As we enter into 2020, Miami remains a buyers' market and investors need to capitalize on this advantage while it is still there. If you are looking at investing in the Miami real estate market in 2020, you must read till the end. Miami hits most people’s radar as a tourist destination, though it periodically hits the news when it looks like it may be hit by a hurricane. However, Miami is a large, thriving city with a strong housing market.
Miami is home to just under half a million people. However, the Miami housing market is far larger than that – it includes much of southeast Florida and more than five million people. That makes the Miami real estate market the seventh largest in the U.S., and it is the second largest housing market in the southeastern U.S.
However, that isn’t reason enough to consider investing in the Miami real estate market. According to a report published by Zillow in Dec 2017, Miami was the country’s fourth most valuable housing market. Trailing only Los Angeles (total value of $2.7 trillion), New York (2.6 trillion), and Washington (996.7 trillion), the total value of Miami’s housing market is an estimated 864.2 billion, which represents a solid 4.7 percent increase year over year.
With that kind of increase every year, just think of what would its valuation be when head into last quarter of 2020? In the latest quarter, real estate appreciation rates in Miami have been around 0.7% to 0.8%. If they remain steady, the annualized appreciation rate would be around 2.8% to 3%. In this article, we shall discuss some more important reasons why you may want to consider buying Miami investment properties in 2020. Please note that there are many variables that can potentially impact the value of a home in Miami (or any other market) and some of these variables are impossible to predict in advance.
What Makes Miami a Hot Place For Real Estate Investment? |
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Miami Real Estate Market Predictions 2020
What are the Miami real estate market predictions for 2020? The latest real estate data from Zillow shows that the current median home value in Miami is $367,249. Miami is currently a buyer's market – which means there are less qualified buyers in the market place and more homes for sale.
The Miami home prices have risen by 1% over the last year. Looking forward in this year, the Miami real estate market forecast is that home prices will continue to increase by 1.2%. Since 2015, the median home price in Miami has increased from $300,000 to $370,000.
Here is the Miami , FL real estate price appreciation graph by Zillow. It shows us the current home price appreciation forecast of 1.2% till Dec 2020.
The median list price per square foot in Miami is $420, which is higher than the Miami-Fort Lauderdale-West Palm Beach Metro average of $230. The median price of current listings in Miami is $489,000 and the median price of homes that have been sold out is $330,500. The median rent price in Miami is $2,400, which is higher than the Miami-Fort Lauderdale-West Palm Beach Metro median of $2,000.
Zillow reports that 9.2% of the listings in Miami had a price cut in Nov 2019, which is a good thing for buyers. It shows sellers were willing to negotiate on prices as they were finding it more and more difficult to sell homes at asking prices. The median price per square foot in Miami in December 2019 was $420.
Miami Housing Market Forecast 2019 – 2021
Here is a short and crisp Miami housing market forecast for the 3 years ending with the 3rd Quarter of 2021. The accuracy of this forecast for Miami is 77% and it is predicting a positive trend. The LittleBigHomes.com estimates that the probability for rising home prices in Miami is 77% during this period. If this price forecast is correct, the Miami home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.
Check this page each quarter for updates to the Miami, Florida Real Estate Forecast.
Miami Real Estate Market Trends
We shall now discuss some of the latest real estate market trends in the Miami such as median home prices, inventory, economy, growth and neighborhoods, which will help you understand the way the local real estate market moves in this region. In Miami-Dade the housing affordability crisis is getting worse. According to the Miami Association of Realtors’ June 2018 report, median single-family home prices increased from $335,000 to $355,000 year-over-year; it was the 78th consecutive month of growth.
Existing condo median prices rose 2.1 percent, from $235,000 to $240,000. For renters, Miami’s greater downtown area is the place to be. Brickell, Downtown and Midtown are some of the top three hottest areas in Miami-Dade right now for renters. For buyers, the top three hottest areas are Coral Gables, Miami Beach and Coconut Grove. Budget-conscious home buyers should consider Homestead, Miami Shores and Kendall. Investors will want to pay attention to the Design District. Miami Beach remains popular, but watch out for inflated prices.
