Miami’s Residential Market – What’s All the Hype?
Miami has had a solid housing price appreciation in the last quarter. However, real estate experts have started questioning whether or not this growth will continue in the coming years.
Let’s have a simplified look at Miami’s residential market and what you can read from its hype:
Historical High Price Appreciation of Homes
In 2021, Miami’s residential market became one of the top performers in the world. For instance, Miami-Dade County saw an increase of 40% in sales. But once the pandemic crisis entered the picture, there was a dynamic shift in the residential market in Miami.
But for the most part, Miami saw consistent growth and became the center of attention for residential properties. On the other hand, wealth inequality is at an all-time high in Miami. Similarly, there are more rigid real estate policies due to geopolitical crises and rising inflation.
By Q4 2022, you can expect the economic outlook to become more optimistic and drive consistent growth. There is also a good chance that policymakers may increase taxes to manage house prices. Practically, this movie would also allow policymakers to manage pandemic-based deficits.
Historically, Miami-Fort Lauderdale has had high residential home price appreciation than other metropolitan areas in Miami. In fact, in the past 25 years, the prices of residential properties have increased by 250%.
Low Housing Supply
One of the foundational elements of a housing supply is new construction. Predominantly, supply has become rigid due to issuing limited permits each year. Objectively, there are equal opportunities and risks for the residential market in Miami. Real estate digital adoption and leveraging modern tech solutions are great opportunities. Still, Miami’s global average in home prices has doubled in 2022.
Sure, residential properties in Miami may not be as expensive as in New York, DC, or Los Angeles, but the city has a severe affordability issue. But the future is not certain – Miami might benefit from different economic policies and increased migration in the coming years.
Slow Population Growth
Data shows that Miami’s residential market is growing, but it might be affected by the slow population growth. Whether it’s foreign or domestic migrants, Miami has become a famous destination for all. In the context of the housing market, however, the dynamics are changing for the domestic migrants.
In the last decade, there has been negative domestic migration in Miami. When it comes to net domestic migration, Miami ranks in the bottom three. Most players in the market are concerned about the slow population growth and how it would significantly affect the housing demand in the foreseeable future.
At 43.8 years, Miami is the home to the oldest workforce. You may not be aware of it, but homeownership in Miami skyrocketed in the 1930s. But in 2022, the future of Miami’s housing market has become more uncertain.
In Miami, senior homeowners aged 65 or higher represent the 2nd biggest portion of the housing market. Of course, if this section of the homeowner works out for adults, the residential market would see an increase in supply. However, a supply increase would significantly decrease house prices.
In retrospect, the discourse around Miami’s residential market is not blown out of proportion. And the facts about Miami’s housing market are more straightforward than people realize. Population growth has started to slow down, which means a negative domestic migration. As a result, construction supply has become low, and home prices are more likely to appreciate.