Florida Real Estate

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It must be understood that even though there seems to be a great deal of bad news vis-à-vis the housing market in Florida, it is not just bad news out there.  There is some good news and one looking into the market has to thus be able to distinguish the good from the bad. For example, right now, the personal buyer and investor can buy homes with low interest rates and reduced prices of 50 percent or more.  This may increase anxiety for sellers though but for buyers, there should be smiles on faces.  Those in South America and Europe – concerned about currency flops at home – are perhaps being a bit too enthusiastic in their purchasing power though, negating important factors such as quality and maintenance costs.  Russians too seem to see South Florida as their dream answer with many purchasing condos in markets that had not planned for such out-of-control growth.

In addition, those in Florida are moving around as South Floridians are heading north, seeking out better schools, lowered crime rates and in general, a higher quality of life.  They are even looking at the purchase of oceanfront homes and property on the Treasure Coast; something that hasn’t happened in many years.

But what is the advice on the street for those looking into purchasing homes in Florida?  Those who didn’t buy during the 2003-7 housing bubble might want to look now.  Don’t look into gated communities or single-family homes; rather stay on the coasts. And, perhaps most importantly, remember that when you look into news in Florida housing, it’s not all bad.

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The economic situation in both Florida and Michigan is pretty similar…and not in a good way. Along with high unemployment and mass foreclosures, this doesn’t bode well for politicians.  Rightly or wrongly, people in economic trouble turn to them to blame them for finance-based problems.  So when it came to the presidential primaries, of course it was going to have an impact. Ultimately though, Mitt Romney scored nearly half of the votes, coming in with 46 percent, the next closest contender to him being Rick Santorum who only got 13 percent.  He said, “we still believe in the America that is the land of opportunity and a beacon of freedom.”  Well, we’ll just have to wait and see how he relates this to the housing issue for the state. 

Both Michigan and Florida have been trying to deal with their economic plights but to what degree has this been successful? Not especially.  Foreclosures are so common because so many people lack a safety net.  So if a spouse gets sick or dies, the main breadwinner loses their work, or there is some other crisis, foreclosure is the next step.  And what’s worse for those in Florida is that since there was such an incredible housing boom, when the crash came, it was even more devastating.  Statistics show that of the 4.5 million borrowers who still have mortgage loans to repay, over 2 million of these now owe more than what their houses are valued at.  Nationwide the figure is around 28 percent, but in Florida it is closer to 48 percent.  Good people who have worked hard their whole lives, are now being forced to rejoin the workforce having taken retirement at 65.

So what impact has the political situation had on this?  Well, it seems like President Obama tried a couple of years ago.  But the Home Affordable Refinance Program he established was too little too late.  It was meant to assist those homeowners with little or no equity refinance.  Florida is now seeing the establishment of support groups for the foreclosed, with one meeting being held in downtown West Palm Beach.

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Americans are really struggling to pay their mortgages.  Currently, approximately 11million people are “underwater” in their homes and it seems Florida is one of the states being impacted heaviest with a staggering 45 percent of their homes in this category.  And one of the biggest gripes people in trouble are having is that the banks and financial firms that were somewhat responsible for this situation are not being penalized.

But things might finally be changing.  A recent poll was undertaken for attorneys general throughout the nation to determine if they are willing to fight the terrible practices undertaken vis-à-vis foreclosure practices in the late 2000s.

The settlement would force banks to provide assistance in the form of billions of dollars to those who have had their homes foreclosed or who are at risk.  Government officials have not been particularly active in forcing the large banks to change their ways and help these people.  Should the deal be activated, up to $17b would be set aside in order to pay for various relief for around a million borrowers who are not up to date on their payments but owe more than the current value of their properties.  As well it would give around 750,000 individuals who lost homes in the foreclosure checks worth $2,000.

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While we have already seen that it looks like 2012 is going to be a good year for the Florida housing market, figures coming in from last year are indicating that 2011 showed the state was recovering from its housing recession too. Indeed, looking at the figures it seems that compared to 2010, there was an 8 percent increase in Florida housing sales in 2011.

In addition, according to figures released from Florida Realtors, over the last few years, there has been a steady escalation in housing sales in Florida, since this latest increase marks the third time in three years that there has been growth.

However, looking at December 2011, it seems that there was a small plummet (of 2 percent) from figures for the year earlier. Again though, it was emphasized that recovery in Florida’s housing market will continue throughout this year.

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Finally, after months of poor performance in America’s housing industry, it seems like 2012 is going to be the year of recovery, albeit gradual. In South Florida for example, home sales are increasing which is good because prices were really hitting a low.  However, the mortgages people took out during the boom are still negatively impacting the market and this has been extremely challenging for many homeowners.

