Headlines – Week of March 25, 2012
April 5, 2012
Florida a Top Market for International Buyers
According to National Association of Realtors® data, bargain prices in American real estate are luring foreign buyers and Florida continues to be the most popular destination.
More than half of international sales in 2011 (58%) came from four states alone: Florida (31%), California (12%), Texas (9%), and Arizona (6%), according to the data.
In a blog post last week, I noted that Inman News recently identified the markets where foreign buyers make up the biggest share of homebuyers.
Here are the top markets:
- Lakeland-Winter Haven, Fla.
- Cape Coral-Fort Myers, Fla.
- Orlando-Kissimmee-Sanford, Fla.
- North Point-Bradenton-Sarasota, Fla.
- Miami-Fort Lauderdale-Pompano Beach, Fla.
- Phoenix-Mesa-Glendale, Ariz.
- New York County, N.Y. (Manhattan)
Have Home Prices Finally Reached Bottom?
We are constantly being asked the question, “Has the real estate market hit bottom yet?”.
In the SW Florida market, our answer recently has been YES.
And now, according to a Bank of America Merrill Lynch forecast recently released, our answer has some validity.
In the fall, many analysts had predicted home prices would drop by 8 percent from the second quarter of 2011 through the first quarter of 2013. Now they’re revising that forecast, realizing the housing market is stabilizing faster than they originally thought.
They now predict that prices will remain flat for the next two years, as the excess foreclosure inventory is absorbed. They then expect to see a pickup in home prices by 2014.
And in the long-term, they see a big rise in housing prices. From 2012 through 2020, analysts forecast a cumulative growth of 42 percent in home prices (at 4 percent on an annualized basis).
The Merrill Lynch data is also supported by sales figures based the 0.7 percent documentary stamp tax on deeds collected by the State of Florida. “Doc stamps,” as they are commonly known, are collected on total prices of newly sold and conveyed property.
Real estate sales totaled $1.05 billion for the year’s (2012) initial two months in Sarasota, Manatee and Charlotte counties, a 20 percent jump compared with $874 million during the same period of 2011, county records show.
Many believe the increased sales represent the resumption of the flow of retirees that are attracted to Southwest Florida.
The jump in sales represents yet another indication that Southwest Florida’s real estate recovery has caught up to, or even surpassed, the state’s. Until now, many parts of the state have experienced a better economic resurgence than Southwest Florida, where traditionally high unemployment and home foreclosures have hampered growth.
Real estate sales were even larger in the state’s top metropolitan areas. Total real estate sales in Miami-Dade County topped $3 billion, a 27 percent increase, while sales in Hillsborough County eclipsed $1 billion, for a 30 percent increase.
In the last 12 months, real estate sales in Sarasota County were $3.6 billion, up nearly a third from the low point of 2009, but still far from the $10 billion peak of 2006.
Investment, Vacation Home Sales up in 2011
According to the National Association of Realtors® (NAR), sales of investment and vacation homes jumped in 2011, with the combined market share rising to the highest level since 2005.
NAR’s 2012 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2011, shows investment-home sales surged 64.5 percent to 1.23 million last year from 749,000 in 2010. Vacation-home sales rose 7.0 percent to 502,000 in 2011 from 469,000 in 2010. Owner-occupied purchases fell 15.5 percent to 2.78 million.
Vacation-home sales accounted for 11 percent of all transactions last year, up from 10 percent in 2010, while the portion of investment sales jumped to 27 percent in 2011 from 17 percent in 2010.
NAR Chief Economist Lawrence Yun said the shift in investment buyer patterns in 2011 shows the market, for the large part, is able to absorb foreclosures hitting the market.
All-cash purchases have become fairly common in the investment- and vacation-home market during recent years: 49 percent of investment buyers paid cash in 2011, as did 42 percent of vacation-home buyers. Half of all investment home purchases in 2011 were distressed homes, as were 39 percent of vacation homes.
The median investment-home price was $100,000 in 2011, up 6.4 percent from $94,000 in 2010, while the median vacation-home price was $121,300, down 19.1 percent from $150,000 in 2010.
Investment-home buyers in 2011 had a median age of 50, earned $86,100 and bought a home that was relatively close to their primary residence – a median distance of 25 miles, although 30 percent were more than 100 miles away.
The typical investment buyer plans to hold the property for a median of 5 years, down from 10 years for buyers in 2010.
The typical vacation-home buyer was 50 years old, had a median household income of $88,600 and purchased a property that was a median distance of 305 miles from the primary residence; 35 percent of vacation homes were within 100 miles and 37 percent were more than 500 miles. Buyers plan to own their recreational property for a median of 10 years.
Lifestyle factors have consistently been the primary motivation for vacation-home buyers, while the desire for rental income drives investment purchases. Vacation homes purchased last year were more likely to be in suburban or rural areas; investment homes were concentrated in suburban locations.
Eighty-two percent of vacation-home buyers said the primary reason for buying was to use the property themselves for vacations, or as a family retreat. Thirty percent plan to use the property as a primary residence in the future, and only 22 percent plan to rent to others.
Half of investment buyers said they purchased primarily to generate rental income, and 34 percent wanted to diversify their investments or saw a good investment opportunity.
Forty-two percent of vacation homes purchased last year were in the South, 30 percent in the West, 15 percent in the Northeast and 12 percent in the Midwest; 1 percent were located outside of the U.S.
Forty-four percent of investment properties were in the South, 23 percent in the West, 17 percent in the Midwest and 15 percent in the Northeast.
Eight out of 10 second-home buyers said it was a good time to buy. Nearly half of investment buyers said they were likely to purchase another property within two years, as did one-third of vacation-home buyers.
Currently, 42.1 million people in the U.S. are ages 50-59 – a group that has dominated second-home sales since the middle part of the past decade and established records. An additional 43.5 million people are 40-49 years old, while another 40.2 million are 30-39.
NAR believes that given that the number of people who are in their 40s is somewhat larger than the 50-somethings, the long-term demographic demand for purchasing vacation homes is favorable because these younger households are likely to enter the market as their desire for these kinds of properties grows, and individual circumstances allow.
NAR’s analysis of U.S. Census Bureau data shows there are 8.0 million vacation homes and 42.8 million investment units in the U.S., compared with 75.3 million owner-occupied homes.
NAR’s 2012 Investment and Vacation Home Buyers Survey, conducted in March 2012, includes answers from 2,241 usable responses about home purchases during 2011. The survey controlled for age and income, based on information from the larger 2011 NAR Profile of Home Buyers and Sellers, to limit any biases in the characteristics of respondents.
Posted by Scott R. Lodde