Find out what’s happening in the property investment arena both in the UK and internationally
A Look into the Future of the Florida Property Market
June 21, 2011Article by Ray Withers
The Florida property market is currently one of the hottest in the world as investors from the UK, America, India, Brazil, China and around the world converge on the bargain infested sunshine state. These buyers have been brought in by the massive amount of bargain properties available for sale, which is a direct result of the massive foreclosure problem in the state.
This is obviously a unique situation, and not only one that would be difficult to replicate in the future, but one that no one would ever want to. Whenever we pundits look upon such strange occurrences it almost becomes impossible for us not to start peering into the direction the market is taking, to try and paint a picture of its potential future — the ghost of property market’s future if you will.
When it comes to Florida, this is incredibly difficult to do. Florida has long been one of the most popular tourism destinations in the world, so when low cost flights opened up the global holiday home shop, it stood to reason that Florida would become one of the most popular markets for property buyers as well.
While tourism was hit hard by the crisis, it is finding its feet again now, and this cannot fail to affect the algorithm that we are putting together to tell the Florida property market’s future. Then you have the fact that many of the people who lost their homes in Florida were from the first wave of foreign buyers. This can’t fail to have an impact either. Eventually tourism will completely recover. Eventually all the distressed and repossessed properties will be sold. Then, if not before, the Florida property market will be able to find its definitive bottom, ground zero, and this is where we must truly build our vision of the future from.
At that point a huge proportion of homes in Florida will be owned by foreigners; while this was true before the crisis it will be much bigger. Foreigners have a whole different set of priorities compared to Florida and American-born owners do. Are they living in the property? Are they renting it out to the local population, to holiday makers, or not renting it out at all? Are they in it for the long term or simply looking to sell as soon as a suitable appreciation has been made?
These questions are all important. Like anywhere else, Florida needs more and more homes each year, the high level of foreign owners could hinder that, and too many people selling when the market bottoms could trigger another fall in prices.
However, the most important thing we have been shown during the crisis is that Florida property has undying popularity. Of course people are going to buy cheap properties when they get the chance. That is not to say they wouldn’t be buying anyway.
So when the market does bottom things will most likely carry on as they always have, Florida property will be popular with buyers, and there will be plenty of demand from holiday makers. By that time the American and global economies should have come through the other side of the crisis, and demand for Florida property will once again be a balance of foreigners and locals. The only thing to watch for is that the banks behave more responsibly than they did in the run up to the crash, whether they will do so I do not know — I haven’t got a crystal ball.