BRITISH HOMES GROUP
April 30, 2010
From today’s Orlando Sentinel…
University of Florida survey: Florida’s real estate has bottomed out
Are things about to turn around for real-estate properties both private and commercial, such as in downtown Orlando? According to 1 study, that is a real possibility even if it is far from a certainty at this point.
Florida real estate has hit bottom and is in the process of stabilizing, according to results of a quarterly survey by the University of Florida.
Private capital – both foreign and domestic – continues to enter the state in search of high-quality investments, said Timothy Becker, director of UF’s Bergstrom Center for Real Estate Studies. As banks start to deal with their problem assets, more deals will come to market, he added.
Also, life insurance companies have started to reinvest in commercial properties after backing off for the past year and a half. Because those companies invest premiums from customers’ policies, they are not deterred by the lack of available bank financing, he said.
While most of the real estate professionals surveyed predicted the market probably won’t get any worse, few said it has actually begun to improve, Becker noted. “One of our respondents summed it up by stating that, ‘If anything, we will get less bad,’ ” he said.
“So if they think things aren’t going to get worse and they may actually get better, it follows that they’re going to want to start investing again,” he said.
While South Florida is one of the state’s strongest areas with its diverse economy, steady migration and influx of foreign capital, Orlando, Tampa and Jacksonville are also picking up.
“Florida’s big cities – those four areas – are less bad off than the rest of the state, and they’re going to be quicker to recover than other places,” Becker said.
The retail and office markets are in the worst shape and will likely continue to struggle until job growth improves and frees up more discretionary spending by consumers, the survey concluded.
Apartments continue to be the strongest sector in the state because of high demand from people moving out of foreclosed homes, Becker said.
Statewide, Florida’s new-home market will continue to be slow as more and more foreclosures become available on the existing-home market, Becker said. “That competition makes it very difficult for new homes to get built and purchased, because buyers can often get an equal or nicer home for a much cheaper price on the foreclosure market,” he said.
The report is more optimistic than some recent economic forecasts, which have predicted the market may further soften through at least the end of the year.
David Stiff, chief economist for Wisconsin-based Fiserv Inc, predicted in March that Orlando residential prices would fall by double-digit percentages through the third quarter and then increase by less than 2 percent from late 2010 until late 2011. Fiserv’s report predicts that housing prices in Florida will fall in all 22 of its largest markets, with prices in Miami falling by one-third through the third quarter of this year.
Mary Shanklin can be reached at firstname.lastname@example.org or 407-420-5538.
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