Something happened in South Florida this quarter that hasn't happened since 2023, and it got almost no attention.
For the twelve months ending in the second quarter, the region signed 13,774 new apartment leases against 12,751 completions. Demand outran delivery. It's the first crossover in three years, and on paper it's the moment the oversupply story is supposed to turn.
I don't think that's the story. The crossover is thin — about a thousand units on a base of thirteen thousand — and there are still roughly 28,000 units under construction across South Florida waiting to land on top of it. One good year of absorption does not clear that.
The story is what's underneath the average. Because "Miami multifamily" stopped being one market a while ago, and if you underwrite the blended number you will misprice a deal in either direction.
The number that matters isn't vacancy. It's the spread between classes.
Across all asset classes, South Florida vacancy sat around 7% through the first half of 2026 — basically flat year over year. Unremarkable. Now separate it by product:
Miami-Dade market-rate and luxury: 10.5% vacancy. The highest in the region.
Broward: 9.7%. Palm Beach, notably, only 6.4%.
Affordable and workforce product: leasing near 95% occupancy — the industry's stabilized benchmark.
Class C in Miami-Dade: vacancy near 3%, per Marcus & Millichap's second-quarter read, with lower-tier renewal conversions running near a record 70%.
Read those together. There is a seven-point vacancy gap between the top of this market and the bottom of it. That is not a market with a supply problem. That's a market with a luxury supply problem and a workforce housing shortage, sitting inside the same county, averaging out to a number that describes neither one.
💡 What this does to a cap rate: a 10.5% vacancy assumption and a 3% vacancy assumption on the same $2M NOI are roughly a 7.5% swing in effective gross income. On a 5% cap that's several million dollars of value difference — produced entirely by which line of the market survey you copied into your model. This is exactly the kind of thing I wrote about on Tuesday when I said most offering-memorandum cap rates are fiction.
Concessions are the real rent number, and they're still hiding in plain sight
Face rents in Miami look stable. Miami-Dade's median asking rent reached about $2,660 in May, up 1.5% year over year, and June added roughly another 1.3%. Modest, but positive.
Net effective rents are a different animal. New lease-ups in oversupplied submarkets are advertising two months free — CMPND Miami among them — and operators in places like Pompano Beach are running two-months-free just to hold occupancy above 85%. Two free months on a twelve-month lease is a 16.7% haircut to collections. It doesn't show up in the asking-rent statistic at all.
Landlords prefer concessions to cutting face rents because face rents are what the next appraiser and the next buyer see. That preference is rational for the seller and expensive for the buyer, and it's why the regional median apartment rent of $2,277 in June 2026 sits about 20% below the June 2022 peak of $2,850 even though nobody's asking rent officially fell 20%.
If you take one thing from this post: ask for the concession log, not the rent roll. A rent roll shows what tenants agreed to pay. The concession log shows what they actually paid.
Sales volume collapsed. Price per unit went up 15.7%. Both are true.
This is the most counterintuitive pair of numbers in the market right now.
Q1 2026 South Florida multifamily sales volume: $946 million — against a five-year quarterly average near $1.9 billion. Roughly half.
First-half 2026 volume: $1.95 billion, down about 12% from $2.23 billion a year earlier.
Average price per unit: $325,921 at the end of Q1 — up 15.7% year over year.
Half the volume at a materially higher price per unit is not a recovering market and it isn't a collapsing one. It's a market where the bid-ask spread is wide enough that most sellers simply refuse to transact, so the only deals that clear are the ones good enough to bridge it. Biscayne Shores traded at roughly $542,000 a unit this year. That's the shape of the market: fewer trades, better assets, higher basis.
For a buyer this is a genuinely favorable structure, because you are not competing with twelve other bidders. You're negotiating with a seller who has been on the market a long time and whose lender is getting less patient. But it also means the comps you'll be handed are survivorship-biased toward the best product in the county. Underwrite accordingly.
The supply cliff nobody's putting in the model
Here's the part I think is genuinely mispriced. Everyone is underwriting the glut. Almost nobody is underwriting its expiration.
Miami multifamily construction starts fell to 6,813 units from 8,592 a year earlier — a 21% decline.
National multifamily permits dropped 18% year over year in the first quarter as developers pulled back.
National new supply is projected to bottom out in 2027, around 444,000 units.
Miami still has roughly 15,500 units under construction, with elevated deliveries running through mid-2027 — and then the pipeline thins out sharply, because what isn't started today cannot deliver in 2028.
Construction takes two to three years. That's not an opinion, it's a schedule. The units that will compete with your asset in 2029 had to break ground roughly now, and they aren't breaking ground. So the pain in this market has a duration: call it 18 to 24 more months of heavy delivery, followed by a stretch where a growing renter base meets almost no new competitive product.
