Miami's Real Estate Boom: What You Must Know

 

Miami is becoming a center for tech startups and investors at a fast pace

Miami has become the second most expensive city in the housing market, after Los Angeles. But this hasn’t stopped people from making the city a new reference in tech development and startups. It has been compared to Silicon Valley. 

 

The pandemic affected several industries and changed the way people worked. It wasn’t necessary to go to an office every day or be close to your workspace. When people started to notice that, most of them began to plan around this by moving to states where they could work in their industries while planning their personal lives. When most companies started to realize the benefits of remote work, they began to change the way they conceived remote work, allowing most of their employees to work from wherever they wanted. 

 

But what does this means for real estate? 

Craig Studniky, executive director of Related ISG Realty, commented that Florida had increased its population by 900 people per day over the last few years. The pandemic didn’t affect this internal migration as much as other states. Over the first four months of 2021, the housing market grew by 39.8%. 

 

It is expected that the housing market will normalize by next year, offering more options for buyers since inventory has been on the rise. However, don’t expect prices to lower; those will still be on the rise. 

 

In recent predictions, there’s a forecast of a 3.2% increase in home price by June next year or even a 12% increase by July. 

 

Millennials are looking for comfort (a better quality of life, and most of them, started to plan their families). That’s a big reason why cities like Miami are booming in real estate: since it’s beginning to become a startup and tech capital, it’s a tax-friendly area, and real estate is on the rise, it’s the perfect place to start planning their professional and personal future. 

 

Just like it happened in New York City and the Bay Area, Miami is in the zeitgeist of a tech financial boom that, on the one hand, has created opportunities for those who can afford a house and have their work here. On the other hand, it makes a breach in the quality of life among specific populations. Still, Rebecca Danta, from the angel firm Miami Angels, claims that part of the solution could be generating more job opportunities in the tech area to close that gap. 

 

Miami’s continued rise won’t stop any time soon and will stay relevant in this new normal, and real estate will be one of the markets that will see the benefits from this. 

Differences between investing in real estate and buying real estate in Miami

 

Have you ever wondered what the difference is between investing in real estate and buying a property in Miami? Here’s some information for you to take into consideration:

If you would like to invest in real estate, it is important to know how to do it. One of the main differences between investing in real estate and buying real estate is that when you invest, you put market needs before personal interests or tastes.

If you are going to invest in real estate in Miami, make sure to check:

-       The location of the property

-       Nearby services and amenities

-       That the property is in good condition

-       That the property is located in an area with high added value

When you buy a property, your emotions and tastes are involved, whereas when you invest, you take other factors into consideration, like, for example, the square meter price of a property.

Remember that if you are interested in investing in Miami, you should consult a Real Estate Market Report, to know the capital gain, the time on the market, the gross rental profitability, the price-to-income ratio and the price-to-rent ratio.

Consequences of the Election in the Miami Market

Either a Republican or a Democrat, we’re all on the edge of our seats waiting to see what will happen with the real estate market in South Florida after 2016’s biggest moment: the election. Donald Trump and his immigration policies were the big winner of the night, so what will happen with Florida?

So, if South Florida’s population is mostly made up of Latin Americans, does this mean that the real estate market is at risk? At Riches, we have the strong belief that it isn’t.

According to Edgardo Defortuna, president and CEO of Fortune International Group (a residential developer), South Florida’s real estate market will be as stable as it has been for the past ten years. South Florida will continue to be one of the best cities in the US to invest on properties.

Defortuna stated that: “If anything, Trump understands how the real estate market works and many of his supporters are major real estate developers and investor”. And moreover: “All his economic policies are for growth and to create new jobs and to jump-start the economy depending on factories going back to work and real estate booming and I don’t see how that could possibly be a negative impact.” 

Therefore, if anything, South Florida’s migration will keep on as it has been in past years, meaning that the real estate market will continue to grow and develop.

Stability is the ultimate goal

“We’re shifting to a buyer’s market, and sellers may have to adjust their expectations.” Jay Parker

The ghost of the housing market crash from 2008 still worries thousands of new investors and real estate owners around the world. Any minor shift feeds the general paranoia despite of what all realtors and experts on the matter say. The market is finally stable and it’s actually growing, especially in cities like Miami where people from all around the world come to invest.

“The report found that in the second quarter of 2016, the number of home sales fell 25 percent in Miami Beach and the barrier islands compared to the previous year. In greater downtown Miami and its major suburbs, sales were down 12.5 percent annually. Even so, they stayed above historical averages.”

Nicholas Nehamas – The Miami Herald

Experts call this a “slowdown”, but what does this actually mean? It means the market is cooling off as a result of a strong dollar and weak economies abroad. Still, this cooling off doesn’t mean a crash at all. Actually, a slowdown without the risk of a crash means stability in the housing market, and apart from the house prices expected to “drop” in 2017, investing in Miami is still a great idea.

What to expect this 2017?

-A solid market but with our feet back on the ground, or the way Cervera Lamadrid put it: “It just won’t be a runaway season”.

-In June 2016, the Florida Home Price was expected to increase 6.8 percent by June 2017.

-Deals involving office and industrial buildings are still going to be the most attractive ones for lenders and investors.

-Investors from the northwestern U.S. attracted to Florida and willing to double down and plant roots in Miami.

Investing in Brickell

Downtown Miami’s full-time population has increased to nearly 90,000, that’s up to 32% since 2010 and 150% since 2000. What does this mean? What a new report by Miami Downtown Development Authority has confirmed: Young professionals are moving and investing on new businesses in Downtown Miami. Restaurant openings, cranes, and traffic snarls are not just a coincidence.

Out of this 90,000 people increase, about half of them are young professionals between the ages of 20 and 44. They have filled more than 20 new residential towers, built since the last real estate boom.

Whitney McLees, a 30-year-old woman who recently moved to the new Melody Tower, in downtown Miami, said: “There are restaurants and stores popping up all over, and I feel like millennials are really driving that energy.”

It’s not a supposition, but a fact, that Downtown Miami is growing as days pass by. This is why it has become a great city to invest in, since it grows more economically stable every day. Brickell is one of those places that should come to mind when thinking about investing. It’s a very good deal to buy a property and then lease it to generate annual profits. And since it’s growing daily, you’ll be almost always guaranteeing a rental income from that property.