Is this Booming Miami Real Estate Market Sustainable?

The Miami Real Estate Markets with the Lowest Risks!

The demand for Miami homes has skyrocketed and average house prices are hitting a record high. With the market being so hot right now many of my buyers are asking me: ” Is this not too much?” and ” Is this market sustainable or will it correct?” Whether this market will keep going up in a straight line or will correct at any point is hard to foresee, but what I can tell you is which kind of markets offer the lowest risks.

The historic average sales prices per SF for homes in the $1M-$5M range in Coral Gables, Coconut Grove and Pinecrest.

Necessity Purchases vs Discretionary Purchases | The Miami Markets with the Lowest Risks.

From a supply perspective, Miami’s primary markets such as Coral Gables, Pinecrest, Coconut Grove (very small), High Pines and Ponce Davis (even smaller) are limited to their geographic boundaries. Unlike the condo market the amount of lots to build homes on has an upper limit and this makes it nearly impossible to “overbuild”, which is something that often happens in the condo market. From a demand perspective, I like to ask myself the question: “Why is demand for these homes so high?” and “What keeps demand up?”

I have repeated this several times when I compare condos to homes, but within the single-family home market the same logic applies. A market driven by a need rather than a want, is a market that won’t easily see its demand drop and will pose less risk than any other market . There is always demand for necessity purchases, while discretionary purchases are more likely to depend on what stage in the economic cycle we are. Discretionary purchases are off-loaded once the market goes down or once people need extra cash flow. Primary residences or necessity purchases are more likely to be kept over a longer period of time and therefore these markets are less disrupted in times of economic hardship. Primary homes are a necessity and less elastic than investment properties.

Our listing on Granada Blvd in Coral Gables went under contract just days after bringing this property to market. The contract price of this property is above its asking price. People are moving to Miami and they want prime real estate, great locations and they have a necessity to be close to the city’s best private schools or businesses.

Is this Booming Miami Real Estate Market Sustainable? The Miami Markets with the Lowest Risks.

While some of Miami’s areas are still discretionary markets, the markets of Coral Gables, Coconut Grove, Ponce Davis and Pinecrest are the core of single-family living. These areas are located around Miami’s best schools, the financial center of Brickell, the airport and most of the corporations that are headquartered in Miami. Therefore these residential areas respond to a real need. If the real estate cycle goes down, interest rates go up or the economy is not doing well, it is unlikely these families will sell their family home before they divest any of their other assets such as second or third homes. People need a home and these areas provide for the stability that families are looking for.