According to a new study from realtor.coma new wave of real estate investors who buy single-family homes to sell at a higher price, or put them on the rental market, are contributing to the housing affordability crisis in South Florida.
By MiamiDiario Newsroom
According to the study, the Miami metropolitan area (made up of Miami-Dade, Broward and Palm Beach) ranks third place in a list of 10 largest cities in the United States with the highest percentage of home sales used with investment purposes.
In the note published inl Miami Herald It is argued that the study shows that the 17% of homes sold in South Florida during the second quarter of 2019 were bought by investors, 1,3% more than in the same period last year.
George Ratiu, Senior Economist at realtor.com cost that rising investment sales in South Florida make it harder for first-time buyers to compete.
According to the Miami Association of Realtors, the average home sales prices rose 2.8% in August – the 93rd consecutive month of increases – at $370,000 current.
“Typically, investors who are active in the entry price range of the market pay cash and are looking for a quick turnaround,” he said. "That has a negative impact on the overall affordability of Miami."
For Ratiu there are important nuances to consider when looking at the types of active investors. «Miami has diversified economically; trade is playing a larger role now that the Port of Miami has become a major East Coast port. There is strong international interest in the city. So for Miami it's about rent growth, because not only can you flip a property, but if that fails, you can also rent it."
A moving market
Two other Florida cities are on the list: Tampa, who occupied the fourth place with 16,2% of sales to investors, and Orlando, who occupied the eighth place with 15,1% about the sales.
According to the study of realtor.com St Louis is at the top of the list, with 18,8% of home sales destined for investors. Birmingham was second with 17,3%. Other subways on the list were Memphis (16.1%), Las Vegas (15.7%), Phoenix (15.1%), Columbus (13.8%) and Philadelphia (13.6%).
La national rate sales from investors was 7,7%, the highest rate of speculation since 2013.
The study defines the investment sales like those that have a corporate or non-individual name in writing. Flips are defined as homes that were sold and then resold at a higher price within a 12-month period.
The average earnings of Flipper was $62,700 (not including money spent on property improvements) according to ATTOM Data Solutions. This translates into earnings between 20% and 33% of home value after repairs.
Ratiu said that despite growing interest from investors, the real estate market is not ready for another implosion like the one in 2008, when rampant speculation led to a national crisis.
"The banks are being much more diligent during the financing process than in 2005,” he said. “Applicants are required to have much higher credit scores and now have a FICO score. And the silver lining is that mom-and-pop investors can now invest in more modest properties and tend to be more responsible owners than corporations."
Source: Miami Herald