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I sometimes wish that people making these kinds of threads, and articles in newspapers and other media, knew the difference between wealth and income, but more often than not it is a useless wish. Naturally politicians are a lost cause.
Anyway, since the time of the city's founding father Henry Flagler, people have been coming to Miami from elsewhere with wealth already in hand. This dynamic really hasn't changed much.
Human beings are not supposed to live in this area in any great number, and it is only possible because of industrial power brought in from outside, whether induced by railways or wealth-based cash flows, among other assets typical of industrial environment-managing power.
To be sure, affordable housing for people with average wage income is a concern, and maybe it should be a public policy issue, but maybe not; we know how that worked out last time, just ask Fannie and Freddie.
But really, in west Kendall, for example, you would be very hard-pressed to spend more than $500,000 on the most luxurious house.
One would have to eliminate from average housing statistics such areas as east of US1, Coral Gables, Pinecrest and a few others to have a more accurate picture of housing affordability among people who depend on wage income. I would not rely on casual average statistics for that.
Maybe public policy should focus instead on west-east public urban transport. But don't rely on the good offices of uncle Sam for that one either, he's more interested in dredging port channels to serve those with wealth already in hand.
As mentioned, excessive leverage in housing, which occurs cyclically (what every 20, every 50 years?), is not really the driver right now, rather it is wealth-based cash flow from outside, which is typical for Miami as it has been for about a century now.
So really nothing new here, except of course the grand scale in the era of globalization.
I'd be more concerned about Miami's vulnerability to a natural disaster that overwhelms human industrial environment-managing power, ask Henry, or a sudden and abrupt breakdown in global economic relationships than the affordability of housing among people with average wage income.
the way I see it--and, believe me, I could be wrong as I do not live in Miami nor know the market--BUT I keep on hearing how all those people from South America have come in and paid cash for all these condos in the metro Miami area....how many 1%'ers can there be in South America?--probably less than the US even if you combine everyone from the continent....that being said, the next economic correction will hit South American even harder than the US and all those people who paid cash for their condos will need to sell them and you'll see another huge real estate correction.....we haven't had a 10% correction in the stock market in how many years? Trust me, that will precede the real estate correction just as the stock market upswing preceded the real estate recovery....anyone care to refute my theory?...again, I'm no econometrician from Stanford or Wharton, but that's how I see things playing out within the next few years.
No way.
Richness in Latin America is related to raw materials, and raw materials are on a bullish trend because Asia is buying everything there is.,,,and the continent will always have the likes of Maduros, Cristinita, Correa, etc, so rich and not so rich will continue to buy a safe heaven in a nearby place.
And not only Latin Americans, also Russians.
Russia is also a place very rich in commodities but not safe for rich people, not even for the very rich.
I sometimes wish that people making these kinds of threads, and articles in newspapers and other media, knew the difference between wealth and income, but more often than not it is a useless wish. Naturally politicians are a lost cause.
I am the OP of this thread and I have a BA in Economics and I am also a few classes shy from a MBA. I think I understand more about Economics than most people who post on this forum.
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Anyway, since the time of the city's founding father Henry Flagler, people have been coming to Miami from elsewhere with wealth already in hand. This dynamic really hasn't changed much.
Ummm, I don't think so. You would have to prove that the majority of the people living in Miami have always been wealthy people, i assure you, that would be a untenable task. Just google median income in Miami over the last two decades or so. It will not support such a assertion.
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Human beings are not supposed to live in this area in any great number, and it is only possible because of industrial power brought in from outside, whether induced by railways or wealth-based cash flows, among other assets typical of industrial environment-managing power.
There is no "supposed to" when it come to economics, in terms of local industries etc. Either politicians can get companies to buy into their local economics via tax breaks etc., or they cant. Miami politicians for whatever reason have not done a bang up job in this regard. NYC at one time was bankrupt and their economy relied heavily on wallstreet. Then they diversified. The same was seen in Houston as well. Charlotte S.C. decided to try and lure banks there and they have been rather successful. This is all down to human ingenuity and making the right decisions to make a place comfortable for businesses to come, and politicians here seem unable to make this happen. Heck the mayor of Miami beach once said he doesn't want start ups, they want to be like the Riveria :S This is the sort of stuff locals have to contend with, just bad decision making by those in charge.
