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Hot buys in Florida

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Nila Sweeney

The US real estate market might make many buyers shudder due to the sub–prime mortgage crisis, which the country is still striving to overcome. However, a closer look reveals that there are still opportunities for keen investors not afraid of risk, according to Canadian Real Estate Magazine (CRE), sister publication of Your Mortgage and Your Investment Property magazines.

“Untapped areas in Florida could prove fruitful if you play your cards right,” says CRE. “It’s hard to predict just where the bottom is when dealing with a mortgage meltdown. An investor could buy now and then regret it later if prices continue to drop. On the flip side, a buyer could purchase now and then sit back, relax and watch as the investment appreciates.” 

Gary Michaels, manager at Resort Realty, Pensacola tells CRE: “This is where the risk factor comes into effect. Overall, Florida’s real estate market has experienced about 50% price depreciation and currently sits at pre–construction costs.”

Consumer confidence in Florida is gloomy. “Over the next few months, it will probably stay at these very low levels, but isn’t likely to go much lower,‘‘ says Chris McCarty, director of UF‘s Survey Research Centre at the Bureau of Economic and Business Research, Gainesville, Florida.

That said, there’s some good news. Oil prices have slightly declined in the state due to lower demand. Also, there’s a tax credit now available that encourages first–time buyers to get into the market. According to Lawrence Yun, chief economist at the National Association of Realtors (NAR), Chicago, about 2.5 million first–time buyers are expected to take advantage of the US$7,500 tax credit between now and the middle of 2009.

So what does all this mean for investors? It suggests you might want to get in now, as the economy and prices are forecast to rise.

“Prices have fallen sharply and quickly in very distressed markets, but most or all of the price declines may have already occurred in these areas, since buyers have now returned to those markets,” says Yun.

Also, it’s key to evaluate the market with a long–term scope. Richard Gaylord, NAR president and broker at Re/Max Real Estate Specialists, Long Beach, California, says, “many buyers with long–term expectations are getting exceptional value in the current market. Once the inventory is drawn down, price pressure will return because the costs of construction are rising – today’s buyers are very well positioned to build wealth over time.”

Certain areas in Florida are performing better than others, which is likely to give investors the most bang for their buck. In fact, cities along the northwest coast have some winning opportunities.

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