In Florida, more than 30% of our property buyers are foreign persons. We are happy to have any and all buyers in Florida! How has the foreign buyer fared in our market for second homes and investment properties?
First of all, we have to have a common currency that these buyers might use to convert into our US Dollars to buy the property. Is is no secret that the wealthy throughout the world have held long term assets in Switzerland so I will use the Swiss Franc to illustrate.
I will use time periods: right after "9-11"; in 2006 after the biggest run-up in Florida property since the 20's; and now.
In case one a hypothetical buyer buys a property right after "9-11" in Florida for $500k. This took 900k Swiss Francs at an exchange rate of 1.8 Swiss Francs to the US $.
In another case the buyer purchased a similar property at the top of the market in 2006 for $1 million (could have been the same house). This took 1,300,000 Swiss Francs at an exchange rate of 1.3 Swiss for 1 US$.
- Buyer in 2001 now has a house that he purchased for $500k now worth $500k....a "round trip".
- Buyer in 2006 now has a house that he purchased for $1 million now worth $500k.
- The 2001 buyer has lost 400k of his 900 Swiss Francs as 1 Swiss Franc just about equals one US $.
- The 2006 buyer has lost about 800k of his 1.3 million Swiss Francs.
As Realtors, we need to advise buyers, including an ever increasing number of foreign buyers, how to position themselves.
As we all know past performance does not guarantee outcomes. Two things will change for sure: the property will go up or down in $ value and the exchange rate will change up or down.
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