Miami Metro’s Real Estate Market appears to be rounding into shape

Average home prices in Miami metro (Miami-Dade, Broward, and Palm Beach counties) appear to be slowly approaching the area’s long-term pricing trend. A slow progression to a housing market’s long-term pricing trend suggests the likelihood of a housing crash is minimal. The news is good for the rental market as well with the average rent for the tri-county area resting slightly below the area’s long-term rental trend

Housing prices and rents follow a mean reverting trend. That is, they revolve around long-term trends. Think of these trends as average appreciation in home prices and rents. Significant deviations from these trends typically do not bode well for market stability.

Currently, metro Miami home prices are settling near the area’s long-term pricing trend. The average home price (while above the long-term home pricing trend for the area) is holding at a 12.5% premium. This premium two years ago was 19.9%. At the peak of the last housing cycle, the Miami metro premium was 67.8% in November of 2006.

Two years later the area’s premium had fallen to 5.8% -- one more year forward, the premium had turned into a discount of -19.2%. Source: Top 100 US Housing Markets -- Inflation Adjusted

In three short years (11/2006 to 11/2009), the market for Miami metro homes had crashed. The drivers for this crash back then were an oversupply of housing units, lax lending guidelines, and a rapidly declining economy. None of these ingredients are present this time around, making a repeat very unlikely.

What seems more likely is that Miami metro home prices will soon be back on their long-term pricing trend, returning the housing market to a stable environment in which to own. 

Population growth is necessary for stable housing and rental markets.  Solid local household incomes are necessary as well. The Tri-County’s population has experienced significant growth in the last ten years, increasing by 10.0%, while the average pay per job for S.E. Florida is $80,400 annually. Both figures are significant and only serve to increase the likelihood that local home prices and rents will remain stable and return to their long-term trends. Source: Stats American -- Big Radius Tool.

The rental statistics are even better. The average rental unit is actually leasing at a discount of 1.26% with a year-over-year increase of 1.42% since June of 2024. Source: Waller, Weeks and Johnson Rental Index. These are numbers that no one would have thought possible just a few years ago. Stable rental markets provide the future demand for homeownership. 

While it is only logical for many residents of S.E. Florida to worry about their local housing market, there are just too many signs for a “soft-landing” and a quick return of home prices and rents to their long-term pricing trend. 

What does all this mean for the typical area household? Given all the “green shoots” in the market, now might be the time to go ahead and purchase or form that first household and rent.

Contact: Ken Johnson, Ph.D.
Christie Kirkland Walker Chair of Real Estate
The University of Mississippi
School of Business Administration