The 2023 Douglas Elliman | Knight Frank Wealth Report Delivers Promising News For Miami Posted on February 28, 2023March 2, 2023 by Sarah Elles Boggs Knight Frank Residential, in partnership with Douglas Elliman, has released its 2023 Annual Wealth Report which includes some bright news for the Miami market. This comes as a relief since most metropolitan areas in the United States are in a season of plummeting sales and sales volume and Miami is holding strong. Here’s why. For starters, the price per meter for luxury properties is still quite affordable when compared to other major metropolitan areas around the globe. At 64 square meters per $1 million USD (689 square feet), Miami offers the most space per dollar of the major cities in the United States, adding also a favorable tax climate and continued demand for housing. To put this into perspective with $1 million USD, you could purchase a 689-square-foot residence in Miami, or if you needed to live in New York, you would only be able to purchase a residence with 355 square feet. Essentially Miami is taking away buyers from New York and Los Angeles, where residents not only pay more per square foot but also are taxed at a higher rate than in the Sunshine State. Douglas Elliman Knight Frank Wealth Report 2023 Price per Metre Another key factor of Miami’s growth is the Prime Price Forecast, which predicts which locations should see an increase over the next 12 months. Trailing only Dubai, Miami is the top city in the United States and second in the world. It is expected to see a 5% increase of value over the next 12 months, considering we do not have to contend with another major market disruptor such as COVID. Douglas Elliman Knight Frank Wealth Report 2023 Prime Price Forecast Speaking of COVID, this is the first year that we have a full data set of behavior in the post-COVID world and things have been shaken up considerably. Destination locations such as Miami area more heavily in demand due to ease of access and connectivity, with an amazing climate and lifestyle offerings. The open markets of America and lack of conflict also work in our favor when compared to Asian or many European and Middle Eastern areas where residents might be taxed more heavily and under greater political control. The 2023 Wealth Report also demonstrates the fact that Miami is officially the top US city where millionaires are buying second and third homes. In fact, residential real estate remains the top investment for HNWI (high net worth individuals). Douglas Elliman Knight Frank Wealth Report 2023 Portfolio Make Up Knight Frank Residential is the premiere international luxury real estate firm that individually operates across Europe, Asia, Africa and Australia. A partnership was formed years back between Knight Frank Residential and Douglas Elliman, the highest-grossing luxury real estate firm in the United States, that was founded in New York City in 1911. Joining forces, the two companies provide a synergy to high net worth and ultra high net worth individuals to service their property needs with 523 offices in 60 countries across 6 continents. To peruse the 2023 Douglas Elliman | Knight Frank Wealth Report in its entirety, it can be downloaded here. If you, or someone you know, are interested in purchasing luxury real estate in Miami and/or Miami Beach, please contact Broker Michael Light, Founder/Owner of the Miami Luxury Homes Group at Douglas Elliman Real Estate, Senior Director of Luxury Sales at Douglas Elliman and a member of its elite Sports & Entertainment Division. Michael has over 15 years of experience working with influential buyers from all over the world and is an expert on educating buyers on market statistics and trends. You may reach Michael directly on his cell phone at (786) 566-1700 or via email at michael@miamiluxuryhomes.com.
