Miami, FL Real Estate Market Trends & Analysis [Updated 2021]

Jump To Another Year In The Miami Real Estate Market:


The Miami real estate market is nothing short of impressive. Located on the Southeast tip of the Florida peninsula, The Magic City has developed a reputation for pristine white-sand beaches, great weather, even better food, and an eclectic culture that can’t be found anywhere else. However, it is worth noting that such regional offerings have given way to one of the hottest real estate markets in the country.

The Miami housing market is the primary beneficiary of a highly desirable location for commercial and residential aspirations. Due, in large part, to a strengthening economy and growing confidence in the housing sector, local inventory has become a commodity for anyone with their finger on the pulse of real estate investing. There are many reasons for buyers, sellers, and investors to be interested in the Florida city, which begs the question: Is Miami real estate a good investment? Better yet, is it a good time to buy real estate in Miami?

Foreign and domestic real estate investors, in particular, have found that Florida’s most famous city can serve as a lucrative backdrop for savvy entrepreneurs. However, it’s not enough to invest in Miami real estate without a plan; you need to listen to what the market is saying in the wake of the pandemic and translate each fundamental indicator into a viable action plan.

Let’s take a look at some of the many reasons someone might want to invest in Miami real estate, and the various exit strategies which are proving most useful to their efforts.

Miami Real Estate Market 2021 Overview

  • Median Home Value: $396,659

  • 1-Year Appreciation Rate: +6.5%

  • Median Home Value (1-Year Forecast): N/A

  • Median Rent Price: $2,450

  • Price-To-Rent Ratio: 13.49

  • Unemployment Rate: 6.4% (latest estimate by the Bureau Of Labor Statistics)

  • Miami-Dade County Population: 2,496,435 (latest estimate by the U.S. Census Bureau)

  • Miami-Dade County Median Household Income: $51,347 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 18.12%

  • Foreclosure Rate: 1 in every 4,876 (2.0%)


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Miami real estate investing

2021 Miami Real Estate Investing

The Miami housing market appears to have reached a tipping point. Prices are appreciating at such a historical rate that profit margins for flippers and wholesalers are growing slim. The last year saw prices grow at an average rate of 6.5%; that’s on top of nearly a decade’s worth of appreciation. Simply put, price increases have been eating into profit margins in Miami for quite some time, and investors are starting to take notice.

According to Attom Data Solutions’ Year-End 2020 U.S. Home Sales Report, only Honolulu saw a bigger decrease in investment returns than Miami. “The biggest annual decreases in investment returns in 2020 came in Honolulu, HI (down 11.8 percent); Greeley, CO (down 8.9 percent); Miami, FL (down 7.7 percent); Cape Coral, FL (down 7.4 percent) and San Francisco, CA (down 5.7 percent),” said the latest report. That’s not to say one can’t pursue a rehab career here (it is entirely possible), but rather that there exists an even better exit strategy for today’s current market environment: long-term rental properties.

Is buying a condo in Miami a good investment (or any other type of rental property for that matter)? It would appear as if the answer is a resounding “yes.” Despite nine consecutive years of appreciation, there are several reasons the Miami real estate investing community is turning to rental properties:

  • Lower borrowing costs

  • Lower risk of vacancies

  • Historically high home values

The demand for rental properties will increase due to the city’s 13.49 price-to-rent ratio. While a 13.49 price-to-rent ratio typically suggests buying is the more affordable option, recent history has proven to be anything but predictable. Instead of more people buying houses in Miami, supply constraints have limited the number of buyers who may actually participate in the market. According to the Miami Realtors Association, there were only 2.8 months of single-family home supply in February; that’s roughly half the supply of a healthy market and about half of the inventory from this time last year. There aren’t enough homes on the market to meet demand, which means more people are being forced to rent. As a result, it’s fair to assume landlords will find their assets receiving more and more attention. While still a threat, vacancies aren’t going to be as prominent for the foreseeable future.

