Residential Multifamily – Market Watch Report

Author: Rich Barnhart

A Very Popular Real Estate Investment

Residential multifamily (2-4 units) has always been a popular investment in the Fort Lauderdale area for several reasons. First of all, these properties are affordable for most investors and financing options are more plentiful compared to larger commercial multi-family (5 or more units). Owners can live in one unit and rent out the other units to offset their expenses and qualify for owner-occupied financing. Residential properties can be rented long-term or short-term as vacation rental properties. Vacation rentals, while more work to manage, can provide a much more attractive return on investment, and because they have to be maintained in much better condition these properties tend to hold their value much better. So, what’s the downside? The downside for investors is that these properties are in such demand that prices remain high and inventories remain low despite the pandemic.

Supply and Demand

The demand for residential income property has been high for many years and overall housing supply has been low, so before the pandemic we already had high prices and low inventory. Sure, some landlords have suffered over the last 6 months due to non-payment of rent by unemployed tenants and their inability to evict. This may be why we’ve see an increase in new inventory recently, but based on the activity of the last 3 months there is still less than 6 months of inventory in the market and median prices are up about 3% in the category. Demand for long-term and short rental housing should remain high as we approach our warm winter months and more people migrate to South Florida from other northern states.

The Data

We analyzed the data from our local MLS where most residential income property (duplexes, triplexes and fourplexes) are listed and sold. Our geographic area includes all of Broward County including Fort Lauderdale, Hollywood and Pompano Beach, Broward’s three largest municipalities. We used the most recent 3 months (July, August and September) for 2020 sales data since sales were limited due to the pandemic lock down prior to July 2020.