All-Cash Sales Decline in Miami’s Real Estate Market
By: Ismael Rodriguez
After reaching highs in 2014, all-cash real estate deals in Miami continue to plummet through this year, and market experts attribute this decline as a sign that international and wealthy investors might be cooling on the market.
The Miami Association of Realtors reported that 289 homes were paid for in cash as of February, making up 33 percent of all homes sold that month. That’s a 20 percent dive from a peaking 600 homes sold in June 2014.
Market experts see the decline as an indicator of investor activity, confirming that international investment has slowed because of a strengthened U.S. dollar against other currencies in fragile economies across, for example, Latin America and the Caribbean.
In fact, Cash deals have declined from 80 percent to 40 percent entering 2017 because of currency devaluations, with the exchange rate hindering foreign buyers, according to what Edgardo Defortuna, president, CEO and founder of Fortune International Group, told the press.
“We’re still requiring a 50 percent cash deposit pre-construction, and a lot of foreign buyers intended to complete their purchases in cash, but they found out they needed to finance. Some only finance as a bridge loan, but fewer people close in cash,” Defortuna told the press. “Things are a little tight, and unless they have a private source of funding, they are getting a mortgage.”
Other experts, like Joseph Hernandez, a member of the Weiss Serota Helfman Cole & Bierman law firm, theorized otherwise, stating that cash deals have declined because of the trending changes to the market.
“I believe it has more to do with the fact that financing is more available in recent years and prices have increased than the federal geographical targeting of cash buyers in Miami,” Hernandez told the press.