The year 2020 impacted the Florida real estate market in an unprecedented way. The pandemic changed the behavior of buyers and sellers, altering the balance between supply and demand in the various real estate segments. The migration of hundreds of thousands of Americans from other states, especially from the north, increased the demand for single-family homes. At the same time, the inventory of this type of property has fallen. On the other hand, the luxury condo market in Miami experienced a difficult year with high inventory and little demand. However, it appears that the market is adjusting. Gradually, the luxury condos market starts to become attractive again.
Florida receives about 1000 new residents daily. All this flow of people puts enormous pressure on the demand side. In this context, the prospects are optimistic, especially if we consider that many of the new residents in Florida initially chose to remain in rented units. The idea would be to understand first whether they really want to live in the Sunshine State and also in which neighborhood or city. It is very likely that many of these residents who are now renting will make the decision to buy their own property, which will positively impact the real estate market.
Will this flow of new residents remain in 2021? What are developers planning? What will happen to the prices of the single-family homes and luxury condos segments?
In this article we bring the opinion of AMG Realty’s partners on the prospects for the Florida real estate market for 2021.
Single Family Homes
The demand for single-family homes does not appear to be going down. This type of property in suburban areas of Miami and Orlando remains a favorite with Americans coming from other states. The inventory remains low, but the developers have already intensified their activities. Proof of this is the buyers confidence index, which reached a historic record.
New constructions will not be able, at first, to relieve the pressure of demand. It takes a few years for the new projects to be approved, built and delivered. In the meantime, it is expected that the inventory will remain low and the market will remain “seller” for a while.
Our projections are that inventory will remain low for a while regarding single-family homes. The flow of people from other states will not decrease. Prices for single-family homes will continue to rise.
With the single-family market heated and few homes on the market, there will be no option for new buyers other than considering luxury condos in Miami. This, incidentally, is the market where today there are the greatest opportunities in Florida. With high inventory and little demand, prices plummeted.
The appeal of having a luxury condo is not the same as that of a single-family home. It has the idea that residential homes in suburban communities can offer better solutions in times of pandemic and confinement, such as ample space, a backyard, and a private pool. It turns out that many luxury condos offer much more than what single-family homes offer. The amenities of luxury condos in Miami are incredible. Some buildings offer a private pool on the balcony, such as the Porsche Design Tower in Sunny Isles Beach.
Gradually, new buyers are already realizing this. Why not take the opportunity today in the luxury condo market and buy extremely spacious apartments with 5-star amenities?
Luxury condos also have another advantage over houses. Maintenance is easier. It is not the owner who takes care of the pool, the garden or the leisure areas. Everything is up to HOA. Best of all, you can also find condominiums in suburban areas and with lower demographic density.
Our projections are that Miami luxury condo prices are close to reaching the lowest level, if they have not already. With the arrival of the vaccine for Covid and the return of normality and the opening of borders to important markets such as Latin America, the demand for luxury condos will increase and prices will rise again in 2021. It is definitely a Buyer’s market with great opportunities.
Commercial Real Estate
With the growing flow of new residents coming from northern states, many of them wealthy business people and executives from large companies, demand for office spaces in the city has emerged. This flow grew during the pandemic, making it an opportune moment to think about projects aimed at this profile.
All of these new executives will need offices. Even if remote work comes to stay, there will always be a need for office space. The developers have already realized the opportunity and started to launch office buildings. Many of them are being built in Aventura, a community that is evolving to become a new financial district.
Even Miami Beach, a neighborhood that has always been focused on tourism and dependent on it, is beginning to aim for commercial developments. During the pandemic, the tourism sector was one of the most affected. The negative impact on the city of Miami Beach was considerable. Municipal authorities understand that diversifying local activities is essential and now might be a good time to put the plan into practice.
Florida is also expected to become the headquarters of several companies that are currently in the note, and intend to migrate to states with lower tax burdens. The latest big news in this regard was the announcement by Goldman Sachs, a giant on Walt Street, that will migrate part of its operations to Florida. All of these employees and collaborators will need a place to stay, some of them are already working remotely in Florida.
It’s a little early to make predictions about the Florida commercial Real Estate and office buildings. It is not yet possible to measure the impact of remote work after the vaccine arrives. The fact is that the large influx of new executives to Florida increases the demand for this type of property. Our forecasts are that, in the first instance, the market will take over existing idle units. In a second moment, perhaps more towards the end of 2021 and the beginning of 2022, prices begin to rise.
About AMG International Realty
AMG International Realty is a global full-service brokerage firm in Florida. If you are interested in buying, renting or selling your property, please give us a call today: +1 (305) 318 6968 (Heloisa Arazi).