For my part, Ian, all I can offer you is a retrospective thought. Without knowing your age, consider where prices in Miami were during the 70's, 80's, 90's and even today. Many will argue we're seieng prices in many areas at levels not seen since pre-9/11.

Interest rates are lower today than they've been in years. Unfortunately, I do remember the rates of the late 70's, early 80's. Double digit rates approaching 19% for some borrowers was not uncommon. Yet, people purchased and refinanced. Consider also that back then, it was cash, or it was 20% down or more and mortgage choices were FHA, VA, 15 yrs or 30 yrs. That's it.

Today, there are so many more choices, prices are at levels I believe we'll not see again for many years and interest rates are likely to begin to go up as soon as the Fed begins to reverse their policy and raise rates.

Today, you can buy a place someone else paid $350k 3 years ago and pay $200k or less in some instances. You can still finance at below 6% and if you intend to keep the property for the next few years (some 5+), you'll enjoy the appreciation plus tax deductions. Remember, someone already thought your new $200k place was worth paying $350k once.

As others have mentioned, Miami (certain areas more than others), offers a destination the world seeks. Not only that but, today, most major water-front cities around the world are much more expensive and currency exchange, still offers an additional bargain incentive to foreigners.

Hope our collective answers help you and happy hunting.

Wenceslao Fernandez Jr, BS, CDPE
Keller Williams Realty

Mon Jun 2 2008, 21:30

Hi Ian,
I would like to comment again on how average people can afford the prices. I guess I should have qualified what you consider "Average". On your income figures, as Carlos said, average people can not afford Miami. Those that thought they could are the ones in financial trouble right now. I did not say prices will not continue to come down "IN SOME PARTS OF MIAMI" If you wish you could buy your primary residence, then you need to evaluate your lifestyle and where you want to live, and you may be fortunate to like one of the areas that will be flooded with condos or homes in the near future. Real Estate is supply and demand.
Good luck to you.
Debi Quade

Wed May 21 2008, 09:34

Hi Ian,
You are a smart man and you have shown that by doing the math. All this talk of Miami becoming the next NY City or LA is just that , a lot of talk, these coments are just out of touch with reality. The reality is that as your math dictates, there is no way on that your average white collar worker can afford a decent home. Just add the taxes, insurance and traffic problems I can not see how this will develop into a Meca overnight, I can see Brickell and the ocean front going forward but outside the strip is just not possible., It will take many years before this market turns around. I have been at training seminars where the stats and projections for South Florida are discouraging, they put the next turnaround of the market by the year 2011, the price of homes are projected to reach levels close to pre 2001. Most of the bloggers will tell you otherwise, they will tell you about the cost of labor and material and how it is just impossible for prices to drop so low. Unless the dollar devalues, and inflation jumps 3-4 points I just dont see how anyone making 60k can afford a 350k home. The numbers don't lie!! Rent and wait!
Z Orlando

Wed May 21 2008, 08:56

Government study confirming your beliefs:

http://www.cepr.net/documents/publications/ownrent_2008_04.pdf

Wed May 21 2008, 07:22

Ian,

I can't say that it is easy to for average people in Miami - you need at least two incomes and sometimes more. Miami is a city in transition and income has not keep up with the cost of living. But things are not as bad as some perceive. Having lived in Miami for almost 50 years and having lived through other boom-bust cycles, I see our city in great position for the next wave. It takes on an average 5 to 7 years to plan, design and build a major building in South Florida. You could look at our current oversupply as either behind the last demand wave or ahead of the next one -- I believe the later.

Our population is still growing - granted not as fast as before. Our State peaked at approximately 1100 new residents per day and now we are closer to 750 per day. Dade and Broward represent about 25% of the State's population growth. The people who are moving into the area are parking themselves in rental properties and that is building pent up demand for future purchases. Personally, I believe Miami's housing oversupply is ahead of the next wave and will eventually be absorbed once the market rebounds.

The statistical reports through the end of April are showing that the housing market in Miami-Dade may have bottomed out in December '07. If you want to look at a statistical report you can see my newsletter at http://www.carlosruizproperties.com/Nav.aspx/Page=%2fPageMan… or at http://www.ewm.com/trendx/ . The best indicator of future sales is pended sales. Regarding single family homes pended sales bottomed out in December '07 at 365. Since then in January 467; February 515; March 582 and by the end of April we had 736 pended sales. Closed transactions also reflected this increase with 328 houses closed in January; 352 in February; 405 in March and when all the numbers are in for April we will probably have 465 sold houses -- at this time May is projecting to be about 555 closed sales.

This demand is being fed by Foreigners who are coming with strong currency to buy devalued properties that are a bargain in comparison to their own. Some of them are in a hurry to buy, because the Euro is beginning to show some weakness. Another factor that is feeding the increasing demand is bargain hunters purchasing foreclosed properties. With demand on a rebound, it won't be long before prices level off and return to the traditional 4-6% appreciation.

In my opinion, this is not the time to rent - this is the time to buy.

Wed May 21 2008, 06:46

Miami may be heading towards a "global city" but it is still ranked the 5th poorest big city in the US. Keep in mind it was recently the #3 poorest. Low education levels and a tiny tech industry, along with thousands of low skill workers certainly does not help.

Sun May 18 2008, 20:54

miami is way overpriced by the metrics you are using. If rent is less than mortgage + ins. + taxes and prices aren't going up to make up for the shortfall then prices will go down. EWM.com has/had nice facts and trends charts and it show massive supply and minimal demand. Prices are going lower it is just a matter of time. The time to buy, in my opinion, will be when all properties look cheap my guess is 20-30% lower than today maybe more...just look at ft myers, 3 bedroom homes that have 2000-3000 mort payments only rent for 800 bucks a month. massive oversupply everywhere down here

Sun May 18 2008, 19:43

Hi Ian,
No one knows "what will happen". But Miami is heading towards being a global city rapidly, so one can expect prices to be on the level of other "Major Global Cities" in the near future.
By "global" I mean...Miami is not a small suburb of any rural area. Miami is not a small major city. Miami is a big city, large investments, huge economic impact on world wide transportation, and the hub of Internation trade with Latin countries.
Only buy what you can afford. Miami may not be the city that everyone can afford to live in, but neither is New York City or LA.
I wish you luck with your decisions. Do not listen to anyone else but yourself when making an educated decision.
Debi Quade
Carson Realty Debi@DebraQuade.com

Sat May 17 2008, 11:32

Ian - many people are in similar shoes as yours and a lot of them choose to rent. The economy is definitely not in our favor and I do wish there was a crystal ball to tell you where housing prices will go.

Many people think we are at the bottom now, some others feel we have a while to go. The smart thing to do is probably not to guess when we hit bottom, but take a risk of buying when the market starts going up again. There are many factors other than the price and interest rates are a major one.

You may be able to wait for prices to go down a bit more, but the interests rates are on the way up. Make sure you take that into consideration as well. Study the areas you are interested in and talk to Realtors that know those areas to know what the pricing history is.

http://www.miamism.com/miami-mortgage-rates-report-may-14-2008

There are still strong areas in Miami that have not gotten hit that hard, there are others that are suffering. Keep studying your options and be smart about recognizing the shift.

Sat May 17 2008, 11:18