There is a strong case for continuing construction of new homes in Miami. Normally, home construction needs to keep up with job growth. If it doesn’t, cities with the largest disparity may see housing shortages and rising home prices. However, in most of the country, housing construction has not been keeping up with the latest employment statistics. In the past, builders constructed 1 home for every 1.5 jobs created. In the last three years, the number of jobs created has outpaced that ratio, with some states seeing 1 home constructed for every 3, 4, or 5 jobs created. In Florida, the ratio is 1 home constructed for every 3.5 jobs created. Although builders and realtors differ on their reasons for the need for new home construction, they do agree that it is necessary.
Everyone knows there are a lot of Miami condominiums under construction, with new projects breaking ground fairly regularly. Some people fear that the pre-construction frenzy will once again have a deleterious impact on the South Florida housing market. Hopefully, understanding the economic importance of the relationship between housing construction and the job market will allay some of those fears.
There is no denying there has been plenty of demand in Miami for the new condos popping up downtown and along the coast. One problem that Miami shares with the rest of the nation is the availability of affordable homes. More and more of the condo projects in Miami are targeting the luxury shopper, excluding many first-time buyers and average families. Obviously, builders want to maximize their profit margins and focusing on the high-end sector certainly bodes well for doing so. Nonetheless, it is imperative that cities offer sufficient affordable housing. Even though there has been positive job growth, wages remain stagnant, preventing people from keeping up with the cost of living. A reduction in spending power limits consumption, which weakens economic growth and negatively affects the housing market. There isn’t an easy or perfect solution, but hopefully increased investments and infrastructure improvements will help things along.