Home values for Miami- Miami Beach- Kendall are forecast to increase by 6 percent over the next 12 months. Nationally, prices are forecast to increase by 1.9 percent.

In the second and third year, prices are forecast to increase 5% and 6%, respectively.

The Risk Premium for investing in this market is currently 0.8 percent.

The Local Market Risk Premium measures the risk of lower future income from a property - due either to lower rents or higher vacancies - and the risk of lower future property value due to a fall in home prices.

In the past 12 months, jobs in this market have grown by 1.0 percent. This compares to a national increase of 1.5 percent.

Job growth is our most immediate guide to the demand for housing. New jobs spur population in-migration while jobs regained in a recovery create new households. Investments are riskier when job growth is falling, less risky when job growth is strong.

Home prices in this market peaked in Q2 2007 at $377,269. Since their peak, prices have fallen by 43%. In the last 12 months, prices have gone up by 4 percent. The average home price in this market is currently $215,839.

The Equilibrium Home Price in this market is currently $240,975.

The Equilibrium Home Price shows where home prices would be in the absence of market distortions. If actual home prices rise well above the Equilibrium Prices, they ALWAYS eventually come back down. This risk is part of the Local Market Risk Premium. The Equilibrium Price is often - but not always - the floor when home prices fall.

The Local Capitalization Rate is used to price a rental property, based on the annual rent stream minus the annual operating expenses. The Cap Rate incorporates both national and local economic risk. The local Investment Cap Rate is used to estimate the value of an apartment building or single-family rental. Proposed property prices that produce a sharply lower cap rate should be scrutinized very carefully.

The population in this market grew 2.1% in 2011, while the US population grew less than 1%.

Population growth - or the lack of it - has the strongest effect on local demand for housing. Average population growth in the US is 1 percent per year. Investments are usually less risky in markets with above-average growth, though more risky in small markets with very high population growth. Population data are always several years old, but current job growth is a fair substitute.

In 2012, net population migration was 0.5%. While migration tends to be small, it can have a large effect on demand for real estate.

Home prices and rents often move in cycles but not at the same rate. Rents are more closely tied to local income, while home prices more easily respond to relatively small changes in supply and demand. Investments often are less risky in markets where home prices and rents increase slowly and steadily.

We forecast rents to increase 18 percent over the next three years in this market, to an average of $1096 per month, partly due to higher inflation.

Rents rarely decrease, but sharp job losses and falling home prices can push them down. Rents are closely related to local income. Monthly rent on average is 2 percent of local per capita income, but there is a lot of variation.

Total housing permits in March 2013 were up 26 percent from last year. Single family permits were up 31 percent.

The Rental Vacancy Rate fell to 5.1 percent in Q1 2013. The Owner Vacancy Rate fell to 1.5 percent.

The survey technique used by the Census to get local vacancy rates for rentals relies heavily on large apartment landlords. It can't easily capture homes that are available for rent. Large changes from quarter to quarter in some markets can be due to survey problems rather than actual vacancies.

Jobs were up 1.0 percent in the past year, compared to the national gain of 1.5 percent..

The concentration of jobs in various industries can reveal special investment risks. An above-average concentration of jobs in construction, manufacturing, finance or tourism indicates a greater vulnerability to economic cycles. But strong growth in these sectors means the current situation is favorable. Large health-care or government sectors often mean more stability and lower risk - but not always.

The Unemployment Rate in February 2013 was 9.5% versus 9.2% last year.

The Financial Capitalization Rate shows the average return on investments with similar perceived risk as residential investment properties - such as BBB corporate bonds - but without taking into consideration the special local risks measured by the Local Market Risk Premium.

The Local Market Monitor forecast relies to a large extent on recent price changes and the momentum of price changes and expected changes in local income and job growth.