With 112 consecutive months of real estate price appreciation in Miami, it seems like the market couldn't get any hotter. And it's not just blue-collar condos or small single-family homes -- Miami’s luxury market is booming as well. The months of supply for luxury properties has been trending steadily downward, both month over month as well as year over year. This means the real estate that's listed is moving fast. Read on for insight on what the Miami luxury market has been doing as well as whether this trend will last so you can make sound investing decisions in what appears to be a foolproof market.
Miami’s luxury market
Miami's luxury market is defined as real estate that sells for $1 million or more and can be both single-family properties or condos. The number of sales for luxury homes has increased 225% year over year, with 312 sales in March 2021 alone. Luxury condos have been lagging just slightly behind, with a 204% increase year over year.
And it's not just million-dollar mega homes -- single-family homes between $400,000 and $600,000 are seeing huge increases as well, with an 81% increase year over year in single-family residences and a 136% increase for condos. There were 729 closings for March 2021 in this price range, making this even more liquid than the upper-end luxury market.
Will the boom actually last?
There have been record-low interest rates, as well as migration away from the high-income tax states and large metropolitan areas up north that work-from-home freedom because of COVID-19 has created for employees. Both U.S. citizens and international buyers have been seeking out Miami’s sunshine, outdoor living, and upbeat lifestyle.
But history tells us that things cannot continue climbing forever. The luxury market rallied before the prior Great Recession in similar fashion to what we're seeing today, only to come crashing down shortly after the market correction. While sales remained positive in the luxury market until 2017, they surely weren't in the triple digits. Miami's 2019 luxury condo market saw a measly 2.3% growth rate.
The Millionacres bottom line
There's no denying the fact that Miami is a hot real estate market, and the current luxury market is presenting unique opportunities for investors right now. With over nine years of consistent appreciation, a pullback could be in the near future. Miami is facing imminent impacts from climate change, and some believe the influx of interest in this market will subside as states like New York, California, and other international countries loosen their policies around COVID-19, relieving some of the demand and alleviating the shortage of properties.