Miami Real Estate Market Predictions for 2025: According to NAR
August 13, 2024As we approach 2025, the Miami real estate market is gearing up for a dynamic shift. This is driven by evolving mortgage rates, changing sales trends, and a strong economic backdrop. Here’s what to expect in the Miami real estate market over the next couple of years.
Mortgage Rates and Their Impact
The mortgage rate landscape will undergo significant changes in the coming years. Projections from the Miami Association of Realtors anticipate that the 30-year fixed mortgage rate will decrease to 6.6% by the end of 2024, with a further drop to 5.7% by the end of 2025. This anticipated decline stems from the Federal Open Market Committee’s (FOMC) plans, which include one rate cut in 2024 and four more in 2025.
The rate reductions are likely to occur in the latter half of 2024, aiming to prevent inflationary pressures from election-related demand spikes late in the year. Lower rates will enhance affordability for prospective homebuyers and investors and could boost market activity in 2025.
Sales Trends: Single-Family Homes vs. Condominiums
In 2024, existing home sales are projected to decline modestly by 6%, primarily due to high mortgage rates and current economic conditions. However, we expect a market rebound in 2025 with a 4% increase in home sales, largely driven by the single-family home sector. Falling mortgage rates, job growth, and improved affordability will fuel this increase.
Single-family home sales are forecasted to rise by 7.8% in 2025, while condominium and townhome sales are expected to remain stable. The stagnation in condominium sales will likely result from potentially higher fees and assessments under the new Building Safety Act, which may dampen demand.
Home Prices and Market Dynamics
Despite the anticipated drop in mortgage rates, home prices in Miami will likely remain strong. Single-family home prices are projected to rise by approximately 7% annually through 2024 and 2025. In 2025, the median sales price for single-family homes is expected to increase by nearly 10%, reflecting a continued seller’s market. Conversely, the median price for condominiums and townhomes is predicted to see a modest rise of 2.5%, influenced by the same higher fees and assessments affecting demand.
As of May 2024, the single-family home market in Miami-Dade and surrounding counties remains competitive, with only four months of supply available. In contrast, the condominium and townhome market is more balanced, with inventory equivalent to over six months of supply.
Economic Growth and Its Implications
Miami’s economic fundamentals will strengthen in 2025, with a projected 2.4% increase in total employment, adding around 80,000 new jobs. The reduction of Florida’s commercial lease sales tax rate from 4.5% to 2.0% will provide significant tax relief for businesses, boost the local economy, and attract new enterprises.
Miami’s role as a key economic gateway for Latin America will continue to drive global real estate transactions. Increased trade and investment flows from North American countries like Mexico and Canada are likely to boost real estate demand. Additionally, Florida’s zero state income tax will keep attracting residents from high-tax states such as New York, San Francisco, and Los Angeles.
Conclusion
As Miami approaches 2025, the real estate market will benefit from a combination of declining mortgage rates, strong economic growth, and ongoing demographic shifts. While existing home sales may dip temporarily in 2024, the overall outlook for 2025 is positive, with increased home sales, rising prices, and sustained demand for single-family homes. For investors and homebuyers, the Miami real estate market offers a promising landscape full of opportunities.
