Deals on South Florida Homes May Be Slipping Away Like Sand, But Not if You Know Where to Look

Aerial view of Eagles Point, a luxury condominium complex in Sarasota, Florida. PREMIER SOTHEBY’S INTERNATIONAL REALTY

The cooldown that characterized South Florida real estate just a few years ago has given way to a white-hot housing market, fueled by an influx of pandemic-weary buyers looking to escape to hotter temps and much lower taxes. 

Across South Florida, listing prices for high-end homes shot up around 14% between 2020 and 2021, according to Realtor.com data. The median cutoff price for South Florida’s luxury segment—defined as the top 5% by list price in Miami-Dade, Broward and Palm Beach counties—was $2.93 million through November 2021. Meanwhile, housing stock in the luxury tier plummeted, with the number of available homes asking over $1 million declining 26.1% in one year.

“The tax environment, weather, cost of living and access to space is driving up demand, and therefore prices,” said Hannah Jones, economic research analyst for Realtor.com.

Yet there are still deals to be had for would-be home buyers who want to live out their fantasy of living beachside and working remotely. Experts said hot properties are hiding in plain sight across the southern peninsula, with several communities teetering on the edge of a boom but continuing to offer a more modest price point.

While high-dollar markets like Miami and Palm Beach will continue to garner the lion’s share of luxury listings, smaller communities and suburbs that offer proximity to urban amenities are attracting the attention of buyers who have migrated from other major metros but still want big-city amenities. 

“There’s a general trend that these smaller cities have tended to be more popular after the pandemic,” said Daryl Fairweather, chief economist at Redfin. 

Many of these communities are on the western side of the peninsula, along the strip between Tampa and Fort Myers. “The Gulf side of Florida is the more affordable option if you’re looking for something close to the water,” she said.

Market Heats up in Towns Surrounding Sarasota 

In a Redfin analysis of U.S. ZIP Codes by year-over-year growth in listing views, seven of the 10 neighborhoods on the list are communities in the Sarasota metro area. Metro Sarasota ranked as the eighth most popular destination for buyers looking to switch metro areas in the third quarter.

At the top of the list is South Sarasota, where the median sale price in September was $434,023. “That’s very moderate for someone looking to live close to the beach in Florida,” Ms. Fairweather said.

Buyers can find million-dollar luxury condos overlooking the water. Further inland, newly constructed luxury villas are just a mile from the beach. “These prices tend to be close to half of what you would pay if you were in Miami,” Ms. Fairweather said.

One of the selling points of South Sarasota is its proximity to Siesta Key, a crescent-shaped barrier island fronting the Gulf of Mexico and brimming with luxury beach homes. 

But there’s growth potential, too. The South Sarasota median price represents a 19% year-over-year increase, and more than one-third of homes sold above their list price in 2021.

Other burgeoning areas surrounding Sarasota include the retirement hub of East Venice, offering a median sale price of $420,000 and a 38% year-over-year increase, and the less populous town of Englewood, offering primo beach access and affordable waterfront real estate. The average price is $427,500, with a 38% year-over-year increase.

“We expect the overall housing market to slow down next year as mortgage rates increase, but this particular strip of Florida will likely remain attractive because of remote work and people looking for more affordable suburbs,” Ms. Fairweather said. 

Interior view of a three-bedroom, four-bathroom luxury condominium. The home is currently asking for $1.1 million. PREMIER SOTHEBY’S INTERNATIONAL REALTY

‘Undervalued’ opportunities in Lee County

Further south on Florida’s Gulf coast, pockets of Lee County are emerging as under-the-radar hotspots. As one of the fastest-growing counties in southwest Florida and in the U.S., Lee County has seen an increase of nearly 142,068 people over the past decade, according to 2020 U.S. Census data. 

The Lee County community of Bonita Springs has long held appeal with high-end buyers, as has nearby Naples in Collier County; year-over-year average sales prices climbed 51% to $941,351 in Bonita Springs in November 2021, and 17% to $802,957 in Naples, according to Premier Sotheby’s International Realty. 

Outdoor amenities at Seaglass, a luxury condominium in Bonita Bay. PREMIER SOTHEBY’S INTERNATIONAL REALTY

But lately, buyers have been looking to other parts of Lee County to find lower-priced luxury homes. Just north of Bonita Springs, they are discovering the village of Estero and the cities of Cape Coral, Fort Myers and Fort Myers Beach, said Erin McDonald, managing broker for Premier Sotheby’s in Bonita Springs. 

