Owning a home is usually a better long-term bet than renting. Triennial data in a Federal Reserve Board report showed that the median net worth of U.S. homeowners in 2016 was $231,400, 44 times the $5,200 national median for renters. Depending on where owners live, their net worth could be even higher.
The Miami-Fort Lauderdale-West Palm Beach area is one of the United States’ strongest real estate markets. According to a report by the National Association of Realtors (NAR), over the past 30 years, the average equity gain on a single-family home in the area was $333,787, over 36% higher than the national average.
Homes in Miami, Fort Lauderdale, and West Palm Beach also sell for more than houses in other parts of the country, with a median price of $350,000 versus the national median of $261,600. So, what is driving these prices?
Everybody Loves the Sunshine
Florida is the top U.S. destination for foreign buyers, and 54% of those sales occur in the South Florida area. Latin Americans comprise the largest group of foreign buyers, which is only natural as Spanish is so widely spoken in the region. Other groups, such as Canadians, Europeans, and Asians, buy homes due to the climate.
Due to the large population of students and seasonal workers, 68% of Miami residents rent – nearly twice the national percentage. This phenomenon lures investors who purchase single-family homes and slice them into multiple units to be rented out individually. When these investors take single-family homes off the market, it raises homeownership prices for everyone.
Thanks to the year-round warm weather, the Miami-Fort Lauderdale-West Palm Beach area is also popular with retirees, many of whom remain in the same properties for the rest of their lives. This limits supply for would-be buyers and, in addition to the foreign buyers and the hot rental market, helps keep home prices high.
New Tech for Foreign Buyers
Home prices in the area might be even higher if it were easier for foreigners to purchase property in the United States. Enter Propy, a blockchain-enabled real estate platform that provides users with local and international listings aggregated from MLS and an All-In-One Transaction platform through which the entire purchase and sale can be executed online using DocuSign eSignature solutions and blockchain-based smart contracts. Properties can even be purchased with cryptocurrencies like Bitcoin, to avoid the expense and legal hurdles associated with cross-border transactions.
The Miami-Fort Lauderdale-West Palm Beach real estate market is hot, and with blockchain-enabled tech like Propy arriving on the scene, it is unlikely to cool off anytime soon. It may get even hotter.