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Miami Real Estate: Overseas Homebuyers Driving up the Local Market

An ever favorite of the Canadians as well as the high networth individuals from South America, the real estate market of Florida is witnessing a surge in activities as far as its homebuying is concerned, especially in Miami. The National Association of Realtors (NAR) has revealed in its March 2013 report that spoke of a recovering housing market ever since the recession ended a few months back.

According to NAR’s report, out of all the residential properties sold in the past, around 7.3 percent of them were bought by the wealthy foreigners. It was found that they paid in dollars to buy homes way back in 2007. However, that same figure jumped up drastically to 19 percent, as per the data collected in 2012, which is the most current data available with NAR.

Moreover, in overall nationwide sales of U.S residential real estates to overseas buyers in 2012, Florida had accounted for a quarter of them, thus topping the list of the most happening housing market in the country with the highest number of properties sold.

In the words of Peter Zalewski, the owner of Condo Vultures that provides brokerage services to the homebuyers based out of Miami, “It feels like 2003 in South Florida”, reminiscing the erstwhile golden days of housing boom in his city.

As per the estimates, foreign property buyers have invested more than $500 billion on over 250,000 real estates in Florida since 2009, a data collected by the NAR found in the report. Take for instance, Daniel Arguelles, 33, who works as a stockbroker in Bogota, he has purchased three properties in Miami during that same period.

He explains that real estate investors like him are choosing Florida over other American states because the local market provides quite an attractive deal clubbed with an affordable dollar and near ground level interest rates. International real estate players like him are mostly using their properties as rental ones, whereas some of the others are using them as their vacation home.

As a result of a sudden influx of foreign money in the country’s housing market, it boosted the confidence of the property sellers that helped to drive up the prices, in return. This has sparked a new trend, i.e., bidding wars, as reported by the local real estate agents and buyers.

Prices of homes in South Florida were up by 14 percent in May this year 2013, as compared to a year ago, shown in the S&P/Case-Shiller real estate index - even though this figure is low by 40 percent than what it is was way back in 2006, a time when the real estate market was at its peak.

If reports are to be believed, then in a particular neighborhood of Miami, where homebuyers are looking for single-family, three-bedroom residential properties, the rates have gone up from $180,000 to $250,000 within a span of three years time. Take a guide before you invest in Miami real estate market.