Hedge funds, investors grabbing up real estate in some parts of Florida

In this file photo taken July 21, 2010, a 'bank owned' sign is seen on a home that is listed as a foreclosure on a HUD website, in Hawthorne, Calif. Nearly half of the homeowners who enrolled in the Obama administration's flagship mortgage-relief program have fallen out.

AP Photo/ Reed Saxon, file

In this file photo taken July 21, 2010, a "bank owned" sign is seen on a home that is listed as a foreclosure on a HUD website, in Hawthorne, Calif. Nearly half of the homeowners who enrolled in the Obama administration's flagship mortgage-relief program have fallen out.

For-sale signs: With such a backlog of foreclosures and the market trying to rebound, how many will be in yards? And how far will the prices plummet to make them disappear? NDN file photo

For-sale signs: With such a backlog of foreclosures and the market trying to rebound, how many will be in yards? And how far will the prices plummet to make them disappear? NDN file photo

— Hedge funds, corporate buyers and large investors are sweeping up real estate in Florida.

And that could lead to higher home prices and more home rentals in some areas of the state.

Jack McCabe, a Deerfield Beach-based real estate analyst and CEO of McCabe Research & Consulting LLC, said real estate prices could spike from hedge funds acquiring a substantial number of properties across the state. That’s a trend that began within the past year, he said.

“We are going to see some double-digit prices, but it’s not going to be because it’s a healthy market,” McCabe said. “The majority is going to be hedge funds and foreign investors.”

RealtyTrac officials echoed some of McCabe’s views.

Jake Adger, a chief economist at RealtyTrac, said the financial industry’s investing may contribute to rising home prices, especially in those markets where single-family rentals currently are profitable.

“If home prices are bid up to the point that those rental returns are less favorable, then those markets may become less attractive to financial investors,” Adger said in an email.

In the past, properties in Hillsborough, Miami-Dade, Broward and Palm Beach counties have been targeted for acquisition by hedge funds in the state. Now, McCabe said, the Sarasota, Tampa and South Florida markets have gained interest.

Last year, Blackstone’s THR Florida LLC acquisition arm bought 366 single-family homes in the Sarasota area and news reports say it has set aside $1 billion for Florida acquisitions. It also bought 954 homes in Hillsborough County and 364 in Pasco and Pinellas counties, according to a McCabe column published in April in the Sarasota Herald-Tribune.

In Southwest Florida, McCabe predicts bulk investors will start to buy properties east of Interstate 75 and in the Fort Myers area.

Shelton Weeks, chairman of the economics and finance department at Florida Gulf Coast University in Estero, said bulk purchases already are affecting the market.

“Their activity has contributed to the decline in inventory and resulting upward pressure on prices that we have seen across Southwest Florida,” Weeks said in an email.

“As we move forward, it is likely that this activity will continue to some degree,” Weeks said. “While the impact on price of a single factor is very difficult to estimate with any precision, we should expect the price response to any decline in supply to be positive.”

Brenda Fioretti, Naples Board of Realtors, on NewsMakers 8-26-12.

Brenda Fioretti, Naples Board of Realtors, on NewsMakers 8-26-12.

Others say real estate isn’t getting bought up by financial investors with a flurry in Collier County, like it is in other parts of Florida.

“We are not experiencing it as much in Naples as the rest of the state because their criteria for purchase is typically single-family product, $250,000 or less in a high-demand area for rentals,” said Brenda Fioretti, NABOR’s media relations committee chairwoman and a managing broker for Prudential Florida Realty in Naples.

“We really don’t have this inventory in our market because we are at a higher price point than the rest of the state. Most of our products under $250,000 are condos, and investment groups typically prefer not to deal with the condo associations and the monthly condo fees.”

Fioretti said investment groups are buying to rent out the properties and hold them for many years, so these properties won’t immediately be flipped and placed back on the market for sale.

A Miami-based real estate investment and management firm said bulk buying has been most evident in southeast Florida.

“We experienced this trend first-hand when we recently sold a portfolio of 116 single-family homes we owned in southern Miami-Dade County. Our portfolio, brokered by HFF, received interest from a veritable Who’s Who of hedge fund and private equity capital,” said Michael Nunziata, a principal with 13th Floor Investments, which has acquired four separate residential communities in Southwest Florida during the past couple of years.

“While some of our Southwest Florida properties have been sold to investors, we have not seen the same level of institutional interest,” he said.

Nunziata said the firm’s Southwest Florida properties have sold “one-by-one” rather than in bulk like the Miami-Dade portfolio.

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