Florida and The International Buyer

Florida and The International Buyer

The international market for U.S. residential property approaches $82 Billion on an annual basis, split equally between non-resident foreigners and recent immigrants.

There is rising affluence throughout the world, and clients come from a wide variety of countries to purchase U.S. real estate. Four states—Arizona, California, Florida, and Texas accounted for 58 percent of total U.S. residential home sales to non-resident foreigners in the 2009/2010 time frame. Florida accounted for 31 percent of total U.S. residential home sales to non-resident foreigners in the same time period.  31 percent of $82B is approximately $25.4B.

REGION OF ORIGIN OF INTERNATIONAL HOME BUYERS

Although home buyers come from all over the world to Florida, a few countries and regions accounted for the majority of sales to international clients. Canada accounted for 39 percent of buyers, up from 36 percent in 2010. The United Kingdom accounted for 7 percent of buyers, down from 15% last year. Other countries with large numbers of buyers included Brazil (8 percent, up from 3 percent), Venezuela (7 percent, up from 3 percent) and Germany (5 percent, same as last year).

The demand for U.S. homes by foreigners is different from the overall U.S. market. All real estate is local, and the important domestic market drivers-- jobs, consumer confidence, family formation, and economic growth—have had major negative impacts on existing home sales in domestic transactions. International sales of U.S. homes to foreigners, however, have different market drivers—perceptions of value relative to foreign comps, the desire to diversify assets, potential vacation use, rental opportunities, and an interest in placing assets in areas with well-defined and secure property rights.

The location choices of foreign buyers differed markedly from the patterns reported among all home buyers nationally. Compared to all home sales, as reported in NAR’s 2010 Profile of Home Buyers and Sellers, foreign buyers were much more likely to purchase in a resort area (32 percent of foreign purchases vs. one percent of all homes sold nationwide) on in a central city/urban area (36 percent of purchases vs. 18 percent). The significant share of resort buyers is not surprising given the nature of the Florida market. In addition, international buyers found Florida’s central cities to be desirable locations in a number of instances.

South Florida, and Miami in particular, enjoys the unique quality of international recognition as a top vacation / resort destination, a center of multicultural diversity, and a critical hub for global trade and finance.  It is no wonder that foreign nationals are being drawn in dramatically increasing numbers to take advantage of real estate opportunities and stake a claim in the American Riviera.

In addition, businesses from all over the world recognize the benefits and strategic advantages of establishing a formal presence in Miami.  The Beacon Council of Miami cites the following top 10 reasons answering the question: "Why Miami?":

Top 10 Reasons

1. More than 100 international consulates, trade offices, and bi-national chambers of commerce that support the worldwide flow of goods and services.
2. Convenient direct air service from Miami International Airport to all major destinations in Latin America and the Caribbean – more flights to the region than any other U.S. airport.
3. Ability to ship goods efficiently anywhere in the world through the Port of Miami, Florida’s largest container port.
4. A central location in the Western Hemisphere and in the Eastern time zone, facilitating communications with Europe and the western United States.
5. Excellent business climate with no local or state personal income tax.
6. Skilled multilingual, multicultural workforce drawn from more than 100 nations.
7. Strong, growing domestic economy serving more than 5.5 million South Floridians.
8. Ready access to sophisticated international banking, insurance and legal services, and other professional services.
9. High quality of life with a wide range of housing options, year-round outdoor recreational activities, renowned cultural institutions and four major professional sports franchises.
10. Financial and workforce training incentives available to qualified companies.

Foreign Buyers Swarming the US Real Estate Market

YTD 2011 Foreign National Real Estate Investment in the US

Florida Leads The Way

5 Great Reasons to Sell Your House Today

5 Great Reasons to Sell Your House Today

by The KCM Crew on September 6, 2011

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We are often asked “Is the time to sell my home?” The answer to that question is based on what your families’ goals are. If you don’t need or want to move for a few years it might make sense to wait for the housing industry to recover and prices to appreciate. However, if you wish to move within the next six to eighteen months, it is probably better to sell sooner rather than later. Here are five reasons why:

Your House Will Get More Exposure Now Than the Winter

Housing sales usually level off in the summer and then regain momentum in September and October. The spring buyers’ market has passed. Don’t miss the early fall market. It has consistently outperformed the winter season.

Distressed Properties Will Impact Prices

Distressed properties (foreclosures and short sales) on the market will increase this fall and winter. This will put tremendous downward pressure on prices for at least the next 12-18 months. Get your home sold before they become your competition.

Mortgages Will Become More Difficult to Attain

Lending standards are continuing to tighten. There is legislation currently being considered that will make it even harder for buyers to qualify. Less demand will equate to lower prices.

