How is the Market

THE CURRENT AND FORECATED MIAMI REAL ESTATE MARKET

Overall, the 2018 Miami-Dade Real Estate Market is healthy and continues to see gains. This is largely due to the almost $6 billion in New Construction that has already completed, the slowdown of future Pre-Construction, and the demand for single family homes in the mid- range market. One of the reasons for the positive sales activity is Sellers coming to the realization that inventory is growing, and that adjusted pricing was necessary to remain competitive and sell. Luxury properties in Miami, both condo and single family home, are being sold at prices 15-20% lower than their original asking prices. But the properties are selling. The luxury market is going to continue to appreciate, just at a more normal pace, according to a recent Miami-Dade Real Estate study in Miami Herald.

We are still in the midst of a Real Estate correction, the effects of which have been visibly felt in condominiums and high value single family homes. The repercussions of over building. Although down 30% since 2017, the oversupply of new condominium inventory continues to put downward pressure on condo values. There is a 32-month supply of condos downtown Miami, an indicator of an oversupplied market. Plans for new rental buildings are underway, adding to the saturation and opportunity for buyers and tenants. For renters, downtown is the place to be.
There is also an oversupply of luxury single family homes in the over-$10 million range. Smart money is recognizing opportunities for some better values. Working class affordability, however, still remains grim. The majority of new developments are targeted to wealthy second home buyers and global investors.

The market influencers, “talk around town”, is predominantly about affordability, increasing traffic congestion, climate gentrification, Trumps new tax referendum, interest rate increases, and the over influx of condo inventory.

The percentage of cash buyers (31%) and financing buyers (47%) remains unchanged since 2017, but dramatically differs from 2015 where cash buyers represented 68%, financing buyers a mere 14%. The inching up of interest rates have motivated hesitant buyers, and banks are more confident in the current Real Estate Market.
Although we are seeing a rise in buyers from countries like Brazil, the overall number of foreign buyers has decreased. According to the study, foreign buyers represented 26% of real transactions into 2018, a steady decline since 2015 where they represented 56% of buyers. Real people are buying, not just cash investors.

The percentage of local buyers increased 11% since 2015, currently at 43%. Out-of-town buyers accounted for 18% of buyers, the majority coming from New York.
The Trump Administration’s Tax Reform has had a noticeable impact on South Florida’s luxury market. The Tax Cuts and Jobs Act (SALT), passed in December 2017, significantly affected high-income tax payers in states like New York, New Jersey, and Connecticut. New Yorkers, where taxes can be as high as 8.82%, ranked first searching for properties on the MLS, as reported by the Miami Association of Realtors. In Miami, the new tax laws do not apply, we have only federal income tax versus the city tax, state tax, and federal tax in the Northeast.

Construction and design quality has risen to meet the demands of todays sophisticated and discerning Buyer, contributing to the consistency and recent growth of the affluent Real Estate Market. New move in ready homes, especially on open water, as well as the leading luxury New Developments, offer never before seen floor plans that maximize indoor/outdoor space and functionality.

Investors and homeowners looking for good investments 5 years down the line continue to pay close attention to the Design District, Midtown, and the Upper Eastside, and elevated communities like Hialeah. Traffic has been a key factor in the residential growth from Edgewater and the Design District to Downtown Miami due to walkability and uber-ability. Miami Beach and Coconut Grove remain very popular, with an eye out for inflated pricing.

Broward property values grew overall 6% as they largely avoided the “high rise” building boom. Miami-Dade property values are up 5.3% overall, predicted to rise 5.1% over the next year according to Zillow. Miami’s softer market could push values up by 2020 as the abundance of unsold condos are absorbed over the next 2 years. There are far fewer Pre-Construction projects in the pipeline.

Florida is the fourth fastest growing state in the nation. Miami is enjoying the majority of the growth action due to incredible architecture, top notch events, arts, amenities, and entertainment to satisfy today’s more sophisticated and gentrified Buyers. It has become a safe place to put your cash and a dynamic city to live the ultimate warm weather lifestyle. South Florida is expected to see continued growth over the next 5 years. Realism and increased optimism are factors influencing the 2018-2019 Miami Real Estate Market.

Feel free to contact us anytime for additional information on the current market.

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