Record sales in waterfront property
The truth is that Miami, more than any big city in the country, has two very different real estate realities somehow coexisting, at least for now, according to a recent article in the New York Times.
For non-distressed properties along the water, sales activity is climbing, prices are on the rise, and some record sales this year have captured the industry’s imagination.
Demand for expensive waterfront properties is generated from South Americans and other foreigners looking to park their cash.
A penthouse on South Beach sold to an Italian for $25 million
Foreign purchases — which analysts estimate make up a third of all sales in Miami and very likely more than half of sales over $1 million — are driving much of the sales activity with New Yorkers have also playing a big role. And cash is king: nearly 73% of non-distressed condo sales, and 76% of distressed condo sales were all-cash in the third quarter of this year.
The picture is starkly different in the distressed market
Sales dipped by 21.5 percent in the third quarter for distressed properties, compared with an increase of 27.3 percent for non-distressed real estate. Properties going through foreclosure and short sales still make up 41 percent of the overall market in the 18 Miami coastal communities that Miller Samuel tracks.
The average third-quarter sales price of non-distressed properties ($528,705) was more than three times that of distressed properties ($161,777).
Homeowners knocked out by all-cash investors
The high concentration of distressed cases, coupled with so many all-cash transactions, has dissuaded most lenders from getting back into the Miami market, analysts say.
In Homestead, a working-class Miami suburb hit hard by the housing downturn, a local real estate agent says all-cash buyers are scooping up properties almost the same day they hit the market. Most are out-of-town investors, many from out of the country.
With lenders still wary of the Miami market and cash investors, it’s increasingly difficult for potential homeowners.