With the dollar high, what to expect from Colombian home purchases in Florida?

Bogotá — Despite the sharp depreciation of the Colombian peso (COP) and a complex global economic environment, high-income Colombians retain an important home buying dynamic in the US state of Florida and for 2023 the expectation remains in the face of a possible fall in prices due to the global recession.

According to figures from the National Association of Realtors (NAR), Colombia participated with 3% of the total foreign home purchases in Florida in the 12-month period between April 2021 and March of that year.

Colombians spent US$1 billion in these purchasesbelow the amount spent by Brazilians with US$1.6 billion, Mexicans with US$2.9 billion, Indians with US$3.6 billion, Canadians with US$5.5 billion and Chinese with US$6.1 billion.

2020 was an especially active year for the purchase of housing in Florida by Colombians since they reached a 4% share among foreign buyers and allocated some $1.3 billion.

In the analysis period, NAR found that Colombians had purchased some 3,200 homes in that state, below the 2020 record of 5,500.

According to NAR figures, in 2022 the average purchase price of homes by Colombians was US$334,300, above $227,500 in 2020, but still below $672,200 in 2021.

Consulted by Bloomberg Línea, the specialist at the real estate research firm ISG World, Daniel Castañeda, explains that the migration of high-income investors from the region is mainly due to political and economic factors.

“This has been the main trigger for Colombians to see in Miami an option to shield their assets against any local circumstance of a political, social or economic nature, which allows them to dollarize their investment in properties in Miami. This not only protects assets in dollars, a strong currency, but also allows investing in a safe market with very high profitability.”, dice.

However, he considers that they also have to do “The high prices per square meter in the main Latin American capitals”.

Even so, the panorama is not simple in the United States either. the Federal Reserve increased interest rates by 0.75% to the range of 3.75% to 4% to contain the strong inflation that plagues that market after the pandemic.

Even with the price of the dollar, he says that cities like Miami are in “a privileged position, since you can find real estate projects in which the value of the square meter, the valuation and the fixed returns in dollars they generate a higher return for the Latino investor compared to equivalent investments in their countries”.

Even so, from ISG World they recognize that due to the high costs of the dollar in these Latin American countries the purchase of luxury properties has decreased.

Thus, according to figures from that organization, these buyers they are leaning even more toward properties between $400,000 and $700,000 on average.

Currently, the favorite destinations for Colombian buyers are Florida (60%), Texas (11%), Maryland (9%) and Virginia (8%).

For 2023, “expectations are very high, since no matter how much there is talk of a global recession, or that property prices may drop, this will not affect Miami. The reason: the demand is already established, that is, around 1,000 people move to the state of Florida a day, of which 25% arrive in Miami Dade County, looking for a place to live, either for rent or for buy,” he explains.

He also highlighted that in the midst of the pandemic, the city of Miami launched a campaign in different states such as California, New York, among others, to “Convince 122 Fortune 500 companies to move to Miami.”

“What this is going to bring to the city is much more money and a flow of people never seen before,” according to Castañeda.

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