Miami real estate is flooded with cash rich foreigners
The price of property in Miami is on the rise, mostly due to cash-rich investors from overseas, which is pricing out many of the locals who live in Miami.
June 18, 2015 / By Mark Burns
It has been a regular problem in Miami where a normal couple put everything in place to purchase their property only to realise that the property has been purchased by a foreign cash buyer and this has happened to every realtor in Miami.
This has now resulted in Miami becoming one of the costliest cities in America to own or rent a home. The stunning beaches and the security of the American real estate market have lured in investors from all around the world in recent years.
When the economy in Argentina or Brazil struggle, real estate agents in Miami see a surge of people who decide that heading north and investing in property for sale in Florida is the best way to spend their money. Even when global oil prices decrease, there is an influx of Russians and Venezuelans and those from Europe who like to purchase holiday homes for winter. However, there has been an increase in activity from Asia, especially China for the first time.
Many Miami homes are being purchased with cash and this is a sure sign that these purchases have been made by foreigners. Total home purchases in Miami was made up by 70% of cash purchases in March 2012. During December this figure dropped to 58% but it was still above the national average of 35.5%. Miami is still a cheap place to purchase prime property.
When compared to other places in the world US properties for sale are well priced, especially as many expect prices to compare with those in Germany, Paris and Russia. City leaders have been pushing hard to introduce a global and cosmopolitan environment that appeals to many different wealthy foreigners.
Miami is often rated in the top ten luxury markets and many Miami developers are advertising properties with many promoting it as the perfect place to purchase with a rental agreement in place. Foreigners are opting to decide on where they buy based on the most attractive places and the most cosmopolitan places and this is why Miami ranks highly.
Luring in these kinds of investors does come at a price. Developers are now creating condos that are priced high and they are also building homes to keep up with the demands of international buyers. As a result of the Miami real estate crash during the recent recession, banks are holding back on offering loans which puts local residents in a tricky situation.
The majority of developments that are currently on-going are not easily affordable for many of those who live in Miami. With many of the projects aiming at luxury it has made it increasingly difficult for those who are renting, with many spending almost half of their salary on rent in the last three months of 2014, which is the second highest in the country, with Los Angeles coming first.
Therefore the distance between rich and poor in Miami is beginning to grow larger.