South Florida Market Sees Continued Demand In Single And Multifamily
Things in south Florida are trending warmer as shown by the latest stats, starting out with the economy’s biggest engine—jobs growth. According to Metrostudy, the Miami metro area gained 29,100 jobs over the past 12 months, at an annual growth rate of 2.4%. This beats the national rate of 1.4% growth year over year.
Quarterly starts increased 77% to 864, and quarterly closings increased 68% to 685 from the previous quarter. Quarterly starts were up 33% year over year, with quarterly closings up 18% year over year. The annual starts rate increased 10% to 2,418, while the annual closings rate decreased 2% to 2,343 from the third quarter of 2018.
Inventory for the area has stabilized with Metrostudy reporting a 9.4-month supply in Miami-Dade County, up from the 8.9-month supply observed in the previous quarter. For reference, nine months of supply is considered normal.
Things are also looking better for land, as the supply of vacant developed lots has increased 7% from the previous quarter. There are now 2,578 parcels, or a 13-month supply. The previous 12 months of lot deliveries totaled 3,184. Future lot inventory decreased 5% from the previous quarter, but increased 6% year over year to 21,017, a 104-month supply.
Compared to other land-rich markets across the country, Florida’s land supply is ultimately constrained, which could turn into a benefit if the economy slides into a recession.
“The scarcity of land in Palm Beach, Broward, and Miami-Dade will likely help buffer this portion of the market from any recessionary winds that may blow in the future,” notes David Cobb, Metrostudy regional director for Florida. “Moreover, the cost of land in this submarket provides a barrier to entry from would-be home builders located elsewhere.”
The luxury condo market in Miami has softened up, and, according to RealPage, the effects of condo conversions in the mid-2000s may finally start to dissipate as the quantity of rental property is on the rise. In Q3 2019 Miami’s stock of apartments reached an all-time high of over 297,000 units. In 2008, there were less than 270,000.
Tenant retention and occupancy levels are both high in Miami, and rent increases are on par with the national average of about 35%. Monthly rates are higher, $1,672 as compared with $1,416 nationally. The bad news is, Miami is currently No. 1 for median rent-to-income level with a 28.8% ratio, making it less affordable. More product is being added to the mix, and will spike to nearly 9,000 new units being delivered early in 2020. Apartment sales prices are similar to the national average at $196,000.
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