South Florida is hot right now, literally and figuratively. While most of the country is blanketed in several feet of snow, Floridians are walking the sandy beaches and soaking up the sunshine. Obviously this is the status quo in wintertime, which is why South Florida real estate has always been an attractive market. But with significant and consistent year-over-year homes sales being elevated for four to six months straight, something else is fueling this booming real estate market. Here's why South Florida real estate is booming.
What trends are behind this?
Home sales are up across the country, with the national average sitting at 22% higher than last December. The lull in moving from last spring's COVID-19 lockdowns and the now much-more flexible work-from-home scenarios have created a perfect storm of eager homebuyers. The additional and obvious upside to buying right now nationwide is the historically low interest rates. You can afford more homes for less money, which encourages renters to finally buy and homeowners to upgrade to larger homes.
Florida in particular, is appealing to many homebuyers from northern states because of its favorable weather and lower property taxes, as well as the fact that it's one of only nine states with no income tax. Being an international hub for business, it draws money from dozens of countries, with a diversified economy in business, tourism, industrial, and beyond.
Which markets are growing fastest?
Not all real estate markets in Florida are created equally. South Florida in particular has seen amazing growth and consistent demand. Miami, for example, has seen 109 consecutive months of price appreciation -- that's nine years straight. This past year, Broward county home sales increased 26.5%, Miami-Dade home sales increased 23.3% year over year, and Palm Beach home sales increased 16.5%.
Houses are selling better than condos, with Miami being the exception, probably due to the large inventory of condos(typical of a large metropolitan area) and the lack of single-family homes at moderate entry points.
South Florida may seem like an ideal place to live, but every location has its own set of pitfalls. Although Floridians can skip the blizzards and drab winter weather, they regularly experience tropical storms and hurricanes, in addition to a very hot summer season. There is also the very real concern of the impact of global warming and sea-level rise in the near future. Miami-Dade predicts one to two feet of sea-level rise by 2060. This can negatively impact flooding, salt water intrusion, storm surge, and coastal erosion. It has already experienced major issues from flooding and infrastructure damage requiring them to spend millions in attempts to improve the infrastructure that has been affected.
South Florida has been and will continue to be a top destination for inward migration. Ample jobs, stable economic activity, and easy access for international business and commerce make it an appealing destination. Investors should speak with an experienced and knowledgeable Realtor in the market before buying. While the market as a whole may be booming, there are always micro conditions to consider. It seems those flocking to this area are focused on the short-term benefits of living conditions and investment opportunities in this area over long-term environmental impacts that could ultimately hurt the bottom-line investment. It's up to you as an investor to determine if you want to partake and identify where the opportunity in this market lies.