Is it normal for so many townhomes/condos to be for sale?

[copcarguyp71]

DW and myself have been starting to put together a long term plan to possibly invest in a rental/vacation property and Kissimmee is one of the possibilities on our list.

There are several communities (particularly condos) that have a ton of units for sale. These are not new construction but rather existing established compounds. I guess our concern is that it looks like an exodus by investment homeowners and many are condos that were purchased at higher prices and are now selling at a substantial loss when looking at the history on Zillow. The old adage of buy low sell high does not always pan out especially in real estate and I am wondering how much of this is a causal effect of the resort expansions within the resort of perhaps this is just normal turnover. Interested in hearing from other homeowners/investors already involved in the area.

 

[nickys]

DW and myself have been starting to put together a long term plan to possibly invest in a rental/vacation property and Kissimmee is one of the possibilities on our list.

There are several communities (particularly condos) that have a ton of units for sale. These are not new construction but rather existing established compounds. I guess our concern is that it looks like an exodus by investment homeowners and many are condos that were purchased at higher prices and are now selling at a substantial loss when looking at the history on Zillow. The old adage of buy low sell high does not always pan out especially in real estate and I am wondering how much of this is a causal effect of the resort expansions within the resort of perhaps this is just normal turnover. Interested in hearing from other homeowners/investors already involved in the area.

Not an owner or investor, but I wonder how many are U.K. owners? The exchange rate is horrendous just now, maybe people finding they just can't get over enough to make it viable, and no sign of any improvement for a while.

 

[Miceberg]

Maybe because financing for short term rental properties is very difficult to come by. Banks will not finance for communities with a small percentage of full-time residents, therefore most properties must be paid for in cash.

 

[copcarguyp71]

Maybe because financing for short term rental properties is very difficult to come by. Banks will not finance for communities with a small percentage of full-time residents, therefore most properties must be paid for in cash.

That does not really explain the exodus it looks like is happening and sellers willing to sell at a loss though.

 

[Miceberg]

I don't know which specific communities you are looking at...some have very few properties for sale. I know that there have been some communities where the association/hoa fees were raised up so high, the owners were basically giving away their units. It is important to see what shape the association/hoa is in and to also carefully view the insurance they carry for the complex. Maybe stay away from the ones that have a bunch of listings and consider it a red flag.

 

[TotalOrlando]

There was an advantage for owners to sell as the exchange rates devalued overseas currencies against the dollar.
Although it was expensive to VISIT the USA, it was sometimes advantageous for overseas investors to SELL their Florida homes.
Owners could even sell their properties for a lower $ value than they'd paid, and still make a net profit with help from favorable currency exchange rates.
It does seem to be settling down now though.

Our genuine thoughts are that communities with 'lots to offer' will always hold their resale value and attract guests.
It's all about guest experience if you want to buy an investment home.

 

[MAGICFLOP]

Not an owner or investor, but I wonder how many are U.K. owners? The exchange rate is horrendous just now, maybe people finding they just can't get over enough to make it viable, and no sign of any improvement for a while.

UK buyers all bought around 2000-2005, they were highly market to them and they bought to rent short to vacationers. The housing crash hit them hard when the found the the house they bought for almost 200K was now worth 80-90k. Some walked away, some lost them (short term rental market evaporated). Now that the market has pretty much returned the ones that were under water are selling, some bought when it was about 100k and are selling to get their profits..
I bought a house to rent short term in 2000, which I now rent long term as well as few others when the market was low. Housing is always a good investment.

 

[slappy magoo]

That does not really explain the exodus it looks like is happening and sellers willing to sell at a loss though.

Possible theory, take it with a grain of salt.

A lot of the condo/timeshare purchases in the area (and TBH timeshare purchases in general) are based on families planning a lifetime of fun trips together. It is the #1 family vacation destination after all.

More than half of all marriages end in divorces. Often assets need to be sold if they can't be split. Or neither party wants to be reminded of that time they thought they'd be going there as a family every year forever.
Kids grow up. Sometimes they're not interested in continuing the tradition their parents were so keen on beginning when they made their purchases.
Tastes change. After a while the idea of routinely going back to the exact same place, doing the exact same thing, isn't as appealing.
Tastes change Part 2 - even for people thinking the condo might eventually be a retirement home, moving to Florida as so many retirees do, the reality of the incredibly brutal hot temperatures in the summer might not make up for the mild winters and the general insanity that seems to permeate Florida in general.
Owners get older and might not be able to make the trip as easily as they culd when they were younger. Then they get less ambulatory. Then they die, and the children might not be able to keep up with the maintenance fees associated with a condo/timeshare property. Or they don't want the responsibility. Can't move because they have careers elsewhere in the country.

Thus, a glut in resale.

 

[nickys]

Possible theory, take it with a grain of salt.

A lot of the condo/timeshare purchases in the area (and TBH timeshare purchases in general) are based on families planning a lifetime of fun trips together. It is the #1 family vacation destination after all.

More than half of all marriages end in divorces. Often assets need to be sold if they can't be split. Or neither party wants to be reminded of that time they thought they'd be going there as a family every year forever.
Kids grow up. Sometimes they're not interested in continuing the tradition their parents were so keen on beginning when they made their purchases.
Tastes change. After a while the idea of routinely going back to the exact same place, doing the exact same thing, isn't as appealing.
Tastes change Part 2 - even for people thinking the condo might eventually be a retirement home, moving to Florida as so many retirees do, the reality of the incredibly brutal hot temperatures in the summer might not make up for the mild winters and the general insanity that seems to permeate Florida in general.
Owners get older and might not be able to make the trip as easily as they culd when they were younger. Then they get less ambulatory. Then they die, and the children might not be able to keep up with the maintenance fees associated with a condo/timeshare property. Or they don't want the responsibility. Can't move because they have careers elsewhere in the country.

