One of the most popular places to buy a condo in the US is Miami. The weather is excellent, the beaches are beautiful, and there are tons of things to do. Plus, the Covid-19 pandemic has enabled more and more people to be able to work from home, so why not work and live in Miami while paying no state taxes, right? The real estate market is just as hot as the weather, and condos are more affordable than single-family homes and are in the mix of everything, making them more attractive to buyers. But before you buy a condo in Miami, be sure to weigh the pros and cons. Here are some things to think about, along with an update for 2023.
In this article:
An update on buying a condo in 2023
In 2023, buying a condo in Miami comes with new challenges due to the looming condo reform. Many condo buildings may need to issue special assessments to make necessary repairs. They must also collect higher monthly fees to meet new condo reserves. These changes can cause condos to be harder to afford and get approved for when it comes to financing.
Interest rates are over 6%, causing the Miami real estate market to slow down. However, prices are still increasing, and the market is moving towards a balanced one. Condos remain affordable compared to single-family homes, making them attractive to buyers. Cash sales are rising in some areas due to high-interest rates, but financing remains accessible. Buyers can find good deals and concessions despite a seller's market.
Do you think buying a condo this year is a good idea?
Yes
No
I don't know
The pros of buying a condo in Miami:
Affordability and inventory
Community
Amenities
Appliances are included
Places of interests
Less Maintenance
Security
Future Investment Purposes
More affordable than single-family homes
In Miami, condos are much more affordable to purchase than single-family homes and may be ideal for first-time homebuyers. In some cases, it is cheaper to own a condo than to rent an apartment, and can become a great investment property in the long term if you decide to purchase a single-family home down the road and rent out the condo.
According to the Board of Miami Realtors, as of February 2023, the average sales price of a single-family home is $971,358 compared to $686,561 for condos. There's also more inventory with 4.5 months of supply for Condos/Townhomes than 3.8 months for single-family homes.
There's currently a shortage of single-family homes while more condo buildings are coming to the market and apartment buildings are being converted to condo buildings.
See more stats below
| Condos/Townhomes | Single-Family Homes |
Median Sales Price | $390,000 | $555,000 |
Average Sale Price | $686,561 | $971,358 |
New Listings | 1,871 | 1,206 |
Inventory | 6,665 | 3,617 |
Months of inventory | 4.5 | 3.8 |
Stats provided by the Board of Miami Realtors via SunStats, February 2023 stats
Community
Many condos have community space to host get-togethers and events. Some buildings host events for their residents as well. Access to community space in your building allows you to host events and invite friends and family without having everyone in your condo (this may come at a cost).
For instance, my clients were featured on Shark Tank and held a watching event for their friends and family, and no one had to set foot in their beautiful Icon Bay condo.
Insurance and utilities
Condos typically require less when it comes to homeowners insurance. Only the inside of the unit needs to be covered; your monthly HOA fee will cover the exterior of the building, and newer buildings typically have impact windows, so your home insurance rate may be cheaper.
The association fee also included water, trash, and sewer utilities. In some buildings, even basic cable and internet are included.
Amenities
Most condos offer amenities such as a pool, gym, community space, and some even offer small movie theaters, bowling alleys, spas, tennis courts, and more. Amenities are getting better as newer buildings offer condo buyers everything they need all within their condo building.
You may be able to get rid of your gym membership and take Netflix and chill to another level.
Views
When you buy a condo, you are more likely to have a great view of the city, bay, or ocean. The sunrise and sunset views are beautiful in Miami, and owning a condo with a great view is one of the top things on buyers' lists.
Be sure to be aware of your surroundings, though; if there's an empty lot in your view or even an older building, there's a good chance that your view may not always be great. Miami is still growing, and empty spaces will become new buildings in the future, obstructing your view.
Keep in mind; that a great view comes at a price—especially waterfront views.
Places of interests
Living in a Condo in Miami typically means you will be living in or near popular areas such as Brickell, Downtown, Edgewater, and South Beach. So you will be living nearby places you visit or would like to visit often, and you may even be close to work.
In some cases, you can ditch your car if you work nearby. And in the Downtown and Brickell area, you have access to the free Metromover to get around along with the Metrorail, which is handy if you fly out of MIA, and the new Brightline station, which will be opening stations in Aventura, Boca Raton, and Orlando!
Less Maintenance
Buying a condo means you don't have to deal with yard work and exterior repairs. Maintenance staff will take care of community areas and hallways, which is included in the association fee. Living in a condo is a huge plus for people who do not want to be bothered by maintaining a home.
You will still be responsible for most maintenance issues within the four walls in your condo.
