Once a poster child of the housing boom and bust, it seems Miami has done an about face since being branded one of the country's worst housing markets.
From being awash in unsold condos and foreclosures, Miami's downtown has morphed into a thriving mecca of bustling sales activity, a new report says, putting the South Florida town on the map among the nation's most active and lucrative housing markets.
"Downtown Miami continues to defy national trends in real estate economics," said Craig Werley of Focus Real Estate Advisors, the firm that conducted the study. "This is particularly remarkable considering the foreclosure crisis that continues to grip much of the rest of the region and state."
Just three years ago, thousands of condo units built in the boom years between 2003 and 2008 sat vacant, victims of the financial crisis that gutted the nation's housing markets. Now, the downtown corridor boasts an occupancy rate of 93 percent, according to the study.
Even the luxury condo tower Icon Brickell, a building dubbed "a monument to excess" by the New York Times, has gone from less than 5 percent occupancy to nearly 89 percent.
"When you get above 90 [percent occupancy], it's kind of speaking to that turn of people moving out and people moving in," says Alicia Cervera Lamadrid, managing partner of Miami-based Cervera Real Estate. "If you're looking for a place to rent in Miami now, you're going to find that prices are up from where they were a year ago and even month to month."
The cost of owning property in Miami's downtown is also on the rise. According to the study, sales prices at the end of 2011—now about $370,000 on average—were up more than 6 percent over prices in 2010. That's a good sign, according to experts, because it underscores that demand is returning to Miami's battered housing market. And while there's evidence of healthy buyer interest domestically, many foreign buyers have their sights set on Miami as well.
"Global investors, real estate investment trusts, and private equity are tripping over themselves to invest in Miami," says Neisen Kasdin, vice chair of the Miami Downtown Development Authority. "Miami has become a great global city."
Lamadrid agrees. "Our buyers are as international as our city is," she says. "We have a strong influence from South and Central America, and a few customers from Europe and the Far East. Canadians are increasingly coming south to Miami and buying more expensive product as a result of the currency."
The same is true of buyers from Brazil, a steady flow of which Lamadrid has seen come into the Miami market over the past several years. With the drop in home values and the increase in the value of the Brazilian currency, buying in Miami has become even more attractive for Brazilian nationals.
"You factor those together and the Brazilian buying power is increased by 53 percent," she says, which has contributed to a surge of buying activity in higher priced homes.
So with the experts hailing a housing recovery underway, what's next for Miami? With housing supply depleted, more building is likely in the city center, Kasdin says, and several projects are already under way.
But is the rush to build a prelude to another 2007-style housing crash for Miami? It's not likely, Lamadrid says, primarily because there's not a lot of outstanding debt tied to the condominium market right now.
"Most of the inventory that closed during the very challenging years closed in cash because as we all know the bank financing disappeared," Lamadrid says. "It makes [the market] extremely stable."