Re: Appreciation in Fl–Orlando - Posted by John Corey
Posted by John Corey on April 20, 2006 at 09:34:06:
Did the local employees get a 47% increase in their wages last year? Are there any more foreign buyers who want to buy a vacation home (normally zoned so they can buy in specific areas)?
My point is the appreciation has to be supported by something. 47% is way off the scale. Put a couple years together and most of the people who already purchased could not afford to live there again if they did not have equity. Hence you hollow out the community in that all the workers (police, fire, education, local business staff, etc) can not afford to live there unless the wages jump. You see a slow down in appreciation or problems with commutes.
You can do the math and it shows that appreciation has to slow down at some point.
When you add in a rising interest rate then you have even more pressure on the monthly payments needed.
The present owners will think that the slow down is temporary and refuse to lower prices. Inventory will build up as everyone waits. Then people will start reducing the asking price until we get to a level where people can afford to buy.
What helps FL is the net influx of people (from up north and from outside the US). Orlando has a lot of foreign investors from the UK and other places. Compared to the UK and Spain FL looks OK. It used to look cheap. When Spain looks less expensive or even slightly more the UK investors will focus there as the commute is a lot better.
To invest means you look at overall returns. If the only real upside is from appreciation (vs. positive cash flow and possible appreciation) then you are speculating. Speculators win big and crash and burn. It just depends when they place their bets.
Side note - 49% of the foreign visitors to the Orlando International airport were from the UK two years ago.