Thoughts On The Miami Real Estate Market Considering The News About The National Economy Posted on August 10, 2023 by Sarah Elles Boggs We are constantly being fielded with questions about the national economy and whether or not it is a good time to buy if you are financing. This is a very tricky question for real estate professionals as there are so many mixed messages coming from the news media. Will there be a crash, or will it be a soft landing? Watch The Macro And The Micro Markets If you are relying upon the major news media for your Miami investing advice, you are likely stressing yourself out unnecessarily. The Miami market is nowhere near the markets in California, polar opposites even. The major news media tend to concentrate on the nation as a whole, the macro-markets. In order to make an informed decision about Miami, you must pay attention to what is going on in Miami and we have historically been an outlier. Yes, we were hit harder during the Great Recession, but we also recovered stronger and more quickly than other markets. Our job market is far more fruitful than the rest of the nation. Between our international banking hub in Brickell and Citadel relocating their entire operation to Miami, we not only have new jobs coming online, we have a lot of very good jobs available. Our tax climate is also favorable for investing, this is a large part of why the mass migration has happened from New York and other states up north that are more highly regulated. The Miami boom is not a heavily-leveraged fake heyday the way it was in 2005. We are funded by a thriving job market, large cash deposits on new construction and the global elite recognizing the opportunity that we offer. Prepare For Naysayers No matter what the market looks like, there will always be someone who says it’s an awful time to buy. There were even people calling for a crash in 2021 when rates were so low, money was almost free. This created a ton of missed opportunities. Values were on the rise and it was almost like stealing money. But this is the nature of investing, there will always be a naysayer or debbie downer. What We Actually See The updated CPI was released this morning and reported that inflation, while still present, has slowed on a national scale. The national job market is on the uptick slowly but surely, and Miami is still strong. Rates were raised in July, and despite fears of another hike in September, the reports this morning give some assurance that it will be awhile before the Fed does anything more with the rates. They no longer predict a recession. Goldman Sachs also predicts that we’ve already seen the bottom, and a soft landing is in store. What we see in Miami. Now as far as what’s going on in Miami, there is a slight loosening of inventory. This is a good thing as we are now in a position where buyers have more options, yet we are still firmly in a seller’s market. The inventory was not tight because of people holding onto sweetheart mortgages, it was tight because there was just not enough to meet the influx of demand. Developers are doing their part to remedy this. If you would like a detailed analysis of our Coconut Grove micro-market, I publish one every year. The last one was just a few months back in March and can be found here. Next week, we can dive into the Douglas Elliman market reports for the different areas of Miami to get a better picture of the performance in different neighborhoods. What The Future Holds Going forward, my advice is to accept the 7% rates for now. The rates of 2021 were an anomaly and while it may be jarring to compare what you could have bought a few years ago to today, but this is the reality today. If you are considering waiting for rates to slip just know that if that does happen (and it likely will not), that will only ignite more competition from others who are waiting. The increased demand will just bring the prices up higher, so you will wind up paying more anyway. The best thing to do if you are concerned about rates is to ask for a rate buydown. Alternatively you can lock yourself in at the prices available today and rates that we have today, then refinance at this price if/when rates do slip in the future. Regardless of which route you choose, all models point to the rates remaining stable for some time in the future and Miami remaining confidently strong. To speak more specifically about an investment or if you need/wish to move, please contact Michael Light, Broker and Executive Director of Luxury Sales at Douglas Elliman. You may reach Michael directly at (786) 566-1700 or via email at michael@miamiluxuryhomes.com. We would be honored to assist you.
