Miami is the city in America’s South that has the most expensive real estate. It is a city of glamour and wealth, with luxurious beachfront properties, famed nightclubs, and a diverse culture that represents America’s melting pot.
While owning a home in this booming city might be most young Miami residents’ dream, up until recently, most have settled for more affordable condominiums or apartments. But recently, there has been a pronounced shift in buyer trends, as the sale of single family homes outpaced the sale of condos for the first time in 18 years.
The biggest reason for this shift is a demographic one: the millennial generation is aging from being a renter based demographic, to the chief residential buyers. The millennial generation, while often still thought of as young adults, has members who are now as old as 39. This means that many millennials are more established in their careers than they ever have been, and likely have more disposable income.
Single family homes sales are up 17%, while condominium transactions are down 3.3%.
Miami’s boom in single family home sales is also due to the lack of income tax in Florida. According to the South Florida Sun Sentinel, many residents from other cities in states like New York and California have turned their eyes to Florida and Miami. In Miami, people found that they can still live in a cosmopolitan city, while also saving money on the lack of income tax. As well, compared to New York City, San Francisco, or San Diego, real estate in Miami is relatively cheap.
According to Miami Today, as of last year, Florida was gaining 640 residents a day. The growing population in Florida, grouped with the growth of millennials into homebuyers rather than renters, has coincided to produce a real estate market trending away from condos.
This change is evidenced by the amount of time that houses spend on the market compared to condos. A report by Miami Today showed that the average condo spent 100 days on the market, while the average single family house spent significantly less time, with 84 days on the market.
On top of that, condo sellers got a slightly lower percentage of their asking price, with sellers getting 94.7% of asking price on condos, and single family home sellers getting 96.7%. Single family homes sales are up 17%, while condominium transactions are down 3.3%.
One answer to that is COVID-19. People who live in condos are locked into paying high monthly fees which go towards maintenance and amenity usage. Now, according to Local10, with COVID, many condos have closed their primary amenities like gyms, pools, and party rooms to try and make the condos safer for residents. While this is the right idea, it also makes it harder for residents to justify paying these fees when they aren’t seeing the benefits.
COVID-19 induced changes in what buyers are looking for, combined with higher-income people moving to Florida with more disposable income due to the lack of income tax, as well as the aging of millennials, has combined to create a sellers’ market on single family homes.
Single family homes in Miami are as in demand as they’ve been in a long time, and in these uncertain times, it seems likely that buyers will continue to seek out the stability they provide.