And traffic has become one of the key factors when deciding where to live. For the fourth year in a row, Miami Beach was once again named the most overvalued neighborhood, with a median price per square foot price of $520, according to Zillow. Brickell clocked in second at $497 per square foot, while the luxury enclaves of Sunny Isles Beach ($554) and Key Biscayne ($753) tied for third.
Homestead, where the median square foot price is $140, was deemed the most undervalued neighborhood. Miami Shores ($338) came in second, because its price is lower other areas with comparable housing stock and quality of schools, such as Pinecrest and Coral Gables. North Miami Beach ($237), Little Havana ($254) and Kendall ($226) tied for third. For more details you can read this report published in the Miami Herald.
Trulia has currently 17,965 resale and new homes for sale in Miami, FL including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. The median sales price is $325,000 and homes are selling for about $231/sqft.
As per the real estate company called Neigborhoodscout.com, the median house price in Miami is $324,783, which indicates that home prices in Miami are well above the national average for all cities and towns in the United States. Large apartment complexes are the most common housing units in Miami. Other types of housing that are prevalent in Miami include single-family detached homes, duplexes and row houses.
Currently, there are 911 single family homes for sale in Miami, FL on Zillow. Additionally, there are 210 single family homes for rent in Miami, FL. Under potential listings, there are about 7 Foreclosed and 296 Pre-Foreclosure homes. These are the delinquent properties that may be coming to the market soon but are not yet found on a multiple listing service (MLS).
Following the housing market decline in 2007, single family rental properties became favorable options for investors, saving in construction or refurbishment prices. The quick turnaround for an owner to rent out their property means cash flow is almost immediate. Single family rental homes have grown up to 30% within the last three years. Almost all the housing demand in the US in recent years has been filled by single family rental units.
In the past month, 1202 homes have been sold in Miami, FL on Redfin.com. In addition to houses in Miami, there were also 6055 condos, 607 townhouses, and 465 multi-family units for sale in Miami last month. The median price of homes for sale is around $435,000. According their statistics, the Miami housing market is somewhat competitive. Homes in Miami receive 1 offers on average and sell in around 65 days. The average sale price of a home in Miami was $335K last month, up 8.1% since last year. The average sale price per square foot in Miami is $222, up 7.8% since last year. A hot listing in Miami can sell for around list price and go pending in around 25 days.
Here is the latest Miami housing market data for the month of Dec 2019 from Redfin.com. The sale to list price ratio shows us that it was a trending more like a buyer's market in the past month.
Miami Housing Market Trends in Dec 2019 |
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| Median List Price | $435,000 |
| Avg. Sale / List | 95.5% |
| Median List $/Sq Ft | $323 |
| Median Sale Price | $335,000 |
| Median Sale $/Sq Ft | $222 |
There are currently 11,992 homes for sale in Miami, FL on Realtor.com. The asking price of single family homes can start from $55,000 and can go up to $20M for a luxury property located in Upper Eastside neighborhood in the city of Miami, FL. Upper Eastside is a popular neighborhood for home buyers who can afford to buy a home in the median price range of $600K. The most expensive neighborhood in Miami is Village of Key Biscayne where the median home price is around $1.4M.
There are currently 7,417 rental properties in Miami and their rent prices range from $490 to $130,000 per month. There are 311 new construction homes for sale in Miami within a price range of $205,000 to $20M. The most affordable new construction homes are located in the located in the Little Haiti neighborhood in the city of Miami, FL. According to Realtor.com, in December 2019, the Miami housing market was a balanced market, which means there was a balance of buyers and sellers in the market. Little Haiti is a popular neighborhood with a median home price of $285,000.
According to Realtor.com, in December 2019, the Miami housing market was a balanced market, which means there was a healthy balance of buyers and sellers in the market. In other words, the demand for housing met the supply. Ideally a buyer would prefer a sale to asking price ratio that’s closer to 90%. In Miami, the buyers have held good leverage in these negotiations in the past month. On an average, they could buy homes for 96% of the asking price. A seller would always prefer scenarios which can yield a ratio of 100% or higher.