Miami Real Estate 2023 – Key Factors Behind South Florida’s Market Stability Posted on December 26, 2022December 29, 2022 by Sarah Elles Boggs We have done it again, in a nation of real estate markets in upheaval, Miami remains sparkling and stable coming into 2023. Francis Suarez knows it, but he’s our mayor. It is his job to make sure that Miami continues to thrive. Knight Frank knows it, and it is their job to rank global markets. The rental market is even thriving despite low inventory and rising rents. So what about Miami is making our market stand out among the rest? Just like the others, we have increasing interest rates, high inflation, supply chain problems and the added albatross that is our identity as a crypto-haven in paradise in a highly volatile crypto market. Here is our safety net, which keeps us at the top of the list. Population Growth The bottom line is that if given the choice, very few people would move to Miami in a heartbeat. We know that you are tired of reading about our amazing climate, the low taxes, diversity and accessibility, but these factors remain. People continue to migrate to the sunshine state for work, the business-friendly climate and inventory remains low, something that is not going to change anytime soon. Reason being that while there are many new construction projects in the works and under construction, they are not going to be delivered in 2023. The labor market is drained from having to rebuild after Hurricane Ian, delaying the active projects and increasing the labor demand. Miami’s saving grace on the mortgage rate squeeze and stable pricing is the rental market, which offers a cushion for those who need to move to Miami but cannot get into a new home at this moment. New rental buildings that were launched in the late 2010’s are now coming to completion and many of the newcomers from the beginning of Miami’s post-COVID boom have now identified and moved into their more permanent homes. According to Michael Taylor, president of construction firm Current Builders, “will still be a real estate hotspot” in 2023, with a sector that “has been booming since the pandemic” and “will not experience a slowdown” at the rate of other states. “High demand continues, as does the influx of new residents” to the state of Florida, “the opposite of what is happening nationally,” Taylor said. Available Land This seems like a questionable reason for Miami’s stability coming into 2023, especially considering that the Florida Realtor Code of Ethics was founded by necessity back in 1913 because South Florida ran out of developable land and some unscrupulous businesspeople started selling swamp lots in the Everglades, but I digress… (that is a true story though). Waterfront properties will always be in demand, but with beachfront and bayfront lots mostly built out at this point, developers have already begun to search farther north into Broward and Palm Beach Counties. New waterfront developments in Miami-Dade are still being announced and built, but are typically in the ultra-luxury bracket in 2023 since developers have the added takedown cost of buying out older buildings and demolishing them. This is an incredibly risky, expensive and time-consuming process, but pays off as the demand remains. While takedown (the process of buying a build site) and demolition are more risky, time consuming and expensive processes, they are easier in 2023 than they were a decade ago. This is due to the increased cost and sanctions imposed upon owners of aging condos and especially the condo associations and management companies of these buildings after the Champlain Tower tragedy in 2020. In order to turn an aging building to a build site, a developer must purchase at least 90% of the owners to sell. It used to be that a handful of owners would dig in their heels and refuse until the developer offered well over market value for the units, but after the Champlain Towers sanctions, many of these owners are having a difficult time being able to afford the necessary upkeep on the buildings, so are easier to convince that it is time to move on. International Appeal Miami has long been a magnet for people from around the world, and we speak about it often. Heck, nearly 60% of Miami’s residents were born in a country outside of the United States! (Another nugget from Mayor Suarez and something we will go into detail about later.) After a brief hiatus due to COVID restrictions and lingering political tensions, the foreign national migration has resumed at an increased pace. Latin Americans remain the highest percentage of those migrating to Miami, but this time around we are also seeing an uptick of new residents from European and Middle-Eastern regions. According to the Miami Association of Realtors, these are the top-10 countries searching for real estate in Miami during November of 2022: 1. Colombia 12.03% 2. China 10.47% 3. Venezuela 6.52% 4. Germany 5.76% 5. Argentina 5.40% 6. Philippines 5.02% 7. United Kingdom 4.51% 8. France 3.99% 9. Canada 3.42% 10. Mexico 3.37% All other countries 39.51% China is representing the country with the largest increase in rank, rising from #14 last year during this time and Colombia has reclaimed its crown after a contentious election threatens to drive the country into the despair that has plagued Venezuela for years. Available Office Space Lucky for us, many developers took a short break in the last decade from developing residential towers in order to fill in the gaps in the office market with some very impressive trophy office projects that are now available or coming available soon. Vacancy rates on trophy office properties in South Florida will drop beneath 5%, predicts Tere Blanca, founder, chairman and CEO of Blanca Commercial Real Estate, Inc. That should trigger local rent growth to continue outpacing national rent growth. After Ken Griffin’s Citadel packed up in Chicago and started setting up shop in Miami, launching a wave of corporate immigration, we have experienced a handful of newsworthy office transactions over recent months. Just last week Kirkland and Ellis, a mammoth law firm, also announced that they are packing their briefcases and hightailing it for the Magic City, inking a mammoth lease for 115,000 square feet of office space (six floors) in 830 Brickell. This is Vlad Doronin’s new office tower that is currently under construction next to Brickell City Centre and just around the corner from the new Citadel offices. Is this a coincidence? Likely not. While the news of struggling office markets plagues competing cities and many firms are reducing their office footprint (*cough cough, Meta, Amazon, and others*), Miami is constantly signing up new firms to work where others vacation. Bravo, Mayor Suarez! So, when you are reading year-end reports and new year forecasts for the real estate markets and business world, please know that Miami is a soft place to land and we are here to help. If you are interested in speaking more specifically about a neighborhood, project or listing, please contact Michael Light, Broker and Executive Director of Luxury Sales at Douglas Elliman. You may reach Michael directly at (786) 566-1700 or via email at michael@miamiluxuryhomes.com.
