Every real estate market has its own quirks with respect to demand and behaviours, and the luxury real estate segment in southern Florida is no exception. The vibrant city of Miami has a myriad of options that attract long-time residents and newcomers alike.
As millions of would-be homebuyers made an exodus from America’s cities throughout the COVID-19 pandemic to take advantage of historically low-interest rates and remote work, bidding wars ensued over suburban single-family homes. It appeared that demand would slow down by 2021 once the bidding wars ceased and most of the people who wanted to leave their current home had done so. But according to Laura Brady, CEO of luxury real estate auction firm Concierge Auctions, prospective home buyers are still lining up. Homes that have not even been built yet are being staked out by buyers able to quickly obtain home loans with rock-bottom interest rates.
But while the single-family home boom was predictable with the wave of elder Millennials leaving expensive cities to get more room to finally start families, the Miami luxury market tells a different story: condo sales are vastly outpacing single-family home sales.
Concierge Auctions found that Florida has seen one of the highest incidences of home sales in 2020, and home sales within the state continue to boom throughout 2021. This is especially true in the Miami area where high-end single-family homes are being snapped up with all-cash deals at an alarming speed. But the demand for condos is even higher, with Miami condo inventory at record lows.
Why the sudden shift in demand? As the hopeful end of the COVID-19 pandemic nears, demand for single-family homes remains high, but a new subset of home buyers has emerged.
With vaccination rates rising and restrictions easing, home buyer behaviours have subsequently changed. Many are seeking different attributes than they were when the pandemic began or was not ready until recently due to saving money while still under lockdown. The demand for single-family homes initially skyrocketed due to concerns over social distancing and inherently facing more contagion risk in an apartment building or lot with shared amenities. Single-family homes provide sprawl and privacy that would be impossible to attain with higher-density housing, and can inherently provide more space for home offices and comfortable areas for children to engage in remote schooling.
But with almost two-thirds of Millennial buyers, in particular, regretting their pandemic home purchase, it’s evident that a significant number of first-time homebuyers were unprepared for the realities of owning a house. For the luxury market in Miami, the condo shortage speaks to both this realization as well as post-pandemic behavioural shifts.
Condos that are apartment buildings, or private lots of free-standing structures, have different rules regarding which structural items are the responsibility of the individual unit owner or the managing agent. In either case, the unit owner pays a monthly fee dedicated to structural maintenance and the on-site amenities. In addition to being more cost-effective than acquiring and maintaining such amenities on their own, like pools, there is inherently less household maintenance to manage.
This new crop of home buyers seeks outdoor space, but one in which they do not need to individually shoulder all the associated landscaping and maintenance costs. Now that entertainment can be sought outside the home once again, condo buyers are choosing lifestyle over space. Condo apartments offer amenities that do not come with single-family homes, such as on-site fitness centres and sports facilities, pools, conference centres, and doormen who can hold deliveries. Higher-density buildings also allow condo owners to meet like-minded neighbours, particularly in properties that have shared spaces. As social distancing took a great mental toll on many during the pandemic, becoming closer with one’s neighbours and meeting new people has become a priority or bonus to Miami condo buyers.
Most of all, the Miami luxury real estate market offers unique properties that share characteristics of single-family homes and luxury apartments. Developments that offer the same or even more square footage of the average single-family home in the United States, but with all the amenities and conveniences of a comparable luxury apartment building typically found in Manhattan or Los Angeles, are more plentiful in Florida than in other states such as the 1000 Biscayne development, in which Concierge Auctions recently sold a unit.
With no state income tax, and entrepreneur-friendly business environment, vibrant nightlife, and tropical climate, Miami continues to attract luxury buyers who prioritize comfort and lifestyle, but without sacrificing space.