In December 2019, the median list price of homes in Miami, FL was $410K, trending up 2.8% year-over-year. The median listing price per square foot was $295. The median sale price was $348K.
Analyzing real estate data from multiple sources gives us a much broader perspective of the direction in which a market is moving. The median list price in Miami, FL on Movoto.com is $450,000. The median list price in Miami was less than 1% change from December to January. Miami's home resale inventories is 8,086, which decreased 1 percent since December 2020. The median list price per square foot in Miami is $344.
As you can see in the graph, the median price per sq ft rose to its peak value in Dec 2019, when it was $348. Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in January.
Miami is a fairly walkable city in Miami-Dade County. There are 122 neighborhoods in Miami. Village of Key Biscayne has a median listing price of $1.4M, making it the most expensive neighborhood. Fountainebleau is the most affordable neighborhood, with a median listing price of $220,000. Popular neighborhoods in Miami include Brickell, Kendall, Aventura, Downtown Miami, Little Haiti, Mid Beach, Edgewater, Downtown, Coconut Grove, Brickell, Wynwood, Miami Springs, South Point, Miami Shores, Hialeah, El Portal, Santa Clara and South Beach.
If you are looking to invest in the Miami real estate, you should that three most important factors when buying a real estate anywhere are location, location, and location. Location creates desirability. Desirability brings demand. There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your Miami investment real estate and you should be able flip it for a lump sum profit. The neighborhoods in Miami must be safe to live in and should have a low crime rate. The neighborhoods should be close to basic amenities, public services, schools and shopping malls.
Miami, FL Foreclosures And Bank Owned Homes Statistics
According to Miami foreclosure data by Zillow, the percent of delinquent mortgages in Miami is 1.2%, which is higher than the national value of 1.1%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Miami homeowners underwater on their mortgage is 10.0%, which is higher than Miami-Fort Lauderdale-West Palm Beach Metro at 7.2%.
| Total No. of Foreclosures in Miami | 4,907 (RealtyTrac) |
| Homes for Sale in Miami | 3,970 |
| Recently Sold | 14,204 |
| Median List Price | $385,000 (1% rise vs Nov 2018) |
There are currently 4,907 properties in Miami, FL that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 3,970. In December 2019, the number of properties that received a foreclosure filing in Miami, FL was 7% higher than the previous month and 26% higher than the same time last year.
Is Miami a Good Place For Real Estate Investment?
Now that you know where Miami is, you probably want to know why we’re recommending it to real estate investors. Is Miami a Good Place Real Estate Investment? Investing in real estate is touted as a great way to become wealthy. Many real estate investors have asked themselves if buying a rental property in Miami is good investment? You need to drill deeper into local trends if you want to know what the market holds for the year ahead. We have already discussed the Miami housing market 2020 forecast for answers on why to put resources into this market.
Although, this article alone is not a comprehensive source to make a final investment decision for Miami but we have collected ten evidence based positive things for those who are keen to invest in the Miami real estate market in 2020. Investing in Miami real estate will fetch you good returns in the long term as the home prices in Miami have been trending up year-over-year. Let’s now discuss state of the Miami real estate market, which can help investors who are keen to buy an investment property in this city.
1. The Strong International Market
In 2011, nearly a third of residents were foreign born. However, about half of those become citizens, so we can say that Miami is simply considered attractive to immigrants. However, the Miami housing market is unusual in the number of foreigners buying homes here. Russians, Brazilians, Argentines, Turks, Chinese and British buyers are buying up properties here at a far higher rate than would be expected.
Some see the property purchases as a safe investment, while others intend to use the beachside condos as vacation properties. A few bought homes in Miami to flee to in case their home countries became untenable, which explains the large Venezuelan expat community in Miami.
2. The Beach
Many tourists come for the beach, and many people want to live there, as well. Miami’s beaches are made all the more attractive by the year-round subtropical weather. This helps explain why Miami-Dade’s population is growing around 2% a year while south Florida’s population overall has been stagnant. It is considered the fifth fastest growing region in the U.S.
