The Unaffordability of Miami (middle-class, sales, real estate market)

[Wild Style]

The Unaffordability of Miami

Found an interesting article about just how unaffordable Miami is when compared to other cities. This definitely isn’t sustainable.


link

[Travelassie]

Originally Posted by Wild Style

The Unaffordability of Miami

Found an interesting article about just how unaffordable Miami is when compared to other cities. This definitely isn’t sustainable.


link

Well, I know our expenses dropped considerably when we moved out of Miami...

[perry335654]

The middle-class suffers the most

[shamrockfisher]

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.

[elchevere]

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.

[Wild Style]

Originally Posted by shamrockfisher

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.

I don't now if you need 10,000 a month out here, but over all, your post is SPOT on. If we use the 40 times income ratio that they use in NYC then I would say, with the average rent for a DECENT area in the urban core of Miami averaging around 2,000 a month (I know because I am looking right now), you need about 80,000 or so, and I would say that is after taxes. That doesn't include whatever you will need to pay for your car, groceries and whatever else.

Its crazy expensive out here. I have a family member in Queens, right down the block from a train station, shopping, movie theater etc. and they pay 1900 for a 3 bedroom. That is NOT happening in the urban core in Miami. This family member also doesn't have a car. I like Miami, a LOT, but it is dumb expensive. I don't know how most people are doing it.


Enchevere

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

I agree 100%, I think there is going to be a reckoning down the line, in terms of a housing correction. These prices are just unsustainable, and history has shown us that time and time again. The real issue is waiting for that correction to come can be exhausting.

[go-getta-J]

Originally Posted by elchevere

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.

If they are paying all cash why would a market correction force them to sell? The last real estate crash was caused by over-leverage due to excessive borrowing. People who lost their jobs and couldn't afford their mortgages were the main drivers of home prices falling.

I'm assuming that these wealthy foreigners derive most of their income from investments (dividends, interest, royalties, businesses, rentals) so that any economic correction would only result in a paper loss. Unless they have cash flow issues, I can't imagine all of them rushing to the exits simply because of a 10% correction.

My thoughts are that Miami's real estate is a long-term play by wealthy foreigners looking for somewhere safe to park their money as well as have a foothold in a major American city with close ties to Latin America.

[Breaking_Good]

To add some flavor regarding the Miami housing market:
Why is the Miami real estate market burning so hot? | 2014-02-19 | HousingWire

-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.

[Sugah Ray]

Originally Posted by Wild Style

The Unaffordability of Miami

Found an interesting article about just how unaffordable Miami is when compared to other cities. This definitely isn’t sustainable.


link

I didn't see Miami being compared to other cities in that link you posted

[Lakers4kb]

Originally Posted by Breaking_Good

To add some flavor regarding the Miami housing market:
Why is the Miami real estate market burning so hot? | 2014-02-19 | HousingWire

-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.

Nice data. Pretty much sums up the Miami Market and its representative demographics in 4 bullets.Efficient