More than 1 million people - many of them white-collar professionals - have moved to the State of Florida since the start of the pandemic, helping to boost the local housing market.
May 24, 2023 at 6:00 am EDT
Debbie and Jeff Stevens retired last year and immediately began planning a cross-country move from Washington state to Florida. They envisioned an oceanfront condo in Clearwater with expansive views, a pool and tennis courts.
But they quickly learned: all of that would come at a price.
Even on their $1.2 million budget, the Stevens kept coming in empty or being outbid. This month, they finally found a two-bedroom beachfront condo that met their needs—and they made an offer, without ever setting foot inside.
“We saw it on FaceTime and made an offer within the hour,” said Debbie, 65. “It was really hard to find what we wanted. I was thinking, 'What? I thought the real estate market was calming down. This is crazy.'"
The US housing market has slowed considerably in recent months, with many parts of the country in an all-out housing crisis. Existing home sales prices fell 1.7 percent in April, marking the biggest dropannual decline in more than a decade, according to the National Association of Realtors.
But not in the Sunshine State, where a steady stream of new residents continues to prop up home prices at 11 metropolitan areas including Miami and Naples. The median home sales price in the state was $410,000 in April, flat from a year earlier but up from $405,000 in March, according to data from Florida Realtors, a trade association.
While there are signs that prices are starting to moderate, many economists say Florida's housing market has held up remarkably well, especially compared to other pandemic hot spots such as Seattle, Austin and Silicon Valley, where home prices they fell about 12% in the last year, according to Black Knight, a provider of mortgage data and technology. As a result, although Florida took the brunt of the 2008 housing crisis, the state appears to be isolated this time around.
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“Florida prices are still going up, which is really shocking because home prices in many parts of the country, especially in the west and along the coast, are going down,” said Ken H. Johnson, real estate economist at Florida Atlantic University. . in Boca Raton. “Not only are we short of housing units, but we are seeing extraordinary population growth. Put those two things together and you have unaffordable housing.”
The pandemic spurred nearly 1 million people to move to Florida from 2020 to 2022, transforming the state's economy and denting its already buoyant housing market. Florida's population grew nearly 2% last year alone, faster than any other state and five times the national growth rate.Census Bureau datashows. Much of that growth, economists say, has been driven by an influx of white-collar professionals who have decided that if they can work from anywhere, they'd like to log on to the beach.
Businesses are also heading to the coast: hedge fund giant Citadel, Windstar Cruises and fitness chain Barry's have all recently moved their headquarters to Miami. Asset management firm ARK Invest left New York for St. Petersburg, while InnovaCare Health moved from White Plains, NY to Orlando.
“We are seeing significant evolution in our economies, especially in Orlando, Tampa, Southeast and Southwest Florida,” said Johnson. “Tech companies and healthcare companies are moving. And it seems like every day a new hedge fund or financial house opens a new branch or moves its entire headquarters here.”
As a result, Florida prices have remained surprisingly buoyant, even as high interest rates have reduced inventory and sales.
While many cities across the country are seeing sharp monthly drops in home prices, up to 8% in one month, home prices have risen in at least 11 Florida metro areas, including Miami, Fort Lauderdale, Pensacola, Naples, Tallahassee and Sebastian, between February and March, according to data from Moody's Analytics. Sebastian and Vero Beach, on the east coast of the state, saw some of the biggest gains, with prices rising nearly 6% between February and March and 9% from last year.
“If you're looking at the beaches or coastal areas, it's still a fight with multiple offers,” said Cyndy Tomassetti, an associate realtor in Jacksonville Beach. “People move here thinking it's going to be cheap, but it might as well be Aspen.”
About 70 percent of her clients are from out-of-state, she said, and they are moving to work for some of the area's biggest employers, including CSX, Johnson & Johnson and Mayo Clinic. They often have little time to find housing and don't mind paying a premium, especially if they are moving out of more expensive markets like Seattle or San Francisco.
Ryan Lutz and his wife, both software engineers, moved to Land O' Lakes, north of Tampa, early last year. from a suburb of Minneapolis, largely because Florida has no state income tax. Both landed high-paying remote jobs during the pandemic and wanted to stretch their money.
“It got us thinking, 'Why the hell are we paying 8% state income tax and dealing with minus 40 degree winters?'” said Lutz, 37.
The couple purchased a $900,000 lakefront home in a gated community with a pool and hot tub, which Lutz calls "a little piece of paradise." Culturally and politically though, it takes some getting used to.
“It's a stark difference, and attacks on education, women and LGBT people don't sit well with me,” he said. “But it's hard to get really mad at the world while you're sailing across a lake on a jet ski.”
The Federal Reserve raised interest rates 10 times last year, causing mortgage rates to double to 6.4% for a 30-year fixed mortgage. This had a negative effect on the real estate market. Overall US home sales fell 3.4% last year as Americans rethink their plans.
Wealthy buyers, however, are increasingly looking to Florida real estate as an investment opportunity. Rafael Corrales, real estate agent at Redfin in Miami, said there has been an increase in foreign investors from Latin America, Asia and Europe coming in with all-cash offers, which is helping to keep prices high.
“When interest rates started to rise last summer, it was like an automatic change: mortgage applications dropped, which opened the window for cash buyers,” he said. “Investors are saying they would rather put their funds into tangible real estate here than deal with the turmoil in the banking system.”
But just because prices have so far held steady doesn't mean they won't fall. Housing economists cited a number of potential concerns, including an increasingly polarized political environment and climate change, as factors that could hurt the state's housing market.
"Florida really is in the eye of the storm when it comes to climate risk," said Mark Zandi, chief economist at Moody's Analytics, which owns a home in Vero Beach. “You can no longer get flood insurance. Insurance rates are rising dramatically - and will continue to rise. That has to hit home prices sooner rather than later.”
But for now, many say they are still being shut out of the local housing market. Tegan and Justin Wolfepack moved to Florida's Gulf Coast from Denver at the start of the pandemic.
They were drawn to St. Petersburg because of its beaches, professional sports teams and “good vibes from the community”. Also, they figured they could save for a year and then buy a house.
But three years later, those dreams were dashed. Homes in your neighborhood that sold for $480,000 in 2020 are now on the market for $1.25 million. Meanwhile, the $2,500 rent is set to rise 10% this year.
“We thought we were going to rent for a year and thought about buying, but the price immediately dropped,” said Tegen, 37, a graphic designer. "It's kind of nerve-racking because we don't know if there's anywhere else to go."
For the Stevens of Washington, the new condo in Florida - which they finally visited last week —represents a new beginning. Debbie worked for years as a nurse and Jeff as an engineer at Boeing. The pandemic has caused them to rethink their priorities. They accelerated their retirement plans and decided that instead of wintering in Florida as previously planned, they would move there.
Your new home overlooks the Intracoastal Waterway and the Gulf of Mexico. The $907 monthly amenity fee covers a pool, weight room, kayak launch, and tennis and pickleball courts. They'll pay more than the Seattle area, but Debbie says, "earning a lot more."
“We decided life is too short and you know what, let's go all in,” she said. “Instead of keeping two families back and forth, why don't we move to Florida?”