Cash buyers are flocking to Florida
When it comes to Florida real estate, cash is king.
The Sunshine State led the nation in July in the percentage of “all cash” home sales.
In fact, a whopping 66 percent of home sales were all cash deals, a new report shows. Real estate experts call the rate “astounding” and the trend is being fueled by investor groups, international buyers, landlords and those seeking vacation homes.
The high rate of all cash deals is putting a crimp on entry-level home buyers who are still having some difficulty obtaining mortgages. Sellers and realtors are opting for all cash deals rather than wait for appraisals, mortgage approvals and other issues associated with those seeking FHA mortgages.
Cash sales made up 57 percent of Florida’s home sales a year ago and 61 percent of all sales in June of this year, according to real estate research company RealtyTrac.
That trend rose again to 66 percent in July. Realty Trac executives called the trend astounding.
Only Nevada—another hard hit state in the recession–and Maine compare with Florida’s numbers.
In Nevada, 64 percent of deals are all cash. In Maine, a popular vacation home destination for Floridians, 60 percent of homes were sold for all cash.
In Nevada, another trend is beginning to take shape. Some underused hotels are converting a portion of their units to condo’s which are attractive to overseas investors, especially Chinese who enjoy gambling.
The hotel market in Florida continues to be robust, but the idea of condo-hotels, popular before the real estate bust in 2007-08, does not seem to be making a comeback.
Brevard County in Florida, home to Daytona Beach led the state with 70 percent all cash deals in July.
The Fort Lauderdale-West Palm Beach market, which includes Boca Raton and Delray Beach, was second in Florida with 69 percent all cash deals in July.
A deeper dive into the numbers suggests that large institutional investors such as private equity firms are beginning to seek out other states for their purchases. Only 14 percent of the cash deals were from institutional investors, according to Realty Trac.
Most of the all cash deals now seem to be driven by smaller investors seeking vacation homes, retirement homes or homes that can be fixed up and rented for income.
While some experts are concerned about the entry level buyer, others say the activity is helping the market by flushing out inventory and creating new demand.
Indeed, residential homebuilding in Boca-Delray appears to gaining steam with GL Homes, Ansca and others entering the market and custom builders focusing on hot neighborhoods including the beach area in Boca-Delray and the red hot Lake Ida market.
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