🔑 The asymmetry: a buyer today is being asked to accept 2026 concessions and 2027 delivery risk in the price. Fine — that's what the discount is for. But the exit, five to seven years out, lands squarely in the supply drought that this pullback is creating. You're buying the trough and selling into the shortage. That's the whole trade, and it only works if you can survive the trough.
Three costs that quietly moved in the buyer's favor
Insurance is finally deflating. American Coastal — the state's largest commercial property carrier — reported Florida commercial property premiums down 16.6% year over year through Q1 2026, and surplus-lines windstorm and hail costs have dropped sharply. On a South Florida apartment deal where insurance can run $1,500–$3,000 per unit annually, a 15% reduction is real NOI, and it flows straight to value at whatever cap rate you're using.
Agency capacity expanded. Fannie Mae and Freddie Mac each got $88 billion multifamily purchase caps for 2026 — $176 billion combined, up 20.5% from 2025. More agency appetite means more competitive quotes on stabilized deals, and the agencies are the reason multifamily debt stays available when banks retrench.
Debt is workable, not cheap. As of late August, roughly 5.69% on a 10-year FHA execution and 6.20% on a Freddie 5-year. At a 5% going-in cap that's still negative leverage on day one — which is precisely why you need either the concession burn-off or the supply cliff to be real. If your deal only works assuming both, it's not a deal.
What would break this thesis
I'd rather say this out loud than have you find it later.
Population. Miami-Dade lost 10,115 residents between July 2024 and July 2025 per Census estimates. Not catastrophic on a 2.7-million base, but the direction is wrong, and the entire absorption case rests on household formation. If domestic out-migration and slower international inflows persist through the delivery wave, 18–24 months of pain becomes 36.
Jobs. South Florida unemployment was 3.9% in June and Miami added nearly 10,000 professional and business services jobs through April — genuinely good. But labor force growth has flattened. Absorption is a jobs story before it's a real estate story.
NOI erosion that isn't in the T-12. Operators are spending more on marketing and resident retention than they modeled. When you buy a lease-up you're often buying a stabilization budget nobody put in the offering memorandum.
What I'd actually do buying Miami multifamily this fall
Underwrite the class, not the county
If it's Class B or C workforce product, your vacancy assumption should be in the 3–5% range and your renewal assumption can be aggressive — 70% conversions is a real number in this tier. If it's 4- or 5-star, use 9–11% and don't let the broker talk you into "stabilized market vacancy." Those are different businesses.
Price the concession burn-off explicitly, on its own line
Don't bury it in a rent growth assumption. Model current net effective rent, then model the year concessions actually go away, and be honest that in a 4- or 5-star asset that year is probably 2028, not 2027. If the returns only work when concessions vanish next year, you're betting on a date, not a property.
Buy where nothing new is coming
The operators winning right now are the ones in supply-constrained pockets — South Miami, Wynwood Norte — where lease-ups are hitting in two months with no incentives at all. Pull the construction pipeline for a one-mile radius before you pull the comps. Submarket supply beats submarket rent growth every single time in a delivery wave.
Structure for the trough, not the exit
Longer interest-only, real operating reserves, no refinance assumption inside 36 months. The thesis here is that you get paid on the other side of 2027. You only collect if you're still holding the asset when it arrives.
What I actually think
Miami multifamily is the best risk-reward I've seen in this asset class in about four years, and it is genuinely dangerous if you buy the wrong tier.
The luxury glut is real, it is concentrated, and it has at least six more quarters to run. Anyone telling you the crossover in leasing means we're through it is reading one line of a spreadsheet. But the same market has Class C at 3% vacancy, insurance falling double digits, agency lenders with 20% more capacity than last year, sale volume at half its normal level so you're barely competing for deals — and a construction pipeline that just contracted 21% and will leave a hole in new supply right about when a 2026 buyer would be selling.
The mistake I keep watching people make is treating this as a single decision — Miami multifamily, yes or no. It isn't. It's a decision about which Miami multifamily, at what basis, with how much runway. Get those three right and the current market is a gift. Get them wrong and you'll spend two years funding somebody else's lease-up.
Looking at a Miami multifamily deal right now? Send me the address or the offering memorandum and I'll pull the real picture: what's actually under construction within a mile, what comparable buildings are giving away in concessions right now, what the tier-appropriate vacancy assumption should be, and what similar assets have genuinely traded for per unit — not what the OM says. No listing pitch, just the numbers.
👉 Message me on WhatsApp | 💼 Underwriting an income property in the next two quarters? That's exactly when this is worth the most | ✉️ silvana@carvalhoresidences.com
Frequently Asked Questions
What are Miami multifamily cap rates in 2026?
Stabilized Class A infill product in Miami has been trading in roughly the 4.75%–5.0% range, with the broader Miami–Fort Lauderdale market spanning approximately 4.8%–6.3% depending on class, location and condition. The wide band reflects how differently the tiers are performing: Class A carries 10.5% vacancy in Miami-Dade while Class C sits near 3%, so a single "market cap rate" is close to meaningless without specifying the product tier.
