When one thinks of the Florida coastline and its beach cities, Miami is on the top of the list. It is easy to be swept away by the lure of Miami. The warm heat kissing your skin as the sun sparkles across the waters. Hot Latin beats to dance the night away to or fantastic food and great ambiance if one prefers a quieter dinner atmosphere. Add to this shops and business spaces to compliment the vibe of this busting city space and you have one hot spot on the east coast. This fever for Miami extends past those looking for a neat spot to vacation to investors looking for a good investment and to locals seeking employment and housing. This then begs the question: just how hot is Miami’s real-estate market?
Recent years have seen huge booms in real estate development in Miami. This is fueled partly by the many wealthy foreign investors from countries such as Brazil and also by corporations purchasing business spaces for new offices. High end luxury condo sales are driven by foreign investors who are often seeking more stable investment markets for a second or even third property. These investors choose Miami when instability in their home country necessitates a safer investment opportunity.
Corporations on the other hand are seeing Miami as a prime location for targeting Latin American markets. Internet companies such as Twitter, Facebook, Google, and Uber have established offices bringing new employment opportunities in the technology sector to the city. The increase in technology jobs then in turn helps to support the real-estate growth as there will be more individuals who are able to purchase or rent homes and condos in the city.
For an investor this is all sounds very promising: more jobs means more homes required and Miami has some of the highest rents in the country. The question then is how long this boom can last? How stable is the local market? Is there still time and room to invest? Careful comparison by the 2015 residential market report, of this growth boom and 2006-2008 peak during the last real-estate boom, suggests that the peak of the market may have indeed passed for this round of development in Miami. Many speculate that the market is cooling as inventory increases and new construction and renovation projects are faced with higher construction and land costs. In contrast, single family home values and time on market suggest that the market is still strong. The average single family house sells in 65 days, which is an improvement over the figures seen last fall. The high-rise condos too are getting snatched up by investors from Latin America, Russia, and Canada looking for second or third propertied in which to invest. Both condo market and the single family housing market look promising as both markets appear to be strong and to have stabilized after the recent real-estate boom.
The new challenges to Miami are coming from the US Treasury department and the Federal Aviation Administration. The US Treasury Department is looking into an initiative that will require real-estate companies to disclose the names of those purchasing properties via a shell company. This was the result of investigations into shell companies revealing that many owners were under investigations by the US government or politicians from Russia and Malaysia. The concern here being that “dirty money” may be fueling the Luxury markets of these two cities. Given that half the homes purchased in the USA at or over $5 Million US Dollars were bought by shell companies, the impact of this new initiative will be felt by the luxury market in that it may deter investors who don’t wish to disclose their identity. The impact of this new initiative is still yet to be seen in Miami. The Federal Aviation Administration, FAA, has also restricted the heights of many proposed high-rise projects that were near the flight paths of the local airport. The impact of both of these challenges may slow or alter the growth in Miami’s luxury condo markets.
In conclusion, Miami’s real-estate climate is dynamic. It is influenced by many factors. Studies suggest it is past its peak and now slowing, but that isn’t a bad news for Miami or its investors. The slowing of the market from its peak helps to stabilize the market from over-expansion and dangerous growth rates. The city is attracting technology companies and regional offices for business growth targeting Latin America. The Luxury market is also rich with investors who see the opportunity of an investment in US real-estate. Single family homes are also selling well. Miami is a great market at many price points for the savvy real-estate investor. How hot is Miami? Hot enough to warrant a trip to check it out yourself and maybe even an investment or two.