South Florida rent increases slow
While South Florida apartment vacancy rates remain well below the national average, rental rate increases are slowing down, the Miami Herald reported. This turnaround could be the result of a slowdown in condo conversions and the decision by some investors to turn condominiums back into rentals, increasing rental supply.
Average monthly rental rates in Miami-Dade County in the first quarter of 2007 were $1,058, up just 1.6 percent from last quarter and 5.9 percent from the first quarter of last year, according to a report released by real estate research firm Reis. Similarly, for Broward County the average rent was $1,051, up only 0.6 percent from the previous quarter and 5.2 percent from last year. Average vacancies were 3.8 percent for both counties, compared to the national average of 6 percent.
The nationwide failure of subprime mortgage lenders and expected increases in adjustable mortgage rates are likely to push homeownership down, adding to the pool of renters in South Florida and elsewhere.
Developers discover new areas
Developers are finding new areas in South Florida to build out. Brevard and Indian River counties boast lower land prices and lower building impact fees than Broward, Palm Beach and St. Lucie, the South Florida Sun-Sentinel reported. Another attraction is that Brevard and Indian River lack the affordable housing requirements Palm Beach imposes on communities of 10 or more houses.
So far DiVosta Building Corp., Lennar Corp. and Shelby Homes have been building communities in Vero Beach in Indian River County. DiVosta has also built in Palm Bay in Brevard County, where two-bedroom homes start at a little over $200,000, and three-bedrooms start from less than $300,000. Comparable homes in Palm Beach would start at $350,000. Lennar has five projects in Brevard. Homeowners in these new communities have been a mix of families and retirees seeking to avoid the high prices closer to Miami.
Hotel-condo projects on the decline
Construction of hotel-condos in South Florida is slowing as buyers are disappearing. Projects like the 138-unit Harrick are on hold, and delays are expected on some projects that have been announced but not started.
In the past two years, only 1,250 hotel-condo units have opened in Broward and Palm Beach counties. The Sun-Sentinel reported that 2,500 units are approved or under construction there, compared to 15,500 units in Orlando and 32,800 in Las Vegas.
High prices are scaring away prospective owners. Units that were $650 per square foot in the late 1990s now go for $1,300 per square foot. High prices have caused a dramatic reduction in presales over the past six months. Many developers are unable to sell enough units to qualify for a loan.
Average condo prices in Broward County this January were 6 percent lower than they were a year ago. Average prices in Palm Beach were up 2 percent from last year.
Hotel rates, vacancy rise
Occupancy is down in South Florida hotels — fewer tourists are booking rooms.
However, rates are up and those that are taking rooms are choosing luxury over budget locations. In February, the most recent figures available, rooms in Broward County averaged $180 per night, up 20 percent from a year ago, thanks in part to thousands of Super Bowl XLI spectators. Miami-Dade’s hotel rooms averaged $230 per night, up 24 percent from last year, the Miami Herald reported. The Super Bowl did not help fill rooms though, as occupancy dropped from 88 to 80 percent in Broward and from 84 to 82 percent in Miami-Dade in February compared to a year ago. According to Smith Travel, the number of overnight stays booked has declined in South Florida for 13 of the last 14 months.
The decline in occupancy hasn’t hurt hotel revenues, which were up 10 percent in Miami-Dade last year, according to Smith. The industry prefers fewer rooms being rented for more money, which causes a decrease in staff and maintenance costs.
Housing slowdown hurts job growth
South Florida is feeling the effects of the national housing slowdown on industry and job growth, the Miami Herald reported.
According to the latest data available, year-over-year job growth in South Florida this February was just 1.2 percent, compared with 3 percent in early 2006. The construction industry saw 5 percent job growth, down from 12 percent early last year.
Local businesses — including car dealers, cruise lines, retail and restaurants — cite the housing slowdown as a cause of lower earnings and weak projections going forward.