If you’re looking for the best place to buy a rental property, it’s worth checking the Miami real estate market predictions for the rest of 2023.
Miami has traditionally been a top location for investing in real estate. However, the Covid-19 pandemic brought a lot of changes to the Florida housing market in general and the Miami one in specific. In this article, we will explore the factors and trends currently dominating Miami real estate in order to evaluate whether it’s still worth it for rental property investors.
Table of Contents
- How the Miami Housing Market Performed in 2022
- How the Miami Real Estate Market Is Doing So Far in 2023
- What’s Next for the Miami Housing Market in 2023?
- Top 10 Areas in the Miami Real Estate Market to Invest in 2023
- How to Find the Best Miami Real Estate Investment Properties
To begin with, we’ll quickly go over the performance of the Miami housing market in 2022 and the first five months of 2023. Then we’ll see what investors can expect for the remainder of 2023, according to experts’ predictions.
Next, we’ll use Mashvisor’s up-to-date data to rank the ten best areas for buying a short or long term rental property in The Magic City this year. We’ll also look at the steps you need to take in order to land a profitable deal in such a traditionally hot market like Miami.
By the time you finish reading this guide, you’ll be familiar with everything there is to know about the real estate investment opportunities in the Miami market.
How the Miami Housing Market Performed in 2022
Before we dive into the Miami housing market predictions for 2023, it’s important to take a step back and look at how the market did last year.
When you invest in real estate, it’s important to choose a market that’s not simply doing well but has historically done well despite hardships. While no market is immune to temporary ups and downs, you want to find a location that is resilient to challenges in the long term and invest in rental properties for sale there.
As a first step, let’s take a look at how the Miami market finished 2022, based on historical real estate data provided by Mashvisor:
Miami Real Estate Market Data at the End of 2022
In December 2022, the Miami housing market in Miami-Dade County looked like this:
- Median Property Price: $810,450
- Average Price per Square Foot: $636
- Days on Market: 80
- Number of Long Term Rental Listings: 8,439
- Monthly Long Term Rental Income: $3,277
- Long Term Rental Cash on Cash Return: 2.94%
- Long Term Rental Cap Rate: 2.97%
- Price to Rent Ratio: 21
- Number of Short Term Rental Listings: 4,448
- Monthly Short Term Rental Income: $3,346
- Short Term Rental Cash on Cash Return: 1.76%
- Short Term Rental Cap Rate: 1.78%
- Short Term Rental Daily Rate: $233
- Short Term Rental Occupancy Rate: 47%
- Walk Score: 56
What does all this real estate data mean for investors considering the Miami market?
Here are the most important trends and conclusions we can extract when comparing the state of the Miami real estate market at the end of 2022 and the end of 2021, based on Mashvisor data.
Miami Real Estate Market Performance 2022
In 2022:
- The median sales price of Miami residential properties increased by 2.57%, showing a good potential for natural real estate appreciation.
- The price per square foot went up by as much as 23.70%, which is remarkable growth.
- The average number of days on market for residential listings went down by 43.66%, signifying the heating of the Miami market. This is contrary to trends across the US housing market in general, which observed a cooling towards the end of last year.
- Inventory doubled year-on-year, similar to other top real estate markets across the US. However, the increase in the number of listings available for sale did not suffice to keep up with the rise in demand, so the Miami market heated up.
Miami Long Term Rental Market Performance 2022
In 2022:
- The number of active rental listings declined by 30.11%. Set against an increasing population and a large share of renters, landlords are seeing even more demand for their rentals.
- As a result of the supply and demand forces, the average rental rate increased by 13.60%, opening even more profitable opportunities for investors.
- The average ROI on long term rental properties went up by an impressive 55.56%, from a cash on cash return of 1.89% in December 2021 to 2.94% in December 2022. If 2.94% doesn’t look like a lot, keep in mind that this is just a city average, whereas individual Miami neighborhoods and investment properties bring significantly higher returns.
- The price to rent ratio declined by 9.68% but remained high at 21. It is one of the reasons for the strong rental demand, as residents find it expensive to buy a home in Miami-Dade County.
Miami Short Term Rental Market Performance 2022
In 2022:
- The number of Miami Airbnb listings increased by 143.59%. A primary driver for this large growth is the low vacation rental activities in Miami and the rest of Florida in 2021 as a result of the pandemic. So, this increase shows a return to the normal level of tourism throughout The Sunshine State.