Real estate prices in these communities have risen slowly and consistently for several years, although not as quickly as prices in other parts of the country. And as buyers get priced out of other markets, these lower-priced Lee County communities have gained popularity with high-end buyers seeking value, Ms. McDonald said. 

“This opportunity is with us today as we start to see these communities that have historically garnered lower price tags begin to turn more to the luxury communities that have existed in Naples, Marco Island and Bonita Springs,” she said.

Lee County’s largest city, Fort Myers, offers some of the lowest housing prices in the county, with Premier Sotheby’s tracking average sales prices at $358,748 as of November. But prices may not stay that way for long, as that figure marks a  32% increase over November 2020. 

In the nearby village of Estero, prices have risen 25% to $502,985 in 2021; and in the city of Cape Coral, prices went up 21% to $459,794. Prices in Fort Myers Beach saw a modest increase of 4% to $647,135, but that came after a 25% gain the previous year.

“It is said, by locals here, that southwest Florida as a region has been undervalued for many years, and it seems that newcomers are recognizing that value and jumping in to enjoy the laid-back beach lifestyle,”  said Ms. McDonald.  

Ms. McDonald is seeing record-low numbers in terms of standing inventory, coupled with record-high numbers of property sales. “What this means is that the number of homes coming to the market remains high, yet they are getting snatched up very soon after hitting the market,” she said. 

National predictions are for a slight cooling in appreciation and a less frenetic year in 2022, Ms. McDonald said. “We do feel like there has been a market reset here, as opposed to the bubble we saw with the crash in the 2000s,” she said. 

Interior view of a four-bedroom luxury penthouse in Bonita Bay. The property is listed for $5.2 million. PREMIER SOTHEBY’S INTERNATIONAL REALTY

Slower Pace in Suburban Broward

For buyers looking for values along the Atlantic coast of South Florida, experts point to the space between Palm Beach and Miami as the sweet spot. 

That would be Broward County, where the median price for luxury-tier homes was $1.85 million in 2021, a 17.5% increase from 2017, according to Realtor.com. By comparison, prices in Miami-Dade County to the south shot up 26.7% during that period, to $3.8 million in 2021. And in Palm Beach County to the north, luxury listing prices in that time span rose 24.9%, to $4 million in 2021.

“These markets are slightly off the beaten path and tend toward slower-paced, suburban lifestyles but are poised for growth as business investment grows,” said Ms. Jones of Realtor.com. 

(Mansion Global is owned by Dow Jones. Both Dow Jones and Realtor.com are owned by News Corp.)

The cities of Hollywood and Pompano, in particular, tend to be moderately priced markets that are receiving more interest from residents of more expensive local markets, Ms. Jones said. “Pompano Beach seems to be especially poised, as listing prices have increased an average of 10.9% per year since 2017,” she said.

This six-bedroom, waterfront property in Pompano Beach, Florida, is currently listed for about $5.3 million. PREMIER ESTATE PROPERTIES, INC.

Flanked by well-maintained beaches and golf and tennis facilities, the Pompano Beach luxury segment had a median list price cutoff of nearly $1.51 million in 2021, an 8.6% year-over-year-increase. Although Pompano Beach has been overlooked by luxury development in the past, Ms. Jones said there is evidence this is changing. “The Ritz-Carlton group just announced it will be building a new condo facility in Pompano Beach, signaling luxury amenities may be on their way,” Ms. Jones said. The development is expected to open in 2024.

Hollywood has seen a slight decrease in luxury listing prices since 2017, but more recent growth indicates interest in the locale, Ms. Jones said. Hollywood is the seventh-most searched city by current Miami residents, attracting 2.1% of all Miami-resident searching traffic in the third quarter of 2021, according to Realtor.com data. “This signals the area is gaining more attention and may start heating up in the near future,” Ms. Jones said.

In Broward County’s most populous city, Fort Lauderdale, luxury buyers can still find value in the condo market, with prices starting at about $1.2 million, said Jonathan Miller, president and CEO of New York-based appraisal firm Miller Samuel. 

But demand is picking up rapidly. “This is a market that has seen some of the largest drops in supply because sales have been so high,” Mr. Miller said. 

Third-quarter 2021 listing inventory in the high-end Fort Lauderdale condo market was the lowest-ever recorded, at 152—representing a 60% drop year over year, said Mr. Miller, who authored Douglas Elliman’s third-quarter sales report for the city. 

“The condo market in Fort Lauderdale is moving 72.5% faster than it did a year ago, and 70.6% faster than two years ago,” he said. “The market is blistering fast.”

Source: Mansion Global | AUTUMN CAFIERO GIUSTI 

Filed under: Headlines by Alec Reimon
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