Multifamily Boom, Trade and Tourism Spurring Miami Growth

  • Following a year-end spike in employment in 2011, Miami payrolls paid back some of their gains, declining by 0.8 percent in the second quarter of 2012. Miami unemployment declined by 0.7 percent between the first and second quarters of 2012, with a Q2 rate of 8.7, still above the U.S. average of 8.3 percent. Job growth is expected to resume over the second half of the year, bringing the unemployment rate down only gradually. Only-modest job growth and lackluster income gains makes Miami feel sluggish in the second half of 2012.
  • Miami stands as one of the hardest hit housing markets of the recent recession.  According to the FHFA Home Price Index, Miami home prices quadrupled from 1985 through their peak in the second quarter of 2007.  Between 2007Q2 and 2011Q3 Miami home prices fell 45 percent, compared with 16 percent nationally.  Year-over-year home price declines in Miami have slowed markedly into mid-year 2012, and now look as though they have turned a corner. Prices are expected to be roughly flat in 2012 on a year-over-year basis, then firming in 2013.
  • Multifamily rental development remains a bright spot in the Miami economy. Multifamily starts rocketed up by 59 percent in 2011. Through the first half of 2012, multifamily activity is up 87 percent from the fourth quarter 2011 average. Some of these rapid gains will be paid back in following quarters. The overall trend, however, is a positive one and bodes well for the Miami real estate market this year.
  • Tourism and trade are also top performers for the Miami economy. Tourism-related tax revenues through June are up, and passenger traffic at Miami International Airport (MIA) is expected to set a record in 2012.  Freight shipments at MIA have grown 4.8 percent in the first half of 2012, but are vulnerable to recession-driven declines in demand from Europe and a cooling Chinese economy.  Latin American economies are also feeling the drag from Europe and Asia, adding to downside risk for Miami’s forecast.  Brazilian investors have been investing in South Florida in record numbers but soft foreign demand and high inflation are weakening the Brazilian economy.

Click here for the complete 2012Q3 Miami Regional Economic Update: Miami2012Q3.

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