TWO YEARS on from the peak of the American realestate boom, it is now possible to buy a property in Florida for less than it costs to build.

In Naples, Florida, America’s foreclosure capital, and in Miami, the realestate market has deteriorated so badly that developers saddled with the cost of maintenance, security and marketing are keen to offload new properties at a loss. Florida has been here before. The end of its first speculative property bubble came just before the 1929 Wall Street crash. Nearly 80 years on, Floridians are experiencing it again.

Nancy Rossi, founder of Rossi Real Estate in Naples, Florida, says: “What happened in 2005 was a fluke. We were writing contracts for properties that buyers didn’t even see. There has been a serious correction. But it is only certain markets that are really suffering, not all property ranges in Florida are dying.”

Residential properties with prices of at least $1.5 million (£725,000) in Naples are “still OK” and holding value, but some homes valued at between $200,000 and $900,000 are sitting on the market without much buying interest.

“There are still a tremendous amount of foreclosures in Naples – people who took out 100 per cent mortgages that they couldn’t handle. Those owners are struggling the most. Properties on the market between $250,000 and $350,000 are often being sold because the owner fell into foreclosure.”

Ms Rossi says that in the past six months she has seen properties priced at almost half their peak value. She cited two-bedroom, two-bathroom condominiums in Naples priced now at about $250,000, compared with the $440,000 tag they would have once enjoyed. One property on her books – a $499,000 four-bedroom home with 2½ acres of land in Naples – is now priced at $100,000 less than it would have fetched two years ago. The property, 15 minutes’ drive from Vanderbilt Beach, has a swimming pool, three bathrooms, hardwood floors, spa tub, plantation shutters and a two-car garage.

According to the National Association of Realtors (NAR), during the third quarter of 2005 about 6.3 million homes (excluding new-builds) changed hands in the US, a 37 per cent increase on the same quarter the year before. That figure is now estimated by Wall Street economists to have fallen to about 5 million, and according to Dresdner Kleinwort, the investment bank, activity is forecast to slide to 4.6 million, the level reached in 2001, the end of the last recession. In the first quarter of 2006, house building peaked, at 2.13 million a year. At present new building is about 1.3 million a year, a 39 per cent decline.

Kevin Logan, senior economist at Dresdner Kleinwort in New York, said: “During the boom lots of people traded up. Transactions in the existing home market rose by almost 40 per cent. That’s over. Prices are going down and probably will be under downward pressure for some time. As long as you don’t expect to turn a profit in a few years, it’s a good time to buy.”

Some states – such as California, Arizona, and Florida – boomed first and were the first to slump. It is those states, some believe, where prices will stabilise first. In San Diego Peter Toner, realestate broker at Prudential California Realty, says: “While the coastal areas are holding up, inland areas are really suffering.”

Mr Toner, an estate agent in London and the Home Counties until 1997, explains: “It is similar to what happened to London in the 1980s. The peripheral areas around London experienced the greatest pain – areas such as Balham and Dulwich. In San Diego county, Oceanside and Chula Vista are suffering. After the enormous growth in the past five to eight years, we are seeing properties priced at 20 to 25 per cent less than at their peak in July 2005.” He added that the market is experiencing a “double whammy” because about a third of potential buyers who could help to stimulate it have been declined mortgages as America’s banks tighten their lending criteria. Toner pointed to one property on his books in Chula Vista’s Otay Ranch Village: with three bedrooms and two bathrooms, it is priced at $450,000.

Depressed prices in San Diego, which is suffering from the end of the boom in condominium building over the past 16 years, have left some apartments on the market, including one with two bedrooms and two bathrooms, priced at $310,000. The property is a refurbished condominium with 24-hour doorman, pool, spa and terrace, not to mention a new kitchen.

Arizona property prices were among the fastest rising in the boom years, as Californian retirees eyed the cheaper cost of living there

Those properties saw some of the severest declines after the boom. But Arizona real estate sales now appear to be recovering, suggesting that the market may be stabilising. Paula Sindelar, at the Pepper Group Diversified Real Estate Company in Tucson, Arizona, says: “Three years ago we were receiving telephone calls from wealthy Californians who wanted to buy property sight unseen. Often, to secure the purchase, they would bid well above the asking price.”

Property prices rose sharply by up to 40 per cent. According to October figures for the Tucson Association of Realtors, while the number of homes sold fell by 28 per cent compared with October 2006, the median sales price slipped less than 1 per cent to $210,000.

CONTACTSHEET

Fancy a flutter in Florida? These agents in the Naples area specialise in international clients and are recommended by the Certified International Property Specialist Network:

Stephen Barker, member of the UK’s National Association of Estate Agents, 001 239 293 4327, www.sebarker.com .

Kathy Rainford, member of the UK’s National Association of Estate Agents, or John Krol, 001 239 592 6662, www.realtyworldtopproducers.com

Mark Semeraro, 001 239 659 6349, www.worldclassnaplesrealestate.com

Linda Brand, 001 239 262 7448, www.lindabrand.com

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