Miami’s Magnetic Real Estate Market
Florida remains one of the most popular destinations in America and Miami is the city most landlord investors investigate for buying property including rental apartments and condos.
The migration to South Florida and Miami, especially for wealthy business owners and investors is noteworthy. A report from SmartAdvisors shows Florida gained a total of 2,175 high earners aged 26 to 35 after accounting for both inflows and outflows in 2023. Texas had more inflows but had higher outflows as well.
Florida’s not just for snowbirds and retirees however. More young, educated workers are relocating to the Sunshine State and in particular South Florida. According to Mansion Global, new residents to South Florida bumped up household income in the region by $16 billion in 2021 alone.
Strong Demand for Florida Real Estate
This trend for young talent and the wealthy might increase in the next few years as American businesses are pressured by high costs, lower capital, and rising taxes. Remote work is in and that enables a move to Florida for workers. And downtown Miami has its own corporate draw as well.
The state ranks #1 for new business formation. And many business owners may see Florida as a way to keep their business alive and exploit the growing Florida market. For some, zero income tax is simply too attractive, especially for companies that sell to international markets. And the State’s property tax rate is 0.80% which is lower than the U.S. average of 0.99%.
A Strong, Growing Economy
Florida’s GDP is strong and growing, the best of all the major populous states. In the last 3 years, GDP has risen from $950 B to $1.7 Trillion (12.6% growth).
As the FED lowers interest rates, funds sitting in money markets could move to Florida for home buying as homeowners begin to leave their locked-in mortgages.
A big release of multifamily units will create opportunities for landlords and for Florida property management companies. Yes, occupancy rates have cooled from their torrid levels with the release of more units, and a slowing US economy. Once that excess is absorbed, it’s likely back to low vacancy rates and high rising rents.
CBRE reports southeast Florida as having an annual rent growth of 7.1%. There are 10,179 recently completed rental units with 46,203 under construction, added to an existing market of 644,686 units with an average occupancy of 95.6%.
The Florida Housing Market
The Florida housing market is marked by strong demand, growing population, persistent tax benefits for new residents, and of course an unparalleled climate to enjoy. And Miami, Palm Beach and Fort Lauderdale are prime residential real estate for those who need to be near the city for work and to enjoy the amenities of Miami City.
Rental landlords are taking note of this major demographic shift to the US south and in particular, Florida’s many wonderful cities. As construction of new multifamily and detached houses continues, the inflows should increase.
Realtor.com reports there are 6,598 homes for sale, ranging from $1 to $59M, and also 9505 homes for rent in the city currently.
In July 2023, the median listing home price in Miami, FL was $675K, +4.7% vs July 2022, and the median home sold price was $530K. The market is considered balanced. Homes remain on the market on average for 56 days (+10 days from one year ago).
Home prices range from $2.7 million in Coconut Grove to $1.2 million on average in Park West and $299,000 in Riverside.
Miami Luxury Homes
And Miami’s real estate market is dominated by apartments and condos, which not long ago were seen as a glutted market.
Fast forward to 2023, and availability is added to affordability as the major complaints. And it’s hard not to consider much of the stock here as anything but luxurious.
According to Mansion Global’s recent report, deals for luxury residences (top 10% of the market) were down 17.7% year over year in Q2, 2023 yet are up 22.9% compared to Q1, 2023. And the median price of high-end homes rose just 0.5%, yet that has surged 15.3% quarter-over-quarter to just over $3 million.
Luxury listing inventory in Q2, 2023 rose 15% compared to Q2, 2022, although they dropped 13.1% compared to Q1, 2023. It’s the same in any market from New York to Texas and Nevada to California as homeowners are locked into lower mortgage rates.
Redfin Reports on Miami Housing Market
According to a Redfin market report home sales and prices are up even against the red hot 2022 sales year across Miami.
Miami home prices have doubled in the last 5 years as the report below reveals. In July 2023, home prices in the city rose 10.5% vs July 2022, selling for a median price of $580K.
Single detached homes have fallen from $1.2 million in January to $665,000 today. Still, house prices are up 18.8% from 12 months ago.
On average, homes in Miami are on the market for 63 days vs only 47 days last year. There were 653 homes sold in July this year, down from 697 last year.
Undoubtedly, the rising mortgage rates rising above 7% are the key reason for less demand. Homes with price drops however are down 2.6% from last year. Homes selling above list price are down 12.9% vs July 2022.
Those looking for homes in Miami and moving there are from New York, Washington and Boston. New residents also come from Los Angeles and San Francisco.
In the Condo sector, condo prices rose 5.7% year over year to $520,000 proving strong demand in 2023 for apartments and condos. Days on market however is up 30 days to a lengthy 70 days.
Miami Realtors Report for July
Miami Realtors reports that single-family home sales dropped 8.9% year over year, while median prices gained 10.8%. Total dollar volume is down a substantial 17.6%. Active house inventory is down 23.3%, while months supply is only up .1% year over year.
Rocket Homes reports that 1 bedroom homes sold at $375,0000 in July (+11.9%), 2 bedrooms old at $426,000 (+1.9%), 3 Bedrooms at $520,000 (+7.9%).
In the rental market in Miami, Zumper’s data shows rents are decreasing slightly after a 2 year period of +20% growth. They report that in July, the average rent price for a 1-bedroom apartment decreased by -4% to $2,700 per month while they average 2-bedroom apartment rent fell 1% to $3,795 per month.
The neighborhoods with the highest rent prices are Bricknell ($5,000), Media and Entertainment district ($4,000), Wynwood ($4,100) and Upper east side ($3,300). You can discover more on Miamr rent prices on the Zumper website.
There are no rent controls in Miami or anywhere in the state of Florida. Although some cities have entertained the idea of rent controls, it’s unlikely such legislation would pass.
Overall, Florida is an ideal place to buy and manage rental property given migration trends, its status as a vacation rental destination, and the favorable tax laws. Competition from other investors will likely increase in the years ahead, given the state’s economic growth and diversification along with business-friendly environment.
Demand for rental units in Miami/Dade County is intense. As the economy has cooled, rent prices have declined, however, when mortgage rates ease, you may find more properties put up for sale.
Florida is a wonderful state, place to do business, invest, and to buy rental property.
ManageCasa frequently exhibits at several Florida HOA conferences throughout Florida including Miami. See our conference schedule for our next appearances as we enjoy meeting HOA managers and landlords alike.
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