It is the Perfect Time to Move-Up

With prices where they are and interest rates at all time lows, there may have never been a better time to move-up into your dream home. If you move into a more desirable home now, you will be in position to gain larger equity as prices eventually appreciate.

You Get to Move On with Your Life

Probably the most important reason to sell is so you can get on with your life. You are considering selling for a reason. Do not allow a less-than-stellar housing market prevent you from reaching your goals as an individual or as a family. Think about the reasons you are thinking about moving . Are these reasons really important to you? If you have to take less than you were originally hoping to get for your house, your family has a question to ask each other: Is the dollar difference in sales price worth putting off our plans? Only you and your family know the answer to that question.

Is a Foreclosure Home a Better Deal than a Short Sale?

A recent article from the Tampa Tribune shows an alarming trend where displaced homeowners apparently have vandalized their homes as a final gesture of derision in the face of foreclosure.

While potential savings may seem somewhat higher with foreclosed homes (40% less than market value is the national average, but your local market may be higher or lower) as opposed to short sales (21% below market value on average throughout the US- again, local markets may prove otherwise),  the cost of renovation and repair on a foreclosure property may prove to be a more expensive proposition.  Also, lenders may opt to deny financing for homes that appraisers deem "uninhabitable".  Now that many lenders are looking more favorably on short sales, buyers should carefully consider a short sale.

Below is a copy of the September 2nd article from the Tampa Tribune: 

Foreclosed homeowners take out revenge on properties

TAMPA, Fla. – Sept. 2, 2011 – Some foreclosed homeowners are taking out their anger on the homes they are forced to leave behind, smashing holes in the walls, scribbling graffiti everywhere, leaving piles of trash and ripping out appliances.

More banks – facing a growing problem from trashed foreclosures – are opting to offer homes at big discounts rather than fix the repairs, which can send surrounding home values in the neighborhood spiraling down, experts say.

Real estate pro Nick Davis with RE/MAX Premier Group told the Tampa Tribune that he has seen some home values greatly diminish from foreclosed homeowners who have trashed it. For example, he recalls one home that would have fetched $250,000 back in 2006 during the housing boom that would now sell for about $75,000 because the former owners trashed it.

“It looks like someone took revenge,” Davis says about the home, which had holes in the wall, appliances ripped out, and piles of trash. “Unfortunately, we’re seeing more of this. We’ve seen cement in the plumbing systems, the air conditioners ripped out from the outside, wiring being removed.”

Some real estate professionals and lenders are even blaming the high number of real estate deals falling apart due to more homes being left in poor condition by the original owners.

Buyers “look at these homes and say, ‘If this is the damage I can see, what else did the homeowner do to this place that I can’t see?’” Davis says.

Some homeowners facing foreclosure place the blame on banks for their woes so they leave behind a mess for the bank. But trashing a home can backfire. Some banks are saying they may even start taking steps to sue homeowners for the cost of repairs, and law enforcement officials say homeowners can be charged with vandalism as well as theft if they remove items that don’t belong to them from the home.

Have Banks Finally Realized That Short Sales Are Better Than Foreclosures?

Recent numbers indicate that banks have experienced an epiphany of sorts when it comes to opting to dispose of distressed homes while they are still under title to the distressed owner via short sale as opposed to waiting until foreclosure takes place, and the bank is now the righfful title-holder, the property has suffered greater abandon and potential vandalism and significantly higher value depletion.

Very revealing and informative article below:

Short Sales Beat Foreclosures, Hands Down!

Shadow Inventory - Not a Boiler Plate Call to Arms

As I have been illustrating for some time now, real estate is a local market driven industry.  While on a national scale, the signs are strongly indicating that a flood of new foreclosure properties are about to hit the market, Sellers should rely on local market data as their primary resource for decision making with respect to the sale of their home.  I would urge Sellers to obtain current market data indicating recent sales activity in their respective communities.  See what the current price range per square foot is on like homes within your community, then look at the homes that have gone "pending" (under contract) to interpret the trend as stable, appreciating or depreciating.  Then take a look at the total number of homes you are competing against month over month.  Are there more or less?  That should give you an indication of the supply and demand component of the equation.  Depending on your findings and the circumstances affecting your urgency to sell, you may need to price your home within the estimated per square foot value range or perhaps below it to attract the greatest number of potential buyers.  The higher the price per square foot, the less likely you are to attract buyers.  To price your home above the value range will likely guarantee that you will enjoy the comforts of your home longer than you might anticipate.  Buyers are looking for extraordinary value, and an experienced and qualified Realtor will know how to effectively showcase your home

The illustration below depicts the national picture, but it may not representative of your community.

