Is the Miami real estate market cooling down? After two years of expansion, is it still a good idea to buy a property there? Read on to find out.
Buyers, investors, and sellers are drawn to the Florida metropolis for several reasons. Still, it raises the question: “Is investing in the Miami real estate market a smart decision?” Better still, is it a suitable time to purchase Miami real estate?
Table of Contents
- Miami Real Estate Market 2023 Predictions and Trends
- 5 Reasons to Invest in the Miami Real Estate Market in 2023
- 5 Best Neighborhoods in the Miami Real Estate Market for Long Term Rental Investment
- 3 Best Neighborhoods in the Miami Real Estate Market for Short Term Rental Investment
Foreign and local real estate investors, notably, find that Florida’s most recognized city can provide a profitable setting for savvy businesspeople. However, simply investing in Miami real estate market without a strategy is insufficient.
You must listen to what the market indicates in the aftermath of the pandemic and convert each critical indicator into a realistic action plan. To bring your plan to fruition, you need to equip yourself with the most valuable tools and updated data available today.
Let’s look at numerous reasons someone would choose to invest in the Miami real estate market, see more about Miami housing market predictions, and some of the best neighborhoods to invest in—with Mashvisor providing all the data.
Miami Real Estate Market 2023 Predictions and Trends
Miami, Florida real estate stories have kept up with the rest of the country. Nevertheless, folowing the Fed Reserve’s determination to tighten housing standards across the board in the US, markets throughout the country may begin to behave autonomously. Higher interest rates and less activity will determine the course of events over the next twelve months.
Although it is too early to predict what Miami’s real estate market will look like in the near future, it is reasonable to understand what the market’s current trends offer interested investors. Here are some Miami real estate market trends projected to continue through 2023.
1. Purchasing a Home in Miami Will Be More Costly
According to Redfin’s real estate data, Miami’s median property price rose 27.4% over the past year. The increase was directly tied to the pandemic’s demand and supply restrictions. However, there is no reason to believe that the same signs will not drive prices upward over the following twelve months.
Although the demand in Miami is falling due to increasing mortgage rates and an expected recession, the city’s 25.2 weeks of supply is insufficient to meet pent-up demand. According to one of Realtor.com’s predictions, home prices might rise another 2.0% by the end of 2023. A housing shortage is seen to drive the prices up.
2. Foreclosures in Miami Will Rise
Miami foreclosures are on the rise. Previously, government help and moratoriums stopped lenders from initiating foreclosure proceedings against delinquent homeowners. However, the said government support is no longer available. The suspensions are due to expire, and owners will be compelled to pay up.
As an outcome, in the third period of 2022, Miami experienced some of the highest foreclosure occurrences. The trend is predicted to continue in the future, as the increased risk of a recession is expected to raise the number of delinquent householders in the area.
It is too early to predict how many foreclosures will begin in the Miami real estate market in 2023, but it is reasonable to anticipate that they will increase.
3. The Best Investment Will Be Rental Homes
Profit margins are down as a result of rising home prices, making rehabs less appealing to investors. Yet, the same variables that reduced profit margins on flips increased the appeal of investment property rental homes.
Rents in Miami, especially, have recently climbed at a quicker rate than housing prices. More significantly, rentals should continue to rise in tandem with housing values. With this 2023 trend, landlords will gain considerably if more people are driven to the rental pool.
As it is still relatively early to say what Miami real estate market will hold this year, we can focus on the current 2023 Miami housing market predictions we’ve discussed.
5 Reasons to Invest in the Miami Real Estate Market in 2023
As the Fed tightens its grip on the housing market by raising interest rates, activity slows, and perception alters. Nonetheless, we can see noticeable tendencies in the Miami housing market, providing a few good reasons to invest in Miami real estate market.
1. Supply Patterns
According to the latest government data, there are about 11,901 current listings and 25.2 weeks of current inventory in the Miami home market. Despite demonstrating more inventory than most marketplaces, there are still not enough homes in Miami to meet demand.
Even though mortgage applications are decreasing as interest rates rise, demand continues to outstrip supply. Moreover, inventory is projected to increase, but not at a rate that will bring the market back into balance.
Also, it’s unlikely that the market will experience a major crash in the coming months as things improve. Still, with all the statistics in mind, Miami requires some more time to return to normal.
2. Trends for Investors
Before the pandemic, the most common exit option for Miami real estate investors was house flipping. However, rising housing prices nearly erased profitability margins. Now, flipping houses is simply too pricey.
It doesn’t imply that flipping isn’t a feasible exit plan in Miami. It’s that economic indicators favor long term real estate housing market solutions like rental properties, which became profitable in the last two years.
3. Many Prospective Locations
Setting aside the numbers and statistics, Miami is a continuously evolving city, which is why so many people are drawn to it. They value its diversity and limitless chances. You may find the upcoming (and finished) locations interesting if you are among such individuals.
Edgewater in Miami, for example, is now seeing a renaissance. The Miami neighborhood’s newfound recovery comes after it experienced a decline from the late 1990s to the mid-2000s. Nonetheless, it is slowly rediscovering its purpose and witnessing a rush of investment. It is a scenario repeated across Miami, as well as other cities in Florida, as the rest of the US works to return to pre-pandemic levels.
4. Thriving Tourism
Miami has long been a popular tourist destination. With its warmer months and lovely beaches, it’s a logical choice for anyone looking to rest, unwind, and have fun. Add to it the fact that Miami is one of the country’s fashion capitals and home to several film studios.
That implies that property owners may profit from local and international tourism, which is popular in the area. It might range from renting out vacation homes to starting a business to meet the demand. The possibilities are limitless for Miami real estate investing.
Moving forward, let’s focus on the best long term and short term rental neighborhoods’ statistics for Miami real estate market.
