The stock prices rose on Tuesday on the stock exchanges of New York, as reported in February that increased requests for housing in the United States and the impression that the conflict between Russia and the West will not aggravate Ukraine.
The Standard & Poor's 500 index rose 13 points (0.7%) to close at 1,872, while the Dow rose 89 units (0.6%) to settle at 16,336 and the Nasdaq rose 53 points (1.3% ) to 4.333.
Microsoft jumped 4% after Reuters reported that the CEO Satya Nadella will use his first act of relevant conference to present a version of the Office suite for iPad.
The yield on the benchmark 10-year Treasury fell to 2.67%.
Lunes, Hunyo 23, 2014
Biyernes, Hunyo 20, 2014
Real estate, The End of the American Dream?
Acquiring a property is one of the pillars of the American dream, which involves access to opportunities for greater prosperity. However, the current economic conditions in the U.S. and policy decisions have undermined this desire and have worse, limited the ability of young strata to achieve a standard of living higher than their predecessors.
The deteriorating labor sector after the economic crisis of 2008 and 2009 was overwhelming and there are few signs of consistent recovery to date. In October 2009, the highest number of unemployed in the past 13 years was recorded, reaching 15.4 million. Subsequently, the figure stood at 10.4 million in March 2014. However, this month to 7.96 million work places losses were exceeded during the crisis (IV Qtr. Trim 07 to II. 09), reaching a cumulative 8.1 creation million jobs.
These figures are due to two phenomena, namely: a lower intention to hire private sector human capital, which also affects less average working hours and the stagnation of real wages and a drop in the population's incentives to join the labor force (participation rate at a record low of 63.2 percent).
These elements are a constant signal to the public about the vulnerability of their source of income, which directly affects the consumption of durable goods. However, the impact has a greater depth in the middle-income strata, as well as young people and their educational training decision, given the difficulty of achieving a better economic condition at present.
The real estate situation reflects the weakness of the average consumers: home sales levels remain 5.04 million, similar to those observed in 2008 Additionally, increased financial costs has intensified stagnation..
According to the capacity index real estate purchase, prepared by the National Association of Realtors, the proportion of the monthly payment on a standard credit increased to 14.4% of the national median family income, from 11.7% in January 2013, which implies an increase of $ 7.536 in the need for a middle class family for a mortgage loan, as a result of higher mortgage interest rate benchmark since July 2013 (+124 basis points) monthly salary.
Market conditions do not point to a better outlook in the short term, in the first instance, by the start of tapering, which will undoubtedly affect the cost of long-term financing (mainly mortgage and student). Recently, a new element was integrated: the reform proposal Johnson-Crapo, which raises the demise of Fannie Mae and Freddie Mac, the mortgage agencies of the U.S. government guarantees.
While the lack of prudential supervision in the risk assessment in these institutions was an important factor in the mortgage crisis of 2008, it is clear that they are part of a system of protection for consumers means that lessens the financial costs, allows for schemes fixed rate long-term, while adding flexibility and risk management, which has also allowed the homeownership rate nationwide has increased from 44% in 1940 to 65% in 2014, and debt mortgage represents 59% of GDP (one of the largest mortgage industry insights globally).
Therefore, poor regulatory enforcement could further raise interest rates on loans and promote the deterioration of the real estate sector (about 40 and 50 basis points, according to Moody's Analytics), to jeopardize the growth of sales sector and the borrowing capacity of consumers (in consideration of a current high level of leverage).
The potential vulnerability of one of the pillars that have enabled the consolidation of the American middle class is high, with the reconfiguration of the system of market prices (including interest rates) and with it, the change in incentives consumers. Monetary authorities and Congress will have to weigh their decisions under the responsibility of affecting the growth engine of the world's largest economy.
