Periodically I will take a descent into real estate geekery (where I began this journey) and talk about the drivers of real estate valuation in the neighborhoods studied in my Yearbook. (Did you get your copy, by the way? You can get yours here.)
I will start with the area near and dear to my heart, and familiar to many of you. Wilton Manors is the center of LGBT+ life in south Florida — one of THE centers in the US. With its mid century homes, restaurants, and culture and nightlife, it is also fashionable for all. In addition to Wilton, there are several nearby neighborhoods that compete with Wilton for buyer attention, and have properties at similar price points.
Notably I exclude West Wilton (west of Andrews Avenue) from this review. On average, properties in West Wilton are more competitive with the Middle River Terrace and Lake Ridge neighborhoods in Fort Lauderdale, so I will analyze those three areas in a later report.
Let’s consider dry lot (no water frontage) homes first.
You may recall from the Yearbook that prices of single-family homes in this geographic area were relatively flat in 2024, with the median selling price at about $750,000.
Now, what factors drive whether a home is above or below that price?
The first thing everybody jumps to is “price per square foot.” The bigger the home, the higher the price. And that’s true, sort of. If you were only going to choose one measure to use in comparison, that’s the best one to use. But what I found, looking at actual sales prices, is that price per foot is only a moderately-good predictor at best, standing alone.
Statistically speaking, price per foot has a correlation coefficient of 0.60 — moderately good, but not great.
You need to consider other factors in determining a proper value — and some of them have significant, even dramatic, effects on valuation.
The way I look at it, the value of a particular home is a function of a basket of factors, including:
- Location;
- Size of home and lot;
- Age of home; and
- Presence (or absence) of various amenities — e.g., number of bathrooms, is there a pool, hurricane impact doors/windows, and others
It turns out, you can perform a multi-variable linear regression on all these and other factors and develop a very robust model for the true “mind of the buyer” – what people are willing to pay for properties with various combinations of qualities.
Here’s what I found. I’ll speak in general terms and hold onto the absolute amounts for benefit of my clients:
Location – all other things being equal, properties in Center Wilton, East Wilton (including Coral Shores) and Poinsettia Heights command significant premiums to properties in the other neighborhoods.
Size of home and lot – you pay more for more square footage, whether in house or lot. You need to consider both. (A sidenote — here in south Florida there are three measures of property square footage in common usage: area under air/cooling; “adjusted” square footage (which credits a partial amount for areas like Florida rooms); and “total” square feet. All three measures are available for just about every property in the county at the property appraiser website (bcpa.net). I tested all three and found the measure with the best correlation with actual sale price was the adjusted square footage. So my modeling used that measure.)
Age of home – there is a definite discount for the age of the home. Everything depreciates to some degree. New(er) homes command higher values. (By age I mean years since the year built, not the “effective age” sometimes cited.)
Amenities – here’s where things get really interesting. As I did many years ago, it is still the case that when you look at actual buyer behavior over hundreds of purchases, there are certain improvements and amenities that add considerable value to properties — almost certainly value in excess of the cost of the improvement.
Specifically:
- More bathrooms equals higher value. (Have a powder room? Can you convert it to a 3/4 or full bath?)
- Swimming pools add considerable value.
- Also, hurricane impact doors and windows are value generators.
How does this play out in the market? Remember – the Fort Lauderdale area developed south to north, and east to west. Homes in Poinsettia Heights, Center and East Wilton are on average a bit smaller, on smaller lots, and are older than homes in the other neighborhoods. Yet as I said earlier, there is a clear location premium for those three neighborhoods. Put it all in a pot, stir it up, and the end result is that valuations in all these neighborhoods are roughly the same, in dollars. But the homes are different.
Want to discuss further? Contact me and let’s chat! (And please take a look at the Yearbook!)