What To Expect In Miami’s Luxury Real Estate Market During 2023 Posted on December 5, 2022December 12, 2022 by Sarah Elles Boggs Inflation. Interest rate hikes. Supply chain problems. Layoffs. Crypto-crash. Now that Art Basel 2022 is a wrap, these are the buzzwords that fill news stories leading up to the end of the year. What a buzz kill. But does this tell the entire story? Not according to Knight Frank, one of the globe’s largest real estate consultancy firms. Each year, Knight Frank publishes its annual Wealth Report. This consists of a breakdown of the world’s prime property markets. It goes through global wealth distribution and threats and opportunities for wealth in these top markets. The 2022 Wealth Report has listed Miami as the second fastest growing luxury real estate markets in the Americas with just over 28% growth since 2021. Knight Frank Luxury Markets Growth 2022 We make it a point to remain objective about Miami’s position in the global arena, the pros and the cons, and what needs to happen in order to ensure we remain perched at the top of the list. For 2021-2022, the growth was largely fueled by the aftermath of COVID-19 and then intensified by Florida’s tax climate paired with Miami’s collaborative business culture. Let’s be honest. If we are forced to quarantine in place and remote working is a viable option, are you going to work remotely in a snowy, dreary climate with excessive taxes, or would you rather quarantine in a sunny climate that invites breezes coming through open windows as you collaborate with others in your field without the worry of excessive taxes? The answer is clear. All of these positive attributes aligned and created a run on the luxury real estate market, throughout Greater Miami (including Coral Gables, Coconut Grove, Downtown Miami, Edgewater/Wynwood, Brickell and Miami Beach). Available inventory was snapped up at record pace and for record prices, yet the prices were still viewed as a bargain for New Yorkers who are accustomed to price tags over $5,000/square foot. In turn, the prices of luxury properties rose over 28%. Is this growth sustainable? Now that we are inching closer to 2023, the Fed has steadily raised interest rates, inflation has hit an all-time high, FTX bombed the already struggling crypto market big time and a new Presidential race is beginning to simmer in the wings. Will we crash or will we continue? It would be very easy to say that because of the crypto markets alone, Miami should prepare for a hit. Knight Frank does not share this sentiment, having ranked Miami again as the second overall market for the high-end housing market. It does predict a slowdown, but not a bust. Rather than the unheard of 28% growth, we should expect a 5 percent price growth in 2023. This may seem like a stumble, however compared to the 2 percent growth anticipated for the global luxury market as a whole and the previously forseen 2.7 percent growth for the Magic City, this really is something to celebrate and look forward to. We are moving back into a place of stability and manageable growth. As we mentioned last week, both the art world and the real estate markets are trending toward traditional, tangible choices. Kitschy digital art did not sell as well at Art Basel as it has in recent years, and the new luxury developments that are performing the best are those with a timeless, elegant feel. Examples, please. Lest we all forget the banana duct-taped to the wall that sold for over $2 million at Art Basel Miami Beach 2019. This year’s viral piece was an ATM that doubled as a leaderboard, ranking attendees by their bank account balance. It did not sell, but was an awful lot of fun and an amazing conversation piece, even if the novelty does wear off as quickly as the 2019 banana on the wall turned brown. While gallerists noted a drop in digital art sales, there was an uptick in more traditional works by artists who used more traditional media. Rather, paintings by Agnes Martin and Phillip Guston were trading for $7 million. Warhols were changing hands. The same holds true for the real estate presented. The real estate projects that fared the best were timeless. Exclusivity and privacy took a front seat to overt opulence and garish finishes. Six Fisher Island Drive was one of the standouts of this year’s fair. This is the new development that is already infamous as being so exclusive, you have to be invited to even consider purchasing. Other new projects that we are seeing perform increasingly better over recent months are those that have solid brand names such as St. Regis Sunny Isles (pictured above), Cipriani in Brickell, and Waldorf Astoria Residences in Downtown Miami. Another strong sector in luxury Miami real estate is new developments that pay homage to nature and wellness. We are very excited to see these projects come to fruition and contribute to the evolution of Miami’s always-changing skyline. If you are interested in speaking more specifically about a neighborhood, project or listing, please contact Michael Light, Broker and Executive Director of Luxury Sales at Douglas Elliman. You may reach Michael directly at (786) 566-1700 or via email at michael@miamiluxuryhomes.com.
