LYND Targets Condos as Homes Become Unaffordable

Home affordability has become an issue in the United States with high interest rates and soaring prices. CRE firm LYND is looking to explore an alternative with condos, particularly in what it views as an under-invested market in Dania Beach, Florida.

A recent report from ATTOM  found that 80 percent of homes in the U.S.’s 589 counties were deemed unaffordable. Major expenses ate up at least 43 percent of average local wages.

This comes after the 30-year Fixed Mortgage rate was hovering mostly between 2.50 and three percent during the height of the pandemic. Now, because of action from the Federal Reserve to slow down inflation, rate hikes have sent the figure between mostly six and seven percent.

“Everybody who was saving up money to buy a home, all of a sudden got told, sorry, you can’t buy a home because the payment that used to be $1,000 is now $5,000 and you can’t afford the house,” David Lynd, President and CEO of LYND told GlobeSt.

FLORIDA’S UNIQUE SETTING

So that forces some Americans to at least look at condos. Typically these are cheaper than homes. And Florida, in particular, has an interesting dynamic to it. Right now, there is what’s called a wealth migration to the Sunshine State, meaning higher-income individuals and businesses are moving there. 

So that has the real estate developer exploring condos, with a focus on luxury units.

Earlier this year, LYND unveiled its 380-unit tower in Dania Beach, called Aileron Residences. The cost of each condominium unit ranges anywhere between $350,000 and a little below $2 million, depending on the space desired.

A CHEAP OPTION IN AN EXPENSIVE MARKET

For context, the average condo in Dania Beach sells for between $800,000 to $850,000, according to David Lynd. So Aileron Residences might bring some value for buyers.

“What we see here is it’s always good to be the cheapest option in a very expensive market. And so we’re the cheapest luxury option that’s within reach of people’s spending capability.”

David Lynd identified the Dania Beach market as an “area that got skipped over,” which is why the company swooped in to purchase the property at $880 per foot.  The CEO noted that condos in other South Florida markets like Miami can sell for up to $2,000 per foot.

“You cannot buy a building with this kind of luxury, amenities on the water, on a canal, for this price per foot, anywhere in Florida,” he said.

“The only reason the pricing is where it’s at for all the value you get is because it’s located in a market that is not known for condos.”

Already, David Lynd said that the Aileron Residences project has found 40 buyers, with the condos only being on the market for 60 days. The 15-story tower is over 10 percent sold.

STRONG FUNDAMENTALS

David Lynd is confident that Dania Beach will be the next region in Florida that takes off thanks to its prime location.

“Because of where it sits position, between West Palm Beach and Miami, makes it the perfect spot for a commuters paradise to work here, live here, and visit your friends in Palm Beach, or work in Dania and go down and visit Miami on a weekend,” he said.

“So the bright line has made the connectivity of the eastern seaboard phenomenal.”

David Lynd values Dania Beach for its strong mix of restaurants, bars, hotels, and movie theaters, making the opportunity to develop condos within walking distance of those entertainment venues that much more attractive.

While David Lynd has made a career of trying to identify under-utilized potential multifamily locations before they take off, he admitted right now it’s tough to match the upside of Dania Beach, with all the wealth that has been flocking to Florida.

‘It’s just really created a very unique sub-market, and so it’s very difficult to take that market dynamic and confidence in any other project in the country because no other market has those dynamics, David Lynd said.

NOW COULD BE A GREAT OPPORTUNITY  TO STILL BUY

While interest rates have been high, David Lynd still sees a good opportunity to buy if it makes sense. Because once buying demand picks up again when the Fed starts cutting rates low enough, prices could go up.

“If you buy today at $880 a foot, you get the project completed, and then you take hold of it. No matter where interest rates are,” he said.

In three years from now, that same project could cost up to $1,200 per foot, according to David Lynd.