Industrial REITs are buying land in Florida again. Denver-based DCT Pan American has purchased a 14.7-acre vacant site in Doral (located in Miami-Dade County) for a 65 percent discount off of the distressed property’s mortgage. The site was purchased for $14 million in 2008 but acquired by DCT for $3.13 million. EverBank had foreclosed on the property’s $8.85 million mortgage.
Indeed, after claiming the dubious title as “default capital of the US”, Florida’s real estate market is showing signs of rebirth, led by affluent buyers, many of them foreign (and, presumably, Canadian). Reports the New York Times:
Much of Miami is gripped by a housing mania as the oversupply of distressed homes dries up and foreigners and investors swoon. Only a few years after it seemed there were so many unwanted high-rise condominiums that the only solution was to tear some of them down, there are plans to build even more… Prices, after a brutal drop, are firming up or even increasing. During the first six months of the year, there were 439 sales for at least $2 million, up 13 percent from last year.
Part of the rebound has been a result of a crackdown on “foreclosure mills”, or legal firms that used unscrupulous methods to claim properties during the crash. Legal challenges against these businesses have slowed the process of foreclosures, giving a market a reprieve from its downward spiral, allowing property prices to remain relatively stable, yet low enough for other investors to swoop in and purchase them.
In Florida, many of these purchasers are foreign, benefiting not only from low real estate prices, but also a weak US dollar.
But is the real estate rebound sustainable? Concludes the Times:
In the meantime, the South Florida market is busy, although it offers a problematic blueprint for a national recovery. For the traditional buyer who wants to put down no more than 20 percent, loans are somewhere between tough and impossible. Many of the sales are to investors, rich people or foreign citizens benefiting from a weak dollar.
- Charles Edwards frequently blogs on real estate investing.