3. The Geographic Constraints
Many of the world’s fastest appreciating real estate markets are attracting people coming for work and quality of life, but they cannot expand the housing supply to meet demand. San Francisco is surrounded by water on three sides, and they make things worse by limiting the height of buildings, so they can’t build up the way NYC has. In Colorado and Utah, a mix of federal parklands and vertical mountains limit where developers can build houses.
We’ve already mentioned that Miami is on the water. Miami has experienced a spurt in high rise construction in downtown, giving it the third highest skyline in the U.S, but other areas limit it so that high rises don’t block the view of the water. However, that hasn’t prevented the Miami real estate market from becoming the sixth densest housing market in the U.S overall.
4. The Limited Supply of New Homes
There’s an interesting factor to consider in the Florida housing market, and that’s the massive retiree population. Many older people move to Florida for the mild weather, and they’re rather immune to housing price fluctuations. Older people who already live here stay in their homes. This results in fewer turnovers in the Miami real estate market, limiting supply for would-be buyers.
That explains why Tampa and Coral remain over-priced markets though jobs aren’t as plentiful there. Retirees who do leave the state periodically tend to keep their Florida home as a second residence instead of selling it. The Gulf Coast is more of a vacation spot than retirement enclave, so there’s less competition for limited housing stock.
5. Jobs, Jobs, Jobs
Many people move to Miami for work. Miami is the largest urban economy in Florida, and it has the 12th largest GDP in the U.S. The World Cities Study Group classified Miami as an alpha city based on the level of business activity, human capital and cultural activity. The unemployment rate in Miami hovers around 4% today; it is currently in line with the national average but often below it. Only Orlando has a better job market.
6. Miami is a Tourist Market
The Miami real estate market does present an opportunity to those who want to cater to tourists. The Port of Miami is known as the Cruise Capital of the World, since it is the top cruise passenger port in the world. Landlords can rent to tourists who want to stay for a week in Miami before flying home or simply want to enjoy Miami’s beaches, cultural activities and sports teams. According to the Wall Street Journal, a $350,000 property can be rented out for $2500 per month. That’s a fair ROI, and you could easily rent out a vacation condo when you aren’t using it yourself.
7. The Massive Population of Renters
Two thirds of Miami residents rent, a rental rate rivaling that of New York City. This is partially due to the number of people working in seasonal and temporary jobs in the tourism business. It is partially due to the limited housing supply relative to demand. And it is partially due to the high cost of housing, even inland, relative to local wages. This is leading many investors in the Miami real estate market to buy single family homes to be carved up into multiple units, each one rented out individually.
8. The Strong ROI for Landlords
Investing in the Miami real estate market can give you strong returns. The high demand for properties in southeastern Florida relative to demand limits the ability of people to buy, creating a large pool of renters. Miami ranked second in the nation for the most cost-burdened renters in the country, paying more than half of their income in rent.
Rents aren’t as high as they are elsewhere in the country, but given the lower property values than markets like Silicon Valley or NYC real estate market, it is a good ROI. For example, the median home price is around $350,000, while the median rent is $1900 a month. A $1900 a month rent would be considered a burden for a household earning $70,000 a year, while median incomes in the area are actually $50,000.
9. The Massive Student Market
As the largest city in Florida, it would end up with multiple large universities for that reason alone. However, Miami’s international appeal and unique position has made it an education and research hub, resulting in the creation of institutions like Florida International University.
There are almost forty colleges and universities within forty miles of Miami, hosting over 350,000 students. Ironically, Miami University isn’t among them – that’s in Ohio. The University of Miami, though, is located in Miami and enrolls more than 17,000 students.
10. It Is Landlord Friendly
Whether you’re renting to students, low-income workers or snowbirds, potential investors in the Miami housing market will be glad to know this is a landlord friendly market. Florida doesn’t have laws on rent control. Security deposits aren’t capped, and you can start eviction is the rent is three days late. Damage to the property requires a seven day conditional quit notice, while repeated lease violations allow for a seven day unconditional notice.
