Low-income loans help fill luxury high-rises in Miami’s Midtown neighborhood

May.May 22, 2013 06:00 PM

Troy Simmons

A federal law intended to boost lending in an impoverished Miami neighborhood is helping upper-middle class buyers compete for luxury digs.

With 30-year, fixed-rate mortgages available at historic lows, realtor, artist and architect Troy Simmons and his wife, a local TV news anchor, decided to ditch their Aventura rental for a home of their own.

But their good credit scores and steady income were no match for cash.

“Eighty percent of my clients are all-cash buyers,” Simmons said. “Average people like myself, we can’t really compete with that.”

Instead, the couple won a bid for one of 20 units in 4 Midtown, a sleek condominium tower in Miami’s next “it” neighborhood eligible for 97 percent bank financing, a legacy of a master plan to increase homeownership in the once-blighted section of town, criss-crossed by out-of-use train tracks.

The financing is available because of the Community Reinvestment Act, a federal law passed in 1977 to encourage commercial banks to lend in low-income urban neighborhoods.

With its immaculate streets, high-end retail and restaurants and condo lobbies awash in marble, Midtown has more the feel of an upper-income suburban enclave.

“This is supposed to be a transitional area but it’s already transitioned,” Ron Krongold, one of Midtown’s biggest investors and the owner of Miami amusement park Jungle Island, told The Real Deal. “We’re brilliant because we’re lucky.”

South Florida’s frenzied recovery from the real estate crash six years ago has pushed up prices to near pre-crash levels amid shrinking inventories.

Midtown’s boom was fueled with cash as overseas buyers, principally from Argentina and Venezuela, seek out a safe haven for their U.S. dollars.

“This type of financing was supposed to target minorities but everyone’s a minority now compared to cash buyers,” said George Fraguio, a finance specialist at Fortune International Group who formerly worked at Countrywide.

Related Article

Midtown 29 and Michael S. Morgan CEO of Morgan Group

Midtown 29 developers close $80M refinance

The Midtown Miami building and Jordan Gimelstein of Dwntwn Realty Advisors

Make it work! Fabrics store of Project Runway fame buys Midtown Miami buildings

Chef Timon Balloo and Felix Bendersky with the Ingraham Building (Credit: Twitter, Facebook and Google Maps)

The Weekly Dish: Sugarcane chef opening downtown Miami concept & more

Miami to see oversupply, high vacancies in CRE and multifamily by 2020: report

The Weekly Dish: Michelle Bernstein opening Little Havana restaurant later this month & more

The Weekly Dish: Time Out Market releases food hall concepts, Punch Bowl Social opening in Wynwood & more

Construction worker dies after possible electrocution at Midtown 8

Starbucks, vegan restaurant among new leases signed in Midtown Miami