What’s Cooking For Miami Real Estate’s Future?
Miami real estate industry makes a huge part of the state’s economy, and according to Price Waterhouse Cooper it is ranked as one of the top 15 cities with a positive outlook.
The city is constantly growing with new luxurious condo developments as well as tourist attractions in every neighborhood. Some of the current ongoing condo projects include the Missoni Baia, Aston Martin Residences, Brickell Flatiron and Elysee. The newest pre-construction project that was announced two weeks ago is UNA condo and it will be located in the bustling Brickell.
The active real estate development draws capital investment into the city. Miami has always been a favorite among foreign investors and this trend is likely to continue. At this time, Miami is also attracting a lot of US residents. The new tax reform has made Florida very attractive since there is no state income tax here.
“Buyers who live in high taxed States such as New York are coming to Miami more so right now,” said Daniela Pellicciotti, the CEO and Founder of Condoideas Realty Group. “The majority of our clients are usually from Canada, Europe and Latin America but we are seeing a growing interest from New Yorkers who are coming to purchase properties in Miami because it has become too expensive to reside in the Big Apple”
This subtle migration is bringing positive impact to Miami real estate industry especially so after two years of slow growth. In 2016, areas such as South Beach, Brickell and Downtown recorded 2,967 closed sales and this figure grew by 2% in 2017 with 3,038 successful sales made in the same time period as last year.
The sales growth is influenced by a couple of factors. The most prominent cause is that Miami has had a surplus of condo inventory which brought prices down. The luxury real estate recorded 53-month of surplus inventory. This is far from the healthy number of 3 to 5 months and it shifted the market to a buyer’s market. Furthermore, the average days on the market for a condo to sell has increased by an additional 28 days which means buyers are now able to negotiate a better deal.
It is also important to note that many real estate transactions in Miami are paid in all cash without financing. The US currency has weakened making it more affordable for foreign investors. These combined factors influenced the growth of condo sales in Miami.
Downtown Miami defied the trend slightly. It is the only neighborhood that has seen stable pricing as well as stable sales in the last 2 years. In 2016, Downtown Miami recorded 1,198 sales and in 2017, the figure went to 1,258. These figures do not include preconstruction sales so overall, the Downtown market has experimented a peak in sales volume too.
The prices in the neighborhood on the other hand remained relatively the same at an average of $319/sqft. This figure is predicted to increase as new developments are ready to be delivered.
“Downtown Miami is attracting a lot of buyers because people are seeing the potential value in this neighborhood,” Daniela explained. “Mega projects such as Miami Central, Brickell City Center, Miami World Center, the expansion of the Design District are making investors excited about Miami. Plus, the Skyrise Miami was announced to begin construction this Spring. All these projects which mean Downtown Miami is developing into something big”
In 2018, the market has seen some positive growth. The number of condos sold this year from January 2018 to March 2018 exceeded the number of condos sold last year. In fact, the National Association of Realtors predicted that Miami will have an expected median price change of 4-5% within the next 12 months. This is positive news for investors.
To add even further, there are three factors that are pushing the industry forward. First of all, foreign economies such as Brazil are promising a better future and Miami is safe haven to park their money. Strong real estate and stock market in the United States are enticing retirees to cash out and invest in Miami. Lastly, the state of Florida has recorded a strong economic growth that fuels the job market which means buyers have greater affordability to buy a house.
Nevertheless, buyers are advised to be cautious since mortgage interest rates are at all-time high. Interest rates went up from below 3.95% in December 2016 to approximately 4.2% as of March 2018. Due to this, 2018 is expected to record a slow yet steady growth throughout the year.
Source: STL News