Miami’s housing market, which had been outperforming the nation, has been experiencing increased headwinds.
Many metros saw sales rates improve in tandem with mortgage rates, but Miami’s new-home market has been on a downward trajectory, perhaps underscoring how out of step prices are in relation to incomes. Still, home builders are reporting absorption rates that far exceed state and national averages.
The existing-home market is also experiencing a shift in tides as sellers make greater concessions. International buyers continue to help buoy demand and account for approximately two-thirds of all-cash transactions.
Strengths
Miami’s office market fared relatively well in 2022 despite uncertainties that have plagued downtowns across the nation. By year’s end, office rents were up and vacancies down compared with 2021. In a bullish sign, Miami has 1 million square feet under development.
Weaknesses
Miami-Dade County is among the most rent-burdened metros in the nation. On average, residents spent close to 60% of their incomes on rent, and that figure is not expected to improve as increasing home prices put more pressure on rents.
Supply
First quarter housing starts decreased 68.2% year over year, while the number of available vacant lots sits at 5,122, down 21.7% from 2022’s fourth quarter. In terms of supply/demand balance, the market area is 1.52% undersupplied.
Sales
New-home sales in the Miami-Fort Lauderdale-Pompano Beach metro area decreased 36.1% year over year to an annualized rate of 6,378 units in February. Over the past 12 months, 3,951 of sales were attached units, and 2,427 were detached. Existing-home closings for the 12-month period ending in March posted a year-over-year decline of 39.6% to an annualized rate of 96,967 units.
Prices
The average list price of for a new detached home in the Miami region increased 6.1% from 2022 to $782,047 in March, while the average list price for a new attached home decreased 21% over the same period to $1,049,220. Homes priced under $400,000 experienced the most closing activity over the last year. The new-home affordability ratio for a detached home reached 9.1% in February.
Economy
Total non-farm employment in the region came in at 2,856,200 payrolls in January, a 3.8% year-over-year increase. There were approximately 6,500 more jobs in January compared with the previous month. The local unemployment rate increased to 2.5% in January compared with 2.2% in the previous month. January’s jobless rate is lower than it was last year when it stood at 3.7%. Zonda forecasts the region’s unemployment rate will finish the year at 3.1%.
Community
The current population for the Miami region is approximately 6,426,710 people. Population in the area is projected to increase by 1% this year. There are approximately 2,436,270 households in the region, which is up 1.3% year over year. Forecasts show that current household formation is expected to increase by an annual growth rate of 0.7% by 2027. Incomes increased by 9.4% year over year to $73,320.
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