2020 has brought about changes in every aspect of life and the housing market does not escape these current trends. Anywhere in the South Florida area is already a popular place for people to move to, especially retirees. With sunny weather all-year round, sandy beaches and no state income tax, it is easy to see why it appeals to many.
The Miami housing market did see a decline brought on by the pandemic, as did everywhere, but when record-low mortgage rates became available, people looking to buy jumped at the chance. For Miami, this meant a super boom in their real estate market in all price ranges. The demand for single-family homes as well as multi-million-dollar luxury homes has skyrocketed.
How Did the Market Get This Way?
The national average for home sales has seen a 22% increase across the country. In the Miami-Dade County alone, total home sales were up 20.9% year-over-year, having bounced back in July 2020. From luxury, multi-million-dollar homes to condos, people are buying the same day as places are being listed on the market. By the end of the first day, a recently listed home could have a dozen offers, with many being over the listing price.
When the pandemic first began, homebuying took a big hit as many were being laid off from their jobs or uncertain of what their future was going to look like. With this, mortgage rates were slashed to record-low rates that had not been seen in decades. According to Freddie Mac, the 30-year fixed-rate mortgage averaged at 2.66% at the end of 2020, which is the lowest they have seen in the survey’s history, which began in 1971. This led to people coming in droves looking to take advantage of these historically low rates, which led to a spike in demand for those looking to buy.
The demand for housing in places like Miami-Dade County, Palm Beach County and Fort Lauderdale have always been popular with those who were newly retired, looking to move south for sunnier weather and a lower cost of living since Florida is one of the few states that does not have a state income tax. This has only escalated since many people were pushed to consider earlier retirement than originally planned because of the pandemic.
The opportunity for remote work is another factor of why those younger than retirement age are also adding to the demand of South Florida real estate. If people have the option to work anywhere, many will choose to go somewhere for the same reasons as retirees. This has led to more people looking to live in Florida for the long-term.
The number of houses available on the market when mortgage rates were first dropping, could not keep up with the ever-increasing demand and this is still the case. According to Forbes, the total for active listings of single-family homes has hit a twelve-year record low at the end of 2020. This was seen across all prices ranges for homes in the area.
As we continue into 2021, the outlook of homes available for sale are homes over the price of $300,000. Homes that are listed at multi-million dollar prices are still in demand and being bought quickly, but the inventory of homes for the workforce in Miami is even lower. The scarcity of single-family homes has also led to the condo market becoming tight as well.
The Luxury Housing Market in Miami
Since many now have the luxury of working from home, they are looking to buy homes that can function as more than just a home. Many are now looking for a place that they can have a home office, gym, outdoor space and more, which is already pricey in this area. If the option is available to them, people will purchase luxury homes in this area just as fast as any other home.
Prices for these luxury homes has continued to increase as demand has not stopped. Sales of homes over $3M had increased for seven consecutive months as of February 2021. It is seen that a majority of those putting in offers on homes are coming in over listing price.
Luxury housing in this area in previous years has typically been bought by foreigners. In South Florida previously, almost 80% of luxury homebuying was done mainly by people from Latin America, Russia and Asia. In 2020 however, this has gone in the opposite direction with now almost 70% of buyers being from the U.S.
No Signs of Slowing Down in 2021
If you are someone who is looking to buy in the Miami real estate market or the surrounding areas, you may have some tough competition. The demand for those looking for housing has not stopped and shows to only be increasing as we get farther into 2021. With inventory of homes being listed for sale only decreasing as the months go on, you have to be aggressive in your plans to buy in this area.
Homes being listed have offers on them within the week and many potential buyers are going in with offers over the list price. Since the Great Recession, the appreciation of homes in Miami have increased with the median home price here being $396,659 according to Zillow. The median home prices are only expected to go up given the circumstances.
The market trends overall from 2020 in the Miami real estate market are carrying over into 2021 and seem like they will be the norm for the remainder of the year. So, if you want to buy in Miami or anywhere in South Florida, be prepared for limited options and paying above the listing price.