5. Homestead Protection
Homestead protection is another great reason to invest in Miami real estate market. It implies that the house of a Florida citizen is safe from creditors. There are a few exceptions to the said rule (depending on whether the money was earned via a felony and other considerations). Nevertheless, typically, it provides excellent asset protection to people in need.
Moreover, it implies that if you have a documented judgment against you, it cannot be attached to or form a lien on your homestead. Simply stated, a creditor cannot repossess your home if you owe money on a judgment.
Florida’s homestead protection is one of the most powerful asset protection instruments in the US. It is a state constitutional legislation that safeguards the worth of a debtor’s main house. Such a protection commonly leads to judgment debtors migrating to Florida to avoid collection by a judgment creditor.
5 Best Neighborhoods in the Miami Real Estate Market for Long Term Rental Investment
If you’re looking to invest in long term rentals in Miami, Florida, here are the top five neighborhoods according to Mashvisor’s December 2022 location report. The neighborhood’s statistics are listed in order of highest to lowest cash on cash return.
1. North Bayfront
- Median Property Price: $776,492
- Average Price per Square Foot: $571
- Days on Market: 83
- Monthly Long Term Rental Income: $3,731
- Long Term Rental Cash on Cash Return: 4.57%
- Long Term Rental Cap Rate: 4.64%
- Price to Rent Ratio: 17
- Walk Score: 74
2. Southwest Coconut Grove
- Median Property Price: $807,033
- Average Price per Square Foot: $465
- Days on Market: 85
- Monthly Long Term Rental Income: $3,858
- Long Term Rental Cash on Cash Return: 4.19%
- Long Term Rental Cap Rate: 4.23%
- Price to Rent Ratio: 17
- Walk Score: 59
3. Upper Eastside
- Median Property Price: $958,756
- Average Price per Square Foot: $580
- Days on Market: 112
- Monthly Long Term Rental Income: $4,442
- Long Term Rental Cash on Cash Return: 3.99%
- Long Term Rental Cap Rate: 4.05%
- Price to Rent Ratio: 18
- Walk Score: 28
4. Auburndale
- Median Property Price: $654,941
- Average Price per Square Foot: $948
- Days on Market: 102
- Monthly Long Term Rental Income: $2,965
- Long Term Rental Cash on Cash Return: 3.52%
- Long Term Rental Cap Rate: 3.56%
- Price to Rent Ratio: 18
- Walk Score: 70
5. Shenandoah
- Median Property Price: $993,470
- Average Price per Square Foot: $827
- Days on Market: 83
- Monthly Long Term Rental Income: $4,571
- Long Term Rental Cash on Cash Return: 3.45%
- Long Term Rental Cap Rate: 3.47%
- Price to Rent Ratio: 18
- Walk Score: 68
If you’re ready to invest in the Florida real estate market, start searching for a profitable long term rental property in Miami now.
You can use Mashvisor to find long term and short term profitable properties in the Miami real estate market.
3 Best Neighborhoods in the Miami Real Estate Market for Short Term Rental Investment
Miami’s neighborhoods are consistently ranked well in terms of environment and quality of life, recently seeing increased employment development and investment in public transit. Of course, they all profit from the bright Miami weather all year round.
If you’re looking to invest in short term rentals in Miami, Florida, here are the top three neighborhoods according to Mashvisor’s December 2022 location report. The neighborhood’s statistics are listed in order of highest to lowest cash on cash return.
1. Southwest Coconut Grove
- Median Property Price: $807,033
- Average Price per Square Foot: $465
- Days on Market: 85
- Number of Short Term Rental Listings: 532
- Monthly Short Term Rental Income: $4,086
- Short Term Rental Cash on Cash Return: 3.69%
- Short Term Rental Cap Rate: 3.73%
- Short Term Rental Daily Rate: $192
- Short Term Rental Occupancy Rate: 43%
- Walk Score: 59
2. Overtown
- Median Property Price: $670,308
- Average Price per Square Foot: $604
- Days on Market: 35
- Number of Short Term Rental Listings: 501
- Monthly Short Term Rental Income: $3,253
- Short Term Rental Cash on Cash Return: 3.04%
- Short Term Rental Cap Rate: 3.08%
- Short Term Rental Daily Rate: $209
- Short Term Rental Occupancy Rate: 53%
- Walk Score: 73
3. Auburndale
- Median Property Price: $654,941
- Average Price per Square Foot: $948
- Days on Market: 102
- Number of Short Term Rental Listings: 640
- Monthly Short Term Rental Income: $3,137
- Short Term Rental Cash on Cash Return: 2.85%
- Short Term Rental Cap Rate: 2.88%
- Short Term Rental Daily Rate: $162
- Short Term Rental Occupancy Rate: 47%
- Walk Score: 70
Ready to invest in Florida’s real estate market? Start searching for a lucrative short term rental property in Miami now.
Conclusion
For the majority of the past decade, the Miami real estate market was running on all engines. Even in the middle of a pandemic, Miami real estate remains a desirable market. For rental properties, in particular, multiple tailwinds seem in their favor.
With the Miami real estate market, lower borrowing costs, rising demand, and a scarcity of inventory all signal that long term buy and hold tactics are now as appealing as short term ones. Indeed, local investors may discover that the pandemic established a more advantageous market for landlords.
Therefore, the Miami real estate market is favorable for both long term and short term rentals. It is up to you to determine which strategy suits you the best. Of course, with Mashvisor’s real estate app’s thorough analysis, you’ll save a lot of time. Additionally, you can be confident that you’re dealing with reliable, up-to-date data.
Schedule a demo with one of our product experts right now. We’ll give you a thorough overview of our services and gladly answer your questions.