This week, I am going to pause the Entrepreneur Mini-Series to discuss a little bit about the market for Real Estate, at least in the Central and South Florida area.
Everybody knows that the market conditions for real estate across our nation is different than the conditions at the state level. But a lot of people stop there. Many people think that knowing what’s going on at the state level translates to your local market. That is not the case. It may be a lot closer than the nation’s conditions, but certainly not accurate enough, to make an informed decision to buy, sell or invest.
Florida has 2 distinct primary markets and a lot of submarkets. The two (2) primary markets are South Florida, from West Palm Beach to Miami, and Central Florida, from Cocoa Beach to Tampa Bay. Arguably, back in the heydays of real estate, Southwest Florida, from Port Charlotte to Naples, was also a distinct market. Not the case anymore. Many South Floridians, as well as Northerners were purchasing and moving to the Southwest corner of the state. In Fact, the Cape Coral area was known as the “Private Jet Capital.” More private jets per capita than anywhere else. Imagine the amount of money that was circulating around that area, around the mid-2000’s. These days, the story is very different for Southwest Florida. The area was hit very hard with foreclosures and also people began fleeing the area, due to the lack of jobs. In fact, the entire state of Florida was hit with a big wave of foreclosures, but people were not fleeing the area, like they were in Southwest Florida. In other areas, people may have abandoned the property when it was going through the foreclosure process, but somebody else was waiting in the wings to pick it up. For Southwest Florida, people were leaving the area, so properties sat empty for long periods of time.
It is worth saying that if you are retired, planning on doing so, or you find a job in the local area; or can work from home and location is not an obstacle, then this is a great place to buy and live, since the properties are still very reasonably prices and the area is beautiful. Properties in Southwest Florida, for the most part, were built as a result of the boom, hence these are newer properties. Great place for an owner occupied person. The potential appreciation for the area is very speculative due to the amount of empty properties, but at least for the next year, another 12-16% appreciation may take place.
In the Central Florida area, the story has similar roots, but very different outcome. Just like Southwest Florida, Central Florida’s prices skyrocketed in the mid-2000’s, until our ill-fated crash of 2007-2008. The central Florida area remained very distressed until late 2011. A lot of foreclosures took place between 2008-2011. A great percentage still going through the system as statistics tell us that properties in Florida take an average of 3 – 3.5 years to get through the foreclosure process. The contrast between Southwest FL and Central Florida, and for that matter, is that Central Florida residents stay in their local area, they didn’t abandon it, so the demand for housing, specially rentals was very high. Investors buying for cash began to buy properties in 2009, to rent to foreclosed and short sale individuals and families. Ex-owners that had been foreclosed on or just had a short sale, didn’t want to change their lifestyle, so they wanted a comparable property to the one they just lost. Smart investors went to work and obtained some of the best tenants out there. Good, hard working people who were used to Homeownership! Talk about a win-win.
Something interesting took place in 2012. After so much doom and gloom, life came back and people decided to get back into the market. Mid 2012, people decided that it didn’t matter anymore what the “nay-sayers” said about the economy or the jobs situation, people decided that it was time to get back to living! Car sales began to improve, shopping malls began to break sales records again, and houses began to sell. New construction was back! The amount of construction permits for new construction has increased exponentially when compared to 2008-2010 levels.
Investors continue to work hard to get properties. The big real estate funds are back in town and people are moving around from house to house, giving credit to the whole 7-year on average that people stay living at one place. Prices are on the upswing and the inventory of available homes is very low, hence the appreciation that we are seeing and also the price correction that was overdue.
It is a great time to buy! Those who are saying, “but the interest rates are going up.” Allow me to say this, they are still the lowest they’ve been in over 20 years!
Contact us if you are interest in purchasing a property. It doesn’t matter where, we have an extensive network of agents, that actually expands the entire planet! We have agreements in place through out the nation and with 37 other countries around the world! We can help you with your purchasing, selling or investment needs! In fact, we have an agreement with a company to safely and legally bring in funds from other parts of the world into the states for much, much cheaper than any bank! Contact us for more info.
