By Herbert Lash and Barbara Liston
NEW YORK/ORLANDO, Fla., June 30 (Reuters) - In sunny central
Florida, some 4,400 miles (7081 km)across the Atlantic from
London, real estate broker Paul Torola is already sensing a
chill from Britain's decision last week to leave the European
Union.
In the days since the June 23 "Brexit" vote that has rattled
global financial markets and sent the British pound to 31-year
lows, Torola has seen potential UK-based buyers suspend their
searches for vacation homes in the Orlando area.
"We've had people looking that have delayed because their
money doesn't go as far," said Torola, a 64-year-old broker for
American Ideal Homes. "It's not that they're not going to buy,
but they're waiting for things to settle."
While equity markets have bounced back, the pound GBP= has
barely recovered and traded below $1.33 on Thursday, still off
11 percent since last week.
Jane Dowle, an eight-year U.S. resident from the United
Kingdom who sells vacation homes around the Walt Disney World
theme park to her fellow Britons, echoed Torola's assessment.
"It's very, very quiet," Dowle said. "There are people we've
been speaking to since before the Brexit vote. Now they've
decided to wait a little longer."
The British have long been a significant force in Florida
real estate, especially around Orlando where they rank first
among foreign buyers. In 2015, they accounted for 28 percent of
the area's property sales to non-U.S. buyers, and statewide they
were the top group from outside the Americas.
Real estate officials already expect fewer British buyers
due to the Brexit vote, as currency moves have a history of
substantially affecting foreign investment in residential
property.
"Now with the British pound much weaker, it will make it
much more difficult for the British to buy just on the currency
translation," said Lawrence Yun, chief economist at the National
Association of Realtors in Washington.
SNOWBIRDS PRECEDENT
Indeed, if the recent experience of Canadian buyers of
holiday homes in warmer climates, nicknamed "snowbirds," is any
guide, British purchases of Florida real estate are about to hit
a wall.
When the Canadian dollar tumbled by 16 percent against the
dollar because of swooning oil prices, Canadians' share of
foreign purchases in the Sunshine State slumped from 32 percent
to just 11 percent in the 12 months ended June 2015, according
to the latest available data.
The threat of a recession in Britain - a high probability in
the view of many economists - could also trip up hopeful buyers,
Yun said. Britons' absence from one of the top U.S. destinations
for foreign investment in residential property would also bode
ill for the Florida market as a whole, he said.
Last year, foreigners bought 12 percent of homes sold in
Florida, but accounted for 24 percent of the overall dollar
value of the purchases. Nationally, foreigners accounted for 4
percent of unit sales and 8 percent of dollar value. (Graphic: http://tmsnrt.rs/291iMRx)
Britons paid $289,600 on average for their Florida
properties last year, 12 percent above the state average, though
less than $538,600 average for all foreign buyers, according to
the National Association of Realtors.
The British, like most foreign buyers, paid mainly in cash.
Such transactions, which accounted for about 83 percent of last
year's total, are particularly susceptible to sharp currency
swings seen since the referendum.
In fact, realtors should expect to see some contracts busted
in the weeks ahead because the sterling costs for many pending
transactions have surged by tens of thousands of pounds in the
past week, said Kelly Cutchin, Orlando-based country manager for
Moneycorp, which helps foreigners execute cash transfers for
their Florida home purchases.
"Unfortunately there are some clients that cannot afford to
close on those properties that they have contracts because the
rate has moved so much against them," Cutchin said.
Lenders helping to bankroll development projects targeted at
British and other international buyers are getting nervous, too.
"Our banker has already spoken to us and said how is this
going to affect your UK sales," said Garrett Kenny, a Dublin
native and owner of Feltrim Group, a developer that specializes
in vacation and investment homes for international buyers in the
Disney area. "I said it's a little bit early to tell."
Still, with the uncertainty prompted by the Brexit vote,
Kenny this week pulled three ads that had been scheduled to run
in a UK magazine that promotes international property sales.
"Definitely I'm concerned" Kenny said.
TIME TO CASH OUT
The pound's decline is a double-edged sword and may motivate
Britons who bought homes in recent years to capture the windfall
from their dollar-based assets.
"We're going to see an increase of British sellers over the
next couple of months," Cutchin said. "If they sell right now
they're going to make huge returns because the exchange rate is
going to be better for them than it has been for 31 years."
At least one deal has already been struck.
On Monday, Kissimmee real estate broker Jon Penny said he
negotiated a deal that helped a Scottish man get out of a house
he bought during the pre-2008 property bubble. The seller, who
paid $456,000 in cash for his house in December 2005 when the
pound was trading well above $1.70, signed a contract to sell to
another Briton for $360,000 in cash.
In his case, sterling's crash made all the difference.
Deeply underwater on the house in dollar terms, the pound's
post-Brexit plunge means he is getting back the same 270,000
pounds he paid for the property 11 years ago.
"He's extremely happy," Penny said. "Everybody wants to say
doom and gloom. But it's never bad for everybody."
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Will Brexit cloud the Sunshine State's real estate market? http://tmsnrt.rs/291iMRx
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