You may have noticed an uptick in construction and newly built homes. But it’s not just a trend we’re seeing here in the Miami real estate market. In fact, about one-third of single-family homes for sale today are newly constructed, a dramatic increase from pre-pandemic levels.
Let's dive into why new construction homes are dominating the market and what you should keep in mind if you're thinking about buying a new home in Miami.
The Rise of New Construction Homes
Since 2019, the landscape of the real estate market has shifted significantly. Remote work, low mortgage rates, and increased demand for homes prompted builders to ramp up construction.
Even as demand has slightly cooled and mortgage rates have risen, new builds continue to play a crucial role in the housing market. Nationally, newly built homes made up 33.4% of the market in Q1 2024 according to Redfin—a trend that's holding steady.
Why New Construction Homes Are in High Demand
Limited Supply of Existing Homes
Builders are constructing about 1 million single-family homes a year. At the same time, many homeowners are reluctant to sell their existing homes due, in part, to high mortgage rates. Robert Dietz, chief economist at the National Association of Home Builders (NAHB), explained, “The level of resale inventory has shrunk.”
With a smaller number of existing homes on the market, new construction takes up a bigger portion of the total housing inventory. Buyers today are exploring all their options, from fixer-uppers to renovated properties to new construction.
Attractive Pricing and Incentives
Builders are inclined to sell their inventory and are often more flexible with pricing than individual home sellers. To attract buyers, they frequently offer incentives such as mortgage rate buy-downs, price cuts, and covering closing costs.
Builders are constructing about 1 million single-family homes a year. At the same time, many homeowners are reluctant to sell their existing homes due, in part, to high mortgage rates. Robert Dietz, chief economist at the National Association of Home Builders (NAHB), explained, “The level of resale inventory has shrunk.”
In addition, new homes are becoming more affordable compared to existing ones. According to the U.S. Census Bureau, the median sale price for new houses in March was $430,700, only 4% higher than the median price of existing homes. This price gap is significantly smaller than in pre-pandemic times, when new homes were priced over 40% higher.
Locally, in Miami, the median sale price for new construction homes was $525,000 in March 2024, compared to $500,000 for existing homes. This represents a 5% premium for new builds, a significant decrease from the pre-pandemic premium of over 35%.
In Broward County, the median sale price for new construction homes was $475,000, while the median price for existing homes was $455,000, a difference of about 4%. This price gap has also narrowed considerably from pre-pandemic times, where new homes were typically priced around 30% higher than existing homes.
Matthew Walsh, assistant director and economist at Moody’s Analytics, told CNBC, “Prices are much closer to parity than during any point in the last three decades.”
What does this mean for you as a buyer?
While some buyers believe newly built homes are too expensive—or too much of a hassle—new construction does offer some unique advantages:
- More flexible pricing: Unlike traditional home sellers, builders may be more willing to negotiate on price, offer concessions like closing cost assistance, or even include upgrades as incentives.
- The latest features and energy efficiency: New homes are built to meet the latest building codes and often come with modern features that can save you money on utilities in the long run.
- Less maintenance: Brand new homes come with the benefit of not needing immediate repairs or renovations. You can move right in and enjoy your new space!
Things to Consider Before You Buy
Although new construction offers some great benefits, there are also some things to keep in mind:
- Wait times: New construction homes aren't always move-in ready. Depending on the stage of construction, you may have to wait several months before you can close on the house.
- Limited space: Over the past few years, builders have been building smaller homes to help offset the costs of construction and help with affordability challenges. According to the NAHB, the median new single-family home was 2,156 square feet in Q4 2023, the lowest reading since 2010.
- Future costs: Property taxes on new builds are often based on estimates and can increase significantly after the first year. Be sure to factor this into your budget.
Local Insights in Miami
Local Insights for Miami
Here in Miami, the new construction market is booming, with several exciting trends and notable new developments that cater to various buyer preferences. The Miami real estate market continues to attract luxury buyers, with high-end developments offering the latest in modern amenities and design. Let's highlight some key areas and trends:
Edgewater
Edgewater has seen a surge in new luxury condos, appealing to buyers looking for waterfront properties with stunning views of Biscayne Bay. Notable developments include Elysee Miami, offering three- to five-bedroom residences with private elevators and expansive terraces. The average price per square foot for new constructions in Edgewater is approximately $700, making it a prime location for upscale living.
Coral Gables
Known for its tree-lined streets and Mediterranean-style architecture, Coral Gables is witnessing a blend of modern new constructions and classic designs. Recent projects such as Villa Valencia offer state-of-the-art amenities, including wellness centers and private pools. The median price for new homes in Coral Gables is around $1.2 million, reflecting the area's premium market position.
Coconut Grove
Coconut Grove continues to be a hotspot for luxury real estate, with developments like Mr. C Residences capturing attention. This waterfront property offers resort-style living with features like rooftop pools and private cabanas. The median sale price for new construction homes in Coconut Grove is approximately $1.5 million, attracting buyers seeking a blend of tranquility and sophistication.
Brickell
Brickell, Miami's financial district, is evolving into a vibrant residential area with high-rise luxury condos. Developments like Brickell City Centre and Una Residences offer modern amenities, including sky pools and private spas. The median price per square foot for new constructions in Brickell is about $800, making it a desirable location for professionals and investors.
Doral
Doral is emerging as a family-friendly community with a focus on modern, affordable homes. Developments such as Canarias at Downtown Doral provide contemporary townhomes and single-family houses with community amenities like parks and schools. The median price for new homes in Doral is around $450,000, appealing to young families and first-time buyers.
Notable Trends in Miami's New Construction Market
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Increased Demand for Energy-Efficient Homes: Buyers are increasingly seeking homes with energy-efficient features, such as smart thermostats, solar panels, and high-efficiency HVAC systems. These features not only reduce utility costs but also contribute to a sustainable lifestyle.
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Rise of Smart Homes: New construction homes in Miami are incorporating smart home technologies, allowing homeowners to control lighting, security systems, and appliances through their smartphones. This trend is particularly popular in luxury developments.
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Customization Options: Developers are offering more customization options to buyers, allowing them to personalize their homes with preferred finishes, layouts, and amenities. This trend is evident in high-end developments like those in Coconut Grove and Coral Gables.
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Mixed-Use Developments: There is a growing trend towards mixed-use developments that combine residential, retail, and office spaces. Projects like Miami Worldcenter exemplify this trend, offering residents convenience and a vibrant urban lifestyle.
Final Thoughts
With one-third of the market consisting of new builds, there are ample opportunities for buyers to find a home that meets their needs. While there are unique considerations when buying new construction, the benefits often outweigh the challenges. From modern amenities and energy efficiency to customization options and attractive incentives, a newly built home could be the perfect fit for your next move.
