The Worst in Housing Markets in Florida is Behind us
Article: As prices start to recover, residential real estate in Florida may be a good buy.
You can get a lot of scary rides in the amusement parks in Florida but no roller coaster ride could be quite like the real-estate market over the last few years. Between 2004 and 2007, Florida had one of the largest real-estate booms in the United States. Careless mortgage lending and irresponsible borrowing were the causes of the boom. However, when the market in the US collapsed, Florida was one of the first to implode.
Luxury Florida Property
Prices fell in the state by more than 40% from peak to trough, and popular places like Orlando saw a decline from US $250,000 at the peak to US $115,000.
- Recent data suggests that the worst is now over and that a recovery has begun.
- The real GDP in 2013 is expected to grow by just under 2%.
Who is buying?
Buyers of residential property are slowly coming back and business has begun to pick up.
- One broker, who used to specialize in selling to buyers from Britain, says that his British buyers have been squeezed out by the strength of the dollar and the downturn in the UK economy.
- He is now dealing with so many Brazilians that he is seriously toying with the idea of learning Portuguese.
- Another broker says that the British have dwindled to 5% of his clientele and buyers from Brazil, Canada, Norway and China are at the top, followed by US buyers from the cold states in the North.
- What is more, many of these buyers are paying cash in order to buy a second home.
The residential property market in Florida
The rebound in the holiday-home market in Florida is a bright spot but, despite house prices rising over the last few months, some 20% of homeowners are still in negative equity territory.
Though interest rates are low, credit criteria continue to be stringent and the recovery appears to be driven by investors and homeowners trading up.
- This is healthy but does not create new homeowners or absorb more houses.
- Unemployment is declining but still well over 8%.
- In certain places like Tampa and Miami, prices are up around 9% each compared to the low point in 2011.
- There is also a reduction in the supply and some experts believe that the inventory has reduced by half.
- One expert points out that homes that are properly priced are being sold within days of being listed.
- However, the foreclosure rate is still the highest in the country and the state is still one of the most distressed real -estate markets following Nevada.
Compelling reasons to invest in Florida
- Prices are low
- The market is showing signs of recovery
- Supply is plentiful and you have a wide choice of houses
- Mortgage rates are at their lowest
- Florida is starting to show signs of positive GDP growth again
- The state attracts a lot of migrants in search of the sun and this translates into more home buyers
- Florida continues to be a favorite for retirees to settle
- You’ll have access to a great lifestyle
The bottom line
There are clear signs that the Florida housing market is beginning to recover and you may wish to take advantage while prices are still relatively low. The worst is definitely behind us and you can look forward to some capital appreciation.