In Florida, Savvy Commercial Real Estate Developers Are Taking Advantage of Opportunities While Analysts Tally How Bad Things Got: Signs That the Worst Is Behind Us?


As the dust continues to settle on the real estate crisis in Florida and the rest of the country, we are becoming increasingly aware of potential opportunities in the market place.  At least, there are hints of this in the news this week as we see real estate developers and investors taking advantage of historically low prices while economic analysts are putting the pieces together and tying up the crisis into an understandable perspective:

Commercial Real Estate Developers Taking Advantage of Cheap Land and Foreign Investment

Here in Florida, savvy real estate developers are building condos - condos are very popular here in South Florida, especially, given our scenic attractions including all those miles of beautiful oceanfront beaches. Lots of condos, in all shapes and sizes.

How are they doing this? With lots of foreign investment funding.

As we have discussed in prior posts, one of the big advantages of having foreign investment dollars for condominium projects in particular is that the international investor often comes with experience in financing real estate that is much, much different that the American model. They pay up front: condo developers see foreign investors willing to pay as much as 80% of the total before the build is done.

Meanwhile, all across the country there are smart land developers who are looking around for great deals on land that is pristine - undeveloped land can be bought at bargain basement prices these days in much of the country. For the first time in a long time, land is attractive again, to developers and builders.

US Housing Crisis Losses of $13 Trillion Almost Match GDP for 2011 Dollar for Dollar Per Expert Analyst

This week, during a speech at the Mortgage Bankers Association meeting in Dallas, a representative of the fraud analysis firm Interthinx told the crowd of bankers that Interthinx studies revealed that the country's housing industry crisis has piled up $13 trillion in costs to the nation's economy, if various areas are combined: the litigation expense, the bailouts, the mortgage-backed securities claims.

Here's the thing: in her speech, Interthinx's Ann Fulmer pointed out that this $13 trillion almost jives, dollar for dollar, with the Gross Domestic Product (GDP) for the United States in 2011 (which was $15 trillion).

Where did she come up with $13 trillion? Interthinx has the following:

  • $8,000,000,000,000.00 (yes, that's the right amount of zeroes: we're talking TRILLIONS here, not millions or billions) in lost homeowner equity
  • $2,000,000,000,000.00 in mortgage industry losses (ForeclosureGate)
  • $3,000,000,000,000.00 in losses to the federal government (and presumably state governments, too) along with U.S. taxpayers

So, is the worst part of the housing crisis behind us?

Are things getting better, or are we in the eye of the hurricane, where the winds lessen and things seem brighter to those who aren't aware that the hurricane still has lots of fury to bring?

We'll know soon enough -- but one thing that gives hope: smart real estate developers aren't just setting back and fretting: they are taking advantage of cheap land, cheap construction costs, and foreign money to build projects like condominium towers in South Florida. It's this kind of determination, to find a way to success and move forward, that is the real and solid sign that we're putting the crisis behind us.


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