Thoughts On The Miami Real Estate Market Considering The News About The National Economy

 
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.