Some good real estate news. Probably.The front page headline in today’s Sun-Sentinel jumped off the page: “Properties near beach suddenly are hot.”
Scott Wyman’s piece revealed that two separate investors have spent $39 million to buy up property in the same areas where luxury high rises were built just before the real estate bust. Even at bargain prices, this is welcome news for it shows that some people are regaining big-time confidence that the world has not ended.
It also reinforced an impression we have had for some time – namely that the older eastside neighborhoods of Fort Lauderdale and neighboring towns have done better in the recession than less desirable locations to the west. Studies often lump Miami-Dade and Fort Lauderdale, which is not valid. Miami had a condo market absurdly overbuilt, and sprawling poorer neighborhoods where people got mortgages they never could afford. Most Fort Lauderdale residents wouldn't go to Miami on a bet – unless the bet is on a sports team.
They same distinction exists in Fort Lauderdale, which has its share of poor neighborhoods and some new western communities which should never have been built. Our impression is that eastern communities have not seen the same rate of foreclosures or people forced to sell with drastic losses.
We asked an expert, Jack McCabe of McCabe Research and Consulting in Deerfield Beach. “It is generally true that oceanfront and waterfront property have fared better during the downturn,” he says. “And older established neighborhoods on the east side have also done better, although in some those sections people refinanced their homes and that led to trouble.”
He points out that situations vary greatly, even in the same location.
McCabe adds: “We are nearing the bottom, but it might be a year to 18 months before we get there. And then when we see values increase it will be at the rate of inflation for a few years. I think we’ll hit a period of hyper inflation in next four to five years due to our $14 trillion national debt. Generally values rise at or above the rate of inflation. The flip side is that interest rates may go so high that it will shrink the pool of buyers and have a negative effect on inflation. It’s a double-edge sword in essence.” Jack McCabe is not always optimistic, but he's usually right.