What’s up in the real estate market

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By: Jeff Perlman Editor in Chief
According to a recent study by CoreLogic – West Palm Beach-Boca Raton-Delray Beach, Fla. has the second highest cash sales for real estate in the country.
While the numbers for cash sales are trending down across the country, the West Palm, Boca and Delray markets are still seeing a large number of buyers buying property without any financing.
According to the latest figures available, cash sales accounted for 35.5 percent of total home sales in January 2016, down 4.2 percentage points year over year from 39.7 percent in January 2015. On a month-over-month basis, the cash sales share increased by 1.9 percentage points in January 2016 compared with December 2015. The month-over-month increase was typical for the month of January.
The cash sales share peaked in January 2011 when cash transactions accounted for 46.6 percent of total home sales nationally. Prior to the housing crisis, the cash sales share of total home sales averaged approximately 25 percent. If the cash sales share continues to fall at the same rate it did in January 2016, the share should hit 25 percent by mid-2017.
Real estate-owned (REO) sales had the largest cash sales share in January 2016 at 59.8 percent. Resales had the next highest cash sales share at 35 percent, followed by short sales at 31.7 percent and newly constructed homes at 17 percent. While the percentage of REO sales that were all-cash transactions remained high, REO transactions accounted for only 7.8 percent of all sales in January 2016. In January 2011 when the cash sales share was at its peak, REO sales represented 23.9 percent of total home sales. Resales typically make up the majority of home sales (about 79 percent in January 2016), and therefore have the biggest impact on the total cash sales share.
Perhaps somewhat surprisingly, Alabama had the largest cash sales share of any state at 53.1 percent, followed by Florida (49.1 percent), New York (47.4 percent), Mississippi (45.8 percent) and West Virginia (45.8 percent). Of the nation’s largest 100 Core Based Statistical Areas measured by population, Detroit had the highest cash sales share at 65.6 percent, followed by West Palm Beach-Boca Raton-Delray Beach, Fla. (54.3 percent), Miami-Miami Beach-Kendall, Fla. (53.4 percent), Fort Lauderdale-Pompano Beach-Deerfield Beach, Fla. (51.5 percent) and Cape Coral-Fort Myers, Fla. (51.1 percent). Syracuse, N.Y. had the lowest cash sales share at 11.6 percent.
Tech Sector Growing
A new study by international real estate firm CBRE has good news for those hoping to see technology and biotechnology grow in South Florida.
The trend lines are up in terms of office space and co-working spaces in the region, including in Boca Raton and to some extent Delray Beach. According to the Business Development Board of Palm Beach County, Boca is home to about half of the biotech companies in Palm Beach County, an impressive number considering that the Florida Scripps Research Institute anchored in Jupiter over Boca a decade ago. Here’s a look at the highlights of the study:
•Office leasing by South Florida tech firms doubled between 2013 and 2015.
•Absorption by companies in the biotech services and manufacturing sector increased tenfold. Tech firms now make up 19 percent of office users up from 11 percent in 2013. In 2015, almost 850,000 square feet was leased to tech companies, up 83 percent from 2014.
•In each of the past three years, co-working and/or executive workspaces have signed new leases totaling more than 100,000 sq. ft.
Another bright spot is an increase in venture capital funding. In 2015, South Florida ranked 21st nationally in VC funding just behind long time trendsetter Boulder and ahead of Dallas. More than $300 million in venture capital poured into South Florida in 2015 and the number of firms getting VC money doubled between 2012 and 2015. Among the recipients: Boca’s Modernizing Medicine which received $38 million and is located at FAU’s Research Park.
Biotech is leading the way and now makes up 21 percent of tech leased space, up from 4 percent in 2013.
Shared workspaces or co-working remains a hot category and locally both Delray Beach and Boca Raton are seeing increases in those types of spaces along US 1, Congress Avenue and downtown.