Miamians Can't Afford to Buy Condos in Miami
In news that isn't particularly new but is worth repeating, the Miami Herald reports that most Miamians can't afford to buy units in of all those fancy condos being built at breakneck speed around town. Most buyers are wealthy people from Europe and Latin America who purchase units as investments or vacation properties (Miami real estate is, after all, the World's hot new currency), and developers, still wary from the last boom-and-bust cycle, require hefty down payments before the buildings even break ground.
Last time around, real estate speculators snatched up units in the preconstruction phase but walked away once the market crashed. Now many developers require large cash down payments, as much as 50 percent, before the buildings are even completed. Most Miamians can't afford it and have a hard time finding banks to finance that kind of deal.
"We don't have a local market capable of making those kind of payments and progress payments," Lewis M. Goodkin, president of Goodkin Consulting, told the paper.
Of course, as those condos rise, they also push up the rent and property value in existing properties where locals live, forcing many out. (Sorry, Edgewater residents.)
Ironically, many foreign buyers may try to rent their units back to regular ol' Miamians, but rents could be so high that few could afford them. Of course, technically it is cheaper to buy than rent in Miami, but developers' down payment conditions make it awfully difficult to buy.
"The real challenge is to attract more [good-paying] jobs. People need to perceive Miami as a serious city," Carlos Rosso, the condo development division president of Related Group, told the Herald.
Unfortunately, this is not a "if you build condos perfect for yuppies, they will come" situation.