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The city of Miami impresses with its rapid evolution and growth in recent years, becoming one of the most desired destinations for global investors. The real estate sector, in particular, makes evident the new explosive scenario of the city.
The average price of real estate in Miami has risen an incredible 80% since the beginning of the pandemic. The valuation was so significant that it contributed to the state of Florida surpassing the state of New York, winning the second position in the ranking of the most valuable real estate markets in the US last year.
In the ranking of the most valuable metropolises in the US, Miami jumped from ninth place to fifth position in just one year, surpassing even the national capital, Washington D.C., and other major real estate centers.
In this article, we gather six factors that underlie the solid valuation potential of the real estate market in Miami. If you are considering buying real estate in Florida, be sure to read to the end. Find out why Miami is one of the most desired and promising destinations in the world for real estate investments.
1 – High and growing demand is not supported by real estate supply
The main driving force behind this incredible change is the growing demand for real estate in the region.
Despite the increase in the construction of new properties, several indicators indicate that supply will not be able to keep up with the strength of constantly expanding demand.
On the other hand, the real estate supply sees no stimulus to meet the high demand.
There are several reasons that lead to the low inventory of properties available for sale. This critical inventory situation arose because of the conditions faced during the pandemic. Its reflections remain to this day.
At the time, several owners who had put their properties up for sale, took the property off the market. At the same time, with the drastic drop in interest rates to levels below 3%, many owners decided to refinance their mortgages in search of smaller installments. These owners, who to this day carry attractive financing conditions, have no incentive to sell their properties and buy another one, with higher rates. They are the so-called Rate-Locked Homeowners.
2 – Little land available
Miami, unlike many cities in Florida, has a characteristic that, in the real estate sector, is a decisive factor for property valuation little land available for construction.
The city is bordered to the east by the Atlantic Ocean and to the west by the Everglades (swamps).
3 – Tropical Metropolis in a first world country
Miami is one of the few cities in a first world country to offer a tropical climate, with pleasant temperatures and sea with warm waters almost all year round.
It is not only a city, but it is also a metropolis, in full expansion. It’s not hard to imagine why the whole world wants to live or have a second home in this paradise on earth.
4 – Disproportionate number of immigrants
Due to its geography and location on the US map, Miami turns out to be one of the main destinations for immigrants who try to reach the US, coming from the Caribbean or South America. Not all these tourists stay in the city, however, even those who do not stay end up occupying real estate, pressing demand.
And we’re not talking about illegal immigrants here. Miami is the main destination for citizens of Latin American countries in general.
5 – Residents of other states “invading” Florida
Miami has always been a city sought after by residents of other US states, especially retirees, in search of pleasant climate and quality of life. With the pandemic and the consolidation of remote work, not only retirees, but also the most diverse public profiles have intensified this movement.
In 2021, Florida received more than 1000 new residents per day. All of them in search of houses and apartments to live in.
6 – Labor market and job creation
In the corporate sphere, the city of Miami is also the darling of US companies. Large organizations decided to migrate their headquarters or divisions, attracting new professionals and boosting the growth of the labor market.
Miami, and the state of Florida in general, are perceived by the American corporate market as a pro-business environment.
In addition to being not very bureaucratic and “business-friendly”, the state of Florida brings a number of tax advantages, offering a tax-friendly environment. The biggest advantage is that the state does not charge the so-called “State Income Tax”, a fee charged in other states perceived as “expensive” by companies in the US, such as New York and California.
With the arrival of giants from the financial sector and also from the technology sector, the city of Miami, which already had the nickname “Magic City”, gained two more: 1- Wall Street of the South and “The new Sillicon Valley“.
With a dynamic corporate market, new professionals invade the region every day. All this flow of people and their respective families arrive in search of housing.
Research conducted by the Portland RealEstate portal, which gathers data from the National Association of Realtors, US Census Bureau and Bureau of Labor Statistics, examined the indicator “job growth-to-building permits”, which assesses housing shortages in relation to job growth.
The indicator shows the relationship between the new job opportunities created in relation to the new building permits issued. As an example, an indicator of 30 means that approximately 30 new job vacancies are suggested for each new building permit issued. As a reference, the average of this indicator for the cities analyzed in the study was 7.64.
Of all the cities analyzed, the city of Miami is among the TOP 10, with an indicator of 20.2, revealing the critical housing shortage in the face of job growth in the region, which pressures demand and drives the average price of real estate.
Miami continues with strong valuation potential
Even with the increase in the number of new constructions, Miami remains with a strong potential of valuation. The new units to be made available on the market do not meet the great growing demand. It is worth noting that new constructions can take up to 6 years to complete the works and deliver the keys. Until then, the inventory will probably still be behind the demand.
About AMG International Realty
AMG International Realty is a global real estate company specialized in Florida and aimed at the foreign public. If you want to know more about investment opportunities in Miami, Orlando and surrounding cities, contact me right now and talk to me on WhatsApp: +1 305 318 6968 (Heloisa Arazi).
