Amidst current political and economic changes, many people are wondering what Miami real estate trends we will see in 2017. With moderately rising interest rates, low risk of a housing market crash, population growth, and a rising trend in deregulation, the outlook for Miami real estate is strong in 2017.
Realtor.com predicted that South Florida will see sales volume increase 4.17% and price increase 3.98% in 2017. Look for increases in investment from the northeastern United States, as well as an increase in the number of Millennials in the marketplace as potential driving factors. Foreign investment and luxury home sales could fluctuate, but no major changes are predicted from these sectors in 2017.
Foreign Investment in Miami
A little more than half of Miami-Dade County residents are foreign born. The region is a melting pot, with residents and investors from all around the globe. Foreign investment plays a huge role in the Miami real estate game. It saw a dip in 2016 in part due to the strengthening of the U.S. dollar. If the dollar is to appreciate more compared to other international currencies, it could encourage a decrease in foreign purchases and incentivize foreign investors to sell these now appreciated investments. However, the U.S. market is strong in relation to other global markets, making it a safe place for international investments. With or without currency appreciation, investment in U.S. real estate is still beneficial and desirable to international parties.
There was much uncertainty surrounding the future of the housing market as we approached the 2016 presidential election. Some people were concerned about what the election of President Trump would mean for foreign real estate investment. Thus far, the politics are not affecting the housing market as much as expected. Much of the uncertainty has dissipated and the fundamentals that make Miami an attractive investment opportunity for foreign investors remain.
Trump’s stand on immigration does not appear like it will have a large impact on Miami real estate trends either. The typical South American investor is sophisticated and not normally adversely affected by immigration policies. For those that may want to migrate to Miami, investment visas are available as an option. Congress is to extend the EB-5 investment visa program which grants permanent residency to foreign investors who back developments that create jobs. Two other things that Trump may bring to the table are lower capital gains and income taxes. If achieved, this could actually encourage more South Americans to move to the United States.
U.S. Investment in Miami
While the fluctuation of foreign investment in 2017 may be uncertain, U.S. investment in Miami, particularly from the Northeast, is expected to increase. The strength of the U.S. dollar has affected Miami real estate trends for luxury and foreign sales over the past year, but Miami holds strong investment potential within the United States. Capitalization rates and interest rates currently have a pretty wide spread. This is sending more high net worth investors from across the U.S. to Miami. Aaron Kurlansky, principal of FM Capital says, “we are seeing a lot of guys exiting properties in New York to double down and plant roots here. These people are longer term investors who want to manage their wealth. They are seeing that they can own 200 units here for the same price of 100 units there.”
Millennial Home Sales on the Rise Nationwide
As Millennials are entering their main home purchasing years, the U.S. is expecting to see increases in Millenial home sales. These increases may be more modest in South Florida where young buyers represent a smaller portion of the housing market. According to Jonathan Smoke, chief economist at Realtor.com, in 2016 buyers under age 35 accounted for 29% of home purchases in South Florida versus 38% nationally. This can be mostly attributed to the large amount of investment purchases and retirement communities in South Florida.
Nevertheless, buying is 43% cheaper than renting a home in Miami-Dade County, which is attractive for first time home buyers who are facing high rents in the Miami area. This may bring more first-time home buyers to the South Florida market than in previous years. Similar real estate trends are being seen in other large cities, leading to potential increases in first-time home buyers nationwide. Renting will also continue to be an attractive offer for Miami Millennials. As renter-focused development projects make their way down the pipeline, it may even become a little more affordable.
2017 is looking to be a stable and steady year for Miami real estate trends. When it comes time for you to make a move, make sure you consult with an expert. Our agents at RE/MAX Paradise can help get you where you need to go. Reach out to us today to get started buying, selling or renting in Miami.