Despite sales pitches you may have heard about this being a great time to buy a second home or condo in Florida at bargain prices, you need to tread carefully. It’s still a very risky market. The bottom has not yet been reached. And you could very well end up with buyer’s remorse…
For more than three years, property values in Florida have plummeted, giving the illusion that, armed with the strong Canadian dollar, you have nothing to lose by snatching up that second home for prices you never dreamed possible. But there are downsides to that dream.
For one thing, many experts here agree that the bottom of the market has not yet been reached, which means you could end up buying a property that will be worth less than you paid for it two years from now.
In addition, unless you’re prepared to pay cash, you could be in for a long, frustrating tug-of-war with banks that are taking forever to close financing on any kind of property—even if you have excellent credit. Many of the homes and condos on the market are properties that have either been foreclosed or are in the process of “short sales” (where mortgage holding companies agree to accept less than the original property value just to get rid of a cash-draining burden). Closing on these kinds of properties would try the patience of Job, and in the end, you still might find yourself empty-handed. You don’t need that kind of hassle—yet it’s foreclosures and short sales that make up the bulk of Florida’s real estate market right now.
There are other problems to consider. If you finally take title to a condo or home in a development site only to find that half or a third of the properties are in foreclosure, not only is the value of your own newly purchased property depleted, but you will find yourself having to offset condo management fees (which can be substantial) for those vacant properties not paying those fees. And that’s something you won’t know until you’re in.
There are also sad tales of developers finding it cheaper to walk away from their projects than proceed with them in this bad market. And when they walk away, they could take your deposits and good faith fees with them, leaving you to pay lawyers to try to get your money back.
I don’t want to paint a totally black picture. Because there may be truly good, solid buys out there. But you need to have somebody you really trust working with you. And you must be patient. And if a deal sounds too good to be true, leave it behind and wait until the market stabilizes. But we’re not there yet.