Florida housing: You never know
Call it a roller coaster or a thrill ride, but be prepared for Florida accommodation costs that are all over the map
This year’s Florida real estate picture is not so much a roller coaster as a carnival filled with thrill rides, sideshows and games of chance. If you need a rental for the season, the bad news is that rents in many regions are skyrocketing for a variety of reasons rooted in the domestic economy. If you seek a good buy on a winter home and are a canny shopper, the good news is that many great deals are still available.
Nationwide, U.S. home prices more than doubled between 2000 and 2006, plunged by one-third in 2009 and have now clawed back only to about two-thirds of the all-time highs. New housing starts have levelled off, resulting in short supplies in some areas. That in turn means higher prices but only in some areas and usually for reasons, such as employment rates, that are unrelated to the concerns of the Canadian investor.
Earlier this year the largest price increases during a three-month period in Florida were in Edgewater (prices rose more than 22 per cent in this community south of Daytona Beach), North Fort Myers, Rockledge on the Space Coast, Islamorada in the middle Keys and High Springs near Gainesville (almost 12 per cent). The biggest price drops, ranging from about 11.5 per cent to just over 15 per cent, were in the Orlando suburb Altamonte Springs, Odessa (inland west of Tarpon Springs), swank Vero Beach, rural Williston and Apollo Beach on the Gulf of Mexico near Tampa.
Rental rates have begun to creep up in many parts of the Sunshine State, with an average $5-per-month increase in the Jacksonville area in the first half of 2014. The rise has been 2.5 per cent for a one-bedroom apartment, 5 per cent for two. Apartment rentals were down slightly early this year in Orlando and Tampa.
The picture in quite different in sunny Miami, where a typical rental unit costs 43 per cent of a family’s monthly income. These figures are based on monthly outlays for a home with a 30-year mortgage so they don’t tell the full story. And they are changing as mortgage interest rates inch up. In early 2014 the median home price in Miami-Dade was $166,000, up 17 per cent, and $191,500 in Broward County, up 19 per cent. (All prices in U.S. dollars)
Cash is King, maybe
Florida and Nevada lead the nation in cash sales for condos. Fully 81 per cent of condos in these states sell for cash now compared to only 23 per cent a decade ago. Analysts such as Tyler Durden of zerohedge.com have argued that the high incidence of cash deals means that it is mainly investors fueling the housing recovery, not individuals or families, and thus “it means that most of America has not participated in this mirage ‘recovery,’ and all it will take to send the buoyant housing market crashing is for the one marginal buyer to become a seller.”
The bottom line for Canadian investors is the final sales price. However, you’re bidding against other buyers flush with greenbacks, such as U.S. baby boomers who are selling large homes and downsizing, and with Americans who are looking at different parameters such as veteran discounts, low interest rates and Federal Housing Authority lending standards.
As always, statistics can be deceiving for snowbirds. You can find charts galore about quality of life issues such as schools and tax rates, but many of these metrics don’t apply to Canadians. You’re simply seeking a warm, pleasant place to spend winter.
Too, statistics come from a variety of sources, from government to lenders, and they can lag by a year or more. Even the freshest stats rarely reflect hot-button local issues that can turn on a dime. Buyers also have to sort out numbers for the types of housing. Sales for condos and townhouses are usually listed separately from single-family houses, but sales figures for “homes” may include both site-built housing and mobile homes. Mobile homes, it should be warned, may be on rented or leased lots rather than on land actually owned by the homeowner.
Just as before the bubble, the bust and the so-called recovery, there’s no substitute for researching today’s market based on your own, personal requirements.
Gainesville, a profile
According to Kiplinger’s Personal Finance magazine, the home of the University of Florida is a good choice for snowbirds who prefer a college-town atmosphere. The median home price there is a modest $169,287, although the cost of living is high for the state at 99.1 on a national scale of 100. The city has museums, outstanding medical resources, a youthful air and a large choice of adult-education opportunities aimed at boomers and seniors. College towns also offer opportunities to rent out your home for short periods, even in summer, through sites such as SabbaticalHomes.com.
New urban living
New Urban design is the latest buzz in developments. Seaside, in the Florida Panhandle, a poster-perfect urban community built in the 1980s, set the pace for Florida homes built on a walk-able grid filled with a variety of services. Celebration, a Disney project, is another prime example of a new, upscale, planned town without city traffic and decay.
More homogeneous, and a new entry in the New Urban movement, is a huge development that is being built on the 700 acres once occupied by the Panama City international airport in northwest Florida. For snowbirds who seek a pedestrian-friendly mixed community, the 3,200 single and multi-family homes at Sweet Bay will have easy access to shopping, a school and a marina with boat storage facilities. Home prices will be in the $200-$400K range.
Home shopping tips
• While purchase price is one criterion, monthly community fees can be crushing to snowbirds who must pay year-round rates for services they use only seasonally. Note too that some homeowner associations don’t permit subletting. Know what you get for your monthly dues.
In the Valencia Lakes development near Tampa, for example, association fees in the $400/month range cover the clubhouse, lawn mowing, basic cable, security monitors and a gated entry that is staffed 24/7. Fees for twin villas also include insurance for the building itself and new exterior paint every five years.
• A very useful website for snowbirds who prefer not to rely on a car is WalkScore.com. Its primary mission is to give a walk-ability score to a city or neighbourhood. They range from almost 90 per cent in New York City to scores such as 27 and 38 respectively in “car dependent” Florida cities such as Kissimmee and DeLand. The website is supported by ads for rental homes and apartments.
• Florida sinkholes rate high in news cycles but they need not strike fear into the Florida real estate buyer. Sinkholes also occur in many other places including Ottawa, where a 40-foot-deep sinkhole opened last February. For probability check Dep.State.Fl.US/Geology and also ask your real estate agent for sinkhole disclosures. Florida insurers may offer a sinkhole rider.
Janet Groene is a professional travel writer who lives in Florida.