Foreign property investors hold the key to a recovery in the Florida real estate market as high unemployment is putting off US buyers, it is claimed by a series of experts.
The state’s high jobless rate, up 11% in September, is creating so much uncertainty that potential buyers are frightened of spending money, according to a new report from the University of Florida.
‘Most economists think the recession is over, but people are afraid to spend money as unemployment keeps going up which creates problems for every sector of the real estate market,’ said Timothy Becker, director of UF’s Bergstrom Center for Real Estate Studies.
‘There is a lot of speculation that there could be a double-dip recession, where we recover just a little bit and then go back into recession again,’ he added.
The report also shows that banks are still reluctant to lend and Becker said that foreign property investors may be needed for a recovery to start. ‘Everybody thinks that Florida will rebound because we have so much going for us. The sun shines every day and there are a lot of advantages to living here. Foreign investors see that, too, and believe their prospects are good for long-term investments,’ he pointed out.
So overall the outlook is still gloomy. ‘While there are going to be improvements some quarters and declines other quarters, we’re mostly going to be bouncing along the bottom for a while. Uncertainty is the most dangerous market condition delaying recovery,’ Becker concluded.
Indeed in order to help foreign investors one developer has set up a mortgage company to help them obtain the funds they need to buy. J
oe Milton, president and chief executive of J. Milton Associates has put up a $100 million cash to boost sales.
‘Some 60% of our buyers are foreign yet they can’t always get loans,’ Milton said. He added that foreign real estate investors are vital to a recovery in the market and he has seen a surge of interest in his company’s luxury condominiums in Sunny Isles Beach.
‘International buyers are activating this market and re-activating sales. The Swiss, Spanish, groups from Italy and England who already own some stuff down here are seeing it as a good time to buy,’ said Mike Lapointe, vice president of Baybridge Capital Advisors in Miami.
Buyers from Latin America are also keen on buying according to Jenny Huertes of Bal Harbour based Condo Vultures who has been undertaking seminars in South American countries.
In some cases it is now cheaper to buy in Florida that major Latin American cities such as Buenos Aires, Mexico City and other parts of Brazil.
South Florida is the most popular location with foreign buyers, in particular Canadians, British, Western Europeans and Canadians, according to the Florida Association of Realtors.