Key facts
- Vertical real estate markets in South Florida present challenges in defining comparable properties.
- Unit views, floor plans, and buyer appeal can differ significantly even for units in the same building.
- Fannie Mae defines market area by where demand and competition originate, prioritizing buyer behavior over proximity.
- Freddie Mac has eliminated fixed distance parameters for neighborhood boundaries.
- The marketability of a condo unit depends on the project's appeal, amenities, and fees, according to Fannie Mae.
- Valuation technology can leverage market structure data to understand property relationships.
In the complex vertical real estate markets of South Florida, including Miami, Fort Lauderdale, and Palm Beach, determining accurate comparable sales requires a nuanced approach that extends beyond simple geographic proximity. Two units on the same floor of a high-rise, directly across the hall from each other, can represent distinct properties to buyers if one offers an ocean view and the other a city view.
Fannie Mae's guidelines emphasize that comparable properties should appeal to the same market participants as the subject property, suggesting that buyer behavior is a more critical factor than mere distance. The question of which property a buyer would consider if the subject unit were unavailable helps define the competitive environment. This competitive set might include units in the same vertical stack, other units within the same building, or even properties in different towers.