- Brickell condo renters on average are paying their landlords over $34,000 per year
- Miami condos are traded among investors like stocks and bonds are traded on Wall Street
- Less competition and a large condo inventory is sure to drive down sales prices to a more affordable level
Over the last 10-15 years, there has been a growing demographic of young professionals that live and/or work in Downtown Miami and the surrounding areas such as Brickell, Midtown and Miami Beach. The majority of this demographic is unable to afford to buy a Miami home or condo, turning them into long term renters. According to the Miami Herald, “For South Florida’s middle class, the dream of owning is slipping out of reach. Home prices in the region are up nearly 45 percent since 2012, but local wages have stayed flat, lagging well behind inflation.” According to a recent Multiple Listings Service 12 month analysis of Brickell 2 bed / 2 bath condo rent rates, the average unit rented for $2,888.51 per month. This means that renters are paying their landlords over $34,000 per year, just to live among all the amenities that the area has to offer. Over 5 years, this calculates to approximately $173,000, funds that could have gone toward paying a mortgage and empowering this demographic to afford all the benefits of homeownership, instead of being long term renters.
MIAMI CONDO MARKET UPDATE
The rental rate numbers are staggering, but the tables maybe turning in favor for the Miami young professional. In a recent Miami Agent article, Carrington’s Wendy Forsythe writes about a possible slowdown in Miami condo sales. “According to the Miami Association of Realtors, this past April (2016), closed sales of townhouses and condos declined 12.1 percent year over year in Miami-Dade County. At the same time, fewer buyers paid in cash (a 16.8 percent decline), and the inventory of active listings increased 15.9 percent. Overall inventory is up to an 11-month supply, a 22.2 percent increase, and more developments continue to come online.” This can be contributed to a number of factors, but none more prevalent than the fact that Miami has a significant number of foreigners who purchase these condos for the sole purpose of investing. Miami condos are traded among investors like stocks and bonds are traded on Wall Street. These same foreign investors have slowed down their buying, and in many cases are looking to liquidate (sell) the current condos that they own. The reason behind this is that many of these foreign buyers are from countries or regions that are experiencing weakening economies such as Latin America, European Union and Asia. A strong growing U.S. dollar has diminished the value of these investor’s currencies, and this growth has investors facing financial losses. This same growth has also diminished their buying power.
AFFORDABLE CONDO PRICES IN THE FUTURE
What does all of this mean for you as a Miami renter looking to become a Miami Condo buyer and owner? This means less competition to purchase the growing inventory of Miami condos now “flooding” the market. There is already a large number of new condos now on the market and with the new construction already underway, we can only expect to see significant increases of inventory over the next 12 months. According to Wendy, “By some estimates, more than 7,300 condominium units are currently in the works…” Less competition, coupled with a large inventory to choose from, is sure to drive down sales prices to a more affordable level, which can lead to improved purchasing power for the Miami renter to turn buyer.
If you have been considering buying a Miami Condo, now is the time to start building your action plan. The first steps of any action plan should include saving for your down payment, knowing your credit score and understanding the Home Buying Process. We also suggest you become familiar with buying a condo in a community association. Homeownership can build wealth, provide tax deductions and long term, owning is cheaper than renting.
The home buying process can be very complicated, so we suggest you turn to an experienced Realtor to help you navigate through the buying process. The Vaughn Real Estate Team is a Metro Miami, Fort Lauderdale, Florida and Metro Detroit, Michigan short sale and luxury real estate specialist. Let the experience and success of our team help you with your next home purchase. Contact us today. 305.814.9310 or visit us online at TheVaughnRealEstateGroup.com
Alex Vaughn, MBA
Alex Vaughn is a Short and Foreclosure Certified Realtor licensed in Florida and Michigan, serving the Miami, Fort Lauderdale, Florida and Metro Detroit, Michigan areas. Alex also holds a Master’s in Business Administration from Florida International University. You can reach Alex on Instagram and Twitter @iAmDAlex.