Time to buy? Florida real estate on the rebound

Vacation property prices is Florida are on the rise but there are still deals to be had.

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Housing prices in the sunshine state are rebounding but there are still bargains to be had, according to a local realtor specializing in snowbird properties.

“Southwest Florida has become very active,” Phillip Wood, president of John R. Wood Realtors based in Naples, Fla., told MoneySense while on a recent media visit to Toronto.

“A lot of people are looking right now partially because prices are just starting an upward climb.” The strong loonie combined with low interest rates has also compelled Baby Boomers to consider a vacation home in Florida, much like their parents. Thirty-one per cent of all recent foreign buyers in Florida are Canadian, according to a report by the National Realtors Association.

“They do recognize that the market is starting to move there and it might be a good time to step in and do something if they want that second home,” Wood said.

Residential real estate prices in South Florida have risen more than 4% in the last year, far outpacing the national average, according to the S&P/Case-Shiller Home Price Index. Still, prices are 45% off all-time highs seen in late 2006, early 2007. The average condo in popular Southwest Florida now sells for $315,000 while the average single-family home now sells for $450,000, Wood said.

That’s the average selling price however. Average selling prices can be skewed by a minority of very expensive sales and areas like Palm Beach, Naples and Miami are favourites among luxury buyers.

Vacation properties can sell for much less than the average. Indeed, the overwhelming majority of Canadian buyers spent less than $200,000 on their Florida purchase this past year while the median price range was $100,000-$199,000.

A portion of these were properties in foreclosure. In fact, these so-called “distressed sales” account for roughly 20% of total sales in Southwest Florida.

“Sometimes they can be good buys but they can be difficult to buy also because you’re dealing with the bank, there are usually multiple offers and typically you don’t get an answer on your offer right away. It can take weeks,” Wood said.

But even these more complicated distressed sales are fewer and farther between these days.

“It’s dropped a lot though from where it was.” At the height of the housing crisis, homes in foreclosure accounted for 50% of all properties on the market.

January through March is Florida’s busiest buying season as snowbirds from across the Northern U.S., Canada and Europe descend on the Sun Belt.

Here are some of Wood’s top Florida buying tips:

Location, location, location. Look for a property that’s either close to a nice beach or near sought-after amenities like a golf course. This will help protect the resale value of the home.

Prospective out-of-town buyers needn’t spend thousands on multiple trips south either. “Surprisingly, we’re having more sales via the web where people actually turn in a purchase contract subject to an in-person inspection within 10 days,” Wood said, adding it’s important to see the property in person at some point before the deal closes.

Know your costs. Canadians would be wise to hire a Certified Public Accountant (CPA) or foreign tax attorney to discuss extra fees including title insurance. There’s also closing fees and annual condo maintenance fees to consider.

Some 90% of Canadians don’t finance their purchase and instead opt to pay in cash for their Florida home, according to the Florida division of the National Realtors Association. If you are going the mortgage route however, you should know that mortgage lending is a little different in the U.S. For a second home, mortgages are usually capped at roughly 65% of the purchase price and at fixed of 4% for 30 years, Wood said. Arranging a mortgage through an Canadian bank with a U.S. subsidiary can open the door to more flexible financing however.

Be competitive. One of the most common mistakes Wood has seen is buyers coming in with ridiculously low-ball offers believing that sellers will bite.

“That’s just not happening now. Maybe three of four years ago it might have worked.”

For more detailed information on the ins and outs of buying U.S. investment properties, see Romana King’s story from our February/March issue entitled, Be an American Landlord.

24 comments on “Time to buy? Florida real estate on the rebound

  1. Beware when purchasing in the USA, just sold a property in S Florida. Selling price 210k, net 172K.,many expenses when selling high commissions 6% 12K, witholding taxes by the IRS on foreign owners 10%= 21K ,closing fees, 5K. Total 31k. Now I have to hired a CA/CPA to claim the difference between the real profit and the witholding tax. Another $750.00 US to 1K. Now imagine if you are a seller with no gain. Beware do not pay more than the 2005 value. Look up the County site where you are purchasing. The Tax Collector will give you a history of the property going back many years. Good luck. Beware of condo rules,.

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    • Thanks.. Was thinking of entering the US market but have very minimal knowledge. This will definitely help.

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  2. Recently we tried to buy a property in Wyoming and find out few real estate crisis over there. Is there something that can put the deals in jeopardy.

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  3. Am a year late reading this. The market seems to have recovered in Florida

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  4. Great post summing here all information regarding of market business,its very useful for everyone thanks this info.

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  5. Selling price 210k, net 172K.,many expenses when selling high commissions 6% 12K, witholding taxes ,i recommend it thanks..

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  6. It is good to see the FL real estate market rebounding so strongly after the last couple of years…I hope the trend continues through 2013!

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  7. The property in southwest Florida is hot right now! The number of distressed housing sales has dropped to maybe 5%.

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    • Wow! 5% is a significant improvement… things were looking very grim there for quite awhile!

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  8. I recently heard of a fellow who bought a Florida townhouse just a year ago for about $200,000. He sold it last month, after a 1 year hold, for about $300,000. Possibly the best part of the price move has already happened.

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  9. I'm not yet an expert on marketing as of now but I think this is a great opportunity. Thanks for sharing.

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  10. It seems like florida real estate is continuing to go up. Bmo just released a report saying prices are up 12% since the bottom. I think there is a perfect storm with cheap real estate and a strong Canadian dollar. The loonie has gone up from 70 cents to parity now. Imagine how much these properties would cost at old exchange rates. Seems like the time to buy is now. But i think you have to be able to hold it for a long time as prices may only go up slowly.

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  11. Home sales in Bend continue to increase while inventories decrease. Prices continue to increase but interest rates are near all time lows. Now is the time to buy Bend Oregon real estate. Thanks.

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  13. This information is really informative and useful for investors. Thank you for sharing.

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