Miami’s real estate has been booming for some time now; in typical Miami fashion, it keeps you on your toes and moves fast while doing it. Competition is on every corner as people continue to flock to our magic city. 

For established Miamians, this roaring market has a different impact than it does for the new transplants relocating from the Upper East Side. 

The reality is that Miami’s real estate market is a double-edged sword. This surge in equity that long-term homeowners now have puts pressure on what to do with it: is it the time to sell and get the cash or improve, enjoy, and then sell those improvements down the road? 

The truth is there is no right answer, but here’s some math to consider.

What the Market Looks Like

Since COVID turned the world upside down, Miami’s housing market has been on a tear – overall, we’ve seen prices go up 16% since November 2020 alone. 

If you bought a cute home on a nice lot in Palmetto Bay back in 1997, you are sitting on a ton of equity. You could sell and cash out, but then the question is where would you live? 

Unless you’re picking up and moving out of South Florida entirely, you’re going to be buying something similar for what you had (just paying a whole lot more in property taxes for it). 

There are other options, however. 

Investing in Your Home

One of the perks of these low interest rates is they are not just for new mortgages. 

You can keep your home (and your property tax rate protected by your homestead exemption), borrow against the equity that has accrued in the real estate market’s run over the past few years, and turn that house you bought 20+ years ago into your dream home. 

Of course, your budget still has to make sense and work for you. But the market has given us all the opportunity of investing in the home (https://www.debowsky.com/renovating-a-miami-home-a-look-at-a-customized-home-in-pinecrest/) and designing to fit our needs and styles, and this can be a smart move – both financially and for improving your quality of life. 

Renovations can take a home from one price point to another with ease and can supply you with a decent return of the capital invested.

The Bottomline

For years, people have been calling us looking to make significant upgrades to their longtime home. And for years, we’ve cautioned them that putting $500,000 into a house where the property value would not match the investment may make it tough to reclaim the equity spent. When looking to build a house for you and your family, we always recommend to focus not solely on the financial return, but the emotional one that improves your day-to-day life. 

With the current market, low interest rates, plus a potential for a massive tax hike for selling and buying back in, that calculus is changing. 

Call us today so that we can see how to make the investments that matter and get you the home you’ve always dreamed of.