For many, 2020 has brought with it a feeling of potential. Like a deep breath of fresh, crisp air at the beginning of a new adventure. I suppose every new year is like that, in a way. Bringing with it the promise of a new chapter, a fresh start. But this one has admittedly felt more powerful. The energy is palpable and catching. Have you felt it in your life?
Surely, I am not going to advise you to invest in Miami real estate simply because the energy of a fresh decade holds promise. But with any fresh start comes a time for fresh ideas and opportunities. If you are considering investing in real estate this year, you should really look at Miami, paying special attention to the submarkets. Miami Beach is looking good, as are several other key submarkets.
Miami Real Estate Market Forecast Is Promising as Population and Income Growth Continue
Population and income growth are great leading indicators of real estate investment potential. Miami has seen strong growth in both of these areas, a trend that is expected to continue. In fact, SmartAssets just listed Miami as one of the top 10 “boomtowns” in the country. Boomtowns are cities where rapid economic growth is creating jobs and attracting new residents. Americans are flocking to these cities because “business is booming, jobs are plentiful and salaries are rising”.
Miami population grew by 9.43% from 2014 to 2018. The Bureau of Economics and Business Research, Florida Population Studies has predicted Miami population could grow by another 13% from 2020 to 2030, ending at close to 3.5 million people.
Income growth in itself is a sometimes forgotten metric that has a huge impact on the state of the housing market long-term. Miami household income grew by a whopping 31% from 2014 to 2018. This rapid income growth helped Miami achieve the rank of second-fastest-growing large city in America in a recent study. The study compared 515 U.S. cities across 17 key factors ranging from population growth to college-educated population growth and unemployment rate decrease.
Miami’s population and income growth can be directly correlated to growth in the housing market. According to a Comprehensive Housing Market Analysis by the U.S. Department of Housing and Urban Development, during the 12 months ending February 2019, new and existing home sales increased 7% in Miami-Miami Beach-Kendall, Florida.
According to a 2019 Knight Frank Wealth Report, Miami takes the title of #1 fastest growing luxury real estate market in the US, and #5 fastest growing luxury real estate market in the world after Madrid, Berlin, Paris and Cape Town.
Miami Housing Demand to Surpass Development Growth
There has been a large amount of development in Miami and Miami Beach in recent years. So much so that it has even slightly outpaced population growth, leading to a surplus in real estate supply. Some of these developments are still under construction with closings expected throughout the year, but the flow of new inventory is slowing. A forward-focused eye can see that this is likely to level out in the investor’s favor.
Far fewer new Miami developments are slated to break ground than there were several years ago. With population growth predicted to continue at a healthy pace, supply will fall off as the inventory is absorbed. This presents an opportunity to secure an investment now when the competition is less fierce and sellers more motivated due to properties languishing on the market. Eventually, the seller will need to sell. So, buy right, then the fundamentals will take over from there. You truly ‘make your money’ on the buy-side in Real Estate. Especially if you follow the fundamentals and truly understand the sub-markets.
While there has been excess demand in several sub-markets, Miami Beach is a sub-market with good fundamentals that has been somewhat stagnant in the past several years. With sound fundamentals and reduced competition, Miami Beach is worth a good look. The State of Florida has so much momentum right now. Miami Beach is positioned extremely well and will continue to be a key piece of the puzzle.
Savvy Investments Continue in Miami
The slowing of new development is a natural thing that allows the market’s supply and demand to re-balance. However, new development has not fallen off of a cliff entirely. Continued investments from experienced investors offer another positive sign for Miami’s real estate market forecast.
Moishe Mana, who owns a major redevelopment project in Wynwood, has put together a growing portfolio of roughly 45 buildings in Miami since 2014. According to an article by Forbes, in October, the Mana Group unveiled a timeline for the redevelopment of his downtown Miami properties, including 11 buildings between Southeast First Street and North Miami Avenue that would be delivered between the first quarter of 2021 and the fourth quarter of 2024.
As all good investors know, the key to making a sound investment is looking closely at the fundamentals when identifying the potential for growth. In Miami Beach, the fundamentals are as good as ever. Interest rates are low, tax advantages are large, and demand is slated to grow. Miami is a buyer’s market now, and a seller’s market to come. That makes it the perfect time to get in on a sound real estate investment in Miami. As Warren Buffet would say, “be greedy when others are fearful”.