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Florida Property Market: A Goldmine Of Opportunity And A Conundrum
March 5, 2010Article by Ray Withers
The Florida property market is currently a gold mine of opportunity for foreign investors. When the first repossessed properties in Florida began appearing on the international market (once the banks had sold the best ones to friends and families) at the beginning of last year, it immediately became apparent that there was some good opportunities to be had — that is, for those with the time to carry out renovations, and — of course –, the cash to buy on the spot.
What very few people would or could have predicted however, is the abundance of brand new developments that would start leaping onto the international marketplace at absolutely crazy prices. While developers in Portugal and other places battened down the hatches, hunkered down and waited for the market to turn, Floridian developers rolled up their sleeves, closed their eyes into a wince and began offering their properties at discounts of up to 70%.
The same thing has been seen in Spain and other places to common effect; a surge in sales as bargain hunters flock from the four corners of the earth, with Britain — as usual — making up its fair share of the contingent. This makes the Florida property market — like all the others — somewhat of a conundrum:
As sales continue to rise up to their pre-bust levels, there is absolutely no way for observers, economists, analysts, researchers or, most importantly, developers to gauge exactly how many of these buyers would be buying if it weren’t for the huge discounts. Further: no way to gauge what effect the removal of said discounts would have on the market now that confidence is growing in the economic recovery, both in the US and internationally.
Whilst being very clear that this was in no way a prediction, David Cox, director of international property investment consultancy Property Frontiers offered his words of wisdom on the situation:
“If it was mainly investors buying then it would be easy to say that the demand would quickly reduce upon the removal of the discounts, but the truth is that the buyer types and reasons are so diverse, that we have no such easy way of gauging the effect removing the discounts would have.
“What I will say is that investors are mainly buying because of the discounts, and they would not buy if the pre-discount prices were reintroduced. However, this is highly-unlikely given that market values have changed so drastically in the last 18 months. Whether these investors would buy if prices were simply put up to their current market values would depend on the local economic fundamentals, and/or the state of the local tourism market in areas zoned for holiday lets.”