While most of the Eastern and Midwestern United States is bracing for what President Trump calls a “brutal and extended cold blast that could shatter all records,” Bloomberg is reporting that “Miami is Hotter Than Ever.”
Last week they published this video highlight, showing some of the neighborhoods that are popular to visitors including Coconut Grove, Little Havana and Wynwood. They also remind viewers that the average temperature in Miami is 75 degrees and it is the second most visited city by international visitors in the United States.
It isn’t just our amazing weather and convenient location that make Miami such a desirable destination either. Back in the Spring, CNBC published a report that New York and California could lose 800,000 residents to Florida over the next 3 years due to the new tax bill. Connecticut, New Jersey, and Minnesota could also lose a combined 500,000 residents.
The tax changes limit deductions of state and local taxes to $10,000, making Florida incredibly attractive to high-earning taxpayers. The fact that Florida has no state income tax and reasonable local taxes compounds its attractiveness.
Not Everyone Has Such A Rosy Outlook
While Bloomberg and CNBC are singing praises for the Miami market, other news outlets are predicting a crash and I feel it is important to speak on this topic from the perspective of an active agent on the ground in Miami and Miami Beach.
Local real estate doomsday predictor, Peter Zalewski has been making the rounds, giving quotes to any outlet who will listen about the impending crash that Miami is facing. While we are friendly with Zalewski and respect his opinion, many of the stories are simply misleading.
Last week, The Robb Report published a story asking the question of whether the luxury property market is headed for a downward spiral? I will admit that the Miami and Miami Beach luxury market has experienced a slowdown from some market segments and increased inventory, but this does not mean that it is in a downward spiral. It means that buyers have more to choose from.
According to MLS data for 2016, 2017 and 2018 YTD, you can see that the average price per foot has not changed much, nor has the average negotiation amount. The number of closings has even increased slightly in 2018 over the last two years and we still have 5 weeks of 2018. The neighborhoods I used for this report were Miami Beach resales from Fisher Island to North Beach. I also only looked into residential properties of $3 million and up. (In another report, I will address the reality of Brickell, Edgewater, Coconut Grove, and Sunny Isles as well as more detailed reports for Miami Beach.)
The Robb Report also went on to discuss the drastic price cuts that have recently graced the headlines including the $5.75 million sale of Zaha Hadid’s personal apartment at the W Miami Beach. It has previously been listed for $10 million.
Just last week, the opulent Le Palais Royal in Hillsboro Beach sold for a rumored $41 million after 11 buyers competed at a no-reserve auction for the property. It had previously been listed for a staggering $159 million. As you can see from the listing photos below, the property is certainly over-the-top (in my opinion it looks like a Vegas resort), but was it ever worth $159 million? No.
It was worth $41 million because that’s what a buyer was willing to pay.
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Pricing a property for an astronomically high price makes for great media coverage, then more media coverage when it sells for market value, but it does nothing to sell for more than what the property is actually worth.
A better strategy is to avoid hiring the agent who will list your property for any price. Hire the agent who will speak candidly with you about what it’s worth. Hire the agent who has the contacts and tools to market your property to actual buyers who will actually be interested in it and actually have the means to buy it.
If you are looking to purchase a property, it is important to hire the agent who knows the market inside and out, the person who knows of possible fluctuations on the horizon and will be candid with you about what is happening. Be honest with that agent about your goals and taste. That is how you will most efficiently have your goals met and avoid paying $159 million for a $41 million property.
All in all, I have to agree with both Bloomberg and The Robb Report. Miami is very hot, a desirable place to live and we have some very beautiful properties to choose from. Are there more options today than last year? Yes. But the numbers indicate that this does not necessarily mean we are in a downward spiral because we are not.
If you would like to speak with us about your goals to move to Miami or to change homes, we are always here to help. As your experts on the Miami Beach and Greater Downtown Miami real estate market, we can help you identify and close on your new dream home. Contact our team today.