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The real estate market, in any region, goes through cycles. At the beginning and end of each cycle, imbalances are usually observed, which bring opportunities. At this time, we understand that the Florida real estate market is entering a micro-cycle, which could mean a unique and opportune moment for investors.
This micro-cycle begins in a context of high demand for real estate in Florida and, on the supply side, extremely low inventory. This unbalanced situation has been going on for approximately 3 years, putting upward pressure on real estate prices. Some recent factors, however, try to bring the market to the balance line. It is in this context, which we understand to be momentary, that a micro-cycle begins in the Florida real estate market.
In this article we detail 5 reasons why we believe that now may be an excellent time to buy a property in Florida.
1 – One of the greatest appreciation potentials in the world
Miami remains among the top destinations for luxury real estate investment in 2023, according to recent projections released in the Knight Frank report. According to the studies, the Miami real estate market will have an expected appreciation of 5% in the luxury segment, even with the recent increase in interest rates and consequent increase in the inventory of properties available for sale.
2 – Florida is one of the fastest growing states in the US
Florida will gain about 3.2 million new residents by 2030, according to the Florida Apartment Association (FAA). This comes after a decade of record growth – between 2010 and 2020, Florida grew by 15% (2.7 million people), ranking second in the entire US territory.
The FAA, based on the number of new residents the “Sunshine State” will receive, projects that 570,000 new homes will be needed to meet all this demand by 2030.
Such an influx of new residents increases the demand for properties, putting pressure on prices, which means great potential for appreciation for those who buy now.
3 – Builders will not be able to keep up with demand
The flow of new residents, mentioned in the previous topic, positively impacts the appreciation potential at the demand end. On the supply side, Florida is unlikely to be able to cope and the imbalance will widen as residential home inventory is already low.
As much as construction companies accelerate their projects, there is nothing to indicate that they will be able to cope with the growing demand. In the last decade, the state of Florida built only 950,000 new units, against 1.62 million in the 2000s and 1.26 million in the 90s. The 2020s would need to break all records.
It so happens that we are in a global post-pandemic and war context in Ukraine. The production chains are still disorganized, with a lack of material and qualified labor. Furthermore, a new residential project can take up to 6 years to deliver, from approvals with local authorities, to construction and delivery of keys.
4 – Market slowed down momentarily – It’s time to enter
High demand and low inventory are nothing new in the Florida real estate market, which has already faced a huge imbalance in recent years.
It so happens that, recently, the American Central Bank (FED) was forced to increase interest rates, in order to control the inflationary escalation. Higher interest rates made mortgages more expensive and demand for real estate experienced a slight slowdown.
Now could therefore be an interesting time to “enter” the market, taking advantage of the momentary slowdown in rising prices.
We understand that the FED will not maintain the upward bias in American interest rates for a long time. Once inflation is under control, interest rates may drop and, with that, the real estate market will be stimulated again.
5 – Protection
For some countries, in particular, now is also a good time to buy a property in Florida and dollarize part of the equity. Brazil’s future is uncertain, with the change of government and all the political and economic uncertainties that accompany it. This situation is similar for many Latin Countries.
Buying a property in Florida, in addition to being a solid investment in hard currency, will also disconnect your assets from the uncertainties in your country.
About AMG International Realty
AMG International Realty is a global real estate company specialized in Florida. To learn more about real estate opportunities in Miami, Orlando and the Tampa region, get in touch right now and chat with me via WhatsApp: +1 305 318 6968 (Heloisa Arazi).
