Miami Real Estate Predictions for 2023/2024

The Luxury Market Sees the Highest Growth

A trend seen is that the higher the price per SF, the more drastic the price changes have been since Covid (Sometimes a shocking 400% higher). We are talking about properties that sell for $1,000 per SF or more. These are the newer, prime properties in prime locations such as Coral Gables, Coconut Grove, Pinecrest, or Miami Beach.

• Dry lot homes in Coral Gables or Coconut Grove (brand new or from the last 8 years)
  • Trading for $1,000-$1,400 per SF, pre-Covid these numbers were $400 to $700
• Homes in Gated Communities 
  • Trading between $1,000 to $2,000 per SF, pre-Covid this was $500- $800
• Waterfront Homes
  • Trading between $2,000 and $4,000 per SF. Pre-Covid a $2,000 SF+ sale was an anomaly

Migration in Ongoing

Migration has slowed down, but that is compared to the levels of 2021/2022. We still get many relocation requests. We are at the start of becoming a new capital of the world and there is so much cash moving into Miami. 

There are several indicators pointing to the fact that Miami’s net migration is still stronger than it was before the onset of the COVID-19 pandemic. For instance, in 2023, we’ve seen a significant uptick in license plate changes, indicating a noteworthy influx of new residents. What’s especially noteworthy is the influx of young people and businesses into the city, a vital factor in its ongoing economic evolution. The introduction of new talent into the workforce is a significant driver of this transformation.

Attracting Major Corporations

Notably, Miami has attracted major corporations like Citadel and witnessed a surge in technology and business ventures. It’s safe to say that the city is still in the early stages of establishing itself as a formidable economic engine within the United States. Wealth continues to flow into Miami, showing no signs of slowing down.

A remarkable statistic is the number of new business applications per capita over the past year, which surpasses that of any other city. This trend represents a genuine force driving Miami’s economic growth. It’s not just about individuals seeking a haven for their pensions or a place to park their money. Miami has transformed into a place where people come to generate wealth actively, altering its perception.

Miami Real Estate Predictions: Best Places to Invest/Live in Miami?

So once you decide to invest in Miami where do you go? Basically all around the urban core (30/40 min drive) is a prime location. We are talking about Miami Shores, Coral Gables, Coconut Grove, Pinecrest, or Miami Beach. Miami is a relatively easy commutable city and where you want to live is more of a personal choice. These areas however offer prime real estate and are close to A-rated schools and the downtown area.

More and more people are now buying a condo as a primary residence, while before these were considered more for the investment market. As the Miami housing market is drying up, buyers are targeting large condos that can replace a single-family home. The luxury condo market is up 30% in the last 12 months as the supply for large residences has dried up. Those that can’t find a home will look at large condos and they are extremely limited. We are talking about the real luxury condos, prime units in the condos are extremely hard to come by. The supply of new products is also extremely limited. Although new condos are answering this gap in the market we will only see 1100 new units coming in in the next year and 4400 in the following 4 years if all goes according to plan. That is not enough to answer the demand. Building a home takes even longer around 2.5 to 3.5 years.

Miami Real Estate Predictions: What Miami Real Estate Poses Most Risk?

Risks in the Condo Markets

When considering real estate investments in Miami, it’s crucial to exercise caution, especially when dealing with older buildings. The collapse of Champlain Towers resulted in a reduction of the assessment period from 40 to 25 years, underscoring the need for maintenance and renovations in aging condominiums. Many of these older condo complexes will inevitably require significant repair work. For some condo owners, meeting the financial demands of these assessments, which can easily reach millions of dollars, can pose a considerable challenge.

In such cases, developers often step in to purchase these condos, taking advantage of the potential risk associated with older properties. With the new reserve rule in place, which mandates the presence of financial reserves to cover these assessments, associations are striving to be well-managed. However, the inherent risk remains substantial.

We thoroughly evaluate various aspects of a condo, including its finishes, location, amenities, floor plans, and financial aspects. The importance of effective management cannot be overstated, as numerous pitfalls can arise when it is not handled properly. If management fails to acknowledge reality or hasn’t allocated sufficient funds when necessary, it could ultimately lead to long-term difficulties for the property owners.

In the current market, buyers face challenges in finding new condos, especially in the $3 million to $5 million price range in Miami Beach. This shortage often directs attention towards older condominiums. It’s essential to clarify that we don’t advise avoiding all older condos. We emphasize however, the importance of caution and thorough research.

Risks in the Single-Family Markets

When it comes to homes, I warn buyers of homes in flood zones in Miami Beach, Coconut Grove, or Coral Gables. Older homes are experiencing large increases in insurance premiums. These premiums can go up to $50K/$60K, superseding your annual taxes. Therefore, you should avoid older homes (even renovated homes) in the flood zone. If you want to be on the water look for a new home built according to the latest code. 

Conclusion

Years analyzing real estate markets, I feel confident to know what drives this market and what to expect in the year to come.

Please really consider the message above and when it comes time to invest in Miami, I hope you pick up the phone and have a direct conversation with me about the pros and cons of homes and condos in Miami. I look forward to the truth as it's the only way buyers and clients will be able to make highly safe investments.