This is our re-write based on an article by Amber Bonefont.
While the national housing market has slowed down, South Florida continues to witness positive gains in home values, albeit at a slower pace. According to a report by ATTOM Data, a provider of nationwide property data, approximately 65.3% of residential properties with mortgages in South Florida were classified as "equity rich" in the first quarter of this year.
To determine the number of properties building equity, researchers analyzed mortgaged residential properties in the area with varying loan-to-value ratios. To be considered "equity rich," the combined estimated loan amount could not exceed 50% of the estimated market value, indicating that homeowners possessed at least 50% equity.
The data reveals a steady increase from the previous two quarters in the tri-county area: in the fourth quarter of 2022, around 64.5% of homes were classified as equity rich, while in the third quarter of 2022, approximately 63% of homes fit the criteria.
South Florida's sustained rise in equity can be attributed to its population growth, with out-of-state buyers flocking to the area to escape larger metropolitan regions with higher housing costs.
"Our real estate values are being upheld by population growth because people are quickly absorbing the limited remaining inventory," explained Whitney Dutton from the Dutton Group in downtown Fort Lauderdale. "When they sell their million-dollar home elsewhere and see what they can get here, they say, 'I'll take it since it offers more space than what I'm accustomed to.' This drives up the resale value of homes."
On a national level, however, there has been a slight decrease in the number of homes classified as "equity rich," as noted in the report. In the first quarter of 2023, approximately 47.2% of mortgaged homes were equity rich, a small decline from the previous quarter's 48%.
"The small equity downturn serves as the latest indication of how declining home prices in many parts of the country are beginning to impact homeowners following a decade-long market boom. This comes at a time when home-seller profits have dropped to their lowest point in two years," the report explained.
In South Florida, it is unlikely that equity gains will diminish, as the market is still expected to see increases in the coming year.
"We may witness a 3-5% rise in property values over the next year, which will impact equity. While we won't see the double-digit increases we experienced in recent years, price hikes will be more stable," added Dutton. "The southeast of the country is projected to be one of the most active regions in terms of population growth, and people need a place to live. They will continue to invest in real estate here."
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