Pompano Beach Real Estate Review

The most common question I get as a Realtor is "How is the market?"  The only way to answer that question is "that depends on your perspective".  Are you a buyer, a seller, a renter, a landlord or other investor (flipper), or an agent like myself.  Each one could have a different opinion.

For sellers there isn't much good news to report. 2010 saw a continuation of price declines in Pompano Beach. Overall Pompano Beach saw an 18% decline according to zillow.com. The rate of decline was slower in the more desirable areas. For example, the 33062 zip which is mostly areas east of Federal Highway and includes the beach only had a 3.9% decline in the median home price. The worst hit was 33064 which saw declines of 35.5%. That number may be a bit misleading. 33064 includes Lighthouse Point which actually saw little to no change for the year in 2010. So, much of the decline must be the Pompano Beach Highlands neighborhood which is a large portion of the 33064 zip code. Palm Aire, the largest condo development in Pompano Beach, had a relatively small 8% drop. Distressed properties were still a big factor in the price declines. Foreclosures and short sales accounted for 29% and 21% respectively of the total sales. This is exactly half of all sales in 2010. But in general properties in good condition and priced correctly still sold in a reasonable period of time.

If you listen to investors this has been the best market in generations. Which may be true as long as you know what you're doing. Investors have many different approaches. Some buy fix up and sell a property for a profit. They are known as rehabbers. Some buy and quickly sell again perhaps to a rehabber. They are known as wholesalers. The rest buy and hold with tenants in places and they are of course the landlords. In my opinion the best approach for investing in this market is buy and hold. I spend a lot of time with my nose in the tax records and the MLS and I see a lot of rehabbers sitting on properties they can't sell or have sold for little to no profit. I'm am sure there are those that are experienced and are doing well, but it's not an exit strategy I would recommend for a newbie investor. Some of my best clients are investors who by and hold. They can easily find tenants, or hire me to do that, and get an excellent return or cash flow, on their invesment. For those customers I am now offering property management services for a more turnkey type of investment.

For the typical retail buyer the market has been very good in their eyes as well. Prices are down 50%, 60% even as low as 70% in some areas, from their highs. Pompano Beach real estate has never been more affordable. For that reason sales activity has been brisk for more than two years. Available inventory has been cut in half from the stagnant days of 2006 and 2007. There is no shortage of buyers out there, but they all want a deal. If they are cash buyers they generally get what they want, within reason. Many of them aren't realistic in their expectations, however. I talk to buyers who expect to be able to buy prime waterfront properties at 30% below TODAY'S values. The truth is properties in desirable neighborhoods priced even a little below market value end up with multiple offers. Others want to finance a $30,000 condo. The problem is the reason the condo is just $30,000 is precisely because you can't finance it.  

With the downturn in sales prices, rents have come down slightly as well. Landlords can no longer expect to get first, last month rent and security deposit from a tenant to move in. At least if they have good credit. There are so few tenants with good credit they can expect to put up no more than one months rent and one months security deposit. On the other hand there are a lot of displaced former homeowners that now need to rent. More of them are coming as foreclosures continue and banks streamline their short sale processes. If you, as a landlord, are willing to take on these more risky tenants there should be no shortage of them. I have put a family that has been foreclosed on into a small house I manage. We just had them put up 3 months worth of security. I'm sure it wasn't easy for them, but they found a way. I also use a law firm to draw up the lease. For the fee they charge, which is reasonable, they will handle the eviction at no further charge and that typical takes just three weeks. So the risk is minimized. Watch rental rates. They are a leading indicator of value. When rents rise property values follow.

All this in turn has been good for me and my fellow agents. Those of us that have survived this mess that is. Nationwide the number of active agents has declined by 30%. I don't know what the number is for Florida alone, but I suspect we have lost more than the national average. Sales activity is up and there is less competition. So, for me the market has been good and I expect it to stay that way and likely get better. A majority of my business has been foreclosures and last year's moratoriums made what was looking like a very good year turn into just an average one. I see the banks shifting away from foreclosures towards more cooperative short sales. Citibank and Bank of America are both rolling out programs that assure a quicker conclusion. I will be reporting more on that soon. I prepared myself for this shift by becoming a Certified Distressed Property Expert (CDPE) last summer. In addition to the experience of actually closing short sales I now have the training to go along with it. I am certainly now less pessimistic than I was last year. The logjam is clearing. It will still be a year or more before we even begin to recover and start the return to a more normal market, but we will.

Tom Day, Remax in Motion
www.TomDayProperties.com

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