Financing condo towers with large upfront payments in the United States basically only works in Miami, thanks to foreign buyers who don't expect to borrow heavily for real estate, Related CEO Jorge Perez said Friday.
"It's a very local market," he told the University of Miami Real Estate Impact Conference. "It's for people who are used to paying cash for most of their second homes."
When condo loans dried up during the housing crisis, Perez and other developers turned to a financing model popular in Latin America where builders demand significant payments throughout the construction process. That's a big change from the boom, when buyers could secure condo contracts for only 10 percent down or less.
Perez said the new model does not work well with U.S. buyers or others who are used to small down payments. "We see resistance to that (Latin American) model in even the Canadian market," he said.