Home prices in South Florida have risen steadily over the last couple of years, with new construction ramping up across the area. Now, some are worried the Miami housing market could be headed for another crash. The dreaded ‘B’ word — bubble — is being tossed around again, as well.
Some economists have forecast that home prices in the area will remain mostly flat in 2016, after many months of steady growth. Here are some notable real estate trends and predictions for the Miami real estate market in 2016.
Miami Real Estate Market to Crash in ‘Next Few Years’
In an interview with The Washington Post, Miami real estate expert Jack McCabe said that the South Florida housing market could be headed toward another bubble-and-bust cycle,
The U.S. government is cracking down
on money laundering in luxury real estate, thanks in part to the investigative
prowess of the New York Times.
The Treasury Department's Financial
Crimes Enforcement Network (FinCEN) announced Wednesday it had issued
"geographic targeting orders" for Manhattan and Miami-Dade County,
Florida, that would compel title insurance companies to report on clients who
pay for big real estate purchases — think $3 million for Manhattan and $1
million for Miami — in cash. The new measures will take effect on March 1 and
remain in place until Aug. 27; if they unveil as much illicit activity as the Times
turned up in its 2015 "Towers of Secrecy" series, the government
will beef up nationwide tracking efforts.
"We are seeking to understand
the risk that corrupt foreign officials, or transnational criminals, may be
using premium U.S. real estate to secretly invest millions in dirty
money," FinCEN Director Jennifer Shasky Calvery said in the announcement.
"These GTOs will produce valuable data that will assist law enforcement
and inform our broader efforts to combat money laundering in the real estate
sector."
The main target of the fed's effort?
The so-called shell company, which is exactly what it sounds like: a legal
business, but in name only; a kind of corporate facade that has no operational
activity but is used to shuffle money around.
Not every shell company is a front
for illegal activity; many start-ups, for example, find it useful to set up a
shell before operations are in full swing. For people looking to stash some of
their wealth in an untaxable asset like a building or apartment, however, the
establishment of a shell corporation is an attractive option — the investor's
name won't appear on the bill of sale, but the corporation's will. Shell
companies provide a veil of anonymity; the Times reported that backers can
build shell companies on top of shell companies to create a big, confusing
onion-like disguise. Little surprise, then, that the Economist has called
them "the vehicle of choice for money launderers, bribe givers and takers,
sanctions busters, tax evaders and financiers of terrorism."
FinCEN says that title insurance
companies are implicated in most every real estate sale closed, meaning they're
full of information the government would love to know. When a shell company
attempts to make an all-cash purchase, the title insurance company will be
obligated to dig up and report the name of that shell's owner to FinCEN, which
will then log it in a database — a key resource for law enforcement
investigating money launderers.
According to the Times, almost half
of all homes purchased across the U.S. valued at $5 million or more were made
through transactions with shell corporations. In its "Towers of
Secrecy" series, the newspaper profiled a number of shady characters
funneling money into U.S. real estate, all of whom occupied one of the most
prominent luxury buildings in the New York real estate landscape: the Time
Warner building.
There was the "Mysterious
Malaysian Financier," the hard-partying Jho Low, whose shell company
financed the purchase and rapid resale of a few multi-million dollar homes to
the stepson of Malaysia's Prime Minister, Najib Razak. The Times reported that
Low conducted many of his business transactions on behalf of his
"friends," and it was his friendly connection to the Malaysian ruling
family that looked particularly suspicious, as if he might be involved in
laundering the money of a corrupt head of state through the sale and resale of
a few pricey New York City and Los Angeles properties.
There were "the Russian Minister
and Friends," the "Mexican Power Brokers" and the "Besieged
Indian Builder," all with similar stories. Over the course of its
investigation, the Times found 200 shell companies with stakes in the Time
Warner Center over the past 10 years, and 16 apartment owners who had been
investigated by governments the world over, all of whom used shell companies to
mask astronomical real estate purchases without anyone batting an
eyelash.
Why? Because money flowing into U.S.
markets is good. "We like the money," Raymond Baker, president
of the Washington-based nonprofit Global Financial Integrity, told the Times.
"It's that simple. We like the money that comes into our accounts, and we
are not nearly as judgmental about it as we should be."
What does Global Financial Integrity
do? According to the Times, it "tracks the illicit flow of
money."
Which is why the newspaper's
investigation was so important: It blew the lid off of staggering sums siphoned
into the U.S. by a litany of unsavory characters and drew public attention to
the practice in a way the government couldn't ignore.
