Miami hits most people’s radar as a tourist destination, though it periodically hits the news when it looks like it may be hit by a hurricane. However, Miami is a large, thriving city with a strong housing market. Let’s take a look at the Miami housing market before sharing top 10 reasons to invest in the Miami real estate market in 2019. Miami is home to just under half a million people. However, the Miami housing market is far larger than that – it includes much of southeast Florida and more than five million people. That makes the Miami real estate market the seventh largest in the U.S., and it is the second largest housing market in the southeastern U.S.
However, that isn’t reason enough to consider investing in the Miami real estate market. According to a report published by Zillow in Dec 2017, Miami was the country’s fourth most valuable housing market. Trailing only Los Angeles (total value of $2.7 trillion), New York (2.6 trillion), and Washington (996.7 trillion), the total value of Miami’s housing market is an estimated 864.2 billion, which represents a solid 4.7 percent increase year over year. With that kind of increase every year, just think of what would its valuation be when heading into 2019?
Housing Market Predictions 2019 Miami Florida
According to Zillow.com, the median home value in Miami is $333,600. Miami home values have gone up 4.6% over the past year and the Miami real estate market predictions show us that the prices will rise 3.6% within the next year. The median list price per square foot in Miami is $431, which is higher than the Miami-Fort Lauderdale-West Palm Beach Metro average of $219. The median price of homes currently listed in Miami is $480,000. The median rent price in Miami is $2,500, which is higher than the Miami-Fort Lauderdale-West Palm Beach Metro median of $2,100.
Here is the Miami real estate prices graph by Zillow which shows us the price appreciation of 3.6% till Sep 2019.
Graph Courtesy – Zillow.comMiami Real Estate Market Trend 2018
According to Trulia, Miami real estate market trends show a 6% year-over-year rise in median sales price and a 2% rise in median rent per month. Trulia has 6,314 resale and new homes in Miami lined up for you, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. The median rent per month for apartments in Miami for Sep 22 to Oct 22 was $2,234.The median sales price for homes in Miami for Jul 18 to Oct 17 was $315,000 based on 3,179 home sales. The average price per square foot for Miami was $221, a decrease of -1% compared to the same period last year.
Miami Real Estate Market Summary:
- Median Sales Price: $315,000
- Price Per Sqft: $221
- Homes For Sale on Trulia: 6,314
- Median Rent Per Month: $2,234
- Median Household Income: $43,395
- Home Owners: 60%
- Single Residents: 29%
- Median Age: 40
- College Educated: 3 to2%
According to Movoto, the average home price in Miami is $445,000. The median list price on Movoto in Miami was less than 1% change from September to October. Miami’s home resale inventories are 9,261, which increased 4 percent since September 2018. The median list price per square foot in Miami is $328. September 2018 was $330. Distressed properties such as foreclosures and short sales in Miami real estate market remained the same as a percentage of the total market in October.
Graph Courtesy – Movoto.comAccording to Neigborhoodscout.com, large apartment complexes or high rise apartments are the single most common housing type in Miami, accounting for 54.86% of the city’s housing units. Other types of housing that are prevalent in Miami real estate market include single-family detached homes ( 25.23%), row houses and other attached homes ( 9.94%), and a few duplexes, homes converted to apartments or other small apartment buildings ( 9.50%). This particular housing mix is relatively uncommon and characteristic of cities that are compact and walkable, and which often have a lively downtown.
Real Estate Appreciation Miami FL
Real estate appreciation in Miami has been tracking above average for the last ten years, according to NeighborhoodScout’s data. The cumulative real estate appreciation rate in Miami over the ten years has been 22.64%, which ranks in the top 30% nationwide. This equates to an annual average Miami house appreciation rate of 2.06%. Appreciation rates are so strong in Miami that despite a nationwide downturn in the housing market, Miami real estate has continued to appreciate in value faster than most communities. Looking at just the latest twelve months, Miami appreciation rates continue to be some of the highest in America, at 7.56%, which is higher than appreciation rates in 82.79% of the cities and towns in the nation.
In Miami-Dade, the housing affordability crisis is getting worse. According to the Miami Association of Realtors’ June 2018 report, median single-family home prices increased from $335,000 to $355,000 year-over-year; it was the 78th consecutive month of growth. Existing condo median prices rose 2.1 percent, from $235,000 to $240,000. For renters, Miami’s greater downtown area is the place to be.
Brickell, Downtown and Midtown are some of the top three hottest areas in Miami-Dade right now for renters. For buyers, the top three hottest areas are Coral Gables, Miami Beach and Coconut Grove. Budget-conscious home buyers should consider Homestead, Miami Shores and Kendall. Investors will want to pay attention to the Design District. Miami Beach remains popular, but watch out for inflated prices. And traffic has become one of the key factors when deciding where to live.
