Miami Housing Market Forecast

Despite few new housing permits and growing inventory, Miami home prices are up and buyers are active.

One of the true international cities in the U.S., Miami is considered the gateway to Latin America – and not just culturally. It’s a meeting place for significant amounts of international business, and those who frequent Miami commonly opt to purchase real estate in the metro area as well, whether to stay there when visiting for business, live there full time or rent out as an investment property.

But Miami’s international influence doesn’t make it immune to trends occurring in other parts of the U.S., especially when it comes to real estate. In many ways, it appears Miami is heading the turn toward a buyer’s market over many parts of the country, with higher housing inventory and low homebuilder confidence, though it doesn’t necessarily feel that way from the ground in the metro area.

Using information from the U.S. News Housing Market Index, we’ve compiled the data you need to understand the current state of the market. Here’s what you should know about the Miami housing market in the recent past, now and looking ahead into mid-2023.

[ READ: Seattle Housing Market Forecast ]
How the Miami Housing Market Changed in 2022
Miami’s newly approved construction permits for both single-family houses and multifamily housing (with two or more housing units) saw a sharp decline in 2022, according to U.S. Census Bureau data. In December, there were just 252 newly approved construction permits for single-family houses in the Miami metro area, which includes Fort Lauderdale and West Palm Beach, among other municipalities. Compared with December 2021, it’s a 57% decline year over year.

Looking at the final three months of 2022, 1,085 single-family homes were approved for construction – a sharp decline compared to the final three months of 2021, when 1,716 permits were approved.

Permits for multifamily housing were also down, with permits approved for just over 965 units in December 2022, a nearly 44% decrease year over year. Looking at the last three months of 2022, nearly 3,300 units received approved permits. While it seems like a lot compared to single-family homes, it’s still down 28.7% from the last three months of 2021, when more than 4,618 units received approval.

Miami Housing Supply and Demand
While plans for new construction homes have gone down, the availability of properties on the market has increased. In December, Redfin reported there were 5.84 months of supply in the housing market, which refers to the amount of time it would take to sell all the homes currently on the market at the current sales price.

Six months is widely considered a balanced market, meaning there’s no distinct advantage on either the buyer or seller side, which puts Miami very close to a balanced market.

However, Miami’s months’ supply has seen a sharp increase since March 2022, when it was at a five-year low of 2.18 months. That, along with the high number of months’ supply compared with the whole of the U.S. housing market, which was at 2.3 months in December, and it’s more likely that Miami is headed into a buyer’s market faster than other parts of the country.

In the market itself, however, the difference doesn’t appear to be so stark. Ines Hegedus-Garcia, executive vice president of Avanti Way Realty in Miami and 2023 chairman for the Miami Realtors association, says she’s seeing supply at around four months as of mid-February.

Overall inventory started trickling up in the last quarter of 2022, but definitely not necessarily higher than other parts of the U.S.,” Hegedus-Garcia wrote in an email.

In the rental market, 6% of rental housing was vacant in December 2022, which held steady from the previous two months. Year over year, rental vacancies were up only slightly from December 2021, when the vacancy rate was 5.83%.

Looking at mortgage applications, the Mortgage Bankers Association reports its seasonally adjusted Purchase Index increased 3% in the week of Feb 3, 2023, compared with the week prior, indicating a slight increase in mortgage loan application volume for new mortgages. The unadjusted Purchase Index was 4% above the previous week, and 37% down year over year.

Consumer sentiment in the U.S. was at 59.7 out of 100 in December, based on the Survey of Consumers from the University of Michigan. It’s a 10.9-point drop compared to the same time in 2021, indicating lower confidence in the current state of the economy.

“Homes are selling close to market pricing or even above but you get a sense of price depreciation because of price drops from sellers asking way above market price,” Hegedus-Garcia says. “We are seeing sellers start to price more reasonably since we are not seeing (the) multiple-offer situations we were seeing at the beginning of 2022.”

Miami’s median sale price was well above the national median of $388,000 in December, though the difference is to be expected with Miami’s large population, reputation for luxury real estate and high number of international investors.