February 29, 2024

A Niche in the Wreckage of Florida Real Estate

”It’s not as bad as I thought,” Ms. Moore said. “You could probably get this place fixed up for $8,000. You could get a refrigerator on Craigslist for $200.”

“$70,000?” she asks aloud, referring to the list price. “What the heck?” Ms. Moore, a real estate broker, has found a profitable niche in the wreckage of Florida’s real estate market, where a glut of vacant homes continues to depress prices. She scouts out deals for several groups of investors, including one that counts a professional poker player as a member and a group of Macedonians from Toronto.

Just a few years back, real estate investors were considered pariahs for fomenting a buying frenzy that drove home prices to stratospheric levels. This time around, housing experts say investors are desperately needed because there are so many vacant homes and homebuyers are having such trouble obtaining credit.

“If Florida is going to have a comeback anytime soon, investors are going to have to play a role,” said Rick Sharga, a senior vice president at RealtyTrac. “There are just too many properties for traditional home buyers to absorb.”

Of course, speculators have been picking through the rubble of America’s real estate collapse for several years now, and the housing industry remains deeply troubled across the country, suggesting that it would be far worse were it not for investors. Data released by the National Association of Realtors recently shows that investors represented 17 percent of all home sales in 2010 nationwide, the same as the previous year. But in recent months, investment activity has picked up, according to Walter Molony, an association spokesman, who attributed the increase to relatively cheap prices and the lack of available credit for homebuyers.

There is no shortage of deals in Florida. The Census Bureau recently reported that 17 percent of the homes in Florida were vacant. Even though the figure includes vacation homes that were unoccupied at the time of the survey, the underlying rate within the state reflects a sustained downturn.

The median house price in Florida, meanwhile, had dropped to $121,900 in February, from $257,800 in June 2006, a decline of 53 percent, according to Metrostudy, a housing research firm. Indeed, some houses and condominiums in Florida are selling for roughly the price of a practical family sedan, new or used.

For instance, a two-bedroom house in Port Charlotte, just south of North Port on the gulf coast of the state, recently sold for $8,000, and listings for $25,000 homes are not uncommon. Many experts expect prices to drop even further.

”Nationally we are expecting prices to stabilize by the end of this year,” said Celia Chen, senior director at Moody’s Analytics. “We don’t expect it to stabilize in Florida until sometime in 2012, and that’s a direct overhang of the excess inventory.”

Despite the risks, several investors expressed optimism about their chances of making money, if not a killing.

“A wise man told me that the best time to enter a business is during a recession,” said Peter Ide, a British builder who was transferred by his company to Florida to buy up homes, fix them up and resell them. “The potential here is phenomenal.”

Steve Barnhardt, a friend of Ms. Moore’s, said he began buying up houses to stay afloat until the market revived. On this morning, he was installing inexpensive carpet in a three-bedroom house that he purchased for $76,000 and had just sold for $103,000; he estimates his profit was $9,000 after paying $5,000 in back taxes and closing costs. (He says he could have made more if not for “low-life” neighbors.)

“The things I used to do are no longer out there,” said Mr. Barnhardt, who had previously made a comfortable living investing in commercial real estate and operating heavy equipment. “Right now, this is what is paying my property taxes and keeping me alive.”

Not everyone views real estate investors as that benign, or savvy. April Charney, a public aid lawyer who lives in nearby Venice, questioned why investors would fix up houses with so few eligible buyers. Besides, she said the new owners were likely to end up with a vacant home next door with squatters, mold or filthy pools.

“They are dreaming,” she said. “That’s just a pipe dream in North Port.”

Article source: http://feeds.nytimes.com/click.phdo?i=d79373c53bae2a1e800a0eed30a4a9df

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