Florida Real Estate
The Florida real estate market has been on a roller coaster ride for several years. Just a few years ago, Florida was considered one of the premium home buying states. In addition to being a fun-loving place to reside, Florida makes for numerous real estate investment properties to accommodate the millions of tourists who flock to the area annually.
Florida real estate was a goldmine for investors. Many made most of their money by offering short-term vacation rentals or providing furnished condos and beach cottages to snowbirds who reside in the Sunshine State during winter months.
Everything changed in June 2007 with the collapse of two Bear Stearns hedge funds. The banking crisis created unprecedented unemployment rates, which caused thousands of homeowners and real estate investors to default on home mortgages. Within months, banks were issuing Lis Pendens foreclosure notices at record pace and housing values began to decline.
Today, property values have declined as much as 40-percent in some areas of Florida. Jacksonville was one of the few states devastated by the mortgage industry fallout, while Miami and Orlando took the hardest hit.
According to Foreclosure Data Online, Orange County has nearly 700 bank owned properties for sale in the Orlando area, while Broward County, home to thousands of NASA employees has more than 1,000 foreclosed homes. Miami-Dade County in southern Florida tops the list of bank foreclosures with nearly 1,400 foreclosure listings.
The U.S. Census Bureau reports Floridians are exiting the Sunshine State at the rate of nearly 200 people daily. Much of this stems from high property taxes, increased insurance premiums, reduced property values, and high unemployment rates. Additionally, many Florida residents are retired and their fixed income prohibits them from affording the high cost of living.
With all the gloom and doom surrounding Florida real estate, there is an upside. Individuals who have considered relocating to Florida or investing in a vacation home can buy houses at prices substantially lower than five years ago. Beachfront homes which once sold for over one million dollars can now be purchased for $500,000 to $750,000.
Penthouse condos with oceanfront views are selling for pennies on the dollar. Homes in gated communities with multiple amenities such as golf courses, swimming pools, exercise rooms, and community club houses are selling for a fraction of their original cost.
Due to the high rate of foreclosures in Florida, many mortgage lenders are forced to enter into real estate short sales. This option can be a lifesaver for retirees who refinanced mortgages or property owners owing more on their loan than the appraised value of their property.
When lenders engage in short sales, they allow property owners to sell their home for less than owed on the loan. Some banks accept the short sale price as payment in full toward the note. Others hold property owners responsible for the deficiency amount between the purchase price and loan balance. Short sales are handled by the servicing lender's loss mitigation division. The process can be complex and often requires assistance from a real estate lawyer or short sale specialist.
No one is certain how long it will take before the Florida real estate market rebounds. Industry experts predict it will be a minimum of five years and perhaps longer for the gulf side of the state which has been affected by the BP oil spill.
There is still money to be made investing in Florida real estate. However, real estate investors should plan to hold properties until the market rebounds. When offering investment properties as rentals, investors will need to offer competitive pricing. Taking time to learn about the area where investment properties are located is essential in order to provide tenants with the type of housing they desire.
We invite you to learn more about investing in Florida real estate and other markets hit hard by foreclosure in our real estate article library. New real estate investing and personal finance articles are added weekly, so take a moment to subscribe to our mailing list to stay abreast of current real estate market trends.