Canadian’s Snapping up Florida Property Bargains: Because they Can

Canadian’s Snapping up Florida Property Bargains: Because they Can

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A few months ago, a report by the National Association of Realtors told us that Florida is by far the most popular region with foreign buyers with 22% of sales. The next closest was California with 12%, followed by Arizona with 11% and then Texas with 7%. Also dominant in the market was Canadians. Taking advantage of the price reductions and the strong loonie (currently at parity with the US Dollar), Canadians are currently making 23% of all foreign purchases in the US according to the National Association of Realtors.

One, Henry Wolfond, who had always had a soft spot for the sunshine state after visiting it every year for family holidays in his youth.

Wolfond watched prices of property in Florida scale the dizzy heights of a boom-time-bubble, putting it out of the reaches of average buyers.

“The euphoria in the United States drove prices up to absolutely unrealistic amounts,” said Wolfond the president and CEO of Toronto-based Bayshore Capital said. “But now the pendulum has clearly shifted.”

Faced with the new reality, pendulum shift of price reductions, whatever you want to call it, it sent Wolfond across the border on a real estate shopping spree. In Florida excellent deals are being done on property every single day, properties at up to 60% below replacement costs. But even by this standard the deal Wolfond close on a beachfront property in September can only be called spectacular.

The Daytona Beach realty scene was worked into a lather about the ‘Canadian guy’ who had apparently purchased 3.82 acres of prime land in Daytona Beach for just $2.5 million (US) — a property that had sold for $23 million in 2006 — a discount of 89%. The original buyer had taken a $20.5-million haircut, symbolizing the depths to which the U.S. real estate market had plummeted.

“We have seen some big discounts here, but that’s an incredible buy,” said John Adams, general manager of Florida real estate service company Adams, Cameron & Co. “We’re used to seeing half-price sales, but this is much more drastic than normal.”

What could be called the bargain on the century was not the last, but the first of Wolfond’s acquisitions in the bargain basement Florida property market. Since the purchase he, along with his Fenix (Spanish for Phoenix) real estate fund have been taking advantage of the strong Loonie and snapping up distressed properties throughout Florida.

But Wolfond and Fenix partners Randy Weisz and Andrew Brown are not alone. They are joined by the likes of Brookfield Asset Mangement Inc., Oxford Properties, Minto Group Inc. and Clublink, companies which are using their massive amounts of capital to get the best deals.

“The U.S. housing market is still unglued after all these years,” said David Rosenberg, chief economist for Gluskin + Sheff and Associates.

Rosenberg, who was the first to call the housing meltdown in the United States when he was the chief North American economist for Merrill Lynch, says it will take three to five years to clean up excess supply of distressed homes, meaning even lower prices around the corner.

“There is a wave of new supply that is going to be hitting the market in the future,” says Rosenberg, estimating that only 20 per cent of the 1.2 million homes in the foreclosure process are on the market so far.

“Expect more deflation, perhaps exceeding 10 per cent before the bottom is reached.”