Real estate experts predict another year of steep home prices in Miami
This is an aerial view of Midtown Miami along a section of Northeast 2nd Avenue, on Friday Dec. 30, 2022.
Miami-Dade County’s housing market reached another stratosphere of unaffordable in 2022 — recall the historic sales prices and triple-digit rent spikes — delivering painful blows for many residents struggling to keep up amid an array of consumer price increases.
After two pandemic years of runaway home costs, what’s coming in 2023? The Miami Herald interviewed four real estate and housing experts to answer that question and expand on what they anticipate in the new year.
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“The only positive thing to say is we don’t expect home prices or rents to increase beyond where they have been in the last two years,” said Ned Murray, associate director of the Jorge M. Pérez Metropolitan Center at Florida International University. “Unfortunately, we’re not going to see on the rental side price decreases which would help workers. On the buyer’s side, we should see prices holding steady.”
County residents experienced record sales prices in 2022 on existing homes, with condos peaking at $415,000 in May and in June at $579,000 for single-family homes, according to the Miami Association of Realtors. Renters faced the same upward pricing pressure with many handed annual double-digit rent increases, while tenants in coastal areas often saw rents triple to enjoy the waterfront views.
The well-documented Miami-Dade housing squeeze continues mainly as the result of a massive migration from across the United States — mainly from the Northeast — into South Florida. Corporate expansions with well-heeled executives and their employees followed since the pandemic began in March 2020. Many of the highly paid newcomers bought homes with cash, pricing out locals and thinning an already limited number of homes available to buy. Real estate experts say we’re past the peak of the tidal wave into the Miami area, but a steady stream of newcomers will relocate here in 2023.
The severe housing crisis motivated county Mayor Daniella Levine Cava to declare a state of emergency in the spring and launch the Building Blocks Program. It’s a multipronged plan to use $13.4 million in federal funding for Miami-Dade’s emergency rental assistance program to help tenants struggling to pay rent. Despite the rental assistance, President Joe Biden’s top U.S. housing official called Miami the ‘epicenter of the housing crisis in this country’ during a summer visit to the Magic City. The county set aside another $85 million in the fall to help residents struggling most to cope with swelling housing expenses.
Here are the perspectives of our four experts regarding the county’s affordable, workforce, market-rate and luxury slices of the market, and county housing policy, in 2023. They are: Jack McCabe, owner of the Deerfield Beach-based real estate and economic research firm Jack McCabe Expert Services; Ana Bozovic, owner of Analytics Miami; Michael Liu, the county’s public housing and community development director; and FIU’s Murray.
What’s lies ahead for affordable and workforce housing?
▪ Question: How will the 2023 residential real estate market differ from 2022?
Ned Murray: Unfortunately, we’re not going to see on the rental side price decreases which would help workers. On the buyer’s side, we should see prices holding steady.
▪ Q: What are the long-term solutions to Miami-Dade’s housing crisis and how can we make progress this year?
Murray: This is going to be all hands on deck, every local government, employer, institution to learn how do we go through our commercial corridors and figure out how can we construct mixed-income housing. We’ve never gone that far. It has always been rental assistance. It has always been a low-income project. We have to take this on in a meaningful way. Every local government needs to begin targeting locations within the county and municipalities that might be appropriate for mixed income housing.
What would be the priorities for that? Number one: areas close to job centers. We’ve created this very disjointed situation. Now we have to think of infill. How do we create infill opportunities to begin bringing workers and housing closer to job centers? Every county and municipality has the opportunity to do that through their land use plan. They need to begin thinking about that and at some point negotiate with developers, whether they be private or nonprofit, to create housing that can be built in these locations.
Also, there needs to be acquisition funds to be able to acquire properties. The county can also be in a position to partner to negotiate with developers on the public funding that would be appropriate. It has to be aggressive. Governments have to be more involved and understand the importance of real estate from a local perspective. It’s a level of responsibility, a level of confidence that doesn’t exist in local government. Local government has to become more entrepreneurial. It’s a big order.
▪ Q: Where do we need more affordable and workforce housing, and why?
Murray: I can tell you we need to look at the communities east and west of the I-95 corridor. You’re talking about the city of Miami. That has the greatest affordable housing need in all of South Florida. Little Havana, Liberty City, Allapattah, Little Haiti — these are some of the most cost-burdened areas. We know from our own analysis that these are working communities, but these communities for the most part are working poor.
▪ Q: What will happen with the affordable housing crunch in 2023, and how will the changes affect the local economy?
Murray: It will get worse in 2023. More employers will find it difficult to retain and attract workers. This is for all occupations, ranging from jobs in leisure, hospitality, healthcare and education. We’re going to see it across the board. It will be much worse than in 2022. That’s why it is so important that we get these affordable housing policies to be put in place. We’re in for a rough ride for the next year or two years.
Where are market-rate residential sales and rentals headed?
▪ Question: How will the 2023 market-rate sales and rental market differ from 2022?
Jack McCabe: Single-family homes are going to continue to escalate in price. For those who own a single-family home, some say to sell, but I’d hold on. There will be more demand and very limited supply. That’s what always pushes prices up.
Multifamily buildings for sale will go down. We’ve seen new condominium sales prices decline for the past 10 months. It is a trend. That is going to continue. We’re going to see things transition into a buyer’s market.
▪ Q: What are long-term solutions to our housing crisis and how can we make progress in 2023?
McCabe: It has gotten to a crisis point. It’s forcing a good chunk of our labor force to move out or drive 60 to 90 minutes each way to work. I hate to see people getting forced out, because the rents are getting jacked up.
