Northerners and seniors from Canada and the U.S. have always been eager buyers of real estate in Florida, Arizona, Nevada and other points southern because of climate, investment and demographics.
In winter 2008, I wrote a three-part series online called "Let's Steal Florida" looking at the collapse in prices there, but cautioning people to bid and suggested offering no more than 60% of the 2004 peak price.
Then in July 2008 -after the Bear Stearns collapse and just before the wheels fell off in September - I wrote "Don't Buy Florida Yet". This was because there was no mortgage money, a condition that preceded the Americans, and world, hitting the credit wall.
If not now when?
So now that there are allegedly "green shoots" and stock market optimism, is it time to buy in Florida, Arizona or Nevada?
My answer is yes, but only ruthlessly. Price is everything and the markets there are a complete disaster. One in five homeowners in the U.S. have upside-down mortgages, or values less than debts. Fore-closures are wrecking values and one California bank just bulldozed 16 empty, fore-closured homes because they were a safety hazard, and value drag, on the neighborhood where it had mortgages on other homes.
This underscores the biggest danger: that your bargain home ends up being in the middle of a wasteland or subdivision of toxic assets. So what's going on in the rest of the neighborhood, gated community or building is critically important.
For instance, the federal government lending rules (as set down by Freddy and Fanny) are that if more than 16% of condo units in a building are in default there will be no more mortgage lending in that building.
This is critical information and condo buyers must request the last one or two year's minutes from the board meetings of the condo corporation to see what problems await from special assessments to default rates or board resignations. If this information is not forthcoming, walk away.
Do your diligence
But if you do your homework and are a vulture by sticking ruthlessly to a stink bid price, you could potentially come up roses. It's never been more of a buyer's market, especially since the crisis may have many more months to run and since the summer is deadsville in the sunbelt real estate market.
Here's the handiest tool that I've come across to begin your search. It's a nifty free website service called www.zillow.com. Just pump in the municipality, or specific address, you are interested in and you will get a ton of information: house values going back for years compared with national averages; average house or condo prices by size; square footage values; what's on the market; what's sold; who are the top listing salespeople and more.
As for the rest of the U.S. market, the value situation is uneven. In Manhattan, for instance, prices in moderate condos or coops in good shape are down by 10%, but still 25% higher than in 2005. Of course, this varies wildly according to neighborhood and building.
So buyer beware, but buyers have great opportunities. No one knows whether this is the bottom or not, but sellers are still desperate or else they are delusional.