Are you considering waiting for a market crunch to buy real estate in Miami? It might be a long wait, as experts at Blokhaus Real Estate + Investments predict that a recession in Florida is unlikely to happen in the near future. Here are 11 reasons why now is actually the best time to invest in property in Miami. Our team of experts closely monitors the market and we would be happy to share our insights with you.
- Miami’s real estate market has shown strong appreciation over the past decade, with sales prices increasing by 16% year-over-year when compared to 2022 and an average annual home appreciation rate of 11.8% over the last 10 years.
- The Miami real estate market continues to experience a shortage of available inventory, with the average months of supply currently standing at 7-9 months. This is significantly lower than the normal rate of absorption (12-14 months) on the market which triggers increased demand and higher pricing. There have been fewer single-family homes under construction in the last several years due to Covid and increased construction costs. The market of existing homes is tight with the demand remaining higher than supply making it a seller’s market.
- There is a significant growth in new pre-construction projects in the booming areas of Miami such as Downtown, Edgewater, and Brickell. These developments offer excellent amenities and a high potential for appreciation, making them an attractive investment option. Additionally, many of these projects allow for Airbnb rentals, which can provide robust rental income and enhance the return on investment. Some of these projects are tailored to supply the demand of high net-worth individuals and executives relocating to Miami for business purposes increasing the offer of ultra-luxury high rises with top-of-the-line amenities and country clubs alike.
- The number of closed condo transactions in Miami has increased by 5% over the last quarter. Although the market is not as active as it was during the booming year of 2022, there are no signs of it slowing down. These trends suggest that the Miami condo market is still performing well and remains an attractive option for investors.
- The Miami rental market is thriving, with rental prices continuing to increase. One-bedroom homes had a median monthly rental rate of $2,330, two-bedroom homes at $2,900, and three-bedroom homes around $3,600 in December 2022. The growing population is a significant contributor to the rising sale and rent prices in the area, with investors expecting strong rental income from long-term or short-term rentals.
- Miami real estate market remained resilient despite an uptick in mortgage rates in 2022. Industry experts predict that mortgage rates are expected to continue to decrease to 5.5% – 5.0% by the end of 2023, which will trigger more buying activity for both single-family homes and condos.
- Inflation in the US has slowed down for a ninth consecutive period, with the annual rate dropping to 5% by March 2023. This is lower than analysts forecasted and indicates a cooling off for inflation and the best opportunity to jump back looking for deals. The Federal Reserve is expected to raise interest rates to a final target range of 5.0% – 5.25%. When the FED stops raising interest rates, it can increase buyer confidence, which in turn can drive demand in the real estate market. This increased demand is likely to lead to further price growth, making it a good time to consider purchasing a home before the next uptrend cycle occurs.
- Miami is a business center with a large concentration of financial institutions and multinational corporations. Many businesses have relocated to Miami since the pandemic, creating a demand for housing for new executives and employees. Miami is also a hub for blockchain and crypto startups, with hundreds of companies and major conferences held in the city.
- The job market in Miami is strong, with a low unemployment rate of below 2% and steadily growing wages. Florida’s economy is the fourth-largest in the US, with a gross state product of $1.4 trillion for 2022. Florida’s tax-friendly environment, with no state income tax and relatively low property taxes, is a major draw for residents and fuels domestic migration to the state.
- Florida is a popular state for foreign buyers to purchase property, with Brazil, Canada, Colombia, and Argentina being among the top countries interested. The average transaction volume from foreign buyers has increased by 34% in the past year, with the median price for a home being $550,000.
- Miami’s beautiful beaches, vibrant arts and cultural scene, diverse culinary options, and active sports scene make it a popular tourist destination. Major professional sports teams, high-profile events, and recovery of tourism after the pandemic contribute to the city’s attraction for travelers. Investors who purchase real estate in Miami can benefit from continued demand for short-term rentals and earn a steady stream of rental income.
Download our free quarterly report regarding the real estate market performance in Miami to obtain further information, insights, and opportunities.