Kai Ryssdal: I remember being in Miami about three, four years ago and seeing high-rise after high-rise after high-rise of apartment buildings — condos that had been abandonded mid-construction. Just sitting there half-done after one of most most brutal real estate busts in the country. Today Miami condos are actually selling quite nicely. Prices are rising. Inventories are falling. But why?
From WLRN, Karen Burkett explains.
Karen Burkett: Some locals are buying property. Ashley Arends hopes to become one of them.
Ashley Arends: I like the crazy in Miami. I like the excitement, the moving, the lights.
The city’s appeal has her talking commitment. She says she’s ready to settle in and become a condo owner. If Arends buys today, she doesn’t think she’ll be overpaying for a one bedroom, one bath.
Arends: It’s cheaper in the long run for me to buy a condo at this point in time. I don’t have to worry about having my rent raised.
Arends’ year-and-a-half hunt for a condo has tested her patience.
Arends: In the time I’ve been searching, I’ve put bids in on almost 10 properties.
And nothing. This 29-year-old attorney has repeatedly been beaten on offers by cash buyers who’ve just pounced on the deals.
Arends: What I think the unit is worth, if there’s a cash buyer that really really loves it, it’s going to get blown out of the water.
These buyers are investors from countries like Argentina, Brazil, Mexico, Spain, even Russia. Plenty of local realtors will tell you international investors saved the market. But foreign investors shop for properties in other U.S. cities too — West Los Angeles, Manhattan, Seattle, Phoenix. In fact, in terms of property values, Phoenix is the only market hotter than Miami right now. See, during the recession, Miami’s skyline was filled with condo towers that sat completely empty. Now, 90 percent are owned or rented.
RJ de Varona: All our sales are to foreign capital sources or high net worth foreign individuals who are looking for U.S. income-producing assets.
RJ de Varona works for a company called the Solution Group. They buy properties, fix them up, rent them out and then sell. A very different business model from the years when flippers were buying on spec. De Varona says foreign investors consider the United States low risk because it has a stable political system and economy.
Unstable is how Michael Alen described his financial situation.
Michael Alen: I had a one bedroom, one-and-a-half bath, 768 square feet.
Burkett: Did it have a balcony?
Alen: It had a balcony, 15th floor. You see the water.
Even though he owned a condo in Miami, the 35-year-old video editor wanted to sell because he was burdened with condo fees. He was paying extra to make up for owners who defaulted on their mortgages. The first time Alen put his condo on the market was two years ago.
Alen: In 2010, I tried to sell it and I had nobody come and look at it. Same realtor, this year. The night we put it on the MLS, I had my first bid. Even before they’d come and looked at it, they just knew. Turns out they had lived in the building too, they just wanted another unit. So they had their eye on it.
Burkett: Cash buyer?
Alen: Cash buyer. European.
Burkett: What do you think about all these cash buyers swooping in and picking up all these condos?
Alen: I think it’s great. I needed it and they came in and they saved me.
In the end, Alen ended up moving to a quieter, more affordable city called Pompano Beach. Still local, but 45 minutes away from waterfront Miami.
Alen: I got double the square footage for less money and I have quite a bit of money to play around and make it exactly how I like. New kitchen, new tiles, a lot of peace, and I want that now.
For this seller, a foreign investor brought relief. But for buyers, higher prices and outside competition — it just adds to the stress of condo hunting in Miami’s suddenly hot market.
In Miami, I’m Karen Burkett for Marketplace.