Investors Continue Their Drive into Real Estate Markets in South Florida

The real estate market in South Florida has been experiencing huge changes and expansion since the pandemic began, with new trends becoming the norm and South Florida experiencing a huge boom in interest. One of these trends has been the huge influx of real estate investors into our markets, purchasing large numbers of properties. This has been seen as a distinctive feature of the South Florida real estate market for the last two years. A recent report by real estate giant Redfin shows that it is not only persisting, but growing through the fourth quarter of 2021, not only in South Florida but in many popular markets across the country.

In Miami, the nearest metro to us here in the Florida Keys, more than 27% of all home sales in the last quarter of 2021 were purchased by real estate investors as opposed to those looking to actually live in the property - the sixth highest percentage in the country. Nearby Fort Lauderdale ranked #10 with 21% of home purchases by investors. In the top 10, in terms of percentages of total sales bought by investors, Florida was overwhelmingly represented. 5 of the top 10 cities were in the state of Florida. Included in the top 10 were Jacksonville (29%), Miami (27%), Orlando (25%),Tampa (25%), and Fort Lauderdale (21%). It is clear that the state of Florida is popular with real estate investors, as so much of our properties are being snatched up for investment purposes.

Dollar-wise, investors purchased an astounding $2.15 billion worth of real estate in Miami, the seventh highest ranking metro in the country, in the fourth quarter of 2021. The highest grossing city was Los Angeles, with $6.7 billion purchased by investors, followed by Phoenix, New York, Atlanta, and Anaheim.

Redfin reports that, nationwide, more than 18% of all real estate transactions in the fourth quarter were made by real estate investors. This marks a record high, with no signs of slowing as we move through 2022.

What does this mean for regular homebuyers? The huge influx of real estate investors, with large amounts of capital behind them, helps to explain the increasing numbers of cash deals that are squeezing many buyers out of deals. It also explains the increasing competition and scarcity of inventory. Not only are investors scooping up properties, they are largely turning residential homes into high-priced rentals. Many investors either buy an affordable house to flip, increasing market values in many areas, or purchase and then turn the property into a high-priced rental for rental income. This is especially prevalent in popular tourist areas like South Florida and the Florida Keys. Real estate experts see this as continuing to grow, and rental prices to continue to go up, throughout 2022. Though the homebuying market may be tough right now, many see this as the better alternative to remaining in the rental market as it remains unsteady and increasingly expensive.

If you are looking to purchase a home in the Florida Keys, we can help you find what you are looking for within your budget. Call us at Broker’s Edge to find out how we can help you navigate this seller’s market!