margate, “If, God forbid, I had to sell and downsize, I know I could make a profit.” Sound familiar?