The current events worldwide have been hitting hard the different sectors all over the world, especially the real estate market in the big cities of the United States like New York, where the situation for investors and realtors became critical in the last year due to the pandemic. However, Miami and South Florida went through a different situation, despite having fewer tourists and high numbers of unemployment, just like the rest of the states across the country.
Surprisingly, Miami and South Florida got a brighter outlook in the real estate market in 2020 “because of and not despite the pandemic”, as said by Fortune Builders, since “demand remained strong for industrial properties due to the surge in e-commerce, and wealthy out-of-state buyers scooped up multimillion-dollar waterfront homes for some very pricey privacy”. This was the case of Ivanka Trump and Jared Kushner, as well as Tom Brady and Giselle Bundchen, to name a few of the big names that packed their bags and moved to Florida on a more permanent scale to live in their luxurious private waterfront homes, far away from the ultra-expensive North cities.
Likewise, local and foreign investors and well-recognized leading companies, like JP Morgan Chase and Goldman Sachs, decided to transfer their operations to Florida, taking advantage of the great tax benefits the state of Florida provides to investors. Besides, due to the COVID-19 pandemic situation, working in big companies can be done remotely more than ever before, without having to spend so much money on a costly office.
For these and other reasons, Miami Real Estate Market stayed afloat and even grew in 2020, despite all the odds.
2020 Investment Overview
The 2020 overview puts the Miami real estate market as one of the most wanted locations for people and investors on different fronts, but especially in the luxury house sales. According to Mansion Global, Miami Luxury House sales doubled in October 2020 thanks to the million-dollar-plus deals across South Florida.
South Florida’s luxury real estate market was hot during 2020. In Miami, luxury single-family home sales rocketed 76.7% in September compared to the previous year, and luxury condo sales jumped 34.9% in comparison to 2019. Also, homes were sold 44% quicker than last year, as stated by the Mansion Global report,
Additionally, the luxury real estate market in South Florida grew considerably faster than the rest of the market in this zone, which results very contradictory to the situation of the state’s economy during the last year, where unemployment numbers rocketed due to the pandemic situation.
Taking statistics from the Miami Association of Realtors, million-dollar-plus house sales in Miami-Dade County more than doubled year-over-year, while overall single-family sales rose by a much more moderate 15.7% during that same timespan. Moreover, existing-home sales increased in both condo and house market, but the biggest growth in the market was brought by high-end properties that allow people to maintain a large social distancing and more space to spend more time at home due to the pandemic.
Other reasons for the great demand of buyers and investors despite the COVID-19 were the fact that mortgage rates are much lower than last year (down to record lows in the 2.8% area), as well as the interest of the millennials to buy a home, having the necessary resources to seal the deal.
COVID-19 Impact
It is no secret that the real estate market across the country was affected by the arrival of the COVID-19 in the world, and restrictions like quarantine orders issued on every state contributed to the negative impact on this sector, including the Miami real estate and housing market.
Luckily, this standstill proved to be temporary, and the Miami real estate market gained its momentum back as the Federal Reserve System has kept interest rates low, favoring millions of Americans to buy their own house. However, this benefit will not last for too long because prices in Miami are expected to increase by 6.6% over 2021.
On the other hand, COVID-19 has had an impact on workers and independent business owners who are looking to leave the big towns where a business rental place can have an over-the-top price. Also, the number of work-at-home workers increased significantly due to the social distancing restrictions, and their priority now is to find a cheaper place, with more room and even nice weather to work in, since they spend more time at home now.
That is why so many people are leaving the North cities like Manhattan, Boston, and Chicago to find a new space in the warm and lovely Florida, where people can get more spacious accommodations for way less money than they had to pay for in their previous homes. In brief, buyers and renters are receiving more value for their purchase.
Finally, the latest unemployment rate in Miami is 10.1%, which is expected to moderate buying activity across the city. This means that now may be the perfect time to buy a house in Miami or South Florida because it is only a matter of time until Miami catches up to national averages.
Conclusion
The extraordinary results of the Miami real estate market in a very hard year for the economy is linked to the high interest of real estate investors who see in Miami and South Florida a golden opportunity to grow and build their rental properties, as well as benefit from the low borrowing costs, increasing demand, growing demographic buyer changes, an improving state economy, and low Florida taxes.
As for the buyers, Miami offers them a greater square footage living, low mortgage rates, and great year-round weather to work from a spacious home.
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