During a five-year run of real estate prosperity, some South Florida communities that bore the brunt of the excruciating housing collapse are enjoying the biggest spikes in value, homeowners and brokers say.
Margate, Oakland Park and Lake Worth are among seven cities in Broward and Palm Beach counties where median home values have more than doubled compared to 2012, according to Zillow, the real estate website.
In Oakland Park, for example, the median value in April was $189,600, 107 percent higher than it was in April 2012, at the start of the housing recovery.
Near the peak of the pre-recession boom in April 2006, the city’s median had ballooned to $259,000 before plummeting 65 percent, one of the worst slides in Broward.
Richmond, Va., transplants Lynda Somers Donahue and her husband, J.D., bought a home last year two blocks off Federal Highway near the Funky Buddha Brewery in Oakland Park.
The couple paid $397,000, but Donahue, a real estate agent, estimates the two-bedroom home with a den already has gained $50,000 in value with only minor improvements, including new cabinets in the kitchen and spruced-up terrazzo floors in the bedrooms.
“It’s a very safe neighborhood,” she said. “We ride our bicycles all over the place, and people say ‘hi’ to each other. I don’t think you could find a better spot.”
Values in other hard-hit areas — North Lauderdale, Palm Springs, Greenacres and Lantana — also have rebounded sharply following the six-year downturn.
“We feel very fortunate,” said Rich Thorpe, a repair manager for Pratt Whitney who bought a home last summer with his wife, Raeann, for $312,000 in the River Bridge development in Greenacres, in the central part of Palm Beach County. “You can definitely tell values are going up in the neighborhood. There’s lots of house pride here. People are constantly making updates.”
A handful of cities, including Lake Park, West Park and Tamarac, fell just short of 100 percent increases, the Zillow figures show.
Values have increased substantially all across Broward and Palm Beach counties during the past five years, though some upscale areas haven’t seen as much of a rebound. The smallest gains belong to Parkland (34 percent), Atlantis (47) and Highland Beach (49).
Zillow’s median values represent a mix of single-family homes, townhomes, condominiums and co-ops. The median means half the properties are worth more and half less.
With some exceptions, the communities sporting the biggest price gains over the past five years are made up of modest homes in working-class neighborhoods that struggled mightily once the housing boom ended.
Homes fell into foreclosure after their owners lost jobs or couldn’t keep up with the higher payments on risky, adjustable-rate mortgages.
“These markets got hit hard with the debacle of the Great Recession,” said Mike Pappas, president of the Keyes Co. in South Florida. “In that ’08, ’09, ’10 range, out of 10 sales, seven of them were short sales and foreclosures.”
When prices bottomed in 2012, investors swooped in, some buying homes for less than $100,000 and launching major renovations.
In many cases, they installed glistening granite kitchen counter tops, replaced worn carpeting with shiny wood floors and added lush new landscaping to brighten curb appeal.
Homes that once were eyesores with overgrown front lawns and appliances ripped from the walls soon sparked bidding wars among first-time buyers and young families who were eager to buy new digs in move-in condition.
In late 2015, investor Allie Greenstein paid $129,000 for a three-bedroom, bank-owned home off Commercial Boulevard in Oakland Park.
Greenstein bought the property with money from a private lender. The home was in such terrible shape that no traditional lender would have granted a mortgage, she said.
“It was abandoned, and there were leaks everywhere,” Greenstein said. “When you looked up [to the roof], you could actually see the sky.”
After spending $36,000 for a new roof and completing other major repairs, Greenstein rented the home for a year. She’s under contract to sell her renovated property this month to a first-time buyer for well above the $239,900 asking price.
“I saw right away after I purchased it that value was skyrocketing, and it still is,” Greenstein said. “I’m just getting a little tired of being a landlord, and I’m ready to cash out.”
Mike Smith still lives in the three-bedroom home in Margate he bought in 2012 for $168,000 as part of a short sale. The previous owner had paid $305,000 in 2005, records show.
Margate’s median value dropped 65 percent during the bust, but has increased 111 percent since Smith bought in the city, according to the Zillow figures.
Smith, an engineer, said he’s mildly concerned that prices have risen so rapidly in recent years. He doesn’t want to see another housing bubble.
He has no plans to sell anytime soon, but he’s comforted in knowing that the market is so vibrant.
“If, God forbid, I had to sell and downsize, I know I could make a profit,” he said.
Because the jumps in home values are occurring from the bottom of the market up, another housing bust is less likely, said Val Chiasson, a South Florida home appraiser based in Boca Raton.
He and other real estate observers said values already are starting to slow. What’s more, they say, stricter lending standards in place since the housing collapse are designed to prevent a repeat of what happened before.
While values in low- and middle-income communities had the most room to grow, another factor in their recovery is the lack of affordably priced new homes being built across South Florida, Chiasson said.
Because so little available land is left, the cost of dirt has soared. That means builders must deliver luxury projects to make the most return on their money, Chiasson said.
The severe shortage of new workforce housing has driven values of existing homes higher, pricing teachers, police officers and other middle-class workers out of the market, officials said.
“We have an ever-increasing demand for low-priced housing, but the supply is not increasing,” Chiasson said. “If they were building more affordable homes, we probably wouldn’t see those prices going up as much.”
Tribune Content Agency