Miami Real Estate Market Predictions 2023 / 2024 | Debunking Some of the Most Common ‘HOUSING CRASH’ Claims

Miami Real Estate Market Predictions 2023 – Florida Housing Crash Will Be Epic

A video by John Williams, in which he talks about rising insurance costs, costs of living, and an increasing number of foreclosures. The video refers to an epic crash in the making caused by extremely high costs of living and an upcoming recession. In addition, the Miami real estate market, with a high number of second homeowners, is more vulnerable than many other markets.

The Cost of Living and Threats of a Recession

My perspective is that this might be the case in the lower end of the market for first or second-home buyers who have stretched their finances and if possible prefer to sell their investment property. In the market I operate in, however, I have not seen nor heard of foreclosures. The $1M+ market is going very strong and it is important to know that in this post-pandemic era, many people fully own their property and therefore are not leveraged by a mortgage. In addition, many homeowners in the Miami luxury market are financially stable and have sufficient savings. If they financed their home it is because the rate was very favorable. The difference with the last cycle is that buyers have more equity and are therefore less in need of selling. It is when people are in need of selling that the market starts shaking. I am not saying nobody will sell, but we will not see the same as we experienced in 2008. There is almost no inventory and once a property comes up for sale, people will jump on it as many parts of the luxury market are still suffering from inventory problems. Those who have an investment property often do not want to sell as rental prices are still high. The incentive to keep their property is high and that’s another difference from the last cycle. These points are also discussed in my podcast (from min 36:50) with Eli Beracha Ph.D., Professor of Real Estate at FIU.

Insurance Costs

The insurance costs he mentions are a valid point though, especially for owners in specific areas. He is right about some insurance companies now pulling out from Florida, As a result, homeowners are now forced to work with Citizen, a government-backed insurance company that holds a certain monopoly position. I have heard about policies going from $20K-$30K per year to $40K-S50K if not more. I deal with clients who are experiencing this and it’s a real phenomenon to the point it will make some homes uninsurable. Will it lead to a Miami Housing Market Crash? Highly unlikely.

I wrote an article on how Miami Insurance Premiums are more likely to wreck the value of your home than a Hurricane. This article is based on a recent podcast, in which I discuss the alarming insurance changes with Hugo Garcia, a litigation lawyer who defends homeowners in insurance claim litigations.

In this video, Chris Igoe speaks about the high interest rates that have slowed down the market and how they might lower the closer we get to the elections. Nothing really new, and yes the market has slowed down, but not because there is no demand, because there is no inventory. Homeowners do not have an incentive to sell. They might not find a better home in this dry market, and they will have to refinance at a higher rate. In addition, the property might be more expensive which means a higher tax bill. A good point raised by Chris, which I completely agree with, is that if you are looking to buy you don’t do yourself a favor waiting for interest rates to come down. If the rates come down, a new surge of buyers comes in. There is a lot of cash waiting on the sideline to be spent. Once the rates are more favorable you will see prices hike again. Would you rather pay $1K extra per month for two years or pay $500K more on a home?

There are no metrics or indicators that suggest the Miami Real Estate Market is going to crash. There is a lot of cash in the market, and a high demand for properties, and people are still moving to Miami albeit at a slower rate. In addition, there is lots of cash “waiting” for interest rates or home prices to drop. I report on what I see in the local market, and rely on the experts for the macroeconomic influences, as referenced in this article.