Don't go kidding yourself into thinking that the recent big condo boom in Miami is going to bring the housing market back. Prices have gone up dramatically, builders are building frantically, and foreigners are buying quickly. These are the facts that remain certain in Miami today.
But here is another disturbing fact. Local buyers are staying out of the fray, either too weak financially or scared to buy. So, instead they are paying absorbatant rental prices to greedy out of town owners. Even the former governor, Jeb Bush, has gotten into the real estate business as part of a group that has bought up over 500 units in midtown Miami alone. Everyone is looking to capitalize and that may be where the problem lies.
This situation is typical of American capitalism. Feed on the hype and then capitalize on the week. I am not saying that one shouldn't buy condos in Miami, but rather, which units to buy and whom should be buying. Foreigners who buy only fix the market temporarily. Local buyers are in it for the long haul and have something at stake, so they are apt to overhaul the market for the greater good of everyone, not just themselves. As a rule of thumb, try to stick with those condos closer to the water or downtown for one. Buy those units that have already started construction and stay away from those that are having pre-construction sales that may never break ground, even if the price is a little higher. I sold several units in the Met pre-construction and everyone lost their deposit. Read the condo docs carefully. There is always something in there you are not going to like, such as renting rules. And finally, try to get a true grip on the maintenance fees. Builders tend to keep them low pre-construction in order to sell, but I guarantee you as sure as the sun will come up tomorrow, so will your dues the instant the builder either finishes or goes belly up.
Now that I have given you what I think is some good advice on buying Miami condos, take into consideration the very real fact that two different kinds of real estate bubbles may be forming right before our very eyes. The first is the rental bubble and the second may be nothing more than a double dipper condo bust. The reasons should be clear. If only foreigners are buying what happens when the market is flooded with rentals? Or, what happens when the market is flooded with flips? This is the scenario that is fast approaching. If foreigners cannot rent or flip their condos and get stuck, like before, they simply bolt and take the loss, regardless of whether or not they have a loan. That leaves an abundance of vacant condos sitting out there for foreclosure or cheap sales, which lower the property value of the rest, thus leading to massive amounts of inventory.
So how does one prepare for this? Simple really. If you have to buy, be prepared for the long haul in locations where I already mentioned. But if you do not have to, go for a house instead. They are so much easier to deal with and have lower maintenance fees and fewer rules for landlords who are just investing. And yes, homes do rent easily, especially in the nicer gated communities. Just make certain that you take an experienced and knowledgeable realtor with you to read over everything. We know what to look for and as a buyer it doesn't cost you to use agents anyway.
Comments(1)