Florida has always been a popular playground for city escapees who want to enjoy the sun, surf and of course the popular Mojito cocktail, while they watch the sun set over the ocean. Living in Florida is about the lifestyle and having fun.
Despite the great attraction, Florida seems to suffer too from the global property melt down. Foreign investors aren’t as active as they used to be only a couple of years ago. According to a recent study by the National Association of Realtors, some 25% of foreign buyers were investing in Florida. On first inspection, this figure doesn’t seem too bad. But when we take into account that the overall number of sold properties has gone down, it becomes clear that the market in Florida has slowed down.
Figures clearly indicate a drop in overseas investors
Figures show that typically foreign buyers were purchasing mainly holiday homes in the region of $297,400. It is also interesting to see that overseas buyers dig deeper into their pockets on average, spending 36% more than domestic buyers.
Another interesting fact is that despite the weak US dollar, overseas buyers aren’t rushing to buy properties in the US. One would wonder why this is the cause. We can only speculate that perhaps even though Asians, Middle Eastern and Europe buyers generally have more buying power, (due to favorable exchange rates), they too have to tighten their belts due to their own local market condition.
Perhaps they are waiting for even better opportunities. Or else they feel the market is still overpriced, even though Florida home prices have been falling.
Interestingly enough, when US Realtors were surveyed back in 2007, 32% returned their survey stating they had dealt with at least one foreign buyer in the previous 12 months. In the 2008 survey, only 26% of the 4,000 real estate agents stated the same. This clearly indicates a drop.
There seems to be a divided opinion amongst experts too. Some say the added cost of insurance and tax is keeping investors at bay. After all, Florida has always been known for the odd Hurricane, therefore it is understandable if some people are cautious.
Marc Rasmussen, a Realtor with SKY Sotheby’s International Realty in Sarasota, on Florida’s western coast said he has seen a jump in interest among international buyers as prices are bottoming out. ‘There’s a lot of activity from Canada and Europe because of the strength of the currencies,’ he said.
‘The values of properties have come down 35%, some even 40% from the highs of 2005. In conjunction with the weak currency, it’s a pretty good time to be a buyer,’ he added. (credit: Property Wire)
Straight from the horses mouth
To find out, what exactly goes on, we contacted Ervin Matik of Matik Global Realty, a Florida agency. Please read on to see what Ervin had to say.
What are your thoughts on Florida’s appeal to international buyers?
“This is absolutely the best time to buy in Florida. Two years ago when we were waiting in lines, lotteries, sending offers to homes that just got listed that day.. we were thinking the market was just great.
The buyers were happy, the sellers were happy and we were happy. Well, we started not feeling so happy when the market started to shift. The prices started dropping, the lenders started tightening and the buyers got scared.
Because most of those buyers had something to sell and their property wasn’t selling, they couldn’t buy. The whole domino effect took place and one thing after another, we all started looking for new ways, new solutions.
What areas in Florida do you advice investors to buy?
I, personally sell in middle to higher end price points and I have found that once I have a solution for the sellers who cant sell, they are so much more comfortable with buying.
My buyers are mostly word of mouth clients who have had recommendations from someone they know – generally local professionals.
I always say… people are always going to move to Florida. Just like our family did and just like 90% of Floridians I know. We’re all from somewhere else…why – because we want to relax, enjoy some fresh air, have some quality in our life that we couldn’t find in city living.
We live in Central Florida … 30 minutes to a beach, 30 minutes to a park, where we can feel like were on vacation whenever we feel like. What I love, I can sell best.
What sort of units do you think investors should go for and Why?
Foreign buyers can do this when they want as their second home. They can buy a property where they know the industry grows every year due to vacationers, enjoy their time here and have the property looked after by a professional property manager.. I also do this as a service to my buyers and it gives them some relief to know that I can look after their property as my own.
I would recommend a Foreign buyer to purchase a Single Family Home with a pool or in a community with a pool.
Are repossessions and foreclosures a way to invest?
I sell repossessions and foreclosures as long as the buyer understands it will be 99% as a ‘As-Is sale’ and they would have to do a renovation project.
Finally what are your 3-5 year projections of Florida’s property market?
I believe in 3-5 years, the market will be just as strong as it was 2 years ago but we will all work with more caution and advise our buyers to be more cautious. With more caution, we can make sure that it doesn’t cause this many foreclosures and losses to investors.”
We would like to take this opportunity and thank Ervin Matik for taking the time to answer this email interview.
Photo Credits: ShootingNikon (Flickr)