INTERNATIONAL
Florida ripe for picking?
Andrea Kirkby revisits the Disney Kingdom and finds some Mickey Mouse house prices.
I
n a credit-crunched US housing market, Florida looks like the most bombed-out state in the Union. Prices have fallen 70 per cent from the 2006 peak – against only 30 per cent for the US as a
whole – with huge numbers of foreclosures and short sales. It’s a market in deep distress. But where there’s distress, there’s
opportunity. David Cox of Property Frontiers believes Florida represents one of the biggest opportunities around today for the canny property investor. “I think the US as a whole is interesting,” he says, “but Florida is really interesting.” He points out that while most of
the US saw nothing like the high rates of development that led to boom and bust in the UK, “Florida was the epicentre of speculative building, so when the credit crunch hit, it took a real pummelling.” While at the peak of the market, prices in
Below: Tampa, Florida, bargains to be had, lifestyles to be enjoyed.
Main: A place in the sun that is ripe for picking as prices fall.
Florida were quite close to the US average,
they’re now well below national levels. He says some properties are now selling at 15-35 per cent of what they would have cost – an 85 per cent discount to
peak prices. “That’s a huge shift in values, compared to the UK where prices have never fallen by more than a few per cent,” he stresses. One factor affecting this is the
prevalence of non-recourse loans in the US. Because the bank can’t pursue homeowners for any shortfall if the house is sold for less than the outstanding mortgage, it’s much easier for homeowners to walk out on the deal if they’re in negative equity. They lose their credit rating for a few years, but at least they now owe nothing on the home loan – and the bank takes the pain. That makes the market react
‘Florida was the epicentre of speculative building, so
when the credit crunch hit, it took a real
pummelling.’ DAVID COX PROPERTY FRONTIERS
TAMPA 46 MAY 2011 PROPERTYdrum
much more quickly to downwards price pressure. But unlike Detroit, another area
where property prices have been savaged, Florida has good economic fundamentals. It’s not reliant on the hard hit automotive sector, but has a diversified service based industry, and, says Cox, it’s now creating jobs again. There’s a strong domestic economy, and a massive tourist infrastructure, with Harry Potter World joining Disneyland as a key attraction, and Legoland Florida planned to open later this year. “Florida has taken a much
bigger kicking than it really deserved,” David Cox says. “It’s undershot its trend value, and this has created a massive opportunity for the investor.” Underpinning the potential for
the property market is a growing population; currently 18 million, and expected to increase to 22 million by 2030. Florida has strong links with the emerging economies of South America, too – Spanish is widely spoken in the state, and many of its firms export southwards. Despite this optimistic prognosis,
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