This traditional Spanish-Deco home can be yours for under $1
million in Miami, Florida. Source:
Sand, sun, glitz and glamour mark Miami, Fla., as a gateway
between the U.S. and the Latin American nations in Central and
For under a million dollars, you can beat the South Florida
heat in your very own pool, which comes with
this 4-bedroom, 3.5-bath North Miami home
. The house has 3,200 sq. ft. and is built in that classic Miami
A history of boom and bust
Since the 1980s, the Miami real estate market has been known for
its massive bubbles and devastating crashes. Sudden and
oftentimes massive influxes of cash -- too often a result of the
South America drug trade -- can send the market soaring. These
booms lack widespread economic support, inevitably leading to a
In the 1980s, the boom days were a direct result of cocaine
trafficking. In this excerpt from the book "
," by Gerald Posner, the author describes just how central
cocaine money was to the metro's entire economy -- from jobs to
In the depths of a recession, the drug trade provided demand
for an estimated 25,000 legitimate jobs in banking, real-estate
construction, and the service industries. Dade County brought
in $400 million extra a year in sales tax receipts. Ten
thousand building permits were issued at a time when national
construction was at a standstill. More than 20 skyscrapers were
erected. "Cocaine was the currency that built that skyline,"
Alex Daoud told me, while looking at the dense clusters of
mainland high-rises across Biscayne Bay.
While certainly not on the same scale, the problem still
exists and can still be a major driver of market forces in the
region. Just look
for a more recent example.
A particularly bubbly bubble
With that history in mind, the boom years in the mid 2000s were
, a leading real estate website, estimates the value of the that
Spanish-Deco home mentioned above peaked at $1.2 million in late
2006. Today, Zillow estimates the home's market value to be just
$795,000, which is notable for the sharp 34% decline from the
peak, and that it's over $100,000 less than the current asking
The chart above goes a long way to explain the seller's
current optimism. From those extreme highs in 2006 and 2007, the
Miami real estate market fell hard in 2009 and 2010. But since
then, the market has rebounded, with the home price index
exceeding growth around the rest of the U.S.
In Miami, it's just another boom-bust-boom cycle playing out
before our eyes.
Two more examples: Boom, bust, and boom
, with 5 bedrooms and 4.5 bathrooms, in a private, gated
community is currently listed for $996,000. It was last sold in
June of 2011 for $790,000. It was then listed in May of 2014 for
$1.05 million. The price dropped to its current asking price in
take this home
, a 4-bed, 2.5-bath home with a full acre in another gated
community. The seller is asking $998,000 today. However, the
property has been listed for sale off and on over the past three
years, beginning in March of 2011 with an asking price of over
In both of these examples, very nice homes with
excellent amenities and features are for sale at a a
very good discount to prices seen in the bubble years of the mid
2000s. However, in both cases, the sellers are pricing their
properties at optimistic levels (that optimism is particularly
extreme in the second example).
You can get plenty of house in Miami for a million dollars.
The key, it seems, is to buy low and sell high, riding the city's
wild waves of boom and bust.
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What $1 Million Buys You in Miami, Florida
originally appeared on Fool.com.
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