So, for those encountering difficulties in the housing market – be they homeowners, those looking to buy or potential sellers – there are some ways of improving the situation. First, since things have started to look up, for those looking to sell it is worth trying to do so earlier rather than later before foreclosures appear.  No matter how desperate you are to sell though, do not try to provide cash/cars/other incentives to get them to buy.  It is a bad idea.

In general, it looks like it is going to be a good year for sales; there are fewer declines in pricing as well as fewer properties on the market than in say 2009, 2010 and 2011.  In addition, it is anticipated that there will be another wave of bank-owned homes which will result in lower values and additional competition for those looking to buy properties.

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Good news for those in the South Florida housing market.  According to the Miami Association of Realtors, looking at figures for November 2011, there was a significant increase from the same timeframe last year.  However, numbers for October 2011 were slightly higher (so this indicates a drop now).   Still, it is good news.

Looking at Miami-Dade County there was mixed news too.  Although there was a drop of 10 percent in sales from last month to this, again there was an increase of a staggering 25 percent from November 2010 to November 2011.  It seems like the trend is thus set vis-à-vis October, November 2011 and November 2010. 

In general though, according to an official from the Miami Association of Realtors, this news is indicative of a “balanced and healthy marketplace.”

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It seems that Florida is looking up vis-à-vis jobs and housing in particular and its economy in general.  The Florida Legislature now has the capacity to develop close to 9,000 jobs, rendering a staggering $900m for the 2012-13 fiscal year.  It will be able to do this by getting money from the state and local housing trust fund which often ends up in the category “general revenue” and pretty much gets lost.

Great Florida Housing à Great Florida Economy

The bottom line is that the more recovery there is on the Florida housing market, the better the entire state’s economy will fare.  If capital is taken from the housing trust fund, it can be used to renovate abandoned homes, which would give those working in the field of construction, jobs, and thus boost the economy. So it just makes sense to invest in the state’s real estate market.  Doing so will result in property value stabilization for everyone while supporting firms that deal in all sorts of construction areas (material provision; contractors; supervisors; workers and more. 

Ultimately, Florida needs its sales taxes to generate revenue and when funds set aside for housing are not used for this purpose, there is an increase in sales revenue, which results in a reduction of the state budget deficit.

 

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It seems like renting out government-owned homes in Florida would be a good idea right now.  But, at the same time, doing so probably will not ultimately solve the problem in the areas where housing prices have taken the biggest hit.

The idea now though – in places like Florida – is that the FHFA (Federal Housing Finance Agency) is currently looking into the possibility of selling these homes to investors who would then rent or sell them, which would generate a profit for them.  The hope thereafter is, that government-agencies will also make money (which they really need) and the value of neighborhood properties will increase by putting renters or buyers into the homes that are sitting empty.  At the same time, this would facilitate tight rental markets through an expansion of the amount of homes available.

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We’re not quite up to the stage where our cars can fly, but thanks to a complex that is being constructed along Miami Beach’s waterfront, we can certainly get our cars pretty close to our living space.  The “Jetsons”-esque elevator will have the ability to send residents’ cars to the front doors of their high-rise condominiums.   This will be the first building ever to be constructed with such a feature.  So no matter how high up you are, you will be able to “park” your car right outside your property!

Called the Porsche Design Tower, this new venture is the result of a partnership between Gil Dezer, (a Miami property developer) and the Porsche Design Group.  In layman’s terms, this is basically an extremely large elevator that has a robotic arm which can go up the tower’s 57 stories at a 90-second clip, and offer great views of the city at the same time! 

But it certainly isn’t an opportunity for those with little money in the bank.  It is anticipated that each unit will sell for around $9million.

 

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Current Florida Real Estate Issues

The US housing market is up and down.  It’s good for some people; bad for others.  Looking at the fact that there are properties on the market which have lost around 50% of their value, this should make it a great time to buy a home.  But that’s just the theory.  It seems the reality is somewhat different.

Other Economic Factors

While it’s true that house prices in distressed areas are selling at pretty much an all-time low, if one has  no money, there is no money  no matter how cheap they are!  In other words, with high unemployment, it doesn’t matter how low property prices are plummeting, there is no capital with which to make a purchase. 

On average, a 30-year mortgage has now dropped to less than 4 percent.  But with people worried about whether or not they are going to remain in gainful employment and thus banks becoming less willing to lend money to these individuals, it becomes way harder to purchase property.  Potential buyers now have to really be put through the ringer as they are requested to produce comprehensive tax returns and income verification.

Where Florida Fits In

Unfortunately Florida is pretty typical of what is going on now vis-à-vis the challenging real estate market. People simply cannot buy homes with no jobs or if they sense severe job insecurity.  The four largest cities in Florida are at this point this right now.  Thus it seems there is quite a way to go before the Florida housing downturn encounters a real recovery.  Potential buyers – or those who should be potential buyers – are sticking to what they know and not taking any risk.  They want to make sure they have a steady income before thinking about taking out a huge loan for a house that could ultimately result in a foreclosure.