Hi Robin

People are starting to look at the Florida market as a golden opportunity now with prices looking so cheap and the weak dollar.

In my view Florida will always be a good location. Its demographics are good with around 3,000 people moving to the state each day (from memory so open to corrections!), tourism industry continues to do well etc.

Some issues I would raise with Florida and more experienced investors in the market might be able to comment on this:
Buying in the right area for rentals – I would imagine property a lot of investors will be looking at will be dependent on the tourist market thus very important to get location right, in terms of areas that permit holiday lets and in particular short term lets. Running costs and county taxes are high I believe so important to get the rental right.

In my opinion, it might be time to start looking but I wouldn’t be in any hurry yet. After so much capital growth and price inflation in the US and particularly Florida, there is probably more depreciation to come yet and along with that more foreclosures.

Anyone looking at getting into the US market now?

Noreen

I think the time will be right very soon, if not already, to look at places like Florida. Yes the mrket may not have botomed out just yet but when it does, say in 6 months time it will be too late as the signals will be obvious to everyone. Better to get in just before the bottom and be ready for the rebound.

Noreen you're absolutely right in what you say. I nearly bought 18 months ago but was put off by the bubble and the high property taxes but I think I'd put up with the latter now. It's just a question of the time to do the research.

I'm going to take a look at North Carolina when I go out there in June as that was quite a booming area and may throw up some bargains but I do think the right property in the right area of Florida will be a good bet now.

One final thought - I wonder how many of the forclosures are real "sub-prime" - wooden roadside shacks and/or mobile homes. I suspect quite a lot.
Huw

One thing to keep in mind on the US economic situation, while we have seen the credit crunch unfold the effect on the wider economy has yet to be fully felt. If this effect results in widespread job losses (likely at some stage) then further property market declines will follow. Such declines need not be restricted purely to sub-prime.

Hi George

I wasn't suggesting any further problems would be related just to sub prime, only that Florida has a significant element of sub-prime properties, which lead to the stats quoted above. As you say, it's really a question of judgement as to how far the market has got to fall. My view is that it will be near the bottom in the next 3 months which will be the time to start looking.
Huw

Have to agree with Huw,

There is no doubt in my mind that the US has a long struggle ahead of it, however Florida is somewhat insulated from the pain because of the international tourist industry, Florida prices will recover more quickly than elsewhere due to speculative buying - based on the likelyhood of a fast recovery.

The problem is this way of thinking.

The problem I see is that people are basing their property purchasing decisions assuming that the tourism will rebound quickly due to international holidaymakers due to weak dollar, consider that the $ will not stay weak for long since the FED will have to raise interest rates quickish within 6 months to offset inflationary pressures by my reckoning.

Consider also that a weak US economy / global slowdown will result in a FALL in national & international holiday makers.

Consider also that prices are not cheap yet .... or even good value! Since we are talking of falls from the position of being massively overvalued.

I'd give it another 6 months, wait for the Bush government to indicate the rise of interest rates, - a sure sign that the property market has bottomed out.

Another good indicator will be the recovery of builders stocks and shares ..... usually preceeds the property market recovery by 4 months or so. Until then your money is better off invested elsewhere.

Hi

It appears it's not just Florida!

Bargain seekers buy up Detroit foreclosures, reports that city's paper.

Investors from both the U.S. and abroad have descended upon Detroit, purchasing foreclosed homes in bulk, says the Detroit Free Press.
In February, home sales were up 49% in the city, which led the U.S. in the number of foreclosures last year.

Many buyers are snatching up multiple properties with the hopes of selling them back to investors to rent them out.

Homes in Detroit's "better neighborhoods" garner $850 a month. Many hope to later sell the homes and are betting that the local market will improve within the next five to 10 years. With so many foreclosures on the market now, "banks must sell in bulk so they don't get overwhelmed with property," says the piece.

However, closing on a bulk foreclosure deal with a bank can be tough going, according to the article. While investors may look to get homes at 20 to 25 cents on the dollar, banks holding Detroit properties are seeking 30 to 35 cents on the dollar.

Obviously, if you're looking at a market like Detroit, you are well advised to do your due diligence well, as parts of the city notoriously resemble a war zone!

But 30 cents to the dollar in the 'better neighbourhoods' is bound to attract interest.

Maybe, though, we're talking here simply about speculators?

cheers

Hi

The National Association of Realtors (NAR) 2008 Investment and Holiday Home Buyers Survey was published this week and made for some interesting reading.

The report painted a picture of the property market in decline comparing figures between 2006 and 2007 - this we all know - however the interesting part of the report was the increase in foreign investors in the US.

It doesn’t come as any surprise that with the strength of the Pound and the Euro against the Dollar; and a large amount of cheap, distressed properties on offer, foreign buyers are helping to take up some of the slack left by the sub-prime crisis in the US.

It is the profile of the foreign investors that makes for interesting reading - the majority of foreign property buyers in the US are from Europe (33%) with UK investors (12%) making up the biggest percentage - the five most acquisitive nationalities investing in US property are: Mexico (13%), UK (12%), Canada (11%), India (6%) and China (5%).

The report also provided useful insights about UK investors buying in the US. They are predominantly lifestyle buyer with 55% wanting the property as a ‘holiday home’, with only 23% of investors who said their property was to be used as a rental investment and 21% planned to use the property for both holiday and holiday letting. Nearly two-thirds (64%) of UK investors purchased in the South of the country followed by the West (26%), Midwest (5%) and the North East (5%). A larger percentage of foreign buyers from the United Kingdom – nearly half – purchased homes in Florida than any other state, the report stated.

When financing their purchase, 33% of UK buyers paid in cash – which is higher than the average for foreign investors (28%). The only country that paid in cash more than the UK was Canada (47%).

So Florida again features as an old favourite but buyers from India and China are now starting to dip their toe in the US property market. This corresponds with our discussion yesterday about the notion that sustained growth in emerging economies this year could tickle the economic giants of this world a little?

Noreen

i also find the US an interesting market - not just because it's such a buyers' market but also because i think the dollar is likely to strengthen against the pound over the next year or two.

but just as in the UK, there's plenty of good data on sale prices and very little on rental yields. anyone come across anything useful, e.g. for locations in florida?

regards,
dan

US is for sure a good time to buy at the moment but if you do then buy a foreclosure in an auction house not one in an agency window. More work but it means the price willl be wholesale not retail and currently there is plenty of choice to get what you want.