South Florida defies national trends, sees steady growth in home equity

Broward County, Florida – In the face of a decelerating national housing market, homeowners in South Florida continue to enjoy significant equity gains, with over 65% of mortgage-carrying residential properties deemed “equity rich” in the first quarter of the year, as reported by ATTOM Data, a premier provider of comprehensive property data nationwide.

The term “equity rich” refers to properties wherein the amalgamated estimated loan amount is less than half of the property’s estimated market value, thereby implying at least 50% equity ownership by the homeowner. Researchers determined this status by examining mortgaged residential properties in South Florida, specifically focusing on properties with varying loan-to-value ratios.

The recorded data reveals a consistent ascension in equity-rich properties over the last three quarters in the tri-county region. In the third quarter of 2022, around 63% of homes were equity rich, which climbed to approximately 64.5% in the fourth quarter of the same year.

Here is a breakdown by county:

• Palm Beach County: The first quarter of 2023 saw 68.3% of homes as equity rich, slightly down from the previous quarter’s 68.8%.
• Broward County: Equity-rich homes increased from 61.5% in the fourth quarter of 2022 to 62% in the first quarter of 2023.
• Miami-Dade County: The percentage of equity-rich homes rose from 64.6% in the fourth quarter of 2022 to 66.2% in the first quarter of 2023.

This surge in South Florida’s home equity is largely due to the inflow of out-of-state buyers seeking refuge from the higher housing costs of larger metropolitan areas, thus causing a population boom.

Whitney Dutton of the Dutton Group in downtown Fort Lauderdale explained, “The ever-growing population is maintaining our real estate values as buyers swiftly consume the remaining limited inventory.” Dutton further noted that new residents often sell their old homes for substantial amounts, which in turn pushes up local resale values as they seek more spacious residences in South Florida within the same price range.

Contrarily, the national scenario has witnessed minor reductions in equity-rich homes. As per the report, approximately 47.2% of homes with a mortgage were equity-rich in the first quarter of 2023, a slight dip from the preceding quarter’s 48%. This downturn, albeit minor, signals the impact of nationwide home price declines on homeowners after a decade of booming markets, coinciding with the lowest home-seller profits observed in two years.

Yet, for South Florida, a contraction in equity gains seems unlikely as the housing market is anticipated to continue its growth trajectory in the coming year. Dutton said, “The next year might witness a 3-5% escalation in property values, which will inevitably impact equity. Although we won’t experience the sharp increases of the past few years, the price inflation will be more balanced. Given the projected population surge in the southeastern region, the demand for homes will persist, fueling the real estate market.”