Condo sales drove big gains in the Miami housing market last month, thanks in part to the continuing impact of the new federal tax code and, in a more recent development, a decline in mortgage rates.
According to the Miami Association of Realtors, existing condo and townhome sales in the Miami area grew 17.7 percent in March compared to the same month last year. That stands in contrast to the trends seen across the state of Florida and nationwide, as home and condo sales fell on a monthly and annual basis in March.
Alex Alexandrov, a luxury real estate advisor with Compass who primarily handles listings in Brickell and Downtown Miami, said this latest surge may be attributed to a number of factors converging all at once.
“A few years ago, it was easy to say that condo sales were driven by Latin America, but things have tilted a bit,” Alexandrov told Miami Agent. “We are seeing a vast increase of Americans moving from northern states like New York and buying a permanent home in Florida because of its favorable tax code, less expensive lifestyle and better weather.”
At the beginning of 2018, the new Tax Cuts and Jobs Act reduced certain deductions that homeowners in high-tax states could claim, effectively increasing the cost of homeownership for some residents. In turn, residents of states like New York, New Jersey and Illinois were incentivized to move to states like Florida, where local taxes tend to be much lower.
Meanwhile, a yearslong building spree in Miami delivered a high supply of new condo units, many of which were sold before the building itself was completed. This created ample opportunities for buyers looking to trade up or find a resale for a great price.
“I think there are great deals for buyers today in the mid segment of the condo market, specifically in buildings that are a few years old,” Alexandrov said. “Deals are being made at a great discount from their 2015 highs and at the same time the infrastructure of our neighborhoods is improving every day, so there is a lot of room for upside.”
The national reach of firms like Compass has helped agents capitalize on this new migration pattern. With a large presence in New York, Compass agents in Florida benefit from an extensive referral network to help them find buyers and sellers.
International buyers continue to play a major role in the market as well. Alexandrov specializes in working with international clients and said he has noticed strong activity among Latin American buyers in the last year or so.
“I can say that in the past year my business has been split down the middle between clients from North America and Latin America,” he said.
Looking ahead, Alexandrov sees promise for both buyers and sellers. The former have benefitted from an explosion of condo inventory in Miami, but that supply is quickly getting snatched up.
“Developers have pumped the brakes on a lot of new projects for a while now, and even if new projects do get announced today, for construction to even begin they will need to sell a certain amount of units,” he said. “From this point, depending of the complexity of the building, it could be three to five years before new inventory returns on the re-sale market.”
Even though the Miami Realtors characterizes the current market as one that favors condo buyers, Alexandrov said he thinks it’s still a great time for sellers to list their homes, too.
“A lot of sellers are looking to upgrade to a bigger condominium. If they purchased their first home during favorable times, they can sell at a profit and at the same time get an excellent deal on the buy side – it’s a win win,” Alexandrov explained. “At the end of the day everyone’s situation is different and it needs to be carefully evaluated to the benefit of the client. “