- More apartments are being built in Miami than anywhere else in the US, the Wall Street Journal reported.
- Some 90% will be luxury units, following a demographic shift in the area.
- This is likely the new normal, a top housing expert told Insider.
People from all over the country flocked to Florida during the pandemic, reshaping the housing market there forever.
Now, “the Florida housing market is undergoing a restructuring as a result of the work-from-home phenomenon,” housing expert Jonathan Miller told Insider.
There is an onslaught of luxury apartment towers designed for these newcomers expected to enter the market next year, the Wall Street Journal reported this week. Particularly in South Florida, it’s a sign that these wealthier newcomers — mostly from the northeast — have permanently altered Miami’s housing market, Miller said.
“The luxury market is wider and deeper than it ever has been before,” and that will make it harder for middle class Miamians who lived in the city before the pandemic to find housing they can actually afford, Miller said.
A changing state
An estimated 674,740 people reported their permanent address changed to Florida in 2021, according to Census data. This influx sent the housing market there into a frenzy.
In January 2020, the median home price in Miami was $343,500, according to Redfin. Last month, it was $560,000 — a 63% increase since the start of the pandemic.
“The fact that Florida is getting more expensive is making it less attractive to homebuyers,” Daryl Fairweather, chief economist for Redfin Corp. told Bloomberg. “It becomes a concern for people trying to fix their monthly housing expenses.”
The Miami metro area is feeling the brunt of the new normal. Rich newcomers drove up the cost of living and forced lifelong Miamians to move away, Insider previously reported. The city had its first population decline in a decade between 2021 and 2022.
“If you’re looking at how much people are spending on rent, almost anywhere in Florida they spend about 10% to 15% more of their income on rent today compared with just a decade ago,” Eli Beracha, director of the Hollo School of Real Estate at Florida International University, told The Wall Street Journal.
The benefactors of this shift: developers and those migrating from other states.
For wealthier newcomers who moved from the northeast, Miami luxury housing is actually comparatively cheap, Miller said. The average monthly cost to rent a unit in Manhattan last month was $5,552, according to Miller’s market report, much less than the average cost to rent a unit in Miami, which is $2,438, per Rent.com.
That, coupled with Miami’s year-round warm weather, tropical beaches, and a tax-friendly environment has made the city a “feeder market,” for northeastern movers who are unchained from their offices in some of the most expensive cities in the country, Miller added.
“There’s been more demand for luxury,” because of that, he said, which is why developers are focusing on that type of housing.
Lifelong South Florida residents have been forced to leave
The Miami metropolitan area, which consists of Miami-Dade, Broward, and Palm Beach counties, has been struggling with affordable housing.
For example, Miami’s middle class residents — especially renters — are in crisis.
“We were forced out of our own city where we grew up, where we nourished our roots, where we have so many contacts and so many people who want us back,” Mercedes Cabrera, a decades long resident of Hileah, a city in Miami-Dade County, told local news outlet WLRN earlier this summer.
The middle class buyer in Palm Beach County is “always coming in a second or third,” WPTV reported last year.
Indeed, in this “restructuring,” in South Florida, brought on by pandemic migration, new construction will skew luxury, Miller told Insider. New housing for middle class residents will occur “perhaps on the margin,” but seldom if ever, he added.
And, with the existing housing stock running short, people looking for housing in South Florida won’t “see any significant improvement in affordability,” he said.
“Miami and most of Southeast Florida have rebranded into more luxury markets. I don’t see that as a fluke or an anomaly,” Miller said. “Price structure has reset.”