Prices for Miami luxury housing will likely stay flat. Here’s what 2021 may hold
Prices for most global luxury real estate markets are likely to stay flat or even dip by late this year. But they should rebound in 2021, according to a recent study by highly regarded Knight Frank real estate consultancy and brokerage firm Douglas Elliman.
The influential London-based firm is predicting a price drop of as much as 5% for residential real estate priced above $1 million, according to its COVID-19 global residential market outlook report. But they are likely to rebound at least slightly — and perhaps by as much as 5% — sometime in 2021.
The firm surveyed its global research teams across 20 cities worldwide to understand the likely impact of the coronavirus in each market, said Kate Everett-Allen, the head of international research for Knight Frank.
The forecast for 2020 may influence local sellers, Everett-Allen said via email. “There may be fewer listing as would-be luxury sellers adopt a wait-and-see approach but unlike 2008, we do not expect a large volume of forced sales. Interest rates are at historic lows and are expected to stay low for some time, inventory levels are lower and more responsible mortgage lending rules mean fewer owners are likely to face financial distress.”
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The study also analyzed Berlin, Buenos Aires, Cape Town, Geneva, Hong Kong, Lisbon, London, Los Angeles, Madrid, Melbourne, Monaco, Mumbai, New York, Paris, Shanghai, Singapore, Sydney, Vancouver and Vienna.
Prices in New York also are likely to remain flat, according to the survey.
Things could be worse. Some other cities are expected to suffer even deeper price drops, including Buenos Aires, Mumbai, Hong Kong, Singapore and Vancouver.
A few factors protect the local market from dramatic price decreases, Everett-Allen said. Tax-deduction limits under the federal tax code play a role.
“Miami was already seeing strengthening demand in 2019 as a result of the SALT tax deduction but the lifestyle on offer, large homes, outdoor space, beach side locations, golf courses will heighten its appeal particularly to those located in higher density cities,” she said.
Knight Frank actually expects prices in a few cities to increase from 0.1% to 5%. Those include Lisbon, Monaco, Shanghai and Vienna.
“Vienna and Shanghai are already out of lockdown. Austria acted quickly and saw a relatively low number of cases whilst Shanghai saw sales start to recover in March,” Everett-Allen said. “Lisbon by comparison not only has a backlog of limited prime supply but is relatively affordable compared to other European cities, whilst in Monaco, prices are largely static given the demand and supply imbalance.”
Jay Phillip Parker, chief executive officer of Douglas Elliman Florida, remains positive about the local luxury outlook for 2020. He said by email, “Miami’s real estate market has matured so much over the last decade both in terms of its neighborhoods, diversified offerings and cultural diversity. The numerous markets within the Greater Miami region offer distinct products, character and lifestyle, which combined with relatively low inventory, I expect will provide for continued stability and even strength as we begin to exit our shelter-in-place order and move to a post COVID-19 new normal.”
Knight Frank expects the local forecast to bring price growth between 0.1% to 5%, matching growth in Los Angeles.
“Whilst inventory levels in Miami are low by historic standards, they are still higher than in some European and Asian cities and the U.S. dollar mitigates any currency advantage for some overseas buyers,” wrote Everett-Allen.
That matches the prediction for Los Angeles.
New York, Buenos Aires and Vancouver likely won’t be as fortunate. Prices in all three cities are expected to drop as much as 5% in 2021.
The big winners for 2021: London and Lisbon, according to Knight Frank. Prices in both are expected to outperform all surveyed cities in 2021, including Miami, with a price jump above 5%.
