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Expat Investor : October 2008
PROPERTY INVESTMENT Right time for Florida? As the US dollar continues its weak stance against sterling, Angus Vaughan, UK Principal from the Professional Mortgage Centre, poses the question, “Is now the right time to be considering buying property in Florida?” The magic of Disney World may be calling for some and that extra large hotdog very appealing to most, but what are the pitfalls of buying a property 4000 miles away? How can you avoid them? And, how do you know when the time is right to buy? As America’s property market sees continuing price cuts in the last few months, investing in a five-bedroom house with swimming pool for a price tag that could only buy a two bedroom terraced in the UK seems like not such a bad idea. “This exciting new prospect gives the British buyers the opportunity to enter the market at half the price of the average American.” In the past few months alone, mortgage rates in Florida have been significantly affected by inflationary pressures and although the Federal Revenue (America’s central banking system) has dramatically slashed interest rates from 6% to 2%, this has had little downward effect on mortgage rates over there – in fact, seemingly paradoxically, it has actually tended to nudge them higher. US homeowners have also been hit hard by the recent credit crunch, making it difficult for new would-be homeowners to enter the market in the US.However this unfortunate prospect does not apply to all! It holds a unique opportunity for British migrants who want to own a property in the sunny state of Florida. And when coupled with the recent and sustained decrease of the US dollar against sterling, there are real upcoming opportunities to buy their dream home. But how is this possible? Well, firstly, the exchange rate has exposed sterling to be worth just under the $2 mark (with slight daily fluctuations), resulting in a fall of the value of the dollar by 0.62% in the month of July 2008 alone and far more than that if you look back a couple of years or so. This exciting new prospect gives the British buyers the opportunity to enter the market at half the price of the average American. The median house price for a single family home in April 2008 was estimated at $285,000, equivalent to £132,000, down by 23% from April 2007. And if you prefer to live with the rich and famous, Orange County (one of the most prestige Counties in Florida) house price medians stand at $520,000 (£267,000) down by 16.1% from last year’s overall figures. Secondly, the economy in Florida is predicted to be well on the way to sustained recovery by the end of 2009. With signs indicating unemployment figures are now at an all time low at just under 4%, and with ongoing extremely low interest rates predicted for the next 12 months, Florida has turned into an affordable commodity. By purchasing a property at the present moment, in the midst of Florida’s and America’s property market downturn, buying a home in the Sunshine State could be an extremely well-timed investment opportunity. The expected steady increase in housing prices as the market naturally recovers from the current low-point will allow sterling buyers to see a very attractive return on their property value, as well as excellent rental prospects for a very high number of weeks per year due to Florida’s long hot season. In other words, now is the ideal time to buy before the market recovery gets too far under way and the perfect opportunity is missed. Florida not only has access to very affordable homes, but it is a genuinely great place to live, as the people are as warm as the climate. With one of the consistently strongest tourism industries in the world, the fourth in the nation for tech job numbers and ranked as one of the best States in America to be an entrepreneur, re-locating to Florida could also be described as an exciting prospect. Fast Facts 88440 October 2008 ? EXPAT INVESTOR 21