Is Miami still oversupplied with apartments?
In the luxury and market-rate tier, yes. Miami-Dade market-rate and luxury vacancy runs about 10.5%, and roughly 28,000 units remain under construction across South Florida with elevated deliveries expected through mid-2027. Affordable and workforce product is not oversupplied — it leases near the 95% occupancy benchmark, and Class C vacancy in Miami-Dade is near 3%. For the twelve months ending Q2 2026, new leases (13,774) narrowly exceeded completions (12,751) for the first time in three years.
Are Miami apartment rents going up or down in 2026?
Asking rents are up slightly — Miami-Dade's median asking rent was roughly $2,660 in May 2026, about 1.5% higher year over year. Net effective rents are weaker, because many new lease-ups are offering concessions of up to two months free, which is roughly a 16.7% reduction in first-year collections. The regional median apartment rent of about $2,277 in June 2026 sits around 20% below the June 2022 peak of $2,850.
Why is Miami multifamily sales volume down if prices are up?
South Florida multifamily sales totaled $946 million in Q1 2026 against a five-year quarterly average near $1.9 billion, while the average price per unit rose 15.7% year over year to $325,921. That combination usually signals a wide bid-ask spread: sellers who don't need to transact are holding, so the deals that do close skew toward higher-quality, better-located assets. The result is fewer transactions at a higher average basis, which makes reported comps less representative of the market as a whole.
When will Miami's apartment supply wave end?
Elevated deliveries are expected to continue through roughly mid-2027, after which the pipeline thins considerably. Miami multifamily construction starts fell about 21% to 6,813 units from 8,592 the prior year, and national multifamily permits were down 18% year over year in Q1 2026. Because apartment construction typically takes two to three years, projects that aren't starting now cannot deliver in 2028–2029 — which is why national new supply is projected to bottom out in 2027.
Is Florida property insurance getting cheaper for apartment owners?
It has been moving in that direction. American Coastal, Florida's largest commercial property carrier, reported commercial property premiums down 16.6% year over year through Q1 2026, and the Florida Surplus Lines Association has reported declines in commercial windstorm and hail costs. Seventeen new property insurers have entered the state since the 2022–2023 reforms. Individual results still vary widely by building age, roof condition, wind mitigation features and claims history, so quote your specific asset rather than assuming the market average.
Market conditions and the construction pipeline change every quarter — if you're reading this later, reach out and I'll pull the current absorption, concession and supply data for your specific submarket. 🔑
Sources: CoStar Group via CRE Daily / The Real Deal, "South Florida Multifamily Faces Fragile Recovery Amid Oversupply," August 2026 (13,774 new leases vs. 12,751 completions for the 12 months ending Q2 2026; all-class South Florida vacancy ~7%; Miami-Dade market-rate/luxury vacancy 10.5%, Broward 9.7%, Palm Beach 6.4%; affordable and workforce near 95% occupancy; ~28,000 units under construction; two-months-free concessions at CMPND Miami and Pompano Beach lease-ups; Miami-Dade population −10,115 July 2024–July 2025 per U.S. Census Bureau; South Florida unemployment 3.9% per BLS, June 2026; median apartment rent $2,277 June 2026 vs. $2,850 June 2022 peak per Realtor.com). Marcus & Millichap, Miami-Dade Multifamily Market Report 2Q 2026 (first-quarter net absorption +40% year over year; Class C vacancy near 3%; lower-tier renewal conversions near 70%; ~10,000 professional and business services jobs added through April). Colliers, South Florida Multifamily Report Q1 2026 (quarterly sales volume $946M vs. five-year average $1.9B; average price per unit $325,921, +15.7% year over year; H1 2026 volume $1.95B, −12%). MIAMI REALTORS® South Florida Rental Market Report, May–June 2026 (Miami-Dade median asking rent ~$2,660, +1.5% year over year). Construction and permit figures from Miami market-universe reporting (~15,481 units under construction; starts 6,813 vs. 8,592 prior year) and Multifamily Dive (national supply bottoming near 444,000 units in 2027; multifamily permits −18% year over year Q1 2026). Cap rate ranges from CBRE H2 2025 Cap Rate Survey and market lender surveys. Debt pricing per Apartment Loan Store, August 21, 2026 (FHA 10-year fixed 5.69%; Freddie Mac 5-year fixed 6.20%). FHFA 2026 multifamily loan purchase caps $88 billion per agency, $176 billion combined, +20.5% year over year. Insurance figures from American Coastal Q1 2026 reporting and Florida Surplus Lines Association commercial windstorm and hail data. Figures are for general information and are not an appraisal, a valuation, or investment advice regarding any specific property. I am a licensed real estate professional, not a financial advisor — underwrite any acquisition with your own accountant and counsel.
