The Broward County housing market has rebounded dramatically from the downturn of the 2006-2009, marked by a 50 percent increase in the median price of a single-family home over the 36 months ending September 2014 and a 65 percent increase in the median price of a Broward condominium during the same three-year time period.
Over the past 12 years — September 2002 through September 2014 —Broward’s residential inventory has tallied record movement. From only two to three months of available inventory in the years between 2002 and 2005, to unprecedented high levels in 2007 and 2008, ranging from 39 to 47 months of supply. An escalating “seller’s market” since 2011 has seen inventory levels drop back into the three to five months supply range, which has fueled the value increases of these past three years. It’s important to remember that a “healthy” market has six to nine months of available inventory supply.
According to data from the Southeast Florida Regional Multiple Listing Service (MLS), we have seen a steady rise in inventory over the past two years. An increasing number of sellers have been motivated to list their properties due to recent steep increases in value, helping to bring previously “underwater” properties into a positive equity position. The construction of new housing has also added to our total available inventory.
Why all this focus on inventory? Well, here’s a Realtor’s “secret”: While we naturally gravitate toward looking at the total number of sales and the median sales price, it’s really the available inventory that is the true harbinger of how healthy a real estate market really is.
I compare it to taking our blood pressure, which must be within a certain range in order for us to be considered healthy. If the number of months of supply are way under six months, we have concerns that values will begin to increase too rapidly, or conversely, if the number of months moves over nine months, we have concerns that values will begin to stagnate and ultimately fall.
In the chart with this article, it’s easy to see that Broward’s months of available supply dropped to significantly low levels between 2002 and 2005, while median prices increased exponentially during the same period. Once we entered 2006, months of supply started to rise dramatically, which caused prices to plummet, which, in turn, contributed to the recession.
Since the lows of 2009, values have steadily increased over the past five years. So has inventory over these past months. As of September 2014, we had 12,385 total homes and condos for sale in Broward County, up from 9,246 the same period a year earlier — an increase in inventory of 34 percent.
We have slightly more than five months of available inventory in Broward, still below the “optimum” range, but nonetheless, a positive increase over the past six months. Total sales have decreased slightly over the past few months, in response to increasing property values and investors retreating somewhat from their prior buying spree, which began in 2009.
And, while Miami-Dade receives a great deal of attention for international sales, Broward continues to hold its own, with data from Broward’s MLS noting that 16 percent of the total sales of single-family homes and condominiums over the past year being purchased by international buyers. The top five countries of origin of these foreign buyers are Canada, Venezuela, Argentina, Colombia and Brazil. Broward is continuing to develop an identity of its own outside the borders of the U.S., attracting a distinct group of buyers who are solely seeking the Broward lifestyle in lieu of other Florida markets.
Liz Caldwell is a sales associate with EWM Realty International/Christie’s International Real Estate and is based in Fort Lauderdale. She can be reached at Lizbcaldwell@gmail.com; www.lizcaldwell.com.
Realtors may submit columns for Broker’s View of 700 to businesseditor@MiamiHerald.com. Questions, email rclarke@MiamiHerald.com