Special to the American Banker
The housing market in Fort Lauderdale remains one of the hottest in the country, sparking fierce competition among Florida's ever-increasing ranks of mortgage bankers and brokers.
Fueling housing's surge is strong growth in population, fed mainly by retirees, corporate relocations, entrepreneurs seeking a new life, and refugees from nearby Miami who are still reeling from Hurricane Andrew. The storm devastated Miami's Dade County three years ago.
"There is rapid in-migration, including a significant amount from Dade," said Mark Vitner, regional economist for First Union Corp. He added that new housing permits were excessive in 1994 but that the market has worked itself out of its overcapacity problem and is now quite sound.
A major strength of the area's housing market is its diversity, mortgage bankers say, noting that the current average loan is a very middling $110,000. "We have a good mix," said Paul Biondo, vice president of residential lending for NationsBanc Mortgage Co. "We're not like Washington, D.C., or the Mid-Atlantic where everything is a jumbo dollar market. When one part of the market isn't moving, another is."
One unusual example of the market's diversity consists of "teardowns," he says. These are waterfront homes 30 years old or older that are now worth far less than the land they sit on. Buyers of these properties often demolish the structures and replace them with houses twice as large, Mr. Biondo said.
"There always seems to be two or three teardowns going on," he said.
The downside of the market's potency: It's prompting mortgage bankers to swarm into Fort Lauderdale and surrounding Broward County. "Every day someone else is coming in," Mr. Biondi said.
The Fort Lauderdale market was dominated last year by large national players - Chemical, Barnett, Home Savings of America. But five years ago, the top-10 list included such local lenders as Circle Mortgage Corp. in Hollywood and Coral Gables Federal Savings and Loan.
National companies have been attracted by a sound economy that includes several major companies that are doing well and beefing up employment, said Blair Glenn, senior vice president and residential lending manager for Barnett Banks Inc. They include Motorola Inc.'s home pager manufacturing plant; Viacom Inc.'s Blockbuster Entertainment unit; and the Latin American headquarters for Pepsico Inc.
Fort Lauderdale, he noted, will even benefit from one of its sickly companies, Sunbeam, a consumer products supplier that recently hired as its chief executive officer Albert Dunlap.
Mr. Dunlap earned the nickname "Chainsaw Al" for the massive firings and divestitures he implemented to turn around Scott Paper Co., and he has implied he will do the same at Sunbeam. But Mr. Glenn said much of the consolidation would be into Fort Lauderdale. Mr. Dunlap recently bought a $1.8 million home in nearby Boca Raton.
Net new jobs overall will rise by 4% this year for an employment level of 607,900, according to Lynn Reasor, Barnett's chief economist. She predicts 3.3% additional growth next year to 627,900 jobs. The number of households should advance 1.8% to 590,300 this year and by 1.7% to 600,300 in 1997, she said.
The newcomers are arriving from Boston, Miami, New York, Philadelphia, and Chicago, mortgage bankers say. "They're not all retirees," said Vincent Muratore, president and chief executive of First Banker Mortgage Services Inc. "I'm talking about the younger generation."
First Banker ranked as No. 10 in purchase loans in Broward County through May with volume of $23.9 million.
Hurricane Andrew caused many Miamians to move north to Broward. While the migration has slowed somewhat, it is still occurring. "It has never actually stopped," said Mr. Biondo of NationsBanc Mortgage.
The transplants from Miami are attracted to newer houses and schools as well as less congestion. Most of them continue to work in Miami so they are congregating in southwest Broward near Interstate 75. "They have a 20- minute commute to downtown Miami," Mr. Biondo said.
Many of the migrants from outside the region do not qualify for typical home mortgages and therefore are being offered subprime loans. But this does not necessarily mean that lenders are engaging in risky business, Mr. Muratore insists. He notes that compared with most of the country, south Florida boasts a disproportionately high number of well-paid service workers, such as bartenders, waiters, and waitresses.
"They have good credit, they just can't show all their income," Mr. Muratore explains.
Entrepreneurs moving in also fall into the subprime categories, says Patrick Flood, president of Homebanc Mortgage Corp., a subsidiary of First Tennessee Mortgage Cos. Typically, they are people from the Northeast who have sold homes and used the proceeds to start up a business or buy a small company.
They may not fit the credit mold required by Fannie Mae or Freddie Mac, Mr. Flood said, but they can still be good risks. He acknowledges, though, that this kind of business can be tricky. Homebanc has set up a separate operation called Equabanc to specialize in subprime loans, he said. Other lenders including Barnett and NationsBanc have similar operations.
Canadians, South Americans, and Europeans are fueling Fort Lauderdale's second-home market, lenders say. In the past, they headed straight for Miami, but that city's well-publicized violent crimes against foreigners have taken their toll.
"They're coming to Broward instead of Dade," says Barnett's Mr. Green. "You can't avoid the news articles about crime even if it's only an impression."
Mr. Heffernan is a freelance writer based in Atlanta.