- The average monthly income of Airbnb hosts dropped by 15.71% but remained strong at $3,346. It’s normal for income to take a temporary hit with the increase in available short term rental property listings.
- The profitability of Miami’s short term rentals also went down by 22.81% as a result of the increased supply.
- The average daily rate for Airbnb properties rose by 3.10%.
- The Airbnb occupancy rate in the Miami rental market declined by 20.95% because of the influx of new rental listings.
Overall, the long term rental strategy was more profitable in the Miami real estate market at the end of 2022. The main factor behind the strong performance of long term rental investment properties was–and remains–the high share of renters vs homeowners among the Miami population.
How the Miami Real Estate Market Is Doing So Far in 2023
After this strong performance in 2022, which was challenging for the US housing market as a whole, we have all the reasons to believe that the Miami real estate market predictions 2023 should be positive. However, savvy investors should rely on solid data rather than beliefs and hopes.
So, let’s take a look at whether the Miami market was able to sustain these growth trends in the first five months of 2023 before we continue with our forecast for the rest of the year.
Once again, we’re going to consider the Mashvisor data as it comes from a range of reliable sources like the MLS, Zillow, Redfin, HotPads, Airbnb, and public records.
Miami Real Estate Market Data in Mid-2023
In May 2023, the Miami housing market is exhibiting the following numbers:
- Median Property Price: $1,042,881
- Average Price per Square Foot: $736
- Days on Market: 71
- Number of Long Term Rental Listings: 9,552
- Monthly Long Term Rental Income: $4,114
- Long Term Rental Cash on Cash Return: 3.06%
- Long Term Rental Cap Rate: 3.09%
- Price to Rent Ratio: 21
- Number of Short Term Rental Listings: 5,969
- Monthly Short Term Rental Income: $4,018
- Short Term Rental Cash on Cash Return: 1.94%
- Short Term Rental Cap Rate: 1.96%
- Short Term Rental Daily Rate: $264
- Short Term Rental Occupancy Rate: 42%
- Walk Score: 56
As our Miami real estate market analysis shows, all numbers underwent significant changes, but what do these mean for investors?
Let’s figure it out.
Miami Real Estate Market Trends 2023
Between January and May 2023:
- Home values went up by 28.68%, crossing the $1,000,000 benchmark. The Miami housing market is heating up with no signs of slowing down any time soon.
- The average real estate price per square foot increased by 15.71%, driving the overall rise in sales prices.
- Days on market went down by 11.25% in response to the growing gap between supply and demand.
- Inventory in the Miami residential real estate market declined by 4.29%. Coupled with the shorter days on market, the Miami market is only getting hotter and hotter.
Miami Long Term Rental Market Trends 2023
Since the beginning of the year:
- The number of long term rental listings increased by 13.19% as savvy investors aim to take advantage of the profitable opportunities in the Miami housing market. Nevertheless, the Miami rental market has not been saturated yet, as demand for rentals is stronger than ever.
- The average monthly income for landlords increased by as much as 25.52%, almost equivalent to the year-on-year appreciation rate. Rental rate growth is one of the main factors driving the influx of investors toward The Magic City.
- The return on investment on traditional rentals went up by 4.08% in terms of cash on cash return and by 4.04% in terms of cap rate. Investing in a rental property is becoming even more lucrative.
- The price to rent ratio remained unchanged, making individuals continue choosing to rent over buying single-family homes or apartments in Miami.
Miami Short Term Rental Market Trends 2023
In the first five months of the year:
- The number of Airbnb rentals in the Miami real estate market rose by 34.20% as a result of the end of the pandemic and the resumption of travel activities. Both Florida as a whole and Miami in specific are on track to regaining their position as one of the most popular destinations across the US.
- Vacation rental income increased by 20.08%, marking the recovery of the short term rental industry after Covid-19.
- The cash on cash return and cap rate of Airbnb Miami rental properties went up by 10.23% and 10.11%, respectively. Short term rentals might be resuming their position as the more profitable rental strategy in the Miami market.
- The nightly rate grew by 13.30%, on average.
- The Airbnb occupancy rate decreased by 9.35%, mostly because of the growth in the number of available listings.
All in all, in 2023 so far, real estate investing has become more profitable in The Magic City, regardless of your preferred rental strategy. While long term rentals continued to bring a higher ROI, return on investment grew faster for short term rentals.
Will these upward trends continue for the rest of the year according to the Miami real estate market predictions for 2023?
