Replace the avd system images you have downloaded with the r02 images. r03 is broken for me but reverting to r02 saved the day!
Update: It appears r03, r04, and r05 all don’t work on m1
Google Play ARM 64 v8a System Image (revision: 2)
Google APIs ARM 64 v8a System Image (revision: 2)
With the latest android (4.1.3) on macOS, the directory you want to put the unzipped images in is probably something like ~/Library/Android/sdk/system-images/android-S
.
For example, the path for the google play image is ~/Library/Android/sdk/system-images/android-S/google_apis_playstore/arm64-v8a