Limiting the buying power of foreign nationals from seven countries would weaken South Florida’s real estate market, experts in Miami’s real estate community said in criticizing legislation backed by Gov. Ron DeSantis.
The Miami Herald contacted 10 real estate agents, academics, lawyers and nonprofit leaders, and they all agreed the bills would soften the South Florida residential market. The legislation could lead to slowing demand, price dips and less participation in programs such as the EB-5 immigrant investor program, in which investors in large real estate developments and their families can apply for green cards.
The bills restrict citizens of China, Cuba, Russia, Venezuela, Iran, North Korea and Syria from buying farmland and any property in Florida within 20 miles of a military installation or critical infrastructure, including an airport, seaport, and wastewater treatment and electric power plants. Only those from China would be restricted from buying any real estate statewide. Renting would be allowed.
Outside of Canada, most of South Florida’s foreign buyers come from Latin America with Argentina ranking as the top contributor, followed by Colombia, Peru, Chile, Mexico, Venezuela and Brazil, according to the Miami Association of Realtors’ 2022 Profile of International Homebuyer Transactions report. South Florida gained $59 billion from residential sales to foreign nationals in 2022, including in Miami-Dade, which saw 67% of foreign transactions, followed by Broward and Palm Beach. Of the $59 billion, 42.2% or $24.9 billion came from non-residents.
While local buyers might rejoice at the idea of less competition, real estate experts say the costs to the real estate market and economy far outweigh any potential advantages.
“I find it very concerning,” said Danny Hertzberg, a sales associate for The Jills Zeder Group, a Coldwell Banker affiliated firm. “Although short term this is a domestic driven market, in the long term it could be problematic and have significant impact on the real estate market in Florida as international buyers come back into the market.”
Ron Yanks, a Broward regional manager for the Keyes Company, said his firm has three agents focused on foreign buyers from China. They’ve received five to seven calls from potential Chinese homebuyers and investors questioning if they should even buy a home or sell what they purchased in recent years.
“They don’t understand the bill. They think they can’t buy any house,” Yanks said, adding the legislation “will hurt” the market.
The foreign influx has long shaped South Florida. Sunny Isles Beach has a large Eastern European immigrant population, gaining recognition as Little Moscow. Little Havana is known for its once bustling Cuban population, and Doral, also known as Doralzuela, has the largest population of Venezuelans in the state.
“While here in Miami it is often said that the city has its doors wide open to foreign investment, promoting the city through trade and sporting events, to introduce legislation of this kind is totally counterproductive,” said Frank Carreño, president of the Venezuelan American Chamber of Commerce. “It really does not matter where the money comes from, money is money. Investments don’t have nationality.”
The legislation would go as far as changing the future cultural makeup of communities such as Doral, said Raúl Leoni, a real estate broker and son of a Venezuelan president of the same name who was known for his activism against the Caracas Socialist Regime. “This legislation, they way it is set up, would make it impossible for any Venezuelan that does not have the residency status or citizenship, to buy land or property in certain areas that are so large that would keep them out of Doral, because the headquarters of the Southern Command is located there.”
Foreign nationals would also be excluded from buying in Sweetwater, Coconut Grove and Key Biscayne due to the 20-mile radius requirement and proximity to other critical infrastructure such as PortMiami.
“Because the way they are setting this up, they are saying that any Venezuelan that is not a citizen or is a resident is a threat to the state. And that is neither just nor accurate and what is taking place here is wholesale discrimination of all citizens mentioned in that legislation,” Leoni said. “When it comes to Venezuelans living here most of us are also enemies of the regime that has taken over our country.”
Foreign real estate buyers have long presented competition to local South Florida residents, especially in an already tightly supplied market. According to the Miami Association of Realtors, foreign buyers usually offered $500,000 as the median purchase price in 2022.
Many make offers in cash, contributing to Miami-Dade and Broward’s high amount of cash deals. In March alone, approximately 40% of all deals were closed with cash, higher than the 29% national average.
“The rate of cash buyers in South Florida is double that from other parts of the country. A lot of that is foreign buyers,” said Jack McCabe, owner of the real estate and economic research firm Jack McCabe Expert Services, saying the legislation would “give South Florida buyers more opportunity and less competition.”
Real estate agents and academics predicted competition and prices would slightly dip in the residential market. Ken H. Johnson, a finance professor specializing in real estate at Florida Atlantic University, said, “This will hurt demand, which will have a downward effect on prices.” The economy as a whole could be impacted as foreign investors go to other assets.
“It might make some buyers happy, but you don’t want prices to be artificially moved down,” Johnson said. “We’re also losing the investment of people who move here and spend money here.”
Foreign buyers would also be prohibited from buying during pre-construction and contributing to programs such as the federal EB-5 visa program, which gives applicants a priority for U.S. visas and green cards in exchange for foreign investment dollars in new development. The program has contributed millions of dollars to new development.
If signed into law, the legislation, HB 1355 and SB 264, would go into effect in July. Current property owners affected would have to register their ownership with the state’s Department of Economic Opportunity. If they fail to do so, they face fines of up to $1,000 a day. Owners selling to a foreign national from one of those countries would face fines of at least $500 and imprisonment.
The real estate market could see an initial impact as soon as the second half of 2023 as a result of the legislation. Dennis Eisinger, managing partner at Eisinger Law in Hollywood, said if it becomes law, the legislation would be expected to face multiple lawsuits.
That legal battle could take years if cases go to higher courts, Eisinger said. “This only encourages foreign buyers to buy in another one of the other 49 states.”