All through 2017, Florida’s housing market has been on steroids, with home values, prices and sales all skyrocketing. At the same time, home prices in Florida are lower than in many other large states, and much closer to the national median. Combined with Florida’s very strong economy, this has made the state a magnet for newcomers coming here in search of job opportunities — and housing.
Surprisingly, the biggest challenge for buyers hasn’t been prices, but instead the availability of homes on the market. The inventory of homes on the market has been so low that sales actually slumped in the summer, when the number of homes on the market couldn’t keep up with the strong buyer demand.
Inventory is expected to improve in 2018 as construction ramps up on new homes.
But at the same time, prospective home buyers are facing more and more competition – and not just from one another. Foreign buyers have become a key driver in Florida’s home buying market, and that trend will almost certainly continue in 2018 as the population continues to rise in one of the nation’s fastest growing states.
For many foreign investors, Florida real estate is quite attractive: homes are far less expensive here than in their native country. It’s also appealing to more and more foreign buyers to own a second home or vacation home here, particularly since Orlando is one of the top travel destinations for international visitors.
Orlando’s appeal to foreign investors
Without a doubt, 2017 helped demonstrate that Central Florida has become increasingly popular with foreign investors looking to buy homes here. International investors drove more than $2 billion in residential sales in Metro Orlando from July 2016 to this past July.
Across the state, foreign buyers were responsible for more than 20 percent of home-sales revenues, according to a report on international buyers in Florida by the National Association of Realtors. In fact, the evidence suggests Florida remained the top destination of foreign buyers purchasing U.S. residential real estate throughout 2017. The largest percentage of all foreign buyers, 22 percent, selected Florida when buying residential property in the United States.
This has been big business for the state’s economy. Florida Realtors reported in its “2017 Profile of International Residential Real Estate Activity in Florida” that $24.2 billion got pumped into the Florida economy this year from foreign investors purchasing homes. This is up from an equally impressive $19.4 billion in 2016.
As the report noted, Florida became particularly appealing this year to buyers from Canada. Home price appreciation there was much stronger than in the U.S., including Florida, so local prices are more appealing. The Canadian dollar also now goes further in the U.S. than it did in 2016. In 2017, the share of buyers from Canada rose, increaseing from 19 percent in 2016 to 22 percent this year.
The largest percentage of foreign buyers have been from Latin America and the Caribbean, accounting for 34 percent of foreign buyers. European buyers represented 23 percent and Asian buyers, 10 percent.
According to the report, foreign transactions accounted for 21 percent of Florida’s residential sales, a 2 percent increase over 2016. Foreign buyers purchased 61,300 properties in Florida this year, up from 47,000 in 2016. That represented 15 percent of Florida’s residential market, a much higher percentage than it represented on a national level. Across the U.S. this year, foreign buyer residential purchases accounted for 5 percent of existing-home sales.
Florida’s home prices were in line with the median purchase price paid by foreign buyers this year: $259,400, up slightly from the $252,500 paid in 2016. The study also noted that 72 percent of all foreign buyers made all-cash purchases.
The top choice in Florida for foreign buyers was the Miami-Fort Lauderdale metropolitan area (which represented 53 percent of the sales), followed by the Orlando-Kissimmee area (11 percent), Tampa-St. Petersburg-Clearwater (9 percent), Cape Coral-Fort Myers (6 percent), and Sarasota-Bradenton (5 percent).
Among those buyers, the study indicated that nearly 70 percent of foreign buyers were looking for a vacation home, or a rental property, or both. About 35 percent purchased a home in an urban area, while 15 percent purchased in a resort area.
Most importantly, a whopping 93 percent had already visited Florida at least once before purchasing a property here. Orlando’s popularity as a tourist destination is no doubt an influential selling point for the real estate industry.
Orlando has plenty of appeal to these buyers
This year, Metro Orlando was second only to Miami when foreign buyers looked to Florida. Brazil, Canada, the United Kingdom and Venezuela sent the largest number of buyers to the Central Florida area.
Brazilian buyers in particular showed strong interest in Orlando area real estate, along with a tendency to purchase homes that are higher than the statewide median sales price of $279,000. Across the state, buyers from Brazil paid around $390,000 for homes here.
Canadians and Europeans also continued to buy homes in the Orlando area, although the study indicated they purchased less expensive homes than those buyers from Brazil.
Many foreign buyers have also shown interest in condominiums, which are now selling faster across Central Florida than they did at the peak of the real-estate market four years ago. Brokers say international investors are behind many of these sales, paying cash for the property and looking at getting a monthly rental on the market that provides them with a steady cash flow.
A survey by the Association of Foreign Investors in Real Estate just ranked Orlando as the 12th most popular spot among U.S. cities for investment opportunities. The group’s 200 members now ow more than $304 billion worth of real estate in the U.S.
Without a doubt, foreign buyers will continue to represent a significant chunk of the home buying market in the Orlando area, generating competition for local residents in search of a home at a time when prices are rising, and inventory is low.
Contact AV Homes, which has been building homes across Central Florida for years, in communities that are close to the theme parks, the jobs center in downtown Orlando, and Orlando International Airport. Our homes are in communities where people feel a strong sense of belonging, and unity.
Call us today at 1-800-AVHOMES to learn more about the communities where we build homes. We definitely have a home out there ideal for your needs!