For the fourth year in a row, Miami Beach was once again named the most overvalued neighborhood, with a median price per square foot price of $520, according to Zillow. Brickell clocked in second at $497 per square foot, while the luxury enclaves of Sunny Isles Beach ($554) and Key Biscayne ($753) tied for third.
Homestead, where the median square foot price is $140, was deemed the most undervalued neighborhood. Miami Shores ($338) came in second because its price is lower other areas with comparable housing stock and quality of schools, such as Pinecrest and Coral Gables. North Miami Beach ($237), Little Havana ($254) and Kendall ($226) tied for third. For more details, you can read this report published in the Miami Herald.
10 Highest Appreciating Miami Neighborhoods Since 2000: By Neigborhoodscout.com
Based on the last twelve months, short-term real estate investors have found good fortune in Miami. Miami appreciation rates in the latest quarter were at 1.73%, which equates to an annual appreciation rate of 7.12%. Here are the 10 most appreciating neighborhoods in Miami.
- Bayshore
- N Miami Ave / NW 36th St
- Buena Vista
- Biscayne Blvd / NE 25th St
- S Miami Ave / SW 1st St
- NW 2nd Ave / NW 24th St
- E Flagler St / NE 2nd Ave
- City Center
- SE 2nd Ave / SE 1st St
- NW 7th Ave / NW 17th St
Appreciation rates for homes in Miami have been tracking above average for the last ten years, according to NeighborhoodScout’s data. The cumulative appreciation rate over the ten years has been 22.64%, which ranks in the top 30% nationwide. This equates to an annual average Miami house appreciation rate of 2.06%. Based on the last twelve months, short-term real estate investors have found good fortune in Miami. Miami appreciation rates in the latest quarter were at 1.73%, which equates to an annual appreciation rate of 7.12%.
Miami FL Foreclosures Statistics 2018
The percent of delinquent mortgages in Miami is 1.2%, which is higher than the national value of 1.1%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Miami homeowners underwater on their mortgage is 10.0%, which is higher than Miami-Fort Lauderdale-West Palm Beach Metro at 7.2%.
On RealtyTrac, there are currently 8,184 properties in Miami, FL that are in some stage of foreclosure (default, auction or bank owned) while the number of homes for sale in Miami, FL on RealtyTrac is 3,456. In September, the number of properties that received a foreclosure filing in Miami, FL was 24% lower than the previous month and 0% higher than the same time last year.
Home sales in Miami for August 2018 were down 99% compared with the previous month, and down 98% compared with a year ago. The median sales price of a non-distressed home in Miami was $287,000. The median sales price of a foreclosure home in Miami was $0, or 0% higher than non-distressed home sales.
10 Reasons To Invest In The Miami Real Estate Market
1. The Strong International Market
In 2011, nearly a third of residents were foreign-born. However, about half of those become citizens, so we can say that Miami is simply considered attractive to immigrants. However, the Miami housing market is unusual in the number of foreigners buying homes here. Russians, Brazilians, Argentines, Turks, Chinese and British buyers are buying up properties here at a far higher rate than would be expected. Some see the property purchases as a safe investment, while others intend to use the beachside condos as vacation properties. A few bought homes in Miami to flee to in case their home countries became untenable, which explains the large Venezuelan expat community in Miami.
2. The Beach
Many tourists come to the beach, and many people want to live there, as well. Miami’s beaches are made all the more attractive by the year-round subtropical weather. This helps explain why Miami-Dade’s population is growing around 2% a year while south Florida’s population overall has been stagnant. It is considered the fifth fastest growing region in the U.S.
3. The Geographic Constraints
Many of the world’s fastest appreciating real estate markets are attracting people coming for work and quality of life, but they cannot expand the housing supply to meet demand. San Francisco is surrounded by water on three sides, and they make things worse by limiting the height of buildings, so they can’t build up the way NYC has. In Colorado and Utah, a mix of federal parklands and vertical mountains limit where developers can build houses.
We’ve already mentioned that Miami is on the water. Miami has experienced a spurt in high rise construction in downtown, giving it the third highest skyline in the U.S, but other areas limit it so that high rises don’t block the view of the water. However, that hasn’t prevented the Miami real estate market from becoming the sixth densest housing market in the U.S overall.
4. The Limited Supply of New Homes
There’s an interesting factor to consider in the Florida housing market, and that’s the massive retiree population. Many older people move to Florida for the mild weather, and they’re rather immune to housing price fluctuations. Older people who already live here stay in their homes. This results in fewer turnovers in the Miami real estate market, limiting supply for would-be buyers. That explains why Tampa and Coral remain over-priced markets though jobs aren’t as plentiful there. Retirees who do leave the state periodically tend to keep their Florida home as a second residence instead of selling it. The Gulf Coast is more of a vacation spot than retirement enclave, so there’s less competition for limited housing stock.
