South Florida buyers who found homes during the housing peak over 15 years ago are finally seeing value return to their homes, but it’s been quite a roller coaster ride.
The housing market took off around 2005, much like it is doing now, with buyers paying a premium to get into a home. Little did they know that a few years later the market would collapse, sending house values plummeting, with some homes losing half their value.
For example, the typical home value in Fort Lauderdale was $235,608 in March of 2007, around the height of the market. Home values would plummet to $89,073 in February of 2012, according to numbers from Zillow.
The drop in home values, which coincided with the 2007-2008 recession, was a concerning time for many home buyers, with many wondering if the market would ever right itself.
“We went into contract on a home in 2005, and by the time it closed, prices had started to fall,” said Steven Weintraub, 72, of Delray Beach.
Weintraub, who also works as a realtor with Lang Realty, and his wife purchased their four-bedroom, new construction home in Delray during the peak of the market, spending around $670,000 when upgrades were factored in. They settled in a 55-plus community, planning to sell their old home and move into the new one as a forever home.
The couple ended up waiting 13 years to see their home value return to the price they paid for it. They watched over the years as the lots around them, especially during the crash, sold for far less than they paid. Home values over all in Delray Beach dropped to around half of what they were at the peak of the market.
Now, Weintraub says he could list the home for $75,000-100,000 more than he paid for, after spending years in the red with his mortgage.
“I would say the first 13 years we were here, I probably wouldn’t have gotten the money back that I put in to it,” he said.
For the most part in South Florida, home values started ticking back up in 2015, only to skyrocket over the past two years as the pandemic boosted the region’s housing market.
Other homeowners who bought during the last peak also felt similar pressures as they saw prices drop after paying a high premium for their homes.
Scott Katzer purchased a home with his wife in Fort Lauderdale in the Coral Ridge Isles neighborhood for $460,000 in November 2006. During its lowest point, his home was worth $200,000 less than what he paid for it and he had to refinance his mortgage. He has felt some relief in the past year or so.
“It’s a happy problem now that it’s a seller’s market,” Katzer said, adding that he and his wife have had brief conversations about the type of profit they could make on their home. “I never thought the market would be worth what it is now.”
But if they sold, where would they be able to afford to live?
It’s an issue Warren Daniele, who works in the restaurant business, recently faced. He bought his home when prices were still on the high side, right as the housing market crashed. He paid $575,000 for a three-bedroom, two-bathroom home in Boca Raton and actually put it up for sale recently for about $200,000 more than he paid for it.
“I didn’t know if we would ever go up,” he said, after watching his home values stay relatively flat until two years ago. “Eventually we did. Real estate is a very long-term investment. No one has a crystal ball, and it’s a little bit of a gamble, but sitting from the upside, it was well worth it,“ Daniele added.
He ended up taking his home off the market, after realizing rents were so high as to not make it worth it to sell.
Most of these homebuyers said that despite the massive dips a decade ago, in the end, they didn’t regret buying their homes.
“My advice would be if you are looking for a home, don’t wait. It may not get any better as far as prices coming down for a long time,” Weintraub explained. He said he wouldn’t necessarily buy at the peak of the market again, but he and his wife were looking for their forever home.
Weintraub added that the current housing market is different than the last housing crash South Florida went through. For the most part, experts agree that the housing market will probably not crash in the dramatic fashion it did in 2008, when the bubble was caused mainly by risky lending practices and a boom in new construction.
Today’s housing market is driven by low interest rates, intense demand from out-of-state buyers and years of low inventory in the area.
According to experts, prices are expected to continue to appreciate between 6-10% throughout this year.
For Katzer, he said he wouldn’t tell people not to buy, since it depends on their lifestyle and what they need.
“In hindsight, they always say that homeownership is what you are supposed to do, but now, with the advent of Airbnb and lot of rental apartments that are nice, I don’t know if I would be in a hurry to go buy something right away,” he added.
