Rental Housing Inventory in Fort Lauderdale over the last 5 years
I work with a number of investors that own property and always find it valuable to know whether rental rates are moving up or down in Fort Lauderdale. I also work with a number of tenants that I've put into housing. They are coming up on lease renewals and want to know if it's best to rent or buy right now. What I've attempted to do is gather some historic housing data, and follow up with commentary. This post was also born out of questions I've been getting about all the new rental projects currently under construction in Fort Lauderdale.
First a note about the data. I'm really going to focus on current supply, versus historic, and how that affects pricing. It's too difficult to try and graph median prices as the program I use rounds up or down by the nearest $1,000, which is really no help when looking at rentals. Clearly it wasn't built for tracking rental pricing as I'm trying to do. However, what I do think is valuable is looking at historic levels of inventory. Real estate pricing is a function of supply and demand, just like any other commodity. So if we look at supply you'll be able to draw conclusions about pricing.
At any rate. Real Estate market report provided by Casey Prindle of Esslinger Wooten and Maxwell. This market report will cover the neighborhoods of: Rio Vista, Victoria Park, Downtown Fort Lauderdale, Fort Lauderdale Beach, Harbor Beach, Lauderdale Harbors, Sailboat Bend, Tarpon River, Croissant Park, Collee Hammock, Las Olas Isles, Lake Ridge, Wilton Manors, Coral Ridge, and Poinsettia Heights. Zip codes covered in this report will include 33301, 33304, 33305, 33315, and 33316. Data reviewed will be compiled by zip code and cover a 5 year period from January of 2009 through January of 2014. Data is taken from the South Florida MLS and provided by Trendgraphix. I've included condominium, single family homes, as well as townhomes.
There's been plenty of articles which have recently been written about the single family home rental market. In short, a number of very large private equity firms formed REIT's which are comprised of single family home rentals. They were able to get a portion of their portfolio's securitized which has allowed them to keep purchasing properties. The presence of these funds has largely impacted the single family home market, specifically homes priced less than $300,000. There has been plenty of speculation, and worry, that these funds would really knock single family home pricing around. Here's the truth, they've only minimally impacted the area of Fort Lauderdale that I cover. Single family home sales, or properties in turn key (rent ready) condition, priced below $300,000 are tough to find around here. That being said, it's worth noting their presence in our market. What have these funds done to inventory levels in Fort Lauderdale? Not much. Infact there was more supply before these funds entered the market, take a look below.
Look at the amount of rental supply in 2009 just after the crash. Huge, huge, huge levels of supply. What's interesting to note is the dark green, which is going to represent the number of rented properties. What we see is the number of properties rented quarter by quarter has been relatively stable over the last 5 years. What's shrinking is the supply of available rentals. To further illustrate this point let's take a look at a months of supply graph.
For those who keep asking how in the world so many rental complex's can be planned in Fort Lauderdale, I would say the supply numbers would be a reason. If you're a developer and you see rental supply levels shrinking, you're level (or risk) of vacancy should be small. In theory. Can the rental market absorb 2,000+ plus new rental units coming online in Downtown Fort Lauderdale? Well, I think they'll get the units filled, but the new supply of those buildings should signal the leveling off of rent rates. I don't believe we'll see rental rates continuing to climb as quickly once all the new supply is available.
Back to the original questions. If you're thinking of investing or renting, what does this all mean for you? I do feel rental rates have peaked locally, at least temporarily. I believe we'll see more of a plateau, versus a steep decline, as the result. At least over the next 24 months as the rental market adjusts to the new supply.
For the renting crowd that is considering buying. If I'm paying $2,500 in monthly rent for a 2 bedroom condominium, some quick math says I'm better off buying a home (in the $300k range) rather than renting a condominium. There's not much more to say than that. Get off the fence, rental rates aren't going to nose dive!
If I'm an investor should all the new supply worry me? Maybe. Keep in mind all of these new projects will likely carry steep rental rates, with the possible exception of smaller units in Marina Lofts. If you try to buy a condo for $600,000 and think you'll be able to rent at cash flow positive rates, it's probably not going to happen. If you try to buy in a building that is in direct competition with the new projects, you may run into some issues. Where this is opportunity is buying something different than the new complex's. This can mean a townhome, something with ocean views, or buying lower priced properties (my favorite idea). If you're spending $150,000 -$200,000 a door for a condominium with low fees the rental rate will be well below that of the new buildings. Multi family housing also remains a viable investment strategy in my opinion. This would be a way to hedge against the new developments. If you'd like to discuss these ideas or anything else (pertaining to real estate!) feel free to call or email me.
I work as a Realtor in Southeast Fort Lauderdale. If you’re interested in buying or selling a home, condominium, or townhouse (townhome) in: Rio Vista, Victoria Park, Downtown Fort Lauderdale, Fort Lauderdale Beach, Sailboat Bend, Tarpon River, Croissant Park, Collee Hammock, Wilton Manors, Poinsettia Heights, Coral Ridge, or Las Olas Isles, please feel free to contact me at (786)443-7203 or through my email firstname.lastname@example.org. I am a Realtor that works on Saturdays in order to accommodate those with busy schedules.
Veniceofamericahomes.com is a trusted source for real estate trends, statistics, and data, as well as aesthetics.
Written By Casey Prindle