Art Basel 2022 – Despite Crypto Uncertainty, Art Sales Rise. What This Means For Miami Real Estate Posted on December 1, 2022December 1, 2022 by Sarah Elles Boggs It hasn’t even been a month since the shocking collapse of FTX rocked an already struggling crypto market and here we are at Art Basel Miami Beach 2022. At Miami’s 2021 art fair, the crypto-bros used their newfound wealth and dreamy-eyed insights for the future to turn up the party wattage to the highest decibel in Miami, an already debaucherous party city on the most excessive week of all of the weeks. “Out of the blue, all these kids from crypto started coming down and spending a lot of money,” Andrea Vimercati, director of food and beverage at Moxy Hotel group and former director of Groot Hospitality, told the Financial Times. Groot Hospitality operates Liv, Story, and Swan, three major Miami hotspots. “Like, an insane amount of money.” There were no limits to the excess with cases of the most expensive champagne being delivered to nightclub tables reserved for $50,000 per night. It was so excessive, entire condo developments were sold out with crypto. People were flashing their crypto wallets, as though it was any less cringe-worthy than showing off your bank account. They’re now gone. With Bitcoin hanging around $57,000 in late 2021, the money was there to throw around and play with. As we inched closer to the unrestricted party that is Art Basel 2022, Bitcoin had sunk to around $17,000. And then, to add insult to injury, FTX suddenly imploded just two weeks before the annual art fair. Yikes. Everyone involved asked similar questions. What does this mean for crypto? What does this mean for Art Basel sales? What does this mean for the service and hospitality industry that rolls out the unrivaled excess? And of course, what happens to the real estate boom that crypto helped to usher into our vibrant and cultural city? What is happening to the nightlife and service industry? Miami’s vibrant nightlife scene is certainly taking a hit in 2022 thanks to the crypto-crash. “They were ordering 12 or 24 bottles of the most expensive champagne and just showering themselves without even drinking,” Andrea Vimercati, the director of food and beverage at Moxy Hotel group, told the Financial Times. “[The crypto entrepreneurs] wanted to show that they didn’t have any limits.” Of course it is still Art Basel so the table spends are still astronomical, just dialed down a bit from 2021. It could be that the young, nouveau riche entrepreneurs have matured, or perhaps they are spooked by the FTX collapse and rocky year for crypto. Whatever it is, the crypto wallets are closed. What is happening with art sales at Art Basel 2022? While the sponsored yacht parties, NFT stunts, Web3 conferences and metaverse ragers are not as unlimited as they were in 2021, the art sales themselves seem to be back into the forefront of the fair, giving many involved a sign of relief. “It’s the post-FTX world,” says New York dealer David Lewis in his booth on the fair’s opening day, referring to the collapse of the crypto exchange founded by Sam Bankman-Fried. “The art world has always been really wary of the crypto world,” a wariness, he says, that appears to have been justified. “I think there’s a lot of comfort in the fact that a lot of the ways of doing things that have been going on for years or decades—or if you think of painting, centuries—are back in the lead.” As tensions mounted, the doors to Art Basel Miami Beach opened to VIP collectors on Tuesday and Wednesday, gallerists were relieved to find sales opening at a steady clip. Collectors from South America, Europe and New York browsed collections with heavy textures and layers, and more traditional forms than the digital pieces that have been more popular in recent years. Pharrell Williams, an Art Basel staple, had his eye on a $100,000 piece made of clay. In addition to the more tangible pieces, works from iconic artists such as Andy Warhol have also flown from galleries. Floyd Mayweather picked up a total of 10-12 pieces during the VIP portion of Basel. Four of these pieces were by Andy Warhol, and he also grabbed a statue of a fist of burning money. Because he can. The total of his sales climbed north of $3 million before the doors were even open to the public. “We pre-sold a lot, so the first hour or two is people seeing the pieces,” says Malik Al-Mahrouky, a sales director at Kurimanzutto, a gallery with locations in New York and Mexico City. Its pre-sales