If local demand isn’t enough to convince the Miami real estate investing community to start building rental portfolios, today’s interest rates should “move the needle.” According to Freddie Mac, the average commitment rate on a 30-year fixed-rate mortgage dropped as low as 2.81% in February; that’s the lowest borrowing costs have been in February in more than two decades. All things considered, borrowing institutional money is very affordable, which simultaneously lowers monthly mortgage obligations and increases cash flow for prospective investors.

Investors are lucky to have several viable exit strategies at their disposal in Miami. Still, none appear more attractive than building a proper rental property portfolio in the wake of the pandemic. Too many important market indicators are pointing towards becoming a buy-and-hold investor to ignore.

2021 Foreclosure Statistics In Miami

Miami real estate investors are certainly aware of their city’s diminishing profit margins. Today’s high prices have made it harder to find deals worth flipping and rehabbing. While it may be harder to find a viable deal, it’s far from impossible. The same high prices responsible for squeezing profit margins are also a leading cause of foreclosure. With one in every 4,876 homes in some stage of foreclosure, the city has an elevated foreclosure rate. At 2.0%, in fact, Miami’s foreclosure rate is more than two times the national average (0.8%).

The foreclosure rate in Miami is relatively high, but pre-foreclosures, auction homes, and bank-owned properties have all declined year-over-year. The best neighborhood to invest in Miami may be up for debate, but those looking to increase their chances of landing a foreclosed property should look where the distributions of distressed homes are the highest. Below is a list of the zip codes with the highest distributions of distressed homes earlier this year:

  • 33122: One in every 164 homes is distressed

  • 33194: One in every 727 homes is distressed

  • 33193: One in every 1,873 homes is distressed

  • 33167: One in every 2,014 homes is distressed

  • 33185: One in every 2,085 homes is distressed

Miami real estate market trends suggest local foreclosures could continue to remain a problem for the foreseeable future. If for nothing else, the pandemic has made it more difficult for homeowners to keep up with mortgage obligations. There is most likely going to be an influx of foreclosures as the pandemic continues, and homeowners in Miami may suffer. That said, well-positioned investors may be able to lend a helping hand. Those who line up financing now may be able to acquire their next deal and help homeowners avoid bankruptcy simultaneously.

2021 Median Home Prices In Miami

The median home price in Miami is a healthy $396,659, according to Zillow. However, it is worth pointing out that today’s price is indicative of nearly a decade’s worth of appreciation. Real estate values haven’t always been as high as they are today. As recently as the first quarter of 2012, the median home value was around $204,000 (at the time, the Great Recession had already taken its toll). However, during the first quarter of 2012, home prices in Miami started to appreciate—and never look back. Since bottoming out during the last recession, the median home value has appreciated by as much as 94.4%.

Certain neighborhoods across the city have contributed more to rising home prices than others. Dating back to the turn of the century, in fact, these Miami neighborhoods have appreciated the most (according to NeighborhoodScout):

  • Buena Vista

  • N Miami Ave / NW 36th St

  • S Miami Ave / SW 1st St

  • City Center

  • SE 2nd Ave / SE 1st St

  • E Flagler St / NE 2nd Ave

  • N Miami Ave / NE 14th St

  • Miami Dade College / Biscayne Blvd

  • NW 7th Ave / NW 17th St

  • Bayshore

Moving forward, the Miami real estate market should continue to appreciate. Due to the Coronavirus and the real estate market impact, many are expecting, Miami’s prices could look different from what many projections forecasted earlier. Shelter in place orders issued by the government tempered appreciation in the first quarter of 2020. However, forecasts underestimated pent-up demand and the power of historically low interest rates. In reality, more people want to buy real estate in Miami, which will drive up competition. Ultimately, demand will increase prices over the course of 2021.

