While the global real estate sector is experiencing a slowdown, Miami seems to experience a different reality. Conflicting real estate forces combine to make the “Magic City” a unique environment filled with opportunity. A recent report released by the consultancy Black Knight shows that Florida holds 4 of the 5 main real estate markets in the country in terms of annual real estate appreciation in 2022. Miami, with 20.1% appreciation compared to last year, comes at the top of the list , followed by Tampa (17.3%) and Orlando (16.6%).
On the one hand, buyers postpone the purchase decision, since they face more expensive financing installments. At the other end, landlords are reluctant to lower prices, still in the inertia of what was a super-heated market, but is already showing signs of slowing down.
Normally, higher interest rates, with the consequent negative pressure on demand, should encourage sellers to lower the price. Not what is happening in Florida! Many owners insist on maintaining prices or simply do not put the property up for sale, in anticipation of a brighter future. This behavior helps to keep inventory at low levels.
High interest rates and lower appetite for buyers are still not enough to offset the very low inventory, keeping prices at considerably high levels.
Expectation is that inventory will increase gradually
The tendency is for inventory to increase gradually, leading the market towards equilibrium, even if this reality is distant. The hope for an increase in inventory in the short term is due almost solely to the greater number of resales (homes already existing and inhabited), since new units (new constructions) could not fill this vacuum so soon. A development, from authorizations at the city hall to the construction and delivery of the keys, can take up to 6 years to be delivered. In an environment with a shortage of labor, material and free land, new constructions are not the solution for the short and medium term.
Miami investor opportunity
This could be a good time for investors, as lower demand could bring some bargaining in the negotiations. Despite the reluctance of sellers to lower prices, the situation today is very different from that seen a year ago, in a scenario of “Bidding War”.
In another report released by Night Frank, Miami remains one of the most promising markets to invest in real estate, with a projected appreciation of 5% for 2023. The “Magic City” is second only to Dubai, with an expected appreciation of 13.5%. The big difference between Miami and Dubai is that the latter comes from a large devaluation compared to last year (50%), which does not suggest a consistent future.
About AMG International Realty
AMG International Realty is a global real estate company specialized in Florida . If you are interested in learning more about real estate opportunities in Florida, get in touch right now and chat with me via WhatsApp: +1 305 318 6968 (Heloisa Arazi).