The deteriorating labor sector after the economic crisis of 2008 and 2009 was overwhelming and there are few signs of consistent recovery to date. In October 2009, the highest number of unemployed in the past 13 years was recorded, reaching 15.4 million. Subsequently, the figure stood at 10.4 million in March 2014. However, this month to 7.96 million work places losses were exceeded during the crisis (IV Qtr. Trim 07 to II. 09), reaching a cumulative 8.1 creation million jobs.
These figures are due to two phenomena, namely: a lower intention to hire private sector human capital, which also affects less average working hours and the stagnation of real wages and a drop in the population's incentives to join the labor force (participation rate at a record low of 63.2 percent).
These elements are a constant signal to the public about the vulnerability of their source of income, which directly affects the consumption of durable goods. However, the impact has a greater depth in the middle-income strata, as well as young people and their educational training decision, given the difficulty of achieving a better economic condition at present.
The real estate situation reflects the weakness of the average consumers: home sales levels remain 5.04 million, similar to those observed in 2008 Additionally, increased financial costs has intensified stagnation..
According to the capacity index real estate purchase, prepared by the National Association of Realtors, the proportion of the monthly payment on a standard credit increased to 14.4% of the national median family income, from 11.7% in January 2013, which implies an increase of $ 7.536 in the need for a middle class family for a mortgage loan, as a result of higher mortgage interest rate benchmark since July 2013 (+124 basis points) monthly salary.
Market conditions do not point to a better outlook in the short term, in the first instance, by the start of tapering, which will undoubtedly affect the cost of long-term financing (mainly mortgage and student). Recently, a new element was integrated: the reform proposal Johnson-Crapo, which raises the demise of Fannie Mae and Freddie Mac, the mortgage agencies of the U.S. government guarantees.
While the lack of prudential supervision in the risk assessment in these institutions was an important factor in the mortgage crisis of 2008, it is clear that they are part of a system of protection for consumers means that lessens the financial costs, allows for schemes fixed rate long-term, while adding flexibility and risk management, which has also allowed the homeownership rate nationwide has increased from 44% in 1940 to 65% in 2014, and debt mortgage represents 59% of GDP (one of the largest mortgage industry insights globally).
Therefore, poor regulatory enforcement could further raise interest rates on loans and promote the deterioration of the real estate sector (about 40 and 50 basis points, according to Moody's Analytics), to jeopardize the growth of sales sector and the borrowing capacity of consumers (in consideration of a current high level of leverage).
The potential vulnerability of one of the pillars that have enabled the consolidation of the American middle class is high, with the reconfiguration of the system of market prices (including interest rates) and with it, the change in incentives consumers. Monetary authorities and Congress will have to weigh their decisions under the responsibility of affecting the growth engine of the world's largest economy.
Lunes, Hunyo 16, 2014
Real Estate Boom in Miami led by luxury homes
While the real estate sector in the U.S. is slowly recovering from the crisis, the market for super luxury homes such as Miami is booming.
The boom of luxury has meant that prices of homes in Miami and all of South Florida and are at 2003 levels, after rising by around 11% last year, after thirteen consecutive months of annual increases . Even the recorded average rent increases of 15% yoy.
During 2013 Miami is entering a new real estate boom fueled by investments mainly Latin, which has transformed the appearance of the city and having the luxury homes in one of their big hooks.
The boom of luxury has meant that prices of homes in Miami and all of South Florida and are at 2003 levels, after rising by around 11% last year, after thirteen consecutive months of annual increases . Even the recorded average rent increases of 15% yoy.
During 2013 Miami is entering a new real estate boom fueled by investments mainly Latin, which has transformed the appearance of the city and having the luxury homes in one of their big hooks.
Biyernes, Hunyo 13, 2014
Wall Street takes aim at U.S. tenants
Six years after the outbreak of the financial crisis that caused the recession in the United States and much of the world, Wall Street investors are rubbing their hands with billionaire profit potential offered by the rental market of houses in this country.
Just when housing prices hit bottom in January 2012, large institutional investors started buying distressed properties in the areas hardest hit by the foreclosure crisis, and to date 200,000 Property acquired.
