Current State of Miami’s Real Estate MarketNovember 22, 2016
The Florida real estate market is constantly evolving, and it can be difficult for people without a real estate background to keep up with the changes. The past year has shown that the Miami housing market has softened, but real estate professionals in the area are confident that the Miami real estate bubble is not about to pop. Some of the factors affecting the current market include:
Miami is a sophisticated international city, and people from around the world have been flocking to the area to invest in condos and single family homes for the past several years. Foreign buyers were particularly active in the Miami luxury real estate market; in 2015 real estate professionals said that over 50% of luxury buyers were foreign, while in 2016 that figure dropped to 33%.
This drop in foreign buyers can be explained by economics and the foreign exchange rate. Latin American investors played a big role in driving the Miami real estate market, especially luxury properties, but major countries such as Brazil, Argentina, Columbia, and Venezuela are currently in a recession and the exchange rate in those countries has decreased by 25-40% compared to the U.S. dollar.
Foreign buyers have not disappeared from the Miami real estate market, but their numbers are expected to be lower than normal until economic conditions improve in other countries. This has created new opportunities for local buyers and domestic out-of-town buyers.
While the number of foreign buyers in the Miami area has declined this year due to economic conditions, there has been an uptick in the number of domestic buyers investing in Miami real estate. A Miami real estate market analysis shows that the number of local buyers has increased from 11% of total buyers in 2015 to 23% in 2016. American out-of-town buyers, particularly New Yorkers, have also risen in Miami from 16% in 2015 to 20% in 2016.
The shift in buyer demographics has slightly altered the real estate environment in Miami. When foreign buyers were dominating the market, many real estate transactions were cash deals as international investors purchased luxury condos as an investment or a vacation home. Foreign buyers focused more on building amenities, nightlife, dining and shopping when choosing where to buy.
As more local buyers are emerging in the Miami market, buyer interests are changing. Buyers are focused more on qualities such as quality school districts, commutes, and access to retail stores and activities since most local buyers plan to live in their new home year round.
Luxury properties, particularly condos, are still in demand with out-of-town domestic buyers. Miami’s thriving Financial District, Florida’s favorable tax laws, and the beautiful climate makes Miami a highly desirable place for domestic investors or people wanting to relocate.
The Miami real estate market may have slowed over the past year compared to years past, but it is not expected to remain this way, and prominent Miami real estate professionals do not expect any type of market collapse. In fact, figures show that there could be a sharp upswing in Miami’s real estate market in about 18 months.
If you are interested in investing in Miami real estate, now is the perfect time to do so. Whether you would like to purchase a condo as an investment or vacation home, or are looking for a single family home, the favorable conditions for buyers are not expected to last long. Take advantage of the current inventory levels, prices, and interest rates now for the best values before the tide shifts back to a seller’s market.