10 Reasons Not To Buy A Condo In Miami (Unless You’re Filthy Rich)
Miami is known for its glitzy condo towers and luxury waterfront living. But buying a condo here can be extremely expensive and risky if you aren’t already wealthy. Here are 10 reasons to think twice before purchasing a condo in Miami.
Reason 1: High Condo Prices
Miami condo prices are among the most expensive in the nation, with a median sale price over $500,000. Luxury units can cost millions. This pricing puts ownership out of reach for many buyers.
Reason 2: Expensive Association Fees
In addition to a mortgage, condo owners pay monthly fees to the condo association for maintenance and amenities. These fees can run $500-1000 per month, adding significantly to the cost of ownership.
Reason 3: Special Assessments
If a condo building needs major repairs, owners can be hit with special assessments of thousands of dollars to cover the costs. These surprise expenses can be a major financial burden, especially for individuals that are living on a fixed income.
Reason 4: Flood Insurance Requirements
Due to risks from storms and sea level rise, flood insurance is required for many Miami coastal condos. Premiums are costly, with fees potentially in the thousands monthly.
Reason 5: Overvalued Market
Some experts believe the Miami condo market is overheated and due for a correction. Buying at the top could lead to declining values, negative equity or the inability to sell.
Reason 6: Transient Neighbors
Many Miami condos function like hotels, with a constant churn of short-term renters. This can detract from community, increase the rate of crime and devalue the overall neighborhood feel.
Reason 7: High Closing Costs
Miami’s high condo prices mean very high closing costs, which run from 5%-20% of the total purchase price. That is potentially tens of thousands of dollars at closing.
Reason 8: Foreign Buyers and Speculation
Cash-rich foreign investors have flooded the Miami condo market, driving up prices for speculation purposes rather than home ownership. This distorts the overall value of Miami’s condo market.
Reason 9: Hurricane Risk
As a coastal location, Miami is vulnerable to hurricane strikes which can damage high-rise condos. Windstorm insurance further increases carrying costs.
Reason 10: Limited Appreciation
With high prices, insurance fees, and assessments, condo costs can exceed any appreciation, especially if the market stagnates or declines. What’s more, as buildings age, assessments increase while the value of each unit depreciates with each passing year.
For all these reasons, purchasing a condo in Miami requires deep pockets. For normal home buyers, significant hurdles exist, and renting may be a better option if you aren’t filthy rich.