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Property Investment in Florida on the Rise Again
Florida’s housing market saw a strong upswing in 2012, with December being the 12th consecutive month of higher median sales prices for single-family homes and townhouse condos after years of a struggling economy and its affects on the real estate market.
In addition to higher median sales prices, Florida’s realtors reported more closed sales and higher pending sales in December, resulting from a growing demand of international investors and a return of domestic buyers. In some areas there was even a shortage of inventory, which put pressure on prices.
The total number of closed sales of existing single-family homes totaled 18,031 last month, a rise of 15.8 per cent compared to December 2011, while pending sales rose 39 per cent. The median sales price for a single-family home in Florida in December was $154,000, up 14.1 per cent compared to December 2011.
According to the trade association Florida Realtors, sales of townhouse condos were also on the rise, with a total of 8,470 units sold across Florida in December 2012, up 8.6 per cent compared to the same month a year ago and pending sales were also up 31.8 per cent year on year.
Monthly rents rose 0.6 per cent in the last quarter of 2012 and 3.8 per cent on an annual basis (the largest increase since 2007), apartment vacancy rates dropped from 4.7 per cent to 4.5 per cent last year.
Rising median prices, the quickly growing number of sales and the low levels of inventory are all signs that the housing market in Florida is improving rapidly. The rise can be attributed to two factors: domestic buyers benefitting from new jobs and an economic upswing, and an increase in foreign investors like the Chinese and Canadian buyers seeking to take advantage of rock-bottom prices in the last couple of years.
Realtors reported that Chinese investors bought up to 35 townhouse condos sight unseen to beat out competing investors preferring to travel to Florida to see properties before purchase. Despite the economic struggles of the U.S., Chinese investors still feel it is a safe place to put their money and are attracted by the beaches, warm climate and value for money for properties in Florida. Interest in Florida by Asian investors has increased considerably in the last year, a trend which is expected to continue as more investors from the region discover the relatively low market prices in Florida compared to traditional investment destinations, such as Vancouver or California.
For now, Canadians remain the largest share of foreign buyers in Florida, accounting for 31 per cent of purchases. However, realtors expect that investors from rising markets such as China, Venezuela and Brazil will increase their share over the next few years considerably. All buyers from Latin America and the Caribbean combined account for 35 per cent of sales. Even though the number of Canadian buyers is by far the largest, the median investment price among Brazilian buyers is already between $200,000 to $300,000; around double of the amount Canadian buyers spend on real estate in Florida.
In total the median home price paid by foreign investors for properties in Florida was $194,700 compared to an overall state median price of $125,000 in 2012. According to the National Association of Realtors, 82 per cent of purchases by international buyers were paid for in cash.
Topic: Florida foreclosures