Florida resembles a thumb extending from the south-east corner of the US to catch passing traffic. Invariably, that traffic stops at Miami. “It is the capital of a region: the whole of the Caribbean is reliant on Miami, and much of Latin America is dependent on it too,” says Hugo Thistlethwayte, head of estate agent Savills’ international residential team.
The relationship is symbiotic: Miami is indebted to Latin America and the Caribbean across the water for tourism, investment and much of its culture. The city’s estate agents have been the beneficiaries of interest from further afield too, with more than a third of buyers in the $1m-plus market coming from abroad, according to Ron Shuffield, president of south Florida-based agent EWM Realty International.
“The state of Florida is growing at a remarkable pace,” says Shuffield. “By the time the sun sets tonight, we’ll have 1,000 more people living here.” The US Census Bureau estimates that Florida’s population grew by more than 370,000 between July 2016 and July 2017, with more than 10 per cent of those settling in Miami-Dade County. The influx of buyers has helped propel the city’s property market — as well as the buildings themselves — upwards.
The median sale price of a condominium in Miami-Dade County more than doubled from a low of $101,000 in 2010 to $230,000 by the fourth quarter of 2017, according to the Southeast Florida Regional (SFR) multiple listing service. It is the same story in the single-family (detached) homes market, where prices rose from $170,000 to $335,000 over the same period. Even so, both are still some way short of their pre-crash peaks — condos reached $260,000 in 2007 and single-family homes $374,000 in 2006.
Lessons were learnt in the years following the downturn, says Thistlethwayte. “People used to put down a 20 per cent deposit for new developments. When the crash came, and prices came down 40 per cent overall, it was often cheaper for buyers to walk away rather than complete.” Now developers share the risk with buyers by setting the deposit as high as 50 per cent, and will sell the bulk of a development off-plan before beginning work, says Thistlethwayte.
“The big difference between now and pre-recession is that, pre-recession, there was a lot of leverage. Over the past 10 years we’ve had another burst of development and sales activity, but more than 50 per cent of our buyers have paid cash,” says Shuffield.
Foreign investment has been fundamental to the recovery of the market since 2010, but agents say the profile of buyers is shifting. “South American money, which has flowed amply into Miami, is drying up,” says Thistlethwayte. Foreign currency movements against the dollar may have something to do with that. For Argentines doing business in Miami, for instance, a weakened peso means costs were 30.8 per cent higher in March 2018 than 12 months previously, according to data compiled by EWM Realty.
Domestic buyers keep coming, many of them “snowbirds” from further up the east coast, tempted by a favourable climate and the lack of a state income tax, but the top end of the market is nonetheless dogged by oversupply. “We like to have between six and nine months of supply,” says Shuffield. The current pipeline of $1m-plus condos should last 40 months.
The result is that prices at the top end have steadied and begun to ease back. Data from SFR show the median price for high-end condos came down 3 per cent to $1.55m between 2016 and 2017. Achieved prices have remained fairly stable since 2010, when the median price was $1.57m.
That might not be so bad, reckons Thistlethwayte. “If there’s a period of flattened growth, that might be good for the city, because people who live and work in the city might have some affordability,” he says.
Photographs: Getty Images; Getty Images/iStockphoto; Littleny/Dreamstime