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To be sure, affordable housing for people with average wage income is a concern, and maybe it should be a public policy issue, but maybe not; we know how that worked out last time, just ask Fannie and Freddie.
not everyone is meant to own a home, nor is everyone desiring to do so. However, policies can be put in place such as making it impossible for someone to sell their home for 3 and 4 times of the amount it was accessed at. That is how it is in Tennessee, and they don't have all these issues. I believe Texas did something similar after their savings and loans debacle in the 90s. Also, making it impossible to charge rent that is higher than 40 times someone's verifiable income. That way the market can control rent prices with out there being these huge leaps before a market correction takes hold (which there will be).
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But really, in west Kendall, for example, you would be very hard-pressed to spend more than $500,000 on the most luxurious house.
One would have to eliminate from average housing statistics such areas as east of US1, Coral Gables, Pinecrest and a few others to have a more accurate picture of housing affordability among people who depend on wage income. I would not rely on casual average statistics for that
This is a none issue as the article, if you bothered to read it, clearly said that there are other factors that play into this. For example, yes you can live in the burbs but then your variable cost increase ie gas, car maintenance, sole reliance on a car which may mean you have to constantly make sure your car is in working order rand if it isn't then having enough on hand to buy a new one, etc. etc.
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Maybe public policy should focus instead on west-east public urban transport. But don't rely on the good offices of uncle Sam for that one either, he's more interested in dredging port channels to serve those with wealth already in hand.
I would like to see public/private partnerships to build out a usable transit system here.
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As mentioned, excessive leverage in housing, which occurs cyclically (what every 20, every 50 years?), is not really the driver right now, rather it is wealth-based cash flow from outside, which is typical for Miami as it has been for about a century now.
The article wasn't really about buying a home, it was about rent and how rent is historically 30% of income, in NYC it is 39% (right now) and in Miami it is 43% (right now). Things are out of wack.
I didn't see Miami being compared to other cities in that link you posted
The article I provided was a summary of the main article from the NYT. There is a small hyper link that says NYT at the bottom of the article that has the original article and shows the comparison.
-In 2013, 62% of closed sales in Miami were all cash compared to 64.3% in 2012.
-All-cash sales were 45.6% of single-family home closings and 73.7% of all condominium sales.
-Since nearly 90% of foreign buyers pay cash, this reflects Miami’s position as a top market for foreign buyers.
-Nationally, cash sales are approximately 30% of closed sales. Since Miami has such a large percentage of international buyers, cash sales locally are more than double the national average.
The article was about renting, not necessarily purchasing a home.
The article was about renting, not necessarily purchasing a home.
Thanks for clearing that up. Yeah, the article in the initial link was not very clear on that. I went back and found the NYT's link down at the bottom.
Some startling stats in that article regarding the median RENT as a share of median income:
Thanks for clearing that up. Yeah, the article in the initial link was not very clear on that. I went back and found the NYT's link down at the bottom.
Some startling stats in that article regarding the median RENT as a share of median income:
Miami
-2000: 26.5%
-2013: 43.2
Los Angeles
-2000: 34.1%
-2013: 47.0%
San Francisco:
-2000: 24.7%
-2013: 40.7%
San Diego:
-2000: 30.9%
-2013: 41.4%
East/West Coast urban areas are becoming increasingly unaffordable to those not in the upper class/elite groups. Median wages have simply not kept up with the increasing cost of living.
Goes to show that this is a widespread problem in our country....not just Miami.
The middle class suffers because there is a certain expectation of lifestyle. The big problem everywhere and magnified living in South Florida is that in order to feel just "normal' it takes an exorbitant amount of money and resources.
How much do 2 cars cost in Miami for a married couple with gas, tolls and insurance added to a normal $250 - $350 a month car payment?
Rental or mortgage payment in a decent area with the option for acceptable public school choices? Of course, homes do not have basements here which makes a normal house feel smaller with less storage space and because we are sandwiched between the everglades and ocean most lots are smaller than average as well.
