MARKET SPOTLIGHT: Is Florida at risk for another real estate crisis?
2018 TOP 10 STATES BY FORECLOSURE RATE
FLORIDA 2018 DISTRESSED SALES BY TYPE
ASSUMING THE RISK: RECESSION VS. CORRECTION
Foreclosure rate is defined as 1 in every X housing units
In the first quarter of 2012, ATTOM reported that 45.6 percent of all mortgage holders in Florida were seriously underwater. By the end of 2013 only 14.8 of Florida homeowners were equity rich. By contrast only 8.4 percent of mortgage holders in the state were seriously underwater for the fourth quarter of 2018 while 25.2 percent of homeowners were equity rich. “I consider Florida a very safe place,” said author, in- vestor and hard money lender Bruce Norris, president of The Norris Group based in Riverside, Calif. “If we’re there, we don’t think it’s risky. There’s a lot of things going for it. It’s number one in the country for migration of wealth.” As someone who has coached and mentored inves- tors over many years, and now also serves as a hard money lender in Florida, Norris is seeing a number of investors pull their money out of California through 1031 exchanges and move that money into one or more new homes in Florida where they can cash flow those rentals for $1,500 a month. “One of the nicest things about Florida is that its business model bounces off how many seniors show up. That’s why I like Florida as a state. It seems to have the right business model and it’s not connected to any one industry,” Norris said.
REO SHORT SALES
direction. All the major markets are below 4 percent un- employment,” said Jack Winston, principal with Goodkin Real Estate Consulting based in Miami. “Migration from other parts of the country by both primary residents and active adults (retirees) is still going on. Certain major cities are attempting to get a foothold in other industries to give them some diversification. The other thing we are pushing in the southeast is new startups. Venture capital money is coming in at a good rate.” Considering the drive for industrial diversification, the continuous flow of population into the state, and its low unemployment rate, Florida has all the essential economic factors real estate investors look for when selecting a location to purchase properties, no matter their chosen investment strategy. ATTOM reported that for 2018 distressed sales accounted for only 12.8 percent of all home sales in Florida. Of those sales, 5.3 percent were REO sales, 4.6 percent were short sales and 2.5 percent were third party foreclosure auction sales. Flips accounted for 6.4 percent of all home sales in Florida for 2018, down 9.9 percent from the year before, and down 12 percent from 5 years ago, but still
All the economic indicators are pointing in the right direction. All the major markets are below 4 percent unemployment.”
up 63.5 percent over the last 10 years. The statewide median sales price for 2018 was $218,990, up 8.1 per- cent from 2017 but down 4 percent from the peak price of $227,500 in 2006. In all, 41.3 percent of all 2018 home sales in Florida were cash sales while sales to institutional investors accounted for only 2.7 percent. “From an investor’s standpoint, it’s still a good place to invest your money,” Winston said.
26 think realty housing news report
june 2019 27
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