It is worth pointing out the median home value across the United States is expected to appreciate more than Miami’s over the next 12 months. The difference is most likely the result of local unemployment rates. While unemployment across the United States has steadily declined since the spike in the first quarter of last year, Miami’s unemployment has improved at a slower pace, even increasing month-over-month from time to time. Today, Miami’s unemployment rate is 6.4%, which is expected to temper buying activity across the city. The lack of participants will slow local appreciation rates, but not for too long. It is only a matter of time till Miami catches up to national averages, which suggests now may actually be a great time to buy a house in Miami.

Miami Housing Market: 2020 Summary

  • Median Home Value: $365,676

  • 1-Year Appreciation Rate: +3.2%

  • Median Home Value (1-Year Forecast): +6.6%

  • Median Rent Price: $2,450

  • Price-To-Rent Ratio: 12.43

  • Unemployment Rate: 10.1% (latest estimate by the Bureau Of Labor Statistics)

  • Miami-Dade County Population: 2,761,581 (latest estimate by the U.S. Census Bureau)

  • Miami-Dade County Median Household Income: $48,982 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 18.12%

  • Foreclosure Rate: 1 in every 5,177 (1.9%)

Miami Real Estate Investing 2020

The Miami real estate market shared the same fate as the rest of the country in 2020. Not unlike all of its other counterparts on the state level, Miami entered 2020 firing on all cylinders. Nearly every Miami real estate market trend was heading in a positive direction, but the introduction of the Coronavirus brought things to an abrupt halt. COVID-19 was officially declared a pandemic by the end of the first quarter, and activity within the housing sector was suppressed. Seemingly overnight, Miami looked poised to suffer its first major setback in nearly a decade. However, it is worth noting that while the Coronavirus hurt the local market, the setback was only temporary. Quick action by the Fed to drop interest rates and pent-up demand quickly took precedent.

A few short weeks after the pandemic was officially declared, the market came roaring back to life. In an attempt to beat appreciation rates, take advantage of lower borrowing costs, and get ahead of the competition, buyers came out in droves. The activity was a welcomed sight, but it quickly turned into competition and eventually lead to significant increases in asking prices. Demand greatly outweighed supply, and the resulting seller’s market increased home values across the whole state, to the tune of nearly double-digit increases over the last year.

The rapid increase in home values, combined with historically low borrowing costs, changed how Miami real estate investors looked at their own exit strategies. While rehabbing and flipping remained a viable strategy, the profit margins grew slimmer over the course of 2020. From March till the end of the year, home values increased 4.2%. To combat rising prices, many real estate investors switched to long-term strategies in 2020. In particular, investors began to take advantage of lower borrowing costs by acquiring rental properties. That way, investors could simultaneously offset higher prices and increase cash flow in one fell swoop. The increased demand also means more buyers would be forced to rent, decreasing the risk of vacancies. All things considered, 2020 was a great year to buy a rental property or add to an existing portfolio.

Miami Housing Market: 2019 Summary

  • Median Home Value: $335,100

  • 1-Year Appreciation Rate: 1.5%

  • Median Home Value (1-Year Forecast): -0.9%

  • Median Rent: $2,400

  • Average Days On Market (Zillow): 127

Miami Real Estate Investing 2019

Miami real estate trends, much like the rest of the country, saw dramatic increases in prices over the course of 10 years. However, 2019 brought about a modern temperance in price appreciation for the Miami housing market. For the first time in a while, 2019 saw median home values decline, albeit slightly. That, combined with an increase in foreclosure activity, really catered to the Miami real estate investing community.

Last year, the median home value increased a modest 1.5% over the course of a year (June 2018 to July 2019), bringing it to $335,100. That was in stark contrast to the national trend, which saw median home values increase by as much as 5.2% over the same period. Regardless, the Miami housing market had trouble keeping pace with the national trends.

