South Florida is drawing in tons of investors. Should you join them? Here’s everything you need to know about the South Florida real estate market in the rest of 2021 and into 2022:
Why Move to South Florida?
Nearly 1,000 people move to Florida each day — and roughly half of that group heads to South Florida.
Here are some of the reasons so many people are moving to South Florida — and why you should too:
- Weather: South Florida has some of the best weather in the country, with average high temperatures that never even dip into the ’60s — not even in December or January! Furthermore, the weather in South Florida surprisingly doesn’t get that hot either. The hottest month is August, with an average high temperature of 88 degrees.
- Activities: South Florida is a vast metropolitan area with endless things to do. The South Florida beaches and shopping, specifically, are world-renowned. South Florida is home to professional football, basketball, baseball, and hockey teams. There are plenty of nature centers in the area, and the Everglades is just a car ride away.
- Taxes: While living in South Florida may be more expensive compared to some other areas, it’s important to note that you’ll be saving a lot of money by not paying income taxes. Florida has one of the lowest tax burdens in the country – just be prepared for higher homeowners and flood insurance rates in South Florida.
- Jobs: Since South Florida is a large and diverse metropolitan area, its job market is strong. Miami is an international banking hub with tons of opportunities. Other large industries include aviation, hospitality and tourism, technology and innovation, trade and logistics, and health care.
Why Invest in South Florida?
Not only is South Florida a great place to live, but it’s also a great place to invest. Here are some of the reasons why you should consider investing in South Florida real estate:
- Miami was ranked #12 in the United States for real estate investing in 2019 by PricewaterhouseCoopers.
- Miami is in the top 10% nationally for real estate appreciation — with properties appreciating 123.65% over the last 10 years for an annual appreciation rate of 8.38%.
- Miami-Dade County home values have increased by 12% over the past year. Broward County home values have increased 15.7% over the past year. Palm Beach County home values have increased by 18.1% over the past year.
- Miami ROIs are higher than average thanks to relatively low home values but high rents.
- Miami is a landlord-friendly place that doesn’t have any laws on rent control, no caps on security deposits, and liberal eviction guidelines.
- Miami is considered a “global hub” with one of the country’s biggest airports and is one of the fastest-growing cities in North America.
- Miami is home to the wealthiest zip code in the U.S., where the average income is $2.2 million, and the median home value is $2.6 million.
- Miami has tax-friendly policies that have been drawing in investors both from other states and abroad.
The South Florida Buyer’s Market
Here are some important statistics and numbers that you need to know about the South Florida buyer’s market — whether you’re looking for an investment property or a primary residence:
- In Miami proper, the market is not considered very competitive by Redfin, with a score of 17 out of 100. This means that multiple offers are rare, and the average homes sell for about 3% below list price after about 52 days.
- The average sales price in Miami is $419,000 — a 17.9% increase since last year.
- In Fort Lauderdale, the market is similar, with a score of 18 out of 100.
- The average sales price in Fort Lauderdale is $440,000 — a 16% increase since last year.
- In West Palm Beach, the market is more competitive, with 26 out of 100. This means that some homes get multiple offers, and the average home sells for about 2% below the list price after about 46 days.
- The median sales price in West Palm Beach is $290,000 — an 18.4% increase since last year.
The South Florida Renter’s Market
Here are some important statistics and numbers that you need to know about the South Florida renter’s market if you’re looking to purchase an investment property and rent it out:
- Two-thirds of Miami residents rent rather than own — this is a huge market that you can take advantage of as an investor.
- The average rent for a one-bedroom apartment in Miami is $1,970; two-bedroom is $2,738; three-bedroom is $3,404; and four-bedroom is $7,000.
- In the Miami area, Deerfield Beach, Delray Beach, and Aventura have the fastest-growing rents that have increased about 15% since last year.
- Many investors in the Miami area are purchasing single-family homes and dividing them into multiple units to rent out individually to maximize return, according to Norada Real Estate Investments.
- Many renters in South Florida are students. There are almost 40 colleges and universities within 40 miles of Miami, with a total of nearly 350,000 students — most of which will need to rent housing.
The Future of the South Florida Real Estate Market
Experts believe that the South Florida real estate market is starting to slow down in line with other similar markets throughout the country. The market can only remain red hot for so long, and after more than a year of insanity, buyers are understandably getting fatigued. Many buyers felt they had to offer tens of thousands over the asking price and waive all contingencies to win homes. Not only is that unsustainable, but it’s also risky for buyers.
Some of these buyers may now feel that they overpaid for their homes. Or maybe they discovered unexpected and expensive issues after waiving the home inspection and now feel stuck. In any case, it seems like fewer buyers currently in the market are willing to take those risks and are practicing patience instead.
With that said, if you’re waiting around for a “crash” or even a “bubble” that will cause prices to drop significantly any time soon, don’t hold your breath. Lack of supply is still a major issue that will not be resolved in the next couple of years. Demand from first-time home buying Millennials isn’t going anywhere either.
It’s impossible to time the real estate market, so if you’re ready to buy, it makes sense to do so while interest rates are still low.
How To Take Advantage of the South Florida Real Estate Market
So how can you buy in South Florida before interest rates go back up and impact what you can afford? First of all, you need to find a lender. Depending on what type of loan you’re looking for, you can find a lender to meet your needs. Just make sure to shop around with multiple different lenders so that you can get the best interest rate.
Additionally, the Federal Finance Housing Agency (FHFA) recently increased the baseline loan limit for single-family homes to $548,250, increasing from $510,400. Homeowners, especially first-time homeowners, can take advantage of this through Fannie Mae and Freddie Mac loan programs.
If you’re having trouble finding a lender or have a unique financial situation that requires a unique loan product, you may want to consider working with a mortgage broker. A mortgage broker acts as a middleman between you, the borrower, and multiple different lenders. This means that you only have to apply once. This also means that the broker can negotiate better rates and terms on your behalf. Just keep in mind that brokers charge fees for their services — usually around 1% of the loan value. It’s up to you to determine whether or not it’s worth it for your needs and expectations.
From there, you need to work with a real estate agent to find the perfect South Florida property. Be prepared to be flexible in terms of your wish list. In a market as fast-paced and expensive as South Florida’s, it may be difficult for you to get everything you’re looking for. However, a good real estate agent should be able to help you find and win a property that meets your “must-have” requirements.
Final Thoughts on the South Florida Real Estate Market
If you’re looking for a lender that knows and understands South Florida real estate, then Vaster Capital is the answer! Vaster Capital is South Florida’s premier bridge lender — providing loans to both individuals and investors alike looking to make their South Florida real estate dreams come true. Reach out to our lending experts today to see how we can make your dream a reality.
Sources:
Miami & South Florida Housing Market Prices & Trends 2021 | Norada Real Estate
Why You Should Invest in Real Estate in Miami Instead of NYC in 2020 | Business Insider
Will South Florida's Real Estate Market Remain Red Hot? | Local 10
Pamela Garcia
Pamela Garcia : October 31, 2021
