Miami’s beauty, incredible climate, abundant business opportunities, and proximity to Europe and the Caribbean make it very desirably situated for International business and trade. In this year’s edition of PWC’s Emerging Trends in Real Estate, Miami checked in at #11, up from 25th year over year—officially recognized as one of the most desirable US markets for real estate investment. The biggest event in 2017 in Miami to affect buyers, and therefore prices, was Hurricane Irma, and several other hurricanes that passed through. But assuming the worst is over, housing is likely in for a strong period. So what, then, does the Miami real estate forecast for 2018 have in store for buyers and sellers?
Price appreciation: condos vs single-family homes
The going Miami real estate forecast for 2018 says the trend that’s seen price appreciation in the city’s housing market isn’t over just yet. While the market for condos and homes in Miami Dade & Broward County is a little flat, house prices have risen 7%. The current average price for a house is $347,000, and average condo prices are around $190,000.
Meanwhile, the number of single-family houses listed fell 4.8 % (307 units) in October to 6,152 homes. New house listings fell 9.3%, and those offered at less than $250,000 dropped severely, spelling a housing shortage. Yet the number of condos for sale rose 5.6% to 15,222 listings during the same period in 2016.
Miami real estate forecast 2018: a condo buyer’s market?
Mike Pappas of the Keyes Company said the double-digit appreciation new condos experienced between 2013 and 2015 created a false perception about what those same units could sell for in 2016 and 2017. Luxury condo sales are expected to stay slow as the single-family market grows in 2018. Condo developers are being forced to pull back after years of extraordinary appreciation.
Yet, for those moving condos listed at $600,000 or less, as well as single-family homes in every price range, the real estate forecast for Miami in 2018 is looking good. Given that the supply of luxury condos on the market is currently at a whopping 45 months’ worth of inventory and sales remain slow, more cancelled projects are expected, as well as discounted prices on development sites.
“At the end of November 2017, we have five years worth of condo inventory over $1 million on the market,” said Ron Shuffield of EWM Realty International. “This is the highest total in one month since the recession in 2008.” That figure includes condos currently under construction and condos that have hit the resale market. This has forced sellers to recalculate their listings, dropping prices by double-digits. “The average price reduction is around 19 percent,” said Shuffield. “Some are 35 percent off the initial asking price.” Given falling prices, real estate investors will have to look harder to find high performing properties in Miami. It looks like a buyers market for condos in Miami in 2018. With condo prices subdued, now may be the time to pick up a bargain before prices soar again.
Some experts believe condo prices will continue to drop, especially in the urban core, as there is a lot of new supply. The fact is, the only way to decrease this massive inventory and stabilize the market is by reducing prices. In this market, a lot of overpriced beach condos are lifting their prices because of neighbouring luxury projects, in spite of the fact that these hefty over-market asking prices are not always justified. The best deals might be achieved by “bold buyers” willing to come in and make offers up to 30% below asking. With so many sellers and properties priced above market value, bold buyers may just be in luck.
Condo supply ever-increasing: real estate forecast for Miami in 2018
More and more secondary-market condo inventory is being added to the supply, while the average number of sales is drifting lower. Peter Zalewski of CraneSpotters.com counts 47,692 new condos, the majority of which are in Miami-Dade County. Of those, 22% have been built and delivered since 2011, with another 24% currently under construction. The remaining units are in early planning phases or actively seeking planning permission. This means the South Florida market is growing by “at least 22,000 units—even if they turn off the spigot today—based on what’s been delivered or what’s under construction,” says Zalewski. Developers, eager to move their inventory, have doubled brokers’ commissions to 10% in the last two years. Further signs that the real estate forecast for Miami in 2018 may just be a buyer’s dream opportunity.