included, he says, a painting by Gabriel Orozco priced around $500,000 and two paintings by Roberto Gil de Montes, which sold for roughly $85,000 and $35,000. While English was far and away the dominant language heard in the fair’s aisles, Al-Mahrouky says he is surprised by the number of serious foreign collectors. “There are lots of Europeans this time around,” he says. “Last year there weren’t nearly as many.” What this tells us with regard to the real estate market… Using clues we have pulled from the crypto market, hospitality spending, art sales and the overall economy trends, it seems there will certainly be a shift to the Miami real estate market, but that is not necessarily bad news. What I believe we will experience is a leveling out. Transactions will continue to happen, particularly in the luxury sector. Traditional buyers will be able to compete for properties vs the crypto buyers. The properties that sell will be less flashy and trendy, making way for a more refined space. Miami is and will always be a desirable location for vacation buyers due to the factors we enjoy even after Art Basel has packed up and headed out. There is amazing culture, a rich culinary scene, never-ending entertainment and nightlife options, and plenty of career opportunities paired with a lack of state income taxes makes us the perfect combination for almost any resident. There really is something for everyone in Miami, and we are excited to cover each highlight in its own blog post. As we move forward through the rate hikes, inflation and crypto collapse that we experienced in 2022, we expect the market to slow, but only to a more healthy level. Sellers should feel confident that their listings will not languish on the market and buyers should feel confident with their ability to compete for the home or investment they really love. If you are interested in speaking more specifically about a neighborhood, project or listing, please contact Michael Light, Broker and Executive Director of Luxury Sales at Douglas Elliman. You may reach Michael directly at (786) 566-1700 or via email at michael@miamiluxuryhomes.com.
Record-Breaking Sale: Ken Griffin Pays $107 Million For Adrienne Arscht’s Coconut Grove Waterfront Compound Posted on September 7, 2022September 9, 2022 by Sarah Elles Boggs Coconut Grove now holds the title as the area of Miami-Dade County that boasts the highest-priced residence after Ken Griffin laid roots there this week. He has been named as the undisclosed buyer of Adrienne Arscht’s palatial waterfront estate, located at 3031 and 3115 Brickell Avenue in Coconut Grove. The estate had been on the market for a jaw-dropping $150 million, so Mr. Griffin scored a nice deal and Ms. Arscht still made records with her landmark sale. No other house over $100 million has ever been sold in Miami-Dade County. Let’s take a look at it. Arscht Mansion Coconut Grove Pool by 1Oak Studios The property is actually comprised of two mansions that are built on a 4-acre parcel with 400 linear feet of bay frontage. This is going to allow for Mr. Griffin to have a home for himself and a separate home for entertaining his mega-financier clients and colleagues, or just friends as Ms. Arscht did during her time at Total Bank. Inside Indian Spring The primary home is known as Indian Spring and was built in 1999. It was designed by the former dean of the University of Miami’s School of Architecture, Jose Gelabert-Navia. It is a true entertaining home with 5 bedrooms, a grand salon, garden room and a dining room with that seats over 20 Citadel execs, or Griffin family members or friends. There is a separate apartment and office upstairs and a six-car garage. The design boasts carved ceilings, marble floors and a direct view of the water. Outdoor amenities include a pool, manicured gardens and a tennis court. Indian Spring Coconut Grove Backyard by 1Oak Studios Indian Spring Coconut Grove Grand Salon by 1Oak Studios Indian Spring Coconut Grove Bedroom by 1Oak Studios Indian Spring Coconut Grove Dining Room by 1Oak Studios Inside Villa Serena The second residence on the estate is called Villa Serena. Having been built in 1913 by former US Secretary of State & presidential candidate three times, it is now on the National Register of Historic Places. She purchased the property for $12 million in 2007 when she discovered that a developer was in negotiation on the home and had intentions of tearing it down. She stepped up and stepped in, then renovated the home to its original