When it comes to Miami real estate, 'anything goes' has been the rule for almost two years now — prices rose by 23.8% between 2021 and 2022 amid increased demand from high-earning migrants with a newfound ability to work remotely.
Tech billionaire and PayPal (PYPL) co-founder Peter Thiel recently told the audience at a conservative conference that Miami is "becoming like California" despite the fact that he too made it over to the state from Sillicon Valley at the height of the pandemic.
A combination of low inventory and mortgage rates has led to bidding wars and, in some cases, overconfidence on the part of homeowners looking to sell.
This week, rapper Lil Wayne listed a Miami Beach mansion for $29.5 million or approximately 75% more than he paid for it in 2018.
A Mansion Fit For a Rap Star
Located at 6480 Allison Road, the 10,600-square-foot home is designed in contemporary style and has over 110 feet of water frontage. It sits on Allison Island, a 35-acre plot of land in Biscayne Bay land where many celebrities and wealthy residents own homes.
The Grammy-collecting rapper whose birth name is Dwayne Michael Carter Jr. bought the home for $16.75 million in 2018. Star home developer Laurent Harrari built it in 2017 to look at once sleek and extravagant.
The estate has seven bedrooms, an entry hall with 22-foot-high ceilings, a movie theater with suede walls, a wine cellar and floor-to-ceiling windows that open onto a balcony with waterfront views, a swimming pool and a cabana.
Douglas Elliman (DOUG) 's Cyril Matz is the listing agent representing the property. Matz regularly works with celebrity clients selling homes in Miami.
Lil Wayne is originally from New Orleans but spent many years living in Miami. He rose to fame as a teen when, fresh out of school in 1995, he became the youngest person to get signed with Cash Money Records.
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The popularity of songs like "A Milli" and "Go DJ" earned the rapper numerous best-selling albums and multiple Grammy and MTV Music awards over the years.
While demand for Miami homes has been through-the-roof for several years, Lil Wayne's attempt to earn 75% more than he paid for the home is ambitious in the best understanding of the market.
Overconfidence and the Miami Market
In 2017, the rapper sold a house on nearby La Gorce Island for $10 million despite once listing it for $18 million. The final price was also $1.7 million less than Lil Wayne paid for it in 2015.
While demand did soar in the last five years, celebrity homes often sell according to separate rules than the rest of the market. When the owners are wealthy and in no rush to sell, many place it on the market with an artificially elevated price tag just to see what happens.
Sometimes it's done simply to generate media attention of something being the "biggest" or "most expensive" listing. A Los Angeles mansion that developer Nile Niami once said would sell for $500 million ended up going for just $141 million at auction.
To top it off, the Miami market may finally be showing the earliest signs of cooldown as inventory rose for the third consecutive month in a row in the summer.
"After two-plus years of record-breaking Miami real estate sales, the market is shifting to be more in line with historical norms," Miami Board of Realtors Chairman Fernando Arencibia Jr. said in a statement.
