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The Miami Real Estate Crash of 2022
In this article, unlike the typical blog posts we create weekly of spectacular residential developments, we are going to talk about a topic that seems to be a major concern for many clients and the general public, especially those who doubt the present and future of the United States and Miami.
As we all know, the country experienced a great crisis in 2007, which lasted several years. At that time, the real estate market in Miami and the rest of the country had a giant drop in prices that produced a major international financial crisis.
We experienced that crisis firsthand, remembering clearly, that anyone who wanted to acquire a property could easily do so… the banks offered loans to all kinds of buyers, without verifying their backgrounds or income, which produced a massive amount of people buying properties that they really couldn’t afford with very small deposits… the banks then resold these mortgages to third parties, with money they didn’t have, creating the great bubble.
Once the system couldn’t stand all the speculation and mortgage loans without any solid financial basis, the system collapsed.
In this case, in 2022, we do not see similarities with the 2007 crisis… Currently the Miami market is very strong, both for existing units for sale and rentals, as well as in pre-construction.
In the case of new developments, we currently have an inevitable rise in prices due to high construction costs, low inventory and especially high demand, with a strong and solid base of at least 30% cash deposits in escrow accounts before the construction of the buildings even begins.
We have to admit though that there’s a more pronounced slow down in the construction of these buildings, due to inflation, lack of labor force, and again, higher construction costs.
In the real estate market for rent and resale, we have had a strong rise in the last two years, but now we see a stabilization of prices in the last 2 months… but we do not see a drop in values, because the inventory is still very limited, and we practically won’t have the delivery of new buildings for the next 3 years, with only 3 or 4 towers…
The high interest rates also had an impact on the slowdown but it doesn’t seem to be a concerning factor… we consider that the unfortunate high inflation is the product of so much money printed by the Federal Reserve to lessen the negative effects of the pandemic, so this was inevitable.
In conclusion, Miami is still Miami, the local market will continue to come to live in the most wonderful place in the nation and the Latin market will continue to see Miami as the capital of the region trying to convert their money into dollars, specially now with so many political changes in countries like Chile, Colombia and the rest of Latin America. These investors seek to protect their capital and convert their money into dollars so that they can multiply it and generate monthly income…and the best way to do it is through real estate… since lately the stock market and cryptocurrency are constantly going down…
This is still an excellent time to invest in Miami and at Miami Residential we are here to help you… please subscribe to our channel, leave us your comment below and like this video.
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