In a single year the private equity giant Blackstone Group went from having no real property to be the largest owner of single-family rental housing (VUA) in the United States.
Now, several companies, including Blackstone, market their VUA similar bonds backed by mortgages that fueled the economic recession of 2008 values.
As these values, VUA bonds are backed by dwellings, but this time are the rental payments, and no mortgage, which amortized interest. Securitization free money, which allows buyers to purchase more great properties with less capital, increasing its influence -. Risk and "Before the owners were people by name, but now companies with large portfolios that span multiple states. Will the systems work are installing Will keep "? analyst Sarah Edelman.
VUA emissions bonds so far are small, with a value less than the 3,000 million. But organizations defending the right to housing pressure on the authorities to strengthen supervision of the growing market. Wall Street's role as owner is unprecedented, and nobody knows what to expect, even fewer families rented houses.
In 2013, two economists at the Federal Reserve - the U.S. central bank - warned the institutions that could "have difficulty in managing large amounts of rental properties or proper maintenance of the houses."
In fact, in May a couple of the town of Sun Valley, in the western state of California filed a lawsuit against a subsidiary of Blackstone, Invitation Homes for toxic mold in your home that caused them "nosebleeds, headaches, fatigue, memory loss, inability to concentrate, chronic runny nose, breathing problems and other symptoms similar to chronic flu. "
In January, the state legislature, Mark Takano, demanded a public inquiry into the matter, which has not yet materialized.
"The securitization will allow bad practices flourish exponentially," he told IPS Kevin Stein, associate director of the California Reinvestment Coalition, a coalition that advocates for access to credit for low-income manager. "We do not know what kind of manager will own, or whether there will be pressure to raise rents," he added.
In October, the investment bank Deutsche Bank sold the first bond backed by VUA, for 479.1 million dollars in anticipated payments of 3,207 rental housing belonging to the enterprise Invitation Homes.
The business accounted for a fraction of the 44,000 homes that Blackstone has nationwide. For next summer goal is to securitize their units valued at 1,000 million dollars.
Overall, in the past three years, major investors spent 20,000 million in the purchase of real estate. The idea to keep a larger share of the $ 3 trillion market representing family homes has many on Wall Street rubbing his hands with enthusiasm.
His entry into the housing market comes at a time when inequality reached record levels in the U.S., where the extraction of the poorest wealth was normalized.
The financialization of everyday life means that something as common as a landlord it's up to your door to collect rent now involve thousands of investors, thousands of miles away, to urge the owner to obtain a greater profit.
"The single-family rentals are not anything new," said Sarah Edelman, analyst research center Center for American Progress. "Before people were the owners by name, but now companies with large portfolios that span multiple states," told IPS.
Will the systems work they are installing? Can they keep them? "He asked.
Since institutional investors may pay more than the selling price - in cash - for numerous properties in practice drove the potential individual owners and raised prices in several housing markets. In one year the percentage of cash buyers doubled, reaching 40 percent of all home sales.
The same lenders generously handing hazardous mortgage loans "subprime", or high risk, before 2008, now reduced to personal credit mortgages, which worsened the outlook for tenants looking to move into a home.
That brought the percentage of homeowners at least the last 20 years and rents rose in virtually all areas of the country. However, revenue move in the opposite direction. Between 2000 and 2012 rents rose 12 percent in real dollars, while the average income of tenants fell 13 percent in that span.
In theory backed securities VUA release funds for the expansion of the rental market. Although there is an immediate need for affordable housing is difficult to digest that Wall Street is renting homes that their owners were forced to leave by the very bad behavior of financial firms.
"Millions of families lost their homes in the mortgage crisis and now as a result we have millions of families looking for houses to rent," said Edelman. "It is true that we need a greater supply of rental housing, but we must also ensure that they are stable," he said.
