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Where in the Real Estate Growth Cycle is Miami?

Posted by Keith Darby on November 4, 2015

When investing in Real Estate, most will consider where in the cycle the market is to guide their strategies and decisions. In Miami, most believe that the market is either in mid-cycle or beginning to slow down.

The Miami Real Estate market’s health is largely indicated by the rental and condo market. When people are building and buying condos, the market cycle is considered to be in a growth phase. Currently, demand is still strong and supply steady. As some bigger projects are completed in early 2016, and supply increases, it will be a test to see if demand follows. In the next two years, the market will see an influx of approximately 7,000 condos, which is less than half of what the market saw in the peak of the last cycle.

Since Miami is a big market for foreign investments, it is also important to consider the stability of foreign investors’ home countries, and the health of their currency, to determine the implications on Miami’s market. The dollar has gained against foreign currencies in the past year, especially in the South American markets. As the dollar strengthens, it will take a larger amount of foreign investors’ wealth to purchase property or continue payments in Miami.

At RISE Realty, we think the market is in a healthy spot, and there are no red flags to consider limiting investing. RISE believes that when the market inevitably begins to slow, it will happen in a more manageable manner. There is no 2008-like collapse to fear! Keith Darby, RISE Realty President, says “Miami has learned from 2008-2010. Development has been more modest, and therefore we are better equipped to handle the challenges of foreign currency devaluation and the natural ebb and flow of demand.” Recent projects were planned more conservatively, with experienced developers, realistic plans, and requirements of higher down payments of 30-50%, so all parties are more invested. Additionally, Miami has a stronger culture and scene built, to help with keeping demand steady. At RISE Realty, we believe Miami will be a strong national and international market for years to come.

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