Florida real estate used to be some of the most highly sought after properties. Individuals invested in beach homes as vacation property. Real estate investors invested in oceanfront condos and beachfront property as short term rentals. The potential to earn a profit from investment real estate was staggering and everyone wanted a piece of the pie.
Today, the Florida real estate market has become synonymous with excessive foreclosures. Property values have declined by 40-percent in some areas. Thousands of coastal homes sit vacant and are now owned by banks. The number of residents exiting the Sunshine State currently exceeds the number of transplants moving in.
According to the U.S. Census Bureau, approximately 200 Floridians move out of the state on a daily basis. Much of this stems from lack of employment opportunities, reduced property values, increased property taxes, and the increasing cost of property insurance.
Additionally, a large percentage of Florida residents are retired ‘snowbirds’ living on fixed incomes. The high cost of coastal living has prohibited many retirees from returning to the state during the winter months and forced them to sell their property at substantially reduced rates.
Real estate information expert, Foreclosure Data Online, reports Miami-Dade county in southern Florida has the highest number of foreclosures, with Orlando following close behind. Titusville, in Broward County is expected to move up the ranks of bank foreclosures when NASA ceases the space shuttle program.
While there is plenty of gloom and doom surrounding Florida’s real estate market, there is also a glimmer of hope. With the decline in property values, individuals who have considered moving to Florida or purchasing a vacation home can now buy houses at substantially reduced rates. Oceanfront condos and beach homes that once sold for $1 million can often be purchased for $600,000 to $700,000.
Thousands of homes for sale are located in gated communities that offer a bounty of amenities. Penthouse condos with panoramic oceanfront views are selling for pennies on the dollar. Homes located in Florida’s interior are often priced 30- to 40-percent below market value.
A large percentage of Florida’s available real estate consists of foreclosure homes and short sale properties. Since Florida has such a high rate of foreclosure, many lenders have been forced to enter into short sale agreements in order to liquidate an overabundance of properties.
Real estate short sales can be a great choice for individuals and investors. Lenders often require borrowers to locate a qualified buyer to purchase their home ‘short’ of the amount owed on the mortgage note. Although short sale properties require entering into negotiation with bank loss mitigation and can take several months to complete, the overall savings can be worth the time and effort.
The time required for Florida’s real estate market to rebound is unpredictable. While it is expected to take 5 years or longer for property values to return to where they were 3 years ago, the market could rebound more quickly when unemployment rates decline.
Real estate investors who purchase property in the Sunshine State should plan to hold investment properties until the market rebounds. Many investors are buying houses for use as rental properties and leasing to foreclosed homeowners who cannot qualify for a home loan. Others are investing in beach cottages and condos in highly sought-after tourist destinations. In order to be successful in residential and vacation rentals, investors must offer competitive pricing.
There is no doubt that Florida will once again be a real estate Mecca. Individuals and investors who buy property now could potentially reap massive profits in the future. However, buyers must conduct market analysis to determine which counties offer the best real estate deals.
Foreclosure Data Online