But as VUA bonds, as apparently happens to all financial instruments, become more and more inevitable, the defenders of the right to claim that housing authorities are not unaware.
Like "The sector has many precedents in the matter is important to establish what the best practices, and state and local regulatory authorities review their policies of relations between landlords and tenants," Edelman argued.
Emissions are rising. In April, the American Colony Estate Homes sold bonds worth $ 513 million, while in May American Homes 4 Rent, the largest owner of single-family homes traded, sold securities by $ 481 million.
Over half of the properties in the business of American Homes 4 Rent are in the cities of Atlanta, Dallas, Las Vegas, Phoenix and Tampa, some of the hardest hit when the bubble burst housing.
"Securitization only provides a mechanism for increasing the volume of this activity," Stein explained to IPS. "It's not surprising that they have found a way to profit from this," he said.
Just when housing prices hit bottom in January 2012, large institutional investors started buying distressed properties in the areas hardest hit by the foreclosure crisis, and to date 200,000 Property acquired.
In a single year the private equity giant Blackstone Group went from having no real property to be the largest owner of single-family rental housing (VUA) in the United States.
Now, several companies, including Blackstone, market their VUA similar bonds backed by mortgages that fueled the economic recession of 2008 values.
As these values, VUA bonds are backed by dwellings, but this time are the rental payments, and no mortgage, which amortized interest. Securitization free money, which allows buyers to purchase more great properties with less capital, increasing its influence -. Risk and "Before the owners were people by name, but now companies with large portfolios that span multiple states. Will the systems work are installing Will keep "? analyst Sarah Edelman.
VUA emissions bonds so far are small, with a value less than the 3,000 million. But organizations defending the right to housing pressure on the authorities to strengthen supervision of the growing market. Wall Street's role as owner is unprecedented, and nobody knows what to expect, even fewer families rented houses.
In 2013, two economists at the Federal Reserve - the U.S. central bank - warned the institutions that could "have difficulty in managing large amounts of rental properties or proper maintenance of the houses."
In fact, in May a couple of the town of Sun Valley, in the western state of California filed a lawsuit against a subsidiary of Blackstone, Invitation Homes for toxic mold in your home that caused them "nosebleeds, headaches, fatigue, memory loss, inability to concentrate, chronic runny nose, breathing problems and other symptoms similar to chronic flu. "
In January, the state legislature, Mark Takano, demanded a public inquiry into the matter, which has not yet materialized.
"The securitization will allow bad practices flourish exponentially," he told IPS Kevin Stein, associate director of the California Reinvestment Coalition, a coalition that advocates for access to credit for low-income manager. "We do not know what kind of manager will own, or whether there will be pressure to raise rents," he added.
In October, the investment bank Deutsche Bank sold the first bond backed by VUA, for 479.1 million dollars in anticipated payments of 3,207 rental housing belonging to the enterprise Invitation Homes.
The business accounted for a fraction of the 44,000 homes that Blackstone has nationwide. For next summer goal is to securitize their units valued at 1,000 million dollars.
Overall, in the past three years, major investors spent 20,000 million in the purchase of real estate. The idea to keep a larger share of the $ 3 trillion market representing family homes has many on Wall Street rubbing his hands with enthusiasm.
His entry into the housing market comes at a time when inequality reached record levels in the U.S., where the extraction of the poorest wealth was normalized.
The financialization of everyday life means that something as common as a landlord it's up to your door to collect rent now involve thousands of investors, thousands of miles away, to urge the owner to obtain a greater profit.
"The single-family rentals are not anything new," said Sarah Edelman, analyst research center Center for American Progress. "Before people were the owners by name, but now companies with large portfolios that span multiple states," told IPS.
Will the systems work they are installing? Can they keep them? "He asked.
Since institutional investors may pay more than the selling price - in cash - for numerous properties in practice drove the potential individual owners and raised prices in several housing markets. In one year the percentage of cash buyers doubled, reaching 40 percent of all home sales.
