FEBRUARY 2012 |
www.opp.org.uk
REPORT
How are they buying? In 2011, 86% of overseas property buyers in Florida bought their real estate outright with cash … a 5% increase on the number of cash buyers in 2010. For John Sebree, vice president of public policy at the Florida Association of Realtors (FAR), the increasing tendency for foreign investors to plough their own money into Florida rather than rely on bank fi nancing is key to the Sunshine State’s market.
“Most surprising to me is the high number of cash buyers. In the U.S. it is well known that fi nancing is tight. If we didn’t have our international buyers and investors paying cash, then Florida might be in a bad situation. Instead, home sales in Florida have now increased for three years in a row.”
How are they using it?
Nearly half of foreign buyers (41%) bought their Floridian property to use as a holiday home, while 23% bought in order to use as rental property, according to the report.
“Given the US visa and residence limitations on the length of time that foreign buyers may be able to personally use their property,” the report adds, “25% of sales were for a dual-use – as a vacation home for the buyer’s family and/or friends, and as a rental property at other times,” it says. Different nationalities also have different reasons for buying in Florida, adds Century 21’s Francisco Angulo. “In general, foreign buyers purchase all types of property. However, there are some nuances. For instance, Brazilians like to invest, whereas Venezuelans are perhaps looking for second homes to live in due to problems back at home.” Colin Murphy, director at agency
Torcana, believes that Canadians in the market are increasingly looking to invest in properties early on, before using them later in life as retirement homes. “The retirement benefi ts of Florida are manifold,” he says, “and it makes a lot of sense for 40-somethings to purchase and rent out now when they have the cash to spare and they get so much bang for their Canadian buck.”
The visa question
Agent comments collated in the report indicate a wide range of suggestions and markers for the Florida overseas
property industry. Many in particular felt that much more could be done by the state’s offi cials to aid the overseas buyer market. Below is a selection of comments from Florida realtors on the subject:
“Immigration rules for foreigners that own property here should be adjusted, allowing more fl exibility for number of entries and length of stay.” “The availability of a retirement
visa that would allow non-residents more than six months in the US
“We need to change the immigration laws to encourage foreign investors to invest cash in this country”
would dramatically help Florida real estate sales.”
“The issue of access to their property/time available for use is serious. So is the problem of the US healthcare system and getting insurance for their time in the US.”
“The legal immigration system needs to be totally overhauled. It is a major deterrent to fi nancially sound, well- educated potential full-time retirees or part time residents.”
“Immigration laws should not scare away foreign real estate buyers and investors. The law limits the amount of time a foreigner is able to spend here in the U.S. thus reducing their appetite to buy.”
“Overseas buyers need to be easily
able to borrow money at a fair rate. There are literally thousands of retirees who have the funds and pensions to retire here from Europe but cannot due to immigration restrictions.” “Giving foreign investors’ families green cards will encourage all of my Chinese clients (current and future) to buy houses in the USA. The green card is the biggest issue for Chinese clients because they want their children to have the legal right to receive better education in the USA.”
“The U.S. needs to change its immigration laws to encourage foreign investors to invest cash in this country by granting them permanent status. It can be based on investor’s visas such as E2 and EB-5, etc.”
“The US government has taken several actions that are affecting foreign buyers’ perception of the US. Latin buyers are concerned over the negative policies directed towards foreign buyers. The idea that the US government may not honour their debt is having a real negative perception given the negative economic consequences. If you considered yourself an educated professional and advisor to your international clients this is something you cannot ignore and you cannot dismiss when asked by a client.” For Angulo, however, change may be coming, exemplifi ed by the introduction of the Visit - USA Act by senator Charles Schumer and Mike Lee late last year. The purpose of this new Act would be to allow foreign investors and
their families to live in America for as long as they invested over $500,000 in a residential property and had full legal ownership of it. This represents - for Angulo, at least - a sea-change in American political thinking towards foreign investment. “It’s a very sensitive issue,” he told OPP. “It isn’t 100% certain that something will happen yet but this is the fi rst time I’ve seen people talk about these kinds of visas.” “It’s a very complex issue.” Don’t expect an instant fall of the barricades however, Angulo warns. “It will be an ongoing process and it won’t happen straight away. Something will maybe go on this year and into next year.”
What will happen in 2012? Angulo remains confi dent that Florida can continue to rebound in 2012. However, patience is the key. “The market will defi nitely continue
to grow,” he says. “The inventory has come and is coming down. But it certainly won’t be a speedy recovery.” Angulo warns that many homes hidden on banks’ balance sheets and stalled in foreclosure court proceedings - the so called “shadow inventory” - could well be set to come to market in 2012. And this would be a move that could keep prices low.
“The shadow inventory is coming from the banks,” he says. We are expecting it. When it starts it could increase sales. Prices, however, might not appreciate accordingly.”
50% 46%
Developer profi le
FLORIDA BUYER MARKET | 55
Percent of Activity with International Clients 2010 Survey
2011 Survey
20%
16%
15% 13%
9% 12% 0% (none) 25% or less
26% to 50% Source: NAR
51% to 75%
13% 6% 76% or more
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