glamor with the conveniences of modern day life. Villa Serena Coconut Grove Entry by 1Oak Studios Arscht Mansion Coconut Grove View by 1Oak Studios This transaction represents the largest residential transaction ever in Miami-Dade County and the only home ever sold in the county for 9-figures. The previous record holder was a 3-property assemblage in Golden Beach, which sold for $93 million to InterSystems founder Phillip Ragon. He plans to demolish the properties and start anew. Ken Griffin has held the “top purchase” crown before with his $75 million purchase on Miami Beach’s Star Island. It remains to be told whether the new purchase was due to the size of the estate, if he fell in love with it, or if he just loves holding records. Either way, we are happy to have him and Citadel in Miami. Ever since listing the home, Archt has pledged to donate the proceeds to an undetermined charity. After looking over her philanthropic record in the Magic City, we are sure it will go to great use. “As the steward of this beautiful property, I am proud to leave its legacy to the next generations of caretakers,” said Arsht in the press statement. “May they also enjoy the breathtaking view!”
Cipriani Residences in Miami’s Brickell Financial District Has Released New Amazing Renderings Posted on August 30, 2022August 31, 2022 by Sarah Elles Boggs Just as we wrap up the summer and begin one of the most beautiful seasons in Miami, Cipriani has given us more to love. They have released 23 new renderings of their elegant new project that is coming to Brickell’s financial district. As we reported back in March when the project was initially launched, the famed Cipriani family has partnered with MAST Capital to bring this amazing property to fruition. “The interior design of Cipriani Residences Miami demonstrates a fundamental richness that recalls the timeless elegance of four generations of the Cipriani family. 1508 London has envisioned an offering that captures both the inherent spirit of Cipriani and the sophisticated lifestyle of Miami,” says Camilo Miguel, Jr., CEO and Founder of Mast Capital, the project’s developer in an interview with The Robb Report last week. Rendering of Cipriani Residences Brickell Miami Exterior Lobby We have also learned that the Ciprianis and MAST Captial have partnered with famed interior design firm 1508 London, located just a stone’s throw from Buckingham Palace, on the project. “We carefully wove together a design that would be both derivative of the brand’s flagship properties and unique to this building. It was important to us that residents feel immersed in the Cipriani lifestyle and also have a sense of place in the heart of Miami’s Financial District.” – Leo Bertacchini, Design Director at 1508 London in the same article to The Robb Report. It has been said that the inspiration for the interiors is to invoke a sense of residing on a yacht, and what is more Miami than luxury and yachting? Scroll down and admire what is coming to 1420 South Miami Avenue, with scheduled completion in 2025. Prices are currently starting at $1.4 million, up to $6.9 million excluding penthouses which have not yet been released. The prices tend to change quickly as residences are sold, so please feel free to reach out for specifics. As of today, the project is 33% sold. If you are interested in a presentation and specific pricing, please contact Michael Light, Broker and Executive Director of Luxury Sales at Douglas Elliman. You may reach Michael directly at (786) 566-1700 or via email at michael@miamiluxuryhomes.com. Rendering of Cipriani Residences Brickell Miami Views Rendering of Cipriani Residences Brickell Miami Speakeasy Rendering of Cipriani Residences Brickell Miami Spa Rendering of Cipriani Residences Brickell Miami South View Rendering of Cipriani Residences Brickell Miami Restaurant Rendering of Cipriani Residences Brickell Miami Reception Rendering of Cipriani Residences Brickell Miami Pool Rendering of Cipriani Residences Brickell Miami Master Bedroom Rendering of Cipriani Residences Brickell Miami Master Bath Rendering of Cipriani Residences Brickell Miami Lounge Rendering of Cipriani Residences Brickell Miami Lobby Rendering of Cipriani Residences Brickell Miami Living Rendering of Cipriani Residences Brickell Miami Living & Balcony Rendering of Cipriani Residences Brickell Miami Library Rendering of Cipriani Residences Brickell Miami Kitchen Rendering of Cipriani Residences Brickell Miami Gym Rendering of Cipriani Residences Brickell Miami Building Location Rendering of Cipriani Residences Brickell Miami Building In Skyline Rendering of Cipriani Residences Brickell Miami Balcony to Living Rendering of Cipriani Residences Brickell Miami Arrival Rendering of Cipriani Residences Brickell Miami Aerial Pool View
