Miami real-estate agents are hyping the market with a level of heavy-breathing not seen since 2006. Prices can only go up, they say. Sales of million-dollar condos in 2011 are up nearly 20 percent over the previous peak year of 2006.
“Miami is hot and it’s not just the weather!” said Jack Levin, chairman of the Miami Association of Realtors.
But a closer look suggests that the Miami boom is displaying some bubble-like tendencies. While it’s not likely to crash anytime soon, the market is being driven by an especially speculative species of wealthy buyer. If global financial markets fall out of bed globally, or emerging markets slow more than expected, Miami’s high-end real-estate market could also suffer.
Consider the stats: The lion’s share of Miami’s high-end real estate is now bought by foreigners. In 2010, according to the National Association of Realtors, Florida accounted for more than a quarter of the $82 billion in sales to international buyers.
The average price paid by those buyers was $400,000, against an overall U.S. average of $212,000. Sixty-two percent of international purchases were all cash, a percentage that has been increasing since 2007.
Real-estate economists and brokers say most of the foreigner investors are rich families from Brazil, Argentina, Venezuela and Russia. These families are growing increasingly nervous about threats to their wealth from economies and governments back home and are looking for a safe place to store their cash.
Miami is an ideal location, offering all the safety of the United States with the fun and mildly exotic feel of southern Florida.