Things in south Florida are trending warmer as shown by the latest stats, starting out with the economy’s biggest engine—jobs growth. According to Metrostudy, the Miami metro area gained 29,100 jobs over the past 12 months, an annual growth rate of 2.4%. This number beats the national number of a 1.4% increase over the year. In Q3 2019, Miami’s stock of apartments reached an all-time high of over 297,000 units. In 2008, there were less than 270,000.
Tenant retention and occupancy levels are both high in Miami. Occupancy rates per class breaks down to 95% in Class A, 96.6% in Class B, and 98.7% in Class C. Occupancy rates for Class C have been extremely high for the past five years. New resident lease growth is 2.1% in Class A, 1% in Class B, and 5.2% in Class C. Renewal-lease rent growth is 1.7% for Class A, 4.7% for Class B, and 6.2% for Class C. Monthly rental rates are higher, $1,672 as compared with $1,416 nationally, with rent growth similar to the national average. The bad news is Miami is currently in first place for median rent-to-income level with a 28.8% ratio—making it less affordable. More product is being added to the mix, and will spike to nearly 9,000 new units being delivered early in 2020. Apartment sales prices are similar to the national average of $196,000.
The luxury condo market in Miami has softened, and, according to RealPage, the effects of condo conversions in the mid-2000s may finally start to dissipate as the quantity of rental property is on the rise. Quarterly single-family starts increased 77% to 864, and quarterly closings increased 68% to 685 from the previous quarter. Single-family inventory for the area has stabilized, with Metrostudy reporting that there is now a 9.4-month supply in Miami-Dade County, which is up from the 8.9-month supply observed in the previous quarter. Nine months of supply is considered normal. As compared with other land-rich markets across the country, Florida’s land supply is ultimately constrained, which could turn into a benefit if the economy slides into a recession as predicted for next year.
According to David Cobb, regional director for Florida, “the scarcity of land in Palm Beach, Broward, and Miami-Dade will likely help buffer this portion of the market from any recessionary winds that may blow in the future. Moreover, the cost of land in this submarket provides a barrier to entry from would-be home builders located elsewhere.”