In examining the largest markets across the nation with the greatest annual increase in foreclosure starts, four out of the five markets were in Florida. Orlando, Jacksonville, Tampa, St. Petersburg, and Miami all posted a year-over-year increase in foreclosure activity in the first six months of 2019. That’s an important distinction to make, as the majority of large markets across the country (84%) saw year-over-year decreases in foreclosure activity. Local real estate, in particular, saw an increase in foreclosure activity of 7.0% over the course of the previous year. Consequently, there wasn’t a single city that saw more foreclosure filings.

Real estate investors were in a great position to find and acquire discounted foreclosures. Miami was just one of the few cities that actually posted a year-over-year increase in foreclosure activity in the first six months of 2019. Still, it also posted one of the largest increases in that time (up 7.0%). That’s a considerable amount, considering the majority of markets saw a decline in activity.

Miami Housing Market: 2016 Summary

  • Median Home Price: $286,700

  • 1-Year Appreciation Rate: 8.2%

  • 3-Year Appreciation Rate: 27.4%

  • Unemployment Rate: 4.9%

  • 1-Year Job Growth Rate: 2.5%

  • Population: 441,003

  • Median Household Income: $46,946

Miami Real Estate Investing 2016

According to Miami real estate news, the market was thriving in 2016. Home prices and appreciation rates surged past the national average. The median home price for the Sunshine State was $286,700 during the first quarter, compared to the national average of $215,767. Along with an upswing of investment activity, appreciation rates continued to soar past the national average, further boosting the confidence of both the Miami real estate investing community and homeowners.

There was no better place for those looking to grow equity in their homes than the Miami real estate market in 2016. Homes appreciated at a rate of 8.2% year-over-year, compared to the national average of 6.1%. For homeowners and investors, gains in the previous three years extended the trend of positive price growth after the recession, with price appreciation and principle payments boosting total equity growth.

The first quarter of 2016 was extremely kind to the local market. Along with home prices outpacing the national average and total home equity rivaling the rest of the country, the economic landscape drove the real estate market going forward. The unemployment rate was better than the national average: 4.9% compared to 5.0%. On top of that, job growth during the first quarter accelerated at a pace of 2.5%, compared to the national average of 2.0%. Unemployment was not only better than the national average but was growing at a rate above the national level.

Miami Housing Market: 2014 Summary

  • Median Home Price: $270,000

  • 1-Year Appreciation Rate: 3.8%

  • Unemployment Rate: 6.1%

  • 1-Year Job Growth Rate: 2.9%

  • Population: 417,650

  • Percent of Underwater Homes: 25.3%

  • Median Income: $44,000

  • Average Days on Market: 45

Miami Real Estate Investing 2014

Miami real estate news was generally positive in 2014. Buyers, both foreign and domestic, showed immense interest in the Miami housing market in 2014. It was in their best interest to create opportunities for buyers and sellers of every level. As a result, the Miami housing market became one of the most prominent in the United States following the recession. In fact, the market took the form of an export economy as foreign buyers continued to invest in the area. At the time, 90.0% of all the new downtown construction was due to foreign investors’ demand.

The median home price was $270,000. The average property was priced at nearly $50,000 more than the national average ($216,567). As a safe-haven for international investors, the local market benefited from international buyers who were looking to escape economic turmoil from their home country. For all intents and purposes, Miami real estate investing was a better alternative than anything they could do where they were from.

Miami County Map:

Map of Miami market

Summary

The Miami real estate market has been firing on all cylinders for the better part of a decade. Even in the midst of a pandemic, real estate in Miami is nothing short of a hot commodity. Rental properties, in particular, appear to have several tailwinds supporting real estate investors. Low borrowing costs, increasing demand, and a lack of inventory all suggest that long-term buy-and-hold strategies are now just as attractive as their short-term counterparts. In fact, local investors may find that the pandemic has created a market that is more favorable to landlords. As a result, it looks as if the Coronavirus actually created a unique window of opportunity for passive income investors.

Have you thought about investing in the Miami real estate market? If so, what are you waiting for? We would love to know your thoughts on real estate in Miami in the comments below:

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