Why Sell Your Miami Investment Condo When Rents Are So High? Posted on April 19, 2022April 24, 2022 by Sarah Elles Boggs The party is on till the break of dawn for Miami investment condo owners and landlords, leaving tenants terrified. Rental rates have jumped 55% year-over-year according to a report by Realtor.com, and a quick scroll through the Brickell Living Facebook Group is evidence enough that everyone is getting priced out of their rented condos. So, if the rental market is so great for Miami investment condo owners, why should they sell now? We have a few reasons… Interest rates are rising While we are certainly still in a seller’s market, interest rates are climbing and thinning out the pool of potential buyers for properties. Just yesterday, the rates for 30-year mortgages jumped by more than one percentage point to 5.0%. The rate is nearly two percentage points higher than the average rate just one month ago and is the highest in over a decade. Even though these rates are still historically low, the fact that they are rising fast is a sign that you should strike while the iron is hot. Don’t chase the bubble because you never know when the market will change until after it has already begun changing, thus reducing your potential sales income. Rent control Miami has traditionally been an incredibly lax city when it comes to rent control. Landlords get a lot of leeway, but this is tightening up. As many tenants are seeing their rents jump by 55% on average, the government has stepped in. Last month, Commissioner Eileen Higgins introduced an ordinance that would require landlords to give their tenants a 60-day written notice of any rent increase of 5% or more. The ordinance also requires the notice for evictions to be extended from 30 days to 60 days. During COVID, the eviction moratoriums wiped out many smaller landlords, causing them to sell to institutional conglomerates who could handle the lack of income and lack of ability to regain control of their assets. While these changes are not very landlord-friendly, we still have it better than some other cities. Some other cities such as Portland and Oakland have prohibited the use of criminal background checks, limited the use of financial background checks, and limited security deposits. Oof. That’s scary for a landlord to hear! Changes or removal of the 1031 Exchange system Last April, Biden announced his “American Families Plan”, which proposes to change the scope of the popular 1031 Exchange program that allows real estate investors to defer their capital gains tax as long as the transactions adhered to a strict set of guidelines. The changes include limiting the tax deferral to profits that exceed $500,000. This isn’t effective just yet, but if it passes, it will absolutely disincentivize investors to put their money in the real estate market and reduce the pool of potential buyers. Additionally, the $500,000 gains limit ($1 million for married couples) might seem like a decent amount, but many people forget that many 1031 Exchanges take place on commercial properties which bring in far more than that. Speaking of commercial real estate, these properties offer property tax revenues and jobs for the locals. If investors aren’t investing, there are fewer jobs available. Without these jobs, the initial problem of tenants being priced out of the market is compounded. Not to mention that property taxes would have to increase in order to compensate for the lack of taxes that the businesses that occupy the investment properties would typically bring in. If you would like more information on the 1031 Exchange program and how it could help your tax basis for investment real estate (it works on residential real estate as well), don’t hesitate to reach out. This post is not intended to scare investors. The market is still very good and Miami is still very much in demand. But if you are on the fence about whether or not to sell your rental investment, now is an amazing time to do it. Please do not hesitate to contact us if you are interested in buying or selling in Florida. You may reach Broker and Executive Director of Luxury Sales, Michael Light, directly at 786.566.1700 or via email at michael@miamiluxuryhomes.com.
