Keep it coming up (Miami: apartment, condo, credit)

[perry335654]

Yahoo!


Just like the song from KC & The Sunshine Band, "Keep it Coming Love", Keep it coming up as Miami's condo market defies gravity, one may consider it a quasi-economy as there is a weak dollar and foreign money flowing from mostly Latin America.

[tallrick]

Very true, and like all things that go up, they eventually fall down! If Ben stops printing it is like musical chairs when the music stops. It is good in some ways that money stolen from Latin America will be lost in Miami.

[doggiebus]

I love how he says The rest he hopes to entice with flash and fantasy, which is exactly what Miami is all about.

[bale002]

Bubble means excessive buying of an asset financed by credit, artificially created money not based on value-added production, such that when supply of credit stops, prices of such assets fall suddenly and sharply.

The fact that many of the purchases nowadays are by cash, not financed by credit, means that US monetary policy has nothing to do with it, at least not directly.

I do not know what percentage of this, if any, is "drug money" from South America, but I do know that current economic policies in several South American, as well as European, countries are scaring off, even choking off, people with assets, including many with legitimate entrepreneurial skills, the same people who are quite used to apartment/condo-style living for which in Miami there is actually a dearth of quality and adequate size. Hence ongoing construction.

More in detail, in the US the effective federal tax rate is around 17%, and there is strong opposition to raising even that very low effective rate, and Florida is a no income tax state, while in countries like Italy and France the effective central government tax rate is around 45%, plus myriad other taxes (other than even property tax), not to mention countries like Russia and Cyprus right now, and in countries like Argentina, Venezuela and Ecuador there is the real possibility of confiscation of assets. The US is still a political and policy haven and Miami is the main port of entry for South Americans and, though to a lesser extent, even some Europeans. Many of these people start up international and local businesses, and at the very least they pay local property taxes and consume, business and purchasing power which keeps goods and services flowing in, out and through Miami.

By the way, the US dollar has been gaining against South American currencies for about a year now and it has traded in a predictable, at times narrow, range against the euro for almost a decade. What has weakened is the domestic purchasing power of the average worker on US soil.

So the demand is more driven by fiscal policy and politics in the US and abroad, and Miami's geographical position globally, not by domestic monetary policy as had been the case in the mid-2000s.

The risk, then, is whether Miami will continue to be able to build upon its success based on its strategic national and global position and hence whether the people who purchase units in these buildings will have enough income going forward to maintain them in top quality shape long term.

Good Luck!

[Komodo666]

The risk, then, is whether Miami will continue to be able to build upon its success based on its strategic national and global position and hence whether the people who purchase units in these buildings will have enough income going forward to maintain them in top quality shape long term.

Not much risk involved for Miami..but increased risks in Venezuela, the second oil reserve in the world, Argentina, Brazil and EEC. So Miami will continue on the rise if no "populists" come into power.