MIAMI REAL ESTATE PRICE TRENDS THROUGH 

 MIAMI REAL ESTATE PRICE TRENDS THROUGH 

Miami is currently a buyer-dominated market. A market in which investors have every incentive to capitalize, as long as its defining advantages remain in place. Let's take a closer look at the trend in Miami real estate prices.

Health crisis: the gap between condos and houses is widening

A phenomenon directly linked to the coronavirus health crisis: in search of a safe place for themselves and their families, Miami residents and many other Americans (especially New Yorkers) are opting en masse for a particular type of real estate: single-family homes. The coronavirus health crisis has accentuated the gap between condos (apartments) and houses in Miami. It is now important to distinguish between them and, above all, to make the right choice.

Given the current situation surrounding the Covid-19 health crisis, the price trends announced in this article should be analyzed with hindsight. Markets may indeed be subject to change in the coming months. We invite you to  contact us to discuss your real estate investment project in Miami and to learn more about the latest price trends, based on your needs and objectives.

A bad time to buy condos in Miami

In the United States and Latin America, the health crisis has led some developers of condominiums located east of Interstate 95 (L-95) to reduce the prices of their existing properties by up to 20%.

Already in their infancy, Latin American economies have been further weakened by the pandemic, and the strong value of the US dollar has made it more difficult to sell to South Americans, who were previously considered key players in the sale of apartments in South Florida.

Additionally, condominium investors who buy and rent short-term have become more hesitant, as the tourism sector has been paralyzed by the health crisis and uncertainty reigns supreme. Real estate professionals are aware that short-term apartment rentals do not meet social distancing measures. As a result, currently, 80% of real estate transactions in Palm Beach, Broward, and Miami-Dade counties involve single-family homes. At the heart of buyers' concerns: the need to protect themselves and keep their distance. For this reason, the current period is not conducive to the purchase of apartments (condos) in these Florida counties.

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Health security: increase in home purchases in Miami

Cost of living, telecommuting, climate... all these factors, taken together, contribute to the massive influx of New Yorkers, more and more of whom want to relocate to Miami. While this trend has strengthened in recent years, the sensitive months of the Covid-19 period coincided with an influx of residents straight from New York, leaving their cramped apartments to find more spacious single-family homes further south. It is estimated that 270 New Yorkers leave their personal comforts every day to move to Miami! This trend is not limited to the wealthiest: the middle classes are also leaving the northeastern United States in large numbers.

While office space values are falling in New York, real estate sales in Florida are reaching record levels. One example is the sale of the Gables Estates mansion for $22 million to a private investor named Lee Scott Millstein and his partner, fashion designer Sylvie Millstein. Between them, they bought a nine-bedroom home with ocean views and everything you'd expect from a lavish luxury Florida villa.

Miami is seeing a significant increase in the number of foreigners looking to rent real estate: a 25% increase! These are residents eager to escape the densely populated areas and dizzying heights of the skyscrapers of major American cities.

To summarize: in Miami, the current trend is toward buying houses and villas, which rhymes with the security of individual housing. The Miami real estate market therefore remains strong.

Real estate remains a safe haven for large investors and Miami remains affordable

The American press, particularly the local press in Florida, is reporting a particular enthusiasm among Middle Eastern investors snapping up properties in South Florida. While they are among the most active real estate investors in the world, Dubai residents continue to target assets in safe havens in the United States, including South Florida.

The recent drop in oil prices has reinforced the need for investors to diversify their sources of income, both in terms of assets held and geographic location. To meet their needs, businessmen and wealthy celebrities are turning to high-end real estate companies specializing in assisting foreign nationals. Each transaction amounts to several million dollars.

Real estate professionals also note that when it comes to Middle Eastern commercial real estate funds and investment companies, the US market remains the most popular investment destination for foreign real estate.

In 2019, 71% more real estate transactions were completed on behalf of foreign buyers, 11% of which came from the Middle East. There are also many investors from surrounding regions such as South Asia, the United Arab Emirates, Qatar, Turkey, and India, among others. Investments range from $1 million to $50 million in residential and commercial properties located in the Miami Dade County areas (Miami, Miami Beach, Surfside, Bal Harbour, and Sunny Isles Beach).

Among the reasons that motivate foreign investors to choose South Florida:

Stable economic growth and constantly changing demographics: these indicators benefit long-term investors.

An attractive popularity with foreign tourists who stimulate the state's economy, much more than anywhere else in the United States.

A strong economy: In 2019, Florida was the fourth largest economy in the United States behind California, Texas, and New York, with a GDP of $1.1 billion and a budget of $91.1 billion

Ease of access thanks to good connectivity with major regions around the world, including the Middle East. Today, the three major Gulf carriers, including Emirates and Etihad Airlines, offer regular flights to South Florida, along with other regional airlines and US-based carriers.

The most notable examples of investments reflecting the foreign interest in Miami are numerous. One example is the sale of the Viceroy Miami hotel to the Kuwait-based Qatari hotel investment company Al Rayyan Tourism Investment Company (KFH) for $65 million. Other notables include Capital's purchase of the new Modera Town Center apartments in Miramar for a modest $120 million, and the Abu Dhabi Investment Authority's acquisition of the Miami Beach Edition hotel for $230 million in late 2015. In Florida, the St. Regis hotel in Bal Harbour was purchased by a Qatari group in 2014 for $213 million.

