Why Now is The Best Time For Florida Investors
For the past two years now investors have slowly backed away from the Florida commercial real estate market. Why is that? Much negative news regarding Florida leads many to opine that it is a risky market. Reports come in that foreclosures in Florida are at an all time high, which is true. However the Florida rates of foreclosures are just now reaching the national level, so why all the publicity? For so many years in a row we experienced such rapid appreciation and demand for not only housing but investment real estate coupled with historically low interest rates that foreclosures in Florida were an uncommon thing. After the rates started to rise and so many got locked into adjustable rate mortgages, trouble was seen on the horizon. The cold facts were that by the end of 2005 nearly 1/3 of all homes in Central Florida including Tampa Bay and the greater Orlando area were owned by investors, and when rates started to rise all these homes were dumped on the open market at once amid worries of rising debt service. Thats alot of inventory to hit all at one time and it changed the market overnight. 
News of many hurricanes have also soured many on investing in Florida but the real facts on this are eye opening as well. Only six hurricanes of category 3 or stronger have touched Florida mainland from 1950 to 2003, though 8 made landfall in 2004 and 2005 the chances of that happening again are extremely remote and so far this hurricane season has been nothing of consequence. Economists predict that the housing market will get rapidly stronger beginning in early 2008 and will be booming again by 2010 once investors realize just how unique the Florida market is.
Many investors have also been hit hard by recent tax and insurance increases and it’s not surprising this is affecting everyone’s bottom line. But change is on the horizon, as record breaking legislatures for tax cuts and insurance reform have already been instituted and we are just beginning to see the effects of these cuts which should be in full swing for the 2008-2009 year.
So why should investors pay attention to the housing market? As the number of people migrating to Florida increases each year the cost and availability of housing does much to influence new development and commercial trends. For example, if 2000 new families moved into a metropolitan area this would have great affects on each facet of the commercial market. Right now the multifamily market is booming as home costs are still out of reach for many and these new families would need places to live that are more cost affordable. Many of these new families as well bring with them new businesses which need office space both corporate and class B and C. Several hundred of these new Floridians also work in the industrial sector thus increasing the demand for industrial space. And finally all of these new families need various forms of retail shopping, groceries, auto repair etc which increses retail demand.
The bottom line is now is a great time to invest in Florida as savvy investors know that a down turn can be one of the best times to make money as building owners who are not informed are trying to get out now since they dont understand the economic inpact of housing on commercial investment real estate. Taking into consideration the above, it is imperative that investors work with qualified real estate professionals who not only have local market knowledge but are educated in market research and analysis to be able to reasonably forecast the coming years to help make a succesful investment. Contact us today for an analysis of your investment needs and to match you with the best property type and investment to minimize risk and maximize your returns.
Peter J. Barnett, CCIM
October 6th, 2007 at 5:31 pm
Thank you for sharing!