I’m a big proponent for rent control. It is very needed, because we’re seeing people getting priced out even of their apartments. With sky-high rents it makes it impossible to afford anything. You’re living paycheck to paycheck. Unless you hit the lottery, it makes it nearly impossible. There have been rent controls legislated in several cities around the country. It’s necessary here as well. Currently, you’re having to settle for less and driving from much further away to work and recreation.
▪ Q: Miami-Dade has a median sales price of $550,000 for a single-family home and $395,000 for a condo, according to the November market report from the Miami Association of Realtors. Where can residents find houses and condos to buy below the median?
McCabe: For a condo, you’re looking in an older building northwest or south of the downtown marketplace, Doral, possibly. Hialeah Gardens. Miami Lakes. There’s probably a good chance you can find something in those areas, but nowhere near the ocean.
If you’re a family looking for a house, you’re looking at the western edge or southern edge of the county, nowhere near the heart of the city.
▪ Q: Many natives and residents reconsidered their long-term plans of buying and continuing to live in Miami-Dade after 2022 due to the housing crunch. What will happen with year-over-year housing and condo prices and demand in 2023?
McCabe: Over the next couple of years we’re going to see some corrections. It will benefit those looking to buy and those looking to rent. Will we see 50% drop? No. Is it going to flatten out? Yes, that’s realistic. It may be over this year and next year. When markets change, prices are the last thing to change. It’s going to take a little while before we see noticeable differences in prices. It will get to where more average income folks can take out mortgages and buy a property. They may have to readjust what they see as the American dream and what the reality is for them in Miami.
What do you foresee in the luxury slice of the market?
▪ Question: How will the 2023 luxury market differ from 2022?
Ana Bozovic: Luxury condos saw a 540% increase in sales when comparing activity from January through November 2022 to January through November in 2019, before the pandemic began. Miami-Dade had 192 sales, up from 30 for those priced over $2,000 a square foot. It also had 85 single-family home sales in that time, up from 10 sales for houses priced above $2,000 a square foot, a 750% increase. This reflects the appetite and buying power of people coming in. They’re used to paying more per square foot. They are part of the wealth migration coming down here. While that initial COVID-19 surge is waning in terms of luxury sales activity, the trickle of people spending top dollar is continuing.
▪ Q: Luxury sales activity slowed in 2022 due to concerns with cryptocurrency and the stock market. What economic factors will influence luxury home buyers the most in 2023?
Bozovic: Our market for homes priced over $1 million market is heavily cash buyers. They are cushioned from interest rates and general economic uncertainty. But, when the wealthy feel less wealthy, they spend less.
▪ Q: Where will million-dollar home buyers look to buy a house or condo in Miami-Dade in the new year?
Bozovic: We are seeing people relocating with their families. Schools are a major factor. Miami Beach — Sunset Islands, Palm Island, Star Island, Hibiscus Island — and Coconut Grove will remain top places. Prices for dry lots, especially in waterfront locations in Miami Beach, have shot up. It’s like buying the land for a brownstone in front of Central Park a century ago. You bought waterfront on Hibiscus or Palm 30 years ago, cool that was nice. You looked out the window. There was no skyline. Now there is.
Downtown Miami and Brickell will be top places for condos. None of these places are that far from one another. People are showing strong preferences toward quality projects and that’s wherever it can be built. Quality means modern with brand recognition and a star architect.
▪ Q: What will be the biggest change or trend in the luxury market in 2023, and what trickle-down effect will that have on the local economy?
Bozovic: Sales volume of homes over $1 million will continue to slow down as it has in 2022.
What do Miami-Dade policymakers plan to do to ease crisis?
▪ Question: How will the 2023 housing market differ from 2022?
Michael Liu: We are still going to see significant demand across the board both for rental and homeownership. There is going to be a lot of stress on the home ownership side. From a macro perspective, I see a stabilization in 2023. Interest rates, the war in Ukraine and energy costs are going to make the ability to buy more difficult. Even though there is a significant number of foreign buyers in Miami-Dade, the majority of buyers in this market still have to rely on financing. I don’t see the Fed cutting back on interest rates. We might see some decline in the second or third quarters.
In the rental market, there are similar pressures on developers and renters. I do see toward the end of 2023 a stabilization of the rental market. We’re going to see less of the skyrocketing annual increases of 30%, 40% and 50%, since there will be more available units coming into the market by the end of the year.
▪ Q: What are the long-term solutions to the Miami-Dade housing crisis and what would progress entail in 2023?
Liu: Forging ahead on our new partnerships and finding land that hasn’t been used for housing and keep pushing the ball in the right direction, so that more land can be put into the pot. And we have to find major employers in the county, whether it be in hospitality or in retail, they need to stand up to the plate and provide assistance to help their employees afford housing.
Government can’t do it all. The private sector needs to step up to the plate. Finally, funding sources need to come up with new products to fund affordable and workforce housing that doesn’t rely on county funding. U.S. housing and mortgage financing entities like Fannie Mae and Freddie Mac they have to come up with products that can support the development of workforce housing. My hope is that the silver lining with a high interest market is these entities will work on products to produce more affordable and workforce housing.
▪ Q: Where is the county looking to develop more affordable and workforce housing in the new year?
Liu: We are going to see some unique and interesting developments down south, especially in Cutler Bay, Homestead and Palmetto Bay and in Florida City.
▪ Q: Many essential local workers have left Miami-Dade during the pandemic due to the rising cost of living and housing expenses, and small business owners said they struggled to fill open positions. Will this trend continue in 2023?
Liu: We’ll still have challenges. Small businesses will continue to be challenged in finding the kind of workforce they need.
This story was originally published December 30, 2022 5:10 PM.
