The world discovers Florida real estate
Part 1: Real estate without borders
By Glenn Roberts Jr. Inman News
At Epcot, a 300-acre park at the vast Disney World resort
Fla., there are 11 massive pavilions that represent nations around the
globe. The Mexico Pavilion resembles an Aztec pyramid, the United Kingdom
Pavilion includes a reconstructed English city with a sampling of
architecture from several time periods, the Canada Pavilion includes outdoor
scenes such as a waterfall and gardens, and the Germany Pavilion features
Biergarten with traditional food.
Looking beyond the borders of this sprawling attraction, which drew about
9.9 million visitors last year, actual international communities have
and spread throughout the state of Florida. The waves of foreign buyers
mostly from Europe and Latin America - are drawn to the sunshine and
comparative affordability of properties in the state, and particularly
The weakening of the U.S. dollar versus other currencies and the
availability of direct international flights to Florida destinations are
also factors in fueling the global market for Florida homes.
Basically, they're not just there for Disney World.
Globalization appears to be in full swing for the real estate industry,
foreign buyers playing a significant role in some U.S. markets and U.S.
buyers showing a growing interest in international markets. As they say
the Magic Kingdom: "It's a small world, after all."
The National Association of Realtors estimated in a report last year
perhaps 15 percent of all homes sold in Florida from May 2004 to May 2005
were purchased by foreign buyers - and real estate professionals say this
influx of international buyers continues to leave its mark on the luxury
The median sales price of homes purchased by foreign buyers in Florida
$299,000, which was 52.4 percent higher than the state's overall
single-family median sales price of $196,200 during the survey period
the Realtor group's Profile of International Home Buyers in Florida report.
And about 22 percent of foreign buyers are purchasing homes priced at
$500,000. The report is based on a survey of 986 respondents who closed
1,844 home sales transactions to non-U.S. residents from May 2004 to May
The U.S. dollar has lost significant worth against the euro, British
and Canadian dollar in the past five years. One U.S. dollar could buy
$1.60 in Canadian dollars in January 2002, for example, compared to a
current value of about $1 U.S. dollar for every $1.11 in Canadian currency.
One U.S. dollar bought almost 1.2 euros in 2002 and is now worth a fraction
of the euro. The British pound is worth nearly twice as much as the U.S.
dollar, and has hovered around this level for the past couple of years.
The exchange rates have not been as favorable for Latin American buyers,
though other factors such as political or financial instability in their
home countries have played a role for those buyers.
Tony Macaluso, a real estate educator and owner of Portside Properties
in Palm Beach Gardens, Fla., who was born in Falmouth, England, said,
not the only country that has (baby) boomers. There is a whole group in
Europe of pretty much the same mindset - looking for a second-home
Different groups of foreign buyers seem to favor different communities
Florida, Macaluso said. British and German buyers are fond of the Orlando
market, he said, and Florida properties are viewed as "a true bargain"
British buyers. Florida's West Coast is popular with Germans and Europeans
in general - there are direct international flights from Frankfurt to
Meyers, Macaluso noted.
Venezuelan, Nicaraguan, and Central American and South American buyers
to purchase in the Miami and Boca Raton markets and South Florida in
general, he said. Many Russian buyers choose the Broward County area.
Foreign buyers are typically not interested in rural areas north of Orlando,
The Realtor association's report found that the Miami-Fort Lauderdale
was most popular with foreign buyers, with 30.4 percent of purchases by
foreign buyers occurring in that area. Next on the list was Orlando, with
22.7 percent, and Naples-Fort Meyers, with 13.7 percent. About 33 percent
foreign home buyers were from the United Kingdom, and 7 percent were from
Germany, 7 percent were from Canada, 7 percent were from Venezuela and
percent were from Colombia. Brazil and France were next on the list.
Alex Shay, broker associate for Beachfront Realty
in Miami Beach, Fla., said
that despite increasing prices for Florida real estate property is inexpensive
foreign buyers. The Florida Association of Realtors reported that median
sales price in Florida increased 17 percent in March to $248,200, and
more than doubled since March 2001, when the statewide median sales price
"When (Europeans) come here everything is
inexpensive," Shay said. The Miami
area is truly international, he said. "It's got a very international
People come here and they don't feel out of place." The beaches and
are definitely a draw, too, he said.
The increasingly international character of the
area owes a lot to a growing
trend in international travel, he said. Foreign buyers of Florida real
estate typically have a pretty good grasp of the English language, Shay
said. "When you get into the luxury market like I'm in, there is
explaining you have to do. You are dealing with people who are wealthy,
have been out there in the marketplace for a long time. This is not their
Among his recent clients: "I've had a gastroenterologist
from Spain, a
dental surgeon from Taiwan. I've had a Russian client, I've had Latin
clients, Israeli clients," he said. "I can get a call from almost
any country and it doesn't surprise me."
While prices continue to escalate in Florida, sales
have been sliding. In
March, sales were down 22 percent compared to March 2005, the Florida
Association of Realtors reported.
Foreign buyers, just like domestic buyers, are
concerned about the
sustainability of price increases in Florida, he said. "Foreign buyers
just like everybody else - everybody is talking about a real estate bubble."
Real estate speculators - both domestic and international buyers - have
lot to do with the current slowdown in the real estate market, said Jack
McCabe of McCabe Research & Consulting in Deerfield Beach, Fla.
"Speculators were just rampant down here," he said, and particularly
luxury condo projects in South Florida. "Speculators and speculative
development and speculative lending created an oversupply in multi-family
units - many of these are luxury. A lot of these purchases, both
internationally as well as U.S., were done over the phone through brokers.
Now a lot of properties are getting cancelled."
But as speculators have left the market, the timing is good for serious
foreign buyers who are purchasing a second home, McCabe said. "It
more of a buyer's market for them. Sellers are now willing to negotiate.
We've seen sales velocities in a lot of markets come to a standstill,
inventories two and three times what they were 12 months ago."
While overall home prices have still been increasing in double digits
year-over-year, condo price increases have moderated, and in March the
median price of existing condos rose 2 percent compared to March 2005,
according to the Florida Association of Realtors, while dropping 4 percent
in the Miami area.
The onslaught of numerous damaging hurricanes over the past two years
Florida haven't dented the real estate market too much, though McCabe
another big storm would really hurt. "There is a lot higher anxiety
here," he said. "The big question we ask in Florida is what
(a big storm)
might change in the mentality of baby boomers as far as future migration."
Lewis M. Goodkin of Goodkin Consulting, a real estate and financial
industries consulting company in Miami, said that international buyers
caught up in the fever of the U.S. housing boom just like domestic buyers.
"The level of speculation had been at a record high. It just dwarfed
anything we've had in the past. (Buyers) were putting money out as an
investment in U.S. properties."
The Internet has been a powerful tool in reaching foreign buyers, Goodkin
said, and "any national developer, anyone who has a major project,
you they get a tremendous amount of inquiries via the Internet."
most heated days of the housing boom in Florida, it was common for new
projects to sell out long before ground had been broken at the development
site, and foreign buyers were among the participants in these sight-unseen
purchases, he said. "It was the first time in all the years I've
business that residential developers were outbidding commercial developers
for a site."
But as the market normalizes the buying will likely occur in a more
traditional way, he said, and land and home costs may ease.
While foreign buyers are a force in the luxury real estate market in
Florida regions, Goodkin said that foreign buyers generally purchase a
range of property types - everything from single-family homes to luxury
high-rise units - in the central part of the state while favoring more
high-end properties in the coastal and southern regions.
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