A constant dynamism that Middle Eastern investors appreciate, particularly Miami's vibrant nightlife, its art and business center...

South Florida offers an interesting mix of beautiful white sand beaches, a vibrant international community, and a thriving entrepreneurial sector. The numerous condominiums, townhouses, single-family homes, estates, and executive homes available in Miami-Dade County, Fort Lauderdale, Broward County, and Palm Beach make Miami a prime destination for foreign investors.

Health Crisis and Real Estate Price Trends in Miami in 2020-2021

At the end of 2019, Miami was emerging as an ideal market for buyers and investors. The city has a population of just under half a million. However, Miami's housing market is much larger, encompassing a large portion of Southeast Florida, with a total population of over five million. As a result, Miami is now the seventh-largest housing market in the United States and the second-largest housing market in the Southeast.

Of course, these figures alone don't validate the value of investing in Miami's real estate market. According to a report published by Zillow in December 2017, Miami was the fourth largest real estate market in the United States, reaching an estimated total value of $864.2 billion. The top three are:

Los Angeles ($2.7 trillion)

New York ($2.6 trillion)

Washington ($996.7 trillion)

The annual increase in the total value of real estate, which is around 5% (4.7% to be exact), provides a good perspective on the future. The growth rate for the last quarter of 2019 was between 0.7 and 0.8%. If this rate remains stable, we can expect an annual growth rate of around 2.8 to 3%.

Miami: A prime location for real estate investment

Ranked 12th in PwC's U.S. investment rankings, Miami offers quality investment opportunities at affordable prices. Rental income is high and growth is steady. In fact, Miami is among the top 10% of U.S. cities with the fastest growth.

In Miami, 7 out of 10 people are renters. Residents benefit from low property taxes. There is no income tax, unemployment is very low (3.5% of the workforce), and the tourist market is strong.

Real estate professionals say that as long as these advantages exist in Miami, it can be considered a buyer's market that investors should capitalize on.

Miami Real Estate Prices in 2020

According to the latest data, the current median home value in Miami is $367,249. It's important to note that Miami is currently a buyer's market, which translates into fewer qualified buyers and more real estate for sale.

Miami home prices increased by 1% between 2019 and 2020. Miami's real estate market is expected to see home prices continue to increase by 1.2% in 2020. Since 2015, the median home price in Miami has increased from $300,000 to $370,000.

The median price per square meter in Miami is $420, which is significantly higher than the average for the Miami-Fort Lauderdale-West Palm Beach metropolitan area ($230).

Currently, the median listing price in Miami is $489,000 with a median sales price of $330,500.

The median rent price in Miami is $2,400, which is $400 more than in the Miami-Fort Lauderdale-West Palm Beach metropolitan area.

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Good news for buyers: 9.2% of homes listed for sale in Miami experienced a price reduction in November 2019. This indicates that sellers are willing to negotiate prices, unable to secure the desired price to sell their properties. In December 2019, the median price per square foot (0.09 square meters) in Miami was $420.

Miami Real Estate Prices: What to Expect Through 2021?

Current data suggests Miami home values will be higher in Q3 2021 than they were 3 years earlier in Q3 2018. Check out the Miami real estate price trend each quarter on Littlebighomes (click here) .

If we look closely at the details of Miami's real estate market, certain trends help us understand how things are evolving. In Miami-Dade, for example, the housing affordability crisis is worsening. The June 2018 report published by the Miami Association of Realtors indicates that the median price of single-family homes rose from $335,000 to $355,000 in one year, representing continuous growth over 78 months.

Median prices for already constructed apartments increased 2.1%, from $235,000 to $240,000. Renters favor the downtown area: Brickell, Downtown, and Midtown are among the three most popular neighborhoods in Miami-Dade. For buyers, the three most sought-after areas are Coral Gables, Miami Beach, and Coconut Grove. Budget-conscious buyers should consider Homestead, Miami Shores, and Kendall. Investors, meanwhile, should consider the Design District.

Closely correlated with quality of life, traffic is a key factor in Miami real estate buyers' decisions. For the fourth consecutive year, Miami Beach was named the most overvalued neighborhood, with a median price per square foot (= 0.089 square meters) of $520. Brickell comes in second at $497/square foot, while the luxurious enclaves of Sunny Isles Beach and Key Biscayne reach $554 and $753, respectively.

In Homestead, the median price per square foot is $140. This neighborhood is, therefore, the most undervalued. Miami Shores, meanwhile, comes in second at $338, its price being lower than that of other neighborhoods with comparable housing stock and school quality (Pinecrest and Coral Gables in particular). North Miami Beach reaches $237, Little Havana $254, and Kendall $226. These three areas tie for third place.

The housing market decline in 2007 made rental properties attractive to investors, allowing them to save on construction or renovation costs. When it comes to investing, speed is of the essence, meaning the assurance of near-immediate cash flow. As a result, the number of rental units has increased by 30% over the past three years. This is in line with the general trend across the United States, whereby housing demand has been met by single-parent rental units.

Statistics show that the Miami housing market is highly competitive. Miami homes receive an average of one offer and sell in about 65 days. The average sale price of a Miami home was $335,000 in December 2019, an 8.1% increase from last year. The average sale price per square foot (=0.09 m²) in Miami is $222, an increase of 7.8% from last year.