Monday, 29 September 2008

Article: Homes More Affordable; Loans Are Not

The Miami Herald featured an article yesterday about a growing issue that's causing the property market in southeast Florida to stagnate. Although prices are - finally - coming down, local buyers very often either can't get the mortgages they require; can only get mortgage at rather prohibitive terms; or need to stump up large downpayments. As the title of the article suggests, homes are indeed now becoming more affordable. But they're still out of reach to many - first time buyers for one - who can't get appropriate loans.

This means that the supply of properties is swelling ever more. Currently, Dade county has a 32-month supply of houses and a massive 41-month of condos, whilst Browward has a 20-months supply of houses and a 29-month supply of condos. In a "normal" market, there would ordinarily be a six to twelve month supply of such properties.

So, what about prices? 62% of condos in Dade county are under $300,000, whilst this percentage is at 78% for Broward. $300,000 is (at the moment) just over £165,000 - so there's plenty of supply of properties at the lower end of the market. But this doesn't help if people are unable to find loans to pay for the properties - something that, given the recent major financial wobbles - probably won't be rectified anytime soon.

This all means that as a foreign buyer, you may well be at an advantage. If you're purchasing a property with cash or are able to obtain a loan in your home country, you're in a very great position. Sellers will view you as a keen buyer and this in itself may work to your advantage - you may well be able to negotiate on price.

Article: Homes more affordable; loans are not (28th September 2008, The Miami Herald)

Tuesday, 16 September 2008

Articles: Recent Roundup

No one can have failed to have noticed the news about America's fourth-largest investment bank, Lehman Brothers, over the last couple of days. The knock-on question from this is - how does it affect us? For those with an interest in southeast Florida property, the collapse of Lehman Brothers may be greater than you think. The bank invested in large-scale projects across the region, including the expansion of Aventura Mall; Donald Trump's new venture in Hollywood Beach; and Canyon Ranch resort on Miami Beach.

Such larger scale projects may not suffer too badly - another lender may simply swoop in any buy off the loans at a discounted rate. Borrowers, assuming they're not making losses, would continue making repayments to the new loan company.

It's with Lehman's investments in condo units in the area that there is an issue. If selling off such projects won't pay off loans, units may be sold as quickly as possible for well below what their actual value may be.

Article: Lehman was major force in S. Florida (15th September 2008, The Miami Herald)

Foreclosures in America increased at a slower rate in August than in previous months. August saw a 27% increase to the same month in 2007; less than in July and June. In total, over 90,000 properties across the country were repossessed in August 2008.

The top U.S. states for foreclosures are Nevada, California and Arizona. Florida comes fourth.

Article: US foreclosure rates up 27 percent in August, slower than July and June (12th September 2008, Sun Sentinel)

Meanwhile, nearly 14% of Florida property owners are behind in their mortgage payments or are facing foreclosure. This compares to 9% of property owners nationwide. Interestingly, the cause of foreclosures may now be shifting from the subprime crisis to those who had good credit history but took out crazy mortgages with tough repayment plans.

Article: 14 percent of Florida facing mortgage crisis (6th September 2008, Sun Sentinel)