Think of Florida as the pop star of vacation destinations: both popular and cheap. While the market there is in a profound rut, it remains the most popular second-home market among American buyers, and the weak dollar is attracting Europeans, Canadians and South Americans.
To understand how the Sunshine State developed as the nation’s No. 1 vacation home spot for Americans, just glance at a map of the U.S. interstate system. Florida’s main west coast highway, I-75, runs straight into the heart of the Midwest; its east coast counterpart, I-95, runs directly north to Washington, D.C., Philadelphia, New York and New England.
Before air travel became the transportation mode of choice, families drove or took the train to Florida. Those old settlement patterns, some established nearly a hundred years ago, still hold true. New Yorkers and those from the northeast still predominantly travel to east coast cities, like Palm Beach, and Midwesterners visit Gulf Coast beaches on Florida’s west side.
“The Sarasota area has been getting vacation home buyers from the Midwest since at least 1910,” said Harold Bubil, real estate editor of the Sarasota Herald-Tribune and host of a television show on Florida real estate. “Real estate firms on the west coast even do marketing or have offices in Chicago and Minneapolis, whereas firms in south Florida or the east coast focus on New York, Boston and Canada.”
According to the National Association of Realtors, 15 percent of total real estate transactions in Florida involve foreign buyers.
Nearly a million Canadians stream down to Florida during the peak winter season, and 300,000 of them spend an average of more than four months under the sun, the longest they are allowed to be continuously outside the country and remain covered by the national health insurance program.
They bring with them their national differences. Whereas wealthy English Canadians congregate along the Gulf Coast and in Palm Beach (Conrad Black and a handful of Toronto billionaires own properties there), French-speaking Québécois cluster in Hollywood, north of Miami, where a 15-block stretch of oceanfront properties is thick with French signs and bars that televise hockey games.
Brokers there said they’ve seen an uptick of interest this year. All across the state, Canadians, enjoying the best exchange rate in 30 years, are snatching up second homes in Florida. As with U.S. buyers, Canadians from the east, including Montreal, tend to buy more along Florida’s east coast, while Toronto and Ottawa buyers are more often locating on the west coast.
Florida realtors are also selling second homes to a growing number of Europeans, whose buying confidence has been bolstered by favorable exchange rates.
Europeans have become so vital to the Florida market that some realtors from the state have begun pitching directly to them.
“When it became clear that the European buyer was important in restoring some of the luster to the real estate market, we bent over backwards to up the number of affiliations we have with prominent European groups,” said Tom Heatherman, a broker with Michael Saunders & Company, a real estate firm in Sarasota.
Several large real estate companies, including Michael Saunders & Company and Esslinger-Wooten-Maxwell (EWM) in Miami, have set up listing partnerships with Mayfair International Realty in the United Kingdom.
Some forty percent of foreign sales in Sarasota are to British buyers. According to Ron Shuffield, president and CEO of EWM, 55 percent of foreigners buying in Florida are from Europe, and the largest percentage of those buyers in the state are British.
“They walk into our offices all the time, especially the beaches where they’re vacationing. They truly have the ability to surprise. The British are more likely to buy more expensive listings than anyone else,” said Heatherman.
Germans also feel at home in Florida and buy properties in substantial numbers along both coasts, according to Shuffield and Heatherman.
Despite the increase in buyers from Canada and Europe, it was Latin Americans who shaped the cultural development of southern Florida. In addition to Brazilians, Argentines and Colombians, Shuffield said he’s seeing an increase in Venezuelans buying properties in the Miami area, a trend he attributes to Venezuela’s turbulent political situation.
Yet because over the years foreign buyers have created their own enclaves throughout Florida, experts said international money alone won’t lift overall prices. A glut of speculative building – frequently paid for with risky mortgages – has made the problem worse, especially in the condo market, where builders can overbuild by many units at once, compared to the single family-home market, which can be built at a pace more in line with the market.