Renting Property in Miami is More Expensive Than Buying

December 9, 2014 by Raanan Katz

Raanan Katz Miami Real Estate Home Renters in South Florida should expect to pay 44.5% of their income to rent each month. Comparing this to homebuyers, renters are paying about 25% more of their monthly income than if they were a homeowner. Homeowners are estimated to spend about 20% of their monthly income towards their mortgages. Renting property in South Florida is currently 67.6% more expensive than the historical average after the housing crisis in 2008.

The national average spending on rent is about 30% of someone’s monthly income, whereas the national average spending on a mortgage is 15% of the average American’s monthly income.

Renting is usually more expensive than buying because the time-span associated with renting is typically shorter than purchasing a property. People normally start out their careers renting, but once they are able to afford to purchase either a property or a car, they jump right on it because of the costs associated with renting vs. buying.

Interest rates are at a historic low, but young Americans seem to still be hesitant on purchasing property. Factors that might contribute to this are the following: 1) Rent prices are slowing down. 2) Young adults are typically choosing to live in places where rent prices are stabilizing and property is expensive. They typically choose to live in big cities with large markets.

Young Adults are looking in cities like Texas, Honolulu, Austin, San Diego, and New York as potential places to purchase a home. Less than 30% of these homes are considered affordable for the typical average young adult in the United States. These are all cities where the average wages are considerably lower than the average monthly income it would take to pay a mortgage on a property.

Foreign Interest in Miami Real Estate

November 13, 2014 by Raanan Katz

Raanan Katz Real Estate Miami, Florida November 3 marked the 20th anniversary for the Miami International Real Estate Congress, which drew over three hundred real estate agents and foreign professionals who focus on foreign markets, including 70 delegates from foreign countries.

The conference was a big success: speakers addressed hot-topic issues, industry experts shed light on current trends, and all attendees enjoyed a number of marketing sessions and gala receptions. But if there is one conclusion to draw from the event, it’s that the Miami-Dade and Broward real estate market is once again being heavily influenced by international real estate transactions.

These international deals actually comprise just under a third of all real estate transactions in the area. And that astounding number doesn’t even meet last year’s high of 35%. The foreign demand for Miami real estate is one of the most vibrant pieces of that market that has put Miami-Dade on track to break another record for residential sales this year.

Difficult economic conditions abroad have not stopped foreign buyers from spending big bucks in southern Florida. Florida home sales average $245,000 but international buyers spent an average of $444,052 on their Miami homes. Brazilians topped that international list with a mean payment of almost $500,000 per property, about two times the state’s average.

The tendency for foreigners to lean towards an upscale Miami market has made them an attractive target for realtors looking to cash in on a profitable trend. Alicia Cervera La Madrid, the managing partner of Miami’s Cervera Real Estate, explained, “We’re probably paying some of the highest commissions in the world — between 5 percent and 7 percent.”

Most of the real estate agents in the South Florida area either hail from a foreign country themselves or are at least multilingual and have a deep understanding of the language and culture of their clients. One of those cultural habits is the propensity toward cash purchases — a full 81% of foreign buyers in the area paid in cash, according to a recent NAR study.

Raanan Katz on Miami after the crash:

After the 2008 market crash, internationally-focused agents are palpably excited by this recent foreign interest in Miami soil. The assumption is that Miami is a great place for foreigners to invest their money, but only time will tell whether that trend will hold up in the coming years.

All Cash Home Sales in Florida – Miami Real Estate

September 12, 2014 by Raanan Katz

Raanan Katz Florida Real Estate 51 percent of all of Florida’s real estate sales are cash home sales. This makes Florida the leader in the United States for cash home sales. On average, national home cash sales are around 33% which is higher than last years rate of around 20%. After the recession, there was a shortage of houses for sale as well as more strict regulations put on mortgage lending. Cash offers are a lot more attractive to sellers as they know that they will have the money right after the papers are signed. It surpasses much of the financing needed in a non-cash agreement, making someone paying cash a way to help them win a bidding war. This makes it very difficult for first0time buyers relying on financing. It it a lot more difficult to qualify for financing these days, and with the high demand and higher supply of cash buyers, young homebuyers are finding it more difficult to purchase homes.

The housing crisis was caused by poor mortgage lending tactics to buyers that were not able to reach their mortgage agreements. This was the era of sub-prime mortgage lending. In the wake of the 2008 housing crisis, banks were forced to put more strict regulations on mortgage lending, making it more difficult for people to buy homes who were on the fringe. Less and less people were then applying for mortgages because they were cut from being qualified. This lead towards a decrease in the supply of houses being built. This lack of supply made it even more difficult for people on the fringe since buying houses using cash became much more attractive to sellers and easier for buyers.

Purchasing a home in Miami (and essentially everywhere else in the United States) is much less expensive than renting. Take a look at Raanan Katz’s blog post on renting vs. purchasing homes by clicking here.