All signs point to the rental market in Miami right now. With business booming downtown, rentals are beginning to become the main priority for developers waiting for buildings to break ground, most of which have sold out their units.
Specifically, as Miami’s condo market slows in its natural cycle, rentals are looking promising to both buyers and developers— here’s why:
The demand is there
When you take a snapshot of the current real estate market as a whole, you see that more and more people are renting households, rather than purchasing homes. Though mostly contingent on the economy, this is also driven by past and particular generations of bad (or lack of) credit; disabling them from being able to qualify for a mortgage or provide a down payment for a home.
Renting provides an alternative that doesn’t have to break the bank for a lot of baby boomers and early generations.
Millennials don’t want houses right now
Millennials, one of the biggest generations to “enter” the real estate market, aren’t considering buying homes, like previous generations tried. Instead, the generation is pushing to move forward in their careers and enter big cities, like Miami, where they are close enough to work, entertainment and amenities.
The age at which people are beginning to settle down is older now, therefore allowing more time to have roommates and save money, or enjoy a smaller “bachelor-type” apartment. And not to mention, burdened with student debt and job hunting, millennials tend to want temporary rentals that help satisfy their immediate needs, rather than committing to those desires via a lifelong mortgage.
Rentals cater more than condos
There is normally some type of uniformity with condos, which people tend to expect and rely on. With rental buildings, units come in all different shapes and sizes, with different rooms, amenities and expectations. But, as the landscape of real estate buyers is changing, there seems to be added benefits when considering rental units.
With different units and different options, a developer can appeal to different audiences all wanting different things, yet satisfying each individual need. A condo unit can be designed for a specific audience, but a rental building can attract different buyers at different ages, with an assortment of incomes and preferences.
You don’t put down a down payment and take out a mortgage on a rental so if, after a year, you’re ready to move on – to a bigger place, to a new city, etc. – rentals afford that opportunity.
Tim Lobanov is the managing director of the Verzasca Group. He has experience in the international real estate space, specifically identifying emerging market trends across both commercial and residential real estate.