Florida’s property prices are bouncing back following the banking crash and tempting retirees to live out their days in the sun. However buyers should still proceed with caution reports JANE SLADE
Gordon Turner has already mapped out the next phase of his life. He’s bought three properties off-plan in Florida where he plans to live with his partner for six months of the year (on a tourist visa) when he retires in 2017 and use the other two for rental income.
Gordon, 62, a family man employed as an Engineering Product Safety Manager in Barrow-in-Furness, Cumbria, has not, however, purchased the properties at The Fountains resort at Champions Gate in Orlando solely for investment and retirement purposes. He also wants to use them for holidays with his extended family. He has two children and four grandchildren and his partner has six children, so he needs three villas; a three-bed for which he paid $312,400 (£195,250) and two four-beds costing $346,900 (£216.810) and $354,400 (£221,500).
However it must be said that Gordon is not your average Florida fan.
He and his family have visited 35 times over the past 24 years, making the very most of all that the state has to offer from its year-round glorious weather, Disney World and Universal Studios and the beautiful beaches.
Gordon explains why he chose Florida over any other destination. “I would like to maintain my current lifestyle once I retire and the properties will allow me to do this as they will bring in a monthly rental.
“There are financial benefits to living in the US like the cost of living being approximately 25 per cent less than the UK, fuel being significantly cheaper and cars better value. There’s no VAT, you are not taxed on your gas and electricity, and you pay less capital gains tax.”
After a troubled few years after property prices collapsed in Florida following the banking crash; when the cost of a three-bed villa dived from $360,000 in 2006 to $170,000 in 2009 – the good times are returning. Zillow, the largest property website in the US, recently released data that showed an increase of 14.8 per cent in the value of homes in Orlando in 2014, compared to the previous year, with a projected rise of 7.2 per cent predicted for the Orlando Metro area in the coming 12 months.
However, it is not just the financial gains that appealed to Gordon (pictured), he is also attracted to the change in lifestyle that a move to the Sunshine State will bring.
“The benefits to health and a more laid back lifestyle are immense. Just picture listening to the palm trees swaying in the wind and wearing a shirt, shorts and flip flops as you read the morning paper in the garden instead of hearing the rain and wind belting down on your windows before you put on your heavy coat, scarf, gloves and brolly to face the British elements!”
Specialist annuity provider MGM Advantage recently revealed that the USA was the third most popular country for UK retirees (behind European destinations of Spain and France), with 16 per cent of those surveyed having a preference for a move to the US when they reach their ‘golden years’.
Philip Button, Managing Director of specialist property investment firm Brookes & Co (www.brookesandco.co.uk) which sourced Gordon’s homes and has been finding property in Florida for UK clients for the past decade, says:
“We’re increasingly seeing property investors who want more from their investment than just financial returns, though of course they do want those too. Instead, investors are looking for lifestyle benefits and considering how the investment can impact on their future plans, on a personal as well as a financial level.”
US home prices are settling into a steady, sensible pace of price increases, following the intense rate of growth during the previous year, CoreLogic’s latest price index has revealed. The figures show year-on-year growth of 7.5 per cent for the year to June 2014, following increases of 11.4 per cent in the year to June 2013.
“It’s good to see US house prices increasing at a sensible rate. The stable market creates excellent opportunities for those looking to buy homes in the US, whether to live in themselves or as buy-to-let or holiday home investment opportunities.
“The pound’s continuing strength against the dollar means that British investors in particular are looking to the US for property bargains, with Florida – and in particular Orlando.”
Focused area analysis, which Brookes & Co undertakes extensively on behalf of its clients, ensures that its Florida property investment opportunities only offer genuine bargains in key locations that maximise buyers’ chances of making a swift return on their investment.
Orlando is one hotspot. Home prices there have risen by 15.1 per cent in the past year, according to Zillow. Further rises of 7.7 per cent are predicted for the year ahead. Meanwhile, the median rental price in Orlando currently stands at $1,146 per month – an encouraging factor for property investors.
“We know the Florida market inside out, having been involved in it for a full decade,” adds Philip.
“Over that time, there has rarely been a better time to invest than right now. Prices are rising, with the average Floridian home having increased in value by 18.9 per cent over the past 12 months. Construction activity is also on the up, with a 35.6 per cent increase in new home starts in the last four months.”
Construction at The Fountains at ChampionsGate, 12-minute drive from Disney World in Orlando, is now well underway and set for completion at the end of February 2015.
The Fountains is a luxury, secluded, gated development of 80 villas, which is part of the larger ChampionsGate scheme of 900 acres which are set to be covered by 3,200 new homes. Smooth green turf now covers a golf course which was abandoned half-built when the property bubble burst in 2007.
The Fountains has been carefully planned to include everything from three and four bedroom luxury villas to a central clubhouse and resort-style pool area.
In spite of the promising outlook for the Florida housing market buyers should proceed with caution and do their due diligence thoroughly. The July 2014 US Foreclosure Market Report from RealtyTrac, the online marketplace for forclosure properties, found that Florida had the highest state foreclosure rate in the nation for the 10th consecutive month despite a 30 per cent decrease year on year.
“Many of the markets are defined by extremes – either the accelerator is to the floor or they’re slamming on the brakes,” RealtyTrac vice president Daren Blomquist said. “Right now the accelerator is on the floor in Florida, but there is a drag on the market as far as foreclosures. The market is showing signs of recovery, but I wouldn’t say it’s healthy yet.”