Florida Property Market 2012 Recovery?
Dubliner Gary Kenny, who has been the CEO of Coldwell Banker Feltrim (CBF) based in Orlando in central Florida for some years, says his company has been enjoying something of a surge in property sales in the first three months of 2012. This is no bravado claim, things have improved so much that he has recently recruited five new sales agents to cope with the rise in demand.
The latest report from the National Association of Realtors (NAR), despite being a remarkably positive organisation even by US standards, indicates that there may be something of a turnaround in train. It comments: “The 2012 NAR Investment and Vacation Home Buyers Survey published on March 29th shows that the combined market share in these two sectors jumped to its highest level since 2005. Investment-home sales rose by an impressive 64.5% to 1.23 million last year, while vacation- home sales rose by 7%.” If you’re looking for a bit of positive affirmation then CBF can give it to you. This NAR survey is very much in line with what CBF has seen happening in the central Florida market. Investors and holiday home buyers with ready cash have been able to take advantage of the bargain home prices on offer. The big attraction to the market at the moment is that rising rental income is now easily exceeding the interest being offered by banks on deposit accounts.
Unfortunately if you’re cash strapped and hoping to jump on the old ‘buy-to-let’ bandwagon (which is admittedly missing a few wheels at the moment) then you may well have to wait a while because mortgage lending is still very difficult to come by, even for US citizens.
The NAR survey highlighted that REO (bank Real Estate Owned properties) are now selling pretty quickly. This is necessary in order to bring the market back to some form of stability as the existence of a large inventory of distressed product causes the market to keep falling in value. Half of all investment property purchases in 2011 and 39% of vacation homes were distressed sales. In Florida, Kenny claims, this is leading to a growing shortage of quality homes to the market. NAR chief economist Lawrence Yun agrees, believing that any government programme to sell REO in bulk to large institutional companies should be limited to small geographical areas.
Before you get too cock-a-hope though, there is a word of warning. Expecting exponential gains in the US property market might not be the way to make your fortune. We all now know where that leads. In property, what goes up very fast tends to come right back down just as quickly. I don’t have to spell that one out to Irish property investors right now. Kenny says: “Property still has to be seen as a reasonably long term investment – those looking to flip and make an instant profit are likely to be disappointed. I reckon buyers have to plan to hold their property for around five years to maximize their return. Last year, the median investment home price was $100,000 in 2011, showing a 6.4% increase from $94,000 in 2010, but due in part to the large number of foreclosures, the median price of vacation homes continued to fall last year, down to $121,300 compared to $150,000 in 2010.”
To end on a positive note, however, Kenny believes the increasing lack of supply of quality holiday homes in central Florida, will lead to a strong recovery in 2012.
You’ll find some available properties in my next post – see here.