What’s Next for the Miami Housing Market in 2023?
Now that we know how The Magic City did throughout 2022 and the first five months of 2023, it’s time to look at the Miami housing market predictions for the rest of the year.
Miami Will Remain a Hot Seller’s Market
First and foremost, the main agreed-upon prediction for the Miami real estate market 2023 is that it will continue booming and being a seller’s market. Supply will still be unable to catch up with demand, so the shortage of Miami homes for sale will persist. Inventory will remain weak, at least for the rest of the year.
Importantly both for homebuyers and real estate investors, this will push prices up. Zillow’s Miami real estate market forecast also expects an upward trend in home values year-over-year but doesn’t specify by how much.
It means that interested investors will need to enter the market prepared with financing figured out and preapproved for a loan. Moreover, they’ll need to be ready to get into a bidding war for the listings they like if they want to become property owners in The Magic City.
Affordability Will Be an Issue in the Miami Housing Market
Currently, the median property price in the Miami market equals $1,042,881. That’s not even that much compared to other expensive markets in Florida, like Fort Lauderdale, where the median sales price reaches $1,268,130.
Nevertheless, the Miami value is three times more than the typical home cost in the US, as reported by Zillow. This makes Miami a highly unaffordable market and is one of the main reasons for the strong rental demand. People either cannot afford to buy a home or don’t see the point when rents are relatively lower than property prices.
The prevailing Miami real estate market predictions in 2023 are for this situation to remain. We cannot see a drop in real estate price increases any time soon. Actually, the strong appreciation is one of the main advantages of the Miami market.
According to NeighborhoodScout data, since the beginning of 2000, Miami home values went up by an impressive 351.95%, resulting in an average annual appreciation rate of 6.78%. Residential real estate prices in Miami grew faster than both in Florida and the US. This is a major factor drawing in more and more investors after long term profit.
Meanwhile, beginner investors need to search for the best loans for investment property before entering the Miami scene. With mortgage rates still around and above 6%, affordability will remain a pressing issue for Miami real estate buyers.
Foreigners Will Be a Driving Force Behind Miami Real Estate Market Trends
Foreign investments have always been a factor in the Miami housing market because of the strategic geographical location, the population makeup, the weather, and the lucrative opportunities, of course.
Despite the lingering effects of the pandemic, between August 2021 and July 2022, foreigners purchased $6.8 billion worth of residential real estate properties in South Florida, where Miami-Dade County is. This marks a 34% year-on-year increase, which is expected to accelerate in 2023 now that the pandemic and related restrictions are officially over.
Over the course of the discussed period, foreign investors made 17% of all Miami home sales, with a median property sales price of $500,000. Two-thirds of these were all-cash purchases. As foreigners can pay entirely in cash, they manage to get a hold of the few affordable opportunities in the Miami real estate market.
Miami Rentals Will Remain a Lucrative Investment Strategy
One of the most important Miami housing market predictions for the remaining 2023 – at least as far as investors are concerned – is that long term rentals will continue to bring a lot of profit. The main driver behind this is the high rental demand. In Miami, as reported by NeighborhoodScout, 70.6% of the local population rents due to the high price to rent ratio, currently at 21.
The high price to rent ratio is a fancy way to say that it’s cheaper to rent than to buy a home, and it’s forecast to remain above the 20 mark for the rest of 2023. Because of demand, rental rates will continue their upward trend. Indeed, return on investment is also expected to increase, albeit slightly, despite the skyrocketing residential property prices.
Airbnb Miami Will Continue to Grow
Although the past couple of years were somewhat bleak for the Miami vacation rental industry, this year’s predictions are looking great.
In 2022, over 26.5 million visitors came to Miami and Miami Beach, marking a record high level. The number is forecast to increase even more in 2023 as both domestic and international travelers are eager to make up for the opportunities missed during the global pandemic.
And there’s nothing less to expect from Miami, which is ranked as the 8th most visited US city for domestic travel.
As we’ve already seen since the start of the year, the performance of short term Miami rental properties is improving, which is expected to continue for the rest of the year. So, if you’re looking for the best short term rental markets in the US, The Magic City is one to consider.
However, before investing in a vacation rental in Miami, keep in mind that the city has strict Airbnb laws and regulations. You have to study them carefully to make sure that your plans for becoming a Miami Airbnb host are feasible. A good starting point for your Airbnb market research is the Mashvisor short term rental regulations page.
