What Housing Market Will You Find When Moving to Florida?
The population in Florida is currently growing faster than any state in the country except Texas. In 2021, more than 547,000 people moved to Florida, a 40% increase from 2020 and nearly 20% more than any year from 2017-2021. Nearly 900 people move to Florida every day. Why are people moving to Florida in such great numbers, and what do they find when they get there?
There are several reasons that have been traditional draws to the state:
- The weather – Florida is famous for its weather, and it has attracted countless snowbirds looking for year-round sun, sand, and moderate temperatures.
- Retirement – Florida has always been a retirement haven (as a Florida-born native, this author can certainly attest to that) due to that famous weather, low housing costs, and the many communities that offer services and amenities catering to this age group.
- Low taxes – Florida has always been a state with no income tax, making it one of only nine that don’t. It also has relatively low property taxes.
- Low housing costs – While there have always been pricey communities in Florida, in the past, there have been many affordable cities and towns in desirable areas.
- State Government’s loose regulatory agenda – Historically, Florida has given businesses a wide berth from a regulatory perspective, and during the pandemic, they remained mostly open, making it attractive for certain individuals.
How Has the Market Changed?
Once the pandemic hit, people started swarming to Florida in record numbers. This mass migration has changed the state’s entire housing market.
Changes for Renters
In February 2022, Realter.com identified the Miami metro area as having the greatest year-over-year rent increase in the state – a whopping 55%. The Orlando area came in at #2 (35.4%), with the Tampa-St. Petersburg-Clearwater area at #3 (32.3%). With these skyrocketing rents, many people are being forced out of the market. Even some traditionally more affordable areas such as Jacksonville show a 25% increase. Many individuals and families are facing unaffordable rental conditions.
It is commonly accepted that a household should spend no more than 30% of its income on housing costs. In the Miami area, as of February 2022, rent typically took up 60% of a household’s income, versus 38% in 2021. In Tampa, it is 45%, and in Orlando, 37%.
Changes for Buyers
People looking to purchase a home will not find it any easier than renters. As a matter of fact, a significant number or renters are buyers who could not find an affordable home to purchase. According to Zillow, home prices in several major Florida markets have increased more than 50% since March 2020. Florida is no longer the bargain it once was and yet there is a severe lack of inventory.
Many existing properties are being purchased by cash-rich large corporations and investors buying up the more affordable housing stock to use as rentals in order to cash in on the skyrocketing rental market. Many are also being purchased to use as Airbnb style properties.
Builders have been unable to ramp up fast enough to keep up with the demand. Labor and materials shortages have slowed efforts to add to the supply. With rising materials costs, when these homes become available, their pricing will be out of reach of many buyers.
Rising Mortgage Rates
Mortgage rates are on the rise. The average rate for a 30-year, fixed-rate mortgage rose almost 2% since the beginning of 2022. In just this month alone, in the first 8 days of the month, 30-year rates have risen almost a ¼ of a point. As the federal reserve works to lower inflation by raising interest rates, the trend will be for rates to rise for the rest of the year, further driving up the price of home ownership.
While this may be a bubble, at this moment many people are still moving to Florida. In 2021, for every 100 people leaving the state, 210 people were moving in. As of now, the growth in home prices during this housing boom has far outpaced income growth. Over the past 12 months, U.S. home prices are up 20.6%, while private sector wages are up only 4.7%. The housing market is clearly outpacing income. Will this, along with rising mortgage rates and inflation, cool the currently hot Florida housing market? Most firms and individuals in the industry see it as foreseeable in 2023, but not anytime soon.
So what will the average individual or family find when they move to Florida? The same lovely year-round weather, beautiful beaches, and relaxed style of living. They will also encounter a difficult housing market, requiring them to spend more than they had anticipated, get creative, downsize, or leave for a lower cost state.
Moving to Florida?
Moving to Florida can be stressful but Sterling is here to help. Contact us to learn more about our full range of moving and storage services. We will work with you to make sure your move stays on schedule and is as stress free as possible.
Give us a call or fill out our online form, and one of our professional team members will be happy to answer all your questions and arrange a free, no-obligation moving estimate.
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