Security
Most condos are only accessible with key fobs, security in place, and secured parking. Some buildings are more secure than others.
Future Investment Purposes
If you decide to move to another city or purchase a single-family home later down the road, owning a condo in Miami gives you the option to rent the property out and have a tenant pay down your mortgage for you while adding to your net worth. You can hire a property manager to manage the unit if you do not want to manage it yourself.
The Cons of buying a condo in Miami:
Association/maintenance fees
Down payment and likelihood of loan approval
Condo Associations, Rules, and Regulations
Appreciation
Privacy
Pet and Family-friendly?
Storage
Association/maintenance fees
On top of your mortgage and property taxes, you will have to pay association fees monthly. These fees will go toward some of the items listed in the pros of buying a condo, such as:
Amenities (gym, spa, community space)
Building maintenance
Water and Trash
Parking (typically one spot is covered, some may offer two parking spots but may also charge extra)
Some buildings offer basic cable and internet as well
You also have to keep in mind that if the building needs a repair, the condo owners have to foot the bill in a special assessment, increasing the monthly dues. Associations typically take a portion of your monthly payment and keep them in a reserve fund for the building, used for future expenses. If the reserve fund doesn't cover the repair, the owners will split the remaining amount.
Down payment and the likelihood of loan approval
Buying a condo in Miami can be tricky as most buildings aren't FHA or Fannie Mae/Freddie Mac approved, which means it may require a higher down payment, typically at least 20-25%. It's always good to aim to put 20% down on a home to avoid paying Private Mortgage Insurance (PMI is required when putting less than 20% down), but this is not always attainable.
It is much easier to purchase a single-family home with as little as 3% down. If you are looking to put less than 20% down, be prepared to have a limited list of condo buildings to choose from, and it will be vital to use a local lender for your purchase as a local lender will have more insight and experience with local condos.
Condo Associations, Rules, and Regulations
The association will set rules and regulations. It's crucial to find out these rules before moving forward with a condo. These rules are subject but not limited to:
Pet restrictions
Rental restrictions
Specific time frames for access to amenities
No guest parking
Parking rules
Balcony restrictions
Some condos even hold the right of first refusal, allowing board members to buy the unit you're buying. For example, you may be getting a great deal on a condo, and a board member may recognize this and decide to purchase the unit, and you went through the process for nothing.
Appreciation
Condos typically don't appreciate like single-family homes do, as you are essentially purchasing a living space and not the land. That's not to say that condominiums don't appreciate well, but overall single-family homes may appreciate better.
Privacy
Your next-door neighbor is your next-door neighbor. You may hear each other's conversations, get-togethers, and TVs. But if you are like most people in Miami and are accustomed to apartment living, this may not be a massive problem for you.
Pet and family, friendly?
Condos aren't as pet or family-friendly as single-family homes. This is not to say condos in Miami aren't pet-friendly or family-friendly; many condos offer pet parks and kid rooms. But a single-family home with a yard may be a better option for buyers with families and pets.
Many people that live in condos in Miami may be in the younger crowd, and let's face it, Miami is a party city, so there may be a bit more noise than if you and your family lived in a single-family home.
Storage
When purchasing a condo, you won't have a garage or yard to store things and may be limited to the number of parking spaces you can have. However, some condos offer storage units, additional parking and may even provide docks for recreational water vehicles at an extra monthly fee.
Is buying a condo in Miami this year a good idea?
While interest rates are currently high, buying a condo can still be a good idea in 2023. Despite the slowdown in the market, prices are still increasing, and condos remain an affordable option compared to single-family homes in Miami
However, buyers should carefully consider their financial situation before making a purchase. With interest rates over 6%, borrowing money is more expensive, and buyers should be prepared for higher monthly payments. Additionally, buyers should be aware of potential special assessments and higher monthly fees due to condo reform looming, as discussed earlier.
Buying a condo this year can still be a good investment for buyers who are financially prepared and can afford higher monthly payments. Waiting for interest rates to lower may not be the best decision, as there is no guarantee that rates will decrease soon or that the market will favor buyers. Additionally, with prices still increasing, waiting may result in paying more for a condo in the future.
While interest rates are high, buying a condo can still be a good idea in 2023 if buyers are financially prepared and aware of potential costs. Working with a real estate professional can help buyers navigate the current market conditions and find the best property for their needs.
Conclusion
Overall, buying a condo in Miami is an excellent option for most buyers looking to purchase a property. It all depends on your wants and needs. I hope this article was helpful. Be sure to hire a real estate professional familiar with condos in your neighborhoods of interest. I'm not accepting new buyer clients until the summer of 2022, but I will be happy to refer you to great buyer agents.
