From this weekend's Sunday Times (London,UK)

Florida's property market has collapsed, but with the worst over, it could be time to swoop in the Sunshine State

Lucy Denyer

February 28, 2010





It's freezing outside, there are at least a couple more months to go before the weather warms up, and the idea of a holiday home in the sun is probably pretty tempting right now. But Spain's not hot enough, and the Caribbean and the Seychelles are too expensive. Could Florida be the answer?



With its country-club lifestyle and balmy climate, the Sunshine State has traditionally been popular with British buyers. In the past 18 months, however, it has fallen out of favour, as prices have come crashing down by 50% or more from their peak. Florida had the second highest foreclosure rate - the equivalent of repossessions - in America in 2008, affecting one in 22 properties. Many remain empty and abandoned, after being seized by the banks.



"Some people just dropped the keys and left - they were effectively handing the property back to the bank," says Todd Swann, owner of Swann & Associates, an estate agency based in DeLand, central Florida. "Pricing didn't seem to matter when times were really desperate. It felt like we were working in a morgue."



In recent months, things have started to pick up. Although prices remain low, properties are starting to move again as people try to make the most of the bargains on offer. For UK-based buyers, there is also the exchange rate to consider: although the pound is already at a nine-month low against the dollar, some analysts expect further falls, which would add to the attraction of buying now.



At face value, there do seem to be incredible deals out there, with flats in some condominiums on sale for as little as $15,000 (£9,700) - sites such as foreclosuredataonline.com give an idea of what's on offer. Yet it's a case of caveat emptor, warns Bill Cowie, director of British Homes Group, a Florida-based company running online auctions where prices start as low as one cent, with no reserve. "A $15,000 condo might sound good, but it's in a building with no homeowners' association, with a wreck of a kitchen," he says.



Instead, do your research, visit America in person - don't even think about buying blind off the internet - and make sure your chosen area is an attractive one with good infrastructure.



In Orlando or other inland areas, it's worth considering a gated community, for a property you can lock up and leave. Stirling Sotheby's International Realty (stirlingsir.com) has a three-bedroom house in the Palisades, a golf community in Clermont, west of Orlando, for £120,000; the owner gets access to a pool, boating and tennis courts.



Northeast of Orlando, in the DeLand area, you are near Ocala National Forest and St John's River, and still only an hour from Mickey and his pals.



Properties with land are a particularly good buy now - land values have dropped so sharply that the extra acreage is almost free. A three- to four-bedroom detached property, with outbuildings and a pool, costs between £116,000 and £162,000.



As with any overseas purchase, there are potential pitfalls. If you plan to a buy with a American dollar mortgage, then any further fall in the pound will increase your monthly repayments; for a fee, you can hedge against this, through a company such as World First (worldfirst.com). Or take out a mortgage half in pounds and half in dollars. Don't forget that you will also be liable for real-estate tax - a yearly fee equivalent to 2% of the purchase price.



Nor should you count on funding your purchase by letting out the property: many condominium associations have rules governing how many rentals you are allowed in a year. Other local restrictions can also apply.