For sale: Florida snowbird nests
Real estate in the Sunshine State is tanking, so why aren’t Canadians buying?
Nov 16, 2007 04:30 AM
Tim Harper
WASHINGTON BUREAU
ENGLEWOOD, Fla.–On this morning on Lemon Bay, the dolphins are jumping. Back home, the loonie is also keeping its head above water.
Toronto retirees Wally and Sandra Phair look over a bay that is a picture of calm, but they know they are standing at the epicentre of one of the most seismic shakedowns of real estate in U.S. history.
They might be sitting on a gold mine. So, when does the gold rush start? And will Canadians lead the way?
Canadians are expected in droves in Florida this winter, easily topping last year’s 2.1 million visits, spending their muscular loonies, staying longer in rentals, prepaying for the season to lock in at rates when the dollar topped out at $1.10 (U.S.) last week. But harried real estate agents here are wondering why they are not buying.
The Phairs have always been smart with their money, the type of people who bought their Canadian retirement home in the Peterborough, Ont., area a generation ago, and as they sit in their rented condo here, they can rhyme off asking and sell prices of properties all up and down Beach Rd.
Florida real estate can be had for a song. The Canadian dollar boasts buying power unheard of in decades, retiring baby boomers are still heading to the sand and water of the Gulf Coast and surely there will never be a better time for a Canadian to buy real estate here.
But, they hesitate. And they are not alone.
“We look at some of these prices and you just say, `Oh man,”’says Wally Phair, who recently retired from the textile business and spends three months of the year here. “If the dollar really cranked up, you’d just have to buy.”
But Sandra Phair has other concerns. What, she wonders, happens to upkeep if you’re the only one remaining in a condominium complex?
Should you really be buying when a short drive from their bayside suite, there are apocalyptic signs advertising homes discounted by $100,000, desperately seeking any offer? What about those blocks of abandoned homes in counties south of here? How long before that shakes out and what will that do to prices across the state?
There is the obvious concern as to whether this housing implosion here has hit the bottom, or whether one must dig a little deeper to find the trough.
If you are a Canadian retiree, a long wait for a real estate rebirth could be daunting.
Insurance is pricey, particularly on desirable waterfront properties that Canadians covet, because they would be in the path of any hurricane that bears down on the Gulf Coast, reprising the 2004-2005 nightmares of Charley and Wilma.
Tax laws here favour Florida homeowners who live in Florida, and rates are higher for investors or those who winter here. Taxes and insurance can eat up 40 per cent of monthly carrying costs in some areas.
“Canadians are sitting in the weeds waiting to see how the market settles out,” says Prior Smith, who has been keeping wintering Canadians informed with his Canada Calling radio show for 31 years.
“They are also waiting to see what happens on insurance and property taxes because both have gone through the roof. There is still some nervousness.”
But the inventory will never be greater.
In Lee County, which includes Fort Myers to the south of here, there were 1,538 foreclosures last month, an all-time high and most of them primary homeowners, not offshore speculators.
Across the state, one in every 95 homes has been foreclosed.
In December 2005, the median price of a single-family home in Lee County was $322,300 (U.S.). Today, that median price is under $231,000.
The Center for Responsible Lending released a study this week showing that the populous counties around Miami and Fort Lauderdale are looking at a tax base loss of $17.2 billion in the coming years, sparked by an expected 35,000 foreclosures, victims of the sub-prime mortgage crisis here.
Charles Richardson, Coldwell Banker’s senior vice-president for residential real estate in southwest Florida, says 300,000 northern transplants are still moving to Florida this year and they are bringing sizable assets with them, despite a nationwide housing downturn.
Richardson says the market here was buffeted by a number of factors. The hurricanes changed the buyer psychology, he says, and speculators rushed in to parts of this state against all reason.
Lots in Lehigh Acres went from $8,000 in 2000 to selling for $65,000 a couple of years later, he says. Homes in the county went from $80,000 to $350,000 in less than 24 months.
Condominiums were wildly overbuilt, driven again by speculators, with unoccupied units never filled, and a further correction is coming, Richardson says. “People got so drunk with the fervour, they anticipated it going on forever, which, of course, it couldn’t.”
David Nelson of World Properties International in Englewood is also stumped by the lack of Canadian buyers, because he believes Florida has bottomed out – or come very close.
“If you’re a Canadian and you’re not sure this is the bottom,” he says, “I advise them to bid $250,000 on a $300,000 property to protect themselves,” he says.
Nelson says the market is having difficulty picking itself off the mat because of all the negativism in the area and the daily drip of pessimism in the news media. Others are already placing their bets. Derek Cray of Lee County is trying to round up to $100 million in New York financing to buy as many as properties in Lee County as he can.
“If you’re not hurting for cash, you’ve got to buy now,” says Cray, who owns a construction company.
Other Canadian-born realtors are bringing the message to Canada, hoping to kick-start that gold rush.
The Phairs are savvy investors. They’ve seen ups and downs before. They like the freedom of renting, but Wally hears the siren’s call.
“I’m not saying I’m not buying,” he says. “I mean, where could you get a summer cottage within 100 miles of Toronto for under $300,000?”
http://www.thestar.com/News/World/article/277054
