The Miami CHMA Has Balanced Housing Markets, but Rising Sales Prices Act as a Barrier to Homeownership
HUD’s Comprehensive Housing Market Analyses provide information on changes in local economies, housing markets, and populations and provide 3-year forecasts for demand in the area. This article is part of a series that sheds light on the content of these analyses.
The Miami-Miami Beach-Kendall, Florida Housing Market Area (Miami HMA), located on the Atlantic coast in southeast Florida, includes the cities of Miami, Miami Beach, Kendall, Doral, and Homestead. With an estimated population of 2.78 million, the Miami HMA is a popular tourist destination known for its beaches, nightlife, and outdoor activities. According to a report from the Greater Miami Convention and Visitors Bureau, a record 23.3 million people visited the Miami HMA in 2018 with an economic impact of nearly $18 billion.
A recent Comprehensive Housing Market Analysis on the Miami HMA highlights the area’s economic and housing market activity.
Modest Growth Across All Employment Sectors
Over the 12 months ending in February 2019, nonfarm payrolls in the Miami HMA increased by 24,700 jobs, or 2.1 percent, to 1.2 million jobs. The unemployment rate averaged 3.8 percent during this period, which was less than the national unemployment rate of 4.1 percent. All employment sectors experienced growth during this period.
The mining, logging, and construction sector experienced the highest percentage of growth among employment sectors, increasing by 9.4 percent and adding 4,500 jobs over the past year.
The professional and business services sector added the most jobs of all sectors over the past year; employment rose from 173,800 to 180,100 jobs, an increase of 6,300 jobs, or 3.6 percent.
Wholesale and retail trade is the largest employment sector in the Miami HMA, accounting for 19 percent of area payrolls. Over the past year, this sector grew by 0.2 percent, bringing employment in the sector to an estimated 222,600 jobs.
The leisure and hospitality sector is the fourth-largest employment sector in the Miami HMA. Employment in the sector increased by 1.6 percent, or 2,200 jobs, over the past year, from 141,700 to 143,900 jobs. Tourism is a large part of the local economy, and employment growth in this sector is attributable in part to the record number of cruise passengers (5.3 million in 2017) departing from PortMiami.
Over the next 3 years, payrolls are expected to grow by 1.9 percent. Growth is expected in both the manufacturing and service sectors. Several projects are anticipated to spur employment growth, including the Miami Worldcenter, which opened the 444-unit Caoba apartment building in downtown Miami. Once completed, the mixed-use Miami Worldcenter will include a convention center, hotel space, and many retailers in addition to the apartment building.
Balanced Sales and Rental Markets Amid Low Homeownership Rates
Over the 12 months ending in February 2019, the home sales market was balanced, with an estimated vacancy rate of 1.6 percent. New and existing home sales totaled 44,600 in the Miami HMA, increasing by 7 percent over the year prior. The average sales price was unchanged over the past year at $465,800. During the same period, approximately 1,625 condominiums were sold, an 11 percent increase over the year prior.
The homeownership rate was 52.4 percent during the period, far below the national homeownership rate of 64.2 percent during the first quarter of 2019. Housing affordability is an issue in the Miami HMA; out of the 238 metropolitan areas measured using the National Association of Home Builders and Wells Fargo Housing Opportunity Index, 92 percent were more affordable than the Miami HMA. The analysis points to rising sales prices as the primary barrier to homeownership.
From February 2018 to February 2019, approximately 5,375 units were permitted for construction, a 47 percent increase from the year prior. Nearly one-third of new single-family home construction over the period occurred in the city of Homestead, which is approximately 35 miles south of Miami.
The Miami HMA rental market is balanced, with an estimated vacancy rate of 6 percent. The apartment vacancy rate also was estimated at 6 percent. From February 2018 to February 2019, approximately 7,525 rental units were permitted, a 5 percent decrease from the previous year. Permitting for new rental units is concentrated in the city of Miami, where several apartment buildings have recently been completed.
Over the next 3 years, demand is estimated for 14,300 additional housing units. Rental market demand is for 13,550 additional rental units. For more detailed economic and housing market analysis, please see the Comprehensive Housing Market Analysis on the Miami HMA.