Investing in Miami Real Estate or Not: The Conclusion
Maybe, you have done a bit of real estate investing in Miami, FL but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold. Should you consider Miami real estate investment? The Miami real estate market offers diverse opportunities to real estate investors, allowing you to choose which rental markets you want to cater to and profit from. A good cash flow from Miami investment properties means the investment is, needless to say, profitable.
A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding a good Miami real estate investment opportunity would be a key to your success. If you invest wisely in the Miami real estate, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it very important to read good books on real estate. You must also collaborate and learn from savvy investors who have retired early on in their lives by investing locally in the Miami real estate market. As with any real estate purchase, act wisely. Evaluate the specifics of the Miami housing market at the time you intend to purchase.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market area, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing and interest rates.
NORADA REAL ESTATE INVESTMENTS strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.
The aim of this article was to educate investors who are keen to invest in Miami real estate in 2020. Purchasing an investment property requires a lot of studies, planning, and budgeting. Not all deals are solid investments. We always recommend to do your own research and take help of a real estate investment counselor.
Other Best Places To Invest in Real Estate in 2020
Another hot market for investors in 2020 is going to be the Denver real estate market. There are many reasons why the Denver real estate market 2020 is going strong today and certain to remain strong for years to come. You cannot afford to miss out on this growing, appreciating real estate market. Since housing inventory is scarce, prices are going up much faster than wages, and the younger population is more comfortable renting than owning, the Denver housing market is seeing a rapid rise in its rental market.
Sheer demand for housing stock is making it profitable to break up large homes into multiple apartments. If Forbes could recommend this as a Denver real estate market investment strategy in 2016, it can be seriously considered today. They said that any single family home in the Denver housing market could be considered a good rental property due to the rapid rise in home prices.
Similarly, the Portland real estate market is another hot market to choose for real estate investing. It is booming because the economy is doing well on its own and the area is head and shoulders above California’s deteriorating situation. The Portland real estate market has experienced double-digit annual price growth in recent years. Home values rose 11.4% in 2016 alone, according to a report from the real estate data company Clear Capital. The home prices in the Portland, Oregon housing market have slowed considerably over the last few months. And that’s a good thing, from a sustainability standpoint.
*Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
References:
Rental market
https://www.miaminewtimes.com/news/65-percent-of-miamians-live-in-rentals-most-of-any-major-american-city-6562379
ROI
https://www.miamiherald.com/news/business/real-estate-news/article183538886.html
https://www.miamidade.gov/business/library/reports/2013-income-poverty.pdf
Landlord friendly
http://www.landlordstation.com/blog/top-landlord-friendly-states/
Limited supply due to retirees
https://www.forbes.com/sites/ingowinzer/2018/03/13/as-appreciation-stalls-differences-in-florida-markets-matter-more-than-ever/#11b7521f6584
Demographics
http://worldpopulationreview.com/us-cities/miami-population/
https://en.wikipedia.org/wiki/Miami
https://en.wikipedia.org/wiki/Miami_metropolitan_area
Jobs
https://www.bls.gov/regions/southeast/summary/blssummary_miami.pdf
https://en.wikipedia.org/wiki/Miami
Foreign buyers
https://www.forbes.com/sites/kenrapoza/2017/08/31/look-whos-buying-up-miami-real-estate-now/#629e4d201232
https://www.usnews.com/news/best-states/articles/2017-07-13/venezuelas-loss-is-miamis-gain
The tourist market
https://en.wikipedia.org/wiki/Miami
Student market
https://www.collegesimply.com/colleges/florida/miami/
ROI
https://www.nbcmiami.com/news/local/Three-Florida-Cities-Ranked-Among-Worst-in-US-For-Renters-494267151.html
Housing Market Data, Trends & Statistics
https://www.zillow.com/miami-fl/home-values
https://www.littlebighomes.com/real-estate-miami.html
https://www.trulia.com/real_estate/Miami-Florida
https://www.movoto.com/miami-fl/market-trends
https://www.redfin.com/city/11458/FL/Miami/housing-market
https://www.neighborhoodscout.com/fl/miami/real-estate
https://www.realtor.com/realestateandhomes-search/Miami_FL/overview
https://www.realtytrac.com/statsandtrends/fl/miami-dade-county/miami
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