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02 August, 2016
Following a prolonged period of record growth, the Miami property market has normalised at a more modest growth rate. The shift marks Miami's emergence from roughly eight years of exceptional and frequently record-breaking sales in the residential sector.
Various local experts believe that Miami has now emerged from this boom period, and normalised at a more modest yet more stable level of growth. Residential properties in Miami have understandably attracted much interest from investors during these record growth years. It will therefore come as a relief to investors in this market that the boom appears to have ended with continued if more modest growth rather than with a marked correction.
Many of the factors that drove the recent years of rapid growth continue to support and strengthen the market. These include especially strong demand, and therefore leading levels of price growth, for middle-market properties, growth in the number of jobs on offer in the area, an up-and-coming downtown area, and a strong pipeline of condominium developments.
Another part of Miami's attraction lies in the level of value it offers, with properties in the city significantly more affordable than in many other cities in a similar class around the world. These low prices, in some ways, belie a situation where development space is in short supply, slowing construction activity and driving up demand.
In some ways, it may be a good thing if Miami has indeed left its rapid growth phase behind. One local analyst pointed out at a recent even that, going forward, annual growth around the 5% mark rather than in the 15-20% range will make it easier for wage growth to keep up. Furthermore, it is possible that a continuation of the past few years' rapid growth levels would have driven up prices markedly, ultimately softening or counteracting the attraction of Miami's low prices. With things appearing to normalise at a more modest growth rate, on the other hand, properties remain affordable and still have plenty of value to offer investors who are just entering the market or who wish to increase their presence there.
Downtown Miami is very much the up-and-coming part of the city at present, and this is where most new construction is taking place. There are currently around 7,200 residential units undergoing construction in Downtown Miami, of which roughly 85% have already been sold, according to data from the Miami Downtown Development Authority and Integra Realty Resources. This level of demand, in combination with a lack of available land, job growth, and a growing population throughout South Florida, provides much reassurance that Miami's property market has plenty of potential to remain strong even without the exceptional growth figures of the past eight years.
Analysts predict that sales will be slower through the remainder of this year than they were in 2015. As such, it is difficult to predict how prices will behave through the rest of 2016. Waterfront properties, however, are expected to deliver a performance that beats most of the rest of the market.
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