The same lenders generously handing hazardous mortgage loans "subprime", or high risk, before 2008, now reduced to personal credit mortgages, which worsened the outlook for tenants looking to move into a home.
That brought the percentage of homeowners at least the last 20 years and rents rose in virtually all areas of the country. However, revenue move in the opposite direction. Between 2000 and 2012 rents rose 12 percent in real dollars, while the average income of tenants fell 13 percent in that span.
In theory backed securities VUA release funds for the expansion of the rental market. Although there is an immediate need for affordable housing is difficult to digest that Wall Street is renting homes that their owners were forced to leave by the very bad behavior of financial firms.
"Millions of families lost their homes in the mortgage crisis and now as a result we have millions of families looking for houses to rent," said Edelman. "It is true that we need a greater supply of rental housing, but we must also ensure that they are stable," he said.
But as VUA bonds, as apparently happens to all financial instruments, become more and more inevitable, the defenders of the right to claim that housing authorities are not unaware.
Like "The sector has many precedents in the matter is important to establish what the best practices, and state and local regulatory authorities review their policies of relations between landlords and tenants," Edelman argued.
Emissions are rising. In April, the American Colony Estate Homes sold bonds worth $ 513 million, while in May American Homes 4 Rent, the largest owner of single-family homes traded, sold securities by $ 481 million.
Over half of the properties in the business of American Homes 4 Rent are in the cities of Atlanta, Dallas, Las Vegas, Phoenix and Tampa, some of the hardest hit when the bubble burst housing.
"Securitization only provides a mechanism for increasing the volume of this activity," Stein explained to IPS. "It's not surprising that they have found a way to profit from this," he said.
Biyernes, Abril 4, 2014
Wall Street higher for housing construction in the U.S.
The share prices rise on Tuesday morning at the beginning of transactions on Wall Street, reported an increase in housing construction in the United States.
Shortly after the start of the day, the Dow Jones Index was up 40 units (0.3 to settle at 14,491, while the Standard & Poor's 500 grew 2 units (0.2%) to settle at 1,554.
Meanwhile, the Nasdaq grew 6 units (0.2%) to settle at 3,244.
Shortly after the start of the day, the Dow Jones Index was up 40 units (0.3 to settle at 14,491, while the Standard & Poor's 500 grew 2 units (0.2%) to settle at 1,554.
Meanwhile, the Nasdaq grew 6 units (0.2%) to settle at 3,244.
Miyerkules, Abril 2, 2014
Mortgage applications in the U.S. rise by falling rates
Mortgage applications in the U.S. rose last week , driven by demand for refinancing due to a drop in interest rates to their lowest level of the year, data showed on Wednesday an industry group .
The Mortgage Bankers Association (MBA , for its acronym in English ) said its seasonally adjusted index of mortgage application activity , which includes both refinancing and demand for home purchases rose 7 % in the week ending 3 May .
The seasonally adjusted index of refinancing applications rose 8.3% MBA while measuring applications for loans to buy homes, an important indicator of home sales, rose 2.4 %.
The refinance share of mortgage activity in total amounted to 76 % of applications from 75% .
Mortgage rates 30-year fixed averaged 3.59% , down one basis point compared to the previous week and the lowest since late December 2012 .
The data covers 75 % of applications for retail residential mortgages in the United States, according to the MBA.
The Mortgage Bankers Association (MBA , for its acronym in English ) said its seasonally adjusted index of mortgage application activity , which includes both refinancing and demand for home purchases rose 7 % in the week ending 3 May .
The seasonally adjusted index of refinancing applications rose 8.3% MBA while measuring applications for loans to buy homes, an important indicator of home sales, rose 2.4 %.
The refinance share of mortgage activity in total amounted to 76 % of applications from 75% .
Mortgage rates 30-year fixed averaged 3.59% , down one basis point compared to the previous week and the lowest since late December 2012 .
The data covers 75 % of applications for retail residential mortgages in the United States, according to the MBA.
