As residential and commercial property markets in Florida continue to thrive, wealthy investors are making their way into the market. The low rates of interest along with highly discounted prices are encouraging domestic buyers to seize the opportunity and purchase properties in the state.
Borrowing has been a problem for those interested in purchasing Florida homes and apartments. While some lenders have run out of funds amidst the worldwide financial crisis, Stewart Holley SVP of Sales and Marketing with the Forseti Group states that ”tightened regulations have made mortgage-lending decline from $2 trillion four years ago, to $966 billion in 2012.” Since bank financing is an unfavorable option, new sources such as hard money, private lending, and others have emerged to help buyers.
However, market insiders say that these indicators do not tell the complete story. People who purchase high-end real estate assets usually have extra equity to dispose. The number of cash deals has also been rare, especially in South Florida’s condominium market, which is slowly recovering. Meanwhile, buyers who purchase semi luxury or normal residential properties, along with those who need a second mortgage on luxury properties, face a tough challenge when securing financing.
Although there have been signs of stability in the commercial real estate market, interest from the domestic market is not as high as expected. Instead, international investors with vast financial standing are completing cash-deals and acquiring their space in the state of Florida. US-based developers and buyers are in need of debt financing, and their inability to secure it closes the door for them, which leaves the market open to foreign investors with cash.
South Florida has maintained relatively steady market fundamentals over the first quarter of 2013. The vacancy rate of office spaces fell slightly, and Broward County experienced the lowest levels at 16.1 %. Market insiders say that local demand has finally managed to outpace supply as most of the properties were either sold or rented to tenants who already had their place in the market. Relocations, renewals, and expansions accounted for most deals in South Florida during the first quarter this year.
New developments throughout the state have been in check, and the market has improved considerably over the past twelve months. As a result, rents for industrial as well as office spaces are expected to rise during the next few quarters. Landlords will soon begin dominating the market as they will no longer be obligated to offer leasing concessions in the future. According to Stewart Holley Director of Sales and Marketing for Forseti Real Estate Services, “market fundamentals have improved significantly over the past year, particularly retail sales, job growth, and the residential real estate market. These factors are a good indication for the entire commercial property market in the U.S. However, the South Florida market is expected to reap larger benefits from the turnaround in its residential sector”.
Real estate analysts forecast that Florida will attract plenty of interest in its commercial as well as residential real estate market. While the commercial market will allow for expansion of existing companies and offer prospects for new ones, the residential market is expected to lure in individuals who are looking for retirement and second homes in the country.