The Truth: Florida Real Estate Market
Florida has long been known for holiday or vacation properties, retirement, and sunshine. In the real estate boom years 2003-2005, Florida became known as the place to invest and resell property for a quick profit. Sadly as the boom came to a crashing halt at the end of 2005, Florida saw a dramatic decrease in real estate activity. As buyers tightened their finances in 2006, homeowners and investors desperately needed to sell. Thus, 2007-2009 will be remembered as the years of foreclosures and short sales. Investors began returning in late 2008 to take advantage of the great deals, particularly in new home construction and condominiums. With prices being anywhere from 30% to 60% less than they were in 2004-2006, smart investors realized the value of Florida properties once again.
In March of this year, activity picked up tremendously in most markets. Real estate companies reported it the best month they had experienced in three years. Not sure whether things would change once summer came, most real estate agents were hopeful yet guarded. April, May and June showed much of the same with buyer activity being strong. According to TrendGraphix, in Sarasota County, the average price per square foot as well as the average price of homes and condominiums increased monthly beginning in March. Coincidentally, inventory levels fell. In February, Sarasota County had 16.4 months supply down to only 10.2 months of supply in June.
South Florida, in particular, has been the subject of some harsh news over the past few years. Now that you’re contemplating listing a property you own or purchasing, it is important you know the real facts versus speculation. The 5 most important things to remember:
- No doubt, it is a great time to buy.
- Yes, there are still bargains to be had.
- The 50% discount you keep hearing about on properties for sale is based on the 2003-2006 prices, not today’s fair market value.
- Financing IS available. Mortgage rates are still the lowest they’ve been since the 1960s. For residents outside the US, expect to put down 25-35%.
- Work with a professional REALTOR® who will look out for your best interest and wallet. Don’t work with someone who will sell you anything just to make a deal.
- Be realistic about what you can buy for your money and be ready to make a prompt decision when the right property comes on the market.
- With respect to Florida real estate taxes, it doesn’t matter if you are a US resident or not. If you are not a Florida resident, you are eligible to apply for a limitation of 10% on annual tax assessment increases. Becoming a Florida resident, though, has great tax advantages!
- Sales of new and existing homes are below replacement cost.
Foreclosures, Short Sales, and Great “Deals”:
- Short sales and foreclosures are not necessarily the best deals. There are plenty of well-priced properties available but they sell quickly.
- Short sales can be great deals but are not for the impatient. Be ready to wait an average of two to six months before the bank counters or approves your offer.
- Yes, there are fantastic deals on condominiums but that cheap condo may end up costing you a whole lot more than you think.
- Do your due diligence – particularly when dealing with condominiums. Is the condominium association financially strong? What are the current association dues – do they have the potential to increase dramatically over the next few months or years due to the number of delinquent owners or developers?
- If you are not a US-resident and are considering buying property in Florida, open a US bank account at least 60 days prior to purchasing. No, you do NOT need a social security number to open a bank account.
- Keep an eye on currency trends and use a currency broker to take advantage of exchanging money when the time is right.
- Work with a REALTOR who understands the process of working with an international buyer with respect to tax, immigration, finance, and law.
- And finally: We do have winters in Florida. This year it was on a Wednesday.
Prudential Palms Realty has a diverse clientele from all over the world and offers select properties in the most desirable locations. If your idea is yachting in the Bahamas, relaxing on the beach in the Dominican Republic, surfing in Costa Rica, diving in Belize, pure investment in emerging Panama, culinary delights in Italy, or romance in France, we invite you to call us.