Martes, Abril 1, 2014
The real estate market boom of Miami
The strong recovery of the market in South Florida continues to get attention. In this comprehensive report written by Fernando Levy Hara market situation shows from the last crisis .
In my last article for Real Estate Report in June 2012 I noted that the deep recession that had shaken since 2008 the real estate market in South Florida seemed to be beginning to disappear .
The property prices have stopped falling and had begun to recover slowly ; rental prices had begun to rise and the number of vacant units to decline.
The stock of 42,000 completed units remaining unsold in 2008 had been absorbed gradually , and there were only 4,500 vacant units . He ended the article saying, " this is the time to re-enter this market , those who enter in the next 24 months will be buying in the beginning of the new virtuous cycle of real estate boom and may have excellent yields within 4-5 years when prices recover . "
Luckily , I was not wrong . Many thought it was too optimistic back in 2009 when I had to swear to my investors would make an excellent business investing in property in "distress " in South Florida.
In 2010 I had to defend my thesis in the Program in Real Estate Development from which I graduated from Harvard University, and some of the jurors, ( the most recognized professors and real estate advisors USA) told me , "Your numbers sound too optimistic, recovery will not reach the region until 2020. "
But I insisted that before 2013 , we would see construction cranes filling the skyline again Miami ... and luckily I was right. I found one of those teachers last month at Harvard, where now I teach classes , and just saw me he said, " I remembered a lot of you ... if you followed in business your theory , you should have made a lot of money these years , it is not right? " . It was a great pleasure to hear .
The recovery of the condo market in this area of the country is , even for an optimist like me, without a doubt amazing .
Of the 42,000 condo units ( beyond what we call horizontal property ) if there are only 650 sold .
Empty units are at a historically low record : 1.4 % of all units are not rented or occupied by their current owners , compared with 4.5% on average across the country .
Only in the area of the urban core of Miami ( Brickell -Downtown- Edgewater- Midtown, from the center of the city to the Bridge Street NE 33) there is a demand for 6542 new units each year due to the new trend of young professionals to live near the downtown area of the city avoiding commute an hour drive to work. This demand is not satisfied now : for 7 years, no new projects were started in the area, and currently there is less supply than demand .
For this reason, the rents rose rapidly : an extraordinary 10.6% in 2012 ( in a country with less than 2 % inflation ); estimated to rise 6% this year and 3.5% each the next four years . As we studied in economics , by rising rents, rising prices of the properties below , so that " the value of goods is directly proportional to the income they generate ."
The National Board of Realtors, one of the largest professional institutions in the country, has appointed Miami with " Number 1 in the market rate of recovery in 2012."
Because recovery was stronger than in other cities?
• On the one hand , Miami is one of the metropolitan areas of higher population growth. While cities like Detroit and other industrial cities in the Midwest are shrinking rapidly (up to 2 % annually over the past 13 years ), Miami has grown between 2% and 1.2% per year since the beginning of the millennium.
• Still paradise for foreigners like me, looking for a place with quality of life , good weather, and professional development opportunities not found elsewhere.
• In addition , the vast majority of these immigrants are young, between 25 and 45, who are in the middle stage of formation and growth of their families. South Florida was no longer 15 years ago the city of withdrawal of American retirees. The population is growing and with them, the need for more and better housing units.
• The demographic composition also contributes : currently 23.5 % of the units are occupied by one person , 27.5 % and 18.7 % for two for three . This creates greater demand for residential units at the beginning of the decade.
• In return for the past 7 years, only 200 new condominium units were built in the area, waiting for the surplus left by the crisis absorbed .
• Finally , we can not fail to mention the powerful effect of the thousands of foreigners who arrived after the crisis to invest their savings in this market , perceived as solid and stable, and where anyone can do business even if not resident , not pay higher taxes, and free to take your money the day you sell your property. The State of Florida is one of the U.S. states in which fewer taxes are paid because, unlike others such as New York or California, there is no provincial income tax . For the same investment in California is paid up to 53 % tax , here will pay 20 %.
