The US Housing Crunch And Its Effect On Miami Beach Real Estate

The city of Miami Beach epitomizes the active, lively South Florida lifestyle, with its healthy mix of sun, sand, lovely people, partying, and a wonderful array of water and outdoor sports activities.

The city, which is situated across Biscayne Bay from Miami, is a burgeoning island city complete with local government, police and fire departments, hospitals, shopping, parks, and marinas. Most of the real estate on Miami Beach consists of expensive single-family homes and estates on the west side and upscale condominium units and apartments on the eastern portion. The city’s economic fundamentals are sound, with tourism and property development as the main engines driving the areas’ current boom.

Current Housing Prices In Miami Beach

Despite the slowdown brought by the current US housing and credit market crunch, the overall real estate trend for Miami Beach has been relatively stable, and prices have not shot up way above, or way down, the median index.

At present, the market for single-family owner-occupied homes has a median value of $334,400 as compared with $119,600 for the overall US. Median monthly owner rates are pegged at $2,555 with mortgage, or $878 without mortgage The median asking for vacant for-sale houses and condos, as of 2005, is $328,300. Median contract rent rates on the other hand, as of 2005 are $764. The greatest driving force behind the growth of Miami Beach is the tourism market, which rakes in billions in revenues, propels the new construction of hotels, condos and apartment units.

Tourists from all over flock to its scenic beaches and lively nightlife, the bulk of which come from Europe, South America and East Asia. The area has been dubbed as the New Manhattan by the US property media, and the Greater Miami association of Realtors estimates that the Miami Beach property boom will generate the construction of more than 100,000 new homes. Most of the real estate developments are currently being gobbled up by foreign buyers.

The US Housing Crunch And Its Effect On The Local Market

As the US subprime credit market reels from a deluge of non-performing loans and unpaid mortgages, real estate trends around Miami have also suffered a bit, with housing prices going down. Local realtors, please who have sold property in Miami for decades, say buyers are at present, shying away from condo and apartment auctions, anticipating what happens next, and adopting a wait-and-see attitude. However, despite the jitters buyers and sellers are feeling, developers are not slowing down in their new construction of more condos and housing units.

The US Federal Reserve’s vote to cut key interest rates by half a percentage point is intent on keeping the economy growing despite the downtrend in the credit markets. The Fed’s move to cut the federal funds rate, have made a positive impact on Wall street and boosted stock prices, though analysts expect this move to take some time in stimulating the beleaguered housing industry. Housing developers and brokers in Miami Beach are optimistic that the Fed’s move would make an appreciable improvement in the currently sluggish real estate market.

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