The areas consisting of Coral Gables, Coconut Grove, The Roads/Brickell Corridor and surrounding communities make up our Area 41.  Here is a snapshot of the last 15 months of unit sales activity in single family homes.  There has been asteady decline in the number of available homes (supply), yet pending and closed sales show about 3.47 months of inventory.  If a normal market holds has about 6-7 months of inventory, then this market is on steroids! 

This will change as distressed properties are fairly likely to appear.  However, this market is sufficiently strong to absorb a significant number of distressed properties before it can be called a distressed community.

Will the Cork Pop On Your Community?

Delinquency Rates Dropping Dramatically - The End of The US Housing Nightmare May Be In Sight

It's difficult to make a convincing argument that housing is beginning to stabilize when you still have high unemployment and almost no growth in GDP, but an interesting trend is starting to develop. 

Click on the article and draw your own conclusions.

Delinquency Rates Dropping Dramatically - May Be Sign That Housing is Beginning To Stabilize

The Biscayne Corridor - All This Activity Can't Be Coincidence

IF IT LOOKS LIKE A DUCK,

AND WALKS LIKE A DUCK

CHANCES ARE....

I've been saying for a while now how for a real estate market that is reportedly in the throws of a persistent vegetative state and a local government whose fiscal challenges are as daunting as Miami Dade County and the City of Miami, there's an awful lot of interesting large scale infrastructure and private sector capital investment going on simultaneously along the Biscayne Corridor.

Maybe it's my urban New Jersey roots that just set off my "Spider Sense" to these things, or maybe I owe it all to a bunch of really good arithmetic teachers, or perhaps my parents instilled me with a pretty keen knack for the abundantly obvious, but it seems fairly apparent that something is going on along the Biscayne Corridor and to all outward appearances, it looks like opportunity dressed in work clothes.

The following link is to an article that does a pretty good job of putting the pieces together.  Give it a click and see if it all adds up for you.

The Biscayne Corridor - All Bets Are On!

Residences At Vizcaya in Coconut Grove - The Peak of Chic in Waterfront Luxury

Click on the Headline to see the most amazing brand new waterfront high luxury community that is the very essence of the NEW Grove!

18 luxury waterfront condos.  6 left as of today, including a 6,000 sq ft bi-level Penthouse with Private Pool.  Private Deeded Docks available.  Infinity Pool.  World Class Fitness Centre.  24 Hour Concierge and Security.  Exquisite Array of First Class Finishes and Features.

Video:
 Residences At Vizcaya - The Peak of Chic

Details:

The Brochure

Shadow Inventory: Short Term Medicine - Long Term Cure

For nearly a year, the threat of "Shadow Inventory" being unleashed on to the market has loomed large in the hearts, minds and wallets of homeowners all over the country.  Certainly, the short term impact of thousands, if not tens of thousands, of distressed /foreclosed properties will adversely affect property values in localities where they predominate.  In some states, the courts have delayed foreclosures for years in some cases, and the sheer volume of homes that will suddenly  be released onto the market will have a tsunami effect on affected communities.

South Florida, while hardly immune to judicial backlogs, have had a considerable head start compared to other regions of the US.  Our real estate boom ostensibly ended in July 2005, whereas much of the country didn't experience their respective housing downturns until late 2006 and 2007. 

We will most certainly feel the effect of the shadow inventory stampede in sficic areas, but I believe the effect will be considerably less devastating than other parts of the country.

In my opinion, the reasons for this is the fact that the mushroom cloud effect of the housing bust hit South Florida first, and many communities have already begun to stabilize.  A second and more critical reason is that South Florida is a Mecca for foreign investment in real estate.  Foreign exchange conditions with our primary international markets in Latin America have drawn thousands of buyers to our shores to take strategic advantage of the currency exchange rates.  Finally, the rental market is smoking hot with increases as much as 20% over the last two years.  In specific areas, the rent vs. buy analysis clearly favors the buyer.

The link below explains the situation and uses New Jersey to illustrate of the declining effect this shadow inventory will have on the real estate market.  I agree that the disposition of all these distressed properties is the only way to bring the supply and demand equation back in to equilibrium.  Please be reminded, however, that real estate is local in nature, and conditions in New Jersey are not the same as in South Florida or Dubuque, IA or Beaufort, SC.

I conclude that sellers should consult with a knowledgable and experienced Realtor who is keenly aware of his local market conditions, and make their decisions based on accurate local data.     

http://kcmblog.com/2011/08/24/shadow-inventory-luckily-here-it-comes/

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