Miami Celebrities Who Got In Trouble With The Tax Man Posted on April 15, 2022April 16, 2022 by Sarah Elles Boggs It’s tax day! While we’re all stressing our finances and measuring our burden to Uncle Sam, let’s take a moment to remember some Miami celebrities that have gotten into trouble with the tax man. Marc Anthony Dios mio! Marc Anthony (also famous for being Jennifer Lopez’s previous husband) got into it with the bureau. In 2007, he got popped with $2.5 million in back taxes, interest and penalties because he neglected to file tax returns for 5 years according to the Associated Press. He settled it up and went back to his latino heartthrob ways, eventually buying and selling the historic Bacardi Mansion in Cocoplum. Lauryn Hill Instead of calling Tyrone, the Fugees crooner should have been calling her accountant in the aughts. According to the Department of Justice, she failed to file her tax returns from 2005 to 2007. She pled guilty to tax evasion charges for $1.8 million of income, but also underestimated additional income and tax losses for 2008 and 2009 that amounted to $2.3 million according to the prosecutor. She explained herself by saying, “When I was working consistently, I filed and paid my taxes. This only stopped when it was necessary to withdraw from society, in order to guarantee the safety and well-being of myself and my family.” She had to withdraw from society a little further when she spent three months in a federal prison. Ultimately she lost a modest house in South Miami to foreclosure and received an eviction on the house she was renting in New Jersey. Leona Helmsley Despite keeping her base in New York, the “Queen of Mean” does have ties to Miami. She was the original owner of the penthouse atop The Palace at 1541 Brickell Avenue that is affectionately known as the Brickell Taj because of its opulent finishes. She had intended to make it her Florida base before her trouble started. After years of terrorizing employees and contractors, the billionaire was busted for claiming $2.5 million in fake expenses and landed in the big house. It certainly didn’t help that she uttered the most famous quote in tax history in front of one of her terrorized employees. She said, “We don’t pay taxes. Only the little people pay taxes.” That employee testified and to lockdown Leona went. To double down on her nickname, she left the majority of her fortune to her Maltese dog named Trouble when she passed away in 2007. Queen of Mean indeed. OJ Simpson We’ve all heard about OJ Simpson’s legal drama, so maybe his tax problems got brushed under the media rug. Does anyone remember when he got liened up for not paying $180,000 of taxes from 2007-2012? This was during the same time as his prison stint for armed robbery and kidnapping, so we’re guessing the media already had more to talk about with regards to The Juice. A few years later, his house in Kendall was sold after he lost it to foreclosure. Lil Wayne Weezy needed about $14 milli after getting slapped with liens for not paying up for as far back as 2002. It is said that Jay-Z assisted with the mission to help keep him on this side of the clink. After the dust cleared and a series of swatting issues, Lil Wayne sold his Miami Beach mansion on La Gorce Island. We’re not sure which is more annoying. The tax man or the swatting. Helio Castroneves Life in the fast lane sometimes catches up to you and the IRS doesn’t stop… but neither can 3-time Indianapolis 500 champ, Helio Castroneves. He has been in trouble with the bureau more than once. In 2009, he was acquitted of six counts of tax evasion for not declaring earnings between 1999 and 2004. Instead, he and his sister allegedly set up a Panamanian shell company to hide the earnings. He cut a $5 million check to the courthouse to clear it up and narrowly avoided jail time. Slick. The disputed taxes were on income he received from Penske Racing Team between 2000 and 2004 for the use of his name, image and endorsement on licensed merchandising sold by the team. The income – around $15 million – was supposed to have be placed in a Panamanian tax shelter but instead was transferred to a Dutch annuity account and then allegedly not properly disclosed to the IRS for taxation purposes. Now that it’s all cleared up, racing champ has also competed and won on “Dancing with the Stars.” He currently lives at Marina Palms in North Miami Beach (which is actually on the mainland). We always like to say that celebrities are just normal people with abnormal jobs, but there’s also the famous song by Notorious BIG and Puff Daddy… “Mo Money, Mo Problems.” Now get that paperwork done and do it right!