Are Real Estate Prices Dropping in Miami?

Despite hundreds of people moving out of Miami, Florida, yearly, the Magic City’s wand has waved in thousands more, who have consistently maintained its net positive migration status.

In 2022 alone, Miami received about 19.2 million overnight visitors, including 4.7 million international visitors. As of March 2023, about 31,000 people had chosen to reside in Miami within the past 12 months. 

What this demonstrates is the high influx of people into the city. While this can boost the workforce and possibly the economy of the city, what impact does it have on the real estate market?

Are real estate prices dropping in Miami? 

Miami’s real estate market has become a hot topic for potential investors, buyers, and sellers in search of inside scoop on the market.

Let’s give it to them!

Inside Scoop on Miami’s Real Estate Market

In the past year, the Miami real estate market has shown some intriguing trends. For instance, the market was booming during the pandemic in 2020, with prices increasing due to high demand and low inventory.

The median home value gradually increased from its fairly stable price, slightly above $300,000 in January 2020, to peak at around $380,000 in September 2020 — illustrating a steady demand for Miami housing.

However, since that time, real estate valuation in Miami has skyrocketed beyond $600,000, painting a different picture from what it was merely four years ago. 

But does this reflect any specific trend in the market? What has the market been like within these five years?

1-Year change

Over the last 12 months, Miami real estate prices have been increasing steadily. After the frenzy in 2021 and early 2022, the market began to stabilize, with prices experiencing a modest decline in some areas. 

There wasn’t a massive drop. But by July 2022, the market corrected to settle around $520,000 after the unprecedented peak of $570,000 in May 2022. Generally, there’s been an overall 8% increase in the 1-year value change.

During this period, many homeowners who had been considering a move found themselves in a unique position. 

The slight price decline prompted some to hire a moving company to seize opportunities in more affordable neighborhoods, while others held off, waiting to see if the market would dip further.

3-Year change 

Looking back over the past three years, real estate prices in Miami have generally trended upwards. This change has been driven by an influx of out-of-state buyers, especially in 2022 and 2023.

5-Year change

The past five years show an even more impressive growth scale in Miami’s real estate market. 

Although the market experienced a slowdown over the years (especially in 2020 and 2021), with a few pumps and crashes, the long-term trend remains upward. 

It reflects Miami’s ongoing appeal as a desirable place to live and invest.

Read more: Will home prices drop in 2025?

A Look at Recent Months: Circling Q1 and Early Q2 of 2024

The Housing market Miami offered in January 2024 started with the median home value sitting pretty at $600,000. 

By the end of Q1 of 2024, the home price had climbed to around $630,000. But around June 2024, it had fallen to $600,000 again.

Right now, as of July-August 2024, this value stands only slightly above the June value of $615,000 — a 5.3% increase from the same time last year. 

Note:

The last few weeks have seen slight noticeable changes, with economic uncertainty cooling Miami’s real estate market.

Factors Causing Miami’s Market Price Shift

Several factors have contributed to the changes in Miami’s real estate market over the years and the past few months. 

Some of these factors include:

Rising mortgage interest rates

As mortgage rates increase, it’s only natural to ask, “Are real estate prices dropping in Miami as well?” 

The short answer: Somewhat. Increased mortgage interest rates, at 6.238% for a 30-year fixed rate, have been a key factor in cooling prices, particularly in higher-end markets.

Buyer affordability in Miami has decreased, leading to a slowdown in demand. On average, Miami homes receive only 2 offers and sell in around 87 days, compared to 73 days last year. 

Moreso, the average homes sell for about 5% below their listing price, while the highly sought-after ones sell for about 1% below their listing price. These are all indicators of a drop in real estate prices.

Economic uncertainty, inflation, and geopolitical influences

Concerns about inflation and the broader economy have made both buyers and sellers more cautious, leading to fewer transactions and more stable prices.

Fewer and fewer houses are being listed, and the number of housing units sold has declined even more based on a year-over-year comparison. The inventory in Miami surpasses the demand.

As for geopolitical influences, zoning laws and permits allow for more developments and construction which account for market price shifts. 

Note:

Government policies and incentives such as subsidies and tax credits affect market sentiments and invariable real estate prices.

Read more: Slumpflation vs Stagflation

Which Neighborhoods Are Most Affected?

While Miami home prices have varied over the years, especially during the pandemic, the price change is not even across the neighborhoods. 

The upscale neighborhoods that had a serious jump in prices are now seeing a drop in prices. 

Some of these neighborhoods include:

Wynwood

It’s a trendy arts district that became a hot spot for real estate investors, but recent months have seen prices cooling. 

As of last month, the price value in Wynwood was down by 20.8% from its figure last year. 

With the average homes in this neighborhood selling for about 6% below the listing price. While the highly sought-after ones go for half — 3% below the list price.

Coconut Grove

Think of it as an upscale neighborhood and a top choice for relocating families from the Northeast and California.

In 2023, the steady influx of families shielded the local real estate market of Coconut Grove from unfavorable economic conditions. This is as evidenced by a 50% increase in private school applications since 2022. 

Although inventory levels were up slightly, quality properties remained scarce, with entry-level home prices doubling over the past three years. 

However, in the last month, the median home price has been down by 27.3%.

Residential vs. Commercial Real Estate: Which is More Affected?

Price changes in the Miami housing market affecting residential properties also swayed into commercial real estate — though the trends differ slightly.

The cooling in residential prices is more pronounced, particularly in luxury markets, giving buyers more negotiating power. But it’s still not a buyer’s market just yet.

On the other hand, the commercial sector has experienced more varied trends. While some segments, like office spaces, are struggling due to the rise of remote work, other areas, like industrial properties, remain strong. 

Rentals have shown more promise as investors who go in for the long term seem to have an advantage. Still, the commercial real estate market in Miami remains resilient.

Closing Remarks — Are Real Estate Prices Dropping In Miami?

So, are real estate prices dropping in Miami? The answer is nuanced. 

While there are some price reductions and market stabilization after an extraordinary period of growth, it’s more of a return to normalcy than a market crash. 

In some neighborhoods, though, the price reductions are not significant enough to cause a market stir. While investors may see this as an upturn in the market, influencing factors such as inflation should be taken into account. 

Not to forget, the increased median days of homes on the market before sale reflect buyer apathy. All these recent trends highlight the importance of timing and location in Miami’s dynamic real estate market.

Written by Billy Guteng. September 4, 2024

Billy is a content writer for Kukun. He was born in France, and has lived in multiple cities around the world ever since. He loves art, design and architecture as well as construction and real estate.