As Dusty Springfield famously sang, "the world goes round without even a sound, and it looks like summer is over".
Dusty was spot on regarding the second part of that lyric but the property and financial worlds were making plenty of noise over the past few months.
Growing confidence in the markets
Stockmarkets have rebounded, as have equities and commodities. Investors have regained their appetites for debt and the interest rates at which banks lend to each other has fallen back to near pre-crisis levels. Ben Bernanke, the Fed Reserve chief, has announced that the worst recession since 1929 was "very likely over at this point". The Sage of Omaha himself (aka Warren Buffett), told CNBC last Wednesday that "the US housing crisis was over".
Confidence is also growing rapidly amongst large investors. I'm not just talking about hedge funds starting to actually buy shares again rather than short them, but also about pension funds and private equity groups buying huge amounts of distressed property in places like Florida.
Twice in the last 4 weeks I've seen developments with 100-300 units for sale taken off the market because single groups have purchased them outright, swiping the rug out from under the feet of those who were considering purchasing one or two units.
US Mortgages for foreigners have finally arrived
Hundreds of you have asked me about mortgages in Florida and we have been in negotiations with dozens of US based banks over the past year in attempts to secure them. It has proved very difficult to say the least - there were far too many brokers and banks talking the talk and nothing more. However, and at long last, it seems that one bank at least (Superior Bank), has a product that will suit most investors.
They have successfully arranged mortgages recently for foreign nationals this summer and I've seen the proof with my own eyes. In a nutshell, if you have a job with steady income and you can prove that you have a 30% deposit and no bad credit history your application will be successful.
Dramatic Inventory Falls in Florida
At the beginning of 2009, Florida seemed to have an unimaginably large supply of property: 23.6 months worth. It is now 8.4 months and because new construction activity is still minimal, it is set to fall further. A market with 6 months supply is considered by economists to be balanced between buyers and sellers.
Let's look at it another way - the last nine months in Florida has been a little bit like one huge Brown Thomas or Selfridges sale. While there'll still be products discounted at 60-70% in six months time, the best quality merchandise and the best deals will always be snapped up by those queuing to get in at the start. We know this because we've been right in the thick of it all year and can see it happening every day.
The combination of market changes and availability of finance strongly suggest that there will not be many once in a generation bargains left after the end of this quarter. I'm certainly convinced that the chance to purchase high quality properties at rock bottom prices in will soon be gone.
Or as Dusty would have put it "the breeze hurries by without even goodbye"
Torcana Ltd is a property investment consultancy dealing with investments in foreclosed property, distressed property, and discounted property in USA, Spain, UK, and Panama. For more information please visit: -
http://www.torcana.com
