Florida remains top US property investment location
Patrick W ONeill, chief executive, ONEILL Group Hong Kong
The US housing meltdown and subsequent recovery has facilitated the largest transference of wealth in a generation and many international investors from Hong Kong, Mainland China and Taiwan have been the beneficiary.
According to the National Association of Realtors (NAR), the Chinese are the second largest international buyer segment in US, following the Canadians. Chinese investment in American real estate is projected to double again this year as it has in the past three.
The NAR report identifies Florida has the No 1 state for international investment accounting for over 24 per cent of the transactions. Ranked second is California, accounting for 11 per cent of foreign purchases followed by Texas and Arizona.
The factors that have catapulted Florida to the top of the international acquisition list include the steep collapse of prices during the housing crisis juxtaposed against the traditionally strong economic growth of the state. Florida was among the hardest hit areas posting value drops over 70 per cent in many areas and some of the highest foreclosure rates in the country.
In the past year, however, Florida has been among the fastest rebounding property markets. The low supply and high demand imbalance in the state have led to median price increases of 14.1 and 26.3 per cent for single family home and condominiums respectively according to the Florida Realtor Association (FRA).
In the city of Orlando near Walt Disney World, median homes prices have climbed 38 per cent since January 2011 continuing an eighteen month streak of ascending values.
Florida, known as the Sunshine State, is the fourth most populated state in the US with nearly 20 million residents. The economy is the fourth largest in America with state GDP of US$750 billion. Among the top industries in the state are tourism which hosted 87 million visitors last year compared to Hong Kong’s 42 million. Disney World in Orlando is the No 1 tourist attraction with over 20 million annual visitors.
The state’s strong economic base and its continuing population growth point to a robust year ahead for the Florida property markets. December home and condominium sales were up 15.8 per cent and 8.6 per cent with pending sales up a dramatic 39.7 per cent and 31.8 per cent respectively compared to last year.
According to the FRA report, 19 per cent of all sales in Florida have been to international purchasers; the highest percentage in the country. The report states that 82 per cent of the sales were all cash and 67 per cent were properties priced under HK$2,340,000.
Nationally, the US housing market is responding to the low inventory and increasing demand with steady price appreciation. According to NAR, total national housing inventory fell 8.5 per cent last month to a 4.4 month supply representing the lowest supply since the height of the last housing boom in 2005. Total existing home sales are up 12.8 per cent compared to December of 2011.
Decreasing inventories and increasing demand pushed the December median price for existing homes up 11.5 per cent compared to 2011. The appreciation is the strongest increase since November 2005 and represents the tenth consecutive month of year-over-year price gains. The 2012 annual median home price gain of 6.3 per cent is the largest annual gain since 2005.