Saturday, October 13, 2007

 

Florida to Export Housing Surplus

Well, not physically, just financially: sell it off at (maybe) bargain basement rates to foreigners with EUR to invest.

In "The United States of Subprime", Wall Street Journal Online (October 11, 2007), RICK BROOKS and CONSTANCE MITCHELL FORD note
Fort Myers, Fla., ... area's median sales price for existing homes is down 22% since December 2005. Foreclosures are running at an all-time high. And there is no end in sight.
and then, several paragraphs later

... This year, through July, the rate of mortgage-default and foreclosure-auction filings in Lee County, Fla., where Fort Myers is located, was second-highest in the U.S., according to ForeclosureS.com. The inventory of unsold homes has swelled to about 15,000, and some investors who had hoped to flip houses at a profit are walking away from sales contracts for purchases they don't want anymore or can't afford.


On October 12, in my inbox was an advertisement (not spam) from a French company promoting P******* Investments, Inc., which said (my translation from French to English, probably imperfect but with no intention to distort)
Become the owner of a superb villa in Florida...take advantage of the decline of the dollar exchange rate and of low interest rates. From €30,000 down.
  • Booming market
    • the American state with the highest growth rate
    • construction costs among the lowest in the country
  • A highly profitable investment
    • developer-direct prices, no agency fees
    • very favorable exchange rate
    • fiscal advantages...
  • Quality offerings guaranteed
    • thousands of villas delivered, prestigeous placement near major roads, service infrastructures (workplaces, schools, shopping centers, etc)
    • ten-year guarantee
    • numerous professional awards
  • Expertise of over 25 years' experience
    • our bilingual agents will meet you, arrange for accommodations, visits to the properties, meetings with the developers and bankers to enable you to evaluate your investment
    • total assistance with all formalities (legal, financial, fiscal)
    • real estate loans at preferential rates (from 1.5%)
    • locally-based French property management available
I wonder if similar ads are circulating in Germany. And what hurricane risks and insurance costs are in that area.




UPDATE: After I posted this yesterday, I thought a bit more about the significance. One interpretation is that it is a clear sign that the housing developers expect the price bubble to deflate; given that outlook, better sell to someone else, and let them (foreigners) take the destroyed value hit.

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