Miami Land Gets the Money of Well-Placed Latin Americans
|August 14, 2014||Posted by Staff under Economic Principles, High Cost of Land, Inequality / Concentration|
This 2014 excerpt of Salon, Aug 10, is by Henry Grabar.
In Miami, only one in 10 new apartments is purchased as a primary residence. Apartments aren’t places to live, even a few months out of the year, or to rent. They are simply unusually shaped deposit boxes where several million dollars (or pesos, or rubles) can be left in security and secrecy.
The “safe haven effect” drives up the cost of housing. And this with an obvious threat in the form of sea-level rise and storm surges looming on the horizon.
Over the past quarter-century, the Miami skyline has grown at a cornfield pace, fueled largely by buyers from South America. Most Miamians speak Spanish at home, and the metro area has the highest share of immigrant business ownership in the country, at 45 percent. This is why the city is sometimes called the “Capital of Latin America.”
Miami’s real estate clientele are looking to move cash reserves from South America’s teetering currencies into American real estate. Only a quarter of Miami condo buyers take out mortgages, versus 70 percent nationwide.
Bank tellers don’t receive a commission on the deposits they accept, so they are more likely to ask questions of a dubious customer than a real estate agent, who stands to make a huge commission on a multimillion-dollar luxury condo deal.
The average price of a unit in a current selling project is $662,439. It’s not pocket change; but it’s also less than half the average condo price in Manhattan. Median sale prices in San Francisco recently topped $1 million.
Is it crazy to add 23,000 units – the crop of the current cycle – to a market with scant local demand, in a metro area with the highest foreclosure rate in the United States? Is downtown Miami a bubble?
Ed. Notes: If only those foreigners would plow their surplus back into their own nations to win economic justice there, so they would not have to flee or to send their money into exile. But the money was probably ill-gotten gains in the first place, so it would not belong to the sort of person interested in either justice or his homeland.
If Miami could control its realtors, it could control its development fate: keep its housing affordable and its neighborhoods intact. How? By taxing land. Then land could not be such a safe haven.
Heck, the city could even get rid of all the other dumb taxes on buildings, sales, and incomes. After that, people would not come for the wrong reasons but to live in justice. And Miami could export a model that benefits everybody — geonomics.