I recently was sitting in the kitchen of a beautifully remodeled home in a highly desirable Fort Lauderdale neighborhood. The totally renovated, two-bedroom, one-bathroom home at 1517 NW 6th Avenue in Fort Lauderdale in the South Middle River enclave not only reflected how homes there are a driving force in Broward County’s strong real estate market. It lent a snapshot of who many of today’s home buyers are - and many reflect a real estate buyer market and millennials as comprising a significant and growing group. Millennials and buyer trends seem to converge in unique neighborhoods.
Like many of these neighborhoods surrounding downtown Fort Lauderdale, South Middle River is thriving. Across Fort Lauderdale, neighborhoods like Oakland Park, Sailboat Bend, Pompano Beach and Wilton Manors are bustling with activity. How do we know? It’s more than the For Sale signs in the yards or listings online.
Anyone who follows the market can read the tea leaves. At The Gary Lanham Group at Coldwell Banker Fort Lauderdale Beach Office, we’ve been reviewing the Multiple Listing Service (MLS). We regularly review county tax roll data. We continually track listings, pending contracts, and sales. We turn those statistics into knowledge to ascertain the current state of the market of area real estate. We’ve written about this several times in the past few months.
What we’ve discovered and discussed is how we’re dealing with excess inventory across the Fort Lauderdale real estate market. Last time, we explored how a daily review of those MLS hot sheets provide a vivid revelation of market conditions.
Taking a Long Look at Listings
But we look deeper. Beyond the past 24 hours, what’s been revealed over the past seven days, 30 days or even since August 21 - the pivotal date the market changed? By taking a look at a day’s, week’s, and months action in a given neighborhood across the northeast Broward County corridor lends a fresh glimpse and keen insights into the market that affects every seller and buyer out there.
For sellers, the more inventory that fills the market, the lower the prices or values may go for area listings, contracts, and sale prices. For buyers, more inventory means a buyer’s market has emerged. It’s compelling to look at the number of closed days and days active on the market. Then, we layer atop that home price increases and price decreases. Then, we compare that to homes that have had pending sales or contracts with backup offers.
Knowledge revealed from that data reveals that greater Fort Lauderdale has a three-to-one ratio of housing availability versus homes getting ready to close through contact. Three-to-one is a striking figure.
Buyers should be very excited indeed, especially millennial home buyers. Stellar available homes may retain their value better than those in need of some improvement or in slightly less desirable areas. Even two homes listed in the same neighborhood can vary widely in price, depending on location and condition. If one includes a new roof or air conditioner, a prime lot, or waterfront position, that simply elevates its allure even further.
What’s Driving Ever More Listings?
Something interesting is happening in the greater Fort Lauderdale real estate market. Our insights tell us that since August, we've been in a buyer's market. What’s puzzling, however, is that we see a flurry of new listings hitting the market. More inventory ostensibly means lower prices.
Why would homeowners list their homes during a buyer’s market? One reason could be that owners see homes listed and selling, and want say, “I want a piece of that action." Another could be that they believe their homes are desirable and their gut tells them they’ll move quickly.
There also are macroeconomic issues at work that need our attention. In February, auto loan delinquencies were reported to be at an all-time high. If we look at other dramatic shifts to real estate market conditions, we see that the trend of rising delinquent auto loans precedes all major real estate slowdowns by 20 to 24 months.
The Real Deal real estate publication recently wrote about “ominous signs” related to foreclosures. Buyers, sellers, and their agents should be paying attention such issues. Whatever the reason, the millennials win: they make high incomes in technology, health care and medical technology businesses, and many are ready to buy.
The New Kids on the Block
Our team’s work in the Fort Lauderdale real estate market is piquing our interest. We’re discovering more than a state of the market. We’re getting a snapshot of the buyers. And their faces are younger than in years past. Millennial home buyers are that face and have become young Fort Lauderdale home buyers.
With this South Middle River home, for example, the sellers are millennials; she’s from South Florida, he’s from Maine. They are ready to return to his family up north to start a family of their own. We might wonder with amusement why anyone would leave Fort Lauderdale’s sun, sand, and surf weather for New England - especially winter.
