Can Trump's European Immigration Policy Affect Miami's Real Estate Market? Samuel Strauch Explains.
As a prominent real estate developer and successful businessman whose brand is recognized in international circles, President Donald Trump brought hope that real estate markets would be buoyed up by his leadership - not that Miami’s real estate sector needed a boost as he was sworn into office.
Median sales price for single family homes in Miami rose by 8.6% while the median price for condos and townhouses increased by 5.5 % year-over-year according to the latest market reports. If the numbers were parsed to focus on the luxury subsector only, the trend would point to strong demand-price fundamentals, indicating a solid footing for both buyers and sellers.
The Luxury Market in Miami
Miami has long been considered one of the preferred playgrounds of the well-heeled. While high-end developments are found in various enclaves in the area, Miami Beach sets the bar quite high for all neighborhoods known for their stratospheric median prices. Specifically, Fisher Island ranked fourth priciest in the nation based on an analysis by Property Shark. South Beach ranked 11th in Forbes Magazine’s ranking of priciest zip codes in the U.S.
The luxury market is a world apart from the housing sector populated by ordinary wage earners. For perspective, consider the following: Miami’s median listing price is around $440,000 according to Zillow data. In the popular Brickell area, the median price for houses for sale was $391,400 in December 2016. Meanwhile, prices of luxury properties usually breach the million-dollar mark, with median listing prices exceeding $500,000. According to real estate pros, foreign buyers are driving the demand for luxury properties partly because the U.S. is still viewed as a “safe haven” for investors.
Immigration and Real Estate Demand
Of the estimated 325,986 people who moved to Florida between July 2015 and July 2016, about 25% ended up in the Miami area. People from Latin American nations, including Brazil, Venezuela, Colombia, Argentina and Mexico, have contributed to the international vibe that has become a hallmark of Miami culture since the Cubans made their mark in the city. Miami is unofficially referred to as the capital of Latin America, and people from these nations have certainly done their part to become part of the fabric of Miami’s neighborhoods.
European fascination for Miami’s endless summer and the glitz and glamour of its social calendar has never abated. With political turmoil, terrorism and economic challenges in France, Britain, Germany and almost all of Europe, real estate insiders are reporting a surge in interest for various types of investment properties in South Florida.
Unrestricted Travel Encourages Investments
Under the Visa Waiver Program enacted in 1986, France and 37 other nations do not need a visa to enter the U.S. for a limited stay. This program eliminates unnecessary travel restrictions for Europeans coming to the U.S. for business or pleasure. Changes, if any, have yet to be announced for the VWP as the countries included in President Trump’s travel ban were never listed as VWP-eligible. With French, German, British and other citizens still enjoying unhindered access to the U.S., expect to see European investors fleeing terrorism threats and other socio-political issues to join the bidding wars for luxury properties in Miami.
Real estate professionals suggest that about 70% of Miami real estate is sold to foreign buyers. Citizens from some Latin American nations countries have slowed down their investment buying due to the strong dollar vis-à-vis their own currencies. However, investors from European and Asian nations are stepping up to the plate, increasing their acquisition of Miami real estate.
Stricter immigration laws may constrain this pipeline, driving would-be immigrants to other countries such as Canada. The president’s infamous travel ban includes a handful of countries, but it has unintentionally ramped up anti-immigrant sentiments, which may lower immigration numbers and, consequently, foreign investment contributions.
Stricter Immigration Laws Restrict Foreign Investment
Foreigners buy properties where they like to spend their vacations. Luxury housing in Miami’s trendy neighborhoods serve as their vacation homes, ensuring absolute privacy and security for their families and guests. These properties are rented out at high-end rates to generate income, compounding the benefits of owning Miami real estate.
As President Trump’s administration grapples with the complexities of U.S. immigration policies, foreign buyers may view this as a sign of disquiet. The mere existence of the travel ban may dampen enthusiasm for Miami investments. Experts point out that investors opt for politically stable countries with an investment-friendly atmosphere.
EB-5 and Real Estate Investments
The immigrant investor program known as EB-5, Employment-Based Fifth Preference, is administered by the U.S. Citizenship and Immigration Service. Under previous administrations, this program made it possible for foreign investors who agreed to invest at least $500,000 to get green cards for themselves and family members under 21. The current administration is in discussions to tweak this program by raising the minimum investment amount to $800,000. A $300,000 increase will be small potatoes for foreign buyers prepared to drop a few million or better for luxury properties. However, mandating guidelines that make it more difficult for non-citizens to travel, immigrate or invest in the U.S. is tantamount to turning away would-be investors. President Trump, experienced in international business as he is, is likely to tread carefully when it comes to business-restrictive immigration policies.
Insider Secrets for Foreign Buyers
The Miami real estate market can be daunting to navigate even for finance-savvy investors from other countries. It is crucial to have insider support from professionals who know the market. Samuel Strauch is a licensed real estate agent with at least 14 years of experience in Florida real estate. He is the founder and CEO of Metrik Real Estate and has earned degrees from Hofstra University, Erasmus University in Rotterdam and Harvard University.
He started his career in banking but eventually joined his family's real estate business based in South Florida. He learned from the pros and specialized in the intricacies of the South Florida real estate market. In 2002, Strauch ventured on his own, forming a real estate company, Metrik Real Estate, that has grown to become a fully integrated company with extensive experience in equity sourcing, project development, acquisitions, management and real estate brokerage. Whatever happens in Miami's real estate market under the Trump administration, Samuel Strauch will find innovative ways to deal with the issues, assuring full support for foreign buyers venturing into Miami luxury real estate.
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