End-Users Trump Phantom Buyers in Miami Real Estate

The international media loves characterizing Miami's residential market as being dominated by foreign owners, many of whom will never set foot in their investment properties - let alone reside there.
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The international media loves characterizing Miami's residential market as being dominated by foreign owners, many of whom will never set foot in their investment properties - let alone reside there.

These so-called 'phantom owners' were especially common during the last real estate cycle, when some out-of-market investors purchased large blocks of condos with favorable financing terms.

But take a closer look at the developments selling in today's market and you will find that many homes are being purchased by end-users, people who will spend all or part of the year in their new residence.

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A few dynamics are driving this shift.

For starters, Miami's brand transcends being an easy target for investors; we're now a desirable place to live, vacation and conduct business.

Whether it's serving as a primary or secondary home, residences here are in high demand because Miami is in high demand. Our design consciousness has been elevated. World-class cultural outlets and retail destinations have boosted our appeal as a year-round destination for visitors and homeowners. New museums and parks have risen, our public and private schools have improved, and entire neighborhoods from Wynwood to Coconut Grove to North Beach have been transformed.

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Second, the emergence of the 50 percent buyer deposit model has created a high barrier to entry favoring end-users over speculators. The days of taking full advantage of small cash deposits and easy-to-access loans are long gone, creating an opening for owners who wish to spend their money on a home they will call their own.

We're also seeing growth in the number of domestic buyers purchasing homes in Miami. With the US dollar performing better than most foreign currencies (especially those in Latin America, historically Miami's top feeder market) and prices here being comparatively lower than those in New York, buyers from the northeast and even South Florida are purchasing residences.

Many of these U.S buyers are scooping up second homes while others are making a lifestyle change by downsizing from a single family home or relocating to Miami altogether.

The common thread in each of these scenarios is the return of end-users, particularly at developments offering low-density formats that appeal to actual residents, walkable neighborhoods that foster a sense of community, and amenities that make people feel at home.

Examples are everywhere. At the sold-out Grove at Grand Bay in Coconut Grove, set for completion later this year, our buyers include prominent accountants, attorneys and doctors. More than half of the building's owners hail from the U.S., including many empty-nesters relocating from across South Florida.

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Nearby, at Park Grove, we've sold units to New England transplants and seasonal snowbirds. One of our newest buyers is a middle-aged couple that relocated from Connecticut to be close to the water. She's an artist and he's in finance and they spent years vacationing on a sailboat in Coconut Grove. Now they're putting down roots in South Florida and will split their time between Miami and Maine.

At Glass in Miami Beach's South of Fifth neighborhood, each of the recently-completed tower's 10 units has been purchased by an end-user. The building's residents include a private banking executive, a tech mogul, members of a powerful steel family and an Icelandic couple that divides their time between Miami Beach and New York. There's also an expat couple from London which rented in Miami Beach for years before buying their unit last year.

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And at Botaniko in Weston, a new community of 125 single family residences spanning 120 acres, we're seeing a steady flow of full-time South Florida residents making the move to west Broward in search of larger homes, luxury amenities, and high-quality schools.

After years of enduring criticisms for our popularity among absentee buyers, Miami is making great strides in appealing to end users. That's good news for our real estate market, our economy, and our City's newest developments.

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