Millennials and home buyer trends are reflected here. Traffic to the young couple’s home tells the bigger tale. South Middle River, like those other areas, is an ideal young-family market. Close to downtown, the Las Olas shopping district, the entertainment and dining options of Flagler Village, and a straight shot down Las Olas Boulevard to Fort Lauderdale beach, this is where young couples and families want to be. This is ground central for millennials and the real estate market.
Welcome the Millennial Buyer
Our research into our clients, real estate contracts, and even mortgage filings, reveals who these prospective and actual buyers are. It also tells us what they’ll be in the months and years to come. The real estate buyer market and young people are a growing group. Almost half - 45% - of buyers in 2019 will be millennials. Also known as Generation Y, this cohort of Americans was born between 1981 and 1996. This year, they range from 22 to 37 years old. By our research, the median age among millennial buyers is 29.
Mortgage brokers are seeing a growing number of applications by and approvals for the millennial population. This is a major shift from 2018 and years prior. Previous to even last year, the primary driver among the buying market was the Baby Boomer. This was the generation born immediately after World War II.
Born between 1946 and 1964, these 54- to 72-year-olds were the rocket fuel for the American economy. From package goods to consumer trends to the creation of entire neighborhoods - even cities - they propelled the American economy like no generation before them.
Now, the boomers are winding down. Some 10,000 are retiring daily. Their kids have grown and they’re downsizing from homes in the suburbs to smaller single-family homes or townhomes. Many are moving to condominiums along Las Olas Boulevard, Fort Lauderdale Beach, Lauderdale by the Sea, Galt Ocean Mile, even Boca Raton.
As they retire and retreat into their own golden years, enter the millennials. Generation Y is driving the buying bucks and becoming the fuel of the Fort Lauderdale real estate market. Socioeconomically, they’re an ideal consumer. They’re college educated, but they might live with their parents to save up money. By the time they’re ready to move out, they’ve saved enough to get their first place.
The Trappings of Luxury Living
Another subset among the millennial population are those who have lived on their own. If they’ve lived in the Flagler Village, Las Olas, or New River rental communities, they’ve grown accustomed to high-touch, luxury living. Amenity-rich rental properties have teased them with granite countertops, tile or wood flooring, impact glass, even community amenities like spas, and work-out rooms and gyms. Some even have cooking demonstrations, wine tastings, and tenant events.
Millennials and real estate with amenities are a well-made match. They’ve come to appreciate the high amenities found with luxury rentals. And they’ve been willing to pay high rents that approach a monthly mortgage. How high? How’s $2,950 a month for a two-bedroom, two-bathroom rental hit you?
So for those millennials who’ve lived or rented in or near downtown, they want to maintain that amenity-rich lifestyle.
Now, the question emerges: rent versus buy first home?
For successful millennials raised by successful boomer parents, this kind of expense isn’t unreasonable. Many make significant incomes. They may not be saving a lot of money. But they have high disposable income and like their parents before them, they place a high value on quality of life.
The Opportunity of a Generation
Focusing for a moment on millennials willing to pay almost $3,000 a month in rent, they’re enjoying an opportunity unique to their generation. They’re thinking to themselves, “I'm in the largest cohort of the home buying population. I have a girlfriend or a boyfriend or a wife or a husband, and maybe it's time to build some equity,” the smart ones are saying. “I can build my savings account, build equity in a nice property in a special neighborhood, and build that nest egg.”
By the time retirement comes - or they need to move to a larger residence for a growing family - they’ll be sitting pretty.
To be sure, many won’t look at life with this pragmatism. One consideration is to rent vs buy first time home buyers. Whatever the generation, they have the expenses and challenges of daily life to consider. Fort Lauderdale area first time buyers span the generations.
But with any generation in any neighborhood, the right purchase in the right area is important. It can be just the launchpad and fuel their life needs to put them into a comfortable orbit today - and for their future plans.
Gary Lanham Group at Coldwell Banker Fort Lauderdale Beach Office is a boutique real estate organization offering sales, leasing, and brokerage services to the Greater Fort Lauderdale area. A listings agent matches home sellers with buyers and tenants with landlords. While Broward County is our universe, we focus on real estate in Fort Lauderdale, Coral Ridge, Imperial Point, Coral Ridge Isles, Oakland Park, and Pompano Beach. Call us today at (954) 695-6518 or visit www.GaryLanhamGroup.com.