Investors came this time around. Until the previous boom, most of the capital came from Latin America. In 2012 , for the first time , the group of biggest foreign buyers came from ... France. The French, eager to escape the onerous 75 % rate of income tax that President Hollande proposed as part of his campaign promise , put aside their traditional aversion to invest abroad , and bought 20 % of the units for sale in the area ... more than Canadians, Venezuelans, Brazilians and Argentines, traditional buyers of properties in this city.
Finally we should add that Miami is in train to become one of the most important cities in the country. Currently already one of the ten metropolitan areas with higher GDP : it is important to note that the GDP of South Florida, an area of 9 million and 90 kilometers long, is higher than any country in Latin America except Brazil and Mexico .
My prediction ?
The condo market in South Florida has given all the conditions to experience sustained development cycle for the next three or four years.
Think of Buenos Aires in 2003 to understand : after a severe crisis in that year the first developments began to appear , driven by the costs and low sales prices . Those who bought at the time to $ 1,100 per square meter thought they were paying expensive but resold three years later for $ 2500. Smart developers then bought huge lots to build 30-story towers at prices that now there is a small batch gets to make a 7-storey building .
Currently this same thing happening in Miami :
In January 2012 we purchased land on water, located in Edgewater , the new top area of Miami, an issue of $ 260 per m2. salable . Last month, the last two lots on the water with an incidence of 850 ! Sold ! The cycle is always the same : at the beginning of the recovery phase increases the price of land , then the construction costs , and this translates to sales prices of new units first and used later.
I do not think that prices increase 100 % as in the Buenos Aires market, because that would be a very exaggerated rise to mature as the South Florida market, but conservative think the price of condominiums increased by 20 % and 30% , following the sharp rise in rental prices .
As the investor can finance 50 % or 60 % of the investment with a bank loan , this allows you to " leverage " their investment , achieving yields of between 40 and 60 % the day you re sell the property, unimaginable gain until very shortly .
In my last article for Real Estate Report in June 2012 I noted that the deep recession that had shaken since 2008 the real estate market in South Florida seemed to be beginning to disappear .
The property prices have stopped falling and had begun to recover slowly ; rental prices had begun to rise and the number of vacant units to decline.
The stock of 42,000 completed units remaining unsold in 2008 had been absorbed gradually , and there were only 4,500 vacant units . He ended the article saying, " this is the time to re-enter this market , those who enter in the next 24 months will be buying in the beginning of the new virtuous cycle of real estate boom and may have excellent yields within 4-5 years when prices recover . "
Luckily , I was not wrong . Many thought it was too optimistic back in 2009 when I had to swear to my investors would make an excellent business investing in property in "distress " in South Florida.
In 2010 I had to defend my thesis in the Program in Real Estate Development from which I graduated from Harvard University, and some of the jurors, ( the most recognized professors and real estate advisors USA) told me , "Your numbers sound too optimistic, recovery will not reach the region until 2020. "
But I insisted that before 2013 , we would see construction cranes filling the skyline again Miami ... and luckily I was right. I found one of those teachers last month at Harvard, where now I teach classes , and just saw me he said, " I remembered a lot of you ... if you followed in business your theory , you should have made a lot of money these years , it is not right? " . It was a great pleasure to hear .
The recovery of the condo market in this area of the country is , even for an optimist like me, without a doubt amazing .
Of the 42,000 condo units ( beyond what we call horizontal property ) if there are only 650 sold .
Empty units are at a historically low record : 1.4 % of all units are not rented or occupied by their current owners , compared with 4.5% on average across the country .
Only in the area of the urban core of Miami ( Brickell -Downtown- Edgewater- Midtown, from the center of the city to the Bridge Street NE 33) there is a demand for 6542 new units each year due to the new trend of young professionals to live near the downtown area of the city avoiding commute an hour drive to work. This demand is not satisfied now : for 7 years, no new projects were started in the area, and currently there is less supply than demand .
