Florida Property Market Could Struggle to find a Bottom

International property investment consultancy Property Frontiers has given a stark warning on the future of the Florida property market. In a recent news article, the firm pointed out the possibility that the buyers of today, which are predominantly investors, could hamper future recovery in their attempts to resell for a profit.

Director David Cox said:

"Since the middle of last year, sales have been increasing in Florida as Americans join international buyers in snapping up distressed and repossessed real estate at bargain basement prices. This has undoubtedly been a good thing in the short-term, because repossessed properties are nothing but trouble for a number of reasons; they drag a neighbourhood down, and prevent it from bottoming, and so the quicker they can be sold the better.

"However, most of the people buying property now are not buying to use, they are buying to resell when the market recovers. Thus, we run the risk that every time the market starts to recover; floods of Florida property for sale will swiftly snuff it out again.

Cox then goes on to say that those who have dispelled the possibility that this could happen because of the investors being predominantly professional, may be proven wrong because we have no way of knowing how the investors circumstances will change over the coming months and years.

However, Cox concludes by explaining how those investors that invest for rental income over and above capital gains, have no need to care about how or when the recovery brings price growth.

With that logic, those investors who have invested for rental yields will surely not be tempted to sell at the first hint of recovery. Though, again, circumstances can change and even those earning a good yield could have found out that being a landlord in the states is not for them, and want to sell at the first opportunity.

We are talking about America here, where everything is on a much bigger scale to what it is in the UK, and even though it is only the state of Florida that we are discussing, we are still talking about tens of thousands of people here. With such a large number of people, it is very hard to predict what volume will feel compelled to sell early in any recovery, or rather, whether that volume will be sufficient to dampen the recovery. The only certainty is that we will all find out in time.