The Miami real estate market saw astounding growth in 2021! The year was marked by low inventory, high prices, fierce competition, and mass migration to the city. Despite the competition, savvy real estate investors made a killing!
Miami is the second-largest city in Florida and one of the best for real estate investing. According to PWC, it’s ranked 12th for real estate investing in the US. Recent studies show Miami real estate has appreciated by 152.88% over the last ten years. This places the city among the top 10% nationally for real estate appreciation.
If you’re looking for a city in South Florida for real estate investment, look no further! But, getting started can be a hassle when you don’t know the 2022 Miami real estate market trends. That’s why we’ve put together this guide. So, let’s get to it!
Miami Real Estate Market Sustainability
Markets are driven by fear, and it’s normal to be concerned. Real estate investors are skeptical about the future of the Miami real estate market after the 2021 boom. We believe the market will remain profitable in 2022. Below are the reasons!
1. Mass Migration into Miami
Miami city and its environs remain one of the fastest-growing regions in the United States. The driving forces behind the mass migration into Miami are high-quality investments at an affordable price, low property taxes, and no income tax.
We can’t overlook other population growth factors like increased freedom, improved city lifestyle, job growth, and safety. The precedent change will continue to fuel more growth in the city while pulling more people from the neighboring States, cities, and towns.
Recent US Census data posits that Florida is attracting more new residents than any other US State. The best part is the visitors are mostly attracted to Miami because of the favorable environment to live, work and play. This trend is expected to continue throughout 2022.
The bottom line is Miami stands out because of the increasing population and better living standards. The job market is thriving, meaning residents can afford to buy and rent houses while meeting their basic needs hassle-free.
If there’s any signal you need, this would be it. No doubt, 2022 will be a great year for real estate investors in Miami and its environs.
2. Increasing Housing Demand, Surging Prices, and the Plummeting Inventory
The rapidly increasing Miami population comes with nothing short of increasing housing demand. Naturally, this trickles to an increase in home and rent prices, especially when the inventory decreases. Simply put, we don’t have enough inventory in Miami.
According to Fortune, Miami is among the worst affected housing markets in the US post the Covid pandemic. Housing data shows Inventory levels are still down more than 50% from pre-pandemic levels.
According to the economics laws of supply and demand, when demand exceeds supply, prices go up. You should expect that in the Miami real estate housing market unless there’s a change. Plus, this will only work out if investors put out more residential housing facilities.
3. Possible Bubble and Market Crash
Amid the fears of surging prices, investors cannot help but think of a possible bubble and a looming market crash. Nothing can be further from the truth! Real estate bubbles and eventual crashes are often fueled by unsustainable debt.
The good news is this isn’t the case for Miami. On the contrary, the real estate housing market in Miami and its environs is driven by pure forces of demand and supply. So thinking of a market crash in 2022 is far-fetched!
The growth will continue provided demand and supply remain constant. We may only see a drop after the supply of inventory supersedes demand. Currently, the inventory is still down more than 50% and will take time to match demand.
4. The Miami Condo Market
The ongoing increase in housing demand, rising prices, and dropping inventory have not spared the Miami condo market. The market is cyclical, fragile, and predominantly investor-driven. According to a David Sidon Group report, several new pre-construction condos have been announced in the wake of the Miami real estate boom.
Typical examples include;
- The Waldorf Astoria.
- St Regis Brickell.
- Five Park.
- The Perigon Miami Beach.
While the supply of new condos in Miami doesn’t match the demand, the effort is worth it! Besides that, this is a positive move welcomed by many investors. Sadly, the surging sales and rent prices are the main setback.
The new pre-construction condos are selling in excess of $1000 per SF, while they’ve been selling for $500 per SF. The critical questions are, will renters afford the high prices? How about the investors? Will they find this sustainable in the long run?
5. Influx of Foreclosure
Miami is expected to see a spike in foreclosures in 2022. An ATTOM Data Solutions U.S. Foreclosure Market Report posits the foreclosure process on Miami properties is already up 67% from Q2 of 2021.
There are many reasons behind the sudden increase. However, the primary reason is the dropping of the foreclosure moratorium on government-backed loans. As a result, you should expect an increase in delinquencies following the withdrawal of government support.
What does this mean for investors? 2022 is the opportune time to line up financing for Miami’s awesome real estate property deals. Distressed homeowners will need help, which is where investors come to their rescue.
6. Investing in Rental Properties will be more Viable
There’s no better time to invest in the Miami rental property than 2022. One, more people are moving to Miami, and two, the demand for rental property is rising. To make it worse, inventory has been dropping since Covid set in and is still 50% down. Savvy real estate investors should see this as an opportunity to build their portfolios.
7. Best Miami Neighborhoods to Invest in 2022
Miami’s real estate market is promising. But still, you want to do due diligence to make the right investment call. Which are some of the best Miami neighborhoods to invest in 2022? Below is a quick rundown!
- Miami Dade College.
- City Center.
- NW 2nd Ave / NW 24th St.
- E Flagler St / NE 2nd Ave.
- N Miami Ave / NW 36th St.
2022 Miami Real Estate Trends | Wrapping Up
The 2022 Miami real estate trends posit another boom. Savvy investors will make remarkable returns if they jump in on time. But here’s the kicker! Getting started can be a hassle when you don’t know what to do. Luckily, H&CO comes in handy. Be sure to contact us for real estate accounting and investing in Miami!