Mary Umberger reports on a Florida housing consultant who was laughed at in 2004 when he suggested dark days were coming to the real estate market. Now, Jack McCabe says, the time for looking at Florida property might be approaching.
"For buyers of second homes, there are some better deals out there than there have been in the last five years, without a doubt, but you have to heed the caveats," he said. "You need to know which buildings may be good opportunities and which to stay away from," he said. "Some of these buildings that have been [fully sold out] for less than a year may already have 50 or 60 foreclosures in them." And those foreclosures are likely to mean migraines for homeowners' associations, as defaulting buyers stop paying dues and may be renting to "suspect" tenants, he said. Then, of course, there's the matter of how foreclosure sales affect the values of other units in the building. McCabe suggests that would-be buyers build strong relationships with experienced real estate agents in their target areas to learn the backgrounds of buildings... "I'd say you're going to see some of your best deals [in some areas] toward the end of 2008 and in the first two quarters of 2009." He still sees another 18 months before the downturn plays out in Florida. "Then we'll see things level out and supply will come down, prices will have come down and insurance and taxes, correlatively, will have come down," he said. Some markets in the state are starting to emerge from the tank, he said. Sarasota and Naples, he said, have always been popular with Chicagoans, who seem to favor the Gulf Coast because it's a relatively shorter drive than the Atlantic Coast. The two cities are still floating in inventory and seeing price declines, but they're nearing bottom, he said. "Ft. Myers and Cape Coral may be the closest to bottoming out in price now," he said. "In Cape Coral, lots that were $5,000 to $8,000 in 2002 and went up to $50,000 to $80,000 in 2005 are now down to $8,000 to $10,000, though the area has had a lot of foreclosures." He's not encouraging, however, about his own back yard, South Florida. "Miami/Dade, it's going to take years," he says, sighing.Frugal Ben Says: It's not just the cost of the property that a buyer needs to examine in Florida. Insurance costs are skyrocketing and might never come down while the infrastructures are crumbling and taxes might increase dramatically to repair the outcome of years of neglect.