Miami is the biggest city in southern Florida and attracts people from all over the world with its lively nightlife, diverse culture, and gorgeous beaches. The city’s housing market is thriving with profitable opportunities for real estate investors and homeowners. In 2022, the Miami housing market was one of the strongest across U.S. cities. Miami recorded the fastest year-over-year home price growth at 15.9%
in comparison to other cities in the country.
While 2023 is not expected to keep up with the incredibly high growth of the previous year, Miami is still a hot city in U.S. real estate. The Miami real estate market has remained strong through the pandemic while the housing markets of other cities came to a halt. Investors, homeowners, and interested buyers alike are wondering what to expect out of Miami’s real estate market in 2023.
1. Out-of-towners will continue to boost the Miami housing market
People migrating to southern Florida help maintain a high demand for housing in Miami. Miami and the surrounding area appeal to non-native Floridians for several different reasons. Northerners flock from cold states wanting to trade blustery winters for Miami’s tropical warmth. Some relocate to Florida from densely populated and highly taxed states. In a post-pandemic world, people have more freedom to work remotely wherever they please. Miami’s gorgeous weather, picturesque beaches, and vibrant culture make the city a dream work-from-home location.
While some may move to Florida full-time, others buy property to escape during the snowy winter months. Buyers wanting a Florida home to live in part-time are often in search of luxury Miami properties. The trend of people moving to southern Florida for better weather is expected to continue positively influencing the Miami real estate market.
2. Tourists increase demand for short-term rentals
The city of Miami is one of the most popular vacation destinations
in the U.S. Miami attracts tourists all year round. Tourists visit Miami for the gorgeous weather, vibrant nightlife, and rich Latin cultural influences. Miami is a great locale for a variety of groups including family vacations, bachelorette parties, and spring break trips. Tourism is a major contributor to Miami’s economy. In 2022, tourists staying at Miami hotels spent more than $17 million
The millions spent every year by travelers visiting Miami demonstrate just how much tourists are willing to spend. Transforming a Miami property into a short-term rental can be a profitable investment because of the city’s booming tourism economy. Unlike some other American cities, Miami is considered to be friendly to short-term rentals
State and local governments have minimal regulations around short-term rentals in Miami. The city’s attractive lack of regulation does not stop at short-term rentals for tourists but also benefits other living costs in Miami. The minimal regulations attract homeowners and corporations alike with low mortgage rates, no income tax, and low sale tax. In 2023, visitors and those new to town are expected to continue significantly contributing to the Miami economy.
3. Housing prices rise
As inflation causes price increases across the country, Miami is no exception. The rise in price in Miami homes ranks among the highest
in the nation. The rise in median sale prices in the Miami metropolitan area was the third-highest increase in the U.S. The increasing sale prices have caused a slowdown in the Miami housing market. Miami’s real estate market has made a steady recovery since the pandemic caused a major slowdown, but the increased prices have made it more difficult for first-time home buyers and those on a limited budget.
Mortgage rates have more than doubled
year-to-date and are up 4.1 points year-over-year rising to more than 7%. The Fed increased interest on fixed-rate loans to combat inflation. Increased mortgage rates have resulted in home buyers spending thousands more creating an opportune time for investors, especially those who can afford to make cash purchases. Despite rising sale prices, the demand for housing in Miami has continued steadily. High prices and increased mortgages can result in a profitable opportunity for real estate investors.
4. Possible shifting buyer demographics
As the millennial generation reaches the home-buying age, the demographics of home buyers may change. Millennials are the largest generation in the U.S. representing 43% of homebuyers
. While many millennials expressed interest in owning a home, the combination of high mortgage rates and home sale prices has discouraged them from becoming homeowners. Millennials have cited difficulty building savings to fund a down payment as a major factor in not buying a home.
As millennials choose to continue renting at a later age than previous generations, rental properties may become increasingly profitable. In metropolitan areas like Miami, rental properties can be a very valuable asset in the housing market. While millennials are waiting to buy a home, do not count them out. Millennials are reaching milestones such as marriage and having kids later in life than previous generations. Perhaps a boom in millennial homeowners is to come later. Changes in buyer demographics like millennials buying or not buying homes will influence the real estate market in Miami.
5. Ready to explore Miami real estate today?
The Ben Moss Group
has years of experience helping clients through all stages of luxury real estate in South Florida, including major cities like Miami. Our team of expert real estate agents works tirelessly to help clients navigate the market of Miami homes for sale
. We are skilled in negotiations, sales, and marketing to meet the needs of all client’s unique situations. With ample experience working with a variety of different clients, our team is ready to face any challenge, though we are specialized in accommodating people in the sports and entertainment industries. Contact the Ben Moss Group to get started today!