Richard Way, Editor for the A Place in the Sun magazine asks Lee Weaver of the British Homes Group Florida for an update on the current Florida market.
Has the Florida Market hit rock bottom yet or is there still a fall in prices to come?
According to US industry expert Hank Fishkind the UK’s favourite Florida property market, Orlando, is either at bottom or close to it in terms of pricing. Although the housing slump overall will continue, Fishkind predicted that consumers looking for home prices in Florida (and particularly in Metro Orlando) to fall much more are not likely to be rewarded for their patience. Other industry and economic sector reports bolster his opinion; UCF economist Sean Snaith sees stabilization by mid-year and the National Association of Realtors (NAR) project median price increases by 2009. With unemployment at 3.9%, job growth steady, new movers to the state remaining strong and tens of millions of yearly visitors, Florida has too strong a foundation not to quickly recover from this pricing and inventory adjustment. I think that most people are aware of that and that’s why the world wide interest for Florida property right now.
Will 2008 be the year the market starts to turn around or level out?
Probably "level out". I visualise the letter "u" with a flat bottom and I picture the market just entering the bottom curve of the left line. I think the biggest determining factor of how quickly we move off that bottom line is inventory levels. Some coastal areas may lag behind a bit and maybe the condo-hotel market in general as lenders still seem unsure of the resale market for this property type.
Surely now is a good time for Brits to buy in Florida – with it being a buyer’s market and the Pound being strong against the Dollar? If not now when will be the optimum time for Brits to buy in Florida for investment?
Absolutely right now is a good time. Uniquely so from a British perspective. excess inventory + motivated sellers + strong pound = perfect UK "Buyers Market" Absolute, no reserve auctions like that of Stirling Sotheby’s (the Florida affiliate of Sotheby’s in the UK) will raise awareness of some of the current values to be had in Florida, bring short and mid term investors back and also help reduce inventory levels. The anticipated Bank of England base rate reductions could also have immediate effects on currency exchange rates, weakening some of the buying power of the Pound.
In the wake of the credit crunch, how available is credit for British buyers? Does the market suit cash buyers? What sort of finance is available for buyers?
A number of options are still available for British buyers. The biggest affect is more in the length of time to "process" the applications as lenders require more supporting documentation for their lower "loan to value" products. Stated income products are still available but at higher deposit levels. US Dollar fixed or adjustable products are common but by far the most popular is the multi currency product because of the ability to originate the loan in UK Pounds and the flexibility to switch it to Dollars (or Euros etc.) at a later date. With prices for 4 bedroomed pool homes hovering around £80,000 there’s no doubt cash sales are increasing. You do lose some tax advantages (interest deduction) and potentially increase risk on your primary home in the UK (if equity is released from it for the purchase) if you pay cash though. Short sale (pre foreclosure) and auction buyers normally need to move fairly quickly so most use the cash option for the short term and then refinance with an equity draw down on the US property as soon as things have settled.
What should British buyers be wary of when buying in Florida at the current moment?
One of the biggest things to be wary of would be pre-construction developers asking for high deposits. Florida is a very heavily "consumer protected" State, but when a developer stumbles (for whatever reason) at the pre-construction stage, recovery of invested funds can be very difficult. Check to see if "incentives to buy" are simply built in to the purchase price or are they of true value. If you want to rent out the home by the week, are there any restrictions imposed at the neighborhood or county level? Retain a Realtor that works well with you and one that listens too and understands your property goals. Here in the US one agent can show you any property so you don’t have to start from scratch explaining your needs every time you want to look at a different house. For your mortgages, ask for a ‘Good Faith Estimate’ from your mortgage company and be wary of ones that don’t align with other quotes…the costs probably appear elsewhere. Normal lines of precaution would also apply…how professional are they and what is the extent of their industry knowledge?, how long have they been in business?, are there any negative reports on websites or blogs about the development or company?, who are they associated with? what do their peers say of them? and, of course, what do their existing clients say about them!