With steady growth in population, Miami has limited land available and can only go vertical. Looking at historical data, Miami real estate values consistently grow. Those who buy and hold have always won. Here are the top reasons why you should invest in pre-construction properties in Miami.
A healthy market is when supply meets demand, and both are at equilibrium. In Miami, the market has reacted early by reducing supply. This has allowed the current units under construction to get absorbed.
Speculation Days Are Gone
In past cycles, Miami saw rampant speculation where buyers purchase properties with small down payments and mortgages were practically given away. Since then, Miami adopted a 50% deposit structure, requiring the majority of capital invested in a project to be developers, equity, and fire deposits. In addition, over 80% of condo sales are all cash, circulating more capital into the market and reducing the chance of a mass sell-off.
Sell First and Build Later
In many cities, condo developments are still speculative. New York requires 20% deposits and Los Angeles only requires three percent. While Miami not only requires 50% deposits, buildings under construction are typically 75% to 85% pre-sold. Projects that do not achieve sufficient pre-sales are scrapped.
Miami is consistently compared and ranked among major global destinations. But as the Magic City continues to grow in popularity, it’s luxury property market still offers the best value, allowing for tremendous upside.
Double-digit increases in rents push people to buy versus rent, and also rewards condo investors with higher annual returns in comparison to riskier investments. With over 90% occupancy, downtown condos are a solid investment that provides stable gains over time.
Not All Properties Are Created Equal
To fill its housing stock, Miami offers a variety of product and multiple price points in order to accommodate the differences in population. Only 7500 units are being added to downtown, a small percentage of today’s overall inventory, and a far cry from the 18,500 added in the prior cycle.
As population shifts, millennials and baby boomers are migrating away from the suburbs to live in the city. With downtown Miami’s population doubling in size and tremendous job growth in the most international banks south of New York City, major publications are naming Miami America’s city of the future. For more pre-construction tips, please check our website.