Toss in the fact that in Miami many middle class people would like to have a boat because you can use it year round here and now you have just added another payment with gas and insurance too.
Add in the rest of the usual life costs and the average middle class family of four can spend $5,000 to $7,000 a month just to feel "normal" while living in an average area with okay schools while driving non-descript cars with an okay boat that may have a cabin but definitely has no a/c and sits in your backyard.
Bluntly, you may need to bring home $10,000 a month before taxes just to feel average and safe and save enough money on the side to actually retire one day.
Location: Miami (prev. NY, Atlanta, SF, OC and San Diego)
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the prices are ridiculous in Miami (as or more expensive than cities in California--rent or owning) without having high paying jobs to sustain such increases....you will see yet another correction down the road--trust me....I know--this time it's different, right?..sure.
I do well, have a nice 2BR condo in a desirable section of downtown San Diego that will be paid off in 6 years that is considerably less expensive (minimum $150K) than comparable units in comparable neighborhoods I can find in Miami....with retirement on the horizon within the next 5-7 years and with a comfortable retirement package that would allow me to pay outrageous prices (but I choose not to), I plan on following the US Corporate business model and will export my retirement for a portion of the year while my body can still take travel....trust me, for $400K or $500K I could live in a very nice section of Rio--i.e. the very desirable Leblon-- (vs. $750K in SoBe) and for just over half that amount I could live equally well--or better--in Barcelona (or get 20% more for my money if I chose Seville or Prague). I certainly can afford to live here and quite comfortable (eat out every night, drive a German car, smoke a good cigar 3 nights a week, travel) but with no baggage nor anyone in my household I am going to go for quality of life--and, more and more, that seems as though that will be achieved outside the US--though I will keep my money parked in US banks....if there's one thing I hate doing, it's overpaying. If I have to travel by plane to get value and a seemingly better quality of life, so be it.
Last edited by elchevere; 04-25-2014 at 02:20 PM..
the prices are ridiculous in Miami (as or more expensive than cities in California--rent or owning) without having high paying jobs to sustain such increases....you will see yet another correction down the road--trust me....I know--this time it's different, right?..sure.
Yes, this time it is different. Didn't you get the memo? HaHa.
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Originally Posted by elchevere
the prices are ridiculous in Miami (as or more expensive than cities in California--rent or owning) without having high paying jobs to sustain such increases....you will see yet another correction down the road--trust me....I know--this time it's different, right?..sure.
I do well, have a nice 2BR condo in a desirable section of downtown San Diego that will be paid off in 6 years that is considerably less expensive (minimum $150K) than comparable units in comparable neighborhoods I can find in Miami....with retirement on the horizon within the next 5-7 years and with a comfortable retirement package that would allow me to pay outrageous prices (but I choose not to), I plan on following the US Corporate business model and will export my retirement for a portion of the year while my body can still take travel....trust me, for $400K or $500K I could live in a very nice section of Rio--i.e. the very desirable Leblon-- (vs. $750K in SoBe) and for just over half that amount I could live equally well--or better--in Barcelona (or get 20% more for my money if I chose Seville or Prague). I certainly can afford to live here and quite comfortable (eat out every night, drive a German car, smoke a good cigar 3 nights a week, travel) but with no baggage nor anyone in my household I am going to go for quality of life--and, more and more, that seems as though that will be achieved outside the US--though I will keep my money parked in US banks....if there's one thing I hate doing, it's overpaying. If I have to travel by plane to get value and a seemingly better quality of life, so be it.
I am not following you on the bolded part above. Are you suggesting home prices (or condo) prices are HIGHER in Miami than San Diego? That is hard to believe. San Diego is roughly as expensive as Los Angeles.
No real direct comparable neighbohrood from South Beach to San Diego. Downtown San Diego is great but it is not on or at the beach.
But I imagine homes/condos in "beach" areas of San Diego are well above So.Fla prices. I mean how about Coronado or La Jolla or even Ocean Beach?
What about a comparison from downtown Miami/Brickell to downtown San Diego....
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