Top 10 Areas in the Miami Real Estate Market to Invest in 2023
Knowing that the Miami real estate market predictions for 2023 are strongly positive is great. But this is not much help to beginner investors as the Miami market is so vast that they probably have no idea where to focus their rental property search.
To help out, we’ve used Mashvisor data from May 2023 to rank the ten best Miami neighborhoods for real estate investments. These include the five most profitable areas for long term rentals and the five top choices for short term rentals. We’ve focused on the cash on cash return as the most comprehensive measure of ROI in real estate investing.
For the selection of the neighborhoods, we’ve looked at areas where the median property price does not exceed $1,000,000 for affordability’s sake. Moreover, we’ve considered established rental markets with a healthy number of active rental listings.
5 Best Miami Neighborhoods for Long Term Rentals 2023
Here are the top five neighborhoods with the highest long term cash on cash return in Miami:
1. North Bayfront
- Median Property Price: $999,593
- Average Price per Square Foot: $626
- Days on Market: 81
- Number of Long Term Rental Listings: 566
- Monthly Long Term Rental Income: $3,479
- Long Term Rental Cash on Cash Return: 3.86%
- Long Term Rental Cap Rate: 3.92%
- Price to Rent Ratio: 24
- Walk Score: 74
2. South-West Coconut Grove
- Median Property Price: $820,258
- Average Price per Square Foot: $485
- Days on Market: 66
- Number of Long Term Rental Listings: 1,680
- Monthly Long Term Rental Income: $3,329
- Long Term Rental Cash on Cash Return: 3.62%
- Long Term Rental Cap Rate: 3.66%
- Price to Rent Ratio: 21
- Walk Score: 59
3. Auburndale
- Median Property Price: $673,887
- Average Price per Square Foot: $950
- Days on Market: 48
- Number of Long Term Rental Listings: 43
- Monthly Long Term Rental Income: $3,038
- Long Term Rental Cash on Cash Return: 3.53%
- Long Term Rental Cap Rate: 3.57%
- Price to Rent Ratio: 18
- Walk Score: 70
4. Alameda-West Flagler
- Median Property Price: $717,606
- Average Price per Square Foot: $639
- Days on Market: 31
- Number of Long Term Rental Listings: 74
- Monthly Long Term Rental Income: $3,249
- Long Term Rental Cash on Cash Return: 3.44%
- Long Term Rental Cap Rate: 3.48%
- Price to Rent Ratio: 18
- Walk Score: 74
5. Shenandoah
- Median Property Price: $976,239
- Average Price per Square Foot: $696
- Days on Market: 45
- Number of Long Term Rental Listings: 83
- Monthly Long Term Rental Income: $3,784
- Long Term Rental Cash on Cash Return: 2.48%
- Long Term Rental Cap Rate: 2.50%
- Price to Rent Ratio: 22
- Walk Score: 68
5 Best Miami Neighborhoods for Short Term Rentals 2023
Following are the top five Miami neighborhoods with the highest short term rental cash on cash return. Remember that Miami real estate market predictions 2023 are looking very positive for the Airbnb industry, but you need to take into consideration applicable local vacation rental laws.