Miami Now Has The Hottest Rental Market In The United States Posted on July 12, 2023 by Sarah Elles Boggs The Summer of 2023 is hot in Miami, and in more ways than just the weather! Starting off 2023, RentCafe ran a study of the top rental markets among major cities across the United States. At the time, only New Jersey slightly inched past Miami in terms of competitiveness for rental properties in the first quarter. Fast forward to today, and the tides have turned. Miami’s historically low vacancy has caused a decrease in the supply of available properties, paired with ever-increasing demand, pushing us into the #1 slot as the Most Competitive Rental Market. Let’s break down how we got here, and how to succeed in this environment if you need to move… The Rush of Demand His critics can say what they wish about Mayor Suarez, but nobody can take away the fact that he is a champion for business in Miami. He has created a business-friendly atmosphere that has caused a mass migration from cities including both New York and Chicago. The movement of these companies has expanded our job market beyond the historically-common tourism and real estate sectors. We are now a burgeoning tech hub and even considered an emerging global city in a new book that was recently published. This swarm of new professionals arriving to the city is joining the swarm of migrants from that arrived in Miami during COVID, seeking a more laid-back lifestyle and remote working environment. The current statistics show that for each available rental option, there are 24 prospective tenants. This figure is nearly double the demand of North Jersey, the second most in-demand market in the country. Developers are working as quickly as possible to bring new apartment and condo options to the marketplace, but these new buildings are not constructed overnight. A new high rise takes at least 24-months to construct, considering one floor per week is added to vertical construction. Developers were not yet caught up with the COVID-era demand when the new professionals began to arrive. These are excellent problems to have, we are of the mindset that growth is good, but it comes with growing pains and this surge of demand is showing no signs of letting up anytime soon. As long as crime and taxes increase up north, those who are able will migrate to the south and Miami is mighty attractive. Aerial View of Ritz-Carlton Residences Coconut Grove The Supply Crunch We touched on this a bit above, but the short supply issue we are faced with is more than just the fact that developers cannot finish new towers quickly enough. We are also faced with historically low vacancy because people in Miami are just not moving the way they used to. According to the RentCafe.com survey, almost 72% of renters renewed their most recent leases, a figure that typically rests slightly lower than 60%. The market has changed so quickly that those who are situated in the most desirable neighborhoods are no longer willing to run the risk of losing their spot in the skyline in search of a spot in the latest building to open. Prices have skyrocketed and the newer towers that are opening are astronomically-priced compared to what residents are accustomed to paying. Rather than risking having to move to an emerging neighborhood, more people are staying put. Another issue we are faced with is that buyers of available condos and homes have increasingly been end-users of the spaces, rather than rental investors. In the past, investors from foreign countries have taken advantage of Miami’s steady demand and availability of purchase opportunities to invest in spaces that are used as rental units. There was a time not so long ago that entire condo towers were almost completely sold out to rental investors. It was a win-win for everyone involved as the neighborhoods were flush with available options for tenants, whether long-term or just until they found a more permanent place to hang their hat. For the investors, their assets remained safe from political fears, or other issues in the investors’ homeland. Changes in government policies on both sides of the border have slowed this pace, although not brought it to a grinding halt. Aerial View of Brickell City Centre The fact that 2023’s Miami condo buyers are increasingly end-users also displaces tenants who have been in their rental condos for years, which leads us back to the demand issue and another tenant jockeying for rental units that just aren’t there. It’s an ongoing cycle that compounds itself, showing no signs of letting up until these new towers start to be delivered to the marketplace. How To Survive And Thrive In This New Rental Market For starters, it goes without saying that you need proper representation. Gone are the days where you can peruse the national listing aggregates (Realtor.com and Zillow), calling the number listed on a pretty listing and deciding the following week to move in within the next month. Today’s market requires tenant representation. You need someone whose sole job is to know what is currently available, what is possibly coming available soon, and knows how to sell you as a tenant to the landlord who has an opening coming up. It takes someone organized, knowledgable, professional and dedicated. Know your budget boundaries and have a clear list of things you need from a rental home followed by a list of things you would like to have. Your Realtor will need to know their boundaries when they go out to do your bidding for you, else you could go out of budget quickly or wind up with a home that does not fit what you need. You will also need to be realistic with the cost of a rental property that embodies all of your “must haves” list. These tips are not meant to stress you in any way. Any of the agents in The Light Group at Douglas Elliman are knowledgable and can seamlessly guide you into what you need based upon the guidelines we are given by you. Being candid with your agent and realistic with yourself is the best way for a stress and drama-free moving experience. When working with an agent, also know that every real estate agent you encounter is working with the same inventory of possible options. Working with several agents will only stress you out more. Furthermore, agents are naturally more dedicated to their loyal clients. If you want an agent’s undivided attention and full-service for your home search, it’s a good idea to find someone you trust and work with that person. If this is your first trip into the Miami property market, you can also prepare yourself for the fact that tenants do not pay their agents. Our service is free to you, the landlords take care of us. We realize that in some other markets, agents are compensated differently, but in Miami real estate representation is free for tenants. We at The Light Group would be honored to help you to bypass the stress and competition that this market brings and get you set up peacefully and seamlessly. If you need/wish to move and are looking for a Miami rental property, or would like to talk about rental investment opportunities, please contact Michael Light, Broker and Executive Director of Luxury Sales at Douglas Elliman. You may reach Michael directly at (786) 566-1700 or via email at michael@miamiluxuryhomes.com. We would be honored to assist you.
