South Florida property developer Joe Milton has put up $100 million of his company’s cash to set up a mortgage company to fund loans for foreign buyers, because foreign buyers are often locked out of the market if they don’t have cash. Although sixty percent of Milton’s buyers are foreign, the few loans that are being made to foreign nationals come with terms deemed unacceptable by most. However, more than half of these foreign buyers are paying everything in cash, with European and Canadian buyers most likely to reject the financing option.
Since the global economic crash, South Florida’s booming property market has been in meltdown, and foreign investors have been taking note of this. The weak dollar is also giving them good reason to take a look at South Florida property. In many areas, residential real estate is now selling for less than half of what it did at its peak. The Florida Association of Realtors reported that the average home price in Miami-Dade fell to $190,900 in September, which is a 30 percent fall compared to a year ago. The average condo price fell to $132,900, a drop of 37 percent.
Europeans are big buyers in South Florida, with Swiss, Spanish, Italians and English all seeing it as a good time to buy. They account for 26 percent of foreign buyers. But it is the Latin Americans who are the largest contingent, making up 52 percent of foreign buyers. Walter Defortuna, chairman of Fortune International Realty, said that for the first time in his 30-year career it’s cheaper to buy an apartment in Miami than in a major Latin American city such as Buenos Aires or Mexico City. “We were always two to three times more expensive than them, and today we are cheaper. They perceive that, no question,” Defortuna said. He also added that these new buyers are more interested in a long-term investment, not the short-term gain. American real estate agents are conducting investment seminars in major Latin American cities with the aim of spreading the word about the affordability of South Florida property.
South Florida’s appeal has always been strong thanks to its beachfront lifestyle and the diversity of nationalities that have made it their home. The Miami-Fort Lauderdale-Miami Beach area is especially popular. A July survey conducted for the Florida Association of Realtors found that almost one in four foreign sales in Florida this year took place in that region.
Photo credits: exalthim via flickr