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Florida in for a Rough Ride
June 4, 2010Article by Ray Withers
The Florida property market is in for a bumpy few years, and unlikely to return to anything like normalcy until at least 2015, according to international property investment consultancy Property Frontiers. The firm believes that oversupply will plague the market until then, as many of those people buying today are not buying-to-use but buying to resell.
“Since the middle of last year, sales have been increasing in Florida as Americans join international buyers in snapping up distressed and repossessed real estate at bargain basement prices. This has undoubtedly been a good thing in the short-term, because repossessed properties are nothing but trouble for a number of reasons; they drag a neighbourhood down, and prevent it from bottoming, and so the quicker they can be sold the better.
“However, most of the people buying property now are not buying to use, they are buying to resell when the market recovers. Thus, we run the risk that every time the market starts to recover; floods of Florida property for sale will swiftly snuff it out again.
“It is okay to say: no this won’t happen, because the investors are mostly professionals, who know about the supply/demand dynamic. But we can’t know what could change in their circumstances between now and then. It is entirely possible that every recovery in the Florida property market will bring sufficient new supply to cause, at best stagnation, and at worst more price falls. And that is after the market starts seeing normal sales, in other words after the repossession levels are back to normal. With all this to contend with, we believe 2015 is an early forecast for the start of a sustained recovery in the Florida property market.”
Luckily there are signs that the repossession problem is starting to slow: according to repossession tracking agency RealtyTrac, defaults fell 7% in May, and overall repossession activity was down 3% on the month and at almost exactly the same level as in May last year, signalling that repossessions may have reached their trough.
Cox finished by saying: “the properties we are marketing are packaged around strong rental yields, with capital gain promised on a buy to hold basis. Investors who are earning strong rental yields needn’t care particularly how long it takes for the market to recover.”
Property Frontiers are currently marketing Florida property for sale at prices starting from £35,000, which buys a 2 bedroom condo in the luxury Village at Town Center development just a few minutes from Disney World.