How overbuilt is Miami?
Like the rest of the country, Miami saw peak residential construction right before the market collapse of 2007. And though the general consensus is that Miami is overbuilt and bordering on “distressed,” a look at residential building permits shows that recent construction activity is not even half of what it was in 2005, according to the National Association of Realtors.
NAR has taken a look at housing construction permits by county in 2000, 2005 and 2015 to determine how cities have dealt with inventory issues, which are plaguing some major markets and are a leading cause in rapidly raising home prices. The years were chosen because 2000 was considered a “healthy” inventory benchmark; 2005 was considered “strong” inventory conditions and 2015 “tight” inventory.
There were 12,617 housing permits granted in 2015, a 1-percent increase over the “healthy” 2005 benchmark of 12,475 in 2000. The 2015 figure is down considerably from 2005, when 26,120 residential construction permits were issued just before the housing market collapse.
A responsible slowdown
The slowdown from 2005 can be seen as a positive and mirrors the national trend. About 60 percent of all counties in the U.S. saw peak construction in 2005, with only 12 percent hitting peak homebuilding in 2015, according to NAR. And despite the talk of overbuilding, Miami’s 2015 pace is only slightly higher than its healthy 2000 benchmark.
There are some places being overbuilt, like Downtown and Brickell, but the rest of Miami-Dade has seen slow but steady growth in homebuilding. But, as a whole, the county is actually under built, according to NAR, which says the county could have built an additional 2,672 homes in 2015 to keep up with demand.
Some places do need housing, particularly for middle-income earners and families of lesser means who are currently being priced out of gentrifying neighborhoods like Little Havana.
NAR’s study does not make it clear if the housing being built would satisfy those needs or continue to pile on the glut of inventory in some places. What we do know is that 22 percent of the 12,617 homes built in 2015 were single family, which is considerably less than the national average of 58 percent. Miami-Dade’s new construction density is much higher than the national average. Here, new buildings averaged 42 units, while nationally they averaged 11.