In 2022, Miami’s metro area population was 6,215,000. Compared to 2021, this was a 0.78% increase.
With its rich culture and diverse background, it’s easy to understand why people are flocking to Miami. There’s available access to some of the world’s finest beaches, beautiful weather year-round, and plenty of opportunities to enjoy outdoor activities.
There’s also no state income tax in Florida which adds to a thriving Miami housing market. Coupled with a good job market, the Sunshine State has quickly become a haven for residents from other states looking to relocate or simply vacation for an extended period of time.
However, people looking for short-term rentals have affected the Miami Housing Market. In addition to the shortage of available housing, there are other issues Miami’s real estate market presently faces. This helpful housing guide outlines what you need to know about the Miami housing market along with trends in market reports.
Keep reading to learn more.
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What experts say 2023 holds for Miami real estate
According to Ines Hegedus-Garcia, Avanti Way Realty’s executive VP, should mortgage interest rates continue to soar, the sale price of homes might take a hit. A decline in mortgage rates may ultimately lead to a robust home sale market in 2023, with demand staying strong.
Arenci Properties Realty’s CEO, Fernando Arencibia Jr., explains that South Florida’s real estate is unique. South Florida’s real estate boasts high “in-migration” on an international and domestic level.
Should mortgage rates increase throughout the year, South Florida’s cash buyers and inbound movers can sustain the housing market. This may prevent home prices from crashing.
However, buyers will still meet calmer conditions, even if prices continue to appreciate.
Airbnb strains out Florida’s pricey, tight housing market
According to a recent report from a housing expert with Florida Atlantic University, renters in South Florida blame popular short-term rentals for expensive home rental prices. Condos, townhomes, single family homes, and apartments rented out for less than six months at a time negatively impact locals. For example, locals looking for year rentals find themselves without viable options.
This negatively impacts Palm Beach, Broward, and Miami-Dade counties. Ken H. Johnson, FAU’s finance professor, compiled anecdotal evidence to conclude these statements. He gathered information from 200 developers, tenants, and real estate agents in 2022.
Since Miami is amongst the world’s most expensive Airbnb market across the globe, locals are finding it difficult to compete with short-term prices. Short-term rental prices average $8,024 a month, according to a 2022 study by Compare the Market. This makes Miami the third most profitable city for Airbnb compared to other Airbnb rentals worldwide.
A Nothern American spokesperson for the Miami Herald explained that Miami commonly sees extended stays of greater than 28 days. Miami’s beautiful weather and plethora of outdoor activities make it an ideal place to live, work, and visit.
Johnston also explained that Miami homeowners should press for lease deals that are long-term. This helps the regional housing market and homeowner’s bottom line.
Renters are forced to take on roommates or cancel their leases. They may have to move back home with their parents.
This puts landlords at risk of not finding steady renters. The recession might mean less demand for short-term rentals but maintain demand for long-term rentals.
An unstable economy forces people to avoid short-term rentals. Less remote work and fewer vacations. It also adds to a reduced need for short-term rentals.
Airbnb remains committed to supporting housing solutions, as the vacation rental industry positively affects Florida’s economy.
Miami Beach doesn’t permit Airbnb rentals in the vast majority of residential areas. Anyone who has an illegal Airbnb may face fines from $20,000 to $100,000. However, those fines were reduced in 2018 after Airbnb sued.
Short term rentals
Professor Johnson from FAU concluded that short-term rentals negatively affect South Florida’s traditional home rental market. This information is largely anecdotal.
Some of this information comes from various conversations with real estate developers, real estate agents, and tenants. However, this information is consistent with national studies previously conducted.
A solution could be policymakers levying taxes on anyone renting their home for less than a year. This would help locals find access to year-long rentals.
It’s also worth noting that Miami-Dade County should experience a decrease in how quickly rental prices increase. This is good news for renters struggling to afford a competitive housing market.
A majority of people in South Florida spend over a third of their monthly income just on housing costs. Many essential workers were pushed out of Miami-Dade. They were unable to afford the area after the pandemic.
At one point, Miami-Dade announced a state of emergency because of housing. Mayor Daniella Levine Cava allocated funds for rental assistance. These funds were in the tens of millions of dollars and went to the neediest residents.
There is still an ongoing discussion over long-term solutions for affordable housing, especially workforce housing.
Coconut Grove residential market comes down to earth
Realtors have begun to see Coconut Grove’s residential market normalize. There’s low inventory and high prices with the pace of development most likely decreasing over the next year.
There’s also an increased demand due to heightened migration. As people migrate to Miami, there is also a lack of available inventory.
This continues to drive up rental prices. As such, locals are left racing to find rentals within their price range.
People are migrating from other states and new businesses and companies are expanding to Miami, making it their headquarters. Christine Martinez de Castro, CMC Group’s director of sales and marketing, explained that Miami still has lower home prices per square foot when compared to other major cities.
She explained that the increased demand and low inventory have slowly become a normal cycle for the housing market with prices remaining steady.
Year-over-year, the listing median price for Coconut Grove single-family houses has increased. Rocket Homes explains that, as of November 2022, the median home sale price is $1.4 million. This equates to roughly $701 per square foot.
Compared to November 2021, this is a 25% increase. There have also been 25.2% more homes sold than a year prior.
Since 2021, the cost of one-bedroom homes and apartments increased by 40.4%. The average price was $275,000 and is now $386,000.
For Miami home prices, two bedrooms increased by 40.6%. This rise went from $675,000 to $949,000.
A three-bedroom apartment was valued at over $1 million in 2021 and is now $1.6 million in November 2022. This is a 39.1% increase.
Coconut Grove homes increased during the last year when compared to other local luxury residential real estate markets. Grove Isle increased by 45.5% in the last year. Sunrise Harbor increased by 52.9%, according to Rocket Homes.
The future of new development
Arnaud Karsenti of 13th Floor Investments believes the pace of development is expected to slow down in the next year.
Experienced developers will need to focus on starting fewer projects. This is an opportunity for them as reduced construction leads to an improved cost of building. This move will be strongly bolstered as the economy improves down the road.
Vita at Grove Isle, CMC Group’s brand new residential development located in Coconut Grove, will feature 65 luxury condos. The price starts at $5.1 million for three to four-bedroom dwellings.
According to Ms. Castro, Grove is running out of space for development. This makes Vita one of the only remaining sites to have water views that are completely unobstructed.
An increased price-setting ability comes from Coconut Grove’s restricted residential supply. This makes the area one of the strongest rental unit markets, according to Terra Group’s CEO David Martin.
Martin explains that Coconut Grove’s rental prices are most likely amongst the county’s highest. This is likely due to little new supply and high interest in that particular housing market.
Terra Grupp is presenting Grove Central with a 23-story tower complete with 402 apartments. These multi-family apartments are brought to Grove Central by the developer GRP Grove Metro Station.
The tower features 170,000 square feet of retail space. There are 1,295 residential and commercial parking spaces as well. The tower is conveniently located in Coconut Grove, next to the Metrorail station.
Understanding the Miami housing market
The Miami Housing Market may significantly change over the next year. A shortage of short-term rentals has placed a strain on locals in search of affordable housing.
Additionally, experienced developers may need to reduce the number of projects they begin in the future. This will hopefully lead to a reduced building cost.
If you’re looking to sell your house fast, there’s no time like the present. iBuyers can help you sell your house the quick and easy way, so be sure to contact us today. We’ll connect you with an iBuyer in your area.