For this reason, the rents rose rapidly : an extraordinary 10.6% in 2012 ( in a country with less than 2 % inflation ); estimated to rise 6% this year and 3.5% each the next four years . As we studied in economics , by rising rents, rising prices of the properties below , so that " the value of goods is directly proportional to the income they generate ."
The National Board of Realtors, one of the largest professional institutions in the country, has appointed Miami with " Number 1 in the market rate of recovery in 2012."
Because recovery was stronger than in other cities?
• On the one hand , Miami is one of the metropolitan areas of higher population growth. While cities like Detroit and other industrial cities in the Midwest are shrinking rapidly (up to 2 % annually over the past 13 years ), Miami has grown between 2% and 1.2% per year since the beginning of the millennium.
• Still paradise for foreigners like me, looking for a place with quality of life , good weather, and professional development opportunities not found elsewhere.
• In addition , the vast majority of these immigrants are young, between 25 and 45, who are in the middle stage of formation and growth of their families. South Florida was no longer 15 years ago the city of withdrawal of American retirees. The population is growing and with them, the need for more and better housing units.
• The demographic composition also contributes : currently 23.5 % of the units are occupied by one person , 27.5 % and 18.7 % for two for three . This creates greater demand for residential units at the beginning of the decade.
• In return for the past 7 years, only 200 new condominium units were built in the area, waiting for the surplus left by the crisis absorbed .
• Finally , we can not fail to mention the powerful effect of the thousands of foreigners who arrived after the crisis to invest their savings in this market , perceived as solid and stable, and where anyone can do business even if not resident , not pay higher taxes, and free to take your money the day you sell your property. The State of Florida is one of the U.S. states in which fewer taxes are paid because, unlike others such as New York or California, there is no provincial income tax . For the same investment in California is paid up to 53 % tax , here will pay 20 %.
Investors came this time around. Until the previous boom, most of the capital came from Latin America. In 2012 , for the first time , the group of biggest foreign buyers came from ... France. The French, eager to escape the onerous 75 % rate of income tax that President Hollande proposed as part of his campaign promise , put aside their traditional aversion to invest abroad , and bought 20 % of the units for sale in the area ... more than Canadians, Venezuelans, Brazilians and Argentines, traditional buyers of properties in this city.
Finally we should add that Miami is in train to become one of the most important cities in the country. Currently already one of the ten metropolitan areas with higher GDP : it is important to note that the GDP of South Florida, an area of 9 million and 90 kilometers long, is higher than any country in Latin America except Brazil and Mexico .
My prediction ?
The condo market in South Florida has given all the conditions to experience sustained development cycle for the next three or four years.
Think of Buenos Aires in 2003 to understand : after a severe crisis in that year the first developments began to appear , driven by the costs and low sales prices . Those who bought at the time to $ 1,100 per square meter thought they were paying expensive but resold three years later for $ 2500. Smart developers then bought huge lots to build 30-story towers at prices that now there is a small batch gets to make a 7-storey building .
Currently this same thing happening in Miami :
In January 2012 we purchased land on water, located in Edgewater , the new top area of Miami, an issue of $ 260 per m2. salable . Last month, the last two lots on the water with an incidence of 850 ! Sold ! The cycle is always the same : at the beginning of the recovery phase increases the price of land , then the construction costs , and this translates to sales prices of new units first and used later.
I do not think that prices increase 100 % as in the Buenos Aires market, because that would be a very exaggerated rise to mature as the South Florida market, but conservative think the price of condominiums increased by 20 % and 30% , following the sharp rise in rental prices .
As the investor can finance 50 % or 60 % of the investment with a bank loan , this allows you to " leverage " their investment , achieving yields of between 40 and 60 % the day you re sell the property, unimaginable gain until very shortly .
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