The real estate market is red hot, and some local homeowners are hoping to cash in. But analyst are worried about what's driving this upward trend and how it will end.
"We thought we'd give it a try and put it on the market," said Sean Premock who recently listed his home in Fort Lauderdale's Victoria Park neighborhood.
The asking price for his nicely renovated, three bedroom pool home is $589,000. That's about $150,000 more than he paid for it three years ago.
Despite the tens of thousands of dollars he's put in to the place, Premock stands to make a handsome profit by cashing out.
"Very much so, a lot of houses in here have increased dramatically over the past two years," he said.
The latest year over year numbers show home prices in Broward jumped 28 percent in the month of July. The median price is $275,000. In Miami Dade, the median price is $230,000 for a single family home. That's up almost 26 percent compared to this time last year.
Analysts say hedge funds and real estate investors are driving this upward trend. According to the most recent numbers from McCabe Research, big money managers purchased 40 percent of all homes in South Florida in July. That shrinking supply of homes is driving up prices.
"Houses, we're buying them for a fraction of what you can build them for, and that will only last so long," said Dallas Wharton, co-founder of Delavaco Properties, Inc., a Fort Lauderdale investment firm that's spent $145 million over the past two years almost exclusively in Florida. They've bought more than 1400 homes and multi-family units. Most of his clients are Canadian.
"For us, we'll go buy the houses, we'll renovate them if need be, we'll put tenants in them. We'll rent them and that's our intention, to have the rental income which provides the yield for our investors, and hopefully enjoy the appreciation on the asset," Wharton said.
But analysts worry that when prices level out, these institutional investors will flood the market with homes for sales and that will, once again, cause prices to drop like a rock.
"Are we creating an artificial bubble here?," Local 10's Roger Lohse asked Wharton.
"You know, I've heard that and I think not. I think absolutely not. You've got to think, where would we be without hedge funds and guys like ourselves? The neighborhoods would be downtrodden. I think we provide a service to the market and it's a free market, anyone out there is free to buy," he replied.
As long as the rental market is strong, Wharton said he'll keep his investors' money in real estate, and homeowners like Premock said they'll be more than happy to take it.
"I am a little concerned with that so, again, that's why I want to take the money and run," Premock said.
Analysts predict this upward trend in home prices will continue for three to five years, and after that, what happens with the real estate market will depend a lot on interest rates and whether banks make it easier to borrow.
The challenge for homeowners hoping to make a buck is to figure out when the market has topped out and sell before the big investors do.