The Miami real estate market, much like the rest of the country, has seen a dramatic increase in prices for the better part of a decade. Due to a unique combination of demand and limited inventory, Miami real estate has been firing on all cylinders since the first quarter of 2012. However, real estate in Miami appears to be at the forefront of a modern temperance in price appreciation. For the first time in a while, 2019 has seen the median home value in Miami decline, albeit slightly. That, combined with an increase in foreclosure activity, should facilitate more investor-friendly activity.
Miami Real Estate Market Overview
Median Home Value: $335,100
1-Year Appreciation Rate: 1.5%
Median Home Value (1-Year Forecast): -0.9%
Median Rent: $2,400
Average Days On Market (Zillow): 127
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Median Home Price Miami
The median home value in Miami has increased a modest 1.5% over the course of a year (June 2018 to July 2019), bringing it to $335,100. That’s in stark contrast to the national trend, which saw median home values increase by as much as 5.2% over the same period. Regardless, the Miami real estate market has had trouble keeping pace with the national trends, and it looks like it will continue to struggle for the foreseeable future. Whereas the median home value in the United States is expected to increase 2.2% in the next 12 months, real estate in Miami may actually depreciate at a rate of 0.9%. It is worth noting, however, that the deceleration of home values is most likely a correction from recent increases. The latest tempering in prices is likely the result of most people not being able to afford to buy in the area.
Miami Foreclosure Statistics
In examining the largest markets across the nation with the greatest annual increase in foreclosure starts, four out of the five markets were in Florida. Orlando, Jacksonville, Tampa-St. Petersburg, and Miami all posted a year-over-year increase in foreclosure activity in the first six months of 2019. That’s an important distinction to make, as the majority of large markets across the country (84%) saw year-over-year decreases in foreclosure activity. The Miami real estate market, in particular, saw an increase in foreclosure activity of 7% over the course of last year. Consequently, there wasn’t a single city that saw a more increased foreclosure start rate than Miami.
Despite the latest increase in foreclosure starts, however, the overwhelming majority of distressed properties in the Miami real estate market are currently in a state of pre-foreclosure, according to RealtyTrac. In fact, 57.0% of Miami’s distressed homes are merely at risk of falling into foreclosure, which represents a great opportunity for investors. Miami real estate investors should be able to acquire these homes at a discount—they just need to know where to look. For the best chances of locating a pre-foreclosure in Miami, investors may want to look in the neighborhoods with the highest distributions of active foreclosures:
Opa Locka: 1 in every 877 homes is currently distressed
Homestead: 1 in every 982 homes is currently distressed
Miami: 1 in every 1,428 homes is currently distressed
Miami Beach: 1 in every 2,137 homes is currently distressed
Hialeah: 1 in every 2,164 homes is currently distressed
Miami Real Estate Investing
Acquiring properties at a discounted rate from their true market value remains, to this day, one of the most foundational practices implemented by real estate investors. If for nothing else, a deal is only worth pursuing if the purchase price allows for adequate profit margins. Foreclosures, for example, typically award savvy real estate investors with great opportunities to capitalize on discounted properties with attractive margins.
Miami real estate investors are currently in a great position to find and acquire discounted foreclosures. Miami was just one of the few cities that actually posted a year-over-year increase in foreclosure activity in the first six months of 2019, but it also posted one of the largest increases in that time (up 7%). That’s a considerable amount, considering the majority of markets saw a decline in activity. The increase in foreclosure activity is directly correlated to the Miami real estate market’s year-over-year increase in foreclosure starts, which were up 32% over the first six months of 2019.
While most cities have actually seen their foreclosure rates decline, Miami real estate investors have seen their opportunities increase at a faster rate than just about everywhere else. As a result, it’s safe to assume investors in Miami may find acquiring discounted properties to be easier than in other cities, which bodes incredibly will for business prospects.
In the event investors are looking to add to their rental portfolios, now may be a great time. Despite the latest drop in prices, the median rent price in Miami is a staggering $2,400, which is about $650 more than the national average.
Miami Real Estate Market Summary
It was only a matter of time until the whole of the national real estate market put an end to nearly a decade’s worth of appreciation, and the Miami real estate market appears to be one of the first dominos to fall. After nearly eight years of continuous price growth, median home values in Miami are expected to fall, which could represent a return to normalcy. Lower prices, in addition to an increase in foreclosure activity, could actually facilitate an investor-friendly marketplace for the foreseeable future.
Have you thought about investing in the Miami real estate market? If so, what are you waiting for? We would love to know your thoughts on real estate in Miami in the comments below.
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