Record Number of Investors Flooding Real Estate Markets in South Florida

South Florida has always been prime investment territory for investors from around the globe. Our tropical environment and desirable weather draw residents and tourists all year, making it a sound investment in the eyes of many, and has kept the investment markets perennially strong. Since the pandemic began, however, real estate investment in South Florida has skyrocketed - bolstered by the incredible demand of homebuyers and companies moving into our state in record numbers.?

Real estate giant, Redfin, recently published a report analyzing the breakdown of home sales in the final quarter of 2021 and the report reaffirms the notion that real estate investment is on the rise big time in our area. In fact, investors accounted for $2.15 billion in home sales in Miami alone during that time period. This was the 7th highest amount for any metro in the country, behind Los Angeles, Phoenix, Atlanta and others.?

In terms of percentages of overall home sales that were purchased by real estate investors during the fourth quarter of 2021, the numbers are even more startling for our state. Out of the top 10 metropolitan areas with the highest percentages of properties bought by investors, instead of regular home buyers looking to live in the property themselves, 50% of the cities were located in the state of Florida! While Atlanta was the number one city with 32.7% of all properties sold to investors, five Florida cities ranked not far below. Jacksonville came in at #3 with 29.8%, Miami was #6 with 27.5%, Orlando was #5 with 25.9%, Tampa was #6 with 24.2%, and Fort Lauderdale was #10 with 21%. Florida was definitely the hottest ticket in town in 2021 for real estate investors across the country.

Some may not understand the tremendous impact that this rush of investment buyers has had, and will continue to have on our local real estate markets. Investors not only increase competition, but a large percentage pay in cash, which is causing many home buyers requiring financing to miss out on deals. Additionally, investment purchases tend to drive up prices for both buying and renting. Many investors buy an affordable home, do minor refurbishment, and flip it for a higher price - in turn raising the market value. A bigger issue, however, is that a majority of investment buyers keep the property and return it to the market as a high-priced rental, thus reducing inventory for buyers and raising costs for renters.?

With all of this in mind, many industry experts believe that - despite rising costs and interest rates - now is still a good time to buy a home in the Florida Keys. Values are continuing to increase and will provide a good return upon eventual sale. Additionally, purchasing enables residents to avoid the skyrocketing rental prices and instability that comes with renting, especially in a seller’s market when an owner can sell at any time.

Overall, the market has been a struggle for the past two years in South Florida for buyers. All indications, including this recent Redfin report, point to the increasing numbers of investors continuing for the foreseeable future. The overall impact will inevitably be felt, positive or negative, for years to come.