1. Liberty City East
- Median Property Price: $392,213
- Average Price per Square Foot: $1,101
- Days on Market: NA
- Number of Short Term Rental Listings: 773
- Monthly Short Term Rental Income: $3,123
- Short Term Rental Cash on Cash Return: 4.45%
- Short Term Rental Cap Rate: 4.52%
- Short Term Rental Daily Rate: $211
- Short Term Rental Occupancy Rate: 53%
- Walk Score: 58
2. Overtown
- Median Property Price: $944,758
- Average Price per Square Foot: $568
- Days on Market: 27
- Number of Short Term Rental Listings: 1,641
- Monthly Short Term Rental Income: $3,784
- Short Term Rental Cash on Cash Return: 3.73%
- Short Term Rental Cap Rate: 3.79%
- Short Term Rental Daily Rate: $227
- Short Term Rental Occupancy Rate: 55%
- Walk Score: 73
3. South-West Coconut Grove
- Median Property Price: $820,258
- Average Price per Square Foot: $485
- Days on Market: 66
- Number of Short Term Rental Listings: 547
- Monthly Short Term Rental Income: $4,076
- Short Term Rental Cash on Cash Return: 3.70%
- Short Term Rental Cap Rate: 3.74%
- Short Term Rental Daily Rate: $193
- Short Term Rental Occupancy Rate: 43%
- Walk Score: 59
4. Auburndale
- Median Property Price: $673,887
- Average Price per Square Foot: $950
- Days on Market: 48
- Number of Short Term Rental Listings: 814
- Monthly Short Term Rental Income: $3,350
- Short Term Rental Cash on Cash Return: 3.05%
- Short Term Rental Cap Rate: 3.08%
- Short Term Rental Daily Rate: $163
- Short Term Rental Occupancy Rate: 55%
- Walk Score: 70
5. Alameda-West Flagler
- Median Property Price: $717,606
- Average Price per Square Foot: $639
- Days on Market: 31
- Number of Short Term Rental Listings: 584
- Monthly Short Term Rental Income: $3,280
- Short Term Rental Cash on Cash Return: 2.08%
- Short Term Rental Cap Rate: 2.10%
- Short Term Rental Daily Rate: $158
- Short Term Rental Occupancy Rate: 54%
- Walk Score: 74
How to Find the Best Miami Real Estate Investment Properties
Since Miami’s housing market predictions for the remainder of 2023 are looking great, investors are naturally wondering how to locate the best opportunities in such a vast market. Investing in a profitable rental property in Miami requires the same process as in any other market, so let’s take a look at the steps.
How to Locate the Best Neighborhoods
The first step in finding the best Miami investment properties is to find a good market for your intentions. Depending on the rental strategy you prefer, you should look at different factors like access to jobs and access to tourist attractions. Meanwhile, things like transportation, safety, and amenities are needed for both short term and long term rental property investments.
You also need to consider the average property prices in different neighborhoods and how they align with your budget. Equally importantly, you should find out what rental income, occupancy rate, and return on investment each area brings.
Doing all this rental market analysis manually requires weeks or even months of work. Alternatively, you can locate the top Miami neighborhoods for your real estate strategy in a matter of minutes with the help of the Mashvisor Market Finder.
You can enter all your exact requirements, such as rental strategy, budget, rental income, and cap rate to get a list of the top Miami neighborhoods that meet these criteria. This is expected to take no more than a minute.
How to Search for the Best Rental Properties for Sale
The second step is to look for available investment properties for sale in your selected neighborhoods. You can check out newspapers, try driving for dollars, talk to your network, connect with other investors, work with an agent, etc.
Or you can give the Mashvisor Property Finder a try. Once again, you can input your investment requirements and get a list of rental properties for sale that meet them. One of the best things about this Mashvisor tool is that it focuses your search on properties perfect for investment purposes, not homeownership. It helps you save a lot of time and effort.
Knowing the lastest Miami real estate market predictions in 2023 best serves you when you use Mashvisor’s Property Finder. The tool has its own investment property calculator for more accurate and realistic ROI and revenue projections.
How to Analyze Investment Properties
The third step in the process of finding a profitable property to take advantage of the positive Miami housing market predictions is to perform an investment property analysis. That means you should check what income, operating expenses, cash flow, and ROI you can expect from each listing you like so far.
Your analysis needs to be based on rental comps – or similar properties in the same market – in order to be reliable and trustworthy. It means that you need to find and collect data on comparable rental listings for your respective strategy.
Or you can use the Mashvisor investment property calculator to make the rental property analysis not only faster but also more accurate. Mashvisor’s real estate and rental data comes from reputable sources, as mentioned above. So, with a few clicks of a button, you can analyze the future performance of any residential property in the US, whether rented out on a short term or long term basis.
To start searching for the most profitable rental properties in the Miami real estate market in 2023, sign up for a 7-day free trial of Mashvisor.
Investing in the Miami Real Estate Market: Final Words
The Miami real estate market predictions for 2023 show that although home prices are increasing, the demand for houses will not slow down. It is because Miami is not only a popular migration destination and tourist destination but also a popular location for savvy real estate investors, both domestic and foreign.
Despite high property prices, investing in the Miami housing market remains a profitable opportunity this year. Long term rentals are expected to bring a higher ROI and don’t face legal restrictions, unlike short term rentals. But Miami real estate investors have been making money for years with both strategies.
If you decide to benefit from the positive outlook for Miami real estate, you have to follow the same steps as in any other market to find a good investment property for sale. And as always, having the right analytical technology on your side will help immensely.
To learn more about how Mashvisor can help you make the best real estate investment decisions in Miami, schedule a demo with our team of experts.