Miami’s Rental Market Ranked Second Most Competitive In The United States Posted on March 25, 2023March 26, 2023 by Sarah Elles Boggs As we round out the first quarter of 2023, we can see our predictions of the 2023 Miami rental market coming to fruition. That’s right, Miami’s rental market is incredibly competitive. The only market even slightly more competitive is North Jersey. This is all laid out in a new study undertaken by RentCafe.com. The study measures occupancy/vacancy rates, the number of days rental units stay on the market, how many tenants opt to renew their leases and the number of new apartments that are delivered to the marketplace. Miami landlords are enjoying vacancy rates of less than 3% and over 70% of existing tenants are opting to renew their rental contracts. The Landlords The low vacancy rate and high rate of tenant renewal is a huge draw for landlords, as apartment turnovers are not inexpensive. You have to take into account the physical turnover, moving the previous tenant out, arranging for the security deposit reimbursement, repair of any damage or wear and tear, marketing costs of seeking a new tenant and the time and energy it takes to qualify the new tenant/arrange their move-in. It isn’t the end of the world, but it is not free and cuts into the return on investment of the property. In Miami today, rental apartments tend to stay vacant for an average of 33 days while this turnover is undertaken. This is far lower than it has been in previous years, even in seemingly strong markets, but is still a month of your investment not earning a return and instead incurring costs. Our current market is prime for welcoming new landlords. Inventory is tight, but not as dramatic as it was in the post-COVID market. New buildings are coming to market frequently and despite most of the US real estate markets teetering on recession, the demand remains strong in Miami. Jobs are still plentiful, the tax climate is more favorable than other markets, financing is possible and why wouldn’t people want to live in Miami? If you have considered a safer place to invest your savings over the more volatile crypto market or stocks, Miami is the market to bet on. The Tenants If you are a tenant in the Miami market, we are sorry to say that you have your work cut out for you. The RentCafe.com report shows that for each available rental unit, there are 20 prospective tenants jockeying for the keys. This does take into consideration the wealth of new rental buildings delivered to our marketplace as well as units that are overpriced. Even with those less-than-desirable options, there are more tenants in line here than anywhere else in the United States by a good stretch. The second closest market was San Diego, with 13 hopeful renters per available dwelling. In order to experience success in a market like this, it is imperative to have all of your ducks in a row. Having a good credit rating and no criminal background is an obvious piece of advice, but you also should come equipped with letters of recommendation, documented income and have strong representation. Utilize the skills of a real estate agent who is proficient in the marketplace and can guide you to the front of the line where possible, but who will also level with you on routes that are not the easiest. How To Get Help The Light Group is well-equipped to assist both prospective tenants and new landlords. We were recently honored as one of the top teams at Douglas Elliman for securing rental units for our clients throughout all markets that Elliman is present in. We pride ourselves on efficiency and ease of service, almost like a concierge approach to finding a new place to live. We understand that moving is stressful, even more so in an uber-competitive environment and we strive to make it as seamless as possible for our clients. If you are looking to invest funds into the rental market, we will be able to guide you to the areas and buildings that will offer an abundance of high quality tenants and lower fees. This would include more reasonable HOA’s, high quality builds that require less upkeep and tenants who do not move around as frequently. We love to see our investors make the most of their dollars that are at play in Miami. To speak more specifically about an investment or if you need/wish to move, please contact Michael Light, Broker and Executive Director of Luxury Sales at Douglas Elliman. You may reach Michael directly at (786) 566-1700 or via email at michael@miamiluxuryhomes.com. We would be honored to assist you.