(Bloomberg) — President Donald Trump’s immigration crackdown is making it harder for foreigners to buy and rent homes, threatening a key pillar of Miami’s half-decade-long economic boom.
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Miami, like much of the US, had already been seeing a real estate slowdown driven by higher mortgage rates and record prices. South Florida was also hard hit by soaring insurance costs and condo maintenance fees, as well as the inevitable comedown after the pandemic-induced relocation frenzy that made the area a magnet for new arrivals.
Now, conversations with house hunters, brokers and mortgage lenders point to another dynamic at play: Growing concern that even legal immigrants aren’t safe from ever-changing policy is paralyzing the market in Miami, where more than half the population is foreign born.
Home sales are down more than 17% from a year earlier in Miami, nearly six times the national decline, according to March data from Redfin Corp. Properties now spend a median of almost 100 days on the market, more than twice the US rate and a sign of waning demand. In the rental market — which is more likely to cater to undocumented migrants and legal immigrants living temporarily in the US — prices for one-bedroom apartments have plunged 16% in the past year, Zillow Rentals data show.
“Some people are afraid — they want to buy or rent, but they say, ‘How can I if I don’t know if next year, or next week, my visa is going to be extended or not?’” said Maruja Gil, a real estate agent with Keller Williams Capital in Miami with almost two decades of experience. “That really affects our market.”
It all points to how quickly Trump’s pledge to undertake the biggest deportation push in history has trickled down to the real estate market in one of America’s most culturally diverse cities. Three months into his second term, the president has moved to roll back refugee, asylum and so-called temporary protected status programs for immigrants from Cuba, Haiti, Venezuela and elsewhere, affecting thousands of people in Miami even as some of these policies are being challenged in court.
Florida has augmented federal immigration efforts with one of the toughest state crackdowns in the country. Governor Ron DeSantis in February signed laws criminalizing unauthorized entry, expanding enforcement funding, and mandating the death penalty for undocumented immigrants convicted of capital crimes.
In recent days, federal agents, local and state law enforcement arrested 1,120 suspected “criminal” immigrants in Florida.
Real estate has an outsize importance in Florida. The industry generates almost a quarter of the state’s economic activity, more than for any other state, according to the National Association of Realtors. There are about 11,000 real estate agents in South Florida, substantially more than in metro Los Angeles and New York — cities more than twice as large.
But Florida’s pandemic-fueled housing boom is now in reverse. Across the state, sales were down in March and housing inventories at record highs, according to Redfin. Squeezing immigrant buyers doesn’t help, people in the industry say.
One Miami agent said that in recent months, two-thirds of his clients in the high-rise luxury market in the Brickell district have scrapped plans to buy. Another said that demand isn’t only down substantially among visa holders but supply is also growing because some owners who don’t have permanent residency are looking to sell their homes and buy in Europe or Latin America instead. An immigration lawyer is seeing a dramatic slowdown in foreigners willing to invest the $1 million or more often needed to get an investor-based green card.
“They’re stepping back and waiting to see how this plays out,” said Peggy Olin, the chief executive officer of OneWorld Properties, who said clients from France and Mexico recently shied away from deals over concerns about immigration rules. “Any time the United States shows any type of uncertain path or signs of issues, the rest of the world pauses, especially if there’s an investment component.”
Trump’s policies are also weighing on the lower end of the market, with many landlords asking for proof of US citizenship or a long-term visa before they rent a home, according to local real estate brokers. They say that’s a departure from the past, when temporary visas were fine and landlords were often willing to look the other way if someone was undocumented.
Adding to the pressure, the Trump administration is cutting off Federal Housing Administration mortgages — which account for 16% of all single-family home loans — to anyone who doesn’t have US citizenship or permanent residency. Until now, FHA loans, which are popular with first-time buyers because they accept lower credit scores and just a 3.5% down payment, were available to people with temporary status.
“This is already having an impact,” said Alexander Jose Gandarilla, a mortgage consultant and CEO of iFinance Florida in Coral Gables. “And it’s only going to have more of an impact.”
Trump’s deportation campaign is adding to woes facing one of the nation’s main stalwarts of growth since the pandemic. Wages in the Miami area were up only 1.2% from a year ago in March, down from a rate of more than 7% seen in recent years and the weakest among the nation’s largest metro areas, government data showed. And after hiring at a much faster rate than the national average in the aftermath of the pandemic, job growth in Miami has been lagging behind the US.
The broader issue is that Trump’s policies are taking aim at America’s long-time perch as one of the world’s most desirable place to invest, according to Chen Zhao, the head of economic research at Redfin.
“From the perspective of a foreign buyer, America might not be a very stable place to invest for the time being — it’s a lot less attractive of an asset,” Zhao said. “Foreign buyers don’t see US real estate as an attractive prospect anymore.”
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