June 2016

For comparison, this rate is currently hovering around 10 percent in the West, less than half the saturation of Florida markets. Such a high prevalence of REO properties adds a certain level of affordability to the market, especially in a city like Miami that is widely considered to be a luxury market reserved for top tier buyers only. Nationwide, more and more baby boomers are nearing retirement age, and the demand for affordable and stable investments will continue to rise. With impressive growth performance and a large supply of distressed properties, it’s no wonder that this generation continues to invest in real estate in the region. Florida is just one example of the increase in demand for housing in this generation, and markets that manage to strike a balance between affordability and market return may see a boost in performance due to the buyers in this market segment. The dynamics playing out in the top Florida markets are just one of many drivers of market performance prevalent in today’s housing environment. For those looking to liquidate positions in Florida, the influx of demand paints a picture of positive upward price growth now and in the near future, thereby suggesting a sell high strategy. Similarly for lenders and consumers, the availability of distressed properties and a surgingmarket are twokey ingredients for lowrisk investments in the Florida housing market. As the market continues to unfold, continue to look past the headline numbers towards the micro trends emerging. The dynamics of millennials, baby boomers, foreign investors — together coupled with the evolvingregulatory landscapewill keepallmarketpractitioners on their toes. When assessing your position in the market, utilize granular market data and be wary of generalized assumptions, and like our Floridian friends, you’ll be well equipped to enjoy many glorious days ahead!

33 percent and 45 percent since the market trough respectively. Top Floridian housing markets continue to grow and return impressive price gains — Tampa is currently reporting a stellar 12.2 percent annual price growth — and it appears that the baby boomer generation may be responsible for this housing market success. The Sunshine State has traditionally been regarded as prime real estate by retirees that flock to the region seeking a warmer and sunnier alternative to the cold Northeast for their golden years, but the most recent Census data indicates that this move may be more popular than ever. The baby boomer segment of the market — homeowners aged 55 to 74 — has increased more than 2.5x faster than the overall population of homeowners in each of the largest four Floridian markets since 2011. In Miami and Jacksonville, the homeownership in this generation has increased more than 500 percent faster than that of the entire population, suggesting that an increased baby boomer demand for housing in the region could be a significant contributing factor in the markets’ overall success. In Orlando, baby boomer homeownership has increased more than 400 percent compared to the overall homeownership trend, and in Tampa this rate is over 250 percent. Graph 2 summarizes the massive growth in the baby boomer demand pool. Conditions in the region are favorable for baby boomer and retiree investment, but impressive price returns aren’t the only attractive market factor for the state. Saturation levels of distressed properties on the market are still much higher in Florida than the rest of the nation, which is currently reporting around 15 percent distressed saturation. For Florida, this rate averages around 23 percent between the major four markets, indicating that there is no shortage of bargain-priced properties in the region for an influx of fixed income buyers.

Alex Villacorta, Ph.D., is vice president of research and analytics at Clear Capital. Alex is responsible for the research and development of innovative tools and methodologies for analyzing vast amounts of real estate data and providing commentary and analysis on the condition of nationwide markets. Alex created the statistical models which drive the Clear Capital Home Data Index™ (HDI), a powerful tool that delivers the most current and accurate market measures possible. Alex also contributes his insight to the company’s monthly HDI Market Report, which offers a near real-time look at pricing conditions at the national, metropolitan, and local market levels.


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