Miami Market Update in Q3
August 10, 2022
Last week we had another raise in interest rates and I like to take the opportunity to inform you about the current market conditions.
Mortgage Rates.
The Feds raised the interest rates again last week by 0.75%. Will this have an impact on Real Estate? There is no doubt that it will have an impact but within reason. Let’s face it the interest rate of the last 2-3 years were an anomaly that cannot last forever and even with the raise they are still low. It was needed to raise the interest rate in order to get inflation under control. There is a Metaphor that is one of my favorites with a lot of truth to it:
“The Chaperone (the Federal Reserves) has ordered the punch bowl to be removed before the party is really warming up”
Inflation.
There is no better shield against inflation then Real Estate. Housing is one of the few tangible assets that tends to hold its value. Historically, we have seen “homeownership outperform inflation” in most decades.
Some Facts.
- In the last 12 month 122 companies moved from other parts of the US to Miami Dade County, Broward and Palm Beach
- There is a continuous high demand from Families up North relocating to Florida
- Most of the countries in South America are having political issues, the most recent one that has been added to the list is Columbia
- The United States is the 3rd largest Country in the world by population with continuous migration.
Are Real Estate prices coming down?
The prices are not increasing in the speed we have seen for the last 1.5 years but they are not coming down either they just settling and will continue to increase within normal appreciation. We are still in a supply shock for the “A” properties and demand is larger than supply.
The “A” properties meaning homes on the water new or in great condition increased in price and the inventory continues to be low. The “B” properties are the same as the “A” just not on the water but new, beautiful and in great condition properties in prime locations. The largest inventory and most of the price reductions you will find with the “C” properties they are the overpriced properties that “lead to the assumption” that prices are coming down. Just looking at the demographics, the migration to Florida and the current Real Estate Cycle there is no indication of a slowdown, in the contrary we still have a lack of supply for the A + B properties. The future of Miami Real Estate continues to be bright and we are not in a recession yet at this time we are having more people moving to Miami than there are Properties available.