5. Jobs, Jobs, Jobs
Many people move to Miami for work. Miami is the largest urban economy in Florida, and it has the 12th largest GDP in the U.S. The World Cities Study Group classified Miami as an alpha city based on the level of business activity, human capital and cultural activity. The unemployment rate in Miami hovers around 4% today; it is currently in line with the national average but often below it. Only Orlando has a better job market.
6. The Tourist Market
The Miami real estate market does present an opportunity to those who want to cater to tourists. The Port of Miami is known as the Cruise Capital of the World since it is the top cruise passenger port in the world. Landlords can rent to tourists who want to stay for a week in Miami before flying home or simply want to enjoy Miami’s beaches, cultural activities and sports teams. According to the Wall Street Journal, a $350,000 property can be rented out for $2500 per month. That’s a fair ROI, and you could easily rent out a vacation condo when you aren’t using it yourself.
7. The Massive Population of Renters
Two-thirds of Miami residents rent, a rental rate rivaling that of New York City. This is partially due to the number of people working in seasonal and temporary jobs in the tourism business. It is partially due to the limited housing supply relative to demand. And it is partially due to the high cost of housing, even inland, relative to local wages. This is leading many investors in the Miami real estate market to buy single-family homes to be carved up into multiple units, each one rented out individually.
8. The Strong ROI for Landlords
Investing in the Miami real estate market can give you strong returns. The high demand for properties in southeastern Florida relative to demand limits the ability of people to buy, creating a large pool of renters. Miami ranked second in the nation for the most cost-burdened renters in the country, paying more than half of their income in rent.
Rents aren’t as high as they are elsewhere in the country, but given the lower property values than markets like Silicon Valley or NYC, it is a good ROI. For example, the median home price is around $350,000, while the median rent is $1900 a month. A $1900 a month rent would be considered a burden for a household earning $70,000 a year, while median incomes in the area are actually $50,000.
9. The Massive Student Market
As the largest city in Florida, it would end up with multiple large universities for that reason alone. However, Miami’s international appeal and unique position have made it an education and research hub, resulting in the creation of institutions like Florida International University. There are almost forty colleges and universities within forty miles of Miami, hosting over 350,000 students. Ironically, Miami University isn’t among them – that’s in Ohio. The University of Miami, though, is located in Miami and enrolls more than 17,000 students.
10. It Is Landlord Friendly
Whether you’re renting to students, low-income workers or snowbirds, potential investors in the Miami housing market will be glad to know this is a landlord friendly market. Florida doesn’t have laws on rent control. Security deposits aren’t capped, and you can start eviction is the rent is three days late. Damage to the property requires a seven-day conditional quit notice, while repeated lease violations allow for a seven-day unconditional notice.
Investing In The Miami Housing Market: The Conclusion
If you are a beginner in the business of real estate investing, it very important to read good books on real estate. You must also learn from successful real estate investors who have retired early on in their lives by investing in some of the best real estate markets like Miami, FL. The Miami housing market offers diverse opportunities to real estate investors, allowing you to choose which rental markets you want to cater to and profit from.
References:
Rental market
https://www.miaminewtimes.com/news/65-percent-of-miamians-live-in-rentals-most-of-any-major-american-city-6562379
ROI
https://www.miamiherald.com/news/business/real-estate-news/article183538886.html
https://www.miamidade.gov/business/library/reports/2013-income-poverty.pdf
Landlord friendly
http://www.landlordstation.com/blog/top-landlord-friendly-states/
Limited supply due to retirees
https://www.forbes.com/sites/ingowinzer/2018/03/13/as-appreciation-stalls-differences-in-florida-markets-matter-more-than-ever/#11b7521f6584
Demographics
http://worldpopulationreview.com/us-cities/miami-population/
https://en.wikipedia.org/wiki/Miami
https://en.wikipedia.org/wiki/Miami_metropolitan_area
Jobs
https://www.bls.gov/regions/southeast/summary/blssummary_miami.pdf
https://en.wikipedia.org/wiki/Miami
Foreign buyers
https://www.forbes.com/sites/kenrapoza/2017/08/31/look-whos-buying-up-miami-real-estate-now/#629e4d201232
https://www.usnews.com/news/best-states/articles/2017-07-13/venezuelas-loss-is-miamis-gain
The tourist market
https://en.wikipedia.org/wiki/Miami
Student market
https://www.collegesimply.com/colleges/florida/miami/
ROI
https://www.nbcmiami.com/news/local/Three-Florida-Cities-Ranked-Among-Worst-in-US-For-Renters-494267151.html
Market Trends & Statistics
https://www.realtytrac.com/statsandtrends/fl/miami-dade-county/miami
https://www.zillow.com/miami-fl/home-values
https://www.movoto.com/miami-fl/market-trends
https://www.neighborhoodscout.com/fl/miami/real-estate
https://www.miamiherald.com/news/business/real-estate-news/article215369140.html https://miami.curbed.com/miami-market-reports
Quoted from http://www.noradarealestate.com