Thus, a glut in resale.

Just occurred to me as well......

A lot of UK new / early retirees bought holiday homes they intended to live in for half the year. This was happening before the last recession, as well as since.

Your points apply just as much to them as it does to US retirees. Maybe they have now reached the age where getting insurance to cover a 6 month trip, any trip in fact, is just too expensive. Hence they really can't use the homes any more. If their families can't afford to take on the costs, these owners will have to sell. Property may well be a good investment but not half way across the world with little chance of ever going back.

 

[slappy magoo]

Just occurred to me as well......

A lot of UK new / early retirees bought holiday homes they intended to live in for half the year. This was happening before the last recession, as well as since.

Your points apply just as much to them as it does to US retirees. Maybe they have now reached the age where getting insurance to cover a 6 month trip, any trip in fact, is just too expensive. Hence they really can't use the homes any more. If their families can't afford to take on the costs, these owners will have to sell. Property may well be a good investment but not half way across the world with little chance of ever going back.

Another addition to the list of possibilities, though I touched on it a bit before - whether or not one chooses to believe in global warming, the fact is there's at least a trend in more severe hurricanes, more flooding, hotter temperatures. The current trend tends to be overall, globally, each month and each year is the hottest month and hottest year on record, even if by bare fractions of a degree. Maybe the naysayers are right and this is cyclical and eventually temperatures will "normalize." But until then, the idea of spending time in an area where the weather can become brutal even outside of summer, where your property might be in places with a likelihood of flooding, makes the prospect of living in Florida seem less exotic that it once did.

For the record, I'm not interested in politicizing this thread with talk of global warming, I only wanted to suggest that the concern some people have about it might be one oe many influential factors in the surplus of available real estate in central Florida. If you don't believe in global warming, by all means take advantage of this buyer's market, good luck, but I'm not trying to steer this discussion in that direction.

 

[networkpro]

Another addition to the list of possibilities, though I touched on it a bit before - whether or not one chooses to believe in global warming, the fact is there's at least a trend in more severe hurricanes, more flooding, hotter temperatures. The current trend tends to be overall, globally, each month and each year is the hottest month and hottest year on record, even if by bare fractions of a degree. Maybe the naysayers are right and this is cyclical and eventually temperatures will "normalize." But until then, the idea of spending time in an area where the weather can become brutal even outside of summer, where your property might be in places with a likelihood of flooding, makes the prospect of living in Florida seem less exotic that it once did.

For the record, I'm not interested in politicizing this thread with talk of global warming, I only wanted to suggest that the concern some people have about it might be one oe many influential factors in the surplus of available real estate in central Florida. If you don't believe in global warming, by all means take advantage of this buyer's market, good luck, but I'm not trying to steer this discussion in that direction.

Hurricanes are a fact in Florida, there was just a lull between significant impacts to the peninsula. Insurability is now an issue for lien-holders who want their financial exposure covered and lots of the major companies have left this market.

 

[nickys]

UK buyers all bought around 2000-2005, they were highly market to them and they bought to rent short to vacationers. The housing crash hit them hard when the found the the house they bought for almost 200K was now worth 80-90k. Some walked away, some lost them (short term rental market evaporated). Now that the market has pretty much returned the ones that were under water are selling, some bought when it was about 100k and are selling to get their profits..
I bought a house to rent short term in 2000, which I now rent long term as well as few others when the market was low. Housing is always a good investment.

A lot did buy then. But there was also a massive surge in U.K. buyers in around 2013 onwards when prices were still low but the recovery had started. You couldn't switch on the TV here for entire series of "A Place in the Sun" featuring Florida from about 2014 onwards, and these were all filmed 6 months earlier; all said the same thing, a massive surge in interest from the UK and Europe. Recovery had started, then the Brexit vote hit the exchange rate.

 

[MAGICFLOP]

A lot did buy then. But there was also a massive surge in U.K. buyers in around 2013 onwards when prices were still low but the recovery had started. You couldn't switch on the TV here for entire series of "A Place in the Sun" featuring Florida from about 2014 onwards, and these were all filmed 6 months earlier; all said the same thing, a massive surge in interest from the UK and Europe. Recovery had started, then the Brexit vote hit the exchange rate.

Perhaps what you say is true, I did not realize there was a renewed interest since 2014. When I bought in 2000, I used a rental agent that was UK born and came here on the wave. He was a bit on the sketchy side and I watched him like a hawk, but I know he had a good base of UK owners. I think many UK owners were taken advantage of by making them buy things they didn't need, like pool heaters and bizarre maintenance stuff ie 'your pools green and it will cost $200 and oh yeah that just happens here'.
The house next to my rental was a UK purchase and I saw the man about 3 times over 10 years and the last time I saw him (2014) he was saying how he was done, he constantly paid out of pocket and because prices were up, he was prepared to dump it at a 50K loss. I think he used the guy I did in the beginning, but probably did not catch on to this guys tricks(shame because he was a good guy). I switched to another UK agent that has been very good and still use him to this day. I hate to say it, but I would never buy a property in another country, buying in FL is ok for me because I can get there if I need to. I am just wondering how many UK owners shelled out money after the hurricane for stuff they did not need.