For the past few years Florida real estate prices have been reaching record highs, creating a market where investors could buy low and sell high almost overnight. But now, as supply has finally surpassed demand, real estate values are declining and investor interest is dwindling. In June, 2006, home sales were down 30% statewide while condo sales decreased 35%. In Naples, Florida – the area with the highest real estate prices in the country with the average single-family house priced at over $450,000—real estate sales dropped a whopping 48% while prices fell 8%. New luxury condominium resort complexes had been popping up all over the state, but condo sales dropped 31% in both Miami and Ft. Lauderdale while Tampa was hit even worse with a 47% decline.



Major urban areas like Orlando, Miami, Tampa, and Ft. Lauderdale are becoming overcrowded and unaffordable to most potential buyers, so investor interest is shifting to less developed regions in the state that have not fallen victim to exorbitant prices and uncomfortably dense populations. Predominantly residential areas like Hernando County are gaining momentum by boasting reasonable prices with room for appreciation. Preconstruction investment in Hernando has proven profitable and safer than investing in existing real estate during the Florida market’s state of price and appeal descent. Whereas investing in a declining market is usually very risky, preconstruction investing provides a cushion against such hazards.

When investing in preconstruction real estate, the down payment—which is much lower than that of a traditional investment—is kept secure in escrow until the development is finished, keeping the investor’s money safe even if the development fails. Since preconstruction projects are not advertised, these early phase properties are also impervious to competition-incited price increases. Preconstruction purchasing also allows investors to flip their properties for significant profit when the prices increase at the completion of construction.