FLORIDA REAL ESTATE NEWS – BACK TO SCHOOL 

 FLORIDA REAL ESTATE NEWS – BACK TO SCHOOL 

As it does every month, Investir.us first reviews economic trends in the United States, followed by real estate news in Florida. Let's take a look at how the leading economic power is faring this back-to-school period. The period is marked by the pandemic and the Delta variant. But also by increasingly hot real estate markets, particularly in Florida.

US growth surpasses China

Source:  https://www.wsj.com/articles/us-economy-likely-to-outgrow-chinas-due-to-contrast-in-pandemic-responses-11629036000

Economic growth is definitely back in the USA

Growth in the second quarter was measured at 6.1% (annualized), meaning it has returned to pre-pandemic growth levels. This is good news overall, although it is below the forecast level (8.5%). This therefore raises fears of a faster-than-expected slowdown as the United States also sees the spread of the delta variant.

A quick international comparison reveals that China, the world's second-largest economy, is also one of the first countries to recover from the recession caused by the global pandemic. Conversely, Great Britain, which has suffered particularly hard, along with its economy, will likely not see its growth levels return for at least a year. 

An interesting analysis was conducted using Google Mobility data, which allows us to measure the return to normal life. This allows us to compare changes in travel patterns and the length of journeys between the current and pre-COVID periods.

covid-19 travel chart in the United States

Using this data, we can see that Americans have still not returned to their workplaces. Many are still working remotely.

The impact of the delta variant has been greater than policymakers and economists had imagined.

What we remember is that the United States is among the first countries to truly emerge from this dark period. However, a return to normal has not yet been fully achieved, and we will therefore wait until the end of the year to draw a full assessment.

A French-speaking expert will advise you. Book a free, no-obligation consultation.

US Real Estate: Supreme Court Sides With Biden!

Several factors encourage us to remain cautious when analyzing real estate market data in the United States. Indeed, the American government has been heavily involved in artificially maintaining the markets. Two factors impacting the country are moratoriums preventing tenant evictions and foreclosures (seizures of properties by banks for non-payment). However, it seems that a major player in the United States is about to signal the end of this situation.

The Supreme Court's recent ruling against the Biden administration

First of all, once again, the moratorium to prevent evictions was renewed by President Biden. Simply put, this ban on evictions covers approximately 90% of tenants in the United States. Which is considerable. The moratorium was extended until October 3, 2021. It was estimated that no fewer than 11 million American adults were behind on their rent payments. Also, nearly 3.5 million Americans are threatened with eviction in the coming months (Census Bureau's Household Pulse Survey).

However, it appears that the Supreme Court has signaled the end of the moratorium. On Thursday, August 26, 2021, the Supreme Court ruled following a request from a group of Alabama homeowners. It has, for the time being, blocked President Biden's extension, with the following justification: 

'If a federally imposed eviction moratorium is to continue, Congress must specifically authorize it'

This means that if there were an extension, it would have had to be specifically authorized by Congress. While it is difficult to draw immediate concrete conclusions at this time, it is clear that such a decision could have far-reaching consequences. The coming days will be crucial in observing the actions taken by the administrations and the justice system.

Government aid is decreasing

Another important element regarding the real estate markets is the exceptions that have been made for borrowers who were no longer able to pay their loans. Last May, no fewer than 1.6 million people were in default on their loans. A real estate crash is therefore inevitable, although it's difficult to know when it will occur. However, it's worth remembering a few things to understand the situation:

There has been a combination of financial support from the government coupled with very low interest rates which has greatly encouraged property buyers. 

The immediate observation is a 24% increase in the median price of homes. However, since government aid is gradually disappearing, a market adjustment will be observed. First, on July 31, the "foreclosures moratorium" that prevented property seizures ended. Also on September 30, the "mortgage forbearance program" will end. This program allowed certain homeowners who met certain conditions to pause their payments. This program affects nearly 1.75 million borrowers (data as of July 11, 2021).

Should we conclude that the United States is preparing for a crisis as violent as 2008?

All experts agree that the situation is different from the crisis typology we experienced in 2008. Indeed, the difference with 2008 is that owners are sitting on a much higher property value than in 2008. Whereas in 2008, even by selling their property, owners could not repay their loan. Today, the situation is completely different. Because even if the owners concerned were unable to repay, they could resell their property at a good price. Obviously, even if a small fraction started selling instead of paying, this would still have an impact on the market, since the inventory of properties is currently historically low.

Florida Real Estate News: The Latest Information for Back-to-School 2021!

Is the Florida real estate market still hot? 

Florida real estate news is, first and foremost, still a market experiencing strong growth, even if this growth is gradually slowing. Let's be clear: the Florida market is still a seller's market. That is to say, sellers remain the ones who have the advantage over buyers. This is simply true if we look at the national scale, but also in certain more specific markets. There is still a very significant inventory deficit. The supply of properties is therefore significantly lower than demand. This is obviously a considerable advantage for sellers. In practice, and from our experience on the ground, the macroeconomic trend is confirmed on the ground. We are currently seeing properties selling 20% above their listed prices. The Port Charlotte market, where we operate, is therefore a good example of the current situation for a large part of the United States.

Another interesting point to note is the luxury market, which has always been important in Florida, particularly among foreign investors. Although a slowdown in purchases by foreigners was noted between August 2019 and July 2020 (as a result of the travel ban), this represents a significant portion of transactions. Another interesting observation is the luxury single-family market in Florida. Cash purchases increased between the first quarter of 2020 and the first quarter of 2021, from 460 to 1,043.

Florida Real Estate News and Foreign Investors

International buyers fall into two categories. They are either nonresident aliens or non-U.S. citizens with a permanent residence outside the United States. They typically purchase a property as an investment or vacation property and tend to visit for less than six months a year, notes the NAR (National Association of Realtors). The other category is resident aliens or non-U.S. citizens. These recent immigrants have typically been in the United States for up to two years or are on a professional, educational, or other visa.

A common misconception among some foreign-born non-U.S. citizens living in the United States is that they lack access to traditional financing. Not only is this incorrect in most circumstances, but the 2020 Profile of International Activity in U.S. Residential Real Estate indicates that 64% of resident foreign buyers obtained financing. (Source: National Association of Realtors and Florida Realtors).

Another aspect concerning non-resident foreign investors in the United States is that they will also have access to financing under certain very specific conditions. First of all, this is not a general truth, and many aspects will come into play. One of the first issues will obviously be the market in which you invest. And here again, Florida stands out because this state has many markets where financing will be possible. You will therefore often be able to obtain financing up to 70% or even 80% of the amount. This still requires a contribution. The fact remains that it is more interesting than ever to obtain money from the bank, which has never been so cheap. Interest rates remain at historically low levels, and Florida is more than ever in the global spotlight.