Real Estate Prices in Miami are going to fall? – Patricia’s real story: A Revealing Insight

Prices are going to fall in Miami

Do you remember the year 2019? It was an interesting year for prices in Miami.

Interest rates for mortgages was over 4.3%, and the average price of a single-family home in Miami was $355,000.

At that time, our team was five years old, and we observed, based on the general data provided by real estate platforms, that the market was beginning to slow down. Although the decline was very gradual, the numbers indicated an inevitable shift in the market.

In the middle of that year, I had my first conversation with Patricia, who was considering buying a three-bedroom, two-bathroom house in the Kendall area. The conversation was interesting, but Patricia was concerned about the high interest rates. I told her something very simple:

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She responded by saying that her mortgage would be considerably higher than her rent of $2000. 

At that moment Patricia was not ready to buy, and our approach has always been to advise our clients in the best possible way, not to persuade them, so our conversation was put on hold, and we agreed to talk again in 3 months to see if anything changed. 

But during that time, it did not.

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Nine months passed, with two more calls in between, and we found ourselves in April 2020. 

When I answered my phone, I was faced with a concerning reality: many people had lost their jobs, others were facing health problems, and uncertainty prevailed. Among the latter was Patricia. 

When she answered, she seemed nervous. She had just left the supermarket, and the chaos of the place had left her worried.

Fortunately, her family was okay, and no one had fallen ill or lost their job. She told me she had heard in the news that interest rates had dropped to 3.37%, but property prices had increased to an average of $380,000.

I explained to her that, given the circumstances, her monthly payment would be around $2500, barely $500 more than her rent. However, Patricia remained convinced that prices would fall because, in her opinion, it was impossible for so many people to buy in Miami given what was happening.

This belief persisted in the following years. Call after call, Patricia began to lose interest in buying a house and always gave me the same response: 

“Prices are going to fall; it’s impossible for people in Miami to keep buying at the same price.”

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In 2023, she called me. She needed to move! The owner of the townhouse she was living in wanted to raise the rent to $3000, and she was not willing to pay that price for a property that was not hers. 

As in every call, her phrase reappeared, and she decided to rent a two-bedroom apartment for $2400.

It’s 2024, and I spoke with Patricia again last week.

She is going to continue living in the apartment she rented, knowing that the rent will soon be increased. As always, I informed her about the current situation: interest rates are at 7% according to major banks, and the price of the house she was interested in back in 2019 is around $500,000, which would bring her monthly payment to about $4000.

This time, with the confidence we already have from having talked for so many years, I reminded her of our first conversation in 2019.

“Do you remember that in 2019 you didn’t want to pay $1000 more to buy your house? Well, we’ve come full circle; currently, you would also be paying $1000 more than what will likely be your rent.”

Patricia laughed, conceding to my point. But once again, despite realizing that she would always end up going through the same cycle, she asserted that prices would fall because people would not continue buying in Miami for those amounts.

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Patricia’s case is not unique

We have seen similar situations with many clients who wait for prices to drop dramatically. However, the reality is that demand in Miami remains high.

Every year, both national and international buyers come to our city with the economic capacity to buy with a high down payment or cash, and the most worrying thing is that Miami is running out of space.

Our entire territory has been developed, with the ocean on one side and the Everglades on the other, builders no longer know where to build new homes, which means that prices continue to rise.

And of course, people keep buying.

Although the numbers are not the same as in 2020, when a house for sale received between 5 and 25 offers, everything sells if it’s at the right price.

Now is when I start showing charts, and you’ll want to close this, but believe me, this is interesting.

April Comparison 1
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Yes, it is true that another pandemic could come, lowering mortgage interest rates; it could be that tomorrow banks start to collapse like in 2008; it could also happen that a hurricane comes and resets the market completely (These are real things people have told me).

Undoubtedly, thousands of almost impossible things could happen for there to be a sharp drop in prices.

But this is what we are really seeing:

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Are you going to keep waiting too? Why? Please, respond here.

P.S. Please let me know what you thought of this blog. This will help us know if we are doing it right. Click here to reply.

Our stories are real, but names, addresses or images have been altered for